Opinion ID: 3014569
Heading Depth: 1
Heading Rank: 2

Heading: Himler’s Intended Loss

Text: A District Court’s finding of intended loss is one of fact, and will not be disturbed unless clearly erroneous. See United States v. Geevers, 226 F.3d 186, 192-93 (3d Cir. 2000). Himler argues that the district court erred in finding that he intended to cause a loss of between $120,000 and $200,000. Under the Sentencing Guidelines, “intended loss” means “the pecuniary harm that was intended to result from the offense.” U.S.S.G. § 2B1.1 cmt. n.2 (A) (ii). Pursuant to Application Note 2 (A) (ii), “loss is the greater of actual loss or intended loss.” See also United States v. Nathan, 188 F.3d 190, 208 (3d Cir. 1999) (“In general, the loss from fraud is the financial loss actually suffered by the victim, or the loss that the criminal intended the victim to suffer if that is greater.”) (citing United States v. Maurello, 76 F.3d 1304, 1309 (3d Cir. 1996)). Application Note 2 (A) (ii) further provides: “ ‘Intended loss’ (I) means the pecuniary harm that was intended to result from the offense; and (II) includes pecuniary harm that would have been impossible or unlikely to occur (e.g., as in a government sting operation, or an insurance claim in which the claim exceeded the insured value).” Himler’s principal argument is that, in order to obtain an enhancement based on the alleged amount of intended loss, the government was required to prove that Himler 7 subjectively intended to cause that loss, whereas, as a matter of fact, Himler never actually intended for the loss to occur. To support this contention, Himler points to his testimony at the sentencing hearing in which he explained that he presented the counterfeit checks at the closing because he had promised his girlfriend that he would buy the condominium and was embarrassed to tell her he did not have the money to do so. Himler further explains that the fact that he did not want to take possession of the condominium shows that he had no intention of causing a loss: I didn’t want to take possession. When it went through, I didn’t know what to tell Carol. I told her the condominium was being painted because [I] didn’t want to go there. I was making every excuse in the world not to go there. I didn’t know what was going to happen. I knew somebody is going to have to come there, the checks weren’t good. I had no intention of taking that property. . . . Himler also urges this Court to find that he had no subjective intent to cause a loss of $120,000 to $200,000 because he did not expect the counterfeit checks to be accepted at the closing or to be honored by Citibank, the bank upon which they supposedly were drawn. Further, Himler stated that he did not anticipate that CSS would pay out funds it did not have, and that he never intended for anyone to lose any money as a result of his actions. In short, the thrust of Himler’s argument is that, although he handed over forged checks in order to buy the condominium, he was really just waiting to be caught and was, in fact, hoping to be caught. This line of argumentation is unconvincing. Himler had many opportunities to come forward and admit to the forgery had he really wanted to “get caught.” In Geevers, we explained that to “assume that Geevers did not want it all is to assume that had one of the banks somehow failed to detect his fraud and started sending Geevers monthly balance reports, Geevers would have refrained from taking any more of the money.” Geevers, 226 F.3d at 193. The equivalent scenario here would be to imagine that had the bank not caught on to the forgery, Himler would have 8 voluntarily returned the condominium and simply walked away. Given Himler’s continued silence in the face of the unraveling of his scheme, the “District Court could reject this proposition as unlikely.” Id. Himler also argues that the District Court based its finding solely on the face value amount of the forged checks and that, because this Court has rejected a per se rule that intended loss can be inferred from the face value of the check, the District Court committed an error of law. See id. at 188 (holding that intended loss “does not equal the face value of the deposited checks as a matter of law.”). Himler’s analysis is flawed. Geevers does establish that the “face value of the deposited checks is not to be mechanically assumed to be the intended loss.” Id. at 194. However, Geevers also holds that “a sentencing court may consider that as sufficient evidence that it was the intended loss.” Id. What Geevers stands for is not only that it is reasonable to infer that a defendant in Geevers’ position intends the full loss of the face value of his false checks, but also that the matter “is not to be determined as a question of law, but as one of fact.” Id. at 193. In the case at bar, Himler handed over two forged checks in the combined amount of $195,000 for the purpose of buying a condominium. It was reasonable for the District Court to infer that he intended to reap the benefit of all $195,000, despite his assertions to the contrary, in light of the fact that in the time between the closing and his arrest, he never once made any move to reveal his fraudulent actions. In a case involving fraudulent checks, the defendant may “proffer evidence about his or her true intentions in order to rebut the presumption that his or her fraudulent deposits may create.” Id. at 188. Himler proffered such evidence, but the District Court obviously did not credit it. Since a finding of intended loss is one of fact, it must be upheld on appeal absent clear error. See id. at 194. There was ample evidence for the District Court to find that Himler intended a loss between $120,000 and $200,000: first, while not dispositive, there was the face value of the checks themselves, equaling $195,000. Second, there was Himler’s continued silence and even affirmative acts to 9 perpetuate the fraud in the face of mounting questions about the authenticity of those checks. Those acts included his directions to “redeposit” the checks when the real estate agent called to tell him that the checks had been returned “without reason,” and, after the checks had been returned a second time, creating and cashing several phony payroll checks in order to placate CSS and keep the scheme alive. Given the totality of the evidence against him, including but not limited to the face value of the forged checks, we conclude that the District Court did not commit clear error in finding that Himler intended to cause a loss between $120,000 and $200,000. III. The District Court’s Sua Sponte Upward Departure This Court’s review of the permissibility of an upward departure is plenary. See United States v. Holmes, 193 F.3d 200, 203 (3d. Cir. 1999). In Burns v. United States, 501 U.S. 129, 138-39 (1991), the Supreme Court held that a district court cannot depart upward without providing notice to the parties that it intended to do so: [B]efore a district court can depart upward on a ground not identified as a ground for upward departure either in the presentence report or in a prehearing submission by the Government, [Fed. R. Crim. P.] 32 requires that the district court give the parties reasonable notice that it is contemplating such a ruling. This notice must specifically identify the ground on which the district court is contemplating an upward departure. Himler argues, and the government concedes, that the District Court erred when it departed upward without providing notice to the parties. Both parties agree that the PSR did not identify any ground for upward departure and that the government never requested one. Under these circumstances, the District Court erred as a matter of law in making an upward departure.1 1. The parties disagree as to the grounds on which the District Court departed upward. Relying on the written judgment, Himler concludes that the upward departure was made due to his “past record” and “problems [he] created for the victim.” The government relies on the oral 10 The government, however, contends that “this is only half the story,” and that the District Court’s error was harmless. A district court’s failure to provide notice before departing upward may be considered harmless unless the defendant can prove that he would have done things differently had notice been given. See, e.g., United States v. Reynoso, 254 F.3d 467, 475-76 (3d Cir. 2001) (failure to comply with Burns did not affect the defendant’s substantial rights because, had proper notice been given, there was nothing that defense counsel would have done differently at the sentencing hearing); United States v. Nappi, 243 F.3d 758, 770 (3d Cir. 2001) (failure to provide notice under Fed. R. Crim. P. 32 does not affect “substantial rights” unless the defendant “would have done something by way of argument or proof . . . that probably would have impacted upon the Court’s sentence”); United States v. Rivera, 192 F.3d 81, 88 (2d Cir. 1999) (holding that failure to provide notice before departing upward “may be harmless error unless the defendant can specify arguments he would have made that the district court did not consider”). The government contends that “the sentencing hearing focused primarily on the very issue upon which the court departed upward: the effect that Himler’s crime had on CSS.” The government argues that Himler and his counsel availed themselves of the opportunity at that hearing to judgment and argues that the District Court based the upward departure on its conclusion that Himler had caused an “economic tragedy” for the victim. Since we are not reaching the merits of the upward departure, we will not attempt to analyze what the grounds for the upward departure were, though we note that the grounds do seem somewhat confused and indeterminate. We also note that if, as Himler contends, the District Court departed upward based on the “problems [Himler] created for the victim,” the U.S.S.G. only provide for an upward departure when those problems rise to the level of extreme psychological injury. See U.S.S.G. § 5K2.3. If the District Court wishes to depart upward based on extreme psychological injury to the victim, it must make specific factual findings and articulate the reasons for the extent of the departure. See United States v. Jacobs, 167 F.3d 792, 798-801 (3d. Cir. 1999) (reversing an upward departure for extreme psychological injury based on the District Court’s failure to make findings). No such findings have been made in the case at bar. 11 present oral and written argument about why the offense level overstated the seriousness of the offense and that “every piece of evidence, every word of testimony, and every argument that could have been marshaled against an upward departure was raised in Himler’s defense.” In short, the government contends that notice of the District Court’s intention to depart upward would not have changed “either the substance or tenor of the debate.” We disagree. The burden is on the government to prove that the error was harmless. See United States v. Stevens, 223 F.3d 239, 242 n.4 (3d Cir. 2000). Some of our sister Circuits have held or implied that a district court’s failure to give notice of its intention to depart upward amounts to constitutional error, and thus that the government must prove that the error was harmless beyond a reasonable doubt. See, e.g., United States v. Lopreato, 83 F.3d 571, 577 (2d Cir. 1996); United States v. Paslay, 971 F.2d 667, 674 (11th Cir. 1992). We have not reached the issue whether a district court’s failure to give notice that it is contemplating an upward departure is constitutional error, and we need not do so here since the government has not met even the standard burden of proving that the error was harmless in this case. Both in her briefs and at oral argument, Himler’s counsel laid out a reasoned set of actions she would have undertaken on behalf of her client had she been on notice that an upward departure was being contemplated. She represents that, in addition to filing briefs arguing that the upward departure was not warranted under either the facts or the law, she would have “subpoenaed CSS’s and Matthew Curiale’s financial records to undermine those parties’ claims of calamitous losses, and to investigate whether those clients suffered losses, and whether those losses were paid out of Mr. Curiale’s personal funds as he claimed.” This information would bear upon whether the offense “endangered the solvency or financial security,” U.S.S.G. § 2B1.1 cmt. n.15 (A) (v), of CSS or Curiale, the victims of the scheme under Fed. R. Crim. P. 32 (i) (4) (B). Counsel explains that those records had not been subpoenaed because the presentence report and the Court made it clear that Himler was going to be sentenced on the basis of intended rather than actual loss. 12 In the same vein, counsel also points out that the District Court made no findings as required by Fed. R. Crim. P. 32 (i)(3)(B) and argues that had the Court provided Himler with notice that it intended to depart on this ground, Himler would have been entitled to discovery concerning the effect of the offense on the solvency or financial security of the victims. Similarly, counsel claims that she would also have mounted an additional defense against upward departure based on the fact that once the condominium sold on April 14, 2003 for $181,000, the figure of the actual loss caused by Himler plunged precipitously. Furthermore, counsel explained that she would have investigated the relationship between CSS, Curiale, and Hanna, the seller of the condominium, with an eye toward uncovering why CSS never attempted to void the transaction once the fraud was discovered. Finally, she states that she would have presented arguments that an upward departure was not permitted by U.S.S.G. § 2B1.1 cmt. n.15 (A)(iii)-(v). The government’s bare assertion that Himler would have done nothing differently had notice been given is convincingly refuted by defense counsel’s detailed explanations as to what, in fact, would have been done differently had notice been given. Under these circumstances, we cannot agree with the government’s contention that the District Court’s error was harmless. We will therefore vacate the judgment and remand to the District Court for resentencing so that it can provide Himler with the opportunity to put on a defense against the upward departure. Since we are remanding this case for a new sentencing hearing, we need not decide whether the District Court did, in fact, rule on the motion for downward departure, nor will we reach the merits of granting such a departure. Similarly, we will not reach the merits of the imposition of an upward departure. Rather, in order to give the District Court maximum flexibility at the resentencing hearing, we will leave these questions open for the District Court’s reconsideration and enable it to review the sentence as a whole.