Court Opinion

ID: 987737
Source: CourtListenerOpinion
Date Created: 2013-07-03 05:25:33.224115+00
Date Added: 2024-06-11T12:37:35.136913
License: Public Domain

Case: 10-10743   Document: 00512294463     Page: 1   Date Filed: 07/02/2013

          IN THE UNITED STATES COURT OF APPEALS
                   FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                   Fifth Circuit

                                                                   FILED
                                                                   July 2, 2013

                                 No. 10-10743                     Lyle W. Cayce
                                                                       Clerk

UNITED STATES OF AMERICA,

                                           Plaintiff – Appellee
v.

ROBERT JOHN MASON, EDWIN TERRENCE BELL, REJIS LAMONT
WILLIAMS, MICHAEL LEWIS ANDREWS, JAMES EDWARD JONES,
KEVIN RAY SANDERSON, JANICE LITTLE SHEPHERD, ERIC RULACK
FARRINGTON, JR.,

                                           Defendants – Appellants

                 Appeals from the United States District Court
                      for the Northern District of Texas

Before JOLLY, DAVIS, and PRADO, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
      Following a jury trial, eight defendants were found guilty of numerous
violations arising out of their participation in a wide-ranging mortgage fraud
scheme.     On appeal, the convicted defendants assert various arguments
challenging: (1) the sufficiency of the evidence against them; (2) instructions
given, and not given, to the jury; (3) the district court’s interpretation and
application of the Sentencing Guidelines; (4) the admission of summary charts
under Federal Rule of Evidence 1006; and (5) the district court’s denial of a
Batson challenge. After a thorough review of the record, we find no merit to any
    Case: 10-10743      Document: 00512294463        Page: 2    Date Filed: 07/02/2013

                                    No. 10-10743

of these arguments. Accordingly, we AFFIRM the convictions and sentences of
Robert John Mason, Edwin Terrence Bell, Rejis Lamont Williams, James
Edward Jones, Kevin Ray Sanderson, Janice Little Shepherd, and Eric Rulack
Farrington, Jr.
      Michael Lewis Andrews, however, raises an additional argument with
respect to the restitution and forfeiture component of his sentence. For reasons
further explained below, the district court plainly erred in calculating the
amount of restitution and forfeiture applicable to Andrews.              As such, we
AFFIRM his conviction, but VACATE the forfeiture and restitution component
of his sentence and REMAND to the district court for recalculation in the light
of this opinion.
                                           I.
      This case arose from a complex mortgage fraud scheme lasting at least
from March 2002 until January 2006. Ten defendants were charged in a fifty-
count indictment alleging: (1) Conspiracy to Commit Wire Fraud in violation of
18 U.S.C. § 1349 (18 U.S.C. § 1343); (2) Bank Fraud and Aiding and Abetting in
violation of 18 U.S.C. §§ 1344, 2; (3) Wire Fraud and Aiding and Abetting in
violation of 18 U.S.C. §§ 1343, 2; (4) Money Laundering and Aiding and Abetting
in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i), 2; and (5) Engaging in a Monetary
Transaction with Criminally Derived Property and Aiding and Abetting in
violation of 18 U.S.C. §§ 1957(a), (d)(1), 2. Two defendants subsequently pled
guilty. And, after an approximately seven-week trial, the jury reached a split
verdict with respect to the other eight defendants, acquitting individuals on
some counts and convicting them on others. This appeal timely followed.
      Andrews had a relatively minor role in the scheme; he recruited
individuals to invest in the scheme and brokered loans for two of the properties.1

      1
        The two properties were 7012 Creek Bend Road (“Creek Bend”) and 1509 Appalachian
Drive (“Appalachian”).

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                                   No. 10-10743

He profited through payments made to Second Chance Mortgage based on the
two loans he brokered. Andrews, however, was acquitted on Count 1 of the
indictment, which alleged the conspiracy charge.             Instead, Andrews was
convicted only on Counts 16 and 17, which specifically described the Creek Bend
transaction and stated that crime.           He was sentenced to 24 months of
imprisonment, ordered to pay $108,659.15 in mandatory restitution, and ordered
to forfeit $121,434.64.
                                        II.
      Andrews argues that the district court erred in calculating the amount of
loss subject to restitution and the proceeds subject to forfeiture. He reminds us
that he was found guilty only on the Creek Bend transaction; he was acquitted
on all other charges. He emphasizes that his acquittal on Count 1 of the
indictment (charging him with conspiracy with the other defendants) limits the
applicable restitution and forfeiture amounts to the specific funds associated
with the single transaction—Counts 16 and 17—of which he was convicted.
Nevertheless, the district court, in calculating the losses to the victims for which
he was accountable, included the amount of loss from a later-in-time transaction,
the Appalachian transaction, which was unrelated to his counts of conviction.
      Because Andrews did not raise this argument before the district court, we
review for plain error. United States v. Inman, 411 F.3d 591, 595 (5th Cir. 2005).
As such, Andrews must show: “(1) there is an error, (2) the error is plain, and (3)
the error affects substantial rights.” Id. If all three requirements are met, “we
will exercise our discretion to correct the error if it ‘seriously affect[s] the
fairness, integrity or public reputation of judicial proceedings.’” Id. (alteration
in original) (quoting United States v. Olano, 507 U.S. 725, 736 (1993)).
      “A defendant sentenced under the Mandatory Victim Restitution Act
(‘MVRA’) is only responsible for paying restitution for the conduct underlying the
offense for which he was convicted.” Id. “[W]here a fraudulent scheme is an

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                                   No. 10-10743

element of the conviction, the court may award restitution for actions pursuant
to that scheme.” United States v. Wright, 496 F.3d 371, 381 (5th Cir. 2007)
(citation omitted). But, “restitution for the underlying scheme to defraud is
limited to the specific temporal scope of the indictment.” Inman, 411 F.3d at
595. And, in Inman, we concluded that the inclusion of “transactions that were
not alleged in the indictment and occurred over two years before the specific
temporal scope of the indictment,” constituted plain error. Id.
       As iterated throughout this opinion, Andrews was acquitted of the
conspiracy charge contained in Count 1, which was the only count involving all
eleven property transactions that the indictment alleged took place between
March 2002 and January 2006. He was convicted only for Wire Fraud and
Aiding and Abetting based on wire transfers related to the sale of the Creek
Bend property on December 19, 2005. It is true, as the government points out,
that Counts 16 and 17 of the indictment “reallege[d] and incorporate[d] by
reference herein the allegations contained in the Introduction of this
indictment.” The government argues that the district court committed no error,
basing its argument largely on the incorporation of the indictment introduction,
which stated that the scheme lasted “[f]rom at least in or about March 2002, and
continuing in or about January 2006.” As such, the government contends that
Inman is distinguishable from the instant case, where the Appalachian
transaction took place before January 2006. Having failed to raise an objection
below, Andrews asserts that the inclusion of the later-in-time Appalachian
transaction rises to the level of plain error because: (1) the error is clear; (2) it
affected his substantial rights because he was ordered to pay an additional
$74,619.12; and (3) this court should exercise its discretion because he was
acquitted with respect to the mortgage fraud conspiracy, but he is still being
ordered to pay restitution for a transaction he was not convicted of participating
in.

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                                       No. 10-10743

       In United States v. Sharma, 703 F.3d 318 (5th Cir. 2012), we explained
that, “An award of restitution cannot compensate a victim for losses . . . caused
by conduct that falls outside the temporal scope of the acts of conviction.” Id. at
323 (citing Inman) (emphasis added). In Sharma, the defendants pled “guilty
to only two of the sixty-four counts of indictment,” which related to a fraudulent
scheme to bill insurers for a specific type of medical procedure. Id. As such, we
held that the district court erred in imposing restitution beyond losses
specifically attributable to fraudulent billing for the particular procedure at
issue in those counts. See id. at 323-24. Sharma thus informs the instant case,
where Andrews’s conviction on Counts 16 and 17 involved his participation in
the fraudulent Creek Bend transaction and nothing else. The Appalachian
transaction was not part of Andrews’s offense of conviction.2 The district court,
therefore, erred in including the amount of loss from the Appalachian
transaction in Andrews’s mandatory restitution order. And, moreover, we
conclude that such error was plain given our prior statement that, “The MVRA
limits restitution to the actual loss directly and proximately caused by the
defendant’s offense of conviction.”3 Id. at 323.
       Having concluded that the district court plainly erred, we next must
determine whether the error affected Andrews’s substantial rights. Inman, 411
F.3d at 595. If the district court properly had limited the restitution order to the

       2
         The government has cited no authority, and we have not located any, analogous to the
instant case where the defendant was acquitted of conspiracy but still ordered to pay
restitution and forfeiture for a transaction charged only as part of the overarching conspiracy;
here, the Appalachian transaction is mentioned expressly in only Count 1 of the indictment,
unlike the Creek Bend transaction which is charged in Counts 1 and 16–17. Thus ordering
Andrews to pay restitution and forfeiture for the Appalachian transaction suggests that the
district court concluded he in fact was a participant in the conspiracy, despite the jury’s
contrary conclusion. Such a finding is improper and creates inconsistency in the jury verdict,
which is entitled to the utmost respect.
       3
        Furthermore, in its brief, the government argues only that the district court
committed no error—plain or otherwise.

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                                        No. 10-10743

amount of loss caused by the Creek Bend transaction, Andrews would only be
ordered to pay $34,040.03 in restitution.                 Inclusion of the Appalachian
transaction thus resulted in Andrews being ordered to pay an additional
$74,619.12. Like Inman, “[t]his variance of over $70,000 merits correction” as
it “affected the outcome of the district court proceedings” with respect to the
judgment against Andrews. Olano, 507 U.S. at 734; Inman, 411 F.3d at 595.
       Furthermore, our failure to correct such an error would “seriously affect
the fairness, integrity or public reputation of judicial proceedings.” Olano, 507
U.S. at 736 (internal quotation marks omitted); see also Inman, 411 F.3d at 595.
Andrews was ordered to reimburse more than $70,000 in funds for a transaction
he was not convicted of participating in; indeed, he was acquitted of the only
count expressly charging criminal activity with respect to the Appalachian
transaction. Failing to correct such an error would, in our opinion, constitute
manifest injustice in the minds of most jurists. We, therefore, find that Andrews
has met the stringent plain error standard with respect to the calculation of his
restitution order.4       On remand, the district court should limit Andrews’s
restitution order to the amount of loss suffered as a result of the Creek Bend
transaction, excluding any proceeds associated with the Appalachian
transaction.
                                              III.
       For the reasons stated above, the judgment of the district court is
                AFFIRMED IN PART, VACATED IN PART, AND REMANDED.

       4
         We also find that the district court committed plain error in calculating the applicable
forfeiture amount, and that the error affected Andrews’s substantial rights. Andrews’s
conviction on Counts 16 and 17 required forfeiture of the proceeds from the Creek Bend
transaction. Indeed, the district court’s judgment states that Andrews is ordered to forfeit
$121,434.64, “representing the amount of proceeds obtained as a result of the offenses in
Count 16 and 17.” On remand, the forfeiture order should be corrected to reflect only those
proceeds obtained from the Creek Bend transaction, thereby excluding any proceeds linked
with the Appalachian transaction.

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