### In the



# United States Court of Appeals

For the Seventh Circuit

____________________

No. 17

‐ 2062

U NITED S TATES OF A MERICA

, Plaintiff

‐ Appellee

,

v.

J ULIUS P ETERSON

, also known as

Eugene Peterson,

Defendant

‐ Appellant

.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 1:15

‐ cr

‐ 00386

‐ 1

— Charles R. Norgle

, Judge

.

____________________

A RGUED J ANUARY 19, 2018

— D ECIDED M AY 29, 2018

____________________

Before B AUER

, M ANION

, and R OVNER

, Circuit Judges

.

R OVNER

, Circuit Judge

. On June 24, 2015, a grand jury

indicted Julius Peterson on two counts of financial institu

‐

tion fraud, one count of making a false statement to a finan

‐

cial institution, and one count of bankruptcy fraud. Specifi

‐ cally, Counts One and Two alleged a violation of 18 U.S.C.

§ 1344 by submitting false documents in relation to his sale

of 7931 S. Union Avenue and 6821 S. Dante Avenue in Chi

‐2 No. 17

‐ 2062

cago, Illinois, Count Three alleged a violation of 18 U.S.C.

§ 1014 by making a false statement to a financial institution

that influenced a mortgage loan for one of those properties,

and Count Four alleged that he violated 18 U.S.C. § 152(3) by

making false statements in his bankruptcy petition.

Peterson pled guilty to one count of financial institution

fraud and one count of bankruptcy fraud. The district court

sentenced him to 24 months’ imprisonment, as well as five

years of supervised release, and ordered him to pay restitu

‐

tion in the amount of $166,936. On appeal, Peterson raises

two challenges to that sentence. First, he asserts that the dis

‐

trict court erred in imposing a two

‐ level enhancement under

U.S.S.G. § 2B1.1(b)(10)(C) because Peterson used “sophisti

‐

cated means.” Second, he argues that the district court erred

in failing to provide reasons for the imposition of the terms

of supervised release. We consider these issues in turn.

The sophisticated means enhancement was imposed by

the district court based on the nature of the offense. The facts

underlying the offense were set forth in the PSR and were

not objected to by Peterson. The conduct at issue in this case

concerned a scheme to defraud financial institutions by false

representations surrounding the sale of property. The sale of

the property at 7931 S. Union Avenue is illustrative. Peterson

sold property to the buyer, Victoria Nyarko, who obtained

an FHA

‐ insured loan for the property from a financial insti

‐

tution. In obtaining the loan, Nyarko submitted paperwork

indicating that the downpayment was a gift from her aunt,

Felicia Thomas, and included a “gift letter” in the applica

‐

tion that had a signature purportedly of Thomas. Thomas,

however, was not Nyarko’s aunt, but instead was a friend of

Peterson, and the signature was not hers. Peterson providedNo. 17

‐ 2062 3

money to Thomas, and Thomas then provided a cashier’s

check to Nyarko with Thomas as the remitter. That money

was deposited in Nyarko’s account, and Nyarko then pro

‐

vided the downpayment with a cashier’s check drawn on

her account with her name as remitter. In that way, a finan

‐

cial institution examining the origin of the money for the

downpayment would trace it as originating with Thomas,

who was identified as the one gifting the downpayment. Pe

‐

terson attended the closing and signed documents indicating

that he had not paid or reimbursed Nyarko for any part of

the cash downpayment and that Nyarko was providing

those funds herself. Following the sale, Peterson deposited

the approximately $169,433 proceeds of the sale in a bank

account in the name of Niya’s Trucking and Transporting, a

company controlled by Peterson. He then paid Thomas with

a portion of the proceeds, and used $30,000 of those funds to

purchase a cashier’s check payable to a company controlled

by Nyarko, Victory Development Group. The account for

that entity had only $100 in it prior to that $30,000 deposit.

When Nyarko defaulted on that FHA

‐ insured loan, the De

‐

partment of Housing and Urban Development paid out ap

‐ proximately $214,075.

Peterson argues that the district court erred in imposing a

two

‐ level enhancement for the use of sophisticated means,

because the facts demonstrated only a garden

‐ variety mort

‐

gage fraud scheme. He points to the language of the en

‐

hancement and the Application Note to that provision.

Guideline §2B1.1(b)(10)(C) provides for a two

‐ level en

‐

hancement “[i]f the offense otherwise involved sophisticated

means,” and Application Note 9(B) states that sophisticated

means includes4 No. 17

‐ 2062

especially complex or especially intricate of

‐

fense conduct pertaining to the execution or

concealment of an offense. For example, in a

telemarketing scheme, locating the main office

of the scheme in one jurisdiction but locating

soliciting operations in another jurisdiction or

‐ dinarily indicates sophisticated means. Con

‐

duct such as hiding assets or transactions, or

both, through the use of fictitious entities, cor

‐

porate shells, or offshore financial accounts al

‐

so ordinarily indicates sophisticated means.

Peterson contends that the conduct in this case does not

fall within that definition. He argues that a “genuine U.S.

corporate account” was used to undertake the relevant

transactions, and therefore this case is not equivalent to the

illustrative items such as fictitious entities, corporate shells,

or offshore accounts. According to Peterson, the district

court erred in crediting the government’s argument that the

conduct involved hidden transactions. Peterson contends

that the district court was required to make findings that es

‐

tablished that his offense conduct involved something akin

to the use of fictitious entities, corporate shells, or other off

‐

shore accounts.

That argument fails to appreciate that sophisticated

means can vary based on the nature of the offense. It will not

always involve means as elaborate as offshore accounts or

corporate shells. The examples in the Application Note are

merely illustrative of the type of conduct that could demon

‐

strate sophisticated means. We have consistently recognized

that “[a]pplication of the enhancement is proper ‘when the

conduct shows a greater level of planning or concealmentNo. 17

‐ 2062 5

than the typical fraud of its kind.’” United States v. DeMarco

,

784 F.3d 388, 397 (7th Cir. 2015), quoting United States v.

Knox

, 624 F.3d 865, 871 (7th Cir. 2010); United States v. Shene

‐

man

, 682 F.3d 623, 631–32 (7th Cir. 2012).

For instance, in Sheneman

, the defendant argued that the

sophisticated means enhancement should not apply because

the offense was a garden variety home flipping scam. Id

. at

632. We upheld the district court’s imposition of the en

‐

hancement, holding that the offense conduct went beyond a

simple scam and included the utilization of powers of attor

‐

ney to conceal the activity, misrepresentations to buyers, fal

‐

sification of loan documents, concealment of the source of

down payments and closing costs, and artificial inflation of

buyers’ bank accounts. Id

. We noted that we had upheld the

enhancement in similar mortgage fraud schemes such as in

Knox

, 624 F.3d at 871–72 and United States v. Green

, 648 F.3d

569, 576–77 (7th Cir. 2011). In Knox

, we affirmed the en

‐

hancement where the defendant used fraudulent appraisals

and false promises to buyers, and falsified loan applications

to convince mortgage lenders to finance. The enhancement

was also deemed applicable in Green where the defendants

purchased seventy properties using fraudulent loan applica

‐

tions and fabricated documents to obtain the mortgages.

Similarly, in United States v. Anobah

, 734 F.3d 733, 739 (7th

Cir. 2013), we rejected the defendant’s argument that the of

‐

fense did not involve a greater level of planning or conceal

‐

ment than a typical fraud of its kind. The district court found

that the scheme involved property in two states, the use of

straw buyers, false loan applications and other supporting

documents, and the use of multiple people to aid in the

scheme. Id

. We held that the court did not clearly err in de

‐6 No. 17

‐ 2062

termining that the sophisticated means enhancement was

applicable on those facts. Id

.

The present case involves similar allegations of planning

and concealment, exceeding that of the “garden variety”

mortgage fraud scheme. The conduct in this case went be

‐ yond that of a simple mortgage fraud case in which the de

‐

fendant might provide funds to the buyer for the downpay

‐

ment and forward a kickback to the buyer after the sale. In

this case, the defendant engaged in significant efforts to con

‐

ceal the source of the downpayment and the kickbacks paid.

The downpayment was made through a friend of the de

‐

fendant, Thomas, who was falsely identified as the aunt of

the buyer, Nyarko. Money was not transferred directly from

the defendant to Nyarko, but instead was deposited in

Thomas’ account, and Thomas then provided a cashier’s

check to Nyarko from her account, thus concealing the

source of the funds. In furtherance of those efforts, a fraudu

‐

lent document was provided identifying Thomas as Nyar

‐

ko’s aunt and the source of the downpayment funds. Efforts

were also made to conceal the kickback paid to Nyarko. The

proceeds of the sale were deposited in a bank account in the

name of Niya’s Trucking & Transporting, and a portion of

those proceeds was paid to Nyarko by a cashier’s check pay

‐

able to Victory Development Group. As the district court

pointed out, that company, Victory Development Group,

had no interest or activity with respect to the real estate

transaction for which the payment was made. The only rea

‐

son for the payment to that business instead of directly to

Nyarko was for concealment of the criminal activity. This

case therefore involves significant actions to conceal the trail

of money and to obscure the identity of the provider and re

‐ cipient of funds, thus distinguishing it from the typicalNo. 17

‐ 2062 7

mortgage fraud and supporting the imposition of the sophis

‐

ticated means enhancement. The district court did not err in

applying the enhancement in this case.

Peterson’s remaining claim is that the district court erred

in failing to provide any justification for the eleven discre

‐ tionary supervised release conditions relating them to the

applicable § 3553(a) factors in the sentencing hearing. He al

‐ leges that the court merely read the discretionary conditions

into the record, and the failure to link the conditions as a

whole to the § 3553(a) factors and provide findings was a

procedural error necessitating resentencing. See United States

v. Aslan

, 644 F.3d 526, 531 (7th Cir. 2011)(“[p]rocedural er

‐

rors include, among other things, failing to calculate or in

‐ correctly calculating the guidelines range, treating the guide

‐

lines as mandatory, failing to consider the § 3553(a) factors,

or failing to explain adequately the chosen sentence, includ

‐ ing an explanation for any deviation from the guidelines

range”) citing Gall v. United States

, 552 U.S. 38 (2007).

Following the acceptance of Peterson’s guilty plea, the

Presentence Investigation Report (”PSR”) was prepared and

distributed to the parties. Defense counsel filed two docu

‐

ments in response to the PSR, Defendant Peterson’s Objections

to the Government’s Version of the Offense and the PSR challeng

‐ ing certain portions of the PSR, and Defendant Peterson’s Sen

‐ tencing Recommendation arguing for a sentence of only one

day time served and probation with home confinement, and

addressing the appropriate application of the § 3553(a) fac

‐

tors. Peterson did not challenge the proposed supervised re

‐

lease conditions in either document, nor did he argue that

the conditions were without justification. In the district

court, once again no objection to the supervised release con

‐8 No. 17

‐ 2062

ditions was raised. The district court judge read each discre

‐ tionary condition into the record, reading directly from the

PSR and even citing the pages as he went. The judge did not

discuss the § 3553(a) factors at that time, but in the sentenc

‐ ing hearing he explicitly adopted the PSR and its findings.

The PSR recommended the conditions which the district

court imposed, and included a statement of reasons identify

‐ ing the § 3553(a) factors which supported imposition of the

conditions. The PSR explained that the conditions were rec

‐

ommended to comport with § 3553(a) concerns of affording

adequate deterrence, protecting the public from further

crimes, and providing the defendant with needed educa

‐

tional or vocational training, medical care, or other correc

‐

tional treatment in the most effective manner. It additionally

declared that the conditions were necessary to keep the pro

‐

bation officer informed of Peterson’s conduct, condition and

compliance, to target interventions to, and factors that are

proven to, reduce the risk of re

‐ offending. Finally, the PSR

declared that the conditions would assist the defendant to

engage in responsible fiscal behavior while complying with

the need to repay victims. The connection between those

reasons and the conditions is obvious for many of the condi

‐

tions, and the defendant acknowledges that most supervised

release conditions can be justified. Whether one could argue

that the reasons are inadequate to justify a particular discre

‐ tionary condition is not before us, because as will be seen

Peterson’s challenge is broader than that.

Immediately after identifying the supervised release

conditions, the district court sequentially asked the proba

‐

tion officer, each of Peterson’s attorneys, and the prosecutor

the following question: “from your standpoint, have I

missed anything?” Sent. Tr. Doc. 63 at 38–39. When individ

‐No. 17

‐ 2062 9

ually queried, each one responded no. Nevertheless, Peter

‐

son now argues that the court in fact missed something

– an

articulation of its application of the § 3553(a) factors in im

‐ posing the supervised release conditions. In general, when a

defendant fails to raise an objection at trial despite being

provided the opportunity to do so, we review the claim only

for plain error. Under that standard, the defendant must

demonstrate an error that is clear or obvious, which affected

the defendant’s substantial rights, and which seriously im

‐

pugns the fairness, integrity or public reputation of the judi

‐

cial proceeding. United States v. Bickart

, 825 F.3d 832, 837 (7th

Cir. 2016). A defendant has the burden to show that the

standard is met, see United States v. Vonn

, 535 U.S. 55, 62–63

(2002) and Peterson did not argue injury at all in his opening

brief. See United States v. Lewis

, 823 F.3d 1075, 1083–84 (7th

Cir. 2016) (noting that even if the responses to the court’s in

‐ quiries were not enough to demonstrate waiver, the failure

to object in response to an invitation would amount to forfei

‐

ture and “[w]here the issue is the sufficiency of an explana

‐

tion or findings, a meager explanation of an otherwise per

‐

missible decision does not call into question the fairness, in

‐ tegrity, or public reputation of the proceedings.”) 1

Regardless of whether we apply the plain error standard

based on the failure to object below, or even the harmless

1 The government initially argued for the application of the plain er

‐

ror standard, and stated in its brief to this court that it did not believe

that the response at the close of sentencing as to whether the court

missed anything was sufficient to constitute waiver. It has since asserted

that a recent opinion in this circuit, United States v. Gumila

, 879 F.3d 831,

837–38 (7th Cir. 2018), supports a conclusion that Peterson waived the

claim entirely. As Peterson’s claim fails in any event, we decline to con

‐

sider that argument.10 No. 17

‐ 2062

error standard advocated by Peterson in reliance on United

States v. Poulin

, 809 F.3d 924, 930 (7th Cir. 2016), the claim

must fail. The only claim here is the narrow one of whether

the district court committed a procedural error in failing to

provide its reasons under § 3553(a) for imposing the discre

‐ tionary conditions. This argument is premised on the court’s

failure to state its reasons at the sentencing hearing. Peterson

is correct that the district court did not state its reasons for

the conditions in its colloquy at sentencing in which it set

forth those conditions. The better practice would have been

to do so. But the district court incorporated the discretionary

conditions directly from the PSR, explicitly adopting the PSR

and its reasoning at that sentencing hearing, and the PSR

identified the § 3553(a) factors upon which the determina

‐

tion was made. That is sufficient to overcome the claim of

procedural error in this case. The procedural requirement

that the court consider the § 3553(a) factors in imposing the

discretionary conditions, and communicate that determina

‐

tion, is met in the adoption of the PSR which supplies that

reasoning. See United States v. Salem

, 597 F.3d 877, 886–87

(7th Cir. 2010); United States v. Burke

, 148 F.3d 832, 835 (7th

Cir. 1998) (“[t]o adopt the PSR is to make factual findings.”).

Although we would urge the probation office and the dis

‐

trict court to strive for more detailed and less rote findings

and explanation of its reasoning as to the § 3553(a) factors,

we have recognized the need to consider the context and

practical realities of sentencing hearings in determining

whether the procedural requirements are met. United States

v. Reed

, 859 F.3d 468, 472 (7th Cir. 2017). Where the parties

present no objection after being provided an opportunity,

we have determined that the procedural requirement can be

satisfied with a more general and less detailed explanationNo. 17

‐ 2062 11

of reasoning. See Bickart

, 825 F.3d at 839 (sufficient where the

district court tied the conditions to the § 3553(a) factors and

engaged in a more detailed exposition as to the two condi

‐

tions to which the defendant objected); United States v.

Pietkiewicz

, 712 F.3d 1057, 1061 (7th Cir. 2013) (“[t]he amount

of explanation required from the district court varies with

the circumstances.”); United States v Starko

, 735 F.3d 989, 992

(7th Cir. 2013) (“[c]ourts do not have to engage in a dis

‐

course of every single § 3553(a) factor; however, it is also the

case that a rote statement that the judge considered all rele

‐

vant factors will not always suffice”) (internal quotations

omitted).

Therefore, Peterson cannot demonstrate that the district

court committed a procedural error in failing to identify the

reasons and apply the § 3553(a) factors. The required proce

‐

dures were met by adopting the reasons in the PSR. Whether

the reasons in the PSR were sufficiently specific to justify

any particular discretionary condition is not before us. This

case does not involve any substantive challenge. In his open

‐ ing brief, Peterson never claimed that the reasons provided

in the PSR and adopted by the district court were insuffi

‐

cient to support a particular discretionary condition. In fact,

his opening brief in this case does not even list the discre

‐ tionary conditions imposed by the court at all, let alone ar

‐

gue as to the inapplicability of the § 3553(a) factors to any

particular discretionary condition. We hold only that here,

where the defendant had knowledge of the conditions and

the reasons in the PSR prior to sentence, and an opportunity

to object to those conditions before and at sentencing but

raises no claims related to any specific supervised release

condition, the court’s adoption of those unchallenged condi

‐12 No. 17

‐ 2062

tions as well as the reasons in the PSR were sufficient to sat

‐ isfy the procedural requirements.

The judgment and sentence are AFFIRMED.