Opinion ID: 4123854
Heading Depth: 3
Heading Rank: 1

Heading: The Bank-Fraud Conspiracy

Text: Under the sentencing guideline for fraud, the amount of loss heavily influences the offense level. See USSG § 2B1.1(b)(1). Here, the district court found that Pielsticker’s relevant conduct included $11,464,560.08 in bank-fraud losses. Under USSG § 2B1.1(b)(1)(K), Pielsticker received a 20-level increase for losses exceeding $7 million but not more than $20 million. Pielsticker challenges (1) the district court’s calculation methodology; (2) its finding that the total loss was $11,464,560.08; and (3) its finding that Pielsticker entered the bank-fraud conspiracy 9 from its outset. We hold that the district court did not err in calculating the amount of loss and that the record supports its factual findings.
Pielsticker challenges the district court’s loss-calculation methodology associated with the bank-fraud conspiracy, arguing that the district court failed to “articulate any methodology whatsoever.” Appellant Opening Br. at 50. “Loss” under the guidelines is the greater of intended or actual loss. USSG § 2B1.1, cmt. n.3(A). Actual loss is “the reasonably foreseeable pecuniary harm that resulted from the offense.” Id., cmt. n.3(A)(i). And pecuniary harm is harm that is monetary or readily measureable in money. Id., cmt. n.3(A)(iii). In calculating loss, the district court “need only make a reasonable estimate of the loss . . . . [and its] loss determination is entitled to appropriate deference.” Id., cmt. n.3(c). Pielsticker argues that the district court erred by failing to state its methodology. But the district court first found that Arrow’s inflated invoices totaled $20,922,058.25, and then subtracted Recourse Accounts and credits to arrive at the Bank’s total loss of $11,464,560.08. From this, we have no problem identifying the district court’s methodology in calculating actual loss. And this methodology met § 2B1.1’s direction to reduce loss by “the money returned.” USSG § 2B1.1, cmt. n.3(E)(i). Thus, we find that Pielsticker has failed to demonstrate that the district court employed an improper loss-calculation methodology. 10
Pielsticker challenges the district court’s finding that the Bank suffered $11,464,560.08 in bank-fraud loss, arguing that this amount lacks evidentiary support. Based on the Bank’s May 1, 2015 victim-impact statement, the PSR calculated $11,464,560.08 in loss. In response, Pielsticker objected to the Bank’s “bare conclusion of its loss, without any supporting back-up.” Appellant App. vol. 4 at 672. He also objected to the PSR, mentioning that the Bank had asserted different loss amounts over time and questioning whether the Bank had reduced its claim by legitimate invoice amounts and collections after the fraud. In its revised PSR, the probation office rejected Pielsticker’s objection, explaining in an addendum that the Bank’s loss calculations had decreased after “accounting for recourses and payment of legitimate invoices.” Appellant App. vol. 5 at 919. The probation office acknowledged that the Bank’s loss calculation had fluctuated, but noted that the calculated losses averaged $12,284,523. Had the record ended here, we might sympathize more with Pielsticker’s position. But instead the record shows that four days before Pielsticker’s October 8, 2015 sentencing, Pielsticker’s counsel entered into a “Stipulation Regarding Testimony of [the Bank] Representatives” to enable the court to accept the stipulation’s contents as the Bank’s testimony in lieu of having a representative 11 testify.5 Appellant App. vol. 3 at 621. Included within this testimony was the following: During the course of the scheme, Arrow submitted false invoices to [the Bank] totaling at least $20,900,000. As a result, [the Bank] suffered a loss of at least $11,400,000. This is a conservative calculation of [the Bank’s] losses resulting directly from the Accounts Receivable . . . . This loss takes into account all collection activity, including collateral obtained after Arrow closed. Appellant App. vol. 3 at 622. This testimony supports the district court’s bank-fraud loss finding by bolstering the Bank’s victim-impact statement with testimony. Using a “conservative calculation,” the Bank’s written testimony estimates the Bank’s losses near the Bank’s slightly higher6 figure in its victim-impact statement from four months earlier. Appellant App. vol. 3 at 623. And, because Pielsticker stipulated to the written statement as the Bank’s testimony, the district court was entitled to rely on it as evidence. United States v. Spann, 515 F.2d 579, 580-83 (10th Cir. 1975) (stating 5 At oral argument, Pielsticker’s counsel cryptically justified the decision to stipulate but later maintain his present position as being for tactical reasons. Oral Argument at 4:30-4:32. Whatever tactical reason Pielsticker had for stipulating—to require a remand for a more precise calculation?—his stipulation certainly means that he chose not to cross-examine the Bank’s witnesses about the bases for their loss figure. His stipulating led to his present complaint—and hurt the district court’s ability to hear more precise information on loss. 6 For some reason, the Bank, in the written testimony stipulated for admission to the district court, rounded its losses to $11.4 million, rather than use the more precise $11,464,560.08 given in its victim-impact statement and used in the PSR. The Bank’s written testimony described its rounded number as a “conservative estimate.” Appellant App. vol. 3 at 623. 12 that a jury may rely on testimony admitted into evidence by the parties’ stipulation in reaching its decision). Now Pielsticker attacks the Bank’s written testimony as unreliable for stating an unsupported conclusion. He argues that to calculate the bank-fraud losses properly, the district court would need to analyze each of the “hundreds, if not thousands, of inflated invoices” for fraud, for recourse payments, and for any other collections. Appellant Opening Br. at 46. In other words, Pielsticker challenges the worth of the very evidence he stipulated be admitted at sentencing. By stipulating and forfeiting any cross-examination of live testimony from Bank witnesses, Pielsticker deprived the district court, and us, of the Bank’s proof in response. In this circumstance, with the Bank’s written testimony properly before it, the district court had a sufficient basis to establish guideline loss. See United States v. Abbo, 515 F. App’x 764, 770 (10th Cir. 2013) (unpublished) (stating that a stipulation to admit into evidence a witness’s testimony in lieu of live testimony “waive[s] any right to challenge the admissibility of the evidence on foundational grounds”) (citing United States v. Aptt, 354 F.3d 1269, 1281 (10th Cir. 2004)). Because the district court properly received the Bank’s written testimony, the district court could rely on it in making its bank-fraud loss calculation.
Pielsticker raises an additional challenge to the district court’s bank-fraud loss calculation by disputing its finding that he entered the bank-fraud conspiracy from its outset. He asserts that he entered the bank-fraud conspiracy late, and thus was 13 responsible for a portion of the total bank-fraud loss, specifically $7,537,948.25 (as the PSR found), or less. To find that Pielsticker entered the bank-fraud conspiracy from the outset, the district court relied on Moore’s testimony from the sentencing hearing. Moore testified that by May 2009, when the bank-fraud conspiracy began, Pielsticker had decided “[Arrow] just need[ed] to create another invoice like . . . the first time.” Appellant App. vol. 3 at 459. And from that point on, either Mowry or Pielsticker authorized the inflated amounts that Arrow billing clerks sent the Bank. Pielsticker doesn’t dispute that Moore’s testimony supported the district court’s finding. Rather, he argues that the district court erred in finding Moore credible. When the district court bases its findings on determinations regarding the witnesses’ credibility, “Rule 52(a) demands even greater deference to the trial court’s findings; for only the trial judge can be aware of the variations in demeanor and tone of voice that bear so heavily on the listener’s understanding of and belief in what is said.” Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 575 (1985). Unless the witness’s story is internally inconsistent or contradicted by objective evidence or documents, we will “virtually never” reverse for clear error. Id. On three grounds, Pielsticker argues that Moore’s testimony was not credible. First, Pielsticker asserts that Moore gave conflicting testimony about the number of times that Pielsticker authorized the inflated amounts. The record shows that on direct examination, Moore testified that either Mowry or Pielsticker authorized the inflated invoices. On cross-examination, Moore clarified that Pielsticker, as opposed to Mowry, authorized the inflated invoices about 25-30 percent of the time. Despite 14 Pielsticker’s contention, Moore’s apportionment between Mowry and Pielsticker is consistent with his statement that either Mowry or Pielsticker authorized the inflated amounts. Second, Pielsticker contends that an e-mail Moore sent on August 15, 2009 contradicts his testimony. In his August 15 e-mail, referring to the inflated invoices, Moore stated, “I have no guilt about the fluff.” Appellant App. vol. 3 at 509. On direct, he testified that Pielsticker was a “tyrant.” Appellant App. vol. 3 at 433. These statements aren’t inconsistent. Third, Pielsticker contends that statements from other Arrow employees contradicted Moore’s testimony. The district court’s decision to credit one individual’s testimony over another’s is “virtually never . . . clear error.” Anderson, 470 U.S. at 575. And our review of the record shows that at least one of these Arrow employees lacked personal knowledge of Pielsticker’s involvement in the bank-fraud conspiracy.7 Because Pielsticker has failed to show that Moore’s testimony was “so internally inconsistent or implausible on its face,” id., the district court could find Moore credible. Thus, the district court did not clearly err in finding that Pielsticker entered the bank-fraud conspiracy from the outset based on Moore’s testimony. 7 For example, Arrow’s billing clerk, Michelle Bullard, stated in her Bank interview that she never communicated with Pielsticker about the practice of inflating invoices. 15 Therefore, we affirm the district court’s finding that the Bank suffered $11,464,560.08 in bank-fraud loss.