NOT RECOMMENDED FOR FULL- TEXT P UBLICA TION File Name: 13 a02 70n. 06

No. 12 -581 0

UNITED STA

TES COURT OF A PPE A LS FOR THE SIX TH CIRCUIT

UNITE D ST AT ES O F AMERICA,

Plaint if f -Appe llee,

v

.
ST EPHEN L . SI MS,

Def end ant -Appe llant. ) ) ) ) ) ) ) ) ) ON APP EAL FROM T HE UNIT ED ST AT ES DIST RICT COURT FOR T HE W ES TER N D ISTRICT OF TEN N ES SE E

Bef ore: DAUGHT REY, ROGERS, a nd McKEAGUE , Circuit Jud ges.

MARTHA CRAIG DAUGHTRE Y, Circuit Judge. Def end ant Ste phe n Sims plea ded
guilty to three coun ts of ban k f raud

. T he district court the n sent ence d Sims to 87 mo nth s

in prison and three y ears on supe rv ised release
, and orde red p a ym e n t o f $2, 424 ,00 0 in

restitut ion to the Fede ral Depo sit Insu rance Corporat ion (FDIC)

. On app eal, the def end ant

cont ests the calculat ion of his Guideline s off ense l evel and challenges the district court’s

det ermin ation of the am oun t of restitut ion due

. W e f ind no rev ersible error and af f irm the
judgme nt in its en tirety.

From 200 4 into 200 8, Sims convinced v arious individuals to app ly f or loan s in the ir

own nam es throu gh Oaklan d Depo sit Ban k in rural W est T enn essee

. Rathe r tha n allowi ng

tho se individuals to keep the loan proce eds, howev er, Sims w ould ref und only ten perce ntNo. 12-5810

United States v. Sims

o f the f und s to the borrower and take posse ssion of the rema ining mo ney, oste nsibl y t o
purch ase or develop real prop erty. T he def end ant inf orme d the borrowers tha t the mo ney
kept by him actu ally w as an investme nt tha t w ould pay of f f or the “inv esto rs” upo n the sale

of the develope d realty. In reality, the “inv estm ent s” never generat ed a prof it, and Sims

w as fo rced to pay mo ney back to the “inv esto rs” in orde r to satisf y the ir loan oblig ation s.

Beca use S ims w as not generat ing in com e f rom the prop erties he purch ased
, in orde r to

raise t h e rev enu e nece ssary to ma ke the payme nts on the num erou s loan s he had

orche strate d, he w as required to iden tif y y et oth er individuals he could convince to obt ain

loan s f rom the Oaklan d ban k

. S im s would the n use his 90-p ercen t share of tho se loan

proce eds to pay the inde bte dne ss to the earlier borrowers. Not surprisingly
, the “borrow

f rom-Pe ter-to-reim burse -Paul” scena rio could not be ma intain ed, giv en the dwi ndling

num ber of p o t e n t ia l “inv esto rs” in the sma ll Oaklan d com mu nity. Conse quently, Sims
began taking out add itiona l loan s in the nam es of previo u s investors, all w ithou t the
knowledge or a cquiescence of tho se ind iv idua ls.

T his loan -lappin g- schem e-gone-awry w as explained in ano the r w ay at Sims’s

sent encin g hea ring by T rent W atrou s, a certif ied pub lic accou nta nt and f raud examine r

w ho investig ate d the imp roprieties at the Oaklan d Depo sit Ban k. Using a specif ic examp le,

W atrou s stat ed:

One transa ction in particu lar tha t com es to min d is w here mo neys were drawn on three dif

f eren t borrowers, a Pernita T aylor, a W atso n, and ano the r party, and it all w ent to a Roy Ew ing. W ell, w hen y ou go back and look at the f iles, the three loan s never had docu me nta tion tha t the ir loan s could be

- 2 -No. 12-5810

United States v. Sims

take n out in the ir nam e and the proce eds of those loans app lied to Mr. Roy Ew ing, nor in the Roy Ew ing f ile w as the re docu me nta tion saying y ou can draw upo n the se oth er not es. So how f und s w ere f low ing f rom one poin t to the next w hen the re w as no conn ection bet w een the partie s is v ery intere stin g. S o y ou had three $11 ,37 6 checks prep ared
, drawn on tho se loan s, f low ing to p ay of f f our lo ans of

an un relate d b orrow er.

Cathe rine W alker, an agent w ith the Fede ral Burea u of Investigation, also testif ied

at the sent encin g hea ring and recou nte d tha t Sims adm itted to f orging docu me nta tion on

44 such unse cured loan s in orde r to obt ain a tota l of $48 8,2 50. Add itiona lly
, Agent W alker
explained tha t Sims also help ed a num ber of individuals obt ain const ruction loan s f rom the

ban k in am oun ts tota ling $80 9,7 00. Altho ugh the proce eds of tho se loan s w ere to be used

to const ruct or reha bilitate hom es in the Mem phis area , W alker saw no evidence of any

const ruction tha t too k place in eithe r 200 7 or 200 8, w hen a ma jority of the loan s w ere

f inalized.

Ind eed
, oth er testim ony indicat ed tha t mu ch of the loan mo ney obt aine d by Sims

w as converted to the def end ant ’s own use. For examp le, Sims conf essed to W atrou s “that

app rox ima tely tw o to 300 ,00 0 had bee n spen t on [Krysty le,] the rapp er he w as spon soring
, 1

[an d] three to 400 ,00 0 w as relate d to his perso nal and busin ess expense s,” includin g
$22 0,9 34 f or tu ition f or his so ns a t a Monte ssori scho ol.

A c c o r d i n g t o t h e p r e s e n t e n c e r e p o r t p r e p a r e d b y t h e U n i t e d S t a t e s P r o b a t i o n O f f i c e , “ t h a t m o n e y w a s 1
p a i d f o r s t u d i o t i m e , p r o m o t i o n a l i t e m s , t

- s h i r t s , a n d o t h e r i t e m s , a s w e l l a s h o s t i n g l a r g e r c o n c e r t s ” f o r t h e y o u n g r a p p e r , b u t “ t h e i n v e s t m e n t w a s l o s t ” “ d u e t o K r y s t y l e ’ s v o i c e c h a n g i n g

. ” O t h e r i n f o r m a t i o n i n t h e p r e s e n t e n c e r e p o r t s u g g e s t s t h a t S i m s d r a s t i c a l l y u n d e r e s t i m a t e d t o W a t r o u s t h e c a s h o u t l a y f o r K r y s t y l e ’ s p r o m o t i o n

. W h e n s p e a k i n g w i t h t h e p r o b a t i o n o f f i c e r , S i m s “ e s t i m a t e d t h a t h e g a v e [ t h e r a p p e r ’ s ] f a t h e r $ 3 0 0
, 0 0 0 t o $ 4 0 0
, 0 0 0 o v e r a t h r e e

- y e a r p e r i o d ” a n d “ s p e n t a p p r o x i m a t e l y $ 4 5 0
, 0 0 0 t o $ 5 0 0
, 0 0 0 ” o n t h r e e l a r g e c o n c e r t s

. - 3 -No. 12-5810

United States v. Sims

Dana English, a f ield supe rv isor w ith the FDIC, testif ied tha t he exam in e d the

records of the Oakla nd Depo sit Ba nk a nd calculat ed tha t th e b ank’s “to tal losse s relate d

to Mr. S ims was $2 ,27 9,0 00, ” an am oun t tha t equaled “the ban k’s last three f ull years of

earn ings at that point in time .” W atrou s estimat ed, how ever, tha t the ban k’s losses w ere
$ 2
, 4 2 4 ,00 0, the slig htly gr eat er f igure const ituting “the am oun t of principa l [tha t w a s ]

out stan ding on tho se loa ns a nd w as wr itten of f by the ban k as u nreco v erab le.”

Need less to say, losses of eithe r am oun t of m o n e y w ere devastat ing to the rural

ban k, causin g it to beco me insolvent. Accordin g to the FDIC f ield supe rv isor, “[t]he losses

f or Mr. S ims alon e w ould have ma terially af f ecte d the ban k’s capita l ratio, ” lo we ri n g tha t

f igure f rom a “satisf acto ry ” 7.2 1 percen t to 5.5 2 perce nt. English f urthe r testif ied tha t the

losses tha t precipita ted tha t drastic drop in the capita l ratio “substa ntially jeop ardize[d] the

saf ety and sou ndn ess o f Oakla nd Depo sit Ba nk.”

Presen ted w ith this testim ony, the district judge f oun d tha t t h e ban k’s loss w as

gr eat e r t h a n $1, 000 ,00 0 but less tha n $2, 500 ,00 0. See USSG § 2B1 .1(b)(1)(I) (201 1).

T he court f urthe r conclu ded tha t the of f ense involv ed mo re tha n ten v ictims, see USSG
§ 2B1 .1(b)(2)(A)(i) (201 1), tha t Sims had used the iden tif ication of oth er individuals w ithou t

the ir perm ission to perp etrat e the crime, see U SSG § 2B1. 1(b)(11)(C)(i ) (201 1), and tha t

the crime “substa ntially jeop ardized the saf ety and soun dne ss of a f inan cial institut ion, see

USSG § B1. 1(b) (15)(B)(i) (201 1). As a result, w ith the conco mita nt of f ense -lev el

increase s, and in lig ht of a gr ant ed three -leve l d o w nward adju stm ent f or accep tan ce of

- 4 -No. 12-5810

United States v. Sims

respo nsibility, th e district court sent ence d Sims as a criminal-hi s t o ry- c a tegory I, level- 28

of f end er to a prison term of 87 mo nth s, a sent ence w ithin the app licable Guide lines range

of 78-9 7 mo nth s. Base d upo n the testim ony of Michael T regle, an atto rney w ith the FDIC,

the district court also orde red re s t it u t io n to the FDIC in the am oun t of $2, 424 ,00 0, the

am oun t tha t the F DIC consid ered due and owi ng to it as the receiv er of Oakland Depo sit

Ban k’s successo r-in-i nte rest.

On app eal
, S im s f irst challen ges the loss-am oun t f igure calculat ed by the district

court to esta blish the app ropriate of f en s e level and app licable Guide lines sent encin g

range. T he district court det ermin ed the loss to the ban k t o b e t h e $ 2,2 79, 000 loan

principa l am oun t attributa ble to Sims’s mach inatio ns that the Oakland Depo sit Ban k w as

f orced to w rite of

f as unre coverable, but “allow ing f or credi t s , o f f s ets, payme nts,

realiz ation s on collateral, w hat ever is the re.” T he def end ant cont end s, howev er, tha t the

loss f igure shou ld be limited to only the $48 8,2 50 tha t Sims adm its he obt aine d w ithou t the

knowl e d ge or acquiescen ce of the individuals w hose nam es and oth er inf orma tion w ere

used on the loan ap plication s.

W e rev iew a district cou rt’s sent encin g dete rmina tion f or reaso nab lene ss un der a

def eren tial abu se-of -discretion stan dard

. United Sta tes v. Erpen beck
, 532 F.3d 423
, 430
(6th Cir. 200 8) (citing Gall v. United Sta tes
, 552 U.S. 38, 51 (200 7)). T hat rev iew has bot h

proce dura l and subst ant iv e com pon ent s, the proce dura l aspe ct of w hich requires tha t w e

ensu re tha t the sent encin g court did not imp rope rly calculat e “the Guide lines range, treat []

- 5 -No. 12-5810

United States v. Sims

the Guidelines as man dat ory , fa il[] to consid er the [18 U.S.C.] § 3553(a ) f acto rs, select[ ]

a sent ence base d on clearly erron e o u s f a c t s , or f ail[] to ade quately explain the chose n

sent ence

. . . .” Gall , 55 2 U.S . at 51

.

T his f irst of Sims’s challen ges t o h is s e nte nce alleges only p roced ural error – the
imp rope r calculat ion of a Guide lines range base d upo n the am oun t of loss suf f ered by the

ban k. He adm its bein g respo nsible f or $48 8,2 50 w orth of l oss, but insists that he cann ot

be held respo nsible f or a loss bet w een $1, 000 ,00 0 and $2, 500 ,00 0, as f oun d by the district

court. Altho ugh the def end ant ’s ma lf easa nce in f orging loan app lications in orde r to obt ain
$48 8,2 50 in loan proce eds is read ily app aren t, the f act is unco ntrove rt e d t h a t Sims also

procu red const ruction loan proce eds in an am oun t over $80 0,0 00 and did not app ly tho se

f und s to the uses f or w hich the y w ere provided. Inste ad, he app ropriate d the mo ney f or

perso nal expenses and for busine ss v ent ures tota lly separate from any

plan to construct

hom es or reha bilitate residen tial prop erty. T he f raud ulen t procu reme nt of tho se f und s thu s

w as p rope rly

con sidered in e stab lishing Sims’s Gu ideline s sen ten cing range.

T he district court wa s ju s t if ie d in rely ing upo n a loss f igure of $2, 279 ,00 0. Dana
English, the FDIC f ield supe rv isor, testif ied tha t the agency’s examina tions of the Oaklan d
Depo sit Ban k’s records indicat ed tha t $2, 279 ,00 0 of the ban k’s losses w ere attribu tab le to

Sims’s action s. In lig ht of tha t evide n c e , t he district court did not abu se its discretion in

ado pting tha t f igure and rejecting Sims’s argume nt tha t he cause d only $48 8,2 50 w orth of

dam age to the f inan cial institu tion.

- 6 -No. 12-5810

United States v. Sims

Our conclu sio n on this f irst app ellate issue preo rdains our resolut ion of the

def end ant ’s secon d allegation of error as well. Sim s m ainta ins be f ore t his court tha t the

district court shou ld not have app lied a f our-level in c re ase to his of f ense level f or

“substa ntially jeop ardiz[ing ] the saf ety and soun dne ss of a f inan cial institut ion. See USSG
§ 2B1 .1(b)(15 )(B)( i) (201 1). Accordin g to the def end ant ’s argume nt, if he w as respo nsible

f or a loss of only $48 8,2 50, t h a t re la tiv ely sma ll shortf all could not have cause d the
insolvency of the Oaklan d Depo sit Ban k. As w e have held
, howev er, the district court did

not abu se its discretion in f inding Sims respo nsible f or a ban k loss of ove r tw o million

dollars, a loss tha t const itute d 20 perc e n t o f a ll m one y lost by the ban k, and an am oun t
equal to the tota l ear n in gs o f the ban k in the three y ears prior to the loss. T his issue is

pat ent ly w ithou t m erit.

In a f inal issue, Sims dispu tes the $2, 424 ,00 0 restitut ion am oun t in clude d in the

district cou rt’s judgme nt. T he def end ant ’s challen ge to t hat f igure f ails, how ever, f or two

reaso ns. First, com pe t e n t e viden ce bef ore the district court esta blished tha t “w hen this

schem e end ed, ” “the am oun t of principa l [tha t w as] out stan ding on tho se loan s and w as

w ritten of

f by the ban k as u nreco v erab le” am oun ted to “$2.4 24 million. ”

Seco nd, def end ant ’s coun sel herse lf conce ded tha t the gov ernm ent ’s assessm ent

of the am oun t of restitut ion due and owi ng w as correct. At the close of the testim ony at the

sent encin g hea ring, the district judge, assistan t United Sta tes atto rney Lawrence Lau renzi,

- 7 -No. 12-5810

United States v. Sims

and def ense atto rney Doris Rand le-Holt engaged in the f ollowi ng exchange regarding the

testim ony of

FDIC att orne y

T regle:

T HE COURT: Anything y ou w ant to say abo ut the testim ony, Mr. Lau renzi?
MR. LAURENZI: Your Hono r, I thi n k t h a t t h e agreem ent of course w as ent ered into as Mr. T regle testif ied abo ut clearly place s any restitut ion to go to the FDIC. T he FDIC has now state d w hat the y consid er tha t am oun t to be, an d th at sh ould be the am oun t th at is o rdered by the court.
T HE COURT: All right. Ms. Ho lt?
MS. HOLT : I subm it it to the cou rt, Your Hon or. T HE CO UR T : Do y ou have any reaso n to dispu te tha t the FDIC is the app ropriate recipien t of the restitu tion?
MS. HOLT : I have no reaso n to dispu te it.
T HE COURT: W h a t a b o ut the am oun t, do y ou have any issue w ith the
am oun t of

restitu tion?
MS

. HOLT : I believe tha t[ ] the am oun t w e agreed on y este rday w as 2

. 4 million.

T hus, if the re w as any error in the calculat ion of the restitut ion am oun t, it is clear tha t

Sims acquiesced to the figure of f ered by the g overnme nt’s w itness. “[W ]he n a party has

him self provoked the court to com mit an error, tha t party ma y not com plain of the error on

app eal unle ss tha t error w ould result in ma nif est injustice. ” United Sta tes v. Dem m ler
, 655

F.3d 45 1, 4 58 (6th Cir.), cert. d enie d , 13 2 S .Ct. 7 94 (201 1).

As discusse d previously
, the restitut ion f igure of f ered during the testim o n y o f the

FDIC la wye r had its basis in unco ntroverted f act. T he district court’s reliance upo n tha t

- 8 -No. 12-5810

United States v. Sims

inf orma tio n w as not error and clearly did not result in a ma nif est injustice. T his issue,

the ref ore, is also without m erit.

For the reaso ns set out abo v e, w e conclu de tha t the app ellate record in this ma tter

rev eals no rev ersible error. Conse quently, w e AFFIRM the judgme nt of the district court.

- 9 -