Court Opinion

ID: 1036316
Source: CourtListenerOpinion
Date Created: 2013-08-02 17:03:03.766274+00
Date Added: 2024-06-11T12:43:09.613316
License: Public Domain

FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT

 UNITED STATES OF AMERICA ,                         No. 11-50392
                 Plaintiff-Appellee,
                                                      D.C. No.
                      v.                           5:09-cr-00005-
                                                       TJH-1
 WILLENA STARGELL,
             Defendant-Appellant.                     OPINION

        Appeal from the United States District Court
            for the Central District of California
       Terry J. Hatter, Senior District Judge, Presiding

                   Argued and Submitted
             March 7, 2013—Pasadena, California

                       Filed August 2, 2013

  Before: Sidney R. Thomas, Andrew D. Hurwitz, Circuit
   Judges, and Ralph R. Beistline, Chief District Judge.*

                   Opinion by Judge Beistline

  *
    The Honorable Ralph R. Beistline, Chief United States District Judge
for the District of Alaska, sitting by designation.
2                 UNITED STATES V . STARGELL

                           SUMMARY**

                           Criminal Law

    The panel affirmed a defendant’s convictions and
sentence for fraud by wire affecting a financial institution,
aiding and assisting in the preparation of a false return, fraud
by wire, and aggravated identity theft, arising out of the
defendant’s work as a tax preparer.

    The panel held that new or increased risk of loss is
sufficient to establish that wire fraud “affects” a financial
institution within the meaning of 18 U.S.C. § 1343, and that
there was sufficient evidence for a rational jury to conclude
that the defendant’s fraudulent returns exposed the banks to
an increased risk of loss.

    Because the wire fraud that was the predicate to the
aggravated identity theft did not occur until after 18 U.S.C.
§ 1028A’s enactment date, the panel rejected the defendant’s
contention that the jury may have convicted the defendant
based solely on pre-enactment conduct.

    The panel rejected the defendant’s contention that
government and the district court infringed on the core of her
defense counsel’s role, in violation of the defendant’s Sixth
Amendment rights, by allowing the defendant’s former
attorney to testify at sentencing regarding the loss and
restitution calculations, where the former attorney was called
by the defendant’s new attorney. Because the former

  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                UNITED STATES V . STARGELL                     3

attorney’s testimony did not contain privileged
communications, the panel rejected the defendant’s
contention that admission of the testimony violated the
attorney-client privilege.

    The panel held that the district court did not clearly err in
calculating the loss and restitution amounts.

                         COUNSEL

Marisa L. D. Conroy (argued), Encinitas, California, for
Defendant-Appellant.

André Birotte, Jr., United States Attorney; Antoine F.
Raphael, Assistant United States Attorney, Joseph R.
Widman, Assistant United States Attorney, Ryan White
(argued), Assistant United States Attorney, United States
Attorneys’ Office, Riverside, California, for Plaintiff-
Appellee.

                          OPINION

BEISTLINE, Chief District Judge:

    Willena Stargell appeals her convictions of twelve
felonies arising out of her work as a tax preparer for various
clients.

    The superseding indictment charged fraud by wire
affecting a financial institution (Counts 1 to 6); aiding and
assisting in the preparation of a false return (Counts 7 to 12);
fraud by wire (Counts 13 to 15); and aggravated identity theft
4               UNITED STATES V . STARGELL

(Counts 16 to 18). The district court dismissed Counts 6, 12,
and 18 on the government’s motion. After the district court
granted her motion for acquittal on Counts 3, 9, and 15,
Stargell was convicted on the remaining charges. She claims
that the district court erred by: (1) failing to grant her motion
for judgment of acquittal as to Counts 1, 2, 4, and 5 of the
superseding indictment despite the government’s failure to
prove that the underlying conduct affected a financial
institution; (2) permitting convictions on Counts 16 and 17
without excluding the possibility that they were based on
conduct that preceded the enactment of 18 U.S.C. § 1028A;
(3) allowing Stargell’s former attorney to testify at the
sentencing hearing; and (4) improperly calculating loss and
restitution amounts.

    We have jurisdiction under 28 U.S.C. § 1291, and we
affirm the convictions and sentences.

                               I

                               A

    After completing a course on tax preparation and
receiving state certification, Stargell began preparing taxes
for Liberty Tax Service (“LTS”) in Moreno Valley,
California. LTS terminated Stargell’s employment in 2003,
and Stargell began her own tax preparation business, called
Liberty Bell Tax Service (“LBTS”).

    The evidence at trial established that while operating
LBTS, Stargell prepared federal income tax returns
containing false statements and engaged in schemes to obtain
refund anticipation loans (“RAL”) from banks based on these
fraudulent returns. In some instances, the IRS detected the
                UNITED STATES V . STARGELL                     5

fraud and declined to issue a tax refund, resulting in a loss to
the banks that made the RALs. The government also proved
that Stargell engaged in identity theft by using the names and
social security numbers of former clients or other individuals,
without their knowledge or consent, to file tax returns and to
request RALs.

                               B

    Before sentencing, the district court held two evidentiary
hearings to determine loss and restitution. At the latter
hearing, Kay Otani, former counsel for Stargell, testified as
a witness. Stargell’s current counsel, the district court, and
the government inquired as to Otani’s method of calculating
loss and restitution, what documents he sought to obtain from
the government, how those documents would have assisted or
disadvantaged him, and what was ultimately provided to him.

    At the conclusion of the hearing, the district court found
an offense level of twenty-two, a criminal history category of
I, and an advisory guideline range of forty-one to fifty-one
months. The district court imposed a $1200.00 special
assessment, restitution in the amount of $362,796.07, and
incarceration for forty-two months. This appeal followed.

                               II

                               A

    Stargell contends that the district court erred in failing to
grant her motion for acquittal as to Counts 1, 2, 4, and 5
because the government failed to prove that such counts
“affected a financial institution” as required by 18 U.S.C.
§ 1343. Stargell’s argument is unpersuasive.
6                UNITED STATES V . STARGELL

    “Where a defendant moves for acquittal at the close of the
government’s evidence, we review de novo whether sufficient
evidence exists to support a guilty verdict.” United States v.
Stewart, 420 F.3d 1007, 1014–15 (9th Cir. 2005) (citing
United States v. Carranza, 289 F.3d 634, 641 (9th Cir.
2002)). Our review of the sufficiency of the evidence
supporting a criminal conviction is to determine “whether the
record evidence could reasonably support a finding of guilt
beyond a reasonable doubt.” Jackson v. Virginia, 443 U.S.
307, 318 (1979). We do not ask whether we “believe[] that
the evidence at the trial established guilt beyond a reasonable
doubt.” Id. at 319 (quoting Woodby v. INS, 385 U.S. 276, 282
(1966)). “Instead, the relevant question is whether, after
viewing the evidence in the light most favorable to the
prosecution, any rational trier of fact could have found the
essential elements of the crime beyond a reasonable doubt.”
Id.

    Special Agent Juan Marquez of the IRS’s Criminal
Investigations Division (“IRS-CID”) testified as a summary
witness pursuant to Rule 1006 of the Federal Rules of
Evidence. Agent Marquez presented a summary chart based
upon his review of 143 tax returns,1 all of which either listed
Stargell as the tax preparer or were connected to her
company, LBTS. The summary chart demonstrated that each
of the 143 tax returns contained either false wage or false
withholding figures, and that the vast majority contained both
false wage and false withholding figures. Every return listed
in the summary chart sought a refund, and the total refunds

    1
     IRS maintains tax records and information in its Integrated Data
Retrieval System (“IDRS”). The IDRS contains information regarding
filed tax returns and information provided by third parties, including
employers and financial institutions.
                UNITED STATES V . STARGELL                     7

sought amounted to $598,657.00. The IRS refunded
$276,331.74 in connection with these returns before it
stopped the remaining claimed refunds.

    Agent Marquez also testified that banks funded a RAL for
each of the tax returns listed in the summary chart. When a
bank issued a RAL and the IRS later stopped the refund for
the related return, the bank was not able to recoup the value
of the RAL and suffered a financial loss.

    To the government, the lost refund money was the main
“effect” that Stargell’s actions had on the banks. Yet, the
banks only lost money with respect to two of the four counts
of fraud charged in the indictment: Count 1 ($4,995.22) and
Count 4 ($6,013.00). The summary chart clearly shows that
the banks did not lose any refund money on the other two tax
returns in question here. Nevertheless, the government
argues that because RALs based on fraudulent returns are
riskier than RALs based on non-fraudulent returns, Stargell’s
fraud scheme “affected” the banks by exposing them to an
increased risk of loss. The banks were affected by Stargell’s
fraud scheme, the government argues, regardless of whether
there was an actual financial loss.

    We agree. Our sister circuits have defined the term
“affects” within the meaning of a similar statute,18 U.S.C.
§ 3293(2), to include new or increased risk of loss to financial
institutions. See United States v. Mullins, 613 F.3d 1273,
1278–79 (10th Cir. 2010) (holding that a new or increased
risk of loss is sufficient to establish that wire fraud affects a
financial institution); United States v. Serpico, 320 F.3d 691,
694 (7th Cir. 2003) (holding that fraud affects a bank if the
bank is exposed to an increased risk of loss, even if the bank
never suffers an actual loss). Although § 3293(2) and § 1343
8               UNITED STATES V . STARGELL

are separate provisions—the former extends the statute of
limitations to ten years for offenses that affect a financial
institution, while the latter defines the offense of wire
fraud—we see no reason why they should hold different
meanings with respect to the term “affects.” Accordingly, we
hold that new or increased risk of loss is sufficient to
establish that wire fraud “affects” a financial institution
within the meaning of 18 U.S.C. § 1343.

    Here, there was sufficient evidence for a rational jury to
conclude that Stargell’s fraudulent returns exposed the banks
to an increased risk of loss. The senior risk analyst for one of
the banks testified that 79.9% of the RALs issued in
connection with Stargell’s fraud scheme resulted in a loss to
the bank, compared with a general loss rate of less than 1%
for non-fraudulent RALs. Therefore, there was sufficient
evidence for a rational jury to conclude that Stargell’s fraud
scheme affected the banks within the meaning of 18 U.S.C.
§ 1343, regardless of whether the banks ultimately suffered
any actual loss. The district court did not err in denying
Stargell’s motion to acquit as to Counts 1, 2, 4, and 5.

                               B

    Stargell claims for the first time on appeal that because
the government’s case regarding Counts 13 and 14 (wire
fraud, 18 U.S.C. § 1343)—the predicate offenses for Counts
16 and 17 (aggravated identity theft, 18 U.S.C. § 1028A)—
focused significantly on conduct that pre-dated the enactment
of § 1028A on July 15, 2004, the jury may have convicted
Stargell based solely on pre-enactment conduct. However,
because the wire fraud did not occur until January 15 and 18,
2005, the predicate offenses for the aggravated identity theft
transpired well after § 1028A’s enactment date.
                  UNITED STATES V . STARGELL                          9

     Under 18 U.S.C. § 1028A(a)(1), “[w]hoever, during and
in relation to any felony violation . . . , knowingly transfers,
possesses, or uses, without lawful authority, a means of
identification of another person shall, in addition to the
punishment provided for such felony, be sentenced to a term
of imprisonment of 2 years.”                (emphasis added).2
Additionally, under 18 U.S.C. § 1343, “[w]hoever, having
devised . . . any scheme for obtaining money or property by
means of false or fraudulent pretenses, representations, or
promises, transmits or causes to be transmitted by means of
wire, radio, or television communication in interstate or
foreign commerce, any writings . . . for the purpose of
executing such scheme or artifice, shall be fined under this
title or imprisoned not more than 20 years, or both.”
(emphasis added).

    In proving its case on wire fraud and on the related
identity theft, the government referenced Stargell’s ongoing
wire fraud scheme starting in February 2004 and ending on
approximately January 27, 2005. Although the government
demonstrated that the scheme partially took place prior to the
enactment date of § 1028A, the superseding indictment
clearly shows that the tax returns in question were not filed,
and thus were not transmitted, until January 2005.
Transmission is a required element of wire fraud under
§ 1343. Consequently, the wire fraud did not occur until the
returns were filed in January 2005, a full six months after
§ 1028A was enacted. The predicate offenses for Counts 16
and 17, therefore, happened after § 1028A was enacted.
Accordingly, the jury was not wrong in convicting Stargell of

 2
   For purposes of 18 U.S.C. § 1028A, the term “any felony violation” is
specifically defined as one of the felonies enumerated in § 1028A(c).
Counts 13 and 14 fall under § 1028A(c)(5).
10              UNITED STATES V . STARGELL

aggravated identity theft while relying on the predicate wire
fraud offenses.

                               C

    Stargell argues, again for the first time on appeal, that the
government and the district court infringed on the core of her
defense counsel’s role by allowing Stargell’s former attorney,
Otani, to testify at sentencing regarding the loss and
restitution calculations. Stargell also contends that since she
did not expressly consent to Otani giving testimony, the
attorney-client privilege was violated. We disagree.

                               1

    “Government violates the right to effective assistance
when it interferes in certain ways with the ability of counsel
to make independent decisions about how to conduct the
defense.” Perry v. Leeke, 488 U.S. 272, 279–80 (1989)
(internal quotation marks and citation omitted). There was no
violation here because it was Peter Swarth, Stargell’s new
defense attorney, who called Stargell’s former attorney to
testify at the sentencing hearing. Swarth examined Otani
concerning the discovery of audit files and other documents
requested from the IRS. The transcript is clear that Swarth
acted independently in calling Otani to testify in the second
sentencing hearing and that there was no interference or
restriction of any kind with Swarth’s presentation of the
defense. Because there was no interference, Stargell’s Sixth
Amendment rights were not violated.
                UNITED STATES V . STARGELL                      11

                                2

   Stargell additionally contends that the admission of
Otani’s testimony violated the attorney-client privilege.
Because Otani’s testimony did not contain privileged
communications, the argument fails.

    Otani’s testimony did not include protected attorney-
client communications of any kind. The majority of Otani’s
testimony dealt with audit documents requested by Otani
from the IRS through discovery while Otani was Stargell’s
defense attorney. In the entirety of Otani’s testimony,
nothing he said or referenced came from Stargell. Therefore,
the attorney-client privilege was not implicated. See United
States v. Ruehle, 583 F.3d 600, 607 (9th Cir. 2009)
(explaining the attorney-client privilege only covers
communications made in confidence by the client); id. (“The
fact that a person is a lawyer does not make all
communications with that person privileged.”) (internal
quotation marks and citation omitted).

                                D

    Stargell alleges that the district court committed three
errors in computing the amounts of loss and restitution in this
case. First, she argues that the district court never actually
made a finding regarding the amount of loss. Second, she
argues that even if the district court made a loss finding, its
finding was unsupported by the evidence because the amount
should not have included qualified refunds. And third, she
argues that the restitution amount should not have included
refunds the taxpayers were legally entitled to claim. We find
that the district court did not clearly err in calculating the loss
and restitution amounts.
12              UNITED STATES V . STARGELL

    “A calculation of the amount of loss is a factual finding
reviewed for clear error.” United States v. Garro, 517 F.3d
1163, 1167 (9th Cir. 2008). Under the clearly-erroneous
standard, a reviewing court will not reverse a lower court
merely because the reviewing court “‘would have decided the
case differently.’” Easley v. Cromartie, 532 U.S. 234, 242
(2001) (quoting Anderson v. Bessemer City, 470 U.S. 564,
573 (1985)). “[A] reviewing court must ask whether, ‘on the
entire evidence,’ it is ‘left with the definite and firm
conviction that a mistake has been committed.’” Id. (quoting
United States v. United States Gypsum Co., 333 U.S. 364, 395
(1948)). In short, the clearly erroneous standard is
“significantly deferential.” N. Queen Inc. v. Kinnear,
298 F.3d 1090, 1095 (9th Cir. 2002).

                               1

    When determining a loss amount for sentencing purposes,
a district court must “provide reasoning to explain its
determination of [such] loss.” Yeung, 672 F.3d at 604–05.
“Although the district court’s findings . . . must be ‘express,’
they need only state the court’s resolution of the disputed
issues.” United States v. Karterman, 60 F.3d 576, 583 (9th
Cir. 1995). If a district court does not provide such a
resolution, “we must remand for the district court to
recalculate and provide its reasoning for th[e] award.” Yeung,
672 F.3d at 604–05.

    Stargell argues that the district court should have made an
explicit finding regarding the loss amount or, at a minimum,
explicitly adopted the government’s loss position. But the
district court did adopt the government’s suggested loss
amount. The district court stated, “It just appears to me that
as had been suggested by you [the government] previously
                UNITED STATES V . STARGELL                   13

that using either standard that you’ve been able to meet your
burden. And it very well may be that under this set of
circumstances, that clear and convincing would be proper.
And I’m satisfied with it.” (emphasis added). The district
court adequately resolved the loss amount dispute in favor of
the government by holding that the government had
established the loss amount by clear and convincing evidence.
In total, the banks lost $107,931.96 in connection with the
143 fraudulent tax returns listed in the summary chart.

                               2

    Stargell further alleges that the district court mistakenly
included in the loss amount the refunds to which the affected
taxpayers were entitled. Stargell’s argument is unpersuasive.

    Under the Sentencing Guidelines, “[i]f the offense
involved tax evasion or a fraudulent or false return, statement,
or other document, the tax loss is the total amount of loss that
was the object of the offense (i.e., the loss that would have
resulted had the offense been successfully completed).”
U.S.S.G. § 2T1.1(c)(1) (emphasis added). Here, the
government recommended that the tax-loss amount equal the
entire loss that would have resulted had Stargell’s schemes
been successfully completed—in other words, the total refund
amount claimed on all of the fraudulent returns. The district
court adopted the government’s total loss figure.

    Concerning the tax-loss amount, a district court should
“make a reasonable estimate based on the available facts.”
U.S.S.G. § 2T1.1 cmt. n.1. Moreover, if higher than the
actual loss amount, the intended loss amount should be used.
United States v. Riley, 143 F.3d 1289, 1291–92 (9th Cir.
1998). It is not the government’s or the district court’s
14                UNITED STATES V . STARGELL

responsibility to establish that defendant’s filed returns were
entitled to refunds if no entitled-refund information was
offered by the defendant. See United States v. Bishop,
291 F.3d 1100, 1116 (9th Cir. 2002) (“It is not the
government’s or the court’s responsibility to establish the
defendants’ itemized deductions, if no itemized deduction
information was offered by the defendants.”).

    Stargell failed to provide any substantial evidence to
support her contention that she gave, or intended to give, the
involved taxpayers the refunds to which they were entitled.
The district court’s conclusion that Stargell intended to keep
the total amount of refunds claimed in the fraudulent returns
was reasonable based on the evidence in the record.
Likewise, using that amount as the “total tax loss” was also
reasonable.

    At sentencing, the onus was on Stargell to establish a
lower tax-loss amount based on the entitled refund, but she
did not. See Bishop, 291 F.3d at 1116. Even at the appellate
level, Stargell has neither pointed to any evidence
establishing that the involved taxpayers were entitled to a
refund nor provided an entitled-refund amount by which the
tax-loss figure should be decreased.

    Based on the record and in light of the dearth of evidence
to the contrary, the district court’s acceptance of the
government’s loss figure—the total refund amount claimed
on all of the fraudulent returns—was a “reasonable estimate
based on the available facts.” U.S.S.G. § 2T1.1 cmt. n.1.3

  3
    Absent evidence to the contrary, it is also a reasonable presumption
that each of the involved taxpayers would have had to file a non-
fraudulent return in order to obtain any refund to which he or she would
                  UNITED STATES V . STARGELL                          15

                                   3

    Stargell also argues that the restitution amount determined
by the district court, like the tax-loss amount, included
refunds that the affected taxpayers were potentially entitled
to claim. A restitution amount can be calculated from “losses
proximately resulting from [a defendant’s] criminal conduct.”
Yeung, 672 F.3d at 606. Therefore, it was not error for the
district court to base Stargell’s restitution amount on the
actual losses minus the amount of paid-in withholding.

                                  III

    For all the reasons above, we affirm the judgment of the
district court.

    AFFIRMED.

have been entitled. Carrying out Stargell’s fraud schemes to their
completion, therefore, would have required the IRS to pay the total
amount of refunds claimed by Stargell in her 143 fraudulent returns as
well as any potential refunds for the non-fraudulent returns filed by the
persons named in Stargell’s returns, conceivably requiring the IRS to pay
a refund twice.