Court Opinion

ID: 33571
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:06:31+00
Date Added: 2024-06-11T16:50:05.445189
License: Public Domain

United States Court of Appeals
                                                               Fifth Circuit
                                                            F I L E D
              IN THE UNITED STATES COURT OF APPEALS        December 15, 2003
                      FOR THE FIFTH CIRCUIT
                                                        Charles R. Fulbruge III
                      _____________________                     Clerk

                           No. 03-30390
                      _____________________

                    United States of America,

                      Plaintiff - Appellee,

                               v.

                       Richard D. O’Neal,

                     Defendant - Appellant.

_________________________________________________________________

           Appeal from the United States District Court
        for the Western District of Louisiana, Alexandria
                 District Court No. 02-CR-10001-1
_________________________________________________________________

Before DEMOSS, DENNIS and PRADO, Circuit Judges.1

PER CURIAM.

     Mr. O’Neal was indicted on nine counts resulting from his

conduct during bankruptcy proceedings.   These counts charged him

with the transfer and concealment of property and assets during

bankruptcy (Counts 1, 2, 4, 6 and 8); money laundering (Counts 3

and 7); the making of false declarations, certifications, and

     1
     Pursuant to 5th Cir. R. 47.5, this Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5th Cir. R.
47.5.4.

                               -1-
statements during bankruptcy (Count 5); and the making of false

statements during a court proceeding (Count 9).

         Mr. O’Neal pleaded guilty to Counts 5 and 9 in exchange for

waiver of the remaining counts.     The district court ordered Mr.

O’Neal to pay restitution of $163,460.00.     On appeal, Mr. O’Neal

challenges the amount of restitution and the restitution payment

schedule ordered by the district court.

Factual Background

     Mr. O’Neal and his ex-wife, Helen O’Neal2, worked in the

scrap business and operated as O’Neal Salvage.     In November 1996,

the two filed a Chapter 13 bankruptcy petition in the Bankruptcy

Court for the Western District of Louisiana.     That petition was

dismissed on January 22, 1997.     On January 28, 1997, the couple

filed a voluntary bankruptcy petition under Chapter 11 in the

same court.     During the bankruptcy proceedings the couple

established a debtor in possession (“DIP”) account at Evangeline

State Bank.     In October 1997, Mr. O’Neal opened a separate

account with his nephew, Brian Corley, under the name “Black

River Trading Company” at the Catahoula-LaSalle Bank in

Jonesville, Louisiana (“Black River account”).     Mr. O’Neal did

not inform the bankruptcy trustee or his creditors of the Black

River account.

     2
     The couple was married during the beginning of bankruptcy
proceedings but was divorced by 1999. Charges were also brought
against Helen O’Neal but were later dismissed.

                                  -2-
     Before beginning bankruptcy proceedings, Mr. O’Neal owned a

Komatsu PC300 excavator valued at $140,000.00, and insured by

Travelers Insurance Company.    The excavator secured a debt of

$191,000.00 that Mr. O’Neal owed to KDC Financial.    When the

excavator was destroyed in a sink hole, Travelers Insurance

mistakenly reimbursed Mr. O’Neal $88,250.00 when it should have

paid the secured creditor, KDC Financial, directly.    Mr. O’Neal

eventually paid $40,000.00 to KDC Financial, but he retained the

remaining insurance proceeds of $48,250.00.    Mr. O’Neal later

sold the excavator for $42,460.00 plus $25,500.00 worth of other

equipment.   The retained insurance proceeds and the earnings on

the scrap sale were not turned over to KDC Financial, or

disclosed to the bankruptcy trustee.    In bankruptcy court

proceedings, Mr. O’Neal denied having received anything other

than two late-model trucks in exchange for the excavator.

     Mr. O’Neal also failed to disclose that he had insured an

Al-Jon bailer that was owned by his son.    When the bailer was

destroyed in a fire, Mr. O’Neal received $68,500.00 in insurance

proceeds.    Mr. O’Neal retained $20,500.00 of those proceeds,

using the rest to pay off an outstanding loan on the bailer.      Mr.

O’Neal then sold the bailer for $10,000.00.    Mr. O’Neal did not

report the insurance proceeds or the scrap metal proceeds in his

bankruptcy report.    After his conviction, but before sentencing,

Mr. O’Neal badly burned his hands while working on a vehicle.

                                 -3-
Sentencing

     Mr. O’Neal pleaded guilty to Counts 5 and 9 of the

indictment against him.   Count 5 alleged that Mr. O’Neal “did

knowingly and fraudulently make a false declaration,

certification, verification and false statement, made under

penalty of perjury,” and specified that he “did not note either

his ownership of a 1993 Ranger boat or his ownership of a 1996

Ford Mustang, all in violation of 18 U.S.C. § 152(3).”    Count 9

alleged that, at a hearing on a Motion to Dismiss, Mr. O’Neal

“did knowingly and fraudulently make a false statement under

penalty of perjury,” and specified that he falsely stated “that

(1) he traded scrap collateral (Komatsu PC300 excavator) for two

trucks and (2) that he purchased two trucks, a 1982 Kenilworth

and a 1970 International F2000D, for the scrap of the PC 300, all

in violation of 18 U.S.C. § 153 (3).”   In pleading guilty to

Counts 5 and 9, Mr. O’Neal’s signed an agreement that read: “in

addition to the penalties set forth in the preceding paragraphs,

the Court may order him to make restitution to the creditors who

were victims of the bankruptcy fraud alleged in the indictment

and that the amount of restitution and method of payment is in

the discretion of the Court.”

       The district court ordered the Probation Office to conduct

a pre-sentence investigation report of Mr. O’Neal.   The report

showed Mr. O’Neal had a net income of $40.00 per month.   In

                                -4-
addition, the Probation Office calculated that Mr. O’Neal’s

conduct had caused his creditors to lose $163,460.00.     This sum

included proceeds Mr. O’Neal had earned from the sale of the 1993

Ranger boat and the 1966 Ford Mustang mentioned in Count 5.      The

sum also included the insurance proceeds and salvage sale

earnings from the excavator and the bailer.

     Mr. O’Neal was sentenced to 15 months incarceration and

ordered to immediately pay $200.00 to the Crime Victims Fund.

The district court also assessed a fine of $4,000.00 and

restitution of $163,460.00.     The district court specified that

beginning within 30 days of his release Mr. O’Neal would be

required to pay $136.00 per month on the fine and $4,807.00 per

month on the restitution.   Mr. O’Neal was given a supervised

release period of 36 months.3

Standard of Review

     If a restitution order is permitted by law, the propriety of

the particular award is reviewed for abuse of discretion.       United

States v. Reese, 998 F.2d 1275, 1280 (5th Cir. 1993).     The

factual findings underlying the award are reviewed for clear

error.   United States v. Cihak, 137 F.3d 252, 263 (5th Cir.

1998).   If a defendant fails to timely object to a restitution

award at sentencing, the underlying factual findings are reviewed

     3
     If Mr. O’Neal begins these payments within 30 days of his
release, and pays the full amount each time, he will complete the
restitution payment in the 35th month of his supervised release.

                                  -5-
for plain error, rather than for clear error.      United States v.

Olano, 507 U.S. 725, 732 (1993); and FED. R. CRIM. P. 52(b).     Plain

error exists where there is error, the error is plain, and the

error affects substantial rights.      Olano, 507 U.S. at 732.   If

plain error is found, this Court has discretion to decide whether

to correct that error.   United States v. Vital, 68 F.3d 114, 119

(5th Cir. 1995) (finding correction appropriate where a failure

to correct would seriously affect the “fairness, integrity, or

public reputation of judicial proceedings”).

     This Court will only reverse a district court’s restitution

order if the appellant demonstrates that it “is probable that the

district court failed to consider one of the mandatory factors

and the failure to consider that factor influenced the court.”

United States v. Schinell, 80 F.3d 1064, 1070 (5th Cir. 1996).

Amount of Restitution

     Mr. O’Neal does not object to the fact that restitution was

ordered.   Instead, he contends that the amount of that

restitution violated the guidelines of the Victim and Witness

Protection Act, 18 U.S.C. §§ 3663-3664. (“VWPA”).      He argues that

the insurance and sale proceeds from the bailer, and the salvage

proceeds from the excavator, should not have been included in his

restitution because they were not losses suffered by victims of

the crimes of which he was convicted.     He contends that the total

                                 -6-
restitution should have been, at most, $59,210.00,4 which would

have qualified him for a lesser sentence under the Sentencing

Guidelines.   Because Mr. O’Neal did not timely object to the

amount of his restitution order, this Court reviews the district

court’s factual findings underlying that award for plain error.

See Olano, 507 U.S. at 732.

     Under the VWPA, courts may order convicted defendants to

compensate their victims for any losses that resulted from the

defendants’ crimes.   A victim of a defendant’s crimes is defined

as “a person directly and proximately harmed as a result of the

commission of an offense . . .” 18 U.S.C. § 3663A(a)(2).

Creditors, trustees and investors are considered victims of

bankruptcy fraud for purposes of restitution.   United States v.

Cluck, 143 F.3d 174, 180 (5th Cir. 1998); United States v.

Dahlstrom, 180 F.3d 677, 686 (5th Cir. 1999).   Courts may also

order restitution in a criminal case “to the extent agreed to by

the parties in a plea agreement.” 18 U.S.C. § 3663(a)(3).

     Additionally, the VWPA includes in the category of

compensable victims, anyone directly harmed by the defendant’s

criminal conduct in the course of a scheme, conspiracy, or

pattern, where the defendant’s offense involved as an element a

     4
     Mr. O’Neal calculated this figure by adding the $11,500.00
he earned from the sale of the Ranger boat, the $5,250.00 he
earned from the sale of the Ford Mustang; and the $42,460.00 he
retained from the insurance proceeds he received for the
excavator.

                                -7-
scheme, conspiracy, or pattern of criminal activity.      See id.

This Court has held that “where a fraudulent scheme is an element

of the conviction, the court may award restitution for ‘actions

pursuant to that scheme.’” United States v. Cothran, 302 F.3d

279, 289 (5th Cir. 2002) (quoting United States v. Stouffer, 986

F.2d 916, 928 (5th Cir. 1993)).     In order to determine which of a

defendant’s actions are actions pursuant to a scheme of conduct,

courts must focus on the actions alleged in the indictment and

their temporal scope.     Id.

     Before even reaching the extent of any scheme by Mr. O’Neal,

this Court can dispose of Mr. O’Neal’s claim that the insurance

proceeds from the excavator should not have been included in his

restitution.   Count 1 of the indictment against Mr. O’Neal

alleged that he knowingly and fraudulently transferred the

$48,250.00 in insurance proceeds from the excavator.      In his plea

agreement, Mr. O’Neal agreed to pay restitution for all of the

offenses charged in the indictment, not merely those to which he

pleaded guilty.   Mr. O’Neal’s creditors, who are represented by

the U.S. Bankruptcy Trustee, lost money because of Mr. O’Neal’s

fraudulent conduct, and were therefore direct and proximate

victims of his conduct.     See Cluck, 143 F.3d at 180.   The

$48,250.00 was properly included in Mr. O’Neal’s restitution

because it was a restitution payment to which he had agreed in

his plea agreement.     See 18 U.S.C. § 3663(a)(3).   This Court

                                  -8-
finds no error in the district court’s inclusion of that sum in

Mr. O’Neal’s restitution.

     Mr. O’Neal’s earnings from the bailer, however, were not

mentioned in the indictment, and therefore require a different

analysis.   Mr. O’Neal argues that he had no obligation to declare

proceeds from the bailer because he did not technically own it.

However, Mr. O’Neal gained income from his conduct regarding the

bailer.   He was required by the bankruptcy court to disclose all

of his earnings and income, whether derived from property he

owned or not.   The charges in the indictment against Mr. O’Neal,

taken together, describe a scheme of bankruptcy fraud between

November 12, 1997 and August 28, 1998.     During this time, Mr.

O’Neal hid profits and insurance proceeds from the U.S.

Bankruptcy Trustee, and lied during bankruptcy proceedings about

having done so.   Mr. O’Neal’s relevant conduct regarding the

bailer took place in November and December of 1997, well within

the time period of the other conduct alleged in the indictment.

Furthermore, Mr. O’Neal also fraudulently hid these resources

from the U.S. Bankruptcy Trustee.      His failure to declare profits

from the bailer can easily be seen as an action pursuant to a

scheme of bankruptcy fraud.    See Cothran, 302 F.3d at 289.

Therefore, the district court did not err by including those

proceeds in the restitution order.      See id.

Restitution Payment Schedule

                                 -9-
     Mr. O’Neal contends that the district court erred by not

considering his financial situation when it created his

restitution payment schedule.   The following factors are to be

considered in determining a restitution payment schedule: 1) the

financial resources and other assets of the defendant, including

whether any of these assets are jointly controlled; 2) projected

earnings and other income of the defendant; and 3) any financial

obligations of the defendant, including obligations to

dependants.   18 U.S.C. § 3664(f)(2).   A district court’s

restitution payment schedule will only be reversed if the

appellant demonstrates “that is probable that the district court

failed to consider one of the mandatory factors and the failure

to consider that factor influenced the court.”    United States v.

Schinnell, 80 F.3d 1064, 1070 (5th Cir. 1996).    In addition to

considering a defendant’s financial situation at the time of

sentencing, this Court has noted the importance of 18 U.S.C. §

3664(k), which allows a district court to adjust its payment

schedule if defendant’s earnings turn out be insufficient to meet

the payments.   United States v. Caldwell, 302 F.3d 399, 420-421

(5th Cir. 2002).

     In this case, the district court ordered a Pre-Sentence

Investigation into Mr. O’Neal’s financial situation.    In light of

that report, the district court ordered that Mr. O’Neal would not

be required to pay interest on the restitution.    This decision

                                -10-
shows that the district court considered Mr. O’Neal’s financial

situation.

       Mr. O’Neal asserts that the payment schedule will be

impossible for him to meet, especially considering the burn

injuries he sustained.    However, he makes no showing that the

district court failed to consider one of the mandatory financial

factors in ordering the payment schedule.       Although Mr. O’Neal’s

earnings were low at the time of sentencing and he had no assets,

he had supported himself in the past, and was without any debts

or dependents.    This Court finds no error in the district court’s

payment schedule order.    See Schinell, 80 F.3d at 1070.

       If, upon Mr. O’Neal’s release, he is unable to meet the

payment schedule, the district court can alter that schedule

pursuant to 18 U.S.C. § 3664(k).        See Caldwell, 302 F.2d at 420-

420.

       This Court AFFIRMS the judgment of the district court.

                                 -11-