Opinion ID: 172808
Heading Depth: 2
Heading Rank: 1

Heading: Griffith's challenge to the district court's loss calculation

Text: A district court's loss calculation at sentencing is a factual question we review for clear error. United States v. Ary, 518 F.3d 775, 787 (10th Cir.2008). Reversing for clear error `requires that, based on the entire evidence, we have a definite and firm conviction that a mistake has been committed.' United States v. Hahn, 551 F.3d 977, 979 (10th Cir.2008) (quoting O'Toole v. Northrop Grumman Corp., 499 F.3d 1218, 1221 (10th Cir.2007) (further quotation omitted)). We review de novo any legal questions underlying the district court's application of the Guidelines. United States v. Leach, 417 F.3d 1099, 1105 (10th Cir.2005). The Government bears the burden of proving loss by a preponderance of the evidence. United States v. Sutton, 520 F.3d 1259, 1262 (10th Cir.2008) (citing United States v. Schild, 269 F.3d 1198, 1200 (10th Cir.2001)).
Under the Sentencing Guidelines, loss means the greater of actual loss or intended loss, with actual loss defined as the reasonably foreseeable pecuniary harm that resulted from the offense. [5] U.S.S.G. ง 2B1.1, cmt. n. 3(A). For cases involving government benefits, loss is further defined as  not less than the value of the benefits obtained by unintended recipients or diverted to unintended uses.... For example, if the defendant was the intended recipient of food stamps having a value of $100 but fraudulently received food stamps having a value of $150, loss is $50. Id. cmt. n. 3(F)(ii) (emphasis added). Where evidence of direct loss is not available, the district court need only make a reasonable estimate of the loss. Id. cmt. n. 3(C); see Sutton, 520 F.3d at 1262-63. Further, the comments to the Guidelines instruct that we are to give appropriate deference to the district court's determination, because the sentencing judge is in a unique position to assess the evidence and estimate the loss based upon that evidence. U.S.S.G. ง 2B1.1, cmt. n. 3(C).
In calculating loss under the Guidelines, the district court does not limit itself to conduct underlying the offense of conviction, but rather may consider all of the defendant's relevant conduct. U.S.S.G. ง 1B1.3; see id. ง 1B1.2(b) (directing the district court, [a]fter determining the appropriate offense guideline section, to determine the applicable guideline range in accordance with ง 1B1.3 (Relevant Conduct)). In pertinent part, the Guidelines define relevant conduct as follows: (1)(A) all acts and omissions committed, aided, abetted, counseled, commanded, induced, procured, or willfully caused by the defendant... that occurred during the commission of the offense of conviction, in preparation for that offense, or in the course of attempting to avoid detection or responsibility for that offense; [and] (2) solely with respect to offenses of a character for which ง 3D1.2(d) would require grouping of multiple counts, [6] all acts and omissions described... above that were part of the same course of conduct or common scheme or plan as the offense of conviction. Id. ง 1B1.3(a) (footnote added). The Guidelines commentary further explains that For two or more offenses to constitute part of a common scheme or plan, they must be substantially connected to each other by at least one common factor, such as common victims, common accomplices, common purpose, or similar modus operandi.... .... Offenses that do not qualify as part of a common scheme or plan may nonetheless qualify as part of the same course of conduct if they are sufficiently connected or related to each other as to warrant the conclusion that they are part of a single episode, spree, or ongoing series of offenses. Id. ง 1B1.3, cmt. n. 9. `We have interpreted this language to mean that if the conduct is sufficiently similar and within the same temporal proximity, it may be considered relevant for purposes of determining the guideline range.' United States v. Williams, 292 F.3d 681, 685 (10th Cir.2002) (quoting United States v. McClelland, 141 F.3d 967, 973 (10th Cir. 1998)). Relevant conduct under the Guidelines thus `comprises more, often much more, than the offense of conviction itself, and may include uncharged and even acquitted conduct.' United States v. Altamirano-Quintero, 511 F.3d 1087, 1095 (10th Cir.2007) (quoting United States v. Allen, 488 F.3d 1244, 1254-55 (10th Cir. 2007)). Nonetheless, relevant conduct still must relate to the offense of conviction. Id. (quotation omitted). While we review for clear error the district court's factual findings in support of a determination of relevant conduct, we review the ultimate determination of relevant conduct de novo. United States v. Tran, 285 F.3d 934, 938 (10th Cir.2002).
Six other circuits have held that relevant conduct under the Guidelines must be criminal or unlawful. See, e.g., United States v. Chube, 538 F.3d 693, 702 (7th Cir.2008) (explaining that relevant conduct must be unlawful); United States v. Maken, 510 F.3d 654, 657-59 (6th Cir.2007) (reciting 6th Circuit precedent to the effect that relevant conduct must amount[ ] to an offense for which a criminal defendant could potentially be incarcerated); United States v. Culverhouse, 507 F.3d 888, 895 (5th Cir.2007) (An offense need not have resulted in a conviction to constitute relevant conduct under the guidelines, but the conduct must be criminal.); United States v. Dove, 247 F.3d 152, 155 (4th Cir.2001) (concluding that relevant conduct under the Guidelines must be criminal conduct); United States v. Dickler, 64 F.3d 818, 830-31 (3d Cir.1995) (same); United States v. Sheahan, 31 F.3d 595, 600 (8th Cir.1994) (same). Like this court, see Altamirano-Quintero, 511 F.3d at 1095, the First, Second, and Ninth Circuits have held that uncharged and even acquitted conduct may constitute relevant conduct under the Guidelines, but have not explicitly held that such conduct must be criminal or unlawful, see, e.g., United States v. Juwa, 508 F.3d 694, 700 (2d Cir.2007); United States v. Reyes-Echevarrํa, 345 F.3d 1, 7 (1st Cir.2003); United States v. Peyton, 353 F.3d 1080, 1089 (9th Cir.2003). Our description of relevant conduct as including uncharged and even acquitted conduct, Altamirano-Quintero, 511 F.3d at 1095 (quotation omitted), strongly suggests that the conduct at issue must at least be criminally chargeable. That suggestion comports with the reasoning of courts that have held that relevant conduct must be criminal or unlawful. See, e.g., United States v. Peterson, 101 F.3d 375, 385 (5th Cir.1996) (To hold otherwise would allow individuals to be punished by having their guideline range increased for activity which is not prohibited by law but merely morally distasteful or viewed as simply wrong by the sentencing court.); Dove, 247 F.3d at 155 (explaining that if relevant conduct need not be criminal, sentencing courts would become mired in the impossibly subjective task of determining the relative `benignness' of various legally permissible acts). Among those courts that have held that relevant conduct must be criminal, those that have taken up the question have also held that the criminal violation may be of either a federal or a state statute. See, e.g., Maken, 510 F.3d at 657-58; Dickler, 64 F.3d at 831; United States v. Bell, 46 F.3d 442, 445 (5th Cir.1995); see also United States v. Newbert, 952 F.2d 281, 285 (9th Cir.1991) (holding that under U.S.S.G. ง 1B1.3, conduct which could be the basis of state prosecution may be considered for sentencing purposes on a federal conviction for other conduct which was part of the same common scheme or plan). Agreeing with the reasoning of our sister circuits, and making explicit what has been implicit in our own precedent, we hold that for a district court to consider a defendant's conduct as relevant under the Sentencing Guidelines, the Government must prove by a preponderance of the evidence that the defendant (1) engaged in conduct (2) related to the offense of conviction pursuant to U.S.S.G. ง 1B1.3 and (3) constituting a criminal offense under either a federal or a state statute. [7]
The district court calculated loss based on Griffith's conduct underlying the offense of conviction as well as her relevant conduct in schem[ing] ... to defraud Mr. Norvell of his assets and income before she became his VA fiduciary. (R. vol. IV at 7.) At sentencing, the court explained that all acts committed by the defendant were part of the same course of conduct and a common scheme or plan as the offense of conviction, and that those acts clearly constitute law violations involving crimes [such] as larceny, embezzlement, [and] unauthorized use of access devices. ( Id. at 6.) Further, the acts determined to be relevant conduct are acts of fraud or deceit, criminal conduct for which [U.S.S.G. ง] 3D1.2(d) would require grouping. ( Id. ) The court then determined that Griffith's fraudulent course of conduct caused loss of $83,739, as follows: 1. $5,118.01 in direct loss conceded by Griffith, consisting of $695 used to pay for Griffith's bankruptcy filing; $100 used to pay off one of Griffith's personal loans; $160 in checks to Griffith's mother, Betty Spencer; $88.01 used to pay for women's clothing; $2,000 used as a down payment on a house in Griffith's name; and $2,075 in checks made payable to Griffith and deposited in her personal account. 2. $32,495 in direct loss not conceded by Griffith, consisting of $9,495 lost to Norvell when Griffith made numerous unauthorized cash withdrawals in the amount of $15,985, occasionally noting on checks that the cash would be used to pay bills. Griffith then failed to pay bills totaling $9,495; $7,000 lost to Norvell when Griffith induced him to sell a home he owned, resulting in issuance of a $15,000 proceeds check to Norvell and his son Ross; Griffith intercepted the check, forged Ross Norvell's name, and deposited the money into one of Norvell's accounts before causing a $9,000 cashier's check to be made payable to her from that account; [8] and $16,000 lost to Norvell when he traded in his 1939 Hudson, valued at $6,000, as a down payment on his purchase of a 2002 Pontiac, valued at $16,000, for Griffith's exclusive use, and financed the remainder of the $16,000 purchase price with a $10,000 installment loan. Griffith later failed to make payments on that loan, leading to the vehicle's repossession. 3. Estimated loss of $46,126, consisting of 60% of $76,876 in the following questionable expenditures, from which Griffith benefitted more than did Norvell: $15,960 (60% of $26,600) lost to Norvell when Griffith induced him to obtain a $26,600 mortgage loan and then dissipat[ed] this ... asset (Addendum to PSR at 9-10); $12,036 (60% of $20,060) lost to Norvell when Griffith dissipated the $6,000 balance of the $15,000 proceeds of the sale of the home referenced above, the $7,000 balance that had been in one of Norvell's accounts in 2001, and $7,060 in lump-sum VA payments; and $18,130 (60% of $30,216) lost to Norvell when Griffith misused his credit to accumulate debts of $30,216. Based on this loss calculation, and pursuant to Guideline ง 2B1.1(b)(1)(E), the district court increased Griffith's offense level by eight, because the loss was more than $70,000 but less than $120,000. The district court also stated, on the record, that even if it had found the loss to be less than $70,000, it would have imposed the same sentence of eighteen months' imprisonment. [9]
Griffith argues that the district court erred in two ways: by basing its loss calculation on facts alleged in the PSR but not proven by a preponderance; and by impermissibly including non-criminal conduct as relevant conduct under the Guidelines. We consider each argument in turn.
Prior to sentencing, Griffith objected to all but $5,118.01 of the district court's loss calculation. See supra ง II.A.3(1).
The record contains evidence demonstrating by a preponderance that beginning in mid-2003, while she was Norvell's fiduciary, Griffith began making unauthorized cash withdrawals (including checks made out to cash) from one of Norvell's bank accounts, sometimes making notations on the checks to the effect that the money was for payment of bills. These withdrawals are substantiated by copies of checks made payable to Cash or to Griffith, as well as by copies of cash withdrawal slips. During the period that Griffith was making these withdrawals, she failed to make payment on a number of Norvell's bills, in the amount of $9,495. The Government has provided copies of these bills, as well as clear evidence that they were not paid. [10] The Government thus proved the $9,495 direct loss by a preponderance. The Government likewise proved by a preponderance the direct loss of $7,000 from the sale of one of Norvell's properties in December 2002, shortly before the VA declared Norvell incompetent to handle [his] own financial affairs (R. vol. III. at 67) on January 13, 2003. The Government put on evidence that Griffith forged the signature of Norvell's son Ross on the check for the proceeds of this sale, deposited the check into one of Norvell's accounts, and then had a cashier's check issued to herself from that account. Far less compelling is the Government's evidence that Griffith should be held responsible for $16,000 in direct loss resulting from Norvell's purchase of a 2002 Pontiac for her exclusive use. After Norvell traded in his 1939 Hudson, valued at $6,000, for the down payment on the Pontiac, he financed the remainder of the $16,000 purchase price with a $10,000 installment loan. When Griffith failed to make payments on the installment loan, the vehicle was repossessed. Yet despite acknowledging the repossession of the Pontiac, which served as collateral on the installment loan, the PSR held Griffith accountable for the unpaid balance on that loan, and the district court adopted this element of the PSR's loss calculation. The Government failed to prove by a preponderance that Griffith's conduct caused a loss of $10,000 in unpaid loan debt where the collateral on that debt was seized. Therefore, the district court clearly erred in including this $10,000 debt in its direct loss calculation. [11]
To arrive at its calculation of $46,126 in estimated loss, the district court accepted the PSR's finding that Griffith was responsible for 60% of $78,876 in questionable expenditures made over the course of her relationship with Norvell. The court explained that the probation officer estimated loss by considering the victim's financial situation, his habits both prior to and after the involvement of the defendant in his life. (R. vol. IV at 10.) The probation officer then determined total funds available during the term of the defendant's involvement with Norvell, with those total funds consisting of income, loans, proceeds from the sale of assets, and credit expenditures. ( Id. at 10-11.) Based on Norvell's lifestyle, expenditures and credit history prior to Griffith's involvement in his affairs and his [financial] recovery since, the PSR deemed it reasonable to conclude that Griffith profited more from [the questionable] expenditures than [did] Norvell. (PSR at 9.) The PSR thus estimated that Griffith benefitted from 60% of those expenditures, while Norvell benefitted from 40%. The district court accepted this estimate, attributing to Griffith as loss 60% of the expenditures at issue. The [district] court need only make a reasonable estimate of the loss. U.S.S.G. ง 2B1.1, cmt. n. 3(C); see Ary, 518 F.3d at 788. Having carefully reviewed the record, we are satisfied that the district court's method of estimating loss in this case was reasonable. We are likewise satisfied that the Government proved by a preponderance that Griffith should be held accountable for the dissipation of 60% of $46,660 in Norvell's funds. These funds included a $26,600 mortgage loan, $6,000 in proceeds remaining from the sale of one of his properties after Griffith diverted $9,000 of those proceeds, the $7,000 balance Norvell had held in one of his bank accounts in 2001, and $7,060 in lump-sum benefit payments from the VA. We conclude that the Government failed to prove by a preponderance, however, that Griffith caused Norvell loss, as that term is defined in ง 2B1.1, when she misused [his] credit totaling $30,216. (Addendum to PSR at 11.) In short, the Government offered no evidence that this credit card debt was ever paid, and the commentary to the Guidelines makes clear that loss must constitute pecuniary harm. U.S.S.G. ง 2B1.1, cmt. n. 3(A)(i)-(iii). While we do not doubt that Griffith's conduct caused harm to Norvell's credit rating, pecuniary harm under the Guidelines does not include ... harm to reputation, or other noneconomic harm. Id., cmt. n. 3(A)(iii). Instead, such harm must be monetary or ... otherwise ... readily measurable in money. Id. Here, the Government did not put on evidence demonstrating that Griffith caused Norvell pecuniary harm, and thus loss, when she misused his credit. Nor did it allege or put on evidence that her conduct caused loss to victims other than Norvell, such as the credit card companies. Consequently, the district court clearly erred when it included in its loss calculation $18,130 attributable to Griffith's misuse of Norvell's credit.
The district court clearly erred in including $28,130 in its calculation of loss. Subtracting that amount from the court's overall loss calculation of $83,739 leaves us with total loss of $55,609. Pursuant to Guideline ง 2B1.1(b)(1)(D), the district court thus should have increased Griffith's offense level by six, rather than by eight, leaving her with an advisory sentencing range of twelve to eighteen months rather than eighteen to twenty-four months. However, because the district court stated on the record that it would have sentenced Griffith to the same term of imprisonment โ eighteen months โ even if it had found loss to be under $70,000, the court's error here was harmless. See Williams v. United States, 503 U.S. 193, 202-03, 112 S.Ct. 1112, 117 L.Ed.2d 341 (1992) (explaining that remand is not necessary to rectify an `incorrect application' of the Guidelines where the error was harmless, i.e., [where] the error did not affect the district court's selection of the sentence imposed); United States v. Graham, 466 F.3d 1234, 1239-40 (10th Cir. 2006). Here, had the district court properly calculated loss at $55,609, Griffith's sentence of eighteen months' imprisonment would have remained within her advisory Guideline range and thus would have been presumptively reasonable on appeal, see United States v. Mumma, 509 F.3d 1239, 1243 (10th Cir.2007). Because the district court's error in calculating loss was harmless, we need not remand for correction of that error.
In calculating loss derived from Griffith's relevant conduct, the district court took into account what it found to be Griffith's ongoing scheme to defraud Norvell of his money and assets, both before and after she became his VA fiduciary and payee, and both before and after she became his wife. In challenging this element of the loss calculation, Griffith emphasizes that in a case involving theft of government benefits, the Guidelines commentary defines loss as not less than the value of the benefits obtained by unintended recipients or diverted to unintended uses. U.S.S.G. ง 2B1.1, cmt. n. 3(F)(ii). Griffith misreads this commentary, eliding the phrase not less than and asserting that [t]o establish the appropriate loss amount, the government had to establish the dollar amount of VA benefits that were diverted from Norvell's support, maintenance and benefit. (Aplt. br. at 15.) Far from establishing a ceiling on loss under ง 2B1.1, however, the commentary Griffith cites instead establishes a floor for that calculation. Therefore, the district court did not err in factoring into its loss calculation harm caused by Griffith's relevant conduct aside from that underlying the offense of conviction, which was theft of Norvell's VA benefits. See U.S.S.G. ง 1B1.3; Altamirano-Quintero, 511 F.3d at 1095. Griffith further argues that even if the district court correctly considered conduct outside the offense of conviction, it erred in considering conduct that was not criminal. The gist of this argument is twofold: first, that in the brief period in which Griffith was Norvell's spouse-payee, she was legally entitled to use his VA benefits for her own purposes; and second, that [e]ven assuming that prior to becoming his payee Griffith allowed or encouraged Norvell to be generous toward her with his money, that conduct would not be criminal. (Aplt. br. at 18.) As to the first claim, the district court found that Griffith's marriage to Norvell was a sham, intended primarily, if not solely, to further [Griffith's] fraudulent plans. (R. vol. IV at 7.) In other words, the marriage itself was part of the same course of conduct and a common scheme or plan as the offense of conviction. ( Id. at 6.) Having reviewed the record evidence, we cannot say this finding was clearly erroneous. As to Griffith's second claim, the district court found that the conduct underlying her ongoing scheme ... to defraud Mr. Norvell of his assets and income, carried out both while [she was] acting informally as a helper for his financial affairs and while she was a formal Veterans Administration fiduciary, constituted criminal behavior. ( Id. at 7.) The court explained that Griffith's repeated acts of fraud against Norvell involv[ed] crimes [such] as larceny, embezzlement, [and] unauthorized use of access devices. ( Id. at 6.) The district court did not identify the specific state and federal statutes under which Griffith could have been charged for those crimes. However, the PSR, which the court adopted in its entirety and without change, explained that Griffith's relevant conduct involve[d] acts of Larceny by fraud and stealth, in violation of 21 Okla. St[at]. Ann. ง 1701[;] Embezzlement, in violation of 21 Okl[a]. St[at]. Ann. ง 1451[;] and Fraud and Related Activity in Connection with Access Device, contrary to 18 U.S.C. ง 1029. (Addendum to PSR at 4.) Based on our holding today that in order to consider non-offense conduct as relevant conduct under the Guidelines, the Government must prove by a preponderance of the evidence that the defendant (1) engaged in conduct (2) related to the offense of conviction pursuant to U.S.S.G. ง 1B1.3 and (3) constituting a criminal offense under either a federal or a state statute, we conclude that the district court did not err in characterizing as relevant conduct Griffith's attempts to defraud Norvell both before she became his VA fiduciary and payee and after she became his wife. For the foregoing reasons, we AFFIRM the district court's loss calculation.