Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-09-01767/USCOURTS-ca8-09-01767-0/pdf.json

Parties Involved:
Joel Rund
Appellant
United States of America
Appellee

Document Text:

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 09-1452

___________

United States of America, *

*

Appellee, *

*

v. *

*

Robert Statman, * 

* 

Appellant. *

___________

Appeals from the United States

No. 09-1767 District Court for the

___________ Eastern District of Arkansas.

United States of America, *

*

Appellee, *

*

v. *

*

Joel Rund, *

*

Appellant. *

__________

Submitted: December 14, 2009

Filed: May 4, 2010

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Appellate Case: 09-1767 Page: 1 Date Filed: 05/04/2010 Entry ID: 3661034
Before RILEY,1

 Chief Judge, WOLLMAN and MELLOY, Circuit Judges. 

___________

RILEY, Chief Judge.

Joel Rund, Robert Statman, and Gary Kleinman (collectively, the defendants)

each pled guilty to conspiracy to commit wire fraud, in violation of 18 U.S.C. § 371. 

The district court2

 sentenced Rund to 18 months imprisonment, Statman to 33 months

imprisonment, and Kleinman to probation. The district court also ordered the

defendants to make restitution, jointly and severally, in the amount of $1,740,073.51. 

Rund and Statman appeal their sentences. Rund also appeals the district court’s

restitution order. We affirm.

I. BACKGROUND

In March 2005, a grand jury indicted the defendants with one count of

conspiracy to commit wire fraud, in violation of 18 U.S.C. § 371; five counts of wire

fraud, in violation of 18 U.S.C. §§ 1343 and 2; and seven counts of money laundering,

in violation of 18 U.S.C. §§ 1957(a), (d)(1) and 2. The indictment also charged Rund

with making a false statement, in violation of 18 U.S.C. § 1001(a)(2). The charges

arise from the defendants’ purchase of a bakery business with funding deceptively

obtained from the Arkansas Development Finance Authority (ADFA).

The defendants each pled guilty to one count of conspiracy to commit wire

fraud pursuant to written plea agreements. The defendants also agreed to certain

stipulations with the government, including a loss amount of more than $1,000,000,

1

The Honorable William Jay Riley became Chief Judge of the United States

Court of Appeals for the Eighth Circuit on April 1, 2010. 

2

The Honorable William R. Wilson, Jr., United States District Judge for the

Eastern District of Arkansas.

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but less than $2,500,000. In exchange, the government agreed to move to dismiss the

remaining counts in the indictment. 

The district court held a sentencing hearing on February 20, 2009. Rund was

unable to attend the hearing due to his poor health. Rund’s counsel appeared on

Rund’s behalf. During the hearing, the parties litigated the proper amount of

restitution to be paid by the defendants, and the district court sentenced Kleinman and

Statman. The district court sentenced Rund on March 30, 2009. 

Rund and Statman (collectively, Appellants)3

 appeal their sentences, arguing

their sentences are procedurally and substantively unreasonable. Rund also argues the

district court erred by (1) relying on uncorroborated victim testimony in determining

restitution, and (2) “adopting the government’s methodology in calculating the

amount of restitution to impose.” 

II. DISCUSSION

A. Procedural Error

An “appellate court must review [each] sentence under an abuse-of-discretion

standard.” Gall v. United States, 552 U.S. 38, 51 (2007). In conducting our analysis,

we “must first ensure that the district court committed no significant procedural error,

such as . . . failing to consider the § 3553(a) factors, selecting a sentence based on

clearly erroneous facts, or failing to adequately explain the chosen sentence.” Id. 

A sentencing court should first accurately calculate a defendant’s advisory

United States Sentencing Guidelines (U.S.S.G. or Guidelines) range and provide both

parties with an opportunity to explain their desired sentence. See id. at 49-50. The

district court must then consider all of the § 3553(a) factors and conduct an

individualized assessment to determine what sentence is appropriate given the facts

3

Kleinman did not appeal.

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in the particular case. See id. “[A] district court is not required to provide a ‘full

opinion in every case,’ but must ‘set forth enough to satisfy the appellate court that

he has considered the parties’ arguments and has a reasoned basis for exercising his

own legal decisionmaking authority.’” United States v. Robinson, 516 F.3d 716, 718

(8th Cir. 2008) (quoting United States v. Rita, 551 U.S. 338, 356 (2007)). 

1. Statman’s Sentence

During Statman’s sentencing hearing, the district court stated it would “consider

the factors in 18 United States Code Section 3553 and the sentencing guidelines.” The

district court accurately calculated Statman’s Guidelines range, finding, based upon

Statman’s offense level of 19 and criminal history category of I, Statman’s Guidelines

range was 30 to 37 months imprisonment. The district court provided Statman with

an opportunity to argue for his desired sentence. Statman’s counsel asked for a

“sentence that does not involve incarceration,” citing Statman’s advanced age (69) and

physical impairments. The district court reviewed the medical documentation

Statman’s counsel provided, and indicated “they have real good medical facilities in

the Federal Correction Institution, so . . . unless someone is in a steep dive with regard

to their health, I go ahead and let them be treated in the institution.” The district court

sentenced Statman to 33 months imprisonment and three years supervised release, and

ordered Statman to make joint and several restitution in the amount of $1,740,073.51. 

Statman argues the district court procedurally erred by “fail[ing] to explain its

reasons for the sentence.” However, “[n]othing in § 3553(a) or in the Booker[

4

]

remedy opinion requires ‘robotic incantations’ that each statutory factor has been

considered.” United States v. Lamoreaux, 422 F.3d 750, 756 (8th Cir. 2005) (quoting

United States v. Crosby, 397 F.3d 103, 113 (2d Cir. 2005) (rejected on other grounds

by United States v. Pirani, 406 F.3d 543, 552 (8th Cir. 2005) (en banc))). We are

satisfied the district court “‘considered [Statman’s] arguments and ha[d] a reasoned

4

United States v. Booker, 543 U.S. 220 (2005). 

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basis for exercising his own legal decisionmaking authority.’” Robinson, 516 F.3d

at 718 (quoting Rita, 551 U.S. at 356). We therefore find no procedural error as to

Statman’s sentence. 

2. Rund’s Sentence

Rund also argues the district court erred in failing to explain his sentence and

discuss the § 3553(a) factors. Rund concedes he failed to object at the time of

sentencing, and therefore, we may only review the issue for plain error. See, e.g.,

United States v. Miller, 557 F.3d 910, 916 (8th Cir. 2009) (citation omitted)

(“Procedural sentencing errors are forfeited, and therefore may be reviewed only for

plain error, if no objection was raised in the district court.”). 

During Rund’s sentencing hearing, the district court stated, “I’ll work through

the guidelines and the factors listed in 18 United States Code Section 3553 and come

up with a sentencing guideline range, and I’ll sentence within that range, unless there

is a reasonable ground not to.” The district court correctly calculated Rund’s advisory

Guidelines range, finding, based upon Rund’s offense level of 19 and criminal history

category of I, Rund’s Guidelines range was 30 to 37 months imprisonment. The

district court then heard testimony from Floyd Hancock, the senior investigator of the

Federal Public Defender’s Office, who offered a declaration from Rund’s treating

physician documenting Rund’s various medical conditions (heart and diabetes) and

stating Rund’s physical condition was “getting progressively worse.” Rund’s counsel

emphasized Rund’s lack of criminal history and asked for a sentence of probation, or

“any non[-]prison sentence.” 

The district court noted, “This is not a case where . . . Rund and the others got

into a business and it started going bad and [they] started robbing Peter to pay Paul. 

There was a larceny in their hearts to begin with, and I still believe that deterrence is

crucially important.” The district court then sentenced Rund to 18 months

imprisonment, three years supervised release, and joint and several restitution in the

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amount of $1,740,073.51. The district court recognized Rund’s poor health and

recommended Rund be incarcerated in “an institution where they have medical

facilities sufficient to treat his illnesses which [the court] consider[ed] quite serious.” 

The district court considered the relevant factors and provided a reasoned basis for its

sentence. See Robinson, 516 F.3d at 718. The district court committed no procedural

error, and certainly no plain error. 

B. Substantive Reasonableness

Appellants also challenge the substantive reasonableness of their sentences. 

“‘We review a challenge to the reasonableness of a sentence for abuse of discretion.’” 

United States v. Price, 542 F.3d 617, 622 (8th Cir. 2008) (quoting United States v.

Starr, 533 F.3d 985, 1003 (8th Cir. 2008)). 

Because Statman’s sentence is within his advisory Guidelines range, “we accord

it a presumption of reasonableness.” United States v. Harris, 493 F.3d 928, 932 (8th

Cir. 2007) (citing Rita, 551 U.S. at 347), cert. denied, 128 S. Ct. 1263 (2008). The

only argument Statman presents in support of his claim that his within-Guidelines

sentence is unreasonable is that the district court did not adequately take into

consideration Statman’s advanced age and poor health in sentencing. During

Statman’s sentencing hearing, the district court stated it would consider the § 3553(a)

factors; it had reviewed Statman’s medical documentation; and there were good

facilities within the Bureau of Prisons where inmates may receive medical treatment. 

The district court sufficiently considered Statman’s health and age in conducting its

analysis, and Statman failed to rebut the presumption that his within-Guidelines

sentence is substantively reasonable. 

The district court varied below the bottom of Rund’s Guidelines range by

twelve months. When a district court gives a sentence outside the Guidelines range,

we “must give due deference to the district court’s conclusion that the § 3553(a)

factors, on a whole, justify the extent of the variance.” Gall, 552 U.S. at 51. “The fact

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that the appellate court might reasonably have concluded that a different sentence was

appropriate is insufficient to justify reversal of the district court.” Id. 

Rund challenges his below-Guidelines sentence, claiming this court cannot

defer to the district court’s judgment because the district court failed to conduct an

adequate analysis. We disagree. During Rund’s sentencing, the district court stated

it would consider the § 3553(a) factors. The sentencing court then heard testimony

about Rund’s medical condition and permitted a declaration from Rund’s treating

physician to be admitted into evidence. After Rund’s counsel asked for a non-prison

sentence, the district court replied by emphasizing the severity of the crime and the

need for deterrence. The district court then imposed an 18-month prison sentence and

recommended Rund be held in an institution which would have sufficient medical

facilities to treat Rund’s various illnesses. The record reflects the district court

conducted an adequate analysis, taking into consideration the evidence Rund

presented. Rund’s below-Guidelines sentence is not substantively unreasonable. 

C. Restitution

Rund argues the district court erred by (1) relying on uncorroborated testimony

in determining the amount of restitution, and (2) “adopting the government’s

methodology in calculating the amount of restitution to impose.” We review de novo

the district court’s interpretation of the Mandatory Victims Restitution Act of 1996

(MVRA), 18 U.S.C. §§ 3663A-3664. See United States v. Farish, 535 F.3d 815, 826

(8th Cir. 2008). We review for clear error the district court’s factual determinations

underlying an order for restitution, see United States v. DeRosier, 501 F.3d 888, 896

(8th Cir. 2007), as well as “the district court’s finding as to the proper amount of

restitution.” United States v. Stennis-Williams, 557 F.3d 927, 930 (8th Cir. 2009). 

“The burden is on the government to prove the amount of restitution based on a

preponderance of the evidence.” DeRosier, 501 F.3d at 896. The government

satisfies this standard when it demonstrates “the existence of a fact is more probable

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than its nonexistence.” In re Winship, 397 U.S. 358, 371 (1970) (Harlan, J.,

concurring) (internal marks omitted). 

1. Testimony

Rund pled guilty to wire fraud and stipulated the amount of loss his offense

caused was more than $1,000,000, but less than $2,500,000. The district court

conducted a restitution hearing. The government elicited testimony from Gene Eagle,

who had worked as an employee of ADFA for 24 years, and was ADFA’s acting Vice

President for Development Finance. Eagle explained “ADFA is a multipurpose bond

issuer for the state of Arkansas,” and described, in detail, the defendants’ fraud. 

The defendants’ fraud centered around a bakery located in Sherwood, Arkansas. 

The bakery was owned by the Koehler family, which began to suffer financial

difficulties, so the Koehlers sought help from ADFA. ADFA decided to work with

the family and hoped to keep the plant operational, because the plant provided

employment to a large number of people. ADFA issued the Koehler family a bond

in the amount of $2,185,000. The Koehler family pledged collateral for the bond,

including three parcels of property owned by the family and the rent proceeds the

family received from the property. The family also pledged the bakery, the bakery

property, and the bakery equipment. Despite ADFA’s bond issue to the Koehlers, the

bakery remained in financial distress. 

During the summer of 2000, ADFA and the Koehlers began looking for

someone to purchase the bakery. The defendants expressed interest in purchasing the

bakery, and ADFA entered into negotiations with the defendants to purchase the

bakery and assume the bond issue from the Koehlers. The defendants presented their

business plan, to manufacture a type of fruit-filled pastry, and agreed to assume the

$2,185,000 bond issue. In April 2001, the agreement was finalized. ADFA agreed

to provide the defendants an additional $1,700,000—$1 million to be spent on

equipment and $700,000 for working capital—and the defendants agreed to inject an

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additional $1.5 million of equity capital into the business, which would also be used

for the purchase of equipment and serve as added security for the funds ADFA

provided. 

To close the deal, the defendants presented ADFA with a signed and notarized

document, purportedly from an investor who had agreed to provide the $1.5 million

equity capital. The defendants then sought the agreed upon funding from ADFA by

presenting documentation to ADFA which indicated how the money would be used. 

This documentation included statements for the purchase of equipment, in which

ADFA would obtain a security interest. The bakery continued operations for about

six months until approximately February 2002, when the bakery closed. The

defendants failed to pay employees, vendors, and a roofing company that performed

repair work for the bakery. The roofing company placed a lien on the property which

ADFA had to pay before the property could be sold. 

After the bakery closed, ADFA conducted an inspection and discovered the

equipment the defendants claimed to have purchased with ADFA funds had not

actually been purchased, but had been leased from another company. As a result, the

funding ADFA provided the defendants for the purchase of equipment was completely

unsecured. ADFA also learned the signed and notarized document the defendants

used to induce ADFA to provide the defendants funding, which purported to be from

an investor who had agreed to provide $1.5 million in equity capital, was fraudulent. 

After describing the defendants’ fraud, Eagle explained the amount of loss

ADFA suffered as a consequence of the fraud. Eagle provided exhibits demonstrating

the actual dollar amounts expended by ADFA as a result of the fraud, such as the $1.7

million bond principal; interest on the unpaid bond principal in the amount of

$84,327.84; the foreclosure expenses; the cost of extinguishing the original

$2,185,000 bond issued to the Koehlers; and other interest ADFA paid in the course

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of extinguishing the bonds. Eagle also provided specific information regarding the

dollar amounts regained by ADFA during and after the fraud, such as the sale of the

foreclosed property and rent proceeds from the Koehlers’ pledged collateral. Eagle

then presented ADFA’s proposed restitution figure of $1,740,073.51, by subtracting

the amount of money ADFA recouped from the amount of money ADFA expended. 

The government also presented the testimony of Charles Lynch, a commercial

development officer who had been employed by ADFA for more than nine years. 

After the fraud, Lynch was responsible for attempting to recoup and sell the collateral

originally pledged for the property at issue. As a result, Lynch was able to testify, in

more detail, about the monies regained by ADFA after the foreclosure sales, which

ADFA then subtracted from its loss. Rund’s counsel did not present any evidence to

counter the figures ADFA presented, but merely joined in another attorney’s argument

that ADFA used an improper methodology in its calculation. 

The district court adopted the government’s proposed restitution figure. We

conclude the district court did not clearly err in relying on the detailed testimony of

ADFA employees, or in adopting the government’s proposed restitution figure. See

Stennis-Williams, 557 F.3d at 930. 

2. Restitution Calculation

Because Rund was absent from the restitution hearing, the district court

refrained from making a specific finding as to the amount of restitution to be paid by

Rund. Instead, the district court asked Rund’s counsel and the government to brief the

issue, and provide any additional evidence which would be relevant in the district

court’s restitution determination. Rund’s counsel replied by requesting “the least

amount of restitution in comparison to the other defendants in this case.” The district

court issued another order asking Rund’s counsel, “Do you plan on relitigating my

February 20, 2009, ruling that the total amount of restitution due is $1,740,073.51?” 

Rund’s counsel emailed the response, “No.” As a consequence, the government

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informed the district court that the government would not bring any ADFA

representatives to testify at Rund’s hearing, which was scheduled to take place in San

Diego, California, to accommodate Rund’s health problems. 

During Rund’s sentencing hearing, Rund’s counsel re-entered a continuing

objection to the $1,740,073.51 restitution figure the district court had adopted, despite

Rund’s counsel’s statements that he would not relitigate the total amount of restitution

owed, and Rund’s stipulation that the amount of loss caused by his offense was more

than $1,000,000 and less than $2,500,000. Rund now appeals the district court’s

restitution calculation, claiming he preserved the issue by his objection. “Rund

submits the district court erred because the loss to ADFA should not have been

calculated based on the alleged foreclosure sale price but [, instead, on] the assessed

value of the properties.” 

During the February 20, 2009 restitution hearing, Eagle and Lynch testified that

after the fraud, ADFA was forced to initiate foreclosure proceedings to regain control

of the property which was fraudulently obtained by the defendants. During the

foreclosure process, ADFA incurred various costs, including attorney fees, advertising

costs, utility bills, insurance costs, auction expenses, and repair bills. Eventually,

ADFA was able to sell the property, but the sale was delayed due to the actions of a

co-conspirator.5

 As a result of the delay, ADFA lost potential buyers for the property

and acquired even more expenses than it otherwise would have. In conducting its loss

calculation, ADFA included the expenses ADFA incurred as a result of the fraud, and

subtracted the amount of money ADFA recouped, including the monies ADFA

received from the sale of the foreclosed property. 

5

Statman placed the defendants’ business into bankruptcy the day before the

foreclosure auction was to occur. 

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The MVRA provides a “court shall order restitution to each victim in the full

amount of each victim’s losses as determined by the court.” 18 U.S.C.

§ 3664(f)(1)(A). When an offense involves the loss of property, the restitution order

shall require the defendant to return the property, or if return of the property is

inadequate, the defendant shall pay the greater of (1) “the value of the property on the

date of the damage, loss, or destruction; or” (2) “the value of the property on the date

of sentencing,” less the value of any part of the property which is returned. 18 U.S.C.

§ 3663A(b)(1). The MVRA does not provide a specific methodology to employ when

valuing property. See United States v. Boccagna, 450 F.3d 107, 114 (2d Cir. 2006)

(explaining “[t]he statute is silent . . . on the question of how the referenced property

is to be valued”). “Rather, the law appears to contemplate the exercise of discretion

by sentencing courts in determining the measure of value appropriate to restitution

calculation in a given case.” Id. 

In Boccagna, the Second Circuit Court of Appeals conducted an analysis of the

exact issue now before us, “whether the MVRA requires property to be valued by

reference to fair market value.” Id. The Second Circuit noted, “nowhere does the

[MVRA] reference fair market value as the only measure to be used in making the

restitution calculations contemplated by § 3663A(b)(1)(B).” Id. (internal marks

omitted). The Boccagna court concluded, “because the law recognizes a number of

reasonable measures of property value, we construe ‘value’ as used in the MVRA to

be a flexible concept to be calculated by a district court by the measure that best serves

Congress’s statutory purpose.” Id. at 115 (internally citing cases adopting various

measures of valuing property). See also United States v. James, 564 F.3d 1237, 1245-

47 (10th Cir. 2009) (agreeing with Boccagna and collecting cases where “courts have

specifically recognized or used the foreclosure sale price as a reasonable method of

determining the amount of the restitution award under § 3663A”). We agree.

Rund would have this court use the appraised value of the foreclosed property

to calculate the loss amount, which would result in a lower restitution payment to

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ADFA. “The ‘primary and overarching goal’ of the MVRA ‘is to make victims of

crime whole, to fully compensate these victims for their losses and to restore these

victims to their original state of well-being.’” United States v. Balentine, 569 F.3d

801, 806 (8th Cir. 2009) (quoting United States v. Gordon, 393 F.3d 1044, 1053 (9th

Cir. 2004)). “The ‘intended beneficiaries’ of the MVRA’s procedural mechanisms

‘are the victims, not the victimizers.’” Id. (quoting United States v. Grimes, 173 F.3d

634, 639 (7th Cir. 1999)). Under the circumstances of this case, the district court’s

use of the foreclosure sale price provided a fair and adequate representation of

ADFA’s loss and satisfied the overarching goal of the MVRA, to make ADFA whole. 

The district court did not err. 

III. CONCLUSION

We affirm the district court’s judgment.

_____________________________

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