Court Opinion

ID: 3003208
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:40:27.228696+00
Date Added: 2024-06-11T15:03:17.275643
License: Public Domain

NONPRECEDENTIAL DISPOSITION
                         To be cited only in accordance with
                                  Fed. R. App. P. 32.1

              United States Court of Appeals
                                 For the Seventh Circuit
                                 Chicago, Illinois 60604

                                   Argued June 9, 2009
                                  Decided June 18, 2009

                                         Before

                            WILLIAM J. BAUER, Circuit Judge

                            RICHARD A. POSNER, Circuit Judge

                            JOHN DANIEL TINDER, Circuit Judge

No. 08-3010
                                                  Appeal from the United States District
UNITED STATES OF AMERICA,                         Court for the Northern District of
     Plaintiff-Appellee,                          Indiana, Hammond Division.

      v.                                          No. 06 CR 118

JEWELL G. HARRIS, SR.                             James T. Moody,
     Defendant-Appellant.                         Judge.

                                        ORDER

        The City of Gary, Indiana, christened a new stadium for its minor-league baseball
team in 2002. A trucking company operated and partly owned by Jewell Harris billed the
City just under $1.6 million for hauling away and disposing of dirt and debris excavated
during site preparation for the stadium. Harris was sentenced to 71 months’ imprisonment
after a jury determined that his bills were fraudulent and found him guilty of mail fraud,
wire fraud, and money laundering. Harris challenges only his prison sentence. We affirm
the judgment.

      The City broke ground on its new stadium in June 2001. Because the stadium site
needed to be lowered about twelve feet, the City contracted with Rieth-Riley Construction
No. 08-3010                                                                               Page 2

to excavate and lower the grade. Under that contract, Rieth-Riley was responsible for
removing and disposing of all excavated material, mostly dirt and sand. Rieth-Riley
subcontracted with Harris’s company, Enterprise Trucking and Waste Hauling.

       Enterprise hauled away the material from the excavation site. Although Rieth-Riley
was already paying Enterprise as its subcontractor, Harris directed that his company’s
drivers stop at a scale and weigh every truckload before dumping it. The City had
previously contracted with Enterprise and paid by the ton for hauling and disposing of
construction and demolition debris. Although the last such contract between Harris and
the City had by then expired, Enterprise exploited its prior dealings with the City by
submitting to the City the weight receipts from the stadium loads with invoices for hauling
and disposal. Under this scheme, Enterprise first collected from Rieth-Riley and then
received almost $1.6 million from the City.

        After the jury returned guilty verdicts on all but one count (for which the proof of
mailing was deficient), the district court calculated Harris’s imprisonment range by starting
with a base offense level of 7, which applies to fraud offenses punishable by a statutory
maximum term of imprisonment of 20 years or more. See U.S.S.G. § 2B1.1(a)(1)(B). The
district court found that the loss was the entire amount that Enterprise received from the
City, just under $1.6 million, and so the court added 16 levels, see id.§ 2B1.1(b)(1)(I), plus
two more levels for Harris’s leadership role, see id. § 3B1.1(c). Harris had no criminal
history, so his total offense level of 25 yielded an imprisonment range of 57 to 71 months.
See U.S.S.G. ch. 5, pt. A. The district court selected the high end of that range.

       On appeal Harris argues that the district court made two errors in calculating his
offense level. First, he insists that the court selected the wrong base offense level of 7.
Second, he contends that the court overstated the fraud loss.

        Beginning with the base offense level, Harris contends—and the government
concedes—that the correct level was 6, not 7. Harris, though, did not object to the district
court’s determination, so our review is for plain error. See Puckett v. United States, 129 S. Ct.
1423, 1429 (2009); United States v. Garrett, 528 F.3d 525, 527 (7th Cir. 2008). A sentence based
on an incorrect guideline range affects substantial rights and can therefore be plain error
requiring resentencing unless there is reason to believe that the error did not affect the
district court’s selection of a particular sentence. United States v. Avila, 557 F.3d 809, 822
(7th Cir. 2009).

      The sentencing guidelines provide that the base offense level for fraud crimes
should be 6, unless the maximum prison penalty for the crime is 20 years or more. U.S.S.G.
No. 08-3010                                                                              Page 3

§ 2B1.1(a). When Harris was sentenced, the relevant statutory maximum for mail and wire
fraud was 20 years, but only because Congress had increased these penalties in 2002.
See Sarbanes-Oxley Act of 2002 § 903, 16 Stat. 745, 805 (codified as amended at 18 U.S.C.
§§ 1341, 1343 (effective July 30, 2002)). At the time of the fraud, however, the maximum
penalty was five years. 18 U.S.C. §§ 1341, 1343 (2000). (The maximum sentence for money
laundering has remained unchanged at 10 years’ imprisonment. 18 U.S.C. § 1957.) Thus, as
the government concedes, the district court should have begun its calculation with a base
offense level of 6, not 7.

        But a remand is unnecessary if the error in calculation did not affect the selection of
the sentence. United States v. Abbas, 560 F.3d 660, 667 (7th Cir. 2009). The district court’s
erroneous addition of a point under § 2B1.1(a)(1) was offset by the court’s failure to follow
U.S.S.G. § 2S1.1, the offense guideline applicable to violations of 18 U.S.C. § 1957. As the
presentence report correctly notes, a sentencing court should determine the offense level
for money laundering by first calculating the offense level for the underlying crime, if it can
be determined. U.S.S.G. § 2S1.1(a)(1). In Harris’s case, that should mean the correct base
offense level is 6 (as explained above), with the appropriate levels added for the amount of
the loss and Harris’s leadership role. See U.S.S.G. § 2B1.1; United States v. Hodge, 558 F.3d
630, 637 (7th Cir. 2009); United States v. Cruzado-Laureano, 440 F.3d 44, 48 (1st Cir. 2006);
United States v. Baretz, 411 F.3d 867, 875-76 (7th Cir. 2005). But then § 2S1.1(b)(2)(A)
instructs that one additional level be added for a conviction under § 1957. When § 2S1.1
was amended in 2001, the Sentencing Commission explained that “all direct money
launderers will receive an offense level that is one to four levels greater than the Chapter
Two offense level for the underlying offense, depending on the statute of conviction and
sophistication of the money laundering offense conduct.” U.S.S.G. app. C, Amendment
634; see Hodge, 558 F.3d at 637. The district court should have added the additional level to
Harris’s total, but did not. Consequently, the error in overstating the base offense level by
one level was harmless, because the total offense level would have ended up at the same
place.

        As for the amount of loss, Harris admitted in the district court that Enterprise billed
the City by sending invoices for services already paid for by Rieth-Riley. But the amount
Enterprise received under its subcontract with Rieth-Riley was small—less than
$100,000—and Harris contends that all of Enterprise’s charges to the City above that
amount were legitimate. The government counters that $1.6 million is the correct measure
of the loss because all of the work Enterprise did at the stadium site was bought and paid
for by Rieth-Riley.
No. 08-3010                                                                             Page 4

       We review a loss calculation only for clear error, so the defendant bears a heavy
burden in showing that the district court’s finding is “‘not only inaccurate but outside the
realm of permissible computations.’” United States v. Peterson-Knox, 471 F.3d 816, 822 (7th
Cir. 2006) (quoting United States v. Lopez, 222 F.3d 428, 437 (7th Cir. 2000)).

        Harris testified at sentencing that he was entitled to the majority of the funds
because his prior contracts with the City authorized him to receive payment for hauling
demolition debris. When construction began on the stadium site in June 2001, there were
still buildings left to be demolished, and Harris contends that all of the invoices he
submitted to the City were for hauling and disposing of demolition debris. At trial,
however, the government presented evidence that the material hauled by Enterprise was
not demolition debris (for which the company might have been entitled to disposal
payments from the City) but excavation debris it was solely obligated to haul for Rieth-
Riley. The government’s expert, a retired IRS agent, testified that he analyzed all of
Enterprise’s billing records and concluded that all of the City’s nearly $1.6 million in
payments were related exclusively to excavation work at the stadium site, and that none of
the money was for hauling and disposing of demolition debris. The former agent’s
testimony was consistent with the testimony of Enterprise’s drivers, who all testified that
they hauled excavation debris (i.e., dirt and sand). The district court’s choice to credit the
former agent and the drivers was not clearly erroneous.

                                                                                 AFFIRMED.