Court Opinion

ID: 6215726
Source: CourtListenerOpinion
Date Created: 2022-02-07 19:00:26.881286+00
Date Added: 2024-06-11T09:18:38.289028
License: Public Domain

Case: 20-20283      Document: 00516192963         Page: 1    Date Filed: 02/07/2022

           United States Court of Appeals
                for the Fifth Circuit
                                                                      United States Court of Appeals
                                                                               Fifth Circuit

                                                                             FILED
                                                                       February 7, 2022
                                   No. 20-20283                         Lyle W. Cayce
                                                                             Clerk

   United States of America,

                                                             Plaintiff—Appellee,

                                       versus

   Sergio Fernando Lagos,

                                                          Defendant—Appellant.

           Appeal from the United States United States District Court
                       for the Southern District of Texas
                            USDC No. 4:18-CV-3559

   Before Davis, Willett, and Oldham, Circuit Judges.
   Don R. Willett, Circuit Judge:
          Sergio Fernando Lagos urged the district court to vacate, set aside, or
   correct his sentence under 28 U.S.C. § 2255 on the ground that he received
   ineffective assistance of counsel during sentencing. The district court denied
   Lagos’s motion, and for the reasons explained below, we AFFIRM.
                                         I
          Lagos pleaded guilty in 2015 to one count of conspiracy to commit
   wire fraud and five counts of wire fraud, in violation of 18 U.S.C. §§ 2, 1343,
   and 1349. Lagos was the owner and CEO of U.S.A. Dry Van Logistics, LLC
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                                          No. 20-20283

   (USADV), a company that provided cross-border trucking services to the
   maquiladora industry. He entered into a loan financing agreement on behalf
   of USADV with General Electric Capital Corporation (GECC), a nonbank
   lender, under which GECC extended a revolving line of credit secured by
   USADV’s accounts receivable. The maximum sum that could be borrowed
   under the agreement was based on the amount of USADV’s eligible
   accounts receivable. From around March 2008 at least until January 2010,
   Lagos and his co-conspirators engaged in a wire fraud scheme whereby they
   induced GECC to extend a $35 million line of credit by fraudulently inflating
   USADV’s accounts receivable. As a result of USADV’s admitted
   “substantial overstatement in . . . Eligible Accounts,” GECC had extended
   a   “significance          [sic]   overadvance”   under    the   loan   agreement. 1
   Consequently, USADV declared bankruptcy several days after GECC
   learned of the fraud, explaining to the bankruptcy court that the company’s
   “need” for financing and the “unlikelihood of finding other sources of
   financing given the significant overadvance position of [GECC]” made a
   bankruptcy proceeding USADV’s “only realistic option.” 2
          Following Lagos’s 2015 guilty plea, the district court sentenced him
   to 97 months’ imprisonment and three years of supervised release and
   ordered him to pay a $600 special assessment and $15,970,517.37 in
   restitution. On direct appeal, Lagos challenged only the amount of restitution
   ordered, arguing that the restitution statute did not authorize the court to
   order restitution for GECC’s legal, expert, and consulting fees incurred in
   investigating the fraud or its legal fees from the bankruptcy proceedings
   caused by the fraud. We rejected Lagos’s argument, but the Supreme Court

          1
            In Re USA Dry Van Logistics, L.L.C., No. 10-20102, Dkt. 12, at 5 (Bankr. S.D.
   Tex. Feb. 2, 2010).
          2
              Id. at 7–8.

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   agreed with him and reversed. 3 In accordance with the Supreme Court’s
   decision, we subsequently remanded “to the district court with instructions
   to delete from [Lagos’] restitution order $4,895,469.73” in improperly
   included fees. 4 The district court entered its amended judgment on
   September 19, 2018, imposing restitution in the amount of $11,075,047.64.
           Lagos initiated this postconviction proceeding shortly thereafter. He
   moved to vacate, set aside, or correct his sentence under 28 U.S.C. § 2255,
   arguing that his counsel was ineffective for failing to properly object during
   sentencing when $4.3 million in court-ordered payments that GECC had
   made during USADV’s bankruptcy proceeding were included in the court’s
   calculation of the “actual loss” caused by Lagos’s fraud—a calculation that
   plays a role in a court’s application of the Federal Sentencing Guidelines. 5
   According to Lagos’s § 2255 motion, his counsel performed deficiently in
   failing to argue that the $4.3 million sum “did not constitute an ‘actual loss’
   that was directly caused by the fraud.” 6 Such an objection, according to
   Lagos, clearly would have been meritorious because the $4.3 million in court-
   ordered payments made by GECC were not a reasonably foreseeable result

           3
             See United States v. Lagos, 864 F.3d 320 (5th Cir. 2017), rev’d and remanded, 138
   S. Ct. 1684 (2018).
           4
               735 F. App’x 171 (5th Cir. 2018).
           5
             The Guidelines set forth appropriate ranges of sentences for economic crimes
   depending on the “actual loss” caused by a defendant’s wrongdoing (or “intended loss,”
   whichever is greater, though there was no calculation of intended loss in Lagos’s case);
   importantly, however, “actual loss” is defined to include only “reasonably foreseeable
   pecuniary harm that resulted from the offense”—that is, the “pecuniary harm that the
   defendant knew or, under the circumstances, reasonably should have known, was a
   potential result of the offense.” U.S.S.G. § 2B1.1, comment. (n.3(A)).
           6
             During sentencing, Lagos’s counsel objected to inclusion of the $4.3 million sum
   in the loss calculation only the ground that it “constituted ‘interest’ or ‘penalty’” of the
   kind excluded from “actual loss” calculations under the Sentencing Guidelines—an
   objection that, as all parties now concede, was meritless.

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   of his fraud, and therefore were not “actual loss” for purposes of the
   Sentencing Guidelines. But because this sum was wrongly included in the
   calculation of loss, the sentencing court determined that the applicable
   Sentencing Guideline range was 97-121 months’ imprisonment; had this sum
   been excluded, Lagos contends, the court would have applied the correct
   Guideline range of 78-97 months.
          The district court denied § 2255 relief. First, the court found that
   GECC’s $4.3 million in court-ordered advances were indeed a reasonably
   foreseeable result of Lagos’s fraud, and thus were properly included in the
   “loss” calculation for Guidelines purposes. The failure of Lagos’s
   sentencing counsel to object to the inclusion of this sum in the loss calculation
   did not prejudice Lagos because such an objection lacked merit anyway.
   Alternatively, the district court held that, even assuming the objection were
   meritorious, its merit was not obvious under existing law at the time of
   sentencing, and so sentencing counsel was not deficient for failing to raise the
   objection. Despite denying Lagos’s motion for postconviction relief,
   however, the district court held that his claim had at least enough merit to
   warrant a certificate of appealability. Lagos subsequently appealed.
                                                  II
          On appeal from a denial of 28 U.S.C. § 2255 relief alleging ineffective
   assistance of counsel, we review the district court’s factual findings for clear
   error and its legal conclusions de novo. 7 “An ineffective assistance claim has
   two components: A petitioner must show that counsel’s performance was
   deficient, and that the deficiency prejudiced the defense.” 8 In assessing
   performance, we are “highly deferential”; we “evaluate the conduct from

          7
              United States v. Scott, 11 F.4th 364, 368 (5th Cir. 2021).
          8
              Wiggins v. Smith, 539 U.S. 510, 521 (2003).

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                                              No. 20-20283

   counsel’s perspective at the time,” “indulg[ing] a strong presumption that
   counsel’s conduct falls within the wide range of reasonable professional
   assistance.” 9
          Furthermore, even if it is established that counsel performed
   deficiently, an ineffective-assistance claimant still must show that he or she
   was prejudiced by counsel’s errors in order to prevail. While “[i]t is not
   enough . . . to show that the errors had some conceivable effect on the
   outcome of the proceeding,” neither is a defendant required to “show that
   [the] deficient conduct more likely than not altered the outcome.” 10 Rather,
   the defendant simply “must show that there is a reasonable probability”—
   that is, “a probability sufficient to undermine confidence in the outcome”—
   “that, but for counsel’s unprofessional errors, the result of the proceeding
   would have been different.” 11 In cases such as this one, where the defendant
   alleges counsel performed deficiently during the sentencing phase, our
   inquiry (at least when collaterally reviewing federal convictions) is thus
   “[w]hether there [i]s a reasonable probability that, but for [counsel’s]
   actions, [the defendant] would have received a lesser sentence than he
   did.” 12
          In deciding ineffective-assistance claims, we may, at our discretion,
   consider either the “performance” or the “prejudice” element of the inquiry
   first. 13 Nor need we “address both components of the inquiry” if it is clearer
   that the defendant has “ma[de] an insufficient showing” as to one of them;

          9
               Strickland v. Washington, 466 U.S. 668, 689 (1984).
          10
               Id. at 693.
          11
               Id. at 694.
          12
               United States v. Grammas, 376 F.3d 433, 438 (5th Cir. 2004).
          13
               Strickland, 466 U.S. at 697.

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                                           No. 20-20283

   put differently, “[i]f it is easier to dispose of an ineffectiveness claim” on
   “prejudice” rather than “performance” grounds, or vice versa, then “that
   course should be followed.” 14
          With these principles in mind, we now consider Lagos’s argument
   that the district court that sentenced him improperly included in its “actual
   loss” calculation the $4.3 million in court-ordered advances GECC paid
   USADV during the latter’s bankruptcy proceeding. Indeed, in Lagos’s view,
   the court’s mistake was so patent that his counsel was deficient in failing to
   raise the issue during sentencing.
          Right out of the gate, however, Lagos’s argument to this effect
   confronts an obstacle: the district court in this postconviction proceeding
   found that USADV’s “bankruptcy was a reasonably foreseeable result of
   [Lagos’] fraud,” and accordingly held that “the court-ordered advances
   were therefore properly included in the amount of loss.” Our precedent
   establishes that a district court’s determination of “loss” under the
   Sentencing Guidelines is a factual finding of the sort that we review for clear
   error. 15 This applies not only to our “review [of] the loss calculation itself,”
   but also to the district court’s finding as to “the foreseeability of the loss.” 16
   Applying the clear-error standard, “[w]e give considerable deference to a
   district court’s factual findings at sentencing,” and will sustain them “as long
   as [they are] plausible in light of the record read as a whole.” 17 The
   Guidelines’ official Commentary—which “is authoritative unless it violates
   the Constitution or a federal statute, or is inconsistent with, or a plainly

          14
               Id.
          15
               See United States v. Ayelotan, 917 F.3d 394, 408 (5th Cir. 2019).
          16
               Id.
          17
               United States v. Krenning, 93 F.3d 1257, 1269 (5th Cir. 1996).

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   erroneous reading of, th[e] guideline” to which it relates 18—makes this
   abundantly clear: the district “court need only make a reasonable estimate of
   the loss,” and that “determination is entitled to appropriate deference.” 19
           In this case, we think that the district court did not clearly err in
   finding that the $4.3 million in court-ordered payments made by GECC was
   a reasonably foreseeable result of Lago’s fraud. Considering the sheer scale
   of the fraudulent scheme, through which USADV secured over $26.2
   million in loans to which it was not entitled by overstating its accounts
   receivable, the company’s bankruptcy should have been a reasonably
   foreseeable prospect; indeed, by the time the scheme was discovered, “it was
   estimated that approximately $10,540,188.75, of the $37,266,037.49,
   accounts receivable on USADV books were legitimate.” Our sister circuits,
   when confronted with similar facts, have held that convicted fraudsters
   whose wrongdoing precipitated the bankruptcy of the companies they ran
   could be held accountable under the Sentencing Guidelines for bankruptcy-
   related losses, as such losses were among the “reasonably foreseeable”
   consequences of their crimes. 20
           Lagos protests that, even if “Dry Van’s bankruptcy was probable at
   the time of Lagos’ fraud . . . , the bankruptcy court’s subsequent order

           18
                Stinson v. United States, 508 U.S. 36, 38 (1993).
           19
                U.S.S.G. § 2B1.1, comment. (n.3(C)).
           20
               § 2B1.1, comment. (n.3(A)). See United States v. Rubashkin, 655 F.3d 849, 868
   (8th Cir. 2011) (“Any reasonable person could have foreseen that large scale fraud could
   lead to collapse and insolvency if discovered.”); United States v. Jackson, 524 F.3d 532, 547
   (4th Cir. 2008), vacated on other grounds, 555 U.S. 1163 (2009). Although the defendants’
   sentencing in Jackson was governed by a prior version of the Guidelines that did not include
   the “foreseeability” language, the defendants there made a “foreseeability” argument on
   appeal on the incorrect assumption that the current Guidelines governed—an argument
   that the court considered (and rejected) even while noting the mistaken premise on which
   it rested. See 524 F.3d at 547 n.20.

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   requiring GECC to advance $4.3 million to enable Dry Van to transact
   business was not probable; at most, it was possible.” This argument
   “confuses the foreseeability of harm with the foreseeability of the manner in
   which harm ultimately occurs. The foreseeability inquiry turns on whether
   ‘harm of a general sort to persons of a general class might have been
   anticipated by a reasonably thoughtful person.’” 21 Here, the district court
   reasonably found that a reasonably foreseeable result of Lagos’s fraud was
   USADV’s bankruptcy. Bankruptcy proceedings entail all manner of
   expenses, for both an insolvent company as well as for its creditors. It was
   foreseeable that USADV’s bankruptcy would impose costs of some kind on
   GECC, USADV’s main creditor. Whether those costs were imposed
   precisely in the form of court-ordered advances, or instead in the form of
   some other expense, is not important to the foreseeability inquiry—or at least
   it was not clear error for the district court below to have so concluded.
           We note that, in a similar case considering the measurement of “loss”
   under the Sentencing Guidelines, the Second Circuit held that a district court
   had reasonably “determined that the scope of [a defendant’s] criminal
   conduct included numerous misrepresentations to customers, and [that]
   these misrepresentations caused a loss of at least $40 million.” 22 It was “not
   clearly erroneous” to hold that defendant responsible for the whole amount
   in applying the Guidelines: “Whether [he] could foresee the manner in which
   the $35 million would be snatched overseas as the fraud unwound is not
   decisive: the district court reasonably found that the risk of a ‘total loss’ was

           21
             United States v. Ruiz-Hernandez, 890 F.3d 202, 211 (5th Cir. 2018) (quoting In re
   Signal Int’l, LLC, 579 F.3d 478, 492 (5th Cir. 2009)); accord United States v. Metzger, 233
   F.3d 1226, 1227–28 (10th Cir. 2000); United States v. Boyd, 229 F.3d 1159 (9th Cir. 2000)
   (unpublished); United States v. Passmore, 165 F.3d 21 (4th Cir. 1998) (unpublished).
           22
                United States v. Levenson, 314 F. App’x 347, 350 (2d Cir. 2008).

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   foreseeable generally, and the overall loss was of at least $40 million.” 23 The
   same can be said here in support of the district court’s findings.
          In light of the foregoing, we conclude that an objection to the
   sentencing court’s actual-loss calculation on “foreseeability” grounds would
   have lacked merit, and accordingly that Lagos was not prejudiced by his
   counsel’s failure to raise this objection during his sentencing. 24
                                          *        *         *
          Alternatively, even if we were to assume that an objection on
   “foreseeability” grounds during Lagos’s sentencing to the inclusion of the
   $4.3 million in the court’s loss calculation would have been meritorious, it
   was not so obviously meritorious that counsel was deficient by Strickland
   standards for failing to raise it. While counsel is expected to raise “[s]olid,
   meritorious arguments based on directly controlling precedent,” 25 “effective
   assistance of counsel does not mean counsel who will raise every nonfrivolous
   ground” for objecting to a ruling adverse to the defendant’s interests. 26
          It is true, as Lagos now points out, that we held in 1999 that
   bankruptcy-related costs (specifically, costs associated with appointing a
   bankruptcy trustee) resulting from a business failure caused by the
   defendants’ fraud were “consequential losses that cannot be considered in
   loss calculations under [the Guidelines].” 27 That case, however, was decided
   under a prior version of the Guidelines, which defined “‘loss’ as ‘the value

          23
               Id.
          24
               See United States v. Kimler, 167 F.3d 889, 893 (5th Cir. 1999).
          25
               United States v. Williamson, 183 F.3d 458, 463 (5th Cir. 1999).
          26
               Green v. Johnson, 160 F.3d 1029, 1043 (5th Cir. 1998).
          27
               United States v. Izydore, 167 F.3d 213, 223 (5th Cir. 1999).

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   of the money, property, or services unlawfully taken.’” 28 “Thus,” we
   reasoned, because “the definition of loss [wa]s centered on the value of the
   thing taken, without reference to consequential or incidental losses,” the
   bankruptcy trustee’s fees were not properly included. 29
           However, as we have explained, the current Guidelines (in effect since
   2001) define “loss” as “the reasonably foreseeable pecuniary harm that
   resulted from the offense.” 30 To the extent our holding in Izydore would
   exclude any reasonably foreseeable losses resulting from a defendant’s fraud,
   then, we think that case has been superseded by changes to the Guidelines. 31
           For these reasons, we do not agree with Lagos that his counsel was
   deficient at sentencing for “failing to cite directly controlling precedent” that
   would have supported an objection to the loss calculation on “foreseeability”
   grounds. 32 By the time of Lagos’s sentencing in 2016, Izydore had been
   partially superseded such that it was no longer the kind of inarguably
   “pellucid and applicable” precedent that counsel was constitutionally

           28
                Id. (quoting U.S.S.G. § 2F1.1).
           29
                Id.
           30
                § 2B1.1, comment. (n.3(A)).
           31
             See United States v. May, 706 F.3d 1209, 1214 n.3 (9th Cir. 2013) (“the 2001
   Sentencing Guidelines amendment defining ‘loss’ under § 2B1.1 as “the reasonably
   foreseeable pecuniary harm that resulted from the offense” abrogated [cases] holding that
   ‘loss’ does not encompass ‘consequential losses.’”); JEFRI WOOD, FEDERAL JUDICIAL
   CENTER, GUIDELINE SENTENCING: AN OUTLINE OF APPELLATE CASE LAW ON
   SELECTED ISSUES 111 (2002) (noting that Izydore “may no longer be valid precedent under
   the current ‘reasonably foreseeable’ standard.”); cf. United States v. Setser, 568 F.3d 482,
   497 (5th Cir. 2009) (A defendant’s “ability to foresee the losses is the critical point.”). To
   the extent our unpublished opinion in United States v. Howard, 262 F. App’x 571, 573 (5th
   Cir. 2008), cited Izydore with approval for the proposition that “loss” under the current
   Guidelines does not include consequential loss, we disapprove it.
           32
                Williamson, 183 F.3d at 463.

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   obligated to bring to the court’s attention. 33 Although this court had never so
   held, it should be clear upon reading the Izydore opinion that its reasoning
   would likely apply with limited force following the 2001 amendments to the
   Sentencing Guidelines. “We have repeatedly noted that Strickland[’s
   performance prong] presents a stringent, rigorous test,” 34 and that the sort
   of “directly controlling precedent” that counsel is expected to discover “is
   rare” given that “factual differences will make authority easily
   distinguishable, whether persuasively or not.” 35 This case does not represent
   one of those rare instances.
           Although Lagos’s counsel at sentencing could have argued under the
   current Guidelines (without relying on Izydore) that the $4.3 million in court-
   ordered payments was not a “reasonably foreseeable” result of Lagos’s
   fraud, such an argument, as we have already discussed, either lacked merit,
   or was at least doubtful enough that counsel was not deficient for failing to
   make it. 36

           33
                Id. at 463 n.7.
           34
                United States v. Fields, 565 F.3d 290, 297 (5th Cir. 2009).
           35
                Williamson, 183 F.3d at 463 n.7.
           36
              See id. (“[I]t is not necessarily providing ineffective assistance of counsel to fail
   to construct an argument that may or may not succeed.”). Lagos argues, in response to the
   district court’s holding regarding his counsel’s performance at sentencing, that counsel
   “did not contend in his affidavit that he made a strategic decision to forego this objection,”
   but instead “acknowledged that the advances in the bankruptcy proceeding should not have
   been included in the loss amount for reasons beyond whether they could be characterized
   as late fees or penalties.” Counsel’s after-the-fact admission, however, does not affect our
   analysis. “Although courts may not indulge ‘post hoc rationalization’ for counsel’s
   decisionmaking . . . , neither may they insist counsel confirm every aspect of the strategic
   basis for his or her actions. . . . After an adverse verdict at trial even the most experienced
   counsel may find it difficult to resist . . . magnify[ing] their own responsibility for an
   unfavorable outcome. Strickland, however, calls for an inquiry into the objective
   reasonableness of counsel’s performance, not counsel’s subjective state of mind.”
   Harrington v. Richter, 562 U.S. 86, 109–10 (2011) (quoting Wiggins, 539 U.S. at 526–527).

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                                                III
           In sum, Lagos’s counsel was not deficient at sentencing for failing to
   object to the sentencing court’s loss calculation on “foreseeability” grounds.
   And even were we to assume he performed deficiently in failing to do so, the
   objection lacked merit such that counsel’s failure to make it did not prejudice
   Lagos. The judgment of the district court is accordingly AFFIRMED.

   We have thus noted that “even if trial counsel admit[s] that she did not contemplate the
   full import of her decision” after all is said and done, this fact is not dispositive. Murphy v.
   Davis, 732 F. App’x 249, 263 (5th Cir. 2018). “The Sixth Amendment guarantees
   reasonable competence, not perfect advocacy judged with the benefit of hindsight.”
   Yarborough v. Gentry, 540 U.S. 1, 8 (2003) (per curiam). Hence, “[t]he relevant question is
   whether some reasonable lawyer could have pursued the challenged course of action,”
   Reaves v. Sec’y, Fla. Dep’t of Corr., 717 F.3d 886, 901 n.9 (11th Cir. 2013) (int’l quotes/cites
   omitted), and here we have concluded that the answer is “yes.” See also Sands v. Lewis, 511
   F. App’x 608, 610 (9th Cir. 2013).

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