Source: http://il.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20100721_0000590.C07.htm/qx
Timestamp: 2017-02-25 20:54:58
Document Index: 508822045

Matched Legal Cases: ['§ 1341', '§ 1956', '§ 1957', '§ 5324', '§ 2', '§ 2']

| United States v. Dokich
UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,v.MELVIN DOKICH, DEFENDANT-APPELLANT.
Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 06 CR 359-Milton I. Shadur, Judge.
ARGUED NOVEMBER 3, 2009
Melvin Dokich sold stock for Efoora, Inc., a company that claimed to be developing diagnostic tests for HIV, mad-cow disease, and blood glucose levels. Unfortunately, Efoora in the end was nothing but a phony. The company invited potential investors and customers to its headquarters in Buffalo Grove, Illinois, where they received tours of manufacturing facilities staffed by temporary laborers and filled with fake test kits and empty boxes. Dokich and others who sold stock lied about Efoora's sales figures, promised that the company would soon be traded publicly, and falsely said that federal agencies were poised to approve its diagnostic tests for sale in the United States. During his time with Efoora, Dokich and his group defrauded thousands of investors of millions of dollars.
It is impossible to run such a scam forever, and Efoora was no exception. In 2006, a grand jury returned an indictment charging Dokich-along with David Grosky, Efoora's CEO, and Craig Rappin, its COO-with nine counts of mail and wire fraud, 18 U.S.C. §§ 1341 and 1343; four counts of money laundering, 18 U.S.C. § 1956(a)(1); four counts of illegal monetary transactions, 18 U.S.C. § 1957; and 33 counts of illegal structuring transactions, 31 U.S.C. § 5324(a)(3). Without reaching an agreement with the government, Dokich pleaded guilty to one count of mail fraud and all of the structuring charges. The district court sentenced him to 84 months' imprisonment and ordered him to pay $55,971,122 in restitution, jointly and severally with Grosky and Rappin. Dokich did not object to the restitution order at sentencing, but he argues on appeal that the district court plainly erred by failing to make a finding that Efoora's victims suffered $55,971,122 in actual loss. Because we find no miscarriage of justice that requires us to overturn the district court's decision, we affirm.
Dokich's challenge to the district court's restitution order requires us to delve into the details of the various estimates submitted to the court between August 2007, when Dokich entered his guilty plea, and July 2008, when he was sentenced, of the loss suffered by his victims. As of mid-2007, the government estimated that Efoora's fraud caused "approximately $35,000,000" in loss. Two months later, the government told the probation officer in charge of Dokich's presentence investigation report ("PSR") that Efoora had deprived 5,000 investors of $35 million and suggested that Dokich could have foreseen $20-50 million in loss. Based on this information, the PSR concluded that $35 million was likely to be the appropriate amount for restitution, but it noted that the government intended to provide more specific numbers at the time of sentencing.
By February 2008, the U.S. Postal Inspection Service had completed an extensive investigation of Efoora. This information prompted the government to file a new calculation of loss with the district court; in this version, it asserted that Efoora had defrauded shareholders of $57,769,237 over the course of the scheme. Of that total, $55,130,612 represented the amount for which Dokich, who had been an Account Executive from 1999 to 2006, was responsible. The filing incorporated the postal agent's detailed report, which explained how loss was calculated. First, the postal agent identified 6,000 stock certificates (representing more than 160 million shares in Efoora), which were dubbed "victim" certificates because investors bought the securities and never saw any return. Next, the postal agent calculated the total amount paid for those outstanding securities. This figure was based on reports from investors of actual expenditures on "victim" certificates, and, where that information was not available, on the estimated amount someone would have paid for the stock based on the average share price at the time of the sale in question. The postal agent noted that the current value of Efoora's shares "was discounted to 'zero,' to maximize the recovery to investors," and so the total of $57,769,237 was simply the amount investors had paid for all outstanding shares. Along with its new calculation, the government gave the district court an appendix detailing the amounts lost by individual victims.
In March, the probation officer supplemented Dokich's PSR again. This time, it noted that even though the esti-mated losses had increased from $35 million to over $55 million, the government "was not seeking the [U.S. Sentencing Guidelines] enhancement for a loss of between $50,000,000 and $100,000,000." The probation officer disapproved of that decision and recommended that the district court use the $55,130,612 figure to calculate both restitution and Dokich's offense level under the guidelines. Dokich objected to the supplemental PSR; he took the position that he could have foreseen only $1 million in losses. In response, the government dismissed Dokich's estimate as meritless and reiterated that "[a]lthough the actual loss was more than $50 million, the government is not arguing for a higher guideline level."
Five days before the sentencing hearing, the government submitted a final calculation of loss to the victims and required restitution. It updated its calculation based on further review of information submitted by Efoora's victims, and it added close to $1 million in losses based on newly discovered securities called "Revenue Royalty Rights," which Efoora had sold to a number of investors. According to the final calculation, Dokich was responsible for $55,971,122.
At sentencing in July 2008, Dokich agreed to take responsibility for $10 million of fraudulent stock sales. The court, however, decided to accept the government's figures. The court noted that Efoora's victims "had invested in a situation in which they were defrauded... to the tune of the figures I have seen in the government's response," which reflected $20-50 million in loss. The district court used that range to calculate Dokich's sentence. Over the government's objection, the court relied on the April 2003 supplement to the guidelines. Adopting the sentencing recommendation from the supplemental PSR, the court increased Dokich's base offense level of six by 22 to reflect $20-50 million in loss, U.S.S.G. § 2B1.1(b)(1)(L), and by an additional six levels because the crime involved more than 250 victims, § 2B1.1(b)(2)(C). After reducing the range for acceptance of responsibility, the court found that Dokich's final offense level was 31, and it placed him in criminal history category I, resulting in a guidelines range of 108-135 months. The court sentenced Dokich to 84 months, below the calculated range.
At the end of the sentencing hearing, the district court turned to restitution. Noting that a restitution award was required by statute and lamenting that any award "would amount to tapping an empty barrel," the district court reviewed the government's filings on loss and the lengthy appendix detailing the experience of individual victims. At various points, the court recognized that the government had asked for restitution of "almost $56 million as to Mr. Dokich." After expressing concern that the number of victims would make restitution difficult to administer, the court concluded, "I will make the determination that the amounts of restitution are joint and several in the sum... that's provided by the government, $55,971,122." On the same day, the court entered a judgment and commitment order, which included restitution, and noted, "All the victims are listed in the list provided to the U.S. District Clerk's office." Dokich did not object to this part of the judgment.
We appointed Susan Kister to represent Dokich in his appeal. Unable to identify any non-frivolous issue, Attorney Kister filed a motion to withdraw. Anders v. California, 386 U.S. 738 (1967). Dokich responded, arguing that even though he had received a below-guidelines sentence, the district court should have sentenced him based on $10 million in loss, not $20-50 million. Although we found no merit in that argument, we noted that there was a conflict between the order imposing restitution in the amount of $55,971,122 and the guidelines calculation, which was based on a maximum of $50 million in loss. Concluding that "[a] restitution award can never exceed ...