Court Opinion

ID: 2807808
Source: CourtListenerOpinion
Date Created: 2015-06-12 14:00:54.424449+00
Date Added: 2024-06-11T11:30:05.713627
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                             File Name: 15a0442n.06

                                                 No. 14–5809                                      FILED
                                                                                           Jun 12, 2015
UNITED STATES OF AMERICA,                                    )                         DEBORAH S. HUNT, Clerk
                                                             )
        Plaintiff-Appellee,                                  )
                                                                      ON APPEAL FROM THE UNITED
                                                             )
                                                                      STATES DISTRICT COURT FOR
                 v.                                          )
                                                                      THE EASTERN DISTRICT OF
                                                             )
                                                                      KENTUCKY
PAUL CHRISTOPHER TURNER,                                     )
                                                             )
        Defendant-Appellant.                                 )
                                                             )

BEFORE: SUTTON, GRIFFIN, and WHITE, Circuit Judges.

        HELENE N. WHITE, Circuit Judge. Defendant-Appellant Paul Christopher Turner

appeals the below-guidelines, 96-month sentence and over $4 million in restitution imposed after

he pleaded guilty, without a plea agreement, to one count of wire fraud and one count of

aggravated identity theft.1 Turner argues that his sentence is substantively and procedurally

unreasonable because the district court found “an excessive amount of loss” and an “inflated

number of victims.” He also challenges the amount of restitution ordered and argues that the

district court erred when it denied his motion for a third continuance. Finding no merit in these

arguments, we AFFIRM.

                                                        I.

        Turner owned and operated several companies that revolved around the “Avenging Apes

of Africa” (“Apes”), a concept he developed in the early 1990s that involved a troupe of

animated apes that travel the world and fight environmental problems and animal poaching. The

companies, which were funded almost entirely through investments that Turner or his associates

        1
          He does not appeal the statutorily mandated consecutive 24-month sentence for aggravated identity theft,
which resulted in a total sentence of 120 months.
United States v. Turner
Case No. 14–5809
solicited, never realized a profit. Originally, Apes was a storyline developed for children’s

cartoons; however, developing the cartoon became too costly, so Turner focused on producing a

one-hour-long DVD. The DVD was completed in 2004 or 2005 eventually Turner licensed the

rights to Los Angeles based MarVista Entertainment. Ultimately, the DVD was available for

purchase in 36 countries, but none of the investors recouped their investment.

        In 2006, after realizing that the DVD was not going to be the international phenomenon

that he had hoped, Turner began plans to construct the “Go Go Gorillas! Fun Center” (“Fun

Center”) in Danville, Kentucky. The Fun Center was supposed to compete with venues like

Chuck-E-Cheese’s, and included an Apes-themed pizza cafeteria, children’s games, a climbing

wall, and bowling. The Fun Center opened in December 2010 and enjoyed three to four months

of profits before it began operating at a loss. By March of 2011, the Fun Center’s games and

rides were being repossessed, utility bills went unpaid, and Turner could not pay all of his

employees. By July 2012, the Fun Center was officially closed.2

        About the same time that the Fun Center was being closed, one of Turner’s investors

alerted law enforcement that she believed that Turner was misappropriating investment funds.

After an investigation substantiated the investor’s claim, the United States ultimately indicted

Turner on five counts of wire fraud and one count of aggravated identity theft. On October 30,

2014, Turner pleaded guilty, without a plea agreement, to Count I (wire fraud) and Count VI

(aggravated identity theft) of the second-superseding indictment. The four remaining wire-fraud

counts (Counts II–V) were dismissed by the United States, but only after the parties confirmed

that in pleading guilty Turner was acknowledging responsibility for the entire scheme of

fraudulent activity spanning 2004 to 2013, not just the specific acts described in Count I, and the

        2
            About the same time that the Fun Center was being closed for financial reasons, Turner met with a
Chicago-based businessman to discuss opening a second (and perhaps third) Fun Center near Lexington, Kentucky.
The instant criminal proceedings stopped the Lexington plan.

                                                    -2-
United States v. Turner
Case No. 14–5809
district court ensured that Turner understood that he was “having to admit to” “trying to

accomplish something that is real fraudulent[]” by “misrepresent[ing]” the actual use of the

investors’ money throughout the entire scheme.

       It is undisputed that Turner received approximately $389,000 in personal benefits from

the scheme (i.e., money to pay his mortgage, to lease expensive vehicles, to pay child support,

etc.). It is also undisputed that during that same time period investors gave Turner at least $4.7

million. Finally, it is undisputed that Turner used some portion of the investors’ funds on

furthering the Apes concept.

       Before sentencing, the district court was required to make a “loss determination”—a

finding of how much “loss” was caused by Turner’s fraud—and a number-of-victims

determination—a finding of the number of persons or entities experiencing “actual loss”—in

order to calculate the appropriate sentencing range under the Guidelines.        At the two-day

sentencing hearing, several witnesses established that Turner’s fraudulent conduct permeated his

companies’ activities from 2004 until 2013. For example, witnesses testified that Turner sold

unregistered stock certificates in one or more of the companies; that Turner obtained loans from

individuals, sometimes for his own use and sometimes for the companies’ use, and then paid the

loans back with the stock; and that it was not uncommon for Turner to write checks from closed

accounts or from accounts with insufficient funds. Moreover, Turner did not allow any of his

employees or investors to see the companies’ financial statements.

       Specific instances of Turner’s fraud were also introduced at the hearing. For instance, in

2006, Turner opened at least one, and possibly two, credit card accounts in another person’s

name without approval, and added additional card holders to a credit card account without the

account holder’s approval. In 2007, Turner exploited his relationship with an investor by:

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United States v. Turner
Case No. 14–5809
obtaining at least four loans in the investor’s name without approval, forging and cashing a

$5,000 check in the investor’s name, and leasing computer equipment in the investor’s name

without approval. Similarly, in 2008, Turner used an investor’s investment of over $450,000 for

unauthorized purposes: This money was supposed to purchase games for the Fun Center, but

apparently was used for something else, as nearly all the games were repossessed within a few

months of the Fun Center’s opening. Moreover, Turner placed liens on this investor’s home and

restaurant, and admitted that he forged the investor’s signature to do so. When the mortgage

company questioned Turner, Turner lied in an apparent attempt to cover up his role in the fraud.

       The United States also introduced the testimony of two forensic accountants who

estimated the amount of money that Turner’s companies received during the relevant time

period, and offered conclusions based on their extensive investigation. One fraud inspector

believed that “by the time the fun center began . . . there was fraud throughout th[e] entire

investment scheme,” and testified that Turner had developed a modus operandi: “Mr. Turner

would start an entity, get into financial trouble, get sued, walk away from that company, start a

new one, and repeat the pattern several times.”

       After considering all of the exhibits and testimony, the district court explained that

       the question . . . is what’s reasonably foreseeable pecuniary harm. And I think it
       is the case that engaging in the kind of widespread illegal activity and the corrupt
       business practices here, although there are a lot of very legitimate business
       practices as well, at some point it’s reasonably foreseeable that the harm . . .
       that’s going to occur will be ultimately the financial ruin of this particular
       company.
       ...
       There are enough risks with legitimate business enterprises that we cannot allow
       fraudulent activities to undermine what is already an inherently risky
       endeavor. . . . So I think intuitively it seems a little troubling that there’s a lot of
       really good effort here that we’re lumping into a loss. But we’re lumping it into
       loss because that good effort was undermined by the illegal and fraudulent
       activity. And so I [do not] think the government has to come in and dispute and
       say, Look, this wasn’t a very good idea, and so that’s fraudulent to be promoting

                                                -4-
United States v. Turner
Case No. 14–5809
        it in the first place, or this never had any potential, or that wasn’t actually a pretty
        good strategy in terms of the business. . . . [T]hey can concede all of that and say
        the tragedy of this is these illegal activities brought all that good stuff crashing
        down.

The district court then determined that Turner’s acts caused approximately $4.7 million of

“actual loss”—the full investment amount raised from others—because Turner’s fraudulent

activity “undermined” his lawful efforts at establishing a successful business. This finding

resulted in an 18-level increase. U.S.S.G. § 2B1.1(b)(1)(J) (applying to a “loss” between $2.5

million and $7 million). The district court also found that Turner’s fraud affected 109 “victims,”

leading to a four-level increase.3          U.S.S.G. § 2B1.1(b)(2)(B) (applying to a loss involving

between 50 and 249 “victims”).

                                                        II.

        We review criminal sentences for both substantive and procedural reasonableness. Gall

v. United States, 552 U.S. 38, 51 (2007). “Reasonableness is determined under the deferential

abuse-of-discretion standard.” United States v. Battaglia, 624 F.3d 348, 350 (6th Cir. 2010). In

determining procedural reasonableness, one factor we assess is “whether the district court

properly calculated the Guidelines range.” Id. at 350–51. If the district court misinterprets the

Guidelines or miscalculates the Guidelines range, then the resulting sentence is procedurally

unreasonable. United States v. Bolds, 511 F.3d 568, 579 (6th Cir. 2007). “The [district] court’s

legal interpretation of the Guidelines [is] reviewed de novo, but its factual findings are reviewed

under the clearly erroneous standard.” Battaglia, 624 F.3d at 351. The government bears the

burden to “prove, by a preponderance of the evidence, that a particular sentencing enhancement

applies.” United States v. Dupree, 323 F.3d 480, 491 (6th Cir. 2003).

        3
           Turner’s challenge to the number of victims is derivative of his challenge to the loss amount. Put another
way, Turner does not challenge that his fraud involved 109 victims if the district court’s loss determination of
“approximately $4.7 million” was correct; rather, he simply states that if the district court erred in its loss
determination, it also erred in its number-of-victims determination.

                                                       -5-
United States v. Turner
Case No. 14–5809
        Once we have determined that a sentence is procedurally sound, we must “then consider

the substantive reasonableness of the sentence imposed under an abuse-of-discretion standard.”

Gall, 552 U.S. at 51. In reviewing for substantive reasonableness, we must “take into account

the totality of the circumstances, including the extent of any variance from the Guidelines

range.” Id. For sentences within the Guidelines, we may apply a rebuttable presumption of

substantive reasonableness. Id. In all cases we must “give due deference to the district court’s

decision,” because the “sentencing judge is in a superior position to find facts and judge their

import.” Id.

                                                       A.

        We review a district court’s loss determination for clear error, meaning that a defendant

must show that the calculation “was not only inexact but outside the universe of acceptable

computations.” United States v. Martinez, 588 F.3d 301, 326 (6th Cir. 2009) (quotation marks

omitted). Section 2B1.1(b)(1) of the Guidelines recommends imposing a sentence that considers

the amount of “loss” caused by a defendant’s fraud. U.S.S.G. § 2B1.1(b)(1). “Loss,” for

purposes of this section, “is the greater of actual loss or intended loss.” U.S.S.G. § 2B1.1 cmt.

3(A).4 “Actual Loss” is “the reasonably foreseeable pecuniary harm that resulted from the

offense.” U.S.S.G. § 2B1.1 cmt. 3(A)(i). When the loss resulting from a financial fraud is

difficult to quantify, the district court need only make a “reasonable estimate of the loss” based

on available information. U.S.S.G. § 2B1.1 cmt. 3(C). Such estimates “need not be determined

with precision.” United States v. Rothwell, 387 F.3d 579, 583 (6th Cir. 2004) (quotation marks

omitted). In this context, the “sentencing judge is in a unique position to assess the evidence and

estimate the loss based upon that evidence,” and thus the district court’s loss determination is due

        4
           The district court did not make an “intended loss” finding, but for reference, “Intended Loss” is “the
pecuniary harm that was intended to result from the offense . . . includ[ing] intended pecuniary harm that would
have been impossible or unlikely to occur.” U.S.S.G. § 2B1.1 cmt. 3(A)(ii).

                                                      -6-
United States v. Turner
Case No. 14–5809
“appropriate deference.” United States v. McCarty, 628 F.3d 284, 290 (6th Cir. 2010) (internal

quotation marks and citations omitted).

       The loss must be “caused” by the defendant’s fraud.         Rothwell, 387 F.3d at 583.

“Causation includes two distinct principles, cause in fact, or what is commonly known as ‘but

for’ causation, and legal causation.” Id. (quoting Fedorczyk v. Caribbean Cruise Lines, Ltd., 82
F.3d 69, 73 (3d Cir. 1996)). Although “the former is always a necessary condition of causation

which often is easily satisfied, the ultimate question is whether the cause in fact is legally

sufficient ‘to warrant imposing liability upon the actor.’” Id. (quoting Farwell v. Un, 902 F.2d
282, 290 (4th Cir. 1990)).

       The district court did not clearly err when it determined that fraud permeated the entire

investment enterprise, and that the actual loss from Turner’s fraud was more than $2.5 million

but less than $7 million (approximately $4.7 million). Given the extent and regularity of

Turner’s criminal wrongdoing (i.e., opening lines of credit in others’ names as early as 2006,

forging documents, selling illegal securities, etc.), his companies were inevitably going to fail

because of his conduct. Moreover, Turner did not propose an alternative loss amount; rather, he

maintained that the fraud and poor bookkeeping rendered it impossible to “reasonably estimate”

the loss, and thus that he should only be accountable for the $389,000 he admits he used for his

personal benefit. The district court rejected this argument, and for good reason, as this method

of calculating loss “is not the preferred method because it ordinarily underestimates the loss.”

United States v. Triana, 468 F.3d 308, 323 (6th Cir. 2006) (internal quotations and citations

omitted). Thus, we cannot say that the district court’s loss determination was “outside the

universe of acceptable computations.” See Martinez, 588 F.3d at 326 (internal quotation marks

omitted).

                                              -7-
United States v. Turner
Case No. 14–5809
                                                       B.

        This finding is in accord with our past decisions. For example, in United States v. Healy,

Healy promoted a product he was not authorized to sell in order to raise capital for his company.

553 F. App’x 560, 562 (6th Cir. 2014). Healy “conned” investors by misrepresenting his role in

creating the product, the product’s capabilities, and the product’s market success. Id. Healy

solicited investments and then used that money to find more investors; when a client asked to see

the functioning product or wanted to buy the product, Healy disappeared or lied to the investor

“because the product, as represented, did not exist.” Id. at 563. We summarized Healy’s plan:

“[Healy] used the ‘business meetings’ as a way of leading investors to believe a big sale was

imminent and enticing them to contribute more to help close the deal.” Id. Healy raised and

spent approximately $1.4 million in this scheme. For the “loss determination,” the district court

calculated the loss to be “the total amount raised from investors,” as opposed to the amount

Healy used for his personal benefit.5 Id. On appeal, we affirmed, finding that a “preponderance

of the evidence” supported the district court’s finding, specifically noting that the district court

did not “err in concluding that Healy operated according to th[e] scheme from the outset”

because he “started making fraudulent misrepresentations when he began soliciting investments”

for his company. Id. at 566. Thus, the district court properly relied on Healy when making its

loss determination.

        Similarly, in United States v. Washington, Washington was found guilty of submitting

fraudulent invoices to the Detroit Public School system. 715 F.3d 975, 976 (6th Cir. 2013).

Washington was supposed to create a wellness program for the school system and completed

some legitimate work for the program (i.e., she had circulated various flyers, had supplied

        5
           The United States, Healy’s counsel, and the probation officer all had agreed to quantify the loss using
Healy’s benefit, as discussed in § 2B1.1 cmt. 3(B).

                                                      -8-
United States v. Turner
Case No. 14–5809
pedometers, etc.). Id. at 978. At trial and at sentencing, Washington argued that because she had

performed legitimate work, the entire $3.2 million she had received should not be considered

“loss.” Id. at 984. Nevertheless, the district court found that Washington caused between $2.5

million to $7 million in loss. Id. On appeal, we affirmed and stated that the district court would

have been “justified in finding the amount of loss to be the entire $3.32 million because it found

that the entire wellness program was a sham.” Id. at 985. This is the case here as well.

       Rothwell, cited by Turner, does not lead to a different conclusion. 387 F.3d at 584.

Rothwell simply makes clear that a defendant must “cause” the amount of loss. Rothwell applied

for and was granted a loan from the Small Business Administration (“SBA”) to rebuild a

building that had been destroyed in a storm. Id. at 581. He “fraudulently obtain[ed] one or more

progress payments in [the] otherwise legitimate loan transaction,” by using some of the loan

proceeds to construct a building on an adjacent lot. Id. at 584. Rothwell made 23 monthly

installation payments on the loan, but eventually “defaulted on the loan when he was unable to

find tenants for the building.” Id. at 581. The district court found that Rothwell had caused an

“actual loss” of approximately $100,000 (the amount of the default) because of the fraudulently

obtained progress payments. We reversed, holding that these isolated events “cannot reasonably

be considered to have caused” the loss because “[t]here myriad explanations for the default—an

unsound business risk, a poor economy, excess [comparable] space in the local market, or

developments in unrelated transactions affecting Rothwell’s ability to repay the SBA loan—all

of which are more likely causes than the fraud-induced progress payment.” Id. at 584. Here,

however, the district court found that Turner’s actions “undermined” the entire investment

scheme, and thus any chance the companies had of succeeding was thwarted by Turner’s actions.

Thus, Turner’s actions can “reasonably be considered to have caused” the investors’ loss. See id.

                                               -9-
United States v. Turner
Case No. 14–5809
         In sum, the record and our past decisions adequately support the district court’s loss-

amount and number-of-victims determinations in this case. Turner does not challenge the district

court’s application of its findings to the Guidelines calculations itself.6

                                                         III.

         Turner next challenges the amount of restitution that the district court ordered. We

review de novo whether restitution is permitted under the law, and review the amount of a

restitution award for an abuse of discretion. United States v. Boring, 557 F.3d 707, 713 (6th Cir.

2009). Under the Mandatory Victims Restitution Act, defendants who commit certain crimes

involving fraud must make restitution to their victims, 18 U.S.C. § 3663A, and the restitution

order must be “based on the amount of loss actually caused by the defendant’s offense.” Boring,
557 F.3d at 713; United States v. Finkley, 324 F.3d 401, 404 (6th Cir. 2003). Because the district

court did not err in determining that the actual loss was $4,761,106.28, it did not abuse its

discretion in ordering restitution in the same amount. We affirm the restitution order.

                                                         IV.

         Finally, Turner appeals the district court’s denial of his motion for a third continuance.

Turner argues that he needed additional time to review all the documents seized during the

investigation, which included multiple pallets of documents that were stored in a government

warehouse. Turner had previously received two continuances to review these documents. After

obtaining the continuances, he apparently did not schedule times to review the documents (he

had to have an appointment to enter the warehouse), even after the United States reminded him

that trial was approaching. In his motion for the third continuance, Turner requested “eight (8)

full days to complete discovery and review of the remaining material.” Turner’s motion was

         6
           A loss of between $2.5 million and $7 million results in an 18-level increase, U.S.S.G. § 2B1.1(b)(1)(J),
and a “loss” affecting 50 to 249 victims results in a four-level increase, U.S.S.G. § 2B1.1(b)(2)(B). Thus, the district
court correctly interpreted and applied the Guidelines to the facts.

                                                        - 10 -
United States v. Turner
Case No. 14–5809
filed on October 22, 2013, and trial was not set to begin until November 4, 2013—over “eight

full days” away. Assuming Turner had acted diligently, he had all the time he stated he needed

to review the discovery.

       Turner also argues that the second superseding indictment “enlarged the time frame of

the alleged scheme by several years and by millions of dollars of supposed losses to various

entities and individuals.” This argument fails; the United States filed a superseding indictment

on August 1, 2013, but apparently some pages of the indictment were not included in the filing.

The United States emailed the full indictment to Turner’s attorney on or around August 1, 2013.

Thus, on September 13, 2013, when the United States filed a second superseding indictment, it

was in actuality the full superseding indictment that was filed on August 1. Turner had the exact

same indictment, which included an identical time frame, since the beginning of August.

       In any event, “a voluntary and unconditional guilty plea bars any subsequent non-

jurisdictional attack on the conviction.” United States v. Corp, 668 F.3d 379, 384 (6th Cir. 2012)

(internal quotation marks omitted). Turner pleaded guilty without a plea agreement, and without

a “court-approved reservation of issues for appeal.” Id. (internal quotation marks omitted).

Thus, Turner has waived his appeal of the district court’s denial of his third continuance.

                                                V.

       For the foregoing reasons, we AFFIRM.

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