Court Opinion

ID: 4183073
Source: CourtListenerOpinion
Date Created: 2017-07-03 17:01:21.417778+00
Date Added: 2024-06-11T07:47:18.452607
License: Public Domain

FILED
                                                                     United States Court of Appeals
                      UNITED STATES COURT OF APPEALS                         Tenth Circuit

                             FOR THE TENTH CIRCUIT                           July 3, 2017
                         _________________________________
                                                                         Elisabeth A. Shumaker
                                                                             Clerk of Court
UNITED STATES OF AMERICA,

      Plaintiff - Appellee,

v.                                                        No. 16-6152
                                                  (D.C. No. 5:14-CR-00347-D-1)
RICHARD M. ARNOLD SR.,                                    (W.D. Okla.)

      Defendant - Appellant.
                      _________________________________

                             ORDER AND JUDGMENT*
                         _________________________________

Before HARTZ, MATHESON, and MORITZ, Circuit Judges.
                 _________________________________

      Richard Arnold Sr. appeals the district court’s restitution award arising from a

scheme involving vehicle-financing rebates. Arnold argues that the district court

erred in awarding restitution to certain lenders and in calculating the amount of

restitution owed. Finding no reversible error, we affirm.

      *
        This order and judgment is not binding precedent, except under the doctrines
of law of the case, res judicata, and collateral estoppel. But it may be cited for its
persuasive value. See Fed. R. App. P. 32.1; 10th Cir. R. 32.1.
                                             I

       Arnold pleaded guilty to one count each of wire fraud and conspiracy to

commit wire fraud. See 18 U.S.C. §§ 1343, 1349. According to the indictment,

Arnold—along with his wife Robyn and his sons Ricky and Robert (collectively, the

Arnolds)—concocted a scheme to defraud individuals out of the financing-incentive

rebates those individuals received when they purchased new vehicles. Specifically,

the Arnolds represented to their victims that if they relinquished their rebates to the

Arnolds, a charitable trust would then pay off their car loans. But while the Arnolds

made some payments on the loans, they eventually stopped making payments and

instead used the remaining rebate funds for their own personal expenses. Eventually,

the individual victims either took over the loan payments or relinquished the vehicles

to the lenders. The lenders then resold the vehicles for less than the remaining

balance on each loan.

       After sentencing, the district court ordered Arnold to pay restitution to, inter

alia, those lenders who repossessed vehicles and resold them at deficiencies. This

included both so-called “captive” lenders, Aplt. Br. 11—i.e, financing units owned

and operated by the automobile companies—and their successors—i.e., lenders that

assumed the financial interests of the original lenders. While not entirely clear from

either the record or the parties’ briefing, it appears that the district court calculated

the restitution due to the captive lenders as the amount of principal remaining on the

loans after the repossession and sale of the vehicles.

                                             2
       The district court ultimately ordered Arnold to pay $280,075.15 in restitution.

Arnold appeals.

                                            II

       On appeal, Arnold argues that the district court erred in (1) finding that the

captive and successor lenders were victims entitled to mandatory restitution under the

Mandatory Victims Restitution Act (MVRA) of 1996, 18 U.S.C. § 3663A, and (2)

failing to credit Arnold with interest that he paid prior to repossession and resale of

the vehicles. In evaluating these arguments, we review the district court’s application

of the MVRA de novo and its factual findings for clear error. See United States v.

Shengyang Zhou, 717 F.3d 1139, 1152 (10th Cir. 2013).

                                            A

       Arnold first argues the district court erred when it concluded that the captive

lenders constitute victims for purposes of the MVRA.

       The MVRA defines the term “victim” to mean, in relevant part, “a person

directly and proximately harmed as a result of the commission of an offense.” §

3663A(a)(2). A victim is “proximately harmed as a result of” a defendant’s crime,

id., “if either there are no intervening causes, or, if there are any such causes, [they]

are directly related to the defendant’s offense,” United States v. Speakman, 594 F.3d
1165, 1172 (10th Cir. 2010).

       Arnold argues that the government failed to meet its burden to show that he

“was the proximate cause of the losses claimed by the [captive] lenders” because the

government failed to prove that the employees of the captive lenders—and therefore

                                            3
the captive lenders themselves—weren’t involved in the Arnolds’ fraudulent scheme.

Aplt. Br. 9.

        For this proposition, Arnold relies on Speakman, 594 F.3d 1165. There, Merrill

Lynch financial consultant Larry Speakman illegally transferred money from the

Merrill Lynch account of his wife, Carolyn Speakman. Id. at 1166-67. Unrelated to

the criminal case the government subsequently brought against Larry, Carolyn also

initiated an arbitration suit against Merrill Lynch. Id. at 1168. The arbitration panel

found some liability on Merrill Lynch’s part and, as a result, ordered it to pay

Carolyn $1,225,000. Id.

        Larry ultimately pleaded guilty to wire fraud, and the district court ordered

him to pay $1,225,000 in restitution to Merrill Lynch, finding that Merrill Lynch was

a “victim” under the MVRA. Id. at 1168, 1170. The district court based this decision

on the facts contained in Larry’s presentence investigation report, which explained

the amount of—but not the basis for—Merrill Lynch’s liability to Carolyn. Id. at

1168.

        On appeal, we reversed and remanded for the district court to determine the

basis for the arbitration panel’s finding of Merrill Lynch’s liability. Id. at 1172-73. In

doing so, we noted that Merrill Lynch was only a “victim” of Larry’s fraud under the

MVRA if, inter alia, Larry’s fraud proximately caused Merrill Lynch’s loss. See id. at

1171. And we explained that intervening causes break the chain of proximate cause

unless they are directly related to the offensive conduct. See id. at 1172. Finally, we

determined that two such potential intervening causes existed. Id.

                                            4
      First, Carolyn’s initiation of the arbitration action was an intervening cause of

Merrill Lynch’s harm. But because the initiation of that action was directly related to

Larry’s fraud, we held that it didn’t break the chain of causation for purposes of

determining whether Merrill Lynch was a victim. Id.

      Second, we noted that Merrill Lynch’s own wrongdoing, if any, might

constitute an intervening cause. See id. at 1172. And we reasoned that if the basis of

Merrill Lynch’s liability to Carolyn was its own intentional acts, those acts would

indeed break the chain of causation between Larry’s fraud and Merrill Lynch’s loss.

See id. at 1173-74. But that wouldn’t be the case if the basis of Merrill Lynch’s

liability to Carolyn instead sounded in respondeat superior or negligence. Id. at 1173.

Thus, we remanded for the district court to determine whether Merrill Lynch’s

liability to Carolyn was based on respondeat superior, its own negligence, or its own

intentional involvement in Larry’s fraud. Id. at 1172-74.

      Here, Arnold argues that the government failed to show by a preponderance of

the evidence that he proximately caused harm to the captive lenders because the

government didn’t show that the captive lenders weren’t complicit in the Arnolds’

fraud. Arnold suggests that Speakman requires as much. In other words, he suggests

that Speakman required the government to disprove the existence of any possible

intervening causes in order to satisfy its burden of showing that the captive lenders in

this case are victims under the MVRA.

      We disagree. In Speakman, the arbitration award constituted evidence that at

least arguably suggested an intervening cause may have broken the chain of

                                           5
proximate causation. See 594 F.3d at 1172-73. Thus, Speakman doesn’t stand for the

proposition that the government must disprove any and all potential intervening

causes before the district court can characterize an entity as a victim under the

MVRA. Instead, Speakman merely establishes that the government must address

potential intervening causes when at least some evidence suggests those intervening

causes might break the chain of proximate causation.

      Arnold points to no such evidence here. That is, he doesn’t identify any

evidence that would even hint that the captive lenders or their employees

intentionally participated in Arnold’s fraud. And in the absence of such evidence, the

district court didn’t err in finding that the captive lenders and their successors were

victims—even though the government didn’t disprove the possibility of their

involvement in Arnold’s fraud.

      Finally, in passing, Arnold cites United States v. Washington, 634 F.3d 1180

(10th Cir. 2011), and asserts that the government failed to prove that “successor

lenders were a standard practice within the automobile sales and distribution system.”

Aplt. Br. 14. But Arnold provides no context, argument, or explanation for this

assertion. Accordingly, any argument that Arnold might be attempting to advance

here is inadequately briefed, and we decline to consider it. See Fed. R. App. P.

28(a)(8)(A) (requiring argument section of appellant’s brief to contain “appellant’s

contentions and the reasons for them”); Bronson v. Swensen, 500 F.3d 1099, 1104

(10th Cir. 2007) (explaining that court routinely declines to consider inadequately

briefed arguments).

                                            6
                                            B

      Next, Arnold challenges the district court’s method of calculating restitution.

      At the outset, we note that Arnold makes no effort to explain how, precisely,

the district court actually determined the amount of restitution owed to each lender.

Nor is the district court’s method entirely clear from its restitution order. True, that

order notes that the amount of restitution owed is the amount of the loan deficiency

remaining after the lenders applied any proceeds from the sale of each repossessed

vehicle. But the order doesn’t specify whether the final amount owed consists solely

of the remaining undischarged principal after subtracting the sale proceeds from the

principal due, or whether it instead includes other components, such as additional

accumulated interest. Based on our review of the record, however, it appears that the

amount the district court ultimately relied on in imposing restitution was simply the

outstanding principal remaining on the loans after the lenders resold each vehicle and

applied the proceeds. That is, while the lenders’ records do note additional

accumulated interest, it doesn’t appear that the district court added that amount to the

remaining principal after applying the resale proceeds.

      Arnold suggests that the district court erred in simply subtracting the sale

proceeds from the remaining principal balance on each loan. Instead, he appears to

assert, the district court should have also subtracted from the remaining principal

balance any interest paid prior to repossession. Failure to do so, Arnold complains,

“would allow [each] lender to collect the interest twice.” Aplt. Br. 16.

      Arnold makes no attempt to explain how the district court’s failure to subtract

                                            7
from the principal balance any interest paid over the life of each loan would allow the

lenders to “collect . . . interest twice.” Id. Instead, as we see it, Arnold’s proposed

method of calculating restitution—i.e., his suggestion that the district court should

have subtracted from the principal balance owed the amount of interest already

paid—would deprive the lenders of the opportunity to collect interest at all.

        We decline to adopt this approach. First, Arnold cites no authority suggesting

that the lenders aren’t entitled to interest under the MVRA. We could reject his

argument on this basis alone. See Fed. R. App. P. 28(a)(8)(A); Bronson, 500 F.3d at

1104.

        Second, as the government points out, our cases indicate that the lenders are

entitled to interest as a component of restitution. Cf. United States v. Williams, 292
F.3d 681, 687, 689 (10th Cir. 2002) (“The car was not sold at auction until July 9,

1997. Accrued interest at the contract rate of 9.5 percent during the intervening time

period as well as credit union expenses and fees incurred in the repossession and sale

of the Jaguar reasonably account for [amount of restitution that district court imposed

under MVRA].”); United States v. Patty, 992 F.2d 1045, 1050 (10th Cir 1993)

(approving prejudgment interest as a component of restitution under Victim Witness

Protection Act because it reflects victim’s “inability to use the money for a

productive purpose, and is therefore necessary to make the victim whole”—

particularly when “victim is a financial institution”). Thus, we reject Arnold’s

assertion that the restitution order somehow overcompensates the lender-victims by

failing to subtract from the restitution owed any interest those lenders previously

                                             8
collected.

      As a final matter, Arnold complains that “some of the claims” for which the

district court imposed restitution also “included costs associated with repossession

and processing.” Aplt. Br. 16. But because the argument section of his brief doesn’t

contain any citations to the record that might support this factual assertion, Arnold

has waived any challenge to the district court’s alleged inclusion of such costs. See

Fed. R. App. P. 28(a)(8)(A); Bronson, 500 F.3d at 1104.

                                    *      *      *

      Arnold fails to demonstrate that the district court erred in (1) concluding that

the captive lenders and their successors constitute “victims” for purposes of the

MVRA or (2) calculating the amount of restitution owed. Accordingly, we affirm.

                                            Entered for the Court

                                            Nancy L. Moritz
                                            Circuit Judge

                                           9