Court Opinion

ID: 9953109
Source: CourtListenerOpinion
Date Created: 2024-03-21 16:01:28.759335+00
Date Added: 2024-06-11T14:45:41.003469
License: Public Domain

In the

    United States Court of Appeals
                For the Seventh Circuit
                    ____________________
Nos. 22-1360, 22-1761
UNITED STATES OF AMERICA,
                                                   Plaintiff-Appellee,
                                 v.

LATONYA R. FOXX,
                                               Defendant-Appellant.
                    ____________________

        Appeals from the United States District Court for the
         Northern District of Indiana, Hammond Division.
        No. 18-cr-00080-JD-JEM-3 — Jon E. DeGuilio, Judge.
                    ____________________

   ARGUED OCTOBER 24, 2023 — DECIDED MARCH 21, 2024
               ____________________

   Before ROVNER, WOOD and HAMILTON, Circuit Judges.
    ROVNER, Circuit Judge. On July 18, 2018, a grand jury
charged LaTonya Foxx, Yvonna Lee, and Tanisha Bledsoe
with engaging in a scheme to defraud by filing hundreds of
fraudulent tax returns. Foxx entered a blind guilty plea to one
count of wire fraud under 18 U.S.C. § 1343, and was sentenced
to 18 months’ imprisonment, one year of supervised release,
and $1,261,903 in restitution. She now appeals the restitution
order.
2                                         Nos. 22-1360, 22-1761

    According to the indictment, “the purpose of the scheme
was to: (1) file hundreds of fraudulent federal tax returns that
generated improper refunds for clients who paid fees ranging
from $400 to $3,000; and (2) to file fraudulent federal tax re-
turns for the defendants, generating improper refunds.” Dist.
Ct. Doc. 1 at 3–4. The indictment described the scheme in de-
tail. As part of the scheme, Foxx, Lee, and Bledsoe would re-
cruit clients, promising them maximum tax refunds, and
would obtain the clients’ personal information including
names, dates of birth, social security numbers, and dependent
and income information. Bledsoe and Foxx then used the in-
formation they collected from their own clients, as well as the
information provided by Lee to Bledsoe and Foxx pertaining
to Lee’s clients, to electronically file federal tax returns with
the IRS on behalf of those clients. Furthermore, the indictment
detailed that the fabricated information on the tax returns in-
cluded, but was not limited to, claiming that very young chil-
dren attended college to claim the American Opportunity Tax
Credit (“AOTC”), creating fake Form W-2s, listing false item-
ized deductions on Schedule A, and listing false profits and
losses on Schedule C, all in order to obtain inflated tax re-
funds. To conceal their fraudulent behavior, Bledsoe and Foxx
filed those fraudulent federal returns as “self-prepared” re-
turns, rather than disclosing that they were paid to prepare
them. For their services, Lee, Bledsoe, and Foxx required a tax
preparation fee from their clients, ranging between $400 and
$3,000. They also included false information on their own fed-
eral returns, thereby obtaining inflated returns for them-
selves.
   Count 3, to which Foxx pled guilty, set forth one use of the
wires “[i]n executing the scheme to defraud,” specifically that
Lee sent a text to Bledsoe from Indiana to Chicago that she
Nos. 22-1360, 22-1761                                            3

had initially received from Foxx, which contained the person-
ally identifying information relating to a resident of Indiana.
Id. at 6.
    Federal courts have no inherent power to award restitu-
tion. United States v. Berkowitz, 732 F.3d 850, 853 (7th Cir.
2013). Any such power, must come from a statute. Id. The
Mandatory Victims Restitution Act of 1996 (“MVRA), 18
U.S.C. § 3663A, authorizes district courts to impose restitution
for wire fraud offenses. United States v. Westerfield, 714 F.3d
480, 489 (7th Cir. 2013). Where, as here, the offense of convic-
tion involves a scheme to defraud, restitution is required un-
der the MVRA for “any person directly harmed by the de-
fendant’s criminal conduct in the course of the scheme, con-
spiracy, or pattern.” 18 U.S.C. § 3663A(a)(2). “Restitution is
‘limited to the actual losses caused by the specific conduct un-
derlying the offense, and, like the loss amount, the govern-
ment must establish that by a preponderance of the evi-
dence.’” United States v. Meza, 983 F.3d 908, 918 (7th Cir. 2020),
quoting United States v. Orillo, 733 F.3d 241, 244 (7th Cir. 2013).
    The offense comprehended by the wire fraud statute is not
limited to the specific conduct set forth in the count to which
Foxx pled guilty, but rather encompasses the entire scheme to
defraud, such that restitution for the victims of the overall
scheme is required. Id.; United States v. Locke, 643 F.3d 235, 247
(7th Cir. 2011). Under the MVRA, Foxx therefore could be or-
dered to pay restitution for all the losses she caused during
the scheme, and not just those relating to the specific wire
transactions to which she pled guilty. “When calculating a de-
fendant’s restitution amount, district courts should ‘ade-
quately demarcate the scheme’ by explaining the scheme’s
4                                         Nos. 22-1360, 22-1761

scope,” which “necessarily requires the district court to ex-
plain how the defendant is responsible for the amount of res-
titution ordered.” United States v. Dridi, 952 F.3d 893, 901 (7th
Cir. 2020), quoting United States v. Smith, 218 F.3d 777, 784 (7th
Cir. 2000).
    In the district court, Foxx argued that the restitution
amount should only be $653,189, because she was unaware of
fraudulent returns that Lee prepared through co-defendant
Bledsoe, and because the IRS might have recouped some of
the improper tax returns. She does not pursue those argu-
ments on appeal, and instead asserts that the district court
failed to adequately demarcate the scheme and make specific
findings that the losses included in restitution derived from
the same scheme for which she was convicted. Ordinarily, we
review a challenge to a district court’s restitution amount for
abuse of discretion. United States v. White, 883 F.3d 983, 992
(7th Cir. 2018). As Foxx concedes, however, she failed to raise
the challenge below, and therefore we review the challenge
only for plain error. Id. Under that standard of review, “we
ask whether the defendant has shown that the error was ob-
vious, affects substantial rights, and seriously affects the fair-
ness, integrity, or public reputation of the proceedings.”
United States v. Beltran-Leon, 9 F.4th 485, 499 (7th Cir. 2021);
United States v. Olano, 507 U.S. 725, 732 (1993). The record re-
veals that Foxx cannot demonstrate plain error here.
    Foxx argues that the district court failed to adequately de-
marcate the scheme in that the court did not explain how the
restitution amount represented financial harm caused by the
wire fraud scheme involving Foxx and co-defendants Lee and
Bledsoe. Foxx specifically questioned how the guilty plea to
the wire fraud sceme charged in Count 3 of the indictment
Nos. 22-1360, 22-1761                                           5

included the “’relevant conduct’ of her separate fraudulent
tax filing wire fraud scheme for tax years 2013 through 2015,
wherein she prepared false federal tax returns falsely claim-
ing entitlement to the American Opportunity Tax Credit, an
education credit.” Defendant-Appellant Brief at 12–13. Essen-
tially, Foxx would characterize some of her false federal re-
turn filings as part of a separate scheme from other such fil-
ings directly involving Lee or Bledsoe.
    The only question, then, is whether the district court ade-
quately set forth findings as to the scope of the scheme so as
to support the restitution award. We are cognizant that the
district court cannot necessarily be faulted for the failure to
expand upon an issue never raised. Accordingly, “[t]he lack
of a finding is not necessarily fatal, but the lack of evidentiary
support that would have supported a finding is.” White, 883
F.3d at 992; Berkowitz, 732 F.3d at 854 (“The district court did
not engage in a lengthy discussion of the restitution order, but
it was not required to do so, especially when [the defendant]
did not raise any specific objections to the restitution calcula-
tion at the time of sentencing.”); United States v. Fennell, 925
F.3d 358, 362 (7th Cir. 2019). Such evidentiary support can be
found in the district court’s own findings, but also in other
sources in the record including a defendant’s declaration in
support of the plea, admissions at the plea hearing, and un-
contested findings in the presentence investigative report
(PSR). White, 883 F.3d at 989; Berkowitz, 732 F.3d at 853. More-
over, we have held that a district court need not engage in a
repetitive discussion, and where a court makes a finding as to
a unitary scheme in an earlier “relevant conduct” discussion,
the court does not commit plain error in awarding restitution
based on that single scheme. Westerfield, 714 F.3d at 489.
6                                         Nos. 22-1360, 22-1761

    Here, no fatal deficiency exists because the record pro-
vides evidentiary support for a scheme encompassing all of
the fraudulent federal returns filed by Foxx during that time
period including, specifically, returns falsely claiming the
AOTC education credit. Moreover, the record does not con-
tain support for characterizing some of those false returns as
part of a separate scheme. Whether clients were referred by
Lee or obtained by Foxx herself, the scheme to defraud in-
volved the same victim (the IRS), the same conduct (the filing
of tax returns claiming credits to which the claimant was not
entitled), and the same time period (2014-2016, involving
claims for the 2013-2015 tax years).
    As Foxx acknowledges in her brief, Count 3 to which she
pled guilty incorporated as an element the scheme to defraud
set forth in the indictment. The indictment related that
scheme to defraud in detail, providing that Foxx used the in-
formation obtained from her own clients, as well as infor-
mation provided to her by Lee pertaining to Lee’s clients, to
file false tax returns with the IRS. The indictment further pro-
vided that the fabricated information on the tax returns in-
cluded, but was not limited to, claiming that very young chil-
dren attended college in order to falsely obtain the AOTC ed-
ucation credit. In her Plea Declaration, Foxx admitted to a
scheme to defraud consistent with that language in the indict-
ment. She acknowledged filing false returns for her own cli-
ents as well as for clients referred to her by Lee, all to engage
in a scheme to defraud the United States by means of false
representations. She further admitted in that Plea Declaration
that for both her own clients and those referred by Lee, the
fraudulent claims on the tax returns included falsely claiming
the AOTC education credit. Furthermore, the PSR set forth
the dates of the scheme to defraud, and Foxx did not object to
Nos. 22-1360, 22-1761                                          7

those facts; indeed, Foxx confirmed conduct as part of the
scheme that spanned those dates in the Plea Declaration. Fi-
nally, in her challenge to the restitution amount in the district
court, Foxx raised no objection to the inclusion of all of the
fraudulent return conduct as part of one scheme—assuming
that all of the fraudulent returns that she submitted during
that time period should be considered and arguing only that
some of the amounts had been recovered and therefore
should not be counted.
    Evidence in the record, therefore, supports the court’s de-
termination that all of the false returns filed by Foxx during
that time period were part of the same scheme to defraud, and
the court ordered restitution only as to returns attributable to
Foxx. Therefore, there was no legal error in assessing restitu-
tion that can be considered “obvious under the law.” United
States v. Burns, 843 F.3d 679, 687 (7th Cir. 2016); Henderson v.
United States, 568 U.S. 266, 278 (2013) (“The Rule’s require-
ment that an error be ‘plain’ means that lower court decisions
that are questionable but not plainly wrong (at the time of trial
or at the time of appeal) fall outside the Rule’s scope.”) And
the inclusion of false returns beyond the specific conduct in
Count 3 is unquestionably appropriate. As we have made
clear, the offense covered by the mail or wire fraud statutes is
the scheme to defraud, not merely the mail or wire use that
occurs in the course of that scheme, and restitution for the en-
tire scheme is required by the MVRA. United States v. Belk, 435
F.3d 817, 819 (7th Cir. 2006); Locke, 643 F.3d at 247.
   In conclusion, the description of the scheme in the record
points to one unitary scheme, and Foxx assumed as much in
her own objection to restitution, which proposed an amount
that would still include the fraudulent returns as one unitary
8                                       Nos. 22-1360, 22-1761

scheme. That is enough to conclude that the district court did
not commit an error that was “plain” in treating the conduct
as part of one scheme, particularly given that all of the con-
duct took place over the same time period, with the same vic-
tim, and for the same goal of obtaining fraudulent tax re-
funds.
  Accordingly, the decision of the district court is
AFFIRMED.