Source: https://m.openjurist.org/131/f3d/540
Timestamp: 2020-04-03 02:33:05
Document Index: 170716414

Matched Legal Cases: ['§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2', '§ 2']

131 F3d 540 United States v. M Saacks | OpenJurist
131 F. 3d 540 - United States v. M Saacks
131 F3d 540 United States v. M Saacks
131 F.3d 540
12 Tex.Bankr.Ct.Rep. 31
Antoine M. SAACKS, Jr., Defendant-Appellant.
No. 97-30246.
Following his jury conviction on charges of bankruptcy fraud, Defendant-Appellant Antoine M. Saacks, Jr. was sentenced to twenty-four months imprisonment, a $7,000 fine, and payment of restitution. In appealing his sentence to this court, Saacks complains that the district court misapplied several of the United States Sentencing Guidelines (the Guidelines). More specifically, he asserts that the district court erred in (1) determining that, for purposes of § 2F1.1(b)(1)(G), the total amount of debts that he caused to be listed in the bankruptcy petition of Jimmy C's Sports Bar and Grill, Ltd. (Jimmy C's) was a proper measure of the loss that Saacks intended to inflict on the creditors of Jimmy C's, the debts of which Saacks had assumed personally; (2) imposing a two-level increase under § 2F1.1(b)(2)(B) after concluding that those creditors constitute "multiple victims"; and (3) deducing that bankruptcy fraud constitutes a violation of a judicial "process," thereby requiring a two-level increase under § 2F1.1(b)(3)(B). Convinced that the district court did not err reversibly in sentencing Saacks, we affirm.
The gravamen of the government's bankruptcy fraud case was that Saacks had (1) concealed from the creditors, the bankruptcy trustee, and the officers of the bankruptcy court, the significant facts that the debtor corporation had assets, that it had been sold, and that Saacks was personally liable for the pre-sale debts of the corporation; and (2) made false reports on the Bankruptcy Schedules and Statement of Financial Affairs. A jury convicted Saacks of seven counts of bankruptcy fraud for which he was eventually sentenced. His sentence was calculated by adding (1) a base offense level of six for fraud, pursuant to § 2F1.1(a); (2) a six-level increase because the scheme comprised a loss of over $70,000, pursuant to § 2F1.1(b)(1)(G); (3) a two-level increase for violating a judicial or administrative order or process, pursuant to § 2F1.1(b)(3)(B); and (4) a two-level increase for targeting multiple victims of the fraud, pursuant to § 2F1.1(b)(2)(B).
A. Loss Caused by Fraud
Section 2F1.1 of the Guidelines specifies a base offense level of six for fraud and provides for incremental increases in the offense level depending on, inter alia, the amount of loss caused by the fraud.1 Application Note 7 to § 2F1.1 defines loss in a case involving fraud as "the value of the money, property, or services unlawfully taken," and specifies that "[i]f an intended loss that the defendant was attempting to inflict can be determined, this figure will be used if it is greater than the actual loss."2 The district court's calculation of loss need not be determined with precision; it need only be a reasonable estimate.3
We review the sentencing court's determination of loss for clear error.4 "[A]s long as the determination is plausible in light of the record as a whole, clear error does not exist."5 Saacks emphasizes, though, that the question presented by his assignment of error regarding loss is not the amount of the loss vel non but the method used by the district court to calculate the loss. As thus framed, Saacks' complaint implicates an application of the Guidelines, which we review de novo.6
The weakest contention advanced by Saacks is that the district court erred in determining that his machinations involved "a scheme to defraud more than one victim." Without citation to authority, Saacks contends that the bankruptcy estate alone, and not the myriad pre-sale creditors of Jimmy C's, was the victim of the fraud for purposes of § 2F1.1(b)(2)(B). As urged by the government, however, the plain language of the Guidelines cannot be disregarded. We agree with the reasoning of the Ninth Circuit which, in upholding a district court's findings that the creditors and the bankruptcy trustee were victims of bankruptcy fraud, stated:
As with the amount of loss, we find no reversible error and therefore affirm the district court's two-level increase under § 2F1.1(b)(2)(B) for defrauding multiple victims.
Saacks' most vociferous complaint targets the district court's two-level increase for violating "any judicial or administrative order, injunction, decree or process not addressed elsewhere in the Guidelines," pursuant to § 2F1.1(b)(3)(B). The sentencing court reasoned that Saacks' "conduct involved a fraud on the bankruptcy system, which resulted in a violation of a judicial 'process.' "
Again, our base point in this analysis is § 2F1.1, the general sentencing provision for all fraud. In this context we find important the observation that in neither § 2F1.1 nor any other section of the Guidelines is there either a base offense level or an enhancement provision for bankruptcy fraud as such. Consequently, were we to stop with the general sentencing provisions for fraud, we would fail to make any distinction between the most pedestrian federal fraud offense and bankruptcy fraud with all of its implications of a scheme to dupe the bankruptcy court, the trustee, and the creditor or creditors of the debtor, i.e., the entire federal system of bankruptcy. If we imagine, for example, some simple fraud with a federal nexus implicating one defrauder's attempt to defraud two individuals ("multiple victims" under § 2F1.1(b)(2)(B)) for a targeted amount of $70,000 (the same level as the instant case for purposes of § 2F1.1(b)(1)(G)), our hypothetical defrauder would be sentenced under precisely the same offense level as Saacks, whose skulduggery directly affected the federal bankruptcy system and thus some seventy-five creditors, a bankruptcy trustee, and a bankruptcy judge. In casting about to see if the Guidelines contain any provision that would distinguish Saacks' conduct from our hypothetical simple defrauder we, like the district court before us, focus first and foremost on § 2F1.1(b)(3)(B), which calls for a two-level increase for violation of a judicial or administrative order or process.
Saacks insists that § 2F1.1(b)(3)(B) cannot have been intended to add two levels to fraud's base offense level of six in every sentencing of every person found guilty of bankruptcy fraud. Yet, he urges, that would be the result of deeming the standing orders of the bankruptcy court an "order" and the bankruptcy system a "process" for purposes of the subject subsection of the Guidelines. The principal thrust of Saacks' argument comes from his invoking Application Note 5, which states:
Subsection (b)(3)(B) provides an adjustment for violation of any judicial or administrative order, injunction, decree or process. If it is established that an entity the defendant controlled was a party to the prior proceeding and the defendant had knowledge of the prior decree, this provision applies even if the defendant was not a specifically named party in that prior case. For example, a defendant whose business was previously enjoined from selling a dangerous product, but who nonetheless engaged in fraudulent conduct to sell the product, would be subject to this provision.8
Recognizing that a majority of the circuits are of a different persuasion, Saacks attempts to distinguish the cases that have held that bankruptcy fraud warrants an increase under § 2F1.1(b)(3)(B). Saacks describes as "tautological" the Eight Circuit's reasoning in United States v. Lloyd, the first case to address the issue, which concluded that even though the defendant "did not violate a specific judicial order, injunction or decree ... [he] did violate a judicial process by fraudulently concealing assets from bankruptcy court officers."10 In criticizing Lloyd, Saacks notes that the court cited neither Application Note 5 nor any other authority for its position. Saacks also faults the Eleventh Circuit's decision in United States v. Bellew for the same reasons.11 And, Saacks likewise takes issue with the Seventh Circuit's majority opinion in United States v. Michalek.12
Consistent with his position that the Seventh Circuit has backed off from the position of the majority in Michalek, Saacks argues that a growing minority of the circuits--including the First Circuit14 and the Second Circuit15--have retreated from the automatic enhancement and now take the position that, without more, § 2F1.1(b)(3)(B) does not automatically mandate a two-level increase in every bankruptcy fraud sentencing.
Disagreeing with Saacks, the government insists that increasing the offense level for those convicted of bankruptcy fraud will not result in double-counting: As § 2F1.1 is a broad guideline covering a variety of crimes besides fraud, including deceit and forgery, adjustment of an offender's sentence based on the specific characteristic of his offense, such as the bankruptcy element of bankruptcy fraud, is appropriate.20 The government further bolsters its position in support of the sentencing court's two-level increase for Saacks by noting that, even if we were to find that bankruptcy does not constitute a judicial process, it must be an administrative process, to which § 2F1.1(b)(3)(B) applies with equal force.
On this matter of first impression in this circuit, the margin of the majority of the other circuits is admittedly less than overwhelming. And Saacks is far from frivolous in urging that we cast our lot with the significant minority position which rejects adding two levels to the base offense level for fraud every time it is used in the sentencing calculus for bankruptcy fraud. Perhaps his most compelling argument is the triple reference in Application Note 5 to "prior" proceedings, decrees, and cases. We nevertheless remain unconvinced and therefore elect to join the majority which recognizes bankruptcy fraud as implicating the violation of a judicial or administrative order or process within the contemplation of § 2F1.1(b)(3)(B). We find sound the reasoning of those circuits constituting the majority position, which emphasizes the fact that, even when the fraudulent debtor takes the very first act by filing his petition in bankruptcy, he is acting subsequently to the previously adopted and promulgated standing orders and standard forms, all of which command complete and truthful disclosure.
United States v. Smithson, 49 F.3d 138, 143 (5th Cir.1995)
United States v. Chappell, 6 F.3d 1095, 1101 (5th Cir.1993), cert. denied by Mitchem v. United States, 510 U.S. 1183, 114 S.Ct. 1232, 127 L.Ed.2d 576 (1994) and Shephard v. United States, 510 U.S. 1184, 114 S.Ct. 1235, 127 L.Ed.2d 579 (1994)
United States v. Ismoila, 100 F.3d 380, 396 (5th Cir.1996), cert. denied by Debowale v. United States, --- U.S. ----, 117 S.Ct. 1712, 137 L.Ed.2d 836 (1997) and Lawanson v. United States, --- U.S. ----, 117 S.Ct. 1858, 137 L.Ed.2d 1060 (1997)
United States v. Krenning, 93 F.3d 1257, 1270 (5th Cir.1996)
United States v. Nazifpour, 944 F.2d 472, 474 (9th Cir.1991) (per curiam) (quoting U.S.S.G. § 2F1.1 App. Note 3)
United States v. Alexander, 100 F.3d 24, 26 (5th Cir.1996), cert. denied, --- U.S. ----, 117 S.Ct. 1273, 137 L.Ed.2d 350 (1997) ("[W]here the commentary to a guideline section functions to interpret that section or to explain how it is to be applied, a sentencing court is bound to consider its implications, unless it is plainly erroneous or inconsistent with the guidelines.")
947 F.2d 339, 340 (8th Cir.1991)
35 F.3d 518, 521 (11th Cir.1994) (per curiam)(concluding that the defendant had violated a "judicial order" by disobeying the "mandate of the Bankruptcy Rules and Official Forms that a debtor truthfully disclose assets and liabilities")
54 F.3d 325 (7th Cir.1995) (concluding that the enhancement is applicable); see also United States v. Mohammad, 53 F.3d 1426 (7th Cir.1995)
Michalek, 54 F.3d at 336 (Ferguson, J., dissenting) (citations omitted). Saacks contends that the Seventh Circuit retreated from the majority view in Michalek when it decided United States v. Gunderson, 55 F.3d 1328 (7th Cir.1995), in which the court looked to Application Note 5 and stated: "From [the language of Application Note 5]. Gunderson concludes that 'it appears that the two-point enhancement at issue here is designed to apply when a defendant has had a previous warning.' We agree." Id. at 1333. As Gunderson had been given such a previous warning, however, the court determined that the increase was applicable. Id
United States v. Shadduck, 112 F.3d 523 (1st Cir.1997)
United States v. Carrozzella, 105 F.3d 796 (2d Cir.1997)
107 F.3d 1448, 1457 (10th Cir.1997)
See id.; see also United States v. Welch, 103 F.3d 906, 907-08 (9th Cir.1996)