Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-05-03419/USCOURTS-ca8-05-03419-0/pdf.json

Parties Involved:
Arthur Dale Senty-Haugen
Appellant
United States of America
Appellee

Document Text:

1

The HONORABLE RICHARD H. KYLE, United States District Judge for the

District of Minnesota.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 05-3419

___________

United States of America, *

*

Plaintiff - Appellee, *

* Appeal from the United States

v. * District Court for the

* District of Minnesota.

Arthur Dale Senty-Haugen, *

*

Defendant - Appellant. *

___________

Submitted: February 13, 2006

Filed: June 8, 2006

___________

Before LOKEN, Chief Judge, BOWMAN and SMITH, Circuit Judges.

___________

LOKEN, Chief Judge.

Arthur Senty-Haugen pleaded guilty to five counts of filing false tax claims and

one count of conspiracy to defraud the government. See 18 U.S.C. §§ 2, 286, 287.

The district court1

 sentenced Senty-Haugen to 57 months in prison and ordered him

to pay the Internal Revenue Service (IRS) $71,610.90 in restitution. Senty-Haugen

appeals, arguing that the court erred in imposing a four-level enhancement for his role

in the offenses and in ordering restitution in favor of the government. We affirm.

Appellate Case: 05-3419 Page: 1 Date Filed: 06/08/2006 Entry ID: 2053911
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The EITC allows low income taxpayers to claim a credit when filing their tax

returns. Alternatively, the Internal Revenue Code permits employers to advance their

employees the funds to be credited and then apply the advanced funds against the

employers’ tax liability. See 26 U.S.C. § 3507. Claiming use of this alternative,

Senty-Haugen’s businesses submitted 23 Forms 941 claiming a total of $130,000 in

refunds for EITC advances the businesses never made to the fictitious employees.

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From 1998 until April 2002, while civilly committed to the Minnesota Sexual

Psychopathic Personality Treatment Center and then incarcerated at a Minnesota

Department of Correction facility, Senty-Haugen implemented a sophisticated scheme

to defraud the IRS by means of two types of false tax claims. Senty-Haugen first

created five businesses that were either fictitious or, for tax purposes, a sham and

obtained tax identification numbers for the businesses. Using social security numbers

obtained on the Internet, he listed deceased individuals as well as himself as

employees and later added some of his fellow inmates to the fictitious payrolls. 

The first type of fraudulent claims were false IRS Forms 941 filed on behalf of

the businesses claiming refunds for monies purportedly advanced to the fictitious

employees under the Earned Income Tax Credit (EITC).2

 The second type of

fraudulent claims were 29 individual income tax returns filed by or on behalf of 18

alleged employees seeking $67,000 in refunds of wage withholding reflected on false

Forms W-2 filed by the fictitious or sham businesses. Before the scheme was

uncovered, the IRS paid a total of $71,610.90 to employees and businesses that filed

these false claims. At sentencing, the district court imposed a four-level enhancement

for Senty-Haugen’s role as an organizer or leader of the offenses, see U.S.S.G.

§ 3B1.1(a), and ordered that he pay the IRS $71,610.90 as mandatory restitution under

18 U.S.C. § 3663A. 

The Organizer/Leader Enhancement. The now advisory Sentencing Guidelines

provide for a four-level enhancement “[i]f the defendant was an organizer or leader

of a criminal activity that involved five or more participants or was otherwise

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extensive.” U.S.S.G. § 3B1.1(a). The district court found that Senty-Haugen

organized and led a fraud scheme that both involved five or more participants and was

otherwise extensive. Either finding is sufficient to uphold the enhancement. See

United States v. Blumberg, 961 F.2d 787, 790-92 (8th Cir. 1992). We review findings

under § 3B1.1(a) for clear error. United States v. Jagim, 978 F.2d 1032, 1042 (8th

Cir. 1992), cert. denied, 508 U.S. 952 (1993). 

On appeal, Senty-Haugen argues that the court erred because “there was no

evidence he exercised the requisite control or decision making authority over other

participants, and he did not receive any profits from their activities.” As in Jagim,

Senty-Haugen conceived and initiated an extensive tax fraud scheme and then

involved other people in the scheme. In applying the five-or-more-participants

requirement, a “participant” must be “criminally responsible for the commission of

the offense,” § 3B1.1, comment. (n.1), but “the defendant need organize or lead only

one other participant.” United States v. Willis, 433 F.3d 634, 636 (8th Cir. 2006).

Here, the plea agreement conclusively established that Senty-Haugen “organized”

others involved in the scheme by instructing them how to file false tax returns to profit

from the scam. Even if those persons were not “participants” because they were not

“criminally responsible” -- a highly dubious proposition given Senty-Haugen’s plea

of guilty to a conspiracy offense -- the entire scheme was without question “otherwise

extensive,” and Senty-Haugen was clearly its organizer and leader. Thus, there was

no clear error. 

Restitution. The Mandatory Victims Restitution Act of 1996 (MVRA) amended

the Victim and Witness Protection Act (VWPA) to require that a sentencing court

“shall order” the defendant to pay restitution to a “victim” of any covered offense. 18

U.S.C. § 3663A(a)(1). Congress enacted the MVRA to create a “more victimcentered justice system” by increasing the number of restitution orders in federal

criminal proceedings. S. Rep. No. 104-179, at 13, 104th Cong., 1st Sess. (1995). 

Covered offenses include “any offense committed by fraud or deceit.”

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See United States v. Tucker, 419 F.3d 719, 721 (8th Cir. 2005), cert. denied,

126 S. Ct. 1583 (2006); United States v. Reichow, 416 F.3d 802, 804-05 (8th Cir.),

cert. denied, 126 S. Ct. 784 (2005); United States v. Vanhorn, 344 F.3d 729, 730 (8th

Cir. 2003), cert. denied, 541 U.S. 954 (2004); United States v. Piggie, 303 F.3d 923,

928 (8th Cir. 2002), cert. denied, 538 U.S. 1049 (2003).

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§ 3663A(c)(1)(A)(ii). A “victim” is “a person directly and proximately harmed as a

result of the commission of an offense . . . including, in the case of an offense that

involves as an element a scheme . . . any person directly harmed by the defendant’s

criminal conduct in the course of the scheme.” § 3663A(a)(2). Senty-Haugen argues

that the district court erred in imposing restitution because the government is not a

“person” and therefore may not be a “victim” for purposes of the MVRA. He cites no

case supporting this contention, which raises an issue of law we review de novo. See

United States v. Ruff, 420 F.3d 772, 773 (8th Cir. 2005). 

The MVRA’s definition of “victim” is identical to the earlier VWPA definition.

See 18 U.S.C. § 3663(a)(2). Although we have never addressed this issue, we have

repeatedly affirmed restitution orders payable to various government agencies under

the MVRA.3

 In United States v. Ekanem, 383 F.3d 40, 42-44 (2d Cir. 2004), the

Second Circuit expressly rejected Senty-Haugen’s argument for three reasons. First,

the court explained, the MVRA’s enforcement provision expressly identifies the

government as an eligible victim by providing: “[i]n any case in which the United

States is a victim, the court shall ensure that all other victims receive full restitution

before the United States receives any restitution.” 18 U.S.C. § 3664(i). Second, the

court noted the many cases construing the identically worded VWPA definition to

include the government as a victim eligible to receive restitution. See United States

v. Martin, 128 F.3d 1188, 1191 (7th Cir. 1997) (collecting cases). Third, the court

explained that construing the word “victim” to include the government is consistent

with the MVRA’s purpose “to expand, rather than limit, the restitution remedy.” We

agree with the Second Circuit’s analysis. Accordingly, we hold that the IRS is an

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eligible victim under the MVRA. Accord United States v. Quarrell, 310 F.3d 664, 677

(10th Cir. 2002); United States v. Lincoln, 277 F.3d 1112 (9th Cir. 2002).

Senty-Haugen further argues that the district court clearly erred in imposing

restitution in the full amount the IRS paid in fraudulent refunds because that amount

included monies that Senty-Haugen did not receive. We disagree. The MVRA

requires restitution “in the full amount of each victim’s losses . . . without

consideration of the economic circumstances of the defendant.” 18 U.S.C.

§ 3664(f)(1)(A). In conspiracy cases, the restitution amount includes all harm caused

“by the defendant’s criminal conduct in the course of the scheme.” § 3664A(a)(2).

Here, the plea agreement established that the IRS’s entire loss of $71,610.90 was

attributable to Senty-Haugen’s criminal conduct. Awarding that amount as restitution

was not clear error. See United States v. Carruth, 418 F.3d 900, 904 (8th Cir. 2005).

Finally, Senty-Haugen argues that the district court’s determination of the

amount of restitution without an admission or jury trial violated his Sixth Amendment

rights as construed in Blakely v. Washington, 542 U.S. 296 (2004). We squarely

rejected that contention in Carruth, 418 F.3d at 902-04.

The judgment of the district court is affirmed.

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