Court Opinion

ID: 181144
Source: CourtListenerOpinion
Date Created: 2010-12-15 17:30:20+00
Date Added: 2024-06-11T12:53:58.644826
License: Public Domain

FILED
                                                           United States Court of Appeals
                                                                   Tenth Circuit

                                                                December 15, 2010
                     UNITED STATES COURT OF APPEALS
                                                  Elisabeth A. Shumaker
                                                                   Clerk of Court
                                 TENTH CIRCUIT
                            __________________________

 UNITED STATES OF AMERICA,

          Plaintiff-Appellee,
                                                         No. 09-1521
 v.                                           (D.Ct. No. 1:08-CR-00089-JLK-1)
                                                          (D. Colo.)
 ARNOLD ZALER,

          Defendant-Appellant.
                       ______________________________

                                ORDER AND JUDGMENT *

Before MURPHY, BALDOCK, and BRORBY, Circuit Judges.

      After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist in the determination

of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument.

      Appellant Arnold Zaler pled guilty to one count of wire fraud in violation

of 18 U.S.C. § 1343, two counts of bank fraud in violation of 18 U.S.C.

      *
         This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
 Cir. R. 32.1.
§ 1344(2), and one count of mail fraud in violation of 18 U.S.C. § 1341. Mr.

Zaler appeals his fifteen-year concurrent sentences which the district court

imposed following its decision not to apply the advisory United States Sentencing

Guidelines (“Guidelines” or “U.S.S.G.”). The district court determined

application of the Guidelines would produce sentences less than necessary to

achieve the purposes of the sentencing factors in 18 U.S.C. § 3553(a). We

exercise jurisdiction pursuant to 28 U.S.C. § 1291 and affirm Mr. Zaler’s

sentences.

                                   I. Background

      For the purposes of this appeal, we find it unnecessary to recount in full

detail the fraudulent conduct involved in this case other than to provide a general

account of the financial schemes perpetrated by Mr. Zaler, as set forth in the

stipulated facts contained in his plea agreement and the unobjected-to facts

provided in the presentence report.

      To begin, Mr. Zaler owned and operated Zaler’s Kosher Meats (Kosher

Meats), a company selling kosher hot dogs and other food products in Denver,

Colorado. In the Fall of 2005, he arranged with Kroenke Sports Enterprises

(Kroenke) to operate a single concession stand at the Pepsi Center, a professional

sports and entertainment facility in Denver, Colorado. Similarly, he contracted

                                         -2-
with another entity to operate a single hot dog concession, known as Kosher

Korner, LLC, at Invesco Field, the stadium for the Denver Broncos football team.

It is during these ventures Mr. Zaler fraudulently obtained loans from various

individuals and entities by making false representations and using fake purchase

orders to convince them he had outstanding accounts receivable for hot dogs from

which he would repay the loans.

                  A. Fraudulent Misrepresentations and Conduct

                           1. Fraud Against MEP Group
                                (Wire Fraud Count)

      On October 17, 2005, Mr. Zaler obtained a loan for $181,000 plus interest

from MEP Group based on his false representation Kroenke ordered 241,000 hot

dogs from his business, Kosher Meats, and his presentation of a fake purchase

order indicating Kroenke would pay $771,200 for purchase of those hot dogs.

When Mr. Zaler failed to repay the loan on schedule and MEP Group requested

payment assurances from Kroenke, Mr. Zaler arranged for Ryan Smith, his

contact at Kroenke, to meet with one of MEP Group’s principals. At Mr. Zaler’s

behest, Mr. Smith falsely represented Kroenke owed Kosher Meats $771,200 for

the purchase order in question and would pay Mr. Zaler on April 3, 2006. Later,

Mr. Zaler signed a document fraudulently representing to MEP Group that

Kroenke owed his business $771,200 and Mr. Zaler would satisfy his obligation

                                        -3-
with MEP Group after receiving payment from Kroenke. On April 4, 2006, Mr.

Zaler repaid MEP Group $306,764.25 from monies obtained through a loan from

Spivak Funding (Spivak), as discussed hereafter. After receiving the payment,

MEP Group agreed to advance Mr. Zaler’s business more money.

      In June 2006, Mr. Zaler provided MEP Group another false and fraudulent

Kroenke purchase order signed by Mr. Smith showing Kroenke ordered 150,000

hot dogs from Kosher Meats for $480,000. As a result, MEP Group caused its

bank to wire transfer $228,000 to Kosher Meats’ account at another bank.

Similarly, on August 2, 2006, MEP Group made a third loan to Kosher Meats for

$150,000 through a bank wire transfer based on Mr. Zaler’s misrepresentation he

had an order for 98,100 hot dogs from Centerplate, a company operating

concession stands at Invesco Field. As part of the same scheme, Mr. Zaler also

provided a fake Centerplate purchase order containing the forged signature of a

Centerplate employee which falsely showed Centerplate owed more than

$300,000 to Kosher Meats. In early 2007, when Mr. Zaler failed to repay these

loans, MEP Group threatened to sue him, after which he signed a repayment

agreement; however, Mr. Zaler only made one payment of $100,000 after

executing the agreement.

                                        -4-
                             2. Fraud Against Spivak
                             (First Bank Fraud Count)

      On February 23, 2006, while Mr. Zaler was defrauding MEP Group, he

obtained the aforementioned loan from Spivak by showing the owner two fake

Kroenke purchases orders, including the previously-mentioned $771,200 purchase

order for 241,000 hot dogs and another for $506,918.40 for 158,400 hot

dogs–both with the forged signature of Kroenke’s vice-president. On March 2,

2006, Mr. Zaler arranged for the owner of Spivak to meet with Mr. Smith, who,

again, at the direction of Mr. Zaler, misrepresented the authenticity of the

purchase orders and stated Kroenke intended to buy more hot dogs from Kosher

Meats. Mr. Smith also signed a document falsely representing the authenticity of

the purchase orders and agreeing that, in the event of a dispute between Kroenke

and Kosher Meats, Kroenke would pay all outstanding invoices “factored by

Spivak.”

      Thereafter, Mr. Zaler and Spivak entered into a “Factoring Agreement” in

which Kosher Meats, through Mr. Zaler, assigned its Kroenke accounts receivable

to Spivak in exchange for loans, even though the accounts receivable did not

exist. With the help of Mr. Smith, from March 2006 through June 2006, Mr.

Zaler sent Spivak eight sets of false and fraudulent documents relating to Kroenke

purchase orders for hot dogs from Kosher Meats. These sets of documents

                                         -5-
included letters signed by Mr. Smith falsely stating Kroenke received the

specified hot dogs from Kosher Meats. On receipt of each set of documents,

Spivak directed its bank to make interbank transfers from its bank account into

the bank account of Kosher Meats.

      In addition to the Kroenke fraudulent purchase orders, Spivak transferred

additional funds to Kosher Meats’ account based on two other fake purchase

orders prepared by Mr. Zaler. The first falsely represented Coors Field–the

stadium of the Colorado Rockies baseball team–ordered hot dogs from Kosher

Meats, and the other similarly misrepresented Centerplate at Invesco Field

ordered hot dogs from Kosher Meats.

      After Mr. Zaler failed to pay back the loans and Spivak contacted Mr.

Smith for payment from Kroenke, Mr. Smith again made false representations at

Mr. Zaler’s direction stating the money would be forthcoming. When Spivak did

not receive payment from Kroenke, it contacted Mr. Zaler, who provided a

$100,000 payment and made multiple additional false representations concerning

Kroenke’s alleged failure to pay the money due his company. Finally, on August

18, 2006, a Spivak representative contacted Kroenke’s general counsel and

learned Kroenke never purchased hot dogs from Kosher Meats. On the same day,

Mr. Zaler returned to Spivak the $188,352 he received from it as a result of the

                                         -6-
fake purchase order for hot dogs at Invesco Field.

                             3. Fraud Against Skupsky
                            (Second Bank Fraud Count)

      In August 2006, Mr. Zaler commenced yet another fraudulent scheme when

he contacted Donald Skupsky about funding his single hot dog concession stand

at Invesco Field. After Mr. Skupsky agreed to invest, they created Kosher

Korner, to which Mr. Zaler assigned his Invesco Field concession stand contract.

Mr. Zaler then provided Mr. Skupsky with a fake purchase order for hot dogs in

the amount of $313,920 with the forged signature of Steve Hall, a representative

of Centerplate. Based on this purchase order, between September 15, 2006, and

January 31, 2007, Mr. Skupsky made a series of loans by interbank transfer from

his account to the Kosher Korner account totaling $142,500. Meanwhile, in

December 2006, Mr. Zaler contacted Mr. Hall and asked him to create a false

document stating the fake Centerplate purchase order would be paid soon.

Instead, Mr. Hall contacted an FBI agent.

                           4. Fraud Against Perlmutter
                               (Mail Fraud Count)

      Between November 8, 2006, and February 8, 2007, while Mr. Zaler

conducted the aforementioned fraud schemes, he obtained three loans from a

Denver businessman, Jordan Perlmutter, in the amount of $323,000. Thereafter,

                                        -7-
between March 9, 2007, and June 4, 2007, Mr. Zaler provided Mr. Perlmutter

three personal checks for repayment of the loans, but all three checks were

returned for insufficient funds. In September 2007, Mr. Zaler misrepresented to

Mr. Perlmutter that his company contracted with Centerplate for the purchase of

$320,000 worth of hot dogs and that Super Target stores also owed his business,

Kosher Korner, $310,000 for hot dogs. Based on these false representations, Mr.

Perlmutter entered into an agreement and irrevocable assignment with Mr. Zaler,

in which Mr. Zaler misrepresented these companies owed him money and

assigned $300,000 of the fake accounts receivable to Mr. Perlmutter.

      On September 7, 2007, Mr. Perlmutter’s attorney sent, by FedEx, the

agreement and irrevocable assignment to Centerplate and a Super Target store.

Three days later, Mr. Zaler went to the Centerplate office, told a Centerplate

employee his attorney mistakenly sent Centerplate a package, and asked her to

retrieve the package without anyone seeing it. Apparently, no package was

retrieved, causing Mr. Zaler to call the same employee three times that day and

then approach her outside the Centerplate office, asking again about the FedEx

package and offering her tickets to a sporting event if she helped him retrieve the

package. The package arrived at Centerplate the next day, at which time the

employee gave it to her supervisor, who delivered it to the FBI.

                                         -8-
                   B. Fugitive Flight and False Representations

      On February 25, 2008, a thirty-count indictment issued against Mr. Zaler,

charging him with mail, bank, and wire fraud. On March 11, 2008, in conjunction

with a summons, Mr. Zaler appeared in district court, at which time a magistrate

judge released him on certain conditions, including he surrender “any passport or

other international travel documents to the clerk of the court immediately upon

release” and not leave Colorado except with the court’s permission. The same

day, Mr. Zaler surrendered his United States passport and a temporary Israeli

travel document; however, he failed to surrender another Israeli travel document

previously issued to him. Following his arraignment, Mr. Zaler left Colorado,

traveled to Atlanta, and then flew to Israel. A few weeks later, he contacted his

probation officer in Denver, pretending to be in Colorado and indicating his intent

to go to Telluride, Colorado; he called again four days later, explaining he could

not travel back to Denver due to a snowstorm. Almost a year later, on February

20, 2009, Mr. Zaler voluntarily returned to the United States.

                        C. Guilty Plea and Plea Agreement

      On July 24, 2009, Mr. Zaler pled guilty to one count of wire fraud in

violation of 18 U.S.C. § 1343, two counts of bank fraud in violation of 18 U.S.C.

§ 1344(2), and one count of mail fraud in violation of 18 U.S.C. § 1341. As part

of the plea agreement, Mr. Zaler stipulated to the foregoing facts and also

                                         -9-
acknowledged his understanding the maximum statutory penalty for violation of

§§ 1341 and 1343 was not more than twenty years and the maximum statutory

penalty for violation of § 1344(2) was not more than thirty years. The parties

also agreed any estimate of the advisory Guidelines range did not preclude

departure for aggravating or mitigating circumstances and that the court could

impose any sentence up to the statutory maximum, regardless of any Guidelines

range computation.

      The plea agreement also reflected the parties’ disagreement on the losses

Mr. Zaler caused victims for the purpose of calculating an increase in his offense

level under U.S.S.G. § 2B1.1(b)(1). The government calculated the loss in excess

of $2,500,000, for an increase of eighteen levels, while Mr. Zaler calculated it at

$2,215,808.97, for an increase of sixteen levels. 1 Using its loss calculation to

assess the total offense level, the government calculated the Guidelines range at

seventy-eight to ninety-seven months but noted it “could conceivably result in an

advisory guidelines range from sixty-three months ... to 150 months,” depending

on a final criminal history category. In turn, using his loss calculation, Mr. Zaler

      1
        U.S.S.G. § 2B1.1(b)(1) provides a scale to calculate the offense level
increase based on the amount of monetary loss caused to victims; under
§ 2B1.1(b)(1)(I), the offense level increase is sixteen if the total loss is more than
$1,000,000 but less than $2,500,000, while § 2B1.1(b)(1)(J) provides for an
increase of eighteen levels if the loss is more than $2,500,000 but less than
$7,000,000.

                                         -10-
estimated his Guidelines range at sixty-three to seventy-eight months but noted it

“could conceivably result in an advisory guidelines range from fifty-one months

... to 125 months,” depending on his final criminal history category. Both parties

agreed, however, “[t]he sentence would be limited, in any case, by the statutory

maximum.” While the parties disagreed over the loss calculation, they agreed the

restitution amount should be $2,664,573.22. At his plea hearing, Mr. Zaler

acknowledged his understanding of the maximum statutory penalties and admitted

no one guaranteed or promised him a specific length of sentence within the

statutory limit. In addition, his counsel reminded the district court of the parties’

disagreement over the § 2B1.1(b)(1) loss calculation.

                               D. Presentence Report

      Prior to sentencing, a probation officer prepared a presentence report,

reiterating the applicable maximum statutory sentences were twenty and thirty

years and using the 2008 Guidelines to calculate Mr. Zaler’s total offense level

and criminal history category. In assessing Mr. Zaler’s criminal history, the

probation officer noted, in part, the following: (1) in 1995, he pled guilty and

received two felony convictions in Colorado for “theft” and “fraud by check” for

which he received a two-year deferred sentence on the theft count, a two- to six-

month sentence on the fraud count, and an order of restitution for $11,000; (2) in

1997, he pled guilty and received a felony conviction in Arizona for “fraudulent

                                         -11-
schemes and artifice” involving the sale of Phoenix Suns and Cardinals season

and playoff tickets to various victims, for which he received a five-year sentence

and was ordered to pay restitution in the amount of $29,740, of which he paid

none; (3) in 1997, he received a felony conviction in Arizona for “fraud schemes”

concerning a scheme similar to the instant one in which he used his computer

software company to defraud investors of millions of dollars based on fake

purchase orders for computer software and a forged letter from a United States

Senator’s office indicating he had been approved for a small business loan in the

amount of $1,250,000; he received a sentence of twelve years, of which he served

only five years, and was ordered to pay $982,541.19 in restitution, of which he

paid only $1,480; according to his probation officer at that time, Mr. Zaler

attributed his conduct to a bipolar disorder, his ego, and a fear of failure; and (4)

in 1997, he received a felony conviction in Arizona for “theft” after defrauding a

bank out of $153,275.33 and another individual out of $41,000, for which he

received a thirty-month sentence and was ordered to pay $138,275.33 in

restitution, of which he paid none.

      On the basis of his criminal record, the probation officer calculated Mr.

Zaler’s criminal history category at III but noted it might warrant an upward

departure of one level given its under-representation, stating:

      In light of the pattern of fraud activity in which the defendant has

                                          -12-
      engaged since 1995 and the nature of that conduct, it appears that
      criminal history category IV may more appropriately represent both
      the seriousness of the defendant’s criminal history and the likelihood
      that the defendant will commit other crimes.

      In determining his total offense level, the probation officer determined it

would be twenty-six if the government’s estimated loss of more than $2,500,000

was used in conjunction with U.S.S.G. § 2B1.1(b)(1)(J), which, combined with

his criminal history category of III, resulted in an advisory Guidelines range of

seventy-eight to ninety-seven months imprisonment. Thus, if the recommended

one-level upward departure, using a criminal history category of IV, was applied

to the government’s offense level calculation, the Guidelines range would be

ninety-two to 115 months imprisonment. See U.S.S.G., Ch. 5, Pt. A (Sent’g Tbl.).

Alternatively, the probation officer determined the total offense level would be

twenty-four if Mr. Zaler’s estimated loss of less than $2,500,000 was used in

conjunction with § 2B1.1(b)(1)(I), which, combined with a criminal history

category of III, resulted in an advisory Guidelines range of sixty-three to seventy-

eight months imprisonment.

      In addition, the probation officer exhaustively presented aspects of Mr.

Zaler’s history and characteristics in conjunction with the § 3553(a) factors,

including an account of: (1) Mr. Zaler’s contention, as well as a psychiatrist’s

                                        -13-
report, he suffers from manic behavior and bipolar disorder; (2) his failure to

voluntarily seek treatment or receive treatment for such a condition while

incarcerated; (3) some of his family members’ impressions he committed the

instant crimes based on his ego and fear of failure, rather than for malicious

reasons; and (4) his past charitable work with various Jewish, political, and other

organizations. The probation officer also noted Mr. Smith, who obtained no

monies as a result of Mr. Zaler’s fraud schemes but acted out of friendship, 2 lost

his job with Kroenke, pled guilty to one count of fraud, and was ordered to pay

$1,886,574.82 in restitution to Spivak Funding and $128,000 to MEP Group,

payable jointly and severally with Mr. Zaler.

      The probation officer also provided information from Mr. Zaler’s girlfriend

who explained he financially exploited her by means of false representations,

causing her to suffer significant negative financial and personal consequences,

including: (1) the loss of all her money and good credit, forcing her to file

bankruptcy and incur legal fees; and (2) emotional stress and hardship. In

addition, the probation officer provided information from the FBI that after Mr.

Zaler fled to Israel in 2008, he attempted to negotiate a deal with an Israeli

Supersol grocery chain for hot dogs, was borrowing money related to that

      2
         While Mr. Zaler did not object to the probation officer’s Guidelines
calculations, other than to the loss calculation, he did object to the assessment Mr.
Smith acted out of friendship, as discussed hereafter.

                                         -14-
endeavor, had a civil suit pending against him, and returned to the United States

only because he knew he was facing a number of problems in Israel.

      The probation officer also pointed out: (1) Mr. Zaler left the country

without permission while on bond and remained a fugitive for more than ten

months before voluntarily returning from Israel to the United States; (2) he began

the instant schemes less than two years after being discharged from parole in

other fraud-related cases; (3) in the last fifteen years, he had committed several

fraud schemes which have financially impacted or even devastated the lives of

multiple individuals; (4) he previously received a total of fourteen and one-half

years imprisonment for his prior fraud convictions but served only six years and

eight months and failed to pay back most of the restitution due his prior victims;

(5) his prior periods of incarceration and orders for restitution did not appear to

serve as a sufficient deterrent as he continued to turn to crime to solve his

business problems, including similar fraud schemes; (6) in committing his fraud

schemes he acted deliberately, motivated by greed, and with no remorse, nor

means or intention of paying the victims back; (7) his prior conduct indicated a

high likelihood of recidivism; and (8) he failed to voluntarily seek and refused to

accept treatment while incarcerated for his asserted bipolar disorder, resulting in a

question as to whether his disorder should serve as a mitigating factor. Based on

these factors, the probation officer recommended a sentence at the high end of the

                                         -15-
government’s “loss calculation” Guidelines range for a sentence of ninety-seven

months on each count. The probation officer also recommended three years of

supervised release on the wire and mail fraud counts and five years of supervised

release on the bank fraud counts, all to run concurrently.

      The only objection Mr. Zaler filed in response to the Guidelines calculation

was to the loss calculation and resulting higher Guidelines range, arguing the

probation officer incorrectly used the government’s loss calculation instead of

his. He also argued in favor of a variant sentence under the § 3553(a) sentencing

factors, noting, in part: (1) his victims charged usurious interest rates on their

loans; (2) he used the monies obtained to keep his businesses afloat and did not

spend a significant amount of money on himself; (3) his actions and the absurdity

of his schemes showed he was delusional and had an “untreated brain disorder”;

and (4) Mr. Smith did not act out of friendship but benefitted from the schemes

by receiving significant cash compensation for his assistance.

                                    E. Sentencing

      At the beginning of Mr. Zaler’s sentencing hearing, the district court stated,

“[t]he parties, [c]ounsel, are hereby advised, if I haven’t notified you earlier, that

I will not be imposing a sentence according to the Sentencing Guidelines, which

are, as you know, advisory only; and I have considered them and will not be

                                          -16-
following that advice.” Then, again, after pointing out it had considered the

materials presented, including the presentence report and its attachments, it

stated, “[n]ow, as I’ve indicated, I’m not following the Sentencing Guidelines. I

am thoroughly familiar with the presentence report and the analysis of those

guidelines contained in that report.” It then allowed the parties to provide

argument and Mr. Zaler an opportunity for allocution, during which Mr. Zaler

apologized for his actions and explained he committed the instant fraud, in part,

based on his ego and fear of failure.

      In imposing his sentence, the district court provided the following

explanation for Mr. Zaler’s fifteen-year sentence:

            The guideline calculations contained in the presentence report
      are correct; however, as directed by the Tenth Circuit Court of
      Appeals in the cases of United States [v.] Huckins 3 and United States
      [v.] Munoz-Nava, 4 I make the following findings:

              (1) The guidelines are not mandatory;

            (2) The facts have been provided by the probation officer and
      subjected to objection by both the prosecution and the defense;

            Aside from objections to matters of restitution, which I sustain
      and will comment upon later, 5 there are no objections having any

      3
          529 F.3d 1312 (10th Cir. 2008).
      4
          524 F.3d 1137 (10th Cir. 2008).
      5
          Contrary to the district court’s statement, our review of the record shows
                                                                         (continued...)

                                          -17-
      effect on my consideration of the appropriate sentence to be imposed.

            Both parties have been advised that the ... sentences will not
      be guideline sentences, and both parties have been given full
      opportunity to argue their positions as to condign sentences.

            ....

             I find the application of the guidelines produces sentences less
      than necessary to achieve the purposes of Title 18 [U.S.C.
      §] 3553(a). They fail to take into full consideration the multiple
      repetitions of the defendant committing various kinds of fraud
      following punishment and arrest.

             I find the defendant is a hard-core recidivist and that sentences
      of lesser time imposed on him in the past have utterly failed to
      prevent him from committing further crimes involving fraud and
      deception. At his present age of sixty, there is no reason based on
      his record to believe that he will ever cease committing crimes of
      this nature. Those crimes deserve punishment and deterrent
      sentences in excess of those recommended by the guidelines.

             Perhaps more to the point, the defendant has previously been
      sentenced to [fourteen and one-half] years for felonies but served less
      than half of that time in prison and yet recidivated again and again. I
      think a greater sentence is thus called for.

            The public needs to be protected from further crimes of this
      defendant, and I think the only hope for such protection is that he be
      imprisoned until such times as he is too old to offend again.

            For almost a two-year period after having served prison
      sentences and parole supervision, this defendant obtained moneys

      5
       (...continued)
Mr. Zaler did not object to the recommended restitution amount of $2,664,573.22
contained in the presentence report, which the parties agreed in the plea
agreement was the amount of restitution due victims. However, as later
discussed, the district court reduced the amount of restitution below the amount
recommended in the presentence report and as agreed to by the parties, which
neither party disputes on appeal.

                                        -18-
      and business loans through fraud and deceit, causing more than $2
      million in loss to the parties named in the indictment. Other parties,
      some far less able to bear the brunt of his criminality, suffered as
      well.

             The defendant created fraudulent documents and enlisted the
      aid and complicity of a younger man [Mr. Smith] whose life is now
      in tatters as a result.

            The defendant states he intended to repay the victims involved
      and that he used his ill gotten gains to benefit his struggling
      businesses. That is a tale that is told more often than not by
      fraudsters, and it means nothing. The path to hell is paved with such
      good intentions.

             The defendant believes that his crimes may have been caused
      at least in part by bipolar disorder. If that is, indeed, the case–and
      the diagnosis is not entirely credible–it is equally true that [he]
      refused to take medication that would have significantly, if not
      entirely, reduced his symptoms. It seems he is suggesting ... that
      because he didn’t like the effects of the medications, others should
      suffer.

             The final factor relating to the defendant’s persistent criminal
      conduct is that he left the United States in violation of his bond, lied
      to others about where he was, and even then as a fugitive attempted
      to resume his practice of cheating and deceiving others.

              From age forty-five to the present, this defendant’s acts are the
      very tissue of lies and deceit. What is perhaps most troubling of all
      is that many of the victims he sought are those who, by their affinity
      to the same proud culture and belie[f]s, were most eager to give him
      a helping hand. In addition to being criminal, these acts are
      shameful.

             I am acutely aware of the awesome finality of sentencing a
      man of sixty to prison; but in this case, the safety of the community,
      the ability of people to be free of his predations, clearly outweighs
      any claim for compassion.

The district court then imposed fifteen-year sentences for each count, to be served

                                         -19-
concurrently, and concurrent terms of supervised release for five years on the

bank fraud counts and three years on the wire and mail fraud counts.

      It also imposed restitution and, in so doing, stated a difference existed

between the determination of loss for the purposes of restitution and for loss

calculations under the Guidelines–the latter of which requires only a reasonable

estimate of loss and may be based on the greater of the intended or actual loss. It

then explained “[t]hough I will not engage in a lengthy discussion of the

guidelines, it is quite possible that a different calculation would result were I to

consider the intended loss inflicted upon your victims.” It then imposed a total

order of restitution of $2,479,946.87. 6

      At the conclusion of the sentencing hearing, Mr. Zaler’s attorney objected

to the fifteen-year sentences on grounds the district court failed to sufficiently

address his Guidelines objections or otherwise set out sufficient factors to justify

the sentence. In response, the district court explained:

      I think that I addressed the fact that the guidelines are not being

      6
         This amount included $152,235.75 to MEP Group; $1,921,073.22 to
Spivak Funding; $142,500 to Donald Skupsky; and $264,137.90 to Kroenke. As
to the amount of restitution due to Mr. Perlmutter, the district court determined
Mr. Zaler’s fraudulent conduct was not a direct or proximate cause for his
decision to make loans to him, resulting in no order of restitution for the amount
of loss he incurred.

                                           -20-
      applied in this case. And hence, the objections as to conformity with
      the guidelines ... have no bearing at all upon my sentence. And the
      reason which I gave and which I adhere to in this case is, as I have
      found, that the guidelines do not sufficiently take into consideration
      the repeated recidivist activities of this defendant.

                                    II. Discussion

                              A. Arguments on Appeal

      On appeal, Mr. Zaler contends his sentences are both procedurally and

substantively unreasonable. Mr. Zaler claims the district court committed

procedural error in three ways. First, he claims it failed to specifically calculate

the Guidelines, which the presentence report estimated ranged anywhere from

sixty-three to 115 months, depending on different variations of Guidelines

calculations, including the upward departure, and, instead, the district court

merely stated, “the guideline calculations in the [presentence report] were

correct.” Next, he suggests the district court failed to consider the mandatory

sentencing factors in 18 U.S.C. § 3553(a)(4) and (6) 7 because it failed to calculate

his applicable Guidelines offense level and criminal history category or consider

      7
         Section 3553(a)(4) provides that in imposing a sentence sufficient, but
not greater than necessary, to comply with the purposes of the sentencing factors,
the district court shall consider “the kinds of sentence and the sentencing range
established for ... the applicable category of offense committed by the applicable
category of defendant as set forth in the guidelines ....” Similarly, § 3553(a)(6)
states the district court shall consider “the need to avoid unwarranted sentence
disparities among defendants with similar records who have been found guilty of
similar conduct ....”

                                         -21-
the need to avoid unwarranted sentence disparities with other similarly-situated

defendants. Finally, he claims the district court failed to adequately explain the

chosen sentence, particularly in light of its substantial deviation from the

Guidelines range and certain Guidelines which already took into account the

“ordinary” circumstances on which the district court relied to impose a variant

sentence. He contends none of these procedural errors are harmless given they

affected the district court’s selection of the sentences imposed.

      As to the substantive reasonableness of his fifteen-year sentences, Mr.

Zaler claims they are substantively unreasonable: (1) in view of the totality of the

information before the district court and the reasons articulated by it; and (2)

because they are nearly double the top of the highest Guidelines range set forth in

the plea agreement and requested by the government. More specifically, he

claims the district court failed to explain why Mr. Zaler’s situation was different

or meaningfully distinct from the circumstances already covered by the

Guidelines calculations or the probation officer’s recommendation that an upward

departure would more accurately represent the seriousness of his criminal history

and his potential to re-offend.

                    B. Standard of Review and Legal Principles

      We review sentences for reasonableness, giving deference to the district

                                         -22-
court under an abuse of discretion standard. See United States v. Smart, 518 F.3d

800, 802, 805-06 (10th Cir. 2008). Thus, we review “‘all sentences–whether

inside, just outside, or significantly outside the Guidelines range–under a

deferential abuse-of-discretion standard,’” in which we “afford substantial

deference to the district courts.” Id. at 806 (quoting Gall v. United States, 552

U.S. 38, 41 (2007)). The district court abuses its discretion if the resulting

sentence is “arbitrary, capricious, whimsical, or manifestly unreasonable.”

Huckins, 529 F.3d at 1317 (internal quotation marks omitted).

      “Our appellate review for reasonableness includes both a procedural

component ... as well as a substantive component, which relates to the length of

the resulting sentence.” Smart, 518 F.3d at 803. “Procedural reasonableness

addresses whether the district court incorrectly calculated or failed to calculate

the Guidelines sentence, treated the Guidelines as mandatory, failed to consider

the § 3553(a) factors, 8 relied on clearly erroneous facts, or failed to adequately

explain the sentence.” Huckins, 529 F.3d at 1317. In determining whether the

district court properly calculated a sentence, we review its legal conclusions de

      8
         The § 3553(a) factors include not only “the nature of the offense” but the
history and “characteristics of the defendant, as well as the need for the sentence
to reflect the seriousness of the crime, to provide adequate deterrence, to protect
the public, and to provide the defendant with needed training or treatment ....”
United States v. Kristl, 437 F.3d 1050, 1053 (10th Cir. 2006) (per curiam); see 18
U.S.C. § 3553(a).

                                         -23-
novo and its factual findings for clear error. See Kristl, 437 F.3d at 1054.

      In turn, “[a] challenge to the sufficiency of the § 3553(a) justifications

relied on by the district court implicates the substantive reasonableness of the

resulting sentence.” Smart, 518 F.3d at 804. Stated another way, “substantive

reasonableness addresses whether the length of the sentence is reasonable given

all the circumstances of the case in light of the factors set forth in 18 U.S.C.

§ 3553(a).” Huckins, 529 F.3d at 1317 (internal quotation marks omitted). In

assuring the district court has considered the § 3553(a) factors before imposing a

sentence, we have said it must “state in open court the reasons for its imposition

of the particular sentence” and satisfy us that it “has considered the parties’

arguments and has a reasoned basis for exercising [its] own legal decisionmaking

authority.” Rita v. United States, 551 U.S. 338, 356 (2007). Further, if the

sentence is within the correctly-calculated Guidelines range, we may apply a

rebuttable presumption of reasonableness to the sentence. See Kristl, 437 F.3d at

1053-55.

      However, a sentence falling outside the Guidelines range, like the one at

issue here, is not entitled to a presumption of reasonableness, nor is it presumed

to be unreasonable. Huckins, 529 F.3d at 1317. Instead, district courts may, in

their discretion, conclude a non-Guidelines sentence best serves the purpose of

                                          -24-
the § 3553(a) sentencing factors but “must provide reasoning sufficient to support

the chosen variance,” Smart, 518 F.3d at 807, including “a specific reason for

deviating from the Guidelines,” Huckins, 529 F.3d at 1317 (internal quotation

marks omitted). As a result, “a district [court] must give serious consideration to

the extent of any departure from the Guidelines and must explain [its] conclusion

that an unusually lenient or an unusually harsh sentence is appropriate in a

particular case with sufficient justifications.” Id. “An adequate explanation of

the chosen sentence allows for meaningful appellate review and promotes the

perception of fair sentencing.” Id.

      While the district court must provide an adequate explanation for a

variance, “[w]e may not examine the weight a district court assigns to various

§ 3553(a) factors, and its ultimate assessment of the balance between them, as a

legal conclusion to be reviewed de novo,” and, instead, “we must give due

deference to the district court’s decision that the § 3553(a) factors, on a whole,

justify the extent of the variance.” Smart, 518 F.3d at 808. In making its

assessment of the sentencing factors, “[i]t is well established that the sentencing

court is entitled to rely on uncontested facts contained in the [presentence report]

for certain sentencing purposes,” including to draw conclusions about the nature

of the offense and history and characteristics of the defendant relevant to the

sentencing factors in 18 U.S.C. § 3553(a). United States v. Mateo, 471 F.3d

                                         -25-
1162, 1166-67 (10th Cir. 2006).

      As to the degree of any variance, the district court need not adhere to “a

rigid mathematical formula that uses the percentage of a departure as the standard

for determining the strength of the justifications required for a specific sentence”

nor “necessarily provide ‘extraordinary’ facts to justify any statutorily

permissible sentencing variance, even one as large as [a] 100% variance ....”

Smart, 518 F.3d at 807 (internal quotation marks omitted). “Although the degree

of variance from the Guidelines range remains a consideration on appeal, ... it

may not define our threshold standard of review.” Id. In the same vein, we do

not require the district court to “distinguish the defendant’s characteristics and

history from those of the ordinary offender contemplated by the Guidelines” when

imposing a variance, nor do we require the “existence of extraordinary defendant

characteristics and history.” Id. at 808. While the Guidelines “reflect a rough

approximation of sentences that might achieve § 3553(a)’s objectives” and

provide a “measure of national practice to use as a starting point,” we recognize

the district court has “greater familiarity with the individual case and the

individual defendant” for the purpose of imposing a variance. Id. Finally, as we

instructed in Smart:

      In many cases, the Guidelines recommendation and the district
      court’s individualized determination will continue to overlap, but we
      may not assume that the Guidelines perfectly express the § 3553(a)

                                         -26-
      factors present in an individual case in the face of a district court’s
      conclusion to the contrary.

             We may not conclude that simply by diverging from the
      Guidelines, a district court has disregarded the policy considerations
      which led the Commission to create a particular Guideline .... If
      district courts are required to balance the Guidelines against the other
      § 3553(a) considerations, then we cannot say they disregard the
      Guidelines simply by striking a different balance and imposing a
      variance in a particular case.

Id. at 809.

                           C. Procedural Reasonableness

      Applying these principles, we begin with Mr. Zaler’s argument his sentence

is procedurally unreasonable because the district court failed to correctly

calculate the Guidelines or apply the recommended upward departure, as required

by the Guidelines themselves or under 18 U.S.C. § 3553(a)(4)(A). As

demonstrated by the record, Mr. Zaler did not object to any portion of the

Guidelines calculation in the presentence report except to dispute the

government’s § 2B1.1(b)(1) loss calculation. When the district court stated the

Guidelines calculations were correct, it was patently aware of the dispute over the

loss calculation and the resulting two sentencing ranges based on the parties’

different loss calculations. Thus, its assessment of the correctness of the

Guidelines calculations pertained to all but the two different loss calculations in

dispute by the parties, which it concluded made no difference in its decision to

                                         -27-
impose non-Guidelines sentences based on its determination that application of

the Guidelines would produce sentences less than necessary to achieve the

purposes of 18 U.S.C. § 3553(a). As a result, it is evident it rejected even the

highest calculation of the sentencing ranges as well as the probation officer’s

recommendation for an upward departure. It also indicated it was “quite

possible” the loss calculation would be more than its restitution determination of

$2,479,946.87, further demonstrating application of the higher loss calculation

would not affect its decision to impose non-Guidelines sentences. Accordingly,

regardless of which loss calculation and resulting sentencing range applied, or if

an upward departure was applied, it is clear the district court concluded such

Guidelines calculations produced sentences “less than necessary to achieve the

purposes of Title 18 [U.S.C. §] 3553(a).”

      To the extent the district court erred in failing to make an express

determination as to which loss calculation applied or by failing to explicitly state

why the recommended upward departure would provide insufficient punishment,

the error is harmless. This is because it is clear the result (i.e., its imposition of

fifteen-year sentences) would be the same, regardless of which loss calculation

the district court considered accurate or if it explicitly rejected the recommended

upward departure. In other words, a remand merely for the purpose of having the

district court explain which of the two loss calculations and resulting sentencing

                                           -28-
ranges is correct, or why an upward departure would be insufficient, would not

result in it imposing a lesser sentence.

      We next address Mr. Zaler’s contention the district court committed

procedural error in failing to consider the need to avoid unwarranted sentence

disparities with other similarly-situated defendants, as required by § 3553(a)(6).

As previously discussed, we no longer require a district court to distinguish the

defendant’s characteristics and history from those of the ordinary offender

contemplated by the Guidelines when imposing a variance, nor do we require

facts demonstrating the existence of extraordinary defendant characteristics and

history. See Smart, 518 F.3d at 806-08 (overturning United States v. Garcia-

Lara, 499 F.3d 1133 (10th Cir. 2007)). Here, the record shows the district court

considered the Guidelines calculations, which are the starting point for

calculating sentences for similarly-situated defendants committing the same

offense, but determined, based on its greater familiarity with Mr. Zaler and the

aggravating circumstances, that a variance was warranted beyond the advisory

Guidelines ranges for the reasons it provided. As a result, we discern no

procedural error in its failing to explicitly distinguish Mr. Zaler’s case from

others.

      Finally, Mr. Zaler claims the district court committed procedural error by

                                           -29-
failing to adequately explain the chosen sentence, particularly in light of its

substantial deviation from the Guidelines range and because it failed to explain

why the Guidelines did not already take into account the circumstances in his

case. In claiming the Guidelines addressed the circumstances presented, he

claims: (1) the recommended one-level upward departure for under-representation

of his criminal history category took into account his recidivist activities; (2) the

sixteen- to eighteen-level increase under § 2B1.1(b)(1) for the loss calculation

took into account the over $2,000,000 loss he caused his victims; (3) the two-

level increase under § 3B1.1(c) for his role in the offense took into account his

enlistment of another person, Mr. Smith, in the commission of his fraud; and (4)

the two-level increase under § 3C1.1 for obstruction of justice took into account

the fact he left the United States while on bond.

      As previously noted, we require district courts to “provide reasoning

sufficient to support the chosen variance,” Smart, 518 F.3d at 807, including “a

specific reason for deviating from the Guidelines.” Huckins, 529 F.3d at 1317.

Here, the district court set out a straight-forward and specific reason as to why it

decided to deviate from the Guidelines when it concluded their application would

produce sentences less than necessary to achieve the purposes of 18 U.S.C.

§ 3553(a) because they failed to take into full consideration Mr. Zaler’s “hard-

core” recidivism in which he repeatedly committed various kinds of fraud

                                          -30-
following his previous punishments for similar conduct, and the fact those

previous punishments “utterly failed” to prevent his committing crimes involving

the same fraud and deception. In providing further explanation in support of its

determination, the district court pointed out Mr. Zaler was “sentenced to [fourteen

and one-half] years for felonies but served less than half of that time in prison,”

and still “recidivated again and again.” It further explained the public needed to

be protected from Mr. Zaler’s further crimes and stated its belief, based on the

record, that he would never “cease committing crimes of this nature” and “the

only hope for such protection” was his imprisonment “until such time as he is too

old to offend again.” It also discussed other factors supporting a variance, such

as the fact his fraudulent schemes occurred within two years after his

incarceration and parole supervision for similar conduct; the devastating financial

and personal consequences Mr. Zaler caused his girlfriend and Mr. Smith; his

refusal to seek treatment or take medication to reduce his alleged bipolar disorder,

which he had previously used as an excuse for prior fraudulent conduct for which

he was incarcerated; the resumption of his fraud while a fugitive in Israel; and his

disingenuous reason for voluntarily returning to the United States. As a

consequence, we perceive no error in the district court’s specific reasons or

explanation for the variance imposed.

      While Mr. Zaler contends the Guidelines took into account the aggravating

                                         -31-
circumstances on which the district court relied in applying a variance, the district

court provided sufficient information in its explanation for us to understand why

it determined they did not. For instance, while U.S.S.G. § 2B1.1(b)(1) took into

account the two different monetary loss calculations caused by Mr. Zaler, the

district court also pointed out he caused these losses after only a two-year period

following his incarceration and parole supervision and imposed suffering on other

victims far less able to bear the brunt of his criminality, as indicated by the harm

he caused to his girlfriend and Mr. Smith. Clearly, it determined § 2B1.1(b)(1)

did not fully take into account these aggravating circumstances. Similarly, while

the Guidelines recommendations took into account Mr. Zaler’s role in the offense

under § 3B1.1(c) for being an organizer, leader, manager, or supervisor in the

criminal activity, the district court indicated they did not take into account Mr.

Zaler’s complicity in causing Mr. Smith’s “life [to be] in tatters.” While Mr.

Zaler received a two-level increase in his offense level for obstruction of justice

under § 3C1.1, the district court noted he not only fled the country and lied to his

probation officer about where he was, but incredibly attempted to resume his

practice of cheating and deceiving others even while a fugitive in Israel. The

presentence report also indicated he was a fugitive for an extensive period of ten

months and only voluntarily returned to the United States because he was facing

possible criminal charges in Israel. Again, it is clear the district court determined

the Guidelines did not take into account such aggravating circumstances.

                                         -32-
      Most importantly, it is clear the district court determined the Guidelines,

including the calculation of his criminal history and the probation officer’s

recommendation of an upward departure for the under-representation of his

criminal history, did not adequately take into account his extensive or “hard-core”

recidivism which prior punishments in the form of incarceration and restitution

orders did not halt or even stymie. Instead, as the district court thoroughly

explained, Mr. Zaler zealously and unabashedly continued to defraud various

individuals and entities in fraud schemes similar to those he previously committed

and for which he received punishment. Thus, while the Guidelines

recommendations and the district court’s individualized determinations may have

had some overlap, we may not assume the Guidelines perfectly expressed the

§ 3553(a) factors present in Mr. Zaler’s case in the face of the district court’s

conclusions to the contrary. Moreover, as previously noted, the error, if any, in

the district court failing to explain in more detail why the Guidelines did not take

these aggravating circumstances into account is harmless. Again, nothing in the

record suggests the district court would have imposed a lesser sentence had it

engaged in a more extensive discussion of the applicable Guidelines and its

reasoning as to why they produced sentences “less than necessary to achieve the

purposes of Title 18 [U.S.C. §] 3553(a).”

                                         -33-
                          D. Substantive Reasonableness

      As to the substantive reasonableness of his fifteen-year sentences, Mr.

Zaler claims they are substantively unreasonable in view of the totality of the

information before the district court and the reasons articulated by it and because

they are nearly double the top of the highest Guidelines range set forth in the plea

agreement and requested by the government. In support, Mr. Zaler again claims

the district court failed to explain why his situation was different or meaningfully

distinct from the “ordinary” circumstances covered by the Guidelines calculations

or why the probation officer’s recommendation of an upward departure would not

accurately represent the seriousness of his criminal history and his potential to re-

offend.

      Despite Mr. Zaler’s arguments to the contrary, we conclude his sentences

are not substantively unreasonable in light of the sentencing factors in § 3553(a).

As previously noted, the district court determined application of the Guidelines

would produce sentences less than necessary to achieve the purposes of 18 U.S.C.

§ 3553(a) because they failed to take into full consideration Mr. Zaler’s extensive

recidivism in which he perpetrated multiple fraud schemes following previous

punishments for similar conduct. It also discussed other aggravating factors

which it believed also warranted a variance, as previously discussed. As a result

of these factors, it determined fifteen-year sentences would best achieve the

                                         -34-
purposes of the § 3553(a) sentencing factors, including protecting the public from

Mr. Zaler’s recidivist activities. Under our deferential standard of review, we

may not examine the weight the district court assigned these § 3553(a) factors or

its ultimate assessment of the balance between the § 3553(a) factors, but, instead,

we give due deference to its decision, as made here, that the § 3553(a) factors, on

a whole, justify the extent of the variance. See Smart, 518 F.3d at 808.

      Similarly, as discussed in our procedural reasonableness discussion, the

district court did consider the Guidelines and determined the Guidelines did not

adequately take into account certain aggravating circumstances, including, but not

limited to, the extensive degree of Mr. Zaler’s recidivism issues; the fact he

perpetrated his nefarious schemes within two years following incarceration and

parole supervision for similar conduct; the negative financial and personal

consequences Mr. Zaler caused his girlfriend and Mr. Smith; Mr. Zaler’s refusal

to seek treatment or take medication to reduce his alleged his bipolar disorder;

resumption of his fraud while a fugitive in Israel; and his disingenuous reason for

voluntarily returning to the United States. In addition, we repeat for clarity’s

sake that the district court was not required to distinguish Mr. Zaler’s

characteristics and history from those of the ordinary offender contemplated by

the Guidelines when imposing the variance. Smart, 518 F.3d at 808. Instead, it

could rely on the uncontested facts contained in the presentence report to make its

                                         -35-
own conclusions concerning the nature of the offense and Mr. Zaler’s

characteristics relevant to the sentencing factors in 18 U.S.C. § 3553(a). See

Mateo, 471 F.3d at 1166-67.

      As to Mr. Zaler’s complaint his sentences are double the advisory

Guidelines sentences, the district court was not required to use a mathematical

formula, including a percentage calculation, to determine the variance, nor

provide extraordinary facts to justify the statutorily permissible sentence imposed.

As we have said, the degree of variance from the Guidelines range remains a

consideration on appeal but cannot define our threshold standard of review.

While the non-Guidelines variant sentences imposed in this case were

substantially more than the recommended advisory Guidelines sentences, they

were within the statutory limit for such crimes, of which Mr. Zaler was advised,

and produced sentences which the district court determined best reflected the

purposes of the § 3553(a) sentencing factors, including the seriousness of Mr.

Zaler’s criminal history, his recidivism or potential to re-offend, and the need to

protect the public. Applying our deferential standard of review to the

circumstances presented, we conclude the district court did not abuse its

discretion in imposing fifteen-year sentences, as the lengths of the sentences

imposed are not “arbitrary, capricious, whimsical, or manifestly unreasonable.”

Huckins, 529 F.3d at 1317. As a result, we conclude Mr. Zaler’s sentences are

                                         -36-
substantively reasonable.

                               III. Conclusion

      For the foregoing reasons, we AFFIRM Mr. Zaler’s sentences on appeal.

                                    Entered by the Court:

                                    WADE BRORBY
                                    United States Circuit Judge

                                     -37-