Opinion ID: 3002613
Heading Depth: 2
Heading Rank: 1

Heading: Guideline loss calculation

Text: With regard to Middlebrook’s sentencing argument, we note that he advances an argument on appeal that is No. 08-1074 9 different from the argument that he presented at the district court during sentencing. Below he argued that “the proper loss calculation in bankruptcy fraud cases is the amount of the debt that the defendant sought to discharge in bankruptcy.” On appeal, he asserts that the district court erred in including the full value of the shareholder note in the guideline loss amount because the non-disclosure of the note did not cause actual or intended loss. The government contends that this argument, not having been raised below, is forfeited. Thus, the government contends, we should review the sentencing loss calculation for plain error. Middlebrook responds that he preserved the argument. He argues that below he merely presented an alternative theory as to why the amount of the note should not be included, but that the court and the government were sufficiently alerted that Middlebrook was challenging the inclusion of the shareholder note in the loss calculations based on his subjective intent. He cites United States v. Lane, 323 F.3d 568 (7th Cir. 2003) to argue that we have “allowed objections raised below that are different from those raised on appeal.” In Lane, defendant Lane argued that the district court improperly allowed the government to present evidence relating to Lane’s indebtedness unrelated to the debt at issue. The government argued that Lane had waived this issue on appeal because before the district court Lane objected to the extrinsic act evidence on the basis that it would portray him as a “deadbeat” and on appeal he argued that the evidence was used to portray him as a 10 No. 08-1074 “liar.” Lane, 323 F.3d at 579. We held in that case that Lane had adequately preserved his claim on appeal. We noted that at trial Lane had made repeated objections to the other debt evidence. We further noted that the government had agreed with the district court that Lane had preserved his objections to the other debt evidence. We held that the government’s distinction between a “deadbeat” and a “liar” was de minimis and Lane’s objections at the district court sufficiently alerted the court and the government as to the arguments that Lane raised on appeal. Id. This case is distinguishable from the Lane case. In Lane, the government conceded that the issue was preserved, and the argument that the defendant made on appeal was basically the same as the argument he made below. By contrast, Middlebrook’s argument on appeal is completely different from the argument he raised at sentencing below. He advances a different theory for excluding the promissory note from the sentencing calculation. We conclude that Middlebrook forfeited his sentencing argument. Thus, we review the sentencing loss calculation for plain error. See United States v. Jaimes-Jaimes, 406 F.3d 845, 847 (7th Cir. 2005). It is well established that “the plain error standard allows appellate courts to correct only particularly egregious errors for the purpose of preventing a miscarriage of justice.” United States v. Conley, 291 F.3d 464, 470 (7th Cir. 2002) (citing Lieberman v. Washington, 128 F.3d 1085, 1095 (7th Cir. 1997)). Even if there has been plain error, we will not reverse unless the error “seriously No. 08-1074 11 affects the fairness, integrity, or public reputation of judicial proceedings.” United States v. Cusimano, 148 F.3d 824, 828 (7th Cir. 1998). In terms of the merits of Middlebrook’s argument, Application Note 3(A) to Guideline 2B1.1(b)(1) states that “loss” is the “greater of actual loss or intended loss.” We have described the term “loss” as used in the guidelines to be “the value of the property ‘taken, damaged, or destroyed,’ i.e., the actual loss . . . or the property the defendant intended to take” (the “intended loss”). United States v. Johnson, 16 F.3d 166, 170 (7th Cir. 1994). “Actual loss” is the reasonably foreseeable pecuniary harm that resulted from the offense. Application Note 3(A)(i) to USSG § 2B1.1. “Intended loss” is “the pecuniary harm that was intended to result from the offense” and it includes “intended pecuniary harm that would have been impossible or unlikely to occur.” Application Note 3(A)(ii) to USSG § 2B1.1. In determining the intended loss amount, the district court must consider the defendant’s subjective intent. Johnson, 16 F.3d at 172. When the intended loss exceeds the actual loss, the district court uses the intended loss in calculating the defendant’s sentence. Id. at 170. Middlebrook argues that his fraud caused no actual loss because the shareholder note had no value, and that he did not intend to cause any loss because he knew the shareholder note did not have any value. He relies heavily on United States v. Berheide, 421 F.3d 538 (7th Cir. 2005) and United States v. Fearman, 297 F.3d 660 (7th Cir. 2002). In Berheide, the defendant obtained a $550,000 loan from a 12 No. 08-1074 bank, but soon thereafter was unable to pay back the loan. The remaining balance was $521,000. He induced the bank to delay its collection efforts by fraudulently granting the bank a secured interest in property he did not own. The district court found a loss of $521,000, the amount of the outstanding loan at the time of the fraudulent security interest. On appeal, we reversed. We held that the defendant had no actual loss because he did not have any assets to pay back the loan. We also held that the district court improperly calculated intended loss because the defendant did not believe that his assets were of a value anywhere near $521,000. Berheide, 421 F.3d at 540-42. In Fearman, a similar fraud case, the district court held that the actual loss was zero, but that there was an intended loss based on the amount that a third party mortgagee was planning to bid for a building. We held that the true measure of intended loss was in the mind of the defendant, and that there was no basis to conclude that the defendant thought the value of the building was more than zero, let alone the amount that the mortgagee intended to bid. Because the defendant knew the building was worthless, the amount the mortgagee would have offered for the building was not the appropriate amount of loss. Fearman, 297 F.3d at 661-62. In this case, the district court included the loss amount from the promissory note in the sentencing calculation because it found that Middlebrook intended that loss. There was ample evidence for the district court to conclude that Middlebrook believed that he had the assets to No. 08-1074 13 pay back the value of the note, and he intended to cause loss to the creditors by concealing the note from them. The note was listed as an asset in the Federal Telecom financial statement provided to a bank two months before the bankruptcy filing. Further, Middlebrook’s personal financial statement as of March 31, 2001 stated that he had a net worth of $2,669,255 after taking into account his liability for the shareholder note. And Middlebrook’s written objection to the PSR gave reason to believe that as of the filing of the Federal Telecom bankruptcy about five months later, his financial situation had not materially changed. The district court was “only required to make a ‘reasonable estimate of the loss.’ ” United States v. Radziszewski, 474 F.3d 480, 486 (7th Cir. 2007) (quoting Application Note 3(C) to USSG § 2B1.1). The district court’s decision to include the value of the promissory note in its calculation as intended loss seems reasonable. It certainly does not amount to plain error. The government also argues that even if the district court agreed with Middlebrook’s argument to exclude the note from the loss calculations, the sentence still would have been 32 months. The offense level would have gone from 28 to 26, and this would have reduced the guideline range to 63-78 months. The district court judge stated that he would have imposed the 32 month sentence as a downward deviation even if his calculation was off. This argument also has merit. We need not remand for resentencing. 14 No. 08-1074