Opinion ID: 624033
Heading Depth: 1
Heading Rank: 4

Heading: Morris's Claims

Text: Morris argues that the wire and mail fraud statutes, as applied to him, exceed Congress's authority to legislate in violation of the Tenth Amendment. Morris raises this constitutional challenge for the first time on appeal. Defenses not raised or litigated in the district court normally cannot be argued for the first time on appeal. Gardner v. Meyers, 491 F.2d 1184, 1190 (8th Cir.1974). This rule, however, is one of prudence and discretion. Ward v. Resolution Trust Corp., 972 F.2d 196, 199 (8th Cir.1992). Typically, constitutional challenges to the charging statute can be raised during pretrial motions, specifically, in a motion to dismiss the indictment. E.g. United States v. Smith, 655 F.3d 839, 848 (8th Cir.2011) (reviewing claim when defendant raised constitutional challenge in a motion to dismiss the indictment). In this case, presenting this argument to the district court would have been futile because, at the time, this Court denied Tenth Amendment prudential standing to individuals `absent the involvement of a state or its instrumentalities.' Id. (quoting United States v. Hacker, 565 F.3d 522, 526 (8th Cir.2009)). However, the Supreme Court recently held that criminal defendants may challenge statutes as violative of the Tenth Amendment. Id. (citing Bond v. United States, ___ U.S. ___, 131 S.Ct. 2355, 2366-67, 180 L.Ed.2d 269 (2011)). Morris did not have prudential standing until after the Bond decision conferred it upon him, and accordingly, he could not make this constitutional challenge to the charging statute. Therefore, we will address the merits of his argument. We review federal constitutional questions, such as whether Congress had the power to enact a statute, de novo. United States v. Sabri, 326 F.3d 937, 945 (8th Cir.2003). The Tenth Amendment provides that powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people. U.S. Const. amend. X. A Tenth Amendment challenge to a statute necessarily fails if the statute is a valid exercise of a power relegated to Congress. United States v. Wright, 128 F.3d 1274, 1276 (8th Cir.1997) (finding challenged statute to be valid exercise of Congress's power to regulate commerce). Article I, Section 8, Clause 7 of the United States Constitution authorizes Congress To establish Post Offices and post Roads[.] The Postal Power allows Congress to regulate the entire postal system. Ex Parte Rapier, 143 U.S. 110, 113, 12 S.Ct. 374, 36 L.Ed. 93 (1892). The overt act of putting a letter into the post office of the United States is a matter that Congress may regulate.... Whatever the limits to its power, it may forbid any such acts done in furtherance of a scheme it regards as contrary to public policy, whether it can forbid the scheme or not. Badders v. United States, 240 U.S. 391, 393, 36 S.Ct. 367, 60 L.Ed. 706 (1916) (internal citation omitted). Congress's Postal Power provides the jurisdictional basis for 18 U.S.C. § 1341, the mail fraud statute. United States v. Elliott, 89 F.3d 1360, 1364 (8th Cir.1996). Thus, Morris's Tenth Amendment challenge to the mail fraud statute necessarily fails because the mail fraud statute is a legitimate exercise of Congress's Postal Power. Wright, 128 F.3d at 1276. Regarding Morris's challenge to the wire fraud statute, 18 U.S.C. § 1343, Morris ignores Article I, Section 8 of the United States Constitution, the Commerce Clause, as a source of legislative authority. [Section] 1343 [is] within the extensive reach of the Commerce Clause. United States v. Hook, 195 F.3d 299, 310 (7th Cir.1999). Therefore, Morris's Tenth Amendment challenge to the wire fraud statute also necessarily fails. Wright, 128 F.3d at 1276.
Morris asserts that the district court erred by not allowing the jury to view the live CyberStudy website thereby denying him his Fifth and Sixth Amendment right to a complete defense. We review a district court's evidentiary rulings for clear abuse of discretion, reversing only when an improper evidentiary ruling affected the defendant's substantial rights or had more than a slight influence on the verdict. United States v. Watson, 650 F.3d 1084, 1088 (8th Cir.2011) (quoting United States v. Shields, 497 F.3d 789, 792 (8th Cir.2007)). At the beginning of the trial, Louper-Morris requested permission to introduce the 2010 version of the online CyberStudy tutorial during her testimony. The district court deferred the ruling until Louper-Morris was to testify. The district court again raised the issue before Louper-Morris's opening statement. [9] It instructed counsel that any demonstration of the tutorial should be done through screen shots that can be moved to on a shot by shot basis, much like clicking onto another site on the Internet. The district court expressed concern about the jury's access to exhibits and opined that the screen shots would enable the jury to review the exhibit at a later time. Thus, the district court excluded admission of the live website. The United States argued that the screen shots would not be representative of the website during the relevant time period, 2000-2002. The district court noted the concern and stated that the issue would be taken up later. Neither Louper-Morris nor Morris sought admission of a screen-shot exhibit. The district court did not abuse its discretion in precluding admission of the live 2010 CyberStudy website. First, the district court was clearly concerned about the jury's access to exhibits, which is a legitimate reason to change the format of the evidence. Second, Morris has not demonstrated how a screen-shot exhibit is inferior to live website or how a screen-shot exhibit is prejudicial to him. Third, we cannot ignore the fact that once the district court ruled to allow only the screen-shot exhibit, Appellants abandoned their efforts to proffer any representation of the CyberStudy website for the jury's viewing. Finally, Appellants sought admission of the 2010 website, which, as the United States pointed out at trial and on appeal, would have limited probative value of the 2000-2002 website. In light of the overwhelming evidence against Appellants and the limited relevance of the 2010 CyberStudy website, the district court did not abuse its discretion in denying admission of the live 2010 website.
Morris contends that the district court improperly applied the two-level sophisticated-means enhancement under U.S.S.G. § 2B1.1(b)(9)(C) and the four-level leadership enhancement under U.S.S.G. § 3B1.1(a). We apply a deferential abuse-of-discretion standard when reviewing the imposition of sentences. Gall v. United States, 552 U.S. at 41, 128 S.Ct. 586. In reviewing for procedural error, we review the district court's application of the [G]uidelines de novo and its factual findings for clear error. Bennett, 659 F.3d at 714 (citations & quotation omitted). Under the sophisticated-means enhancement, a defendant's base offense level may be increased by two levels if the offense otherwise involved sophisticated means. U.S.S.G. § 2B1.1(b)(9)(C). Sophisticated means is defined as especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense. U.S.S.G. § 2B1.1(b)(9)(C) cmt. n.8(B). The sophisticated-means enhancement is appropriate when the offense conduct, viewed as a whole, was notably more intricate than that of the garden-variety [offense]. United States v. Hance, 501 F.3d 900, 909 (8th Cir.2007). Even if any single step is not complicated, repetitive and coordinated conduct can amount to a sophisticated scheme. United States v. Fiorito, 640 F.3d 338, 351 (8th Cir.2011) (quoting United States v. Bistrup, 449 F.3d 873, 882 (8th Cir.2006)). Morris does not dispute the district court's factual findings that formed the basis of the sophisticated-means enhancement. Rather, he contends that the district court erred in its legal conclusion that the fraud was sophisticated. We disagree. The CyberStudy fraud involved a vast marketing scheme that included mobilizing various community leaders. It involved lobbying state agencies including the Minnesota Department of Revenue and the Minnesota Attorney General. The fraud required the preparation of thousands of tax returns and power-of-attorney forms, endorsed with fraudulent signatures. Cf. United States v. Septon, 557 F.3d 934, 937 (8th Cir.2009) (affirming application of the sophisticated-means enhancement where a scheme involved submitting numerous loan applications to lenders containing forged signatures, forged notary stamps, and falsified or altered [documents]). Finally, the fraud required the creation of a fake pool loan allegedly financed by Rev. McAfee's organization, Salem, Inc. This coordinated conduct amounts to a sophisticated scheme. The district court did not err in applying the sophisticated-means enhancement. Morris also argues that the district court erred in applying the four-level leadership enhancement pursuant to U.S.S.G. § 3B1.1(a) because he was at worse,... a manager or supervisor of the scheme[,] and his mother, Louper-Morris, was the true leader and figurehead of the organization. The district court considered and rejected this argument. It stated: As to the leader or organizer objection relative to paragraph 42, the Court will overrule the defense objection. I have considered this carefully and considered dropping this to an organizer or a manager, I guess, rather than a leader/organizer which would be three points, but having once again gone through the nature of the role that was played by Mr. Morris in this, I just find that I cannot change that recommendation that the probation office has made. A leadership role is determined by the nature of defendant's role in the offense, the recruitment of accomplices, the degree of participation in planning or organizing the offense. United States v. Williams, 605 F.3d 556, 570 (8th Cir.2010) (quoting United States v. Ortiz-Martinez, 1 F.3d 662, 677 (8th Cir.1993)). A defendant's decision-making authority... and the degree of control and authority that the defendant exercised over others is indicative of whether the defendant had a leadership role in the offense. Id. (quoting United States v. Del Toro-Aguilera, 138 F.3d 340, 342 (8th Cir.1998)). The leadership enhancement does not apply solely to those who first instigated the criminal activity, and the defendant need not be the only organizer or leader. United States v. Bolden, 596 F.3d 976, 984 (8th Cir.2010). Like the district court, we disagree with Morris's characterization of his role in the CyberStudy fraud. Denita Hollie testified that Morris had a leadership position with CyberStudy. She stated that although he did not generate many of the ideas that propelled the scheme, he helped implement Louper-Morris's ideas by instructing employees. Morgan Brown, Denita Hollie, Benita Williams, and Lyman Locket each testified that Morris acted as CyberStudy's attorney. As the company's attorney, he had a degree of authority. He drafted all of the legal documents for the organization including customer agreements and letters threatening collection actions and immigration actions. He also negotiated the K-MartCyberStudy computer contract. Carlos Granados testified that Morris was also in charge of all banking for the company. Lastly, Morris, like Louper-Morris, took a substantial amount of money from CyberStudy's bank account for personal use. These facts support the district court's determination that Morris was a leader or organizer within the context U.S.S.G. § 3B1.1(a). The district court did not err by enhancing Morris's sentence by four levels for his leadership role.
Morris argues that the district court's restitution order improperly included restitution to K-Mart, who was already receiving compensation from a settlement agreement. He asserts that the restitution order improperly doubly compensates K-Mart through the civil settlement and criminal restitution. After a few years of litigation, CyberStudy entered into a settlement agreement in which it was to pay K-Mart $610,000 in compensation for breaching the computer contract. CyberStudy failed to make any payments and, in October 2003, a judgment for $1,211,134.03 plus interest and attorney's fees was entered against CyberStudy for this failure. In this criminal case, the district court imposed mandatory restitution in the amount of $3,562,502.74-$2,351,368.71 owed to the Minnesota Department of Revenue and $1,211,134.03 owed to K-Mart. Appellants were held jointly and severally responsible for the restitution payments. Morris admitted on cross-examination that Appellants had not paid any amount on the civil judgment. Ordinarily, we review restitution awards for an abuse of discretion. United States v. Jefferson, 652 F.3d 927, 932 (8th Cir.2011). Morris, however, did not challenge the restitution order at sentencing. We therefore review the restitution order for plain error. United States v. Piggie, 303 F.3d 923, 928 (8th Cir.2002); United States v. Riebold, 135 F.3d 1226, 1231 (8th Cir.1998). Plain error review is extremely narrow and is limited to those errors which are so obvious or otherwise flawed as to seriously undermine the fairness, integrity, or public reputation of judicial proceedings. Piggie, 303 F.3d at 928 (quoting United States v. Beck, 250 F.3d 1163, 1166 (8th Cir.2001)). The Mandatory Victims Restitution Act (MVRA), 18 U.S.C. §§ 3663A-3664, requires individuals who are convicted of wire fraud to pay restitution to their victims. United States v. Mancini, 624 F.3d 879, 882 (8th Cir.2010); 18 U.S.C. § 3663A(c)(1)(A)(ii) (ordering mandatory restitution for victims of an offense against property under this title, ... including any offense committed by fraud or deceit). The MVRA instructs that, [a]ny amount paid to a victim under an order of restitution shall be reduced by any amount later recovered as compensatory damages for the same loss by the victim in(A) any Federal civil proceeding[.] 18 U.S.C. § 3664(j)(2)(A). Although the purpose of the MVRA is to make victims whole and compensate them for their losses, United States v. Frazier, 651 F.3d 899, 904 (8th Cir.2011), the MVRA does not allow victims to obtain double recovery or a windfall through restitution. Id. at 910-11; United States v. Ruff, 420 F.3d 772, 775 (8th Cir.2005) ( Ruff I ); see also United States v. Manzer, 69 F.3d 222, 230 (8th Cir.1995) (finding that the MVRA's precursor, the Victim and Witness Protection Act of 1982, does not allow double recovery for the same loss through both a restitution order and a civil judgment); United States v. Gaultier, 727 F.2d 711, 716 (8th Cir.1984). Nevertheless, Morris's argument is without merit. By Morris's own admission, K-Mart has yet to receive any payments in satisfaction of the civil judgment. Therefore, Morris has failed to show that enforcement of the restitution order would result in double recovery for K-Mart. Cf. United States v. Ruff, 472 F.3d 1044, 1047 (8th Cir.2007) ( Ruff II ) (finding that the district court did not plainly err in denying Ruff's request to offset the restitution amount with the forfeiture proceeds in part because Ruff did not show that the victim was receiving double recovery). If either Appellant begins to make payments on the civil judgment, either he or she may seek in the district court a reduction of the restitution order to credit or offset amounts recovered by K-Mart. Frazier, 651 F.3d at 910-11; Manzer, 69 F.3d at 230; Gaultier, 727 F.2d at 716. Absent evidence of a double recovery, we can say that the district court did not plainly err in awarding restitution to K-Mart even though K-Mart can enforce a civil judgment against Appellants.