Source: https://casetext.com/case/us-v-hayes-61
Timestamp: 2019-01-22 19:15:55
Document Index: 496544043

Matched Legal Cases: ['§ 2', '§ 1343', '§ 1', '§ 1', '§ 2', '§ 2', '§ 3', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2']

U.S. v. Hayes, 242 F.3d 114 | Casetext
242 F.3d 114 (3d Cir. 2001)
…Higbee v. Sullivan, 975 F.2d 558, 561-62 (9th Cir. 1992); Celaya v. Halter, 332 F.3d 1177, 1183 (9th Cir.…
…The Sixth Circuit rejected this argument, holding that by choosing persons out of order, "Brown diverted or…
holding that the government has the burden of proving loss
Summary of this case from U.S. v. Feldman
No. 00-2802.
Argued: December 19, 2000.
Filed: February 20, 2001.
John H. Yauch, Lisa M. Mack, Federal Public Defender Newark, NJ, for appellant.
Robert J. Cleary, United States Attorney, George S. Leone, Assistant United States Attorney, Chief, Appeals Division, Maureen A. Ruane, Assistant United States Attorney, Newark, NJ, for appellee.
This is yet another sentencing appeal that turns on the proper determination of loss amount under the fraud provisions of the Sentencing Guidelines, U.S.S.G. § 2F1.1. Defendant Jacquita D. Hayes, who lacked the necessary college degree to be a social worker, but who forged her qualifications and worked for several years for three New Jersey social service agencies, was convicted in the District Court of wire fraud, 18 U.S.C. § 1343, for causing one of the agencies to deposit her salary into her bank account. The sole issue before us on appeal (and the principal issue before the District Court at sentencing) was whether the total salary paid to Hayes in all of her fraudulently obtained employment should have been assessed as the amount of loss (the salary from the other two agencies being drawn in as relevant conduct under U.S.S.G. § 1B1.3) or whether, under the rule of United States v. Maurello, 76 F.3d 1304 (3d Cir. 1996), the court should have attempted to determine whether any of the services performed by defendant had value. If the latter, the loss calculation should have been made by determining which portions of Hayes's services had value to the clients (or to the agency) and which did not.
Hayes wanted to be a social worker, but to secure a position with the New Jersey Division of Youth and Family Services ("DYFS"), she not only lied about having a bachelor's degree, but also submitted a forged diploma as proof of her educational achievement. Hayes got the job and spent the next 4-½ years as a fieldworker counseling troubled children for DYFS. Her performance is hard to gauge because DYFS does not monitor its field workers, but there were no complaints from families about her performance, and, in their reviews, her superiors praised her written assignments and case assessment skills, and lauded her commitment, enthusiasm, and hard work. At some point during her employment she mentioned that she was thinking of leaving DYFS, and she requested and received a letter of reference. But she remained on the job until she was ultimately fired for falsifying documentation concerning payment to a family.
Hayes did have some trouble at DYFS: She had an affair with a co-worker during working hours, was disciplined for looking at confidential records, crashed a New Jersey vehicle while intoxicated, was suspected of theft, and showed up drunk for work. These incidents did not, however, form the basis for her discharge.
In 1996, Hayes got a job with Mentor Clinical Services ("Mentor"). Again, her duties involved counseling troubled children, and again she falsely claimed to have the bachelor's degree and master's degree that constituted the minimal educational requirements of the job, backing-up these prevarications with forged paperwork. She even forged a social worker's license and listed her mother (without disclosing the relationship) as a professional reference. After a year, she was promoted and given a ten percent raise. There was no direct supervision of her counseling, and Mentor received no complaints. In October 1997 she was fired when Mentor determined that she had lied about her credentials. There is some dispute between Hayes and the Government regarding her precise responsibilities at Mentor: According to Hayes, most of her work at Mentor was oversight and administration, but the Government contends that Hayes had a great deal of clinical responsibility in addition to her supervisory duties.
DYFS is funded by both the federal government and the State of New Jersey. Both Mentor and YCS receive funding from DYFS and other state agencies, and both Mentor and YCS received reimbursement from DYFS for the payment of Hayes's salary.
Hayes was charged with one count of wire fraud, for causing Mentor to deposit her salary into her bank account even though she was not qualified for the job. She pled guilty, and, for sentencing purposes, her fraudulent employment at DYFS and YCS was deemed relevant conduct under U.S.S.G. § 1B1.3. Thus, in order to determine her offense level under the Sentencing Guidelines pursuant to U.S.S.G. § 2F1.1, it became necessary to determine the total amount of monetary loss to the defrauded agencies.
The government argued, and the District Court agreed, that the total "loss" was Hayes's total salary for the work performed from 1990 through 1997, which was $190,298.77. This put her at offense level 13. Two levels were added for "more than minimal planning," U.S.S.G. § 2F1.1(b)(2), and two levels subtracted for acceptance of responsibility, see U.S.S.G. § 3E1.1. This made her eligible for 12 to 18 months' imprisonment, and the District Court sentenced her to a year and a day, plus a term of supervised release. Hayes now appeals the loss calculation, arguing that because the agencies received her services in exchange for the salary, the loss amount should be zero.
The offense is governed by the Fraud Guidelines, which explain that the offense level is to be determined by the amount of the loss. The Guidelines provide examples demonstrating that when something of value is provided in return for the loss, the "loss" valuation is equal to the difference between what was provided and what was taken. See U.S.S.G. § 2F1.1, cmt. n. 8(a) ("A fraud may involve the misrepresentation of the value of an item that does have some value. . . . Where, for example, a defendant fraudulently represents that stock is worth $40,000 . . . the loss is the amount by which the stock was overvalued. . . ."). The application notes further provide that loss need only be a reasonable estimate, based on available information. See U.S.S.G. § 2F1.1, cmt. n. 9.
On appeal, we concluded that the Guidelines's use of the loss calculations to inflate punishment beyond the base offense level is intended to capture the amount of harm caused by the crime, and it therefore is perfectly appropriate to treat the competent attorney (who has provided his clients with valuable services) differently from the incompetent one. We explained: "To the extent that the unauthorized services provided by defendant have not harmed their recipients, but to the contrary have benefitted them, we conclude that defendant's base offense level should not be enhanced." Id. at 1312. Because "loss" could not be calculated merely by reference to the fees charged, we sought to find an "appropriate substitute." Although we endorsed the approach taken by the probation officer, i.e., beginning with the fees of dissatisfied clients, we noted that some clients might falsely claim to have been dissatisfied in hopes of getting a financial windfall. Therefore, we required the Government to demonstrate that the complaints by such clients were "bona fide" and capable of reasonably supporting a loss determination. See id. at 1313. We reversed, but concluded by observing that if, on remand, the District Court was still convinced that a mere reference to the amount of monetary "loss" failed to capture the seriousness of the offense, the court could apply an upward departure in accordance with 2F1.1's instruction that "[i]n cases in which the loss determined . . . does not fully capture the harmfulness . . . of the conduct, an upward departure may be warranted." Id. (quoting U.S.S.G. § 2F1.1, cmt. n. 11).
Hayes, of course, argues that her case is just like Maurello. However, the District Court believed, and the Government agrees, that Maurello was different because: (1) the actual value of the lawyer's services could be assessed; (2) the clients were available to comment on the services; and (3) there was no allegation that the defendant's skills as an attorney were deficient. In contrast, the "clients" that Hayes serviced — the abused children — cannot be surveyed, for they are fragile and unlikely to complain. Moreover, the agencies might be reluctant to confess to the children and their families that an unqualified worker was counseling them; at a minimum, such actions would be an invitation to a lawsuit. As a result, the District Court held that the value of Hayes's services could not be assessed, and that the best estimate would be the entire amount of her salary. The court also declined to consider evidence that some employers had given Hayes positive evaluations, although we are not entirely clear whether the evidence was rejected as non-probative of the issue of valuation, or as irrelevant because the "value" of services provided was not germane to sentencing.
In reaching its conclusion, the District Court relied in part on United States v. Geevers, 226 F.3d 186 (3d Cir. 2000). Geevers pled guilty to bank fraud via use of a check kiting scheme. In that case, the District Court held that the loss Geevers had intended to cause could be ascertained by reference to the full face value of the checks, despite Geevers's argument that no reasonable check-kiter could really expect to get away with that much. On appeal, the panel affirmed, concluding that Geevers's expectations were not equivalent to his intent — that is, Geevers was trying to get away with whatever he could manage, and the fact that he might have understood that at some point the scheme would fail did not mean that his intention was different. Further, the panel believed that Geevers's intent was a factual question in which a prima facie case could be made out for the Government by showing the face amount of the checks, and that the burden would then shift to Geevers to show that he had intended to take less than those amounts. See id. at 193. In Hayes's case, the District Court noted that Hayes "knew what she was doing here. She received whatever income she received . . . knowing full well that she was not qualified. . . ." The court therefore believed that Hayes's scheme was like Geevers's deliberate attempt to defraud the banks of the face value of the checks.
Hayes worked for DYFS for nearly five years, and received several positive evaluations. She came to Mentor with nearly five years' experience, and was promoted and given a raise. The Government conceded at sentencing that "[s]ome of her services appear to be absolutely helpful," when advising the District Court to sentence Hayes to the lower end of the range. Certainly this is enough evidence to demonstrate that Hayes intended to provide, and did provide, actual services in exchange for her salary, necessitating that an inquiry be conducted as to the value of those services.
In light of the foregoing analysis, and the fact that the record establishes that Hayes got quite a number of good ratings and a promotion, we believe that the Maurello calculation could be made here, perhaps with the aid of an expert in social work who would evaluate her files. We do not suggest that a file analysis will yield an exact calculus, but neither did the survey of client satisfaction in Maurello, and there is no reason to believe a file analysis (or some other measure the District Court may devise) will not be at least as accurate. None of this is to condone Hayes's criminal conduct (any more than Maurello's), but at this stage, what is at issue is not culpability, but quantification of loss, as dictated by the Guidelines regime.
We therefore conclude that the judgment must be vacated and the case remanded for resentencing. We intimate no view as to what the outcome on remand should be. We hold only that, under the present circumstances, the District Court should have attempted the loss calculation. We acknowledge that, if the District Court is satisfied that the ultimate calculation does not adequately capture the amount of the loss, it may depart upward. See U.S.S.G. § 2F1.1, cmt. n. 11. We also add that we do not suggest that the District Court will always be able to calculate loss in cases of this genre, only that it seems possible to do so here.
We note in this regard that the other approaches suggested by the Government — calculating loss on the basis of gain to the defendant or diversion of government program benefits — are unavailing. The application notes to the Fraud Guidelines mandate that with respect to government benefits, "loss is the value of the benefits diverted from intended recipients or uses." U.S.S.G. § 2F1.1, cmt. n. 8(d). This instruction seems geared towards dealing with people who actually take money out of government programs, and is particularly concerned with directing courts to look at what the money was to pay for or where the money was supposed to go, in contrast to an approach that would focus on where the money was coming from (i.e., the Government). For instance, that Guideline may be invoked when someone exchanges cash for food stamps and then redeems the stamps from the Government: If a regular "loss" calculation were used, there might be almost no loss at all, because the Government pays out the same amount (face value of the stamps) that it might have done otherwise, and the money actually ends up in the hands of the intended recipients (poor people) by virtue of the fact that they sold their stamps. In contrast, the Guidelines's focus on intended use ensures that the face value is the full loss, because the money was intended to go for food, not cash, to the stamp recipients. See United States v. Griffin, 215 F.3d 866 (8th Cir. 2000).
We acknowledge that district judges may view this case (and indeed Maurello) as imposing on the already cumbersome Guidelines sentencing process an expensive, time consuming, and elusive additional burden. Although we sympathize with such objections, and respond "touche," the responsibility for this state of affairs does not rest with us but rather with a sentencing regime that insists upon assessing penalties by the mechanical quantification of harm rather than by a qualitative, albeit subjective, evaluation of blame. It may be relatively simple to quantify the use of illegal drugs by measuring drug purity quality. It has proven much more difficult to quantify loss, as the rough statistic in the margin reflects.
This result once again demonstrates the deep flaws of a system that creates a hulking superstructure of regulation when the simple extension of a modest amount of additional discretion to our extraordinarily able and dedicated cadre of district judges would do the job better. See United States v. Walker, 202 F.3d 181, 182 n. 1 (3d Cir. 2000). However, we are bound as judges of the Third Article to carry out the mandate of the Congress and the United States Sentencing Commission. Because this is a case in which we believe that it has been amply demonstrated that Hayes provided some value to the agencies and that her full salary cannot therefore be termed "loss," we have no choice but to vacate the judgment and remand for further proceedings consistent with this opinion. It is so ordered.