Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-09-30202/USCOURTS-ca9-09-30202-0/pdf.json

Parties Involved:
Nicholas R. Gossi
Appellant
United States of America
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, 

No. 09-30202 Plaintiff-Appellee,

D.C. No.

v.  1:08-CR-104-S-EJL

NICHOLAS R. GOSSI,

OPINION Defendant-Appellant. 

Appeal from the United States District Court

for the District of Idaho

William F. Downes, District Judge, Presiding

Argued and Submitted

February 5, 2010—Seattle, Washington

Filed June 15, 2010

Before: Arthur L. Alaracón, William A. Fletcher, and

Johnnie B. Rawlinson, Circuit Judges.

Opinion by Judge Alarcón

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COUNSEL

Robert A. Wallace, Boise, Idaho, for the defendant-appellant.

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George W. Breitsameter , Assistant United States Attorney,

Office of the United States Attorney, Boise, Idaho, for the

plaintiff-appellee.

OPINION

ALARCÓN, Circuit Judge:

Nicholas R. Gossi appeals from a restitution order imposed

pursuant to the Mandatory Victims Restitution Act

(“MVRA”), 18 U.S.C. § 3663A, following his guilty plea to

Mail Fraud in violation of 18 U.S.C. § 1341. Gossi contends

the district court failed “to use the true return date in offsetting the value of [the] returned property.” He also maintains

that the district court erred in “treat[ing] [him] more harshly

than all other codefendants” and in ordering him to pay restitution more than “[o]nly [i]ntended, [f]oreseeable and

[c]ulpable [l]osses.” We affirm because we conclude that the

district court’s valuation of the property was within the discretion afforded district courts. We also hold that the district

court correctly ordered Gossi to pay restitution based on

losses proximately resulting from his criminal conduct.

I

On May 14, 2008, a federal grand jury returned a thirty-two

count indictment charging Gossi and his four co-defendants

with bank fraud. In addition, Gossi was charged with mail

fraud and making a false statement of material fact to the

Department of Housing and Urban Development (“HUD”).

On September 22, 2008, Gossi pled guilty to the count that

charged him with mail fraud in violation of 18 U.S.C. § 1341.1

1

In return for Gossi’s guilty plea, the government dismissed all remaining counts on the indictment against Gossi. 

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On March 13, 2009, Gossi was sentenced to imprisonment

for six months followed by a period of six months home

detention. In addition, Gossi was ordered to be placed on

supervised release for a period of five years. 

The district court entered a restitution order directing Gossi

to pay National City Mortgage Company (“NCMC”) the

amount of $288,087.12. In reaching this amount, the district

court explained:

The “Actual Unpaid Principal Balance of the Mortgage Loan,” according to [NCMC’s] own balance

sheet, was actually $704,087.12 at the time it took

possession of the property. The Total Realized Loss

includes $156,174.71 in fees and expenses accrued

after the property was returned. The Court thus finds

that $704,087.12 accurately reflects the value of the

property taken on the date of loss pursuant to 18

U.S.C. § 3663A(b)(1)(B)(i)(I). The current asking

price for the Dublin Drive property does not reflect

the value of the property returned, on the date it was

returned. The first appraisal apparent to the Court

was provided to [NCMC] on November 22, 2008; it

placed the value of the property at $416,000 “as is.”

The Court accordingly imposes upon . . . Gossi a restitution obligation in the amount of $288,087.12

($704,087.12 - $416,000.00) pursuant to 18 U.S.C.

§ 3663A(b)(1)(B).

Gossi has timely appealed from the district court’s order.

We have jurisdiction pursuant to 28 U.S.C. § 1291.

II

Gossi contends that the district court erred in determining

the return date of the property for purposes of assessing the

value of the property. He asserts that the district court should

have assigned value “when the bank could and should have

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initiated foreclosure” rather than when it actually foreclosed.

(Appellant’s Br. 10.) According to Gossi, this is when the

property should have been considered to be returned, i.e.,

“when the bank knew the loan was in trouble and had the

legal right to initiate [foreclosure] proceedings.” (Id. at 11.)

Gossi also contends that the district court refused to set an

earlier return date because “the restitution calculation of the

court was driven, in part, by considerations of fault rather than

evidence of property value . . . .” (Id.)

“A restitution order is reviewed for an abuse of discretion,

provided that it is within the bounds of the statutory framework. Factual findings supporting an order of restitution are

reviewed for clear error. The legality of an order of restitution

is reviewed de novo.” United States v. Gordon, 393 F.3d

1044, 1051 (9th Cir. 2004) (quoting United States v. Stoddard, 150 F.3d 1140, 1147 (9th Cir. 1998)).

[1] “Federal courts have no inherent power to award restitution, but may do so only pursuant to statutory authority.”

United States v. Follet, 269 F.3d 996, 998 (9th Cir. 2001) (citing United States v. Hicks, 997 F.2d 594, 600 (9th Cir. 1993)).

“The courts have such authority under the Victim and Witness

Protection Act of 1982 (“VWPA”), providing for discretionary awards of restitution after conviction for certain crimes,

18 U.S.C. § 3663, and under the Mandatory Victims Restitution Act of 1996 (“MVRA”), providing for mandatory restitution for crimes of violence and property offenses, 18 U.S.C.

§ 3663A.”

2

Id.

“[T]he starting point for interpreting a statute is the language of the statute itself.” United States v. Hackett, 311 F.3d

989, 991 (9th Cir. 2002) (quoting Consumer Prod. Safety

2

18 U.S.C. § 3663(b)(2), or the VWPA, and 18 U.S.C. § 3663A(b)(2),

or the MVRA, are nearly identical and “courts interpreting the MVRA

may look to and rely on cases interpreting the VWPA as precedent.”

Gordon, 393 F.3d at 1048. 

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Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980)).

“Absent congressional direction to the contrary, words in statutes are to be construed according to ‘their ordinary, contemporary, common meaning[s].’ ” Id. (citing Pioneer Inv. Servs.

Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 388

(1993)).

[2] In United States v. Davoudi, 172 F.3d 1130 (9th Cir.

1999), we stated that, pursuant to the restitution statute,

[t]he district court is authorized by 18 U.S.C.

§ 3663(b)(1)(B)(ii) to order restitution in the amount

of the victim’s loss “less the value (as of the date the

property is returned) of any part of the property that

is returned.” This court has held that this plain language requires property to be valued as of the date

the victim took control of the property. See [United

States v. Smith, 944 F.2d 618, 624-625 (9th Cir.

1991)]. “As of that date, the [secured lender] had the

power to dispose of the property and receive compensation.” Id. at 625. Accord United States v. Catherine, 55 F.3d 1462, 1465 (9th Cir. 1995); United

States v. Hutchison, 22 F.3d 846, 856 (9th Cir. 1993)

(“In Smith, . . . [w]e rejected the district court’s valuation of the property as of the date on which it was

sold.”). Under Smith and its progeny the district

court should have based the restitution to HSA on

the fair market value of the Bel Air property at the

time HSA “had the power to dispose of the property” as it wished.

Id. at 1134-35 (emphasis added).

[3] Under this Court’s precedent, the district court reasonably found that NCMC had the power to dispose of the property at the time it took control of the property at foreclosure.

“Value should therefore be measured by what the financial

institution would have received in a sale as of that date.”

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Smith, 944 F.2d at 625. Contrary to Gossi’s contention, the

district court could not have set the value of the property

based on appraisals prior to foreclosure simply because

NCMC did not have “the power to dispose of the property and

receive compensation” before foreclosure. Id. Whether the

district court also considered Gossi’s fault in imposing restitution is of no moment to the district court’s finding because the

district court reasonably valued the property in accordance

with this Court’s precedent. Nothing in the record indicates

that NCMC “had the power to dispose of the property as it

wished” prior to foreclosure. Davoudi, 172 F.3d at 1135

(internal quotation marks omitted).

The district court did not abuse its discretion in determining

the amount of restitution.

III

[4] Gossi next argues that the district court also erred

because the restitution obligations imposed on his codefendants, who pled guilty to a different fraud scheme,

required them to pay lesser amounts. However, as the government points out, the restitution obligations of co-defendants

are irrelevant to Gossi’s restitution obligation. Gossi was the

only defendant to enter a guilty plea to defraud NCMC. The

other co-defendants pled guilty to offenses involving a separate entity, Zions Bank. The district court reasonably set restitution in favor of NCMC pursuant to § 3664(f)(1)(A), which

states:

In each order of restitution, the court shall order restitution to each victim in the full amount of each victim’s losses as determined by the court and without

consideration of the economic circumstances of the

defendant.

18 U.S.C. § 3664(f)(1)(A) (emphasis added). Accordingly, the

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district court did not abuse its discretion in ordering Gossi to

pay restitution to NCMC for the full amount of its losses.3

IV

Gossi also argues that the district court committed error

because he only should be responsible to pay restitution for

the reasonably foreseeable harm as opposed to the direct and

proximate harm that resulted from his mail fraud offense.

Gossi asserts that “[o]nly [i]ntended, [f]oreseeable and

[c]ulpable [l]osses should [c]ount.” (Appellant’s Br. 14.)

[5] “[R]estitution can only include losses directly resulting

from a defendant’s offense.” Stoddard, 150 F.3d at 1147

(quoting United States v. Sablan, 92 F.3d 865, 870 (9th Cir.

1996)). “For that reason, ‘a restitution order must be based on

losses directly resulting from the defendant’s criminal conduct.’ ” Id. (quoting Sablan, 92 F.3d at 870).

“A victim for restitution purposes is a person who has suffered a ‘loss caused by the specific conduct that is the basis

of the offense of conviction.’ ” United States v. Gamma Tech

Indus., Inc., 265 F.3d 917, 927 (9th Cir. 2001) (quoting

Hughey v. United States, 495 U.S. 411, 413 (1990)). In

Gamma Tech, this Court stated:

3

Initially, Gossi also argued that, in its restitution order, the district

court “failed to analyze his ‘ability to pay’ and did not order a payment

plan.” (Appellant’s Br. 7.) However, in his reply brief, Gossi indicated that

he was “withdraw[ing] the argument that his payment plan was improper.”

(Appellant’s Reply Br. 1.) In doing so, Gossi stated: 

For purposes of payment plans, Appellant acknowledges that

more detailed financial information would have allowed the court

to fashion a better-tailored repayment plan. With guidance

afforded by the government’s brief, Appellant is expected [to]

endeavor to comply with the conditions of his sentence in handling these issues with his probation officer. 

(Id. at 1-2.) 

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It is clear from our cases that the phrase “directly

resulting” means that the conduct underlying the

offense of conviction must have caused a loss for

which a court may order restitution, but the loss cannot be too far removed from that conduct. . . . Defendant’s conduct need not be the sole cause of the loss,

but any subsequent action that contributes to the

loss, such as an intervening cause, must be directly

related to the defendant’s conduct. The causal chain

may not extend so far, in terms of the facts or the

time span, as to become unreasonable.

Gamma Tech, 265 F.3d at 928 (citations omitted).

“Under 18 U.S.C. § 3664 (‘§ 3664’), a dispute as to the

proper amount of restitution must be resolved by the district

court by a preponderance of the evidence.” United States v.

Waknine, 543 F.3d 546, 556 (9th Cir. 2008) (citing 18 U.S.C.

§ 3664(e); United States v. Clayton, 108 F.3d 1114, 1118 (9th

Cir. 1997)). “The government bears the burden of proving

that a person or entity is a victim for purposes of restitution,

[United States v. ]Baker, 25 F.3d [1452,] 1455 [(9th Cir.

1994), rev’d on other grounds, United States v. Lawrence,

189 F.3d 838, 846 (9th Cir. 1999)], and of proving the amount

of the loss, 18 U.S.C. § 3664(e).” Id.

It is undisputed that Gossi was the only defendant that pled

guilty to defrauding NCMC. In determining NCMC’s loss, the

district court valued NCMC’s returned property as of the date

NCMC took control of such property (at the time of foreclosure when NCMC had the power to dispose of the property

as it wished). Based on these factors, the district court ordered

Gossi to pay restitution. 

Gossi relies on United States v. Zolp, 479 F.3d 715 (9th

Cir. 2007), to support his contention that he should be liable

only for any intended or foreseeable harm. However, as the

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government notes, Zolp dealt with sentencing, not restitution.

In Catherine, 55 F.3d at 1464-65, we explained:

The fact that the designation of offense level 13 is

dependent upon an enhancement for the loss to the

victim does not mean that this loss determination is

to be utilized for purposes of determining the amount

of restitution to be paid. Although . . . the guidelines,

under which the defendant agreed to be sentenced,

and 18 U.S.C. § 3663, governing restitution, both

involve a calculation of loss to the victim, the

method of calculating loss is different in each. . . .

The different method of calculating loss in each case

is due to the different purposes behind the two statutes. A defendant’s culpability will not always equal

the victim’s injury.

This distinction was highlighted in our recent opinion in United States v. Hutchison, 22 F.3d 846, 854-

56 (9th Cir. 1993) [abrogated on other grounds,

United States v. Wells, 519 U.S. 482 (1997)], another

false loan application case. In Hutchison, we reached

different results in calculating loss for purposes of

confinement and loss for purposes of victim restitution. Relying on the intended loss, which in that case

was greater than the actual loss, we calculated the

loss for custodial sentencing under [U.S.S.G.] section 2F1.1 as the gross loan amount, with no offset

for actual payments made on the loan or the value of

the forfeited collateral. In contrast, we held the

amount of restitution to be paid under 18 U.S.C.

§ 3663 was the actual loss, which we held must be

calculated as the unpaid balance on the loan, minus

the value of the collateral at the date the victim bank

gained control of the collateral, plus the bank’s

expenses prior to the same date.

Id. (emphasis added).

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[6] Sentencing, unlike restitution, focuses on the criminal

defendant. 18 U.S.C. § 3553, which lists the factors to be considered when sentencing a defendant under the advisory Sentencing Guidelines, explains the purposes of sentencing.

Section 3553(a) states:

(a) Factors to be considered in imposing a sentence.

— The court shall impose a sentence sufficient, but

not greater than necessary, to comply with the purposes set forth in paragraph (2) of this subsection.

The court, in determining the particular sentence to

be imposed, shall consider— 

. . . . 

(2) the need for the sentence imposed—

(A) to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense;

(B) to afford adequate deterrence to criminal conduct;

(C) to protect the public from further crimes of the

defendant; and

(D) to provide the defendant with needed educational or vocational training, medical care, or other

correctional treatment in the most effective manner[.]

18 U.S.C. § 3553(a)(2)(A)-(D) (emphasis added). Clearly,

§ 3553 focuses on the individual criminal defendant. In sentencing a defendant, the advisory Sentencing Guidelines

require only that the greater of the actual or intended loss be

applied in computing the offense level when sentencing the

defendant. See U.S.S.G. § 2B1.1. Under the Guidelines,

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“ ‘[a]ctual loss’ means [only] the reasonably foreseeable

pecuniary harm that resulted from the offense.” Id. at application n.3(A)(i) (emphasis added). 

Restitution, on the other hand, focuses on the victim and

the harm proximately caused by the defendant’s conduct. In

Gordon, we explained that

The primary and overarching goal of the MVRA is

to make victims of crime whole. In achieving this

objective, Congress intended district courts to

engage in an expedient and reasonable restitution

process, with uncertainties resolved with a view

toward achieving fairness to the victim. . . . 

The MVRA makes restitution mandatory for particular crimes, including those offenses which involve

fraud or deceit. See 18 U.S.C. § 3663A(c)(1)(A)(ii).

Under the MVRA, a court must order restitution to

each victim of an offense, and the court cannot consider the defendant’s economic circumstances. See

18 U.S.C. § 3664(f)(1)(A). The prior restitution

statue, the Victim and Witness Protection Act

(“VWPA”), required courts to consider the economic

circumstances of the defendant prior to ordering restitution, and the grating of restitution was discretionary, not mandatory. See 18 U.S.C. § 3663. . . . 

[W]e are presented with a statute[,] the primary and

overarching goal of which 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 . . . .

Gordon, 393 F.3d at 1048, 1053 (quotation marks omitted).

Rejecting the argument that the Guidelines should be used in

calculating a loss for restitution purposes, in Gordon, we

observed:

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Gordon argues that we should also look to the Sentencing Guidelines for the measure of loss. In sentencing a defendant for fraud the district court must

make a “reasonable estimate” of the victim’s “loss.”

U.S.S.G. § 2B1.1 app. n. 3(C). The general rule in a

case involving property obtained by fraud is that the

measure of loss is “[t]he fair market value of the

property unlawfully taken.” Id. app. n. 3(C)(i). As

noted above, the MVRA’s purpose is to make the

victims whole; conversely, the Sentencing Guidelines serve a punitive purpose, necessitating a different loss calculation scheme than the MVRA.

Compare United States v. Bae, 250 F.3d 774, 777

(D.C. Cir. 2001) (noting that under the Sentencing

Guidelines “[l]ost profit is an undesirable measure of

loss” because it “would penalize frauds differently

depending upon whether the victim is a consumer or

producer”) (emphasis added) with United States v.

Rice, 38 F.3d 1536, 1544 (9th Cir. 1994) (holding

under the VWPA that lost profits are permissible

and determinable on the date of the taking for restitution purposes because the property had a “book

price which includes a profit markup”). While there

is little logic in increasing or decreasing a defendant’s sentence as a result of unpredictable fluctuating values for misappropriated items in the punitive

context, accounting for such fluctuations is necessary in making victims whole in the restitutionary

context.

Id. at 1052 n.6.

Restitution clearly focuses on the victim, not the individual

defendant. Restitution seeks to compensate the victim for all

the direct and proximate losses resulting from the defendant’s

conduct, not only for the reasonable foreseeable losses. The

purpose of restitution is to put the victim back in the position

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he or she would have been but for the defendant’s criminal

conduct. We previously explained:

[t]he purpose of restitution is twofold: (1) to restore

the defrauded party to the position he would have

had absent the fraud, Restatement of Restitution [§]

1, Comments a, b, c, and d (1937); (2) and to deny

the fraudulent party any benefits, whether or not

foreseeable, which derive from his wrongful act. Id.

[§] 1 Comment e, [§] 151 Comment c; Janigan [v.

Taylor, 344 F.2d 781, 786 (1st Cir. 1965)]. Thus,

where a person with knowledge of the facts wrongfully disposes of or acquires property of another and

makes a profit thereby he is accountable for those

profits. Id. [§] 1 Comment e, [§] 151 Comment f.

When the property is of fluctuating value, such as

stock, the injured party may be awarded an amount

equal to the highest value reached by the stock

within a reasonable time after the tortious act. Id. [§]

151 Comment c; Myzel v. Fields, 386 F.2d 718, 744

n.23, 745 (8th Cir. 1967).

Nelson v. Serwold, 687 F.2d 278, 281 (9th Cir. 1982) (emphasis added). 

[7] Because the advisory Sentencing Guidelines and restitution to victims under the MVRA clearly focus on different

aspects of the offense and serve different purposes, we reject

Gossi’s argument that we should look to the advisory Sentencing Guidelines for calculating the victim’s losses.

AFFIRMED.

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