Court Opinion

ID: 2994145
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:13:03.308808+00
Date Added: 2024-06-11T11:45:20.245271
License: Public Domain

In the
United States Court of Appeals
For the Seventh Circuit

No. 99-2896

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

LISA W. CORRY,

Defendant-Appellant.

Appeal from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. IP 98-167-CR-01-B/F--Sarah Evans Barker, Chief Judge.

Argued January 10, 2000--Decided March 15, 2000

  Before FLAUM, MANION, and EVANS, Circuit Judges.

  EVANS, Circuit Judge. Lisa Corry appeals her
sentence, contending that the district judge was
wrong to conclude that a lack of personal gain
from the crime could not be the basis of a
downward departure.

  Corry entered a guilty plea to a charge of bank
fraud in violation of 18 U.S.C. sec. 1344. The
charge grew out of her employment as the
controller of an Indianapolis, Indiana, business,
Taurus Foods, at which she made a salary of
$56,000 per year. The company was started, owned,
and operated by her father and his partner.
Before Ms. Corry got in hot water, Taurus was
experiencing serious financial problems.

  Taurus had a loan agreement with Bank One
Wisconsin under which the bank provided a line of
credit based on and secured by Taurus’ accounts
receivable and inventory. In order to establish
the line of credit, Taurus had to submit a form
titled "Collateral Report and Advance Request" to
Bank One offices in Milwaukee, Wisconsin. The
form was for reporting accounts receivable and
inventory and thus dictated the amount of credit
available--the more value in the
receivables/inventory, the greater the line of
credit for Taurus. Corry was responsible for
filling out the form and sending it to the bank;
she was the one who signed it, indicating that
the information it contained was true, complete,
and accurate. We are now considering this case
because, in an unsuccessful attempt to keep the
company afloat, Corry submitted forms with
inflated figures, all of which ended up in a loss
to the bank of at least $900,000.

  The district judge, Sarah Evans Barker,
determined at sentencing that Corry’s adjusted
offense level was 16 under the guidelines,
sec.2F1.1, based on a stipulated loss to the bank
of between $850,000 and $1,500,000. Corry argued
for several downward departures. As relevant to
this appeal, she claimed entitlement to downward
departures based on her claims that she did not
experience personal gain from the fraud and that
the amount of the loss overstated the seriousness
of the offense. The judge, it is clear, carefully
considered these arguments and granted a 2-level
downward departure because in her view the amount
of the loss overstated the seriousness of Corry’s
criminal conduct. The judge denied other downward
departure requests, particularly the one based on
her claim that she didn’t personally profit from
her fraud, and that action is the reason for her
appeal.

  Corry’s claim is that Judge Barker determined
that considering the request was precluded by
United States v. Seacott, 15 F.3d 1380 (7th Cir.
1994). The problem with Seacott, as Corry
perceives it, is that the decision preceded Koon
v. United States, 518 U.S. 81 (1996), which set
out the standards and procedures for
consideration of a request for a downward
departure. Corry argues that under Koon her
request should have been considered, even if not
necessarily granted.

  Koon clarified the analysis of downward
departures. It made clear that downward
departures are reviewed for an abuse of
discretion; errors of law are by definition
abuses of discretion. Koon also set up a
framework for looking to the merits of a
departure:

If the special factor is a forbidden factor, the
sentencing court cannot use it as a basis for
departure. If the special factor is an encouraged
factor, the court is authorized to depart if the
applicable Guideline does not already take it
into account. If the special factor is a
discouraged factor, or an encouraged factor
already taken into account by the applicable
Guideline, the court should depart only if the
factor is present to an exceptional degree or in
some other way makes the case different from the
ordinary case where the factor is present. Cf.
ibid. If a factor is unmentioned in the
Guidelines, the court must, after considering the
"structure and theory of both relevant individual
guidelines and the Guidelines taken as a whole,"
ibid., decide whether it is sufficient to take
the case out of the Guideline’s heartland. The
court must bear in mind the Commission’s
expectation that departures based on grounds not
mentioned in the Guidelines will be "highly
infrequent." 1995 USSG ch. 1, pt. A, p. 6.

At 95-96. As relevant here, the issue under Koon
would be whether a lack of personal gain takes
the case out of the heartland of sec.2F1.1. Judge
Barker did not explicitly analyze Corry’s
situation in the precise terms set out in Koon.
But we do not believe she either committed an
error of law or abused her discretion in
rejecting Corry’s claims.

  First, it must be noted that while Seacott
preceded Koon, its analysis of highly similar
facts to those here is consistent with the
"heartland" approach set out in Koon. Seacott was
a loan officer for a lending institution. He
authorized loans to Newton Nichols, the owner of
the Glass Bar tavern in Gas City, Indiana. The
Glass Bar was in financial straits and Nichols
was trying to sell it but needed some money to
tide him over. Seacott could not authorize loans
directly to Nichols so he personally lent him
money and then authorized loans to other persons,
knowing that they would funnel the money to
Nichols. The money was used as operating capital
for the Glass Bar and also to repay a $1,400
personal loan Seacott previously made to Nichols.
Unlike Corry, Seacott convinced the district
judge that he was entitled to a downward
departure because he did not personally benefit
from the misapplication of funds. We reversed
because, for one thing, we concluded that Seacott
did, in fact, obtain personal gain from the
misapplication of funds. But we also observed
that circumstances like those in Seacott’s case
had been taken into consideration by the
Sentencing Commission. As we see it, that is
simply a statement that the case does not fall
outside the heartland of the applicable
guideline. We see nothing contrary to Koon in
such a conclusion.

  That said, and given that Corry’s fraud bears
striking similarity to Seacott’s, we would be
surprised if a district judge did not think it
would be inappropriate to base a downward
departure on a lack of personal gain. A fraud to
keep a business afloat--especially a family
business--is not all that unusual, either with or
without direct personal gain. It can hardly be
said to fall outside the heartland of sec.251.1.
In addition, Corry’s fraud actually involves much
more gain to her than did Seacott’s fraud to him.
As we said, the business Corry set about to save
was a family business; her father was a founder
and owner; her brother worked for the company--
not to mention the fact that she herself pulled
down a $56,000 salary from Taurus. It would be
quite a stretch, we think, to conclude that by
cooking the books to keep this family business
afloat, Corry did not receive a personal gain.

  On a more practical level, however, the issue
as presented here is rather hypothetical. At
Corry’s sentencing the claim that the loss
overstated the seriousness of the offense was
mixed in with her claim about the lack of
personal gain. Corry’s attorney said that the two
were related. In fact, after arguing that Seacott
no longer controlled, counsel said:

Clearly, the motivations and the reasons and the
effect of Ms. Corry’s conduct in this case take
it out of the heartland of fraud cases and the
factors considered by the sentencing commission,
and we do feel that it is appropriate to depart
downward because the amount of loss which has
determined the offense level overstates the
seriousness and wrongfulness of her conduct and
that she did not personally profit from the
activities as a result.

  As this statement shows, Corry’s argument that
a downward departure should be ordered based on
the lack of personal gain includes a statement
that the loss overstates the seriousness of her
conduct. Clearly the two bases in this case are
related, and they were treated as related by
Judge Barker. Given the way Corry’s request was
framed, it would be requiring watchmaker
precision in the analysis of human conduct to
require the district judge to determine exactly
which factors are relevant to which argument,
even if a lack of personal gain were an
appropriate basis for departure.

  That the loss overstates the seriousness of the
offense is, to use Koon’s terminology, an
encouraged basis for departure. It was on that
sound basis that Judge Barker granted a 2-level
departure. It does no damage to the structure of
the guidelines to say that Corry received all the
consideration she could have obtained based on
the circumstances of her crime. There is no
indication from this record that if Judge Barker
had divided the single argument into separate
parts that Corry would have gotten more, in
total, than the 2-level downward departure she
received.

  Finally, it should be emphasized that to the
victim, the criminal’s motives are mostly
irrelevant. If someone steals your wallet and
gives the money in it to the Humane Society,
rather than blowing it in Las Vegas, that’s
little comfort as you gaze at your empty pocket.

  The sentence here was carefully and thoughtfully
calculated. Ms. Corry got one 2-level downward
departure, and she was not entitled to anything
more on her related claim. The judgment of the
district court is AFFIRMED.

  Flaum, Circuit Judge, concurring. While I agree
with the majority’s outcome in this case, I write
separately to explain the different reasoning by
which I reach this conclusion. In United States
v. Seacott, we held that lack of personal profit
motive in a fraud case is a "legally insufficient
reason to depart downward from the applicable
Guidelines range." 15 F.3d 1380, 1387 (7th Cir.
1994). The district court interpreted Seacott’s
holding as "foreclos[ing]" it from considering
failure to profit as a departure factor. I
believe that the district court’s interpretation
of our holding in Seacott was correct. However,
two years after Seacott, the Supreme Court’s
decision in Koon found that "for the courts to
conclude a factor must not be considered under
any circumstances would be to transgress the
policymaking authority vested in the Commission."
Koon, 518 U.S. 81, 106-07 (1996). The Court then
held that "a federal court’s examination of
whether a factor can ever be an appropriate basis
for departure is limited to determining whether
the Commission has proscribed, as a categorical
matter, consideration of the factor." Id. at 109.
Failure to profit is not a ground expressly
forbidden by the Commission. See U.S.S.G. Ch. 1,
Pt. A 4(b). Thus, to the extent that our decision
in Seacott precluded district courts from
considering personal profit motive as a basis for
departure, it has been superseded by the Koon
analysis. It is understandable that the district
court was reluctant to rule in a manner contrary
to our holding in Seacott before this Court had
interpreted Koon’s effect on that case. However,
in light of Koon, I believe that it was an error
of law for the district court to conclude that it
was foreclosed by Seacott from considering
Corry’s failure to profit as a departure factor.

  On the facts of this case, however, the
district court’s legal error is harmless. Corry’s
fraud involved a deception conducted to keep a
family business afloat. This business, moreover,
employed Corry at a substantial salary. When
Corry’s fraud kept the family business viable,
Corry benefitted both directly in terms of her
continued salary and indirectly from the benefit
to her immediate family. The facts of this case
plainly do not support the argument that Corry
did not personally profit from the fraud she
committed. Therefore, it would have been an abuse
of discretion for the district court to have
granted a downward departure on this basis even
if that court had appropriately concluded that it
was permitted to consider this ground. See Koon,
518 U.S. at 99-100 (stating that review of a
district court’s decision to grant a sentencing
departure is for abuse of discretion). Thus, the
legal error did not affect Corry’s ultimate
sentence and was harmless.