Court Opinion

ID: 2961580
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:44:59.983439+00
Date Added: 2024-06-11T11:21:00.296599
License: Public Domain

USCA1 Opinion

	

          November 20, 1992                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________          No. 91-2293                                    UNITED STATES,                                      Appellee,                                          v.                                  LLOYD R. HAGGERT,                                Defendant, Appellant.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                              FOR THE DISTRICT OF MAINE                     [Hon. D. Brock Hornby, U.S. District Judge]                                            ___________________                                 ____________________                                        Before                              Torruella, Circuit Judge,                                         ______________                            Brown,* Senior Circuit Judge,                                     ____________________                          and Bownes, Senior Circuit Judge.                                      ____________________                                 ____________________               Charles  F. Dalton,  Jr., with  whom Dalton, Baron  & London               __________________                   _______________________          were on brief for appellant.               F. Mark Terison, Assistant United States Attorney, with whom               _______________          James L. McCarthy, Assistant  United States Attorney, and Richard          _________________                                         _______          S. Cohen, United States Attorney, were on brief for appellee.          ________                                 ____________________                                 ____________________          ____________________          *of the Fifth Circuit, sitting by designation.                                          1                    BOWNES, Senior Circuit  Judge.   Defendant-Appellant,                            _____________________            Lloyd Haggert,  appeals the sentence imposed  by the district            court   following   his   conviction   for   bank   fraud.               Specifically,  Haggert challenges the court's imposition of a            five-level increase  from his  base offense under  Sentencing            Guideline    2F1.1, which mandates such  an increase when the            "loss" attendant to fraud is "more than $40,000."  U.S.S.G.              2F1.1(b)(1)(F) (Nov. 1991).  The district court looked to the            amount of  loss that Haggert intended  to obtain fraudulently            from the bank, in assessing loss at $62,508.50, the sum total            of Haggert's  fraudulent sight drafts.   Haggert asserts that            the  court  ought  instead  to  have  used  the  actual  loss            resulting  from his  criminal  conduct, which  the court  had            determined was $5,511.30.  We  affirm the sentence imposed by            the district court.                                         I.                                           I.                                     Background                                       Background                                     __________                    Lloyd Haggert was convicted  by a jury in the  United            States District Court for the District  of Maine of violating            Title 18  U.S.C.   1344, by  defrauding the federally-insured            Skowhegan  Savings  Bank.     The  act  underlying  Haggert's            conviction  was his  attempt  to pay  delinquent real  estate            mortgages  with valueless  sight drafts.   On  May 30,  1989,            Haggert presented two sight drafts, totalling $62,508.50,  to            the  assistant manager of the  Skowhegan Savings Bank who, at                                         -2-            that time, believed them  to be cashier's checks  and stamped            them  as paid.  The  bank later discovered  that these drafts            lacked   a   financial  institution   identification  number.            Further investigation revealed that the financial institution            upon which  they were drawn  was not a  legitimate, operating            institution.                    When the Skowhegan Savings  Bank refused to discharge            Haggert's mortgages, Haggert  obtained a judgment to  enforce            the  sight  drafts.1    The  bank  eventually  foreclosed  on            Haggert's mortgages.  After  accounting for the proceeds from            foreclosure,  the bank  suffered a  loss  of $20,248.10.   In            addition, the  bank incurred  costs of $5,511.30,  in fending            off  Haggert's  attempts  to  force  the  bank  to  honor the            fraudulent sight drafts.                        Prior  to  his sentencing,  Haggert responded  to the            pre-sentence report  prepared  by the  government.    Haggert            objected to  the determination of the  amount of restitution,            which had been set  at $25,759.40, to reflect the  total loss            to  the  bank in  its dealings  with  Haggert.   In addition,            Haggert  challenged  two  factual  assertions  that  are  not            pertinent  to the issue before  us.  Haggert  made no further            objections  either at  the pre-sentence  stage or  during the            sentencing  hearing.   In fact,  the district  judge directly                                            ____________________            1  It would appear  that the defendant  obtained the judgment            himself, without going through any judicial procedures.                                         -3-                                          3            asked Haggert  whether he  had any additional  objections, at            the beginning of  the sentencing hearing, and whether  he had            anything to add, near the end of the hearing.                      The district court determined  that the amount of the            defendant's  fraud was  $62,508.50, and  added  the mandatory            five-level  increase  for  loss   of  more  than  $40,000  to            Haggert's   sentence.  For   the   purpose   of   calculating            restitution,  the  court determined  that  the  bank's actual            damages were  limited by statute to the loss directly related            to the criminal conduct  of the defendant and  thus exclusive            of  the bank's  foreclosure  costs.   See  18 U.S.C.     3664                                                  ___            (1988).  The court established  that the actual damage caused            by  the defendant's fraud was $5,511.30, the cost to the bank            of Haggert's attempts to enforce the fraudulent sight drafts.            Haggert  was sentenced to a term of fifteen months in prison,            followed by a  two-year term of  supervised release, and  was            ordered  to pay  $5,511.30  in restitution  to the  Skowhegan            Savings Bank.                                          II.                                          II.                                      Discussion                                      Discussion                                      __________            A.  Standard of Review                 __________________                    We have repeatedly stated in  the sentencing context,            as  well as in other areas,  that issues not presented to the            district  court will not be  addressed for the  first time on            appeal. See, e.g.,  United States v. Shattuck, 961 F.2d 1012,                    ___  ____   _____________    ________                                         -4-                                          4            1015 (1st Cir. 1992)("[w]e do not review sentencing guideline            disputes  which  were  not  preserved  before   the  district            court.")(citing United States v. Dietz,  950 F.2d 50, 55 (1st                            _____________    _____            Cir. 1991)); United  States v. Uricoechea-Casallas,  946 F.2d                         ______________    ___________________            162,  166  (1st  Cir.   1991)(failure  to  raise   sentencing            guideline  issue at  district court  precludes raising  it on            appeal);  United States v. Curzi,  867 F.2d 36,  44 (1st Cir.                      _____________    _____            1989)("an issue not presented in the district  court will not            be addressed for the first time on appeal.").  As we observed            in the case of Hernandez-Hernandez v. United States, 904 F.2d                           ___________________    _____________            758, 763 (1st Cir. 1990), "[w]e have applied this proposition            in  well over a hundred cases since Johnston v. Holiday Inns,                                                ________    ____________            595 F.2d 890 (1st Cir. 1979)."                    In Johnston, this court explained that while the rule                       ________            governing issues raised for  the first time on appeal  is not            absolute, it is relaxed only in extreme cases.  Arguments not            raised  below   will  be   entertained  on  appeal   only  in            "`horrendous cases where a gross miscarriage of justice would            occur'" and, in addition, where the  newly asserted ground is            "`so compelling as virtually to insure appellant's success'."            Id. at 894.   The Johnston standard was recently  affirmed in            ___               ________            United States v. McMahon, 935 F.2d 397, 400 (1st Cir. 1991).            _____________    _______                    In  this  case,  Haggert  had  ample  opportunity  to            challenge  the sentence  imposed.   The  pre-sentence  report            assessed  the amount  of fraud  as $62,508.50,  and expressly                                         -5-                                          5            recommended the five-level increase eventually adopted by the            district court.   In  his memorandum responding  to the  pre-            sentence report,  Haggert offered three  objections, none  of            which concerned either the calculation of the amount of fraud            or the five-level increase.   Moreover, during the sentencing            hearing,  the  district  court  judge took  care  to  inquire            whether  Haggert  had  further objections  or  comments,  and            Haggert voiced no additional concerns.  See generally, United                                                    ___ _________  ______            States v. McMahon, 935 F.2d at 399 (failure to object to pre-            ______    _______            sentence report); United  States v.  Fox, 889  F.2d 357,  359                              ______________     ___            (1st  Cir. 1989)(failure to challenge facts set forth in pre-            sentence  report either  in responsive  memorandum  or during            sentencing  hearing precluded  raising challenge  as to  same            issue on appeal).                      Because  Haggert   neglected  to  raise   before  the            district court the sole basis of his appeal, Haggert's appeal            is precluded subject only to the narrow exception articulated            in Johnston.   Our reading  of the Sentencing  Guidelines and               ________            the  supporting case law convinces  us that no  error of such            proportion exists  in  this case.    Far from  implicating  a            miscarriage of  justice, or  evoking a  new ground  of almost            assured success,  the district court's sentence  was a proper            interpretion  and application of  the Sentencing Guidelines.2                                            ____________________            2 Had  Haggart preserved his  claim below, our  inquiry would            have  been two-fold.  In Sentencing Guideline cases, we first            determine de novo  the scope  of the Guideline  at issue  and                      __ ____                                         -6-                                          6            Indeed,  we  are  convinced   that  Haggert  would  not  have            prevailed  on the merits even if the issue had been preserved            for appeal.            B.  The Sentencing Guidelines                _________________________                    The issue raised  on appeal is the  meaning of "loss"            in  the Sentencing  Guideline covering  fraud.   The district            court measured loss by the amount that the defendant intended                                                                 ________            to obtain fraudulently from the bank.   Defendant argues that            the actual  loss resulting  from his criminal  conduct should                ______            have  provided  the basis  for augmenting  his sentence.   We            begin with an examination of the Sentencing Guidelines.                    Guideline   2F1.1 covers  crimes involving fraud  and            deceit.  That Guideline  begins with a base offense  level of            six, which  level is adjusted  upward in accordance  with the            dollar  value of  the loss  involved in  the crime.   Section            2F1.1  mandates an increase of five levels when the "loss" is            "more than $40,000."   U.S.S.G.   2F1.1(b)(1)(F) (Nov. 1991).                    Application Note 7 of the Commentary accompanying the            Guideline  deals with  the valuation  of  loss.   In relevant            part, Application Note 7 provides:                     Consistent  with  the provisions  of    2X1.1                    (Attempt, Solicitation or Conspiracy),  if an                    intended   loss   that   the  defendant   was                                            ____________________            then  assess  the  district court's  fact-finding  for  clear            error.  See United  States v. St. Cyr, No.  92-1639, slip op.                    ___ ______________    _______            at 6  (1st Cir. October 15, 1992).                                         -7-                                          7                    attempting to inflict can be determined, this                    figure will be used if it is greater than the                    actual loss.             U.S.S.G.   2F1.1,  comment. (n.7).2  This  explication of the            Guideline  has been relied upon  in the First  Circuit and in            other circuits.  See United States v. Cesar Resurreccion, No.                             ___ _____________    __________________            91-2015,  slip op.  at 7  (1st Cir.  October 30,  1992) (even            where  it cannot be stated  precisely, the intended loss will            be used  if it is  larger than  the actual loss).   See  also                                                                ___  ____            United States v. Schneider, 930 F.2d at 556; United States v.            _____________    _________                   _____________            Palinkas,  938  F.2d 456,  465 n.19  (4th Cir.  1991); United            ________                                               ______            States v. Smith, 951 F.2d 1164, 1166 (10th Cir. 1991); United            ______    _____                                        ______            States v. Shattuck, 961 F.2d at 1016 (citing United States v.            ______    ________                           _____________            Kopp, 951 F.2d 521 (3rd Cir. 1991)).            ____                                            ____________________            2 The first sentence in Application Note 7 refers the reader,            for a discussion of valuation of loss, to the Commentary in              2B1.1 (Larceny, Embezzlement, and Other Forms of Theft).  The            Commentary  in    2B1.1, in  turn, refers  for  discussion of            partially   completed   offenses   to       2X1.1   (Attempt,            Solicitation,  or Conspiracy).    The example  provided in               2B1.1 of  a partially completed offense is  a completed theft            that is part of a  larger, attempted theft.  This example  is            closely analogous to the case at hand where the defendant was            not  successful in  reaping  the anticipated  profits of  his            fraud.   See generally, United States  v. Schneider, 930 F.2d                     ___ _________  _____________     _________            555,  556  (7th  Cir.  1991)("Many  fraudulent   schemes  are            interrupted  before they  reach fruition.   From  a practical            standpoint they  are attempts,  and their gravity  depends in            significant  degree on the size  of the loss  that would have            been inflicted had the scheme not been interrupted.").                     The  second  sentence in  Application  Note  7, which            begins  the  quote  cited  above, also  refers  to     2X1.1.            Whichever  road  is  taken,  the  result  is  the  same.    A            sentencing  judge must look to the  amount that the defendant            intended  to  defraud or  to steal,  or  to the  actual loss,            whichever is greater.                                         -8-                                          8                    Application Note 7  contains an  example of  intended            loss  that  closely  approximates  the  crime   committed  by            Haggert.  The example provides  that, "if the fraud consisted            in . .  . representing that  a forged check  for $40,000  was            genuine,  the loss  would  be $40,000."    U.S.S.G.    2F1.1,            comment.  (n.7).   The fraudulent  sight drafts  that Haggert            presented to  the bank  as genuine  totalled $62,508.50.   By            analogy  to this example,  the loss would  be $62,508.50, the            assessment made by the district court.                    Notwithstanding the general rule whereby loss for the            purpose of  sentencing  is  the  greater  of  the  actual  or            intended losses, Haggert  urges us  to apply to  his case  an            exception narrowly created for  loan application and contract            procurement cases.  The exception, articulated in subpart (a)            of  Application  Note 7,  defines  a  category of  fraudulent            actions for which the  expected or actual loss to  the victim            provides the basis for the sentence enhancement.  Application            Note 7(a), in pertinent part, provides as follows:                                          -9-                                          9                         In fraudulent loan application cases and                    contract   procurement    cases   where   the                    defendant's  capabilities   are  fraudulently                    represented, the  loss is the actual  loss to                    the victim (or  if the loss has  not yet come                    about, the expected loss).  For example, if a                    defendant  fraudulently  obtains  a  loan  by                    misrepresenting the value  of his assets, the                    loss is the amount of  the loan not repaid at                    the time the  offense is discovered,  reduced                    by  the amount  the  lending institution  has                    recovered, or can expect to recover, from any                    assets pledged to secure the loan.                         In some cases, the loss determined above                    may significantly understate or overstate the                    seriousness of  the defendant's conduct . . .                    .            U.S.S.G.    2F1.1,  comment. (n.7(a)).   We  fail to  see the            relevance of this exception  for the factually distinct crime            of fraudulent loan  payments made well after  loans have been            secured.    Nevertheless,  we   examine  the  scope  of  this            exception  in   order  to  underscore  our   conclusion  that            Haggert's  fraud is  precisely the  sort of  criminal conduct            that the exception does not cover.                        The Seventh  Circuit has  explained the scope  of the            exception for fraudulent information in a loan application or            in contract procurement by  distinguishing between two  types            of  fraud. See United States  v. Schneider, 930  F.2d at 558.                       ___ _____________     _________            The first type of fraud implicates the "true con artist," who            never intends  to perform the undertaking, such  as the terms            of the contract or  loan repayments, but who intends  only to            pocket  the money  without rendering  any service  in return.            The second type of fraud involves a person who would not have                                         -10-                                          10            attained  the contract  or loan  but for  the fraud,  but who            fully intends  to perform.3 Id.  In the latter case, and only                                        __            in the latter case, is the intended loss not to be considered            for sentencing.                    Contrary to Haggert's attempt to place himself in the            latter category of offenders, Haggert's conduct is a paradigm            of the  first type  of fraud.   Haggert had  no intention  of            paying the loans  for which  he was in  default.  He  drafted            valueless  forms of payment which he presented to the bank as            valid.  When  he succeeded momentarily  in his ploy,  Haggert            went so far  as to attempt to enforce a  judgment against the            bank for the amount of his fraudulent sight drafts.  When the            bank had  difficulty locating the financial  institution upon            which the  fraudulent drafts  were drawn, Haggert  evaded the            bank's requests for his assistance, and obstructed the bank's            attempts to determine the facts, by continuing to insist upon            the  veracity  of  the  information  he  provided  the  bank.            Finally,  Haggert knowingly  presented the sight  drafts that            had  been  falsely stamped  as "paid"   to  another financial            institution to support  new loan applications.  Any  of these            actions alone would suffice  to establish Haggert's intention            not to  pay the  debts he  owed to  the bank;  together, they                                            ____________________            3 See generally, United States v. Smith, 951 F.2d at 1167 ("A              ___ _________  _____________    _____            thief who  steals $100,000 is  more culpable than  a salesman            who  obtains $100,000 by selling a victim an $80,000 house he            fraudulently represents as being worth $100,000.").                                         -11-                                          11            underscore  that  Haggert  fully  intended   to  defraud  the            Skowhegan Savings bank in the amount of $62,508.50.                     As  the Schneider  distinction  between two  types of                            _________            fraud  illustrates,  even   under  the  exception   for  loan            application and contract procurement cases, the intent of the            defendant is the measure by which the loss is to be assessed.            See United States v. Schneider, 930 F.2d at 558.   In each of            ___ _____________    _________            the  cases upon which  defendant relies where  the court held            that the  loss should be offset to reflect collateral pledged            by the defendant, or  that the actual loss  should constitute            the loss  for sentencing purposes, the  defendants lacked the            intent  to inflict the full amount  of the fraud.  See United                                                               ___ ______            States v. Smith, 951  F.2d at 1169 (finding no  evidence that            ______    _____            the  defendant  intended  to   inflict  the  amount  of  loss            established by the district  court); United States v. Hughes,                                                 _____________    ______            775  F.  Supp. 348,  349 (E.D.  Cal.  1991) (noting  that the            defendant neither  intended nor desired that  his loans would            go  into default).    Contrawise, in  loan application  cases            where there was no  intent to perform, the intended  loss has            provided the  basis for augmenting the  defendant's sentence.            See United States  v. Johnson,  908 F.2d 396,  398 (8th  Cir.            ___ _____________     _______            1990).                     The  Guidelines  are  concerned  with  assessing  the            seriousness of the defendant's  conduct, given the wide array            of conduct covered by  fraud.  See U.S.S.G.    2F1.1 comment.                                           ___                                         -12-                                          12            (backg'd.).4  See  also United States  v. Rothberg, 954  F.2d                          ___  ____ _____________     ________            217,  218  (4th  Cir. 1992).    What  the  Guidelines do  not            envision  is rewarding  a defendant  for her  or his  lack of            skill in executing a criminal act.  Haggert's failure to reap            the full  financial benefits  of his  fraud cannot  provide a            basis  for  lowering the  sentence  imposed  by the  district            court.                      Affirmed.                     ________                                            ____________________            4  Note  7(a),  which  articulates  the  exception  for  loan            applications and contract procurement, contains language that            underscores the  importance of  assessing the  seriousness of            the  defendant's  conduct as  well.   We  refer to  the first            sentence of the second paragraph quoted supra at p. 9.                                                     _____                                         -13-                                          13