UNITED STATES OF AMERICA v. FREDERICK H. BANKS, Appellant
Nos. 19-3812 & 20-2235
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
Argued March 29, 2022. Opinion filed: November 30, 2022
PRECEDENTIAL
Before: RESTREPO, ROTH, and FUENTES, Circuit Judges
Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Criminal Action No. 2-15-cr-00168-001) District Judge: Honorable Mark R. Hornak
Abigail E. Horn (ARGUED)
Federal Community Defender Office for The Eastern District of Pennsylvania
601 Walnut Street
The Curtis Center
Suite 540 West
Philadelphia, PA 19106
Counsel for Appellant
Laura S. Irwin (ARGUED)
Office of the United States Attorney
700 Grant Street
Suite 4000
Pittsburgh, PA 15219
Counsel for Appellee
ROTH, Circuit Judge:
A jury convicted Frederick Banks of wire fraud, and the District Court sentenced him to 104 months’ imprisonment and three years’ supervised release. On appeal, Banks argues that the District Court erred in three ways, by (1) denying his constitutionally protected right to self-representation, (2) applying the loss enhancement to the fraud guideline in the
I.
In January 2016, a federal grand jury indicted Frederick Banks for stalking, wire fraud, aggravated identity theft, and making false statements. The wire fraud charges “related to interlocking schemes ... carried out by [Banks] to fraudulently gain the money and property of others in relation to the FOREX.COM international exchange system by submitting phony registration information for himself and then using those registrations to execute bogus trades that would drop money into bank accounts that he had set up.”2
A. The Scheme
Banks‘s scheme targeted Gain Capital Group, which did business as Forex.com. Gain Capital‘s clients opened accounts, deposited funds, and then used those funds to invest in the foreign currency exchange market. Banks‘s plot was to open Gain Capital accounts and make electronic deposits into those accounts, but his deposits were drawn on bank accounts with insufficient funds. He then tried to withdraw funds from these accounts, “with the goal being to complete the withdrawals/transfers before the lack of supporting funds could be detected.” To support his scheme, Banks made fraudulent representations through text message, telephone conversations, and emails. He misrepresented his identity, his income, his occupation, his net worth, and the balances in his bank accounts.
Importantly, Gain Capital suffered no actual loss. Banks made fraudulent deposits of $324,000 and unsuccessfully executed 70 withdrawals/transfers totaling $264,000. Gain Capital, however, did not transfer a single dollar to Banks.
B. Banks‘s Competence to Stand Trial and Competence to Represent Himself
Early in Banks‘s prosecution, his court-appointed lawyer suggested to the District Court that Banks was not competent to stand trial and to assist in his own defense. The District Court concurred, relating that Banks
appeared to be materially detached from reality, wholly inappropriate in his conduct, communications and general affect, and consumed, for reasons which to this day remain inexplicable, with the notion that the then-pending (and subsequently superseded) federal criminal charges should all be dismissed because in [Banks‘s] estimation, [a] former FBI Agent had set him up in an earlier federal prosecution which long ago became final.3
Banks was also “fixat[ed] with the same CIA-induced ‘voice to skull’ telepathic communication” he referred to in an “allegedly fraudulent habeas petition.”4 The District Court also noted that Banks had previously told this Court that he was not competent to stand trial or represent himself, even when he told the trial court in those proceedings that he was competent.
Accordingly, the District Court ordered an evaluation of Banks. Dr. Robert Wettstein evaluated Banks and concluded he “was psychotic and delusional, and was subject to various forms of delusional and psychotic episodes.”5 Dr. Wettstein believed, however, that Banks could understand
The District Court then concluded “a second professional opinion was necessary to protect both the rights of [Banks] and the integrity of the judicial process.”6 Dr. Heather Ross, a forensic psychologist, concluded Banks “was so continuously delusional that he was not competent to stand trial, nor to waive his right to counsel and represent himself.”7 After the statutory period of restorative treatment, yet another forensic psychologist, Dr. Allisa Marquez, concluded not only that Banks was restored to competency, but that he had never been incompetent (as defined in
After these evaluations, the District Court “repeatedly solicited the position of both the United States and [Banks‘s] appointed counsel as to the issue of competency. They ... each uniformly and consistently expressed their observation that [Banks] [was] neither competent to stand trial, nor to waive counsel and represent himself at any such trial.”9 Combined with the District Court‘s own observations of Banks, the District Court accepted the conclusions of Drs. Wettstein and Ross that Banks suffered from “a mental disease or defect of psychosis and delusional paranoia,” but the District Court also accepted the doctors’ conclusions that Banks was “competent to be tried.”10
Then the District Court considered Banks‘s “repeatedly asserted desire to waive representation by counsel and represent himself.”11 Although the District Court acknowledged that “ordinarily, if a defendant is competent to be tried, that means as a matter of course that such a defendant is competent to represent himself,” it explained that trial court judges are in a “particularly apt position to assess such matters, and that there can be a narrow class of cases in which that parallel conclusion does not hold.”12
The District Court concluded that the “content and volume” of Banks‘s filings demonstrated that he “is so detached from the reality as to what can and cannot be accomplished by legal processes that he has sought to assert in the context of a federal criminal trial that he has not knowingly and voluntarily waived his right to be represented by counsel in the defense of these serious criminal charges, and is not capable of doing so.”13 Although Banks “can understand the charges against him, and what can happen to him if he is convicted of them, and that he can assist his lawyer as that lawyer pulls the levers of justice on his behalf in the course of a criminal trial . . . he has no competence to make the decision to give up his right to be represented by a lawyer in that trial and related proceedings in any knowing way.”14
C. Sentencing
Banks‘s offense level computation under the
The attempted loss, based on [Banks‘s] fraudulent deposits, is $324,000. Therefore, the base offense level is increased by 12 because the attempted loss was greater than $250,000 but less than $550,000.
USSG §2B1.1(b)(1)(G) (As a general rule, loss is the greater of actual loss or intended loss, pursuant to Application Note 3).16
The 12-point increase raised Banks‘s adjusted offense level from 7 to 19. During sentencing, the District Court explained that the Sentencing Guidelines define “loss to not only be actual loss, but to be intended loss. And the application notes indicate that the intended loss counts into the calculation of the loss amount, even if it‘s determined to be improbable or impossible of occurrence.”17 The District Court found that the loss amount exceeded $250,000, triggering the 12-point loss-amount enhancement. The District Court explained that Banks “intended to cause a loss in a pecuniary amount in excess of $250,000” and that Banks “by his conduct, intended to cause such a loss; and, therefore, it is appropriately added into the guidelines calculation under
The District Court sentenced Banks to 104 months’ imprisonment and three years’ supervised release.
II.19
Banks makes three arguments on appeal. First, he contends that the District Court erred in denying his constitutionally protected right to self-representation. Second, he asserts that the loss enhancement to the fraud guideline, found at
A. Banks‘s Right to Self-Representation20
Generally, criminal defendants have a constitutional right to eschew a
Banks mainly contends the District Court applied the wrong test when it assessed whether his waiver of his right to counsel was knowing and voluntary. He suggests the District Court improperly conflated a knowing and voluntary waiver with a determination of Banks‘s competency for self-representation at trial. We disagree.
In our Circuit, a defendant may only waive his right to counsel if three requirements are met:
- The defendant must assert his desire to proceed pro se clearly and unequivocally.
- The court must inquire thoroughly to satisfy itself that the defendant understands “the nature of the charges, the range of possible punishments, potential defenses, technical problems that the defendant may encounter, and any other facts important to a general understanding of the risks involved.”
- The court must “assure itself” that the defendant is competent to stand trial.23
This appeal, and our analysis, focuses on the second requirement—whether the District Court properly concluded Banks did not knowingly and voluntarily waive his right to counsel. We begin with the District Court‘s analysis. The District Court found that
the content and volume of [Banks‘s] filings demonstrate to this Court . . . that [Banks] is so detached from the reality as to what can and cannot be accomplished by legal processes that he has sought to assert in the context of a federal criminal trial that he has not knowingly and voluntarily waived his right to be represented by counsel in the defense of these serious criminal charges, and is not capable of doing so.24
The District Court added that although Banks understood the charges against him, and what can happen to him if convicted, “he has no competence to make the decision to give up his right to be represented by a lawyer in that trial and related proceedings in any knowing way.”25 Based on the District Court‘s colloquies with Banks, the District Court concluded that Banks‘s mental state, “is such that he not only cannot, but is not capable of, understanding
The District Court predicated its finding that Banks could not understand the risks of self-representation on Banks‘s voluminous filings and the court‘s own observations of Banks over several years. The court had noted Banks‘s “unrelenting focus” on his “perceived facts of the investigation of the prior criminal convictions on the federal criminal charges against him, which have long ago become final and conclusive,” coupled with his “unrelenting and persistent focus on CIA-managed ‘voice-to-skull’ technology, a construct as to which he admits he has no factual basis to conclude was ever applied to him.”28
Because the District Court properly concluded Banks could not knowingly and voluntarily waive his right to counsel, we will affirm the District Court‘s order denying Banks‘s request for a waiver of counsel.
B. The Intended-Loss Enhancement in Guideline § 2B1.129
Next, we turn to Banks‘s argument that the District Court erroneously applied the intended-loss enhancement to his sentence when the victim suffered $0 in actual losses. The application of the intended-loss enhancement hinges on the meaning of the term “loss” as used in Guideline
Courts treat the Sentencing Guidelines as legislative rules, and the Sentencing Commission‘s comments interpreting its Guidelines as interpretative rules.30 Historically, first, under Bowles v. Seminole Rock & Sand Company, 325 U.S. 410 (1945), and, later, under Auer v. Robbins, 519 U.S. 452 (1997), courts deferred to the Sentencing Commission‘s interpretation of its own regulations.33 Application of Auer deference required courts to defer to the Sentencing Commission‘s commentary for a Guideline unless that interpretation was plainly erroneous or inconsistent with the Guideline.34
Recently, however, the Supreme Court decided Kisor v. Wilkie, in which it made clear that, before according Auer deference, “a court must exhaust all the ‘traditional tools’ of construction,”35
What‘s more, a court must make an “independent inquiry” into the “character and context” of the reasonable interpretations of the regulation.38 The Supreme Court identified three character-and-context circumstances under which an agency‘s otherwise reasonable interpretation should not receive controlling weight: (1) when an agency‘s interpretation is not its “‘authoritative’ or ‘official position‘”39; (2) when an agency‘s interpretation does not implicate its “substantive expertise” in some way;40 and (3) when an agency‘s reading does not reflect its “fair and considered judgment” but rather is a “convenient litigating position,” a ”post hoc rationalization”41 or parroting of a federal statute.42 Under Kisor, then, there must be both a genuine ambiguity in an agency‘s regulation and the character and context of an agency‘s interpretation must fall within the regulation‘s zone of ambiguity.43
Against this backdrop, this Court sat en banc and unanimously concluded that this reprised standard for Auer deference applied to the Sentencing Commission‘s interpretive commentary.44 “If the Sentencing Commission‘s commentary sweeps more broadly than the plain language of the guideline it interprets, we must not reflexively defer. The judge‘s lodestar must remain the law‘s text, not what the [Sentencing] Commission says about that text.”45 That framework, then, applies to Banks‘s challenge to
We begin with the plain text of
| Loss (apply the greatest) | Increase in Level |
|---|---|
| (A) $6,500 or less | no increase |
| (B) More than $6,500 | add 2 |
| (C) More than $15,000 | add 4 |
| (D) More than $40,000 | add 6 |
| (E) More than $95,000 | add 8 |
| (F) More than $150,000 | add 10 |
| (G) More than $250,000 | add 12 |
| (H) More than $550,000 | add 14 |
| (I) More than $1,500,000 | add 16 |
| (J) More than $3,500,000 | add 18 |
| (K) More than $9,500,000 | add 20 |
| (L) More than $25,000,000 | add 22 |
| (M) More than $65,000,000 | add 24 |
| (N) More than $150,000,000 | add 26 |
| (O) More than $250,000,000 | add 28 |
| (P) More than $550,000,000 | add 30. |
The Guideline does not mention “actual” versus “intended” loss; that distinction appears only in the commentary. That absence alone indicates that the Guideline does not include intended loss.49
The government concedes that “the presumption is that a word carries its ordinary meaning (and thus may resolve its ambiguity).”50 We agree. The ordinary meaning of “loss” in the context of
(a) the act or fact of losing;
(b) a person or thing or an amount that is lost;
(c) the act or fact of failing to gain, win, obtain, or utilize;
(d) A decrease in amount, magnitude, or degree;
(e) the state or fact of being destroyed or placed beyond recovery; and
(f) the amount of an insured‘s financial detriment due to the occurrence of a stipulated contingent event.52
The 1988 edition of Webster‘s Ninth New Collegiate Dictionary defines “loss” as:
1a: the act of losing possession b: the harm or privation resulting from loss or separation c: an instance of losing
2: a person or thing or an amount that is lost . ..
3 a: failure to gain, win, obtain, or utilize b: an amount by which the cost of an article or service exceeds the selling price
4: decrease in amount, magnitude, or degree
5: destruction, ruin
6: the amount of an insured‘s financial detriment by death or damage that the insurer become liable for....53
In collecting dictionary definitions of “loss,” the United States Court of Appeals for the Sixth Circuit wrote that:
One dictionary defines the word to mean, among other things, the “amount of something lost” or the “harm or suffering caused by losing or being lost.” American Heritage Dictionary of the English Language 1063 (3d ed. 1992). Another says it can mean “the damage, trouble, disadvantage, [or] deprivation ... caused by losing something” or “the person, thing, or amount lost.” Webster‘s New World College Dictionary 799 (3d ed. 1996). A third defines it as “the being deprived of, or the failure to keep (a possession, appurtenance, right, quality, faculty, or the like),” the “[d]iminution of one‘s possessions or advantages,” or the “detriment or disadvantage involved in being deprived of something[.]” 9 Oxford English Dictionary 37 (2d ed. 1989).54
Our review of common dictionary definitions of “loss” point to an ordinary meaning of “actual loss.” None of these definitions suggest an ordinary understanding that “loss” means “intended loss.” To be sure, in context, “loss” could mean pecuniary or non-pecuniary loss and could mean actual or intended loss.55 We need not decide, however, whether one clear meaning of the word “loss” emerges broadly, covering every application of the word. Rather, we must decide whether, in the context of a sentence enhancement for basic economic offenses, the ordinary meaning of the word “loss” is the loss the victim actually suffered.56 We conclude it is.
Because the commentary expands the definition of “loss” by explaining that generally “loss is the greater of actual loss or intended loss,”57 we accord the commentary no weight. Banks is thus entitled to be resentenced without the 12-point intended-loss enhancement in
C. The Special Conditions of
Finally, Banks argues the District Court erred by imposing four special conditions of supervised release: (1) barring Banks from purchasing digital devices without approval; (2) barring Banks from conducting certain financial transactions without approval; (3) imposing costs and fees on Banks; and (4) requiring Banks to “cooperate in the collection of DNA as directed by the Probation Officer, pursuant to
The government contends that Banks did not properly preserve his challenges to the special conditions because he did not object to any of them at sentencing. Banks concedes that his challenges to the device-purchase and financial-transactions conditions are unpreserved, so we will review those conditions for plain error. The parties dispute whether plain error or abuse of discretion guides our review of the costs and fees award and the DNA collection requirement under the Adam Walsh Act. It does not matter because under either standard we will affirm. We address each condition of supervised release in turn.
First, the District Court barred Banks from purchasing digital devices without approval.61 Banks argues the condition is “contradictory, vague, and violates”
The device-purchase condition also does not violate
Mr. Banks, I‘m imposing those computer restrictions because that‘s the tools you use to trick other people, to try and take their money, to try and enrich yourself, to commit fraud. And I specifically find in the facts of your case that there‘s no basis for the Court to conclude that you‘re not unwilling to continue to do so. Those are the tools of the fraud that you committed in this case. Those are the tools of the crimes of conviction in this case. When I couple that with your prior record of federal criminal convictions for fraud, the aggravated identity theft conviction in this case, your willingness to cause turmoil in the lives of other people by legal filings, by financial chicanery, I specifically find and conclude that it‘s necessary for you to comply with the law and to fulfill the purposes of supervised release that all of those conditions be in place in your case.68
The District Court‘s findings and reasoning support the device-purchase conditions and are narrowly tailored to Banks. We will affirm the device-purchase conditions.
Second, the District Court barred Banks from conducting certain financial transactions without approval. The District Court prohibited Banks from “engag[ing] in financial transactions in any single amount in excess of $500.00 (or cumulatively within any 7 day period in excess of $100[0].00) without approval of the probation office.”69 Banks argues this condition is vague and violates
Third, the District Court imposed certain costs and fees on Banks.73 Banks contends that the District Court gave no reason for these conditions, in violation of
More importantly, Banks‘s challenge to this potential imposition of costs is unripe. Because the probation office indeed might not require Banks to contribute to these costs, his challenge “rests upon contingent future events that may not occur as anticipated, or indeed may not occur at all.”77 If Banks wishes to conform the written special conditions to the District Court‘s oral pronouncement, he may move under
Finally, the District Court ordered that Banks “shall cooperate in the collection of DNA as
III.
For the reasons stated above, we will affirm the District Court‘s order denying Banks‘s request to waive his right to counsel as well as the District Court‘s order imposing special conditions of supervised release. Because we hold that “loss” in the context of