*1 (even ones) suspects for all the guilty
may protect fully by themselves declin-
ing questions to answer. Nor do the
forcibly any privacy invade interest or suspects’
extract information without the
consent.
Childs,
short,
that line of cases is incorrect and should be
reconsidered our court en banc. America, UNITED STATES of Plaintiff-Appellee, SANDERS, Jr., Allen Cecil Defendant-Appellant.
No. 02-41514. United States Court of Appeals,
Fifth Circuit. Aug. 2003.
Terri Lynn Hagan, (ar- Asst. Atty. U.S. Plano, TX, gued), for Plaintiff-Appellee. Udashen, Robert N. Gary Alan Udashen (argued), Udashen, Dallas, TX, Sorrels & for Defendant-Appellant.
Before M. EMILIO GARZA and DeMOSS, DUVAL,1 Circuit Judges, and Judge. District DeMOSS, Judge: Circuit
INTRODUCTION Defendant was jury convicted bank fraud violation of 18 U.S.C. §§ 1344 and and making a false statement to the Small Business Adminis- 645(a) tration in §§ violation of 15 U.S.C. 2. appeals He claiming the evidence conviction, was insufficient support the district court in admitting erred cer- evidence, tain and the district court erred in sentencing him. affirm jury We verdict because the evidence is sufficient and the district court did not err admit- ting any complained of evidence. However, because the district court erred Sanders, in sentencing we vacate the sen- tence and remand to the district court for re-sentencing.
BACKGROUND
The facts established at trial are fol- (“Sand- Sanders, lows. Cecil Allen Jr. Judge 1. District for the United sitting by designation. States District Louisiana, Court for the Eastern District of that he had a dry did disclose open ers”), Ms wife wanted finance amount of unsecured obli- order substantial cleaning business. they Number One business, called representations outside the gations applied for Cleaners, and his wife Specifically, Sanders owed made Jones. amount of $4,000, business American Household Credit over September &Bank Trust on Plano $3,500, from Bank Optima Crestar Express 1996. $4,000, AT&T Master Card $20,000, and Family Norma Grantham was 75% applied for The loan Sanders Boss Admin- guaranteed by the Small Business *4 (“SBA”). Therefore, in order to istration introduced evi- government also loan, fill had to out Sanders obtain misrepresented other dence that Sanders part application his 413 as of SBA Form Bank to think information that led Plano full requires and process. Form 413 SBA condition he was in better financial than he of current assets and disclosure complete of actually page was. On 3 SBA Form liabilities. 413, represented paid only that he Sanders package, his loan Sanders preparing $16,500 the year. on accounts for charge Corpo- to Centinal Financial referred was actually significantly paid had more. He ais com- by Plano Bank. Centinal ration paid had to MBNA America He by Plano Bank to assist SBA pany hired over to Choice Visa. and ap- in their loan preparing applicants loan on Form provided information Sanders 413 plications to Plano Bank. for submission flow. to calculate his cash Sand- was used pre- applicants Centinal interviews the cash flow was listed as while ers’s by qualifies approval certain loans for of it have shown a deficit should Jones, employee, bank. Chris Centinal Lawless, Ken a commercial officer report, inter- credit reviewed Sanders’s approved working at Plano Bank who him, helped prepare him SBA viewed loan, had testified that if the bank been Form 413. a negative that had cash aware Sanders report 28 credit showed credit Sanders’s flow, the loan. it would have denied high revolving and a level card accounts ap- After the loan amount was interview, During the Sanders told credit. dry proved, purchase Sanders’s card that much of credit debt Jones fell there were through cleaners because report paid. been As reflected on the had problems at the environmental location representations, result of Sanders’s oral purchased. the cleaners that was to be that credit card reported Jones Sanders’s dry and his wife found a different Sanders reflected on debt was much lower than as purchase price, cleaners to lower report. testified that credit Jones they which also called Number One Clean- provided Centinal on the relies information his loan applica- ers. Sanders resubmitted recommen- making the borrower its for a new loan of tion but time Bank, dations to Plano and stated he Plano Bank Trust with an from & 80% going informed Sanders that Centinal guarantee. SBA rely provided. on the information Jones testified that he told Sanders loan, the second funding Prior to Form rely the bank would SBA on 1997, signed an affida- April Sanders making when its loan decision. stating corpo- individual and vit his trial, position changed financial had not government
At introduced evi- rate Jones, substantially application his during dence that his interview since loan, cleaners, first and that his SBA Form 413 the assets of the Plano Bank $2,164.12, information still accurate. Maria La- recovered after deducting costs. gusis, employee the bank who closed on 13, 2002, February On a grand jury for loan, testified that in affi- signing the the United States District Court for the davit, certifying Sanders was that all the Eastern District of Texas returned a two information Form 413 was ac- SBA count indictment charging Sanders with para- curate and that she reviewed this bank fraud violation of 18 U.S.C. graph with to make un- sure he §§ 1344 and and for making a false doing. derstood what he was statement to the Small Business Adminis- 645(a) §§ tration violation of 15 U.S.C. The new loan was disbursed in four and 2. installment, installments. With each At jury trial the completed an Form SBA presented evidence demonstrating that he represented that there had been Sanders had withdrawn a total of change no substantial adverse in his finan- from the Number One Cleaners bank ac- cial condition since he submitted his loan count approximately 4 months before it *5 application. went Chapter into 7 bankruptcy and did meantime, In the Sanders’s credit card not disclose these withdrawals to the bank- personal unsecured debt mount- was ruptcy court. The district court gave a 10, 1997, By ing. April his debt was over limiting instruction to jury informing $143,000. His undisclosed debt was them that they only could consider the $53,610. and his disclosed debt was evidence to determine if Sanders had the Special Agent Smiddy, Don of the United requisite state of mind or intent to de- Service, Inspection States Postal showed fraud, or whether he committed the acts jury signed checks written and by by accident or mistake. September Sanders around the dates of' Sanders’s defense at trial that 30, 1996, 10, 1997, and April payable to the signed documents he were vast and com- credit card companies for debt Sanders did plicated. He testified that Jones and the not in disclose his application or SBA other loan officers did not explain the doc- Forms. This evidence was used to estab- uments to him. Additionally Sanders tes- debt, lish that Sanders was aware of this tified that he understood that the credit but did not disclose it as an adverse report would include all of his credit histo- in change his situation. ry. He also testified that he did not inten- tionally misrepresent anything to the 8, 1997, On October Number One Clean- bank. He stated that signed when he ers filed for Chapter 7 in Bankruptcy affidavit, no him one showed the docu- Northern District of Texas. Sanders had he had previously completed ments in or- made three loan payments totaling der if anything changed. to determine had on the Plano Bank guaranteed SBA loan of later, Four February months 22, 2002, May jury On found Sand- 10, 1998, personal Sanders filed for bank- guilty ers charged in both counts of the ruptcy in the Eastern District of Texas. indictment. Sanders was sentenced to a personal bankruptcy, Sanders dis- term 21 imprisonment of months on each closed the credit card debt which he had count of the indictment to be served con- not disclosed during application the loan currently and pay was ordered to restitu- process. The $76,767.69, loan from Plano Bank was tion in the amount of and a discharged bankruptcy. selling After special totaling assessment Sanders $200. govern argues that concurrent to serve ordered was also Sanders to estab insufficient evidence ment offered each count: release on supervised terms of FDIC Bank and Trust was that Plano lish indictment, and 1 years on count put on testimo government insured. indictment. 2 of the count year on Lawless, Plano a former ny from Ken appeal. timely filed notice Sanders loans, of SBA charge officer Bank loan government argues that appeal he On the time during loan officer who was a Bank and Trust that Plano prove not did testi for a loan. Lawless applied Sanders the evi- and therefore FDIC insured insured dur that the bank was FDIC fied his bank support insufficient dence is argues Sanders ing question. the time that argues also Sanders fraud conviction. because the proof was insufficient that this admitting some court erred the district into evidence an did not offer government at trial. presented that was of the evidence certificate, a check for cancelled insurance the district court Finally, claims any testimony premium, or the insurance sentencing him. erred knowledge basis of Ken Lawless’s as to by Bank Trust was insured that Plano & spe contends that the FDIC. Sanders DISCUSSION acquittal cifically judgment moved at tri- presented the evidence I. Whether government failed grounds on the prove that Plano al was sufficient Plano Bank was insured prove by the Trust was insured Bank and counters the FDIC. FDIC, thereby supporting Sanders’s testimony object did bank conviction *6 fraud. on the nor did he cross-examine Lawless that argues also government issue. The challenge to the reviewing “In made an oral motion for although Sanders evidence, deter the we must sufficiency of motion was acquittal, of judgment jury could have a rational mine whether erroneous be on defense counsel’s based guilt established the evidence found that had offered no government lief that ele doubt on each beyond a reasonable insurance, merely not insuf proof of FDIC offense, drawing all reasonable of ment in the district court proof. ficient When viewing from the evidence inferences in counsel that there had formed defense light in the credibility all determinations issue, defense proof deed been on to the verdict.” United most favorable motion, saying it was withdrew the counsel (5th Solis, 420, 299 F.3d 445 States v. an erroneous belief. Defense based on Cir.2002). at the reurge his motion counsel did government close of the evidence. indictment, of the In Count One Mr. Lawless’s testi light that of argues pur of bank fraud was convicted Sanders cross- defense counsel’s failure to mony, held to 18 1344. We have suant U.S.C. the lack of object, or as well as examine only is not proof that of FDIC insurance contradictory testimony, there was suffi of the bank fraud an essential element that Plano Bank evidence to establish cient crime, necessary it but is also insurance. requisite had the jurisdiction. of federal establishment Schultz, 723, testimony 725 of a v. 17 F.3d held that United States We have Slovacek, (5th Cir.1994); is to establish that United States v. bank officer sufficient insured, (5th Cir.1989); 842, especially when bank is FDIC 867 F.2d 845 United (5th Trice, challenged on cross-exam testimony Cir. is not v. 823 F.2d States 1987). Rangel, 728 F.2d ination. States United Cir.1984). (5th argues year were made to insiders within 1 of the 2) distinguishable the instant case is bankruptcy filing; that testimony, Rangel, because in defense Rangel from prosecutor on elicited cross-ex- during argument counsel conceded amination, concerning his reneging on an federally institution in- the financial agreement agent with a real estate however, case, present In the sured. Id. 3) check; and, pocketing a refund extrinsic objection, after the initial Sanders’s coun- evidence that Sanders filed a false work- acquittal. sel withdrew his motion for compensation er’s claim. Further, we have held that a defense coun- First, offered into evi- necessary “concession” is not to find- sel’s testimony dence showing and exhibits
ing
testimony
employee
that the
of a bank
disclose,
Sanders and his wife did not
is sufficient to establish that a bank is
corporate bankruptcy
their
petition, pay-
Slovacek,
at
FDIC insured.
845- ments
and reimbursements withdrawn
Additionally, we
held that a
46.
have
corporate
from their
account within one
showing
personal knowledge
of
of FDIC year
filing
of their corporate bank-
necessary
testimony
if
insurance is not
ruptcy petition. An instruction that
unchallenged by opposing
offered was
evidence concerning
bankruptcy
peti-
Trice,
counsel.
States instruction, it minimizes Cir.1978). limiting first determine court must issues The relevant to an United danger prejudice. evidence is of undue that the extrinsic character, LeBaron, defendant’s F.3d 625-26 than the issue other States intent, i.e., motive, prepara- (5th Cir.1998). did opportunity, Accordingly, the court tion, identity, or absence knowledge, plan, admitting the not abuse its discretion Anderson, 933 or accident. of mistake evidence. must “the evidence at 1268. Second F.2d Second, intro- evidence was testimonial value that is sub- probative possess government when Sanders duced preju- undue outweighed by its stantially in his own defense. took the stand require- the other and must meet dice reneging about prosecutor asked Sanders (internal Id. at 1269 of Rule 403.”3
ments agent an with the real estate agreement on omitted). quotation prosecutor home. The who sold Sanders’s case, it established In this has been an reneged suggested Sanders offered the evidence that the agent with the after Sanders agreement claim prove intent and refute Sanders’s agent’s partial refund of the received purposes These of mistake or accident. accepted Apparently commission. 404(b). Next, under permissible are bought larger the refund but never relevant to order to find extrinsic evidence allegedly he agent house from the character, propo other than an issue agreed to do. an that the evidence is of nent must show argues that this evidence was charged of offense that is similar only establishes that there irrelevant and disclose failing Id. The act of fense. dispute contract between the real was a bankruptcy peti known information on the govern- agent estate and Sanders. failing the act of to dis tion is similar to took the stand argues ment that Sanders applica known information on loan close credibility at issue and the real put light tion the standard of forms and attacks Sanders’s credi- estate transaction discretion, review, is abuse of Rule bility, permissible which is under prong evidence is relevant under first 608.4 of the Beechum test. testifies, puts When defendant Beechum, the prong As to the second in issue. his character for truthfulness specifically district court stated at sidebar F.2d Waldrip, States v. United attorneys probative with the that the value (5th Cir.1993). 608(b), the Under Rule any prejudicial outweighed the evidence *8 if evidence is Likewise, may district court determine there are no other Rule effect. and under Rule of truthfulness Additionally, gave probative 403 concerns. the court if may probative evidence the cautionary jury. a the exclude instruction to Un- provided requires than conviction of crime as in rule 3. Rule 403 also that the evidence’s probative substantially by be out- may proved value not not be extrinsic evi- issues, however, weighed by the mislead- confusion of They may, in the discre- dence. ing jury, delay, consideration of undue court, probative tion of the if of truthfulness time, presentation waste of or needless untruthfulness, inquired into on or cumulative evidence. Fed.R.Evid. 403. (1) cross-examination of the witness con- cerning the witness’ character for [sic] 608(b) pertinent part: 4. Rule states in truthfulness or untruthfulness.... Specific a wit- instances of the conduct of 608(b). Fed.R.Evid. ness, purpose attacking sup- or porting credibility, the witness' other [sic] substantially outweighs under several of the Federal Rules of Ev- effect prejudicial Although Id. Sand- idence.5 probative value. incident is irrelevant argues ers that the Again, analyze we the admission of this dispute, contract because it was mere 404(b) evidence under utilizing two- commit- alleges that Sanders government prong admitting Beecfmm test for evi- agent fraud and cheated the real estate ted prior dence of bad acts. In relation to the him a refund. Fraud has been giving into test, prong first of the whether the evi- of a witness’s charac- probative held to be any dence was relevant to other issue be- untruthfulness. ter for truthfulness or character, sides the government Sanders’s See, Mikolajczyk, v. e.g., United States offered the videotape prove, among oth- (5th Cir.1998). 237, 244 The evidence F.3d that things, er the loan fraud like the false may prejudicial, have been but the district compensation worker’s claim was not com- probative found the value was not court by mitted accident or mistake. This is by preju- unfair substantially outweighed 404(b). Also, permissible under evidence Therefore, dice. the district court did not something of Sanders’s failure to disclose allowing govern- abuse its discretion known, working that was his while claim- regarding ment to cross-examine Sanders ing compensation, worker’s is related to the transaction. failure to his disclose his known debt on bank application, tending prove Third, prosecutor ques also by he acted with intent and not mistake or compen tioned Sanders about a worker’s prong accident. As to the second sation claim Sanders submitted while he test, again gave limiting the court in- working was for the United States Postal prejudicial impact struction and the of this government showed Service. Sanders, himself, by evidence was limited claim was fraudulent because Sanders raising compensa- the issue of the worker’s for Number while worked One Cleaners tion claim that the arguing compensation maintained a he worker’s get submitting “out to him” for claim he unable to stating work. claim. testified on cross-examination cleaners, although he at the worked Additionally, of the evi any bags dry-cleaning not haul he did error, dentiary rulings to be reversible during period of time he submitted his question admission of the evidence must stating claim to the Postal Service substantially prejudiced have do To contradict physical could not labor. 103(a); rights. See Fed.R.Evid. Fed. testimony, prosecutor introduced 52(a); Lopez, R.Crim.P. United States dry videotape hauling of Sanders clean (5th Cir.1992). 1024, 1034 Sand ing during the dates he informed the Post that the alleged ers has not his brief working. al that he was not Service have affected a sub complained of errors right. stantial evidence, argues specifi- Accordingly, the district court did not cally videotape hauling of Sanders admitting its discretion in evi- dry-cleaning, prosecutor which the offered abuse *9 fraud, in bankruptcy allowing com- to show that he committed worker’s dence about the government question fraud was inadmissible. The Sanders pensation transaction, admitting evi- that it admissible real-estate or government asserts was concedes, brief, 608(b) argues government that dence under but it is admissible 5. The in its rules. the evidence is extrinsic evi- under other inadmissible 520 2Fl.l(b)(2). § This compensa- victim. See U.S.S.G. concerning the worker’s
dence if Additionally, there were the offense level at 8. put tion claim. errors, harmless and therefore they were that the offense provides Section 2F1.1 are evidentiary rulings
the district court’s incrementally for level should be increased affirmed. original losses that exceed PSR, $77,500, the using a loss amount of clearly the district court III. Whether ultimately re- amount of the loan Sanders sentencing Sanders. erred in ceived, originally increasing recommended calculation of the amount “The 6. The the offense level finding, a factual reviewed for of loss is $77,500 objected as the to the PSR’s use of Tedder, States v. 81 clear error.” United level, amount to calculate the offense loss (5th Cir.1996) (citation omit F.3d 550 that the and case law arguing guidelines ted). satisfy error “In order to this clear required using as the amount to necessary finding is that the test all that is calculate the offense level because that was light of the record as a plausible amount of loss intended to Sanders Edwards, whole.” States United any hearing, cause. Without the PSR was (5th Cir.2002). However, F.3d objec- government’s revised based on the interpretation application and, tion; presented judge, to the it de novo. Guidelines is reviewed United adding recommended 8 levels to the of- (5th Hill, 914, 916 States v. Cir. fense, based on an intended loss amount of 1995). $232,000, increasing the total offense level stated, to 16. The PSR the “actual loss in A. Loss Calculation at Sanders’s Sen- $76,767.69; however, in- this case was tencing Hearing. $232,000; appears tended loss was It that Sentencing were Guidelines for, intended to obtain the loan used to calculate sentence be- beyond but due to circumstances post cause would have been an ex there control, Consequently, he did not.” problem guidelines, if the 2002 facto guideline range revised PSR indicated the were in effect on the date that Sanders imprisonment for lev- Sanders’s offense sentenced, were used. See U.S.S.G. 21-27 el was months. § pre-sentencing report 1B1.11. The objections Sanders filed to the revised (“PSR”) § 2F1.1 used U.S.S.G. to calculate PSR, claiming among things other that the the sentence for bank under 18 fraud original using was correct PSR making § U.S.C. 1344 and a false state- amount of the offense calculate ment to the Small Business Association and corresponding sentencing range. level 645(a). § under 15 U.S.C. The PSR rec- argued sentencing based on ommended that two offenses be improper amount be- grouped together and counted as one of- pay cause he intended back sentencing purposes fense for because but, in fact never even received a loan for harm. counts involved the same See 3D1.2(d). additionally using U.S.S.G. The base offense ignores amount the actual amount greater level for “Fraud and Deceit” under 2F1.1 pay- that remained after the is 6. in- of the loss The PSR also recommended an made and the collateral was crease of 2 the of- ments were offense levels because argued according fense also planning involved more than minimal sold. Sanders Sentencing greater or a scheme to defraud more than one Guidelines *10 repayment it over- teed to Plano Bank & Trust not be used because amount should upof to 80% of the loan amount. of his conduct. the seriousness states para- defined term is first in This used hearing, Sanders Sentencing At graph expressly 8 of the Indictment which level should that the offense again argued charges that Sanders caused false informa- $232,000 proposed on the be based Bank tion to be submitted to Plano & rather on the loan amount but “in to obtain the Number Trust order One any payments loan amount minus actual in similarly para- Cleaners Loan.” And of the received from the sale and cash graph charged 9 of the Indictment it argued for collateral. Sanders caused additional false informa- amount of sentencing based on the loan tion to be furnished to Plano Bank & Trust the loss they argued “in order to obtain the Number One Clean- to cause. The court did Sanders intended Furthermore, paragraphs 14 ers Loan.” why it found the loss specifically not state charge of the Indictment that “on and 15 adopt it did amount to be but 10, 1997, in April or about order obtain PSR; although, of fact findings $54,680.00 proceeds of the Number findings made no as to Sanders’s PSR Loan, SANDERS caused an One Cleaners general than the statement intent other 1050, SBA Form Settlement Statement a loss of that he intended to cause Trust;” submitted to Plano Bank & be $232,000. The court then sentenced Sand- “in day on that same order to obtain the the mini- imprisonment, 21 months ers to proceeds of the Number Cleaners [One] guideline range mum under the sentence Loan, SANDERS caused an Affidavit to for his offense level of 16. Bank submitted to Plano & Trust.” Finally, in of Count paragraph Indictment Analysis B. charges that Sanders made Indictment determining the correct amount of in para- false statements as “described case, in this we must start loss 8(a-b) 1 of graph [the] and 9-12 Count charge of the Indictment which counts purposes to the SBA for the Indictment offenses of with the substantive influencing guar- the action of the SBA § under 1344 and bank fraud 18 U.S.C. anteeing [One] the Number Cleaners false statement to the Small making a Loan, purpose obtaining and for the (“SBA”) under 15 Business Administration the Small Business Act.” money under § 645. The Indictment does not U.S.C. no mention whatever There is conspiracy attempt or an under charge loan of proposed Indictment of count, either and there is no reference any attempt part or of in the Indictment. 18 U.S.C. 371 fraudulently proceeds “obtain” the of such introduction section Paragraph 5 of the which Pla- any loan or of actions proposed 1 of the Indictment states as of Count in connection with no Bank & Trust took follows: apparent It is proposed loan. such Loan,” the offense of conviction therefore that 5. The “Number One Cleaners Indictment, only to the related term is in this under Indictment as that used Sanders, Defendant, connec- on or actions of refers to a loan of made $77,500.00 made on 10, 1997, the “loan of CE- tion with April about to defendant (“SAND- SANDERS, 1997 to Defendant Cecil April ALLEN or about CIL JR. ERS”) Sanders, Likewise the court’s Plano Bank & Allen Jr.” spouse by and his Trust, jury did not mention guaran- instruction to for which loan the SBA *11 any way significance cantly the relevance or of understates or overstates the ser- conduct, any proposed involving loan transaction iousness of the defendant’s $232,000.00. upward or departure may downward be
warranted. Loss Calculation in Fraudulent C. (n.7(b)). 2F1.1, § U.S.S.G. comment. Application Loan Cases. We note that the term “intended loss” is following, The 1995 Guidelines state the expressly not anywhere defined concerning loss calculation a fraudulent Guidelines. The term is used earlier loan case: opening paragraph of Note 7 in a loss the actual loss [T]he is to the victim sentence which reads follows: (or about, yet if the loss has come provisions Consistent with the of loss). expected example, For if a § 2X1.1 (Attempt, Solicitation or Con- fraudulently defendant obtains a loan by spiracy), if an intended loss that assets, misrepresenting the value of his attempting defendant was to inflict can the loss is the amount of the loan not determined, figure will if be used repaid at the time the offense is discov- greater it is than the actual loss. ered, by lending reduced the amount the comment, (n.7). (or 2F1.1, U.S.S.G. expect institution has recovered can recover) from pledged assets to The phraseology of this sentence would However, secure the loan. where the seem to indicate that an “intended loss” is greater intended loss is than the actual 1) one: resulting from convictions for an loss, the intended loss is to be used. “Attempt, Conspiracy or Solicitation” to cases, In some the loss determined commit some other substantive offense may significantly above understate or which the Defendant attempting overstate the seriousness of the defen- 2) commit; which capable being is de- dant’s conduct. For example, where the 3) termined; and, greater is than “actual substantially defendant understated his loss”. loan, debts to obtain which he never- repaid, theless the loss determined Analysis D. Loss Calculations (zero loss) above will tend not to reflect this case. adequately risk of loss created transcript sentencing hearing the defendant’s conduct. Conversely, a reflects that hearing argument after may defendant understate his debts to a counsel, the district court made the follow- degree to (e.g., limited obtain ing rulings: business), expand grain export genuinely expected to repay and for THE COURT: The court’s under- which he qualified would have at a high- standing of the law the 5th Circuit is er interest rate had he made truthful that it’s the intended loss and not the disclosure, but he is unable to actual loss in circumstances such as this loan because of some unforeseen event governs. And based on the evi- (e.g., embargo an imposed grain trial, ex- dence that the at Court heard ports) which would have caused a de- the—and what’s contained in the presen- fault in any case, event. In such a report, tence persuaded Court is loss determined may above overstate the that the Defendant intended obtain a seriousness of the defendant’s conduct. loan of and that that was the Where the loss signifi- determined above intended loss. *12 I the addendum to the PSR con-
Also, that Likewise recalling the evidence case, following provisions: tains the the Defen- at the trial of this heard han- regard to the conduct with dant’s DEFENDANT’S OBJECTION NO. S: the loan and his proceeds the of dling of objec- The defendant maintains a verbal pay- the few respect to conduct presentence the tion to the revisions of of filing made and the ments that he report objec- based on the Government’s by can find that the Court bankruptcy, original report, guide- tions. evidence, as re- preponderance on a loss line calculations were based case, that the De- by Quay quired $77,500, of the amount the de- amount the loan. not intend to fendant did actually fendant loaned. The Govern- also from the And the Court finds officer argued, probation ment and the reasonable effort that the—a evidence agrees, that the intended loss now out of to realize the maximum was made guide- should be used to determine the by the bank. the collateral range, line the intended loss was the the, recall, I say ap- I that originally will loan amount the defendant by the making for, $232,000. of loans program SBA or The defendant plied a little to be desired from bank left objects change. this the loans. standpoint monitoring RE- PROBATION OFFICER’S objection, your I will overrule So in the As stated Govern- SPONSE: Counsel, anything and now hear and case objection, guidelines ment’s say Mr. have to you and support law the use of the intended loss mitigation punishment. calcula- guideline on which to base the under probation tions. The officer was findings by of fact There are no other impression it was the defen- relating in this to its trial court record choice to terminate the sales con- dant’s determination of the amount loss. the first tract with the seller of business PSR, which the trial court The revised to purchase. that the defendant intended ruling, contains made reference to its Government, According to the the seller following provisions: sign a business would not subor- of that Characteristics: Specific 16. Offense by the agreement required dination (b)(1)(I) § 2F for an 8- 1.1 calls U.S.S.G. bank; therefore Sanders was forced if exceeded increase the loss level It appears contract. terminate sales in this case The actual loss the loan intended to obtain that Sanders however, $76,767.69; the intended was $232,000, to circumstances but due $232,000; appears It that Sand- loss was control, not. Accord- he did beyond to obtain the loan for ers intended ing Application Note to U.S.S.G. circumstances be- but due to 2F1.1, § if an intended loss that control, According yond his he did not. inflict can attempting to defendant was Note 7 to U.S.S.G. Application determined, if figure this will be used be 2F1.1, if an intended loss There- than the actual loss. greater it is to inflict can attempting defendant was loss, $232,000, fore, will be the intended determined, if figure will be used be this range. guideline calculate the used to There- than the actual loss. greater it is in the loss, $232,000, provisions these PSR fore, will be From the intended thereto, apparent that it is range, and Addendum guideline to calculate the used determined the department probation increased 8. and the offense level is $76,767.69.6 in this case attempting “actual defendant was to inflict loss” determined, can figure will be original report note its “the Likewise we if it greater used is than the actual were based guideline calculations on loss loss.” $77,500, the amount amount the defen comment, actually dant loaned.” When the Gov (n.7). *13 2F1.1, § U.S.S.G. objected ernment to the use of as C. Absent an indictment count which original report, the loss amount the the defraud, charges “attempt” an probation officer amended its PSR to use ap- the term “intended loss” has no $232,000 figure suggested by the the Gov plicability to the determination of making change, ernment. In this the pro “loss” in this case. officer made no findings
bation additional Government, pro- D. think the We fact, exclusively of but relied on the Gov bation officer and the trial court interpretation ernment’s that “if an intend in considering finding erred ed loss that the defendant attempting amount of a loan which a defendant determined, inflict figure can be this will received or intended to receive as a if greater be used it is than the actual in determining factor “intended loss.” We think the Government erred in Quaye, loss.” See United States v. office, proposing probation this rule to the (5th Cir.1995) probation in adopting office erred this that a (stating finding as to the report, rule in its and the district court amount the defendant received or in utilizing erred rule following this intended to receive was not suffi- reasons: prove cient to the amount of the loss). intended pointed
A. As we out earlier opinion, the defendant was not probation We think the got officer it charged in any the Indictment with right using the first time “actual loss” as “attempt” to defraud Plano Bank & the purposes increasing loss amount for of Trust and the substantive offense (1995). § the offense level under 2F1.1 charged in the Indictment was the 7(b) The Application first sentence of Note specific loan transaction in the expressly states: “In ap- fraudulent amount of which closed plication cases and procurement contract 10,1997. April cases, the loss is the actual loss to the (or victim if yet B. the loss The term has come ap- “intended loss” as it about, loss).” expected U.S.S.G. pears in the last sentence of the (n.7(b)). 2F1.1, § comment. paragraph first of Application Note 10, 1997, 7(b) April loan on (1995) fully funded § of U.S.S.G. 2F1.1 is an and the circumstances which precipitated obvious cross reference to the term the need to determine “actual loss” had all “intended loss” it appears occurred. There was no therefore need to opening paragraph of Application try to estimate “expected loss” within the Note 7 which states: meaning of this first sentence. provisions “Consistent with the (Attempt, effect, 2X1.1 Solicitation or Con- persuad- what the Government spiracy) if an intended loss that ed the trial court to do pretend was to 6. We Paragraph objection note that accuracy under 57 of the have raised no Report, Presentence it any way recommended restitu- this amount and did not contend in (actual loss). tion in they any arising this same amount had "loss” out victims, SBA, $232,000. Plano Bank & Trust and the proposed loan of the actual loss. Sanders maintains Indictment used a count there was $71,354.88: actual loss was to de- attempt an charged Sanders payments minus the three made on Bank & Trust of Plano fraud loan, $3,981.00, case, however, and minus if that had been Even $2,164.12 the bank realized on the sale that the Government persuaded we are not on the liquidating after the collateral loan. proving its burden of have met would $71,354.88 evidence, The actual loss amount of would that Sand- of the preponderance in an of have resulted offense level of portion intend to ers did not imprisonment sentence would have fall- loan. proposed range en within the 15-21 month instead an Intent to E. Parties’ Contentions range. 21-27 month 2F1.1 See *14 Repay range 5A. The 15-21 month is con- sentencing range sistent with the and of- that there is no evi- contends Sanders originally fense level recommended the the repay intended to not dence that he PSR. court argues that the district loan. He facts which following the government failed to consider All the evidence that the purchased that he support argument argues supporting his as the district court’s inten- every finding repay, Number One Cleaners of no intent to does not First, he made three operating finding plausible actually tion of it. make the but which he claims payments supports on the loan claim that he intended Sanders’s the loan. repay intention to repay very shows his to the loan or at the least he cleaners, Second, operated the actually repay he to not an never intended fix- money into including putting time and amount he never received.7 Third, equipment. both ing some obsolete First, argues the Sanders’s government $232,000, and amount proposed the loan the extent of his debt failure to disclose $77,500 actual loan of were secured the that he applying proof when for the loan is collateral, and he had no involvement repay intended to not the loan. Sanders’s orig- for the appraisals the of the collateral is the con- failure to disclose known debt loan. inal loan or the modified of bank duct for which he was convicted fraud, but, not in-and-of-itself intend- this does that because he asserts in- that he loan, plausible make the assertion the district court repay ed to his part all or repay in tended to not either have the intended loss not used should sentence, have the calculating the but should repay same to is not the for all Sanders’s intent the entire record
7. We have reviewed
indicating
"plausibly” supports
presence
the district
thing
that
the
of evidence
evidence
Govern-
finding, even evidence the
court’s
repay. We note however that
intent not to
his
brief, despite our
did not cite in its
ment
original
com-
provisions of the
loan
under the
appellee's
must
requirement
that
brief
loan,
$232,000
Sanders and
mitment for the
"parts of the record relied
contain citations to
personal
obligated
sign a
wife were
to
28(a)(4);
R.App.
R.App. P.
Fed.
P.
on.” Fed.
promissory
guarantee
corporation’s
of their
Further,
28(b).
government in its brief
Trust;
anticipa-
and in
to Plano Bank &
note
evidence in
argues that "there is no credible
loan,
and his
closing such
tion of
repay
to
the record that Sanders intended
guarantee.
actually signed such
wife had
however,
argument,
misstates the
This
loan.”
probation offi-
prosecutor, nor the
Neither the
burden,
prove
government
had to
it is the
that
cer,
gave any consideration
the trial court
nor
preponderance
the evidence that
by a
determining
of intent
the issue
to this fact in
$232,000
repay
to not
Sanders intended
repay.
to
loan,
indicating
evidence
and the absence of
Second,
government argues
the collateral. Without more evidence
concerning
securing
financial
situation worsened
Sanders’s role in
collateral,
originally applied
when he
with the
the ultimate inade-
from the time
quacy
prove
of the collateral does
loan to the time
proposed
repay
Sanders had the intent to not
loan and
when he received
$232,000, an amount he never received.
ability
repay
the loan
meant his
less-
therefore
intended to not
ened and
Fifth,
government
argues
be-
Using the government’s
loan.
repay the
only
pay-
cause Sanders made
three loan
ability
repay
relevant
logic
own
is
$77,500 loan,
ments on the
this is evidence
intent,
any-
evidence
if this
indicates
repay
of his intent to not
loan.
ability
thing
repay
it is that Sanders’s
government’s
argument concerning
applied
when he
greater
this evidence makes no sense.
likely
therefore he was less
Sixth,
government’s
argument
final
to have the intent to not
the loan at
is that Sanders withdrew over
that time.
from the corporate
prior
account
Third,
argues that the
bankruptcy and did not declare this on the
timing
bankruptcy filing, approxi-
bankruptcy petition and this is evidence of
*15
after
mately four months
the final dis-
$232,000
repay
intent to not
loan.
$77,500 loan,
of the
bursement
indicates The record is unclear as to what the with-
repay
Sanders never
intended to
for;
drawn funds were used
Sanders main-
$232,000.
apparent
timing
close
of
any
tains that he
pocketed
never
of the
filing
bankruptcy
for
and the
money
loan
but rather
in trying
used it
to
final disbursement
loan does make the dry cleaners work. With noth-
prove,
not
even tend to
prove, or
he
withdrawal,
ing more than the mere
it is
repay
intended not to
the loan of
plausible
not
along
this evidence
with
funded
which was never
and which he
the government’s other evidence estab-
never received.
preponderance
lishes
a
of the evidence
that Sanders
repay
intended to not
Fourth,
government argues
that the
$232,000,
received;
an amount he never
it
collateral that was to be used to secure the
plausibly
could
be evidence of intent con-
inadequate
loan was
and that this
$77,500 loan,
cerning the
but Sanders was
indicates
had the intent
to
Sanders
not
not sentenced based on that loan amount.
repay the
Our case law indi-
cates that if the defendant has no
Finally,
owner-
while several
cases
this Cir-
ship interest in or control over the collater-
cuit have sentenced the defendant based
loan,
al used to secure the
then the loss
on the intended loss when the actual loss
less,
amount does not
calculation
need to con- was
those cases all include
facts
Morrow,
sider the value of the collateral. United
present
this case.
177 F.3d at
(5th
Morrow,
300; Tedder,
551; Hill,
States v.
177 F.3d
(and other) evidence, concluded, the court plausibly enough, that Cecil Allen Sanders CONCLUSION (“Sanders”) did not intend to repay a Having carefully reviewed the record of $232,000 loan from Plano Bank and Trust case, parties’ respective briefing (“the Bank”). majority opinion, how- arguments, for the reasons set forth ever, asserts that the district dearly court above, jury we affirm the verdict and the erred in making this determination. For evidentiary decisions of the district court. *17 reason, majority the opinion holds However, we vacate Sanders’s sentence that the district court erred in using the the remand case for re-sentencing $232,000 figure to determine Sanders’s consistent with our instructions herein. Although agree sentence. I with much of PART, AFFIRMED IN VACATED IN (the majority opinion the part that affirms PART, REMANDED IN PART. conviction), I cannot concur in opinion’s the decision to reverse Sanders’s GARZA,
EMILIO M. Judge, Circuit sentence. concurring part in and dissenting in part: majority opinion The rests its conclusion
A man walks into a apply bank to a that the district court in sentencing erred $232,000 loan. A bank loan officer hands separate First, Sanders on two grounds. form, the man a requires the man to majority opinion the holds that the district disclose his assets liabilities. $232,000 The man court could not consider the form, stares at pondering all, the his recent at because the Government did not debts and problems: $4,000 cash flow include this loan in Sanders’s indictment.1 recites, majority opinion 1. As the never in fact received the loan.
529 fact that was no part concludes the there Second, majority opinion clearly erred in us- reference Sanders’s indictment court that the district thereby The figure opinion ap- to calculate Sand- loan. ing the that, pears the evidence shows to when the district because assert ers’s sentence loan. repay a intended court calculates defendant’s sentence that Sanders conclusion, view, 2F1.1, my can be pursuant §to the court can never Neither precedent. beyond charged in reconciled with our consider offenses those
the indictment. I opinion’s assertion is majority sur involves the district present case have prising. repeatedly We reaffirmed Sentencing Guideline application court’s that, when a district court sentences a a § That dis- provision 2F1.1. states defendant, take account the court can into trict court should increase sentence specifically that were not included offenses has who committed certain a defendant See, e.g., the indictment. United States fraud) in proportion bank (including crimes Anderson, (5th 515, v. 174 F.3d 526 Cir. by the defen- financial loss caused 1999) (“It necessary is not defen SentenCing dant. See U.S. Guidelines charged dant to have with or convict been 2Fl.l(b)(l). § For purposes Manual carrying ed of out the other acts before gener- “loss” is guideline, this relevant they conduct can be considered relevant or loss to the ally expected the actual sentencing purposes].”); [for United 7(b). However, Id., cmt. n. victim. (5th 23, F.2d 26 Singleton, States v. provides that “where the intended 2F1.1 Cir.1991) (“[A] court, considering the when loss, the greater than the actual loss is guidelines, under appropriate sentence to be Id. intended loss is used.” only have can consider not crimes that not found, case, by court present the district doubt, beyond a reasonable proven been evidence, that Sand- preponderance of been but crimes that have even ers did not intend v. charged.”); see also States Pow United found, Therefore, the court loan. Cir.1997) (con (5th ell, fact, intended to that Sanders matter that, determining cluding defendant’s $232,000. The court con- cause a loss of violations, the for federal tax dis sentence figure greater than cluded that this only consider not trict court could (which, the actual loss caused amount of tax losses but also federal presentence report according losses, tax amount of because state $76,767.69), calculated Sand- and therefore conduct”); “relevant latter constituted cf. in- ers’s based on sentence Carreon, F.3d United States *18 loss. tended Cir.1994) (“A (5th may district court 1241 a sentence conduct opinion concludes that the base defendant’s majority The $232,000 acquitted because the defendant was using the which district court erred only sen the need establish sentence. figure to determine Sanders’s (unlike the elements the tencing facts majority conclusion opinion bases business, sive) diy cleaning applied for money and requested purchase to a the $77,500 establishment, approved The Bank cleaning ap- Bank another loan. dry and the however, loan, minute, again relying claims that on Sanders’ proved the loan. At the last deal, were stable. Sanders’s indict- pulled his finances the out of the because of seller specifically fraud referred facility. ment for bank problems with the environmental (and expen- less this second loan. Sanders later found second 530
crime) $232,000 $77,500 preponderance of the evi- loan by loan and the that he dence”)- ultimately received. Sanders’s failure to report all of his debts and liabilities on
Indeed,
applied
have
this rule in
we
,See
application
loan
“conduct”
Anderson,
§
174 F.3d
2F1.1 context.
that led to his convictions for bank fraud
(rejecting the defendants’ assertion
at 526
calculating
making
that “the district court erred
and for
false statements to the
(“SBA”).
attributable to them
the amount
loss
Small Business Administration
2F1.1],
§
and thus their
of
base
[under
convictions,
affirming
majori-
those
levels,
court in
fense
because
district
ty opinion clearly recognizes that Sand-
su
charged
cluded conduct not
filling
ers’s
loan applica-
conduct
out the
as
perseding indictment
relevant conduct
(for
tion
both
and the
1B1.3”);
§
pursuant
to U.S.S.G.
see also
loan)
was “criminal.”
1297,
Burridge,
v.
United States
191 F.3d
Therefore,
question
of whether the
Cir.1999)
(10th
(rejecting
de
1304-05
district court
could consider
that the district
fendant’s assertion
court
loan at
turns
it
sentencing
on whether
in calculating
erred
his sentence under
§
qualifies
2F1.1 because the district court included
as “relevant conduct” under
charged in
conduct that was not
the indict
§
provision,
1B1.3. Under that
“relevant
Dickler,
ment);
v.
United States
64 F.3d
“all
conduct” includes
acts and omissions
Cir.1995)
(3d
(stating, in
review
part
...
that were
of the same course of
court’s calculation
ing
district
of loss
plan
conduct or common scheme or
as
2F1.1,
§
under
that “[t]he relevant crimi
Sentencing
offense of conviction.” U.S.
need not be
nal conduct
conduct
lB1.3(a)(2).
§
Guidelines Manual
charged,
which the defendant was
nor con
commentary
§to
1B1.3 further explains
duct over
the federal
juris
court has
that, in order for two
offenses
constitute
diction”) (citations omitted).
part of a
or plan,” they
“common scheme
course,
to say,
That is not
that the
“substantially
must be
each
connected to
court can consider
district
conduct
factor,
other
at least one common
such
beyond
charged
indictment
victims,
as common
common accomplices,
determine a defendant’s sentence. The
purpose,
oper-
common
or similar modus
only
can
prior
district court
consider
acts
Id.,
n.9(A); Anderson,
andi.”
cmt.
two
satisfy
conditions. The conduct
526; Powell,
F.3d at
The opinion surely would con- (submitting ands the same falsified loan cede that Sanders’s conduct in for applying form). Therefore, application the loan was criminal. As the recounts, majority opinion application for loan the consti- submit- conduct,” ted the loan application same for the initial tutes “relevant was properly
531 Indeed, majority re- opinion court sen- the even by district at the considered very the deferential nature of our cites tencing.2 § majority 2F1.1 As the review cases. II states, opinion we affirm the district sentencing long court’s determination as as asserts that majority opinion next The findings “plausible the court’s of fact are have used the court should not the district as a light the record whole.” United the Government because figure, (5th Edwards, 606, v. States 303 F.3d 645 preponderance a the prove to failed Cir.2002) (“In satisfy order to this clear not to did intend evidence that Sanders necessary test all that is is that the error majority opinion con the The repay loan. finding light of the record plausible that, intended to because Sanders cludes (internal whole.”) as quotation a marks loan, district court should the the repay omitted) added); see (emphasis also Unit- “intended loss” at not have used Sanders's (7th 428, v. 222 Lopez, ed States F.3d 437 Instead, calcu the court should have all. Cir.2000) (“The proof appeal- burden of on “actual his based on the lated sentence ing a court’s calculation re- v. district loss that he caused. See United States loss” (5th Cir.1996) Tedder, 549, quires the to the de- 551 defendant show that 81 F.Sd (“Where only repay intends to termination was not inaccurate but the defendant loans, loss, computa- the permissible rather than outside realm of then actual tions.”) (internal omitted) quotation marks loss, appropriate is the basis for intended added). 2F1.1.”); (emphasis § calculating loss under United (5th Henderson, 917, 19 v. F.3d 928 States however, re- majority opinion, after The Cir.1994) (“If defendant] intended to [the standard, goes on citing proper then loans, district repay banks apply anything but clear error review. should not have used intended loss court (in with a opinion The does not accordance sentencing.”). for the basis standard) examine the clear error evidence evi- as a whole to determine whether that majority opinion purports recog The might support the district court’s the calculation of loss under dence nize Morrow, 177 F.3d finding. factual at finding § is factual that this Court 2F1.1 a Cf. (“Given 301 standard of [clear error] States reviews for clear error. See United review, (5th Morrow, 272, only question we must address 301 Cir. F.3d 1999) supports is the district district court’s whether the record (noting that “[t]he § 2F1.1 a court’s determination that the defendants loss under is find calculation of only for er did in fact intend to inflict loss fact reviewable clear ing of Tedder, fraudulently ror”); 550; obtained 81 F.3d at United total amount of the (in loans.”). Instead, (5th Hill, majority opinion 42 F.3d Cir. States v. standard) 1995). novo exam- accordance with de majority opinion appears also ex- separately, of evidence piece district court’s ines each acknowledge why standing plaining did intend determination that Sanders evidence— district court’s finding support alone—cannot majority opinion thereby fact, subject to for error. decision.3 only review clear Indeed, the court failed might 2. of loss under 2F1.1 because it have been error conduct”). to include all "relevant not to consider district court Bennett, See United States v. loan. Indeed, (1st Cir.1994) (concluding that discussion in the ma- 3. much of the calculating jority opinion seems more concerned erred in the amount district court *20 error effectively that, turns clear standard of support conclusion when Sanders loan, a de novo applied review into standard. he not did believe he thus, (and, repay would able to the debt example point. A illustrates single this debt). did not to repay intend The opinion examines majority The the Gov- at suggested evidence trial also that Sand- contention that Sanders’s failure ernment’s particularly ers was not honest or forth- problems his financial on his disclose coming respect with to financial matters. indicates a lack intent application loan only Not did he make misrepre- material opinion rejects debt. The repay sentations on his bank applications, stating that fail- argument, “Sanders but also failed to disclose information debt ... ure to known does not disclose on his bankruptcy petition.4 That evi- plausible make in-and-of-itself the asser- dence could have led the district court to tion intended to not repay that he either representations discount Sanders’s that he $232,000.” all of the The part majority or did fact to repay intend the loan. In opinion question mischaracterizes be- sum, the district court have could inferred fore this The issue is not whether Court. pattern from Sanders’s of dishonesty in piece a particular of evidence “in-and-of- transactions, financial combined with supports itself’ the district court’s deci- Sanders’s clear awareness of his own fi- Instead, question sion. is whether troubles, nancial that when ap- Sanders evidence, light that of the record as a $232,000 loan, plied he did not whole, supports district court’s factual (and to) believe he could did intend that determination Sanders did not intend repay the debt. Edwards, repay the debt. See produced trial, 645; evidence at at Fed.R.Evid. when (noting that cf. “ whole, ‘[rjelevant viewed as a indicates that evidence’ means the dis- evidence hav- (that trict court’s determination ing any tendency to make the Sanders existence of loan) did not intend to consequence fact is of that Indeed, atwas least plausible. in my opin- of the determination action more probable ion, suggests or evidence that the less than it would district probable be without evidence”). finding court’s factual was correct. As a result, the district court properly used the If majority were to examine the $232,000 figure to determine Sanders’s above light evidence the record as a sentence. whole, must as we under the clear error majority opinion presents review, no valid the majority standard of see would reversing reason for the district court’s that the district court’s determination was sentencing determination in this case. “plausible.” indeed The evidence at trial Therefore, I respectfully dissent. showed well of his aware precarious condition; financial for that reason,
very he intentionally hid finan- problems cial from the Bank ap- when he plied for the loan. That evidence would explaining the fallacies in support Government’s that there is no evidence to the dis- arguments than determining whether the trict court's factual determination. supports evidence the district court's deci- sion. The fact that some Government's addition, suggested 4. the evidence may "make[] contentions no sense” indicate may filed a have fraudulent worker's spend the Government should time more compensation lawsuit. refining arguments, suggest its but does not