United States Court of Appeals

For the Eighth Circuit

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No. 15-3563

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United States of America

lllllllllllllllllllll Plaintiff - Appellee

v.

Coleman Carpenter

lllllllllllllllllllll Defendant - Appellant

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Appeal from United States District Court 

for the Eastern District of Missouri - St. Louis

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 Submitted: September 23, 2016

 Filed: November 23, 2016

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Before WOLLMAN, BRIGHT, and KELLY, Circuit Judges.

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BRIGHT, Circuit Judge.

The government charged Coleman Carpenter with mail and wire fraud arising

from a scheme in which he overpaid for commodities to the benefit of certain

customers while managing a grain elevator for Bunge of North America (Bunge). 

After Carpenter pleaded guilty to one count of mail fraud, the district court sentenced

him to twelve months and one day in prison. The district court also ordered him to
pay $1,561,516.25 in restitution to Bunge, which included $87,536.65 in attorney's

fees and expenses Bunge paid to an outside counsel during the investigation of

Carpenter's fraudulent scheme and his prosecution.

Carpenter appeals arguing the district court erred in calculating the amount of

restitution, and by including the attorney's fees from Bunge's outside counsel in the

restitution award. We affirmthe portion of the district court'srestitution award which

does not include attorney's fees ($1,473,980.00), but vacate the portion awarding

attorney's fees and expenses($87,536.65), and remand to the district court for further

proceedings.

I

Bunge, a global agriculture commodities business, employed Carpenter as the

manager of a grain elevator in Hickman, Kentucky. Bunge authorized Carpenter to

purchase agricultural commodities, which included corn, wheat and soybeans, from

producers and merchants "on the spot." In addition, Carpenter could enter into

futures contracts for commodities to be delivered at a later date.

Futures contracts had two components: the futures price and the basis. The

first component – the futures price – was set by commodities markets. Bunge

provided Carpenter access to the current futures prices electronically and through a

commercial trading desk (hedge desk) located at its St. Louis, Missouri headquarters.

Carpenter was authorized to establish the futures price component of the per bushel

price for a particular futures contract based upon the current futures price as

determined by the Chicago Board of Trade (CBOT).

The second component – the basis – was set by Bunge and depended on

various market conditions, such as location of a point of purchase, operational needs

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of Bunge, and prices offered by a competitor. Bunge gave Carpenter the authority

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to "push the basis" in order to respond to changing market conditions or the

operational needs of Bunge, but limited this authority to $.08 per bushel at the most. 

So, for example, if the basis at a given time was $-.15, Carpenter had the authority to

push it to $-.07.

Between 2009 and 2013, Carpenter frequently entered into futures contracts in

excess of the combination of the CBOT current futures price and Bunge's basis, and

his limited authority to "push the basis." In fact, on some occasions Carpenter

increased the price Bunge paid for commodities by $.30, $.40, or .$50 per bushel. For

example, on August 1, 2013, Carpenter entered into a futures contract for 60,000

bushels of corn at $5.25 per bushel. Carpenter utilized a futures price of $5.63 per

bushel with a basis of $-.38, despite the fact that the hedge desk provided him with

a CBOT current futures price of only $4.9075, and the highest price paid on the

CBOT that day for corn was $4.9975.

Thus, Carpenter inflated the futures price component of the contract by $.7225

per bushel based on the CBOT current futures prices, or by $.6325 per bushel based

on the CBOT high price of the day. After adjusting for the basis, the amount Bunge

lost on this single contract was $43,350, as measured by the difference between the

$5.63 futures price utilized by Carpenter and the approved CBOT current futures

price of $4.9075 (60,000 bushels x $.7225). Carpenter then misrepresented these

unauthorized transactions in mailings to Bunge headquarters.

During the scheme, Carpenter received large payments of money from some

of the grain elevator customers. For example, in consecutive years in March 2009

Examples in the record report the basis as a negative number, such as $-.38. 

1

In other words, the final price of any particular futures contract for the selling farmer

– after combining the CBOT current futures price and Bunge's basis – would likely

be below the CBOT current futures price to reflect Bunge's operating costs.

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and 2010, Carpenter received $10,000 checks from Ronnie Bates Farms, one of the

grain elevator's customers. Carpenter's bank account also showed large cash deposits

made between 2009 and 2013 totaling over $38,000. Carpenter denies the cash

deposits he made to his bank account during that time were related to the fraud

scheme.

In 2013, Bunge discovered Carpenter's fraud during an internal audit. Bunge

asked the Thompson Coburn law firmin St. Louisto assist in reviewing and assessing

Carpenter's unauthorized transactions, while at the same time providing information

to the government for potential criminal charges against Carpenter. Thompson

Coburn assisted Bunge and the government in reviewing the transactions both before

and after a federal grand jury returned an indictment against Carpenter on June 25,

2014. After being charged, Carpenter pleaded guilty to one count of mail fraud in

violation of 18 U.S.C. § 1341.

Prior to sentencing, a probation officer prepared a Presentence Investigation

Report (PSR) which, in part, calculated the amount of loss that resulted from

Carpenter'sfraud pursuant to United States Sentencing Guidelines Manual (U.S.S.G.)

§ 2B1.1. The PSR determined loss using a "one-day Chicago Board of Trade high

price" as the number to be subtracted from the inflated price paid by Carpenter. For

its part, the government recommended loss should be calculated by comparing a

"two-day" CBOT high price to the price of Carpenter's unauthorized transactions,

which was more conservative than the method recommended by the PSR and resulted

in a lower loss amount. Using this two-day method of calculation, the government

determined Bunge overpaid its customers approximately $937,000 as the result of

Carpenter's unauthorized transactions. InCarpenter's plea agreement, he admitted his

fraud scheme resulted in "approximately $937,000" in overpayments by Bunge to

various customers.

At sentencing, the district court adopted the parties' agreement asto amount of

lossto calculateCarpenter's advisory guidelinesrange, and then turned to the separate

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issue of determining the amount of loss for purposes of restitution. The district court

agreed the precise amount of restitution was difficult to calculate because the market

price at the exact time of day Carpenter entered into each of his fraudulent

transactions was unknown. The district court ultimately adopted the PSR's one-day

method to determine restitution, however, because Bunge's losses would be

underestimated using either the one- or two-day method based on the CBOT high

price of the day. Under the one-day method of calculation, the district court set the

amount of Bunge's loss for restitution purposes at $1,473,980.00.

Bunge also sought restitution for the attorney's fees it paid to outside counsel

prior to and during the government's investigation. Carpenter objected to the

attorney's fees arguing, in part, that fees incurred after the government started its

investigation were not "necessary." See 18 U.S.C. § 3663A(b)(4) ("The order of

restitution shall require that such defendant—in any case, reimburse the victim for 

. . . necessary . . . expenses incurred during participation in the investigation or

prosecution of the offense."). The district court reviewed the billing statements

provided by Bunge's counsel and then awarded 90% of the claimed fees, reflecting

a 10% reduction for specific fees associated with a press release, reproduction

charges, punitive damages issues, correspondence, and courier services, to which

Carpenter had also objected. After the reduction, the fees and associated expenses

totaled $87,536.65. Including the attorney's fees, the total restitution the district court

awarded to Bunge was $1,561,516.25. Bunge filed thistimely appeal challenging the

amount of restitution.

II

We review the district court's decision to award restitution for abuse of

discretion, but any fact findings asto the amount are reviewed for clear error. United

States v. Chalupnik, 514 F.3d 748, 752 (8th Cir. 2008). "The government bears the

burden of proving the amount of restitution based on a preponderance of the

evidence." United States v. Frazier, 651 F.3d 899, 903 (8th Cir. 2011).

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A. The Overpayments

Carpenter contends the district court erred in awarding the initial

$1,473,980.00 in restitution (the amount less the attorney's fees) for two reasons. 

First, Carpenter contends the amount of restitution is difficult, if not impossible, to

determine and is not warranted. See 18 U.S.C. § 3663A(c)(3)(B) ("Thissection shall

not apply . . . if the court finds . . . that determining complex issues of fact related to

the . . . amount of the victim's losses would complicate or prolong the sentencing

process to a degree that the need to provide restitution to any victim is outweighed

by the burden on the sentencing process"). Second, Carpenter argues that Bunge did

not sustain a loss becauseBunge factored in his overpayments when it ultimately sold

the commodities he purchased.

With respect to Carpenter's first argument, we have consistently held that "the

district court has wide discretion in ordering restitution." United States v. DeRosier,

501 F.3d 888, 897 (8th Cir. 2007). When determining restitution, "the district court

need make only a reasonable estimate of the loss, and we accord particular deference

to the loss determination because of the district court's unique ability to assess the

evidence and estimate the loss." Id. at 895 (quoting United States v. Scott, 448 F.3d

1040, 1044 (8th Cir. 2006)). In cases where the amount of loss (and by extension the

amount of restitution) caused by fraud is difficult to calculate, "a district court is

charged only with making a reasonable estimate of the loss." United States v. Parish,

565 F.3d 528, 534 (8th Cir. 2009) (internal quotation marks and citation omitted).

Carpenter's claim that the loss wasimpossible to calculate is belied by his own

admission in the plea agreement that his fraud scheme resulted in "approximately

$937,000" in overpayments by Bunge to various customers using the government's

more conservative two-day CBOT high price method of calculating the loss. Thus,

the real issue presented in this appeal is limited to whether the district court erred by

choosing the one-day method over the two-day method when calculating loss and

restitution. The two-day method assumed that some of Carpenter's fraudulent

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transactions were actually agreed to at the high price of one day, but due to

administrative delays at the Hickman facility, may not have been completed until the

next day. Using this method, the highest price over any given two-day period was

used to compute loss. In contrast, the one-day method used the CBOT high price of

the day a commodity purchase was made. Carpenter objectsto the district court's use

of the one-day method because it resulted in a higher loss than that calculated under

the two-day method.

We see no grounds for reversing the district court's decision to choose the onedaymethod over the two-daymethod. As we previously stated, exact precision is not

necessary when determining loss, only a reasonable estimate. Either method the

district court would have chosen here would have been reasonable, as both methods

underestimated Bunge's actual loss. The times when Carpenter made unauthorized

transactions occurred throughout each day, not necessarily every time the CBOT price

was at its highest. For example, in the August 2013 purchase of corn discussed

above, the CBOT current futures price provided to Carpenter at the time of sale was

$4.9075, while the highest price paid on the CBOT that day for corn was $4.9975, a

difference of $.09 per bushel, or a total of $5400 for the 60,000 bushel sale. The oneday method used by the district court did not capture the additional $5400 Bunge lost

on this particular sale (as reflected in the PSR at ¶ 20, which only reported a loss of

$37,950 on this particular transaction rather than the $43,350 Bunge actually lost),

or the similar amounts Bunge lost on Carpenter's many other fraudulent transactions.

Because the exact times of the unauthorized trades could not be determined, the use

of the CBOT daily high price automatically ensured that Bunge's actual loss would

be underestimated under both methods of calculation.

Carpenter next argues that Bunge did not sustain a loss (and by extension was

not entitled to restitution) because Bunge recouped his overpayments at the time of

its sale. The district court used the correct standard of lost profits to determine

Bunge's loss. See United States v. Chalupnik, 514 F.3d 748, 755 (8th Cir. 2008). 

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Here, Bunge's lost profits were based on the difference between the authorized

purchase price and the amount of Carpenter's unauthorized purchases. The lost

profits remained constant regardless of the resale price. Finally, Bunge does not have

exclusive control over the sale price as Carpenter seems to contend. The

commodities market is a global market that dictates the sale price. The district court

properly determined that the loss sustained by Bunge was the total amount of lost

profits and that the lost profits remain constant regardless of the sale price.

B. The Attorney's Fees

Carpenter contends that attorney's fees incurred by Bunge's outside counsel

after the government took over the investigation were not "necessary" under 18

U.S.C. § 3663A(b)(4). Carpenter relies primarily upon United States v. Papagno, 639

F.3d 1093 (D.C. Cir. 2011), which reversed a restitution order awarding expenses

incurred by a victim during its own internal investigation of an employee's fraud

where there was no evidence the investigation was ever requested by criminal

investigators or prosecutors, holding that under those circumstances the victim's

'"participation in the investigation or prosecution of the offense'" was not

'"necessary.'" Id. at 1095 (quoting 18 U.S.C. § 3663A(b)(4)).

Our circuit has taken a somewhat broader view of the loss that can be included

in a restitution award, and have "specifically approved of the inclusion of attorney's

fees and investigative costs in a restitution award when these losses were caused by

the fraudulent conduct." DeRosier, 501 F.3d at 897 (citing United States v. Akbani,

151 F.3d 774, 780 (8th Cir. 1998); United States v. Piggie, 303 F.3d 923, 928 (8th

Cir. 2002)). As Carpenter contends, however, the fact that there is no per se

prohibition on awarding restitution for attorney's fees or investigative costs does not

relieve the government from satisfying the statutory requirement of showing such

costs were "necessary . . . expenses incurred during participation in the investigation

or prosecution of the offense." 18 U.S.C. § 3663A(b)(4).

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Carpenter's specific objection in the district court was that outside attorney's

fees incurred by Bunge after the government initiated its own investigation were

unnecessary. The record does not show the district court ever directly addressed that

claim, or made a specific finding that the fees were necessary. Instead, the district

court only appears to have addressed Carpenter's other objections to the attorney's

fees submitted by outside counsel. We therefore vacate the district court's award of

attorney's fees and expenses and remand to the district court to specifically address

whether the attorney's fees incurred after the government initiated its own

investigation were "necessary" under § 3663A(b)(4). If the district court determines

that any portion of the fees were not "necessary," those fees should not be included

in the restitution award.

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III

We affirm that portion of the district court's restitution order awarding

$1,473,980.00. We vacate the portion ofthe district court'srestitution order awarding

attorney's fees and remand for further proceedings consistent with this opinion.

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If read liberally, Carpenter's objection to the attorney's feesin the district court

2

also raised a claim that he should be entitled to a "set off" from the total amount of

restitution awarded if Bunge's insurance company pays for any claim related to

Carpenter'sfraudulent conduct. To the extent Carpenter renewsthat claim on appeal,

we reject it. When an insurer makes payments for a victim's loss, a defendant is

required to pay restitution back to the insurance provider under the Mandatory

Victims Restitution Act, and is not entitled to a set off. United States v. Mancini, 624

F.3d 879, 882 (8th Cir. 2010).

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