Court Opinion

ID: 2676743
Source: CourtListenerOpinion
Date Created: 2014-06-02 21:00:27.818825+00
Date Added: 2024-06-11T11:18:23.783068
License: Public Domain

FILED
                           NOT FOR PUBLICATION                             JUN 02 2014

                                                                       MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                        No. 12-10467

              Plaintiff - Appellee,              D.C. No. 4:10-CR-03578-DCB-
                                                 HCE-1
  v.

PHILLIP ERNEST NARUM,                            MEMORANDUM*

              Defendant - Appellant.

UNITED STATES OF AMERICA,                        No. 12-10658

              Plaintiff - Appellee,              D.C. No. 4:10-CR-03578-DCB-
                                                 HCE-1
  v.

PHILLIP ERNEST NARUM,

              Defendant - Appellant.

                    Appeal from the United States District Court
                             for the District of Arizona
                     David C. Bury, District Judge, Presiding

                        Argued and Submitted May 13, 2014
                             San Francisco, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: D.W. NELSON, McKEOWN, and M. SMITH, Circuit Judges.

      Phillip Narum pled guilty to two counts of filing a false tax return and one

count of failure to file an income tax return, and was found guilty of fourteen

counts of wire fraud after a jury trial. Narum received principally a 48-month

sentence and was ordered to pay $632,685.99 in restitution to Michael Young and

Bryant Young. Narum appeals his wire fraud convictions, his sentence, and his

restitution order. We have jurisdiction under 28 U.S.C. § 1291, and we reverse in

part, affirm in part, vacate in part, and remand for further proceedings.

      Narum first argues that the district court erred by admitting into evidence all

transfers of money from Young & Sons’ accounts to Narum, including money he

received pursuant to the terms of his employment contracts. We reject this

argument. The charged wire fraud is inextricably intertwined with Narum’s

employment history with Young & Sons and the transfers of money from the

company to Narum. United States v. King, 200 F.3d 1207, 1215 (9th Cir. 1999);

United States v. Vizcarra-Martinez, 66 F.3d 1006, 1012–13 (9th Cir. 1995).

      Narum next argues that we should reverse his conviction for counts 1, 2, and

6 of the indictment, which charged Narum with wire fraud arising out of transfers

from his personal bank account to pay for a dragster and dragster parts. We agree.

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Once Narum converted Young & Sons’ funds by transferring them to his personal

bank account, his subsequent use of the wires to buy dragsters was not in

furtherance of his scheme to defraud, but instead was meant to allow him to enjoy

the fruits of his crime. United States v. Redcorn, 528 F.3d 727, 739 (10th Cir.

2008). The conduct charged in counts 1, 2, and 6 thus does not constitute wire

fraud as a matter of law. United States v. McNeil, 320 F.3d 1034, 1040 (9th Cir.

2003) (“Wire fraud has three elements: a scheme to defraud, use of the wires in

furtherance of the scheme, and the specific intent to defraud.”). We reject the

government’s contention that a wire fraud conviction may be based on any wire

transfer taking place during the time period encompassed by the scheme to

defraud. Wire fraud requires a use of the wires in furtherance of a scheme to

defraud, not merely a use of the wires during a scheme to defraud.

      Narum next argues that there was insufficient evidence to convict him of

wire fraud based on his use of the Young & Sons credit card for personal expenses.

We reject this argument. Although Narum contends that he intended to repay

Young & Sons and that his personal use of the company card was therefore

authorized, viewed in the light most favorable to the prosecution, a rational jury

was free to reject this argument and conclude Narum never intended to repay the

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company. United States v. Inzunza, 638 F.3d 1006, 1013 (9th Cir. 2011) (amended

opinion).

      Turning to sentencing, Narum argues that the district court erred by

grouping Narum’s wire fraud and tax convictions under U.S.S.G. § 3D1.2, and by

denying Narum a reduction for acceptance of responsibility for pleading guilty to

the tax counts. We reject these arguments. The counts were properly grouped

because “one of the counts embodies conduct that is treated as a specific offense

characteristic in, or other adjustment to, the guideline applicable to another of the

counts.” U.S.S.G. § 3D1.2(c). Specifically, the tax counts were subject to a two-

level enhancement due to the conduct underlying the wire fraud, because the

fraudulently derived income Narum failed to report was from a “source of income

exceeding $10,000 in any year from criminal activity.” Id. § 2T1.1(b)(1). Since

Narum did not plead guilty to all of the properly grouped offenses, he was not

entitled to an acceptance of responsibility adjustment. United States v. Ginn, 87

F.3d 367, 370 (9th Cir. 1996) (“[A] defendant is not entitled to an adjustment when

he does not accept responsibility for all of the counts of which he is convicted.”);

United States v. Garrido, 596 F.3d 613, 618–19 (9th Cir. 2010) (limiting Ginn in

cases where counts are grouped separately and it is thus “possible to calculate

acceptance of responsibility for each separate offense”).

                                           4
      Finally, Narum argues that the district court erroneously calculated

restitution and loss by (1) undervaluing Narum’s work on the Copper Hills Project,

(2) failing to credit him the full $500,000 he was purportedly owed under his

second written employment contract, and (3) concluding that the restitution and

loss figures included the excess pay he received prior to the date he obtained

signatory authority over the Young & Sons accounts. We reject the first argument.

While Narum points out that the government submitted inconsistent valuations of

this work at different points in the case, the district court’s restitution order

carefully explains these inconsistencies, and its final valuation did not constitute

clear error. United States v. Lawrence, 189 F.3d 838, 844 (9th Cir. 1999). We also

reject the second argument. Narum’s second written employment contract

contemplated that he would be paid $100,000 per year, and Bryant Young testified

that he did not approve payments in excess of that amount. We agree, however,

with Narum’s third argument. According to the testimony at trial, all payments

Narum received prior to the date he obtained signatory authority were approved by

Bryant Young, and there was no evidence that Narum obtained this approval by

fraud. Instead, the evidence merely showed that Narum asked for money beyond

what he was due under his contract, and that Young gave him the money. Thus,

                                            5
the excess payments Narum received prior to obtaining signatory authority over

Young & Sons’ accounts were not obtained through Narum’s scheme to defraud.

      Although the district court’s loss figure was therefore inflated, the error was

not material to the district court’s application of the Guidelines. Subtracting the

pre-signatory authority overpayments from the district court’s computation of loss

could not yield a loss figure below $400,000, leading to the same base offense

level the district court used in its determination of Narum’s Guidelines sentence.

Thus, we affirm Narum’s sentence of 48 months. The restitution figure, however,

should be reduced to exclude the pre-signatory authority excess payments

approved by Young. We remand for further proceedings to allow the district court

to calculate the precise amount of this reduction, allocate the reduction between

Michael Young and Bryant Young, and then reenter a restitution order against

Narum.

      Accordingly, we REVERSE Narum’s convictions on counts 1, 2, and 6 of

the indictment, AFFIRM Narum’s remaining conviction and sentence, VACATE

the district court’s order directing Narum to pay restitution to Michael Young and

Bryant Young, and REMAND for further proceedings consistent with this

disposition.

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