Court Opinion

ID: 2820229
Source: CourtListenerOpinion
Date Created: 2015-07-24 21:03:09.359506+00
Date Added: 2024-06-11T12:52:54.920409
License: Public Domain

FILED
                                                                United States Court of Appeals
                                                                        Tenth Circuit

                                                                         July 24, 2015
                                        PUBLISH                     Elisabeth A. Shumaker
                                                                        Clerk of Court
                       UNITED STATES COURT OF APPEALS

                                     TENTH CIRCUIT

 UNITED STATES OF AMERICA,
               Plaintiff–Appellee,
 v.                                                           No. 13-4174

 JEFFREY CHARLES ZANDER,
               Defendant–Appellant.

           APPEAL FROM THE UNITED STATES DISTRICT COURT
                     FOR THE DISTRICT OF UTAH
                      (D.C. No. 2:10-CR-01088-DN-1)

Theresa M. Duncan, Albuquerque, New Mexico, for Defendant–Appellant.

Scott J. Thorley, Office of the United States Attorney (Carlie Christensen, Acting United
States Attorney, and Elizabethanne C. Stevens, Assistant United States Attorney, on the
brief), Salt Lake City, Utah, for Plaintiff–Appellee.

Before MATHESON, McKAY, and MORITZ, Circuit Judges.

McKAY, Circuit Judge.

       Defendant Jeffrey Zander was convicted of two counts of mail fraud, two counts of

wire fraud, one count of money laundering, and three counts of willful failure to file

federal tax returns. He was sentenced to sixty-eight months of imprisonment and ordered

to pay $202,543.92 in restitution to the Paiute Indian Tribe of Utah, the main victim of his
fraud. On appeal, he challenges his convictions on the mail fraud, wire fraud, and money

laundering counts. He also challenges the length of his sentence and the amount of

restitution awarded to the Tribe.

                                            I.

       The fraud and money laundering counts at issue in this appeal all arose out of

Defendant’s scheme to divert federal grant money intended for the Paiute Indian Tribe for

his own personal use.

       The Paiute Indian Tribe of Utah is a federally recognized Indian tribe located in

southern Utah, which consists of five distinct bands: the Cedar, Indian Peaks, Kanosh,

Koosharem, and Shivwits bands. The Tribe’s main asset is the reservation land held in

trust by each of its bands.

       Defendant began working for the Tribe as a tribal planner in 1998, and he

subsequently became the Tribe’s trust resource and economic development director. As a

director, Defendant worked independently with minimal supervision. In about 2004 or

2005, Defendant suggested the Tribe seek federal grant money to fund the development

of an Integrated Resource Management Plan—a comprehensive, long-term plan regarding

the use, development, and management of tribal resources and assets—for each of the

Tribe’s bands. Tribal officials agreed the Tribe and bands would greatly benefit from the

development of IRMPs to guide their resource management decisions.

       Between 2005 and 2007, Defendant prepared grant proposals to request funding

from the Bureau of Indian Affairs for the Tribe to develop an IRMP for each of its bands.

                                            -2-
In each grant proposal, Defendant represented that most of the grant proceeds would be

used to hire and pay an outside consultant and facilitator to assist the Tribe, since “[t]here

is no resident community expertise in natural resources management, strategic planning,

or economics.” (Supplemental R. Exs. 1-1 p. 11, 1-2A p. 4, 1-3 p. 8, 1-4 p. 13, 1-6 p. 13.)

The grant proposal for each band’s IRMP was approved by that band’s council and by the

Tribal Council, then submitted to the BIA. The completed submission forms described

Defendant as the person to be contacted regarding the proposals and listed his fax number

as well as the Tribal office’s mailing address in the pertinent contact information.

       The agency approved and awarded the following five IRMP development grants:

$25,000.00 for the Koosharem Band in July 2005; $28,000.00 for the Indian Peaks Band

in August 2006; $28,000.00 for the Kanosh Band in August 2006; $34,500.00 for the

Cedar Band in August 2007; and $49,500.00 for the Shivwits Band in August 2007. A

BIA awarding official notified the Tribe of each grant’s approval by mailing the Tribe a

grant award package from her office in Arizona to the Tribe’s offices in Utah via certified

mail. Each grant agreement provided that grant funds would be transferred to the Tribe’s

bank account through an Automated Clearinghouse electronic transfer.

       Instead of hiring an outside consultant and facilitator to help develop IRMPs for

each band, Defendant created false invoices and purchase orders for four fictitious

companies and represented to the Tribe that these companies had provided consulting and

facilitating services for the IRMP development projects. Based on these representations,

the Tribe issued checks made out to these nonexistent companies and, at Defendant’s

                                             -3-
direction, either mailed the checks to post office boxes that were actually owned or

controlled by Defendant or gave them to Defendant to hand-deliver to the purported

companies.

       After issuing these checks, the Tribe requested reimbursement from the BIA under

the IRMP grants. The local BIA office approved each of the Tribe’s reimbursement

requests. After approving a request, the local office would fax the approved

reimbursement form to a BIA processing center in Reston, Virginia. In accordance with

the terms of the grant agreements, the government reimbursed the Tribe by wiring grant

funds via an ACH transfer from the United States Treasury in Kansas City, Missouri, to

the Tribe’s bank account in Utah.

       Defendant submitted progress reports to the government in which he represented

that consulting and facilitating companies were actively involved in each of the IRMP

development projects. He also represented that he traveled out of town and sometimes

out of state to meet with these companies and work on the different IRMP projects. On at

least one occasion, Defendant submitted his progress report to the BIA via fax.

       Defendant deposited the checks made out to the fictitious companies into his

personal checking accounts. He then spent the funds for his personal benefit, including

using them to make a down payment on a home he purchased in November 2007.

Although he expended all $165,000.00 of the IRMP grant funds awarded by the BIA,

Defendant completed only one four-page IRMP for the Koosharem Band. A prosecution

witness testified at trial that other IRMPs she had seen “vary in pages from a minimum of

                                            -4-
50 to over a hundred.” (R. at 903.)

       The Tribe learned of Defendant’s scheme in March 2008 after a bank employee

called the Tribe to ask about a check made out to one of Defendant’s nonexistent

businesses which he had attempted to deposit into his personal account. Following a

short investigation, the Tribe fired Defendant. According to a Tribal representative, the

Tribe thereafter received a notice of collection from the government seeking repayment of

the grant funds based on the Tribe’s failure to produce the IRMPs the grants were

intended to fund.

       In February 2012, a federal grand jury indicted Defendant on two counts of mail

fraud in violation of 18 U.S.C. § 1341, two counts of wire fraud in violation of 18 U.S.C.

§ 1343, one count of money laundering in violation of 18 U.S.C. § 1957, and three counts

of failure to file federal tax returns in violation of 26 U.S.C. § 7203. The four fraud

counts all stem from the last two grants Defendant obtained as part of his scheme—the

August 2007 grants for the Cedar Band’s and Shivwits Band’s IRMPs. Specifically, the

two mail fraud counts arose from the mailing of the grant award packages for these grants

from the BIA office in Arizona to the Tribal office in Utah. The two wire fraud counts

arose from: (1) a February 2008 fax from a BIA office in Utah to a BIA office in

Virginia regarding reimbursement for various Tribal grant expenses, including expenses

incurred under these two IRMP grants; and (2) a February 2008 ACH transfer from the

U.S. Treasury in Missouri to the Tribe’s bank in Utah, which included funds allocated for

the IRMP grants. The money laundering count arose from Defendant’s use of funds

                                             -5-
obtained through the IRMP grants to purchase a cashier’s check for a down payment on

his house. Finally, the three tax-related counts—none of which are at issue in this

appeal—were based on Defendant’s failure to file a tax return for the years 2005, 2006,

and 2007.

       After a seven-day trial, a jury found Defendant guilty on each of the counts in the

indictment. The district court denied Defendant’s Rule 29 motion for a judgment of

acquittal, holding there was sufficient evidence to sustain a conviction on each of the

challenged counts.

       Prior to Defendant’s sentencing, the probation office prepared a presentence

report. This PSR stated Defendant had received a total of $176,698.00 as a result of his

fraud,1 and the PSR accordingly included a ten-level enhancement for the fraud offenses

based on a loss between $120,000.00 and $200,000.00. See U.S.S.G. § 2B1.1(b)(1)(J).

Based on this calculation, the PSR calculated a total offense level of 24 and a guideline

range of 51 to 63 months of imprisonment. The PSR also reported Defendant owed

$176,698.00 in restitution to the Tribe.

       An attorney for the Tribe prepared a victim impact statement, which was attached

to the PSR. In this statement, the Tribe reported that, in addition to the money Defendant

directly took from the Tribe, the Tribe “has had to absorb the costs associated with

       1
         Although the BIA only awarded the Tribe a total of $165,000 for the five IRMP
development grants, the Tribe contributed additional amounts to the IRMP projects out of
Tribal funds, and Defendant’s fraud caused a loss of these Tribal funds as well.

                                            -6-
hundred of hours of lost employee time[ and] attorney’s fees.” (Doc. 198-2 at 25.)

Moreover, the Tribe had to pay into a state unemployment fund for the unemployment

benefits Defendant received from the state of California after his termination in 2009

from a subsequent, unrelated job in California. The Tribe included a financial impact

worksheet that specified various losses associated with Defendant’s actions: $176,698.00

in stolen funds; $13,910.00 for attorneys fees “associated with the FBI and Department of

Justice investigation and prosecution, responses to Zander’s subpoena requests,

Department of the Interior attempts to recoup the embezzled funds, state charges against

Zander for the trespass into the Tribal building, unemployment benefits improperly paid

to Zander, termination, and related Zander requirements”; $10,000.00 for the salary

increase Defendant was promised in exchange for working as the Tribe’s general counsel;

$8,339.98 for unemployment benefits paid to the Utah Department of Workforce

Services; and $3,595.94 for “lost wages and employees time and travel related to Zander

case.” (Id. (capitalization standardized).)

       Defendant objected to the PSR’s loss calculation of $176,698.00 and the

recommended award of restitution in the same amount. He argued the loss calculation

and restitution should be based solely on the funds he received from the two grants which

formed the basis for his convictions, not the amount he received from the IRMP scheme

as a whole. The probation office declined to modify the recommended loss and

restitution amounts.

       At Defendant’s sentencing hearing, the district court asked the government why

                                              -7-
the additional losses described in the Tribe’s victim impact statement had not been

included in the loss calculation. A government attorney replied that “the government has

been operating under the agreed upon amount of $176,698.00 and was unaware, until

receiving this exhibit, of the additional [loss].” (Doc. 232 at 7.)

       The district court initially stated it would apply the PSR’s loss figure of

$176,698.00. However, the court then heard testimony from a Tribal representative about

the extensive negative consequences suffered by the Tribe as a result of Defendant’s

fraud. The court asked several questions about the Tribe’s losses, and another Tribal

representative explained the way the Tribe had calculated the specific losses claimed on

the financial impact worksheet. Following this explanation, the court concluded there

was “some substantiation of amounts” relating to the Tribe’s claimed losses of

$13,910.00 in legal fees, $8,339.98 in unemployment benefits paid to Defendant, and

$3,595.94 for Tribal employees’ time and travel costs associated with this case. (Id. at

36.) The court found that the Tribe had failed to substantiate only its claimed loss of

$10,000.00 for Defendant’s general counsel salary increase.

       The court then asked Defendant to address the Tribe’s additional claims of loss.

Defense counsel stated it was hard for her to address claims of loss which had just been

brought up for the first time. She raised a specific objection to the claim of loss for Tribal

employees’ time and travel costs, but indicated she would need more time to respond to

the claims of loss for unemployment benefits and attorneys fees.

       After considering all of the parties’ arguments and evidence, the court found the

                                             -8-
correct amount of restitution to be $202,543.92, based on all of the Tribe’s claimed losses

except the requested $10,000.00 for Defendant’s salary increase. The court noted that

Defendant’s objection to the amount of restitution was “preserved for the record.” (Id. at

59.) The court also relied on this new $202,543.92 figure for the sentencing loss

calculation, which raised Defendant’s offense level by one level and increased his

recommended sentencing range to 57–71 months. Based on this calculation, the court

sentenced Defendant to a within-guidelines sentence of 68 months’ imprisonment.

                                             II.

       Defendant raises five main issue on appeal: (1) a sufficiency-of-the-evidence

challenge to his mail fraud convictions; (2) a sufficiency-of-the-evidence challenge to his

wire fraud convictions; (3) a conditional challenge to his money laundering conviction;

(4) a challenge to the procedural reasonableness of his sentence; and (5) a challenge to the

district court’s award of $202,543.92 in restitution to the Tribe.

       We first consider Defendant’s challenge to the sufficiency of the evidence

supporting his two mail fraud convictions. We review the sufficiency of the evidence de

novo, “viewing the evidence and the reasonable inferences to be drawn therefrom in the

light most favorable to the government.” United States v. Grassie, 237 F.3d 1199, 1207

(10th Cir. 2001) (internal quotation marks omitted). “We will reverse a conviction only if

no rational trier of fact could have found the essential elements of the crime beyond a

reasonable doubt.” United States v. Willis, 476 F.3d 1121, 1124 (10th Cir. 2007) (internal

quotation marks omitted).

                                             -9-
       A mail fraud conviction under 18 U.S.C. § 1341 requires evidence of “(1) a

scheme or artifice to defraud or obtain property by means of false or fraudulent pretenses,

representations, or promises, (2) an intent to defraud, and (3) use of the mails to execute

the scheme.” United States v. Welch, 327 F.3d 1081, 1104 (10th Cir. 2003). The third

element of this test does not require use of the mails to be an essential element of the

fraudulent scheme; rather, “‘[i]t is sufficient for the mailing to be incident to an essential

part of the scheme or a step in the plot.’” United States v. Washington, 634 F.3d 1180,

1183 (10th Cir. 2011) (quoting Schmuck v. United States, 389 U.S. 705, 710-11 (1989)).

Nor does the defendant need to use the mails himself: It is sufficient “if the perpetrator

does an act with knowledge that the use of the mails will follow in the ordinary course of

business, or where such use can reasonably be foreseen, even though not actually

intended.” Washington, 634 F.3d at 1183-84. In other words, a defendant commits mail

fraud if he “set[s] forces in motion which would involve mail uses.” United States v.

Worley, 751 F.2d 348, 350 (10th Cir. 1984) (internal quotation marks and ellipses

omitted). “The only causation required by the mail fraud statute is whether the defendant

could reasonably foresee the occurrence of mailings.” Id.

       On appeal, Defendant does not dispute the government’s evidence of a scheme and

intent to defraud, but he contends the government failed to present sufficient evidence to

satisfy the third element of the mail fraud test. He argues the connection between his

conduct and the charged mail uses—the BIA’s August 2007 mailings of two grant award

packages to the Tribe—is too attenuated to show that he set forces in motion which would

                                             -10-
involve use of the mails. While he does not dispute he drafted the proposals for the grants

awarded in the BIA’s August 2007 mailings, Defendant stresses he was not authorized to

submit these grant proposals to the BIA, so they could only be submitted if the Tribe

passed a resolution to pursue the grants. Moreover, he points out that the BIA review

board does not approve all IRMP grant proposals. Thus, Defendant argues, “[t]he chain

[of causation] is simply too long and too attenuated to support his conviction.”

(Appellant’s Opening Br. at 21.)

       We find this argument unpersuasive. In essence, Defendant argues he did not

foreseeably cause the use of the mails because either the Tribe or the BIA could have

inadvertently thwarted his fraudulent scheme by rejecting the grant proposals, and if they

had done so, the BIA would not have mailed the grant award packages to the Tribe.

However, the fact that the grant award packages would not have been mailed if the

fraudulent scheme had failed does not make the chain of causation too attenuated to be

foreseeable. A reasonable person in Defendant’s position could have foreseen that his

scheme, if successful, would result in the use of the mails, and this is enough to satisfy the

foreseeability requirement.

       Defendant also argues his fraudulent scheme did not actually cause the use of the

mails because federal law requires the development of management plans for Indian

tribes by either the tribe or the Secretary of the Interior, see 25 U.S.C. § 3711(b), so the

Paiute Indian Tribe of Utah would likely have pursued the IRMP development grant

funds in any event. Thus, he argues, even if he had not suggested the Tribe pursue the

                                             -11-
IRMP grants and drafted the grant proposals to do so, the Tribe would likely have still

pursued this course and thereby caused the BIA to mail a grant award package to the

Tribe.

         Defendant cites to no evidence supporting this speculation, and he does not even

attempt to argue that the contents of the grant award packages would have been the same

absent the scheme. Moreover, the hypothetical possibility that individuals might have

legitimately engaged in a course of conduct which could have led to a similar use of the

mails does not negate the government’s evidence that the defendant actually set forces in

motion which led to mail usage in connection with the fraudulent scheme.

         In Schmuck v. United States, 489 U.S. 705 (1989), the Supreme Court considered

the validity of several mail fraud convictions that arose out of an odometer-tampering

scheme. The government presented evidence that the defendant rolled back the

odometers on several automobiles, then marketed them to several retail dealers at

artificially inflated prices. “These unwitting car dealers, relying on the altered odometer

figures, then resold the cars to customers, who in turn paid prices reflecting Schmuck’s

fraud.” Id. at 707. As required by law, the dealers completed the resale of each

automobile by submitting a title-application form to the Wisconsin Department of

Transportation on behalf of the retail customer. Id. The defendant’s mail fraud

convictions were based on the dealers’ mailings of these title-application forms. In

affirming these convictions, the Supreme Court rejected the defendant’s argument that a

mail fraud conviction cannot be based on routine mailings that are innocent in

                                            -12-
themselves. The Court held that the defendant could appropriately be convicted of mail

fraud because the dealers’ mailings of the title-application forms resulted from the

defendant’s fraudulent scheme and served an essential role in his scheme.

       The defendant in Schmuck could have legitimately sold automobiles with non-

fraudulent odometer readings, and the retail dealers would still have been required by law

to mail title-application forms for the automobiles they resold. Similarly, the Tribe could

have legitimately sought and obtained IRMP grant funds, and the BIA would have

arguably still been required to mail grant award packages to the Tribe.2 However, the fact

that a similar mailing might have been made absent the fraud is irrelevant to the pertinent

inquiry—whether the defendant’s fraudulent scheme actually set forces in motion

foreseeably leading to the use of the mails incident to an essential part of his scheme. If

the government’s evidence satisfies this inquiry, it is sufficient to prove “[t]he only

causation required by the mail fraud statute,” Worley, 751 F.2d at 350. The government

need not disprove any possibility the defendant could have engaged in legitimate conduct

which might have led to similar mail usage.

       Defendant further argues the BIA’s mailings were not part of the execution of the

fraudulent scheme because “[t]he fraud, if any, occurred when Mr. Zander billed the

Tribe for work that he was not authorized to perform,” and his misrepresentations to the

       2
         The government contests Defendant’s argument that the BIA was legally required
to use the mails to send the grant award packages to the Tribe. We need not resolve this
issue based on our conclusion that it is irrelevant whether the mailings became legally
required as a result of Defendant’s fraudulent scheme.

                                             -13-
Tribe had nothing to do with the government’s decision to approve the grants and mail

the grant award packages to the Tribe. (Appellant’s Opening Br. at 23.) However, the

mail fraud statute does not require a direct connection between fraudulent

misrepresentations and the use of the mails. Rather, “[i]t is sufficient for the mailing to

be incident to an essential part of the scheme or a step in the plot.” Schmuck, 489 U.S. at

710-11 (internal quotations marks, citation, and brackets omitted).

       We conclude that the mailings in this case were incident to an essential step of this

scheme—the BIA’s award of the grants to the Tribe. Indeed, according to Defendant’s

own arguments, these mailings were a necessary part of this essential step of the scheme,

since Defendant contends the BIA was legally required to use the mails to sent the grant

award packages to the Tribe once they were approved.3 We thus conclude that the

government presented sufficient evidence for the jury to rationally find that Defendant set

forces in motion which foreseeably led to use of the mails incident to an essential step in

       3
         In his reply brief, Defendant argues the BIA’s award of the grants was not an
essential part of his scheme, since the Tribe paid for some IRMP-related work for the
Shivwits and Cedar bands before it received the BIA’s grant awards for these bands’
IRMPs. Defendant did not raise this argument in his opening brief, and it is therefore
waived. See Stump v. Gate, 211 F.3d 527, 533 (10th Cir. 2000). Moreover, as the
Supreme Court has explained, “[t]he relevant question at all times is whether the mailing
is part of the execution of the scheme as conceived by the perpetrator at the time.”
Schmuck, 489 U.S. at 715 (emphasis added). As conceived by Defendant at the time, the
scheme required the BIA to award the IRMP grants so the Tribe would have a pool of
funds Defendant could fraudulently take as the Tribe’s trust resource and economic
development director. Even if the Tribe’s later actions arguably suggested the scheme
could have succeeded without the BIA’s grant approval, the evidence still supports the
conclusion that the mailings were “part of the execution of the scheme as conceived by
[Defendant] at the time.” Id.

                                            -14-
Defendant’s fraudulent scheme.

       Defendant also argues his mail fraud convictions must be reversed because the

grant award packages contained no false or misleading information and the BIA was

required to mail these packages once it approved the grants. For support, he quotes a

sentence from our opinion in United States v. Lake, 472 F.3d 1247 (10th Cir. 2007),

which states that “mailings of documents which are required by law to be mailed, and

which are not themselves false and fraudulent, cannot be regarded as mailed for the

purpose of executing a fraudulent scheme.” Id. at 1256 (internal quotation marks

omitted). He also relies on the Supreme Court’s opinion in Parr v. United States, 363

U.S. 370 (1960).

       However, “[t]o the extent that [Defendant] would draw from these . . . cases a

general rule that routine mailings that are innocent in themselves cannot supply the

mailing element of the mail fraud offense, he misapprehends this Court’s precedents.”

Schmuck, 489 U.S. 714-15. A detailed review of the Parr and Lake

decisions—particularly in light of the Supreme Court’s further discussion of these issues

in Schmuck—convinces us these cases are distinguishable and do not prevent the mailings

in this case from forming the basis for Defendant’s mail fraud convictions.

       In Parr, various individuals associated with a local school district defrauded the

district and its taxpayers of district funds through various means such as cashing checks

issued to fictitious persons. 363 U.S. at 381. The defendants were convicted of mail

fraud based on their mailing of the tax notices and remittances which were necessary to

                                            -15-
collect taxes to fund the school district. Id. at 385-86. However, the Supreme Court

noted that “the indictment did not expressly or impliedly charge, and there was no

evidence tending to show, that the taxes assessed were excessive, ‘padded,’ or in any way

illegal.” Id. at 387. Moreover, the government did not question that the defendants were

required by state law to use the mail to collect the district’s taxes. Id. at 388. Under these

circumstances, the Court in Parr held that the defendants had not committed mail fraud

by mailing documents they were legally required to mail, regardless of their scheme to

later steal some indefinite part of the funds which would be legally acquired through these

documents.

       Our reversal of the defendants’ wire fraud convictions4 in Lake was likewise based

upon the facts that (1) the predicate transmissions were required by law, and (2) there was

no evidence the documents would have differed in any respect in the absence of the

fraudulent scheme. In Lake, the defendants allegedly “conducted a far-reaching scheme

to milk the company [they ran] for all they could through a pattern of fraud and deceit.”

472 F.3d at 1249. “Despite the scope of the alleged fraudulent scheme, all the counts of

the indictment depended on proving the efforts of the defendants to conceal from the

United States Securities and Exchange Commission (SEC) their personal use of corporate

aircraft.” Id. at 1249-50. Specifically, the government alleged the defendants committed

       4
         The requisite elements for mail fraud and wire fraud are “virtually identical,” so
interpretations of one statute “are authoritative in interpreting parallel language” in the
other. United States v. Weiss, 630 F.3d 1263, 1263 (10th Cir. 2010) (internal quotation
marks omitted).

                                            -16-
wire fraud based on their company’s transmission of required SEC reports which failed to

disclose the defendants’ personal use of corporate aircraft. Id. However, we concluded

that the government had failed to prove the defendants were actually required to disclose

their aircraft use in the SEC reports. Thus, regardless of whether the defendants

otherwise defrauded the company of its assets, “[a]s far as the trial evidence showed, even

in the absence of a fraudulent scheme the seven reports would have been filed and the

contents would have been the same.” Id. at 1255. “Consequently,” we held, “we cannot

see how their filing advanced the alleged fraudulent scheme or how one could say that the

defendants’ purpose in filing them was to advance the scheme.” Id. at 1255-56. Relying

on Parr, we accordingly reversed the wire fraud convictions.

       The Supreme Court’s Schmuck decision clarifies that Parr’s holding applies only

to cases like Parr and Lake, where the transmissions at issue were not caused or changed

by the fraudulent scheme and cannot be considered incident to an essential part of the

scheme. In Schmuck, the Court rejected the defendant’s argument that Parr and similar

cases do not permit a mail fraud conviction to be based on routine, legally required

mailings which are innocent in themselves. Rather, the Court held, “[t]he relevant

question at all times is whether the mailing is part of the execution of the scheme as

conceived by the perpetrator at the time.” Id. at 715. The Court concluded that a jury

could reasonably find the long-term success of the defendant’s odometer-rollback scheme

to depend on dealers complying with their legal requirement to mail title-application

forms to the state. Moreover, while the mailings in Parr “would have been made

                                            -17-
regardless of the defendants’ fraudulent scheme, the mailings in [Schmuck], though in

compliance with Wisconsin’s car-registration procedure, were derivative of Schmuck’s

scheme to sell ‘doctored’ cars and would not have occurred but for that scheme.” Id. at

713 n.7. A reasonable jury could accordingly conclude that the dealers’ mailings of the

title-registration forms were caused by the fraudulent scheme and were incident to an

essential part of the scheme, thus satisfying the mail fraud requirements. Id. at 712.

       The mailings in this case, like the mailings at issue in Schmuck, resulted from the

fraudulent scheme and are incident to an essential part of this scheme, even if they might

be considered routine and innocent in themselves. As in Schmuck, Defendant’s actions

set forces in motion which foreseeably led to the use of the mails. Once these forces were

set in motion, the BIA in this case—like the retail dealers in the Schmuck case—may have

been legally required to use the mail to send certain documents. However, it is irrelevant

whether mailings become legally required after the defendant sets these forces in motion,

so long as the defendant did in fact set these forces in motion and “the mailing is part of

the execution of the scheme as conceived by the perpetrator at the time.” Id. at 1450.

The government presented sufficient evidence to support these conclusions in this case,

and we therefore affirm Defendant’s mail fraud convictions.

       Next, Defendant challenges the sufficiency of the evidence on his wire fraud

convictions. The elements of wire fraud are extremely similar to the elements of mail

fraud, requiring evidence of “(1) a scheme or artifice to defraud or obtain property by

means of false or fraudulent pretenses, representations, or promises, (2) an intent to

                                            -18-
defraud, and (3) use of interstate wire or radio communications to execute the scheme.”

United States v. Ransom, 642 F.3d 1285, 1289 (10th Cir. 2011) (internal quotation marks

omitted). “Because the requisite elements of the two statutes are virtually identical, this

court has held interpretations of § 1341 are authoritative in interpreting parallel language

in § 1343.” United States v. Weiss, 630 F.3d 1263, 1271 n.5 (10h Cir. 2010).

       As with his mail fraud convictions, Defendant challenges the government’s

evidence only as to the third element of the wire fraud test. He contends he did not cause

and could not reasonably have foreseen the two wire transmissions described in the wire

fraud counts—an internal BIA fax relating the Tribe’s reimbursement requests, and an

ACH transfer from the U.S. Treasury to the Tribe’s bank account in Utah—because there

was no evidence he knew about the BIA’s internal communication methods or the

banking aspects of the Tribe’s business.

       This argument misapprehends the pertinent test. The relevant question is not

whether Defendant knew or could reasonably have foreseen the details of these specific

transmissions. Rather, “it’s enough if [he] set forces in motion which foreseeably would

involve use of the wires.” United States v. Mullins, 613 F.3d 1273, 1281 (10th Cir. 2010)

(internal quotation marks omitted). As we explained in rejecting a similar argument in

Mullins, “we are concerned with whether ‘the use of the wires in the ordinary course of

business,’ not the precise use of ‘this or that wire,’ was known or reasonably foreseeable

to someone in [Defendant’s] position.” Id. (quoting United States v. Wittig, 575 F.3d

1085, 1099 (10th Cir. 2009) (ellipses omitted). In Mullins, we concluded the defendant

                                            -19-
could reasonably foresee use of the wires to transmit FHA loans “in light of evidence that

wire transmission are integral to other parts of real estate transactions” with which the

defendant was familiar. Id.

       We similarly hold in this case that the government presented sufficient evidence to

support the conclusion that Defendant could have reasonably foreseen use of the wires

incident to an essential part of his fraudulent scheme. At the time Defendant prepared

and submitted the two IRMP grant proposals which formed the basis for his wire fraud

convictions, he had already successfully obtained three similar IRMP grants. Like the

two grants underlying his convictions, each of the prior grants contained an identical

provision stating the Tribe would receive its grant funds through ACH wire

transmissions. Additionally, the grant submissions included Defendant’s fax number in

the contact information, and he personally used at least one fax transmission to

communicate with the BIA regarding his progress on the Koosharem Band IRMP project.

Based on this previous course of dealings as well as the IRMP grant language, the jury

could rationally find that the use of the wires was reasonably foreseeable to Defendant.

The jury could also rationally find that the particular wire uses at issue in this case were

incident to an essential part of Defendant’s scheme, since they related to the payment of

grant funds from the BIA to the Tribe to continue covering Defendant’s fraudulently

claimed expenses.

       Defendant also challenges his wire fraud convictions on the ground that the wire

transmissions would have occurred regardless of his fraudulent scheme, since the fax and

                                             -20-
the ACH transfer involved a larger sum of grant funds from other unrelated grants as well

as a reimbursement request for the IRMP grants involved in the fraud. However, the

evidence indicates the contents of these transmissions—unlike the transmissions at issue

in Parr and Lake—would have differed absent the fraudulent scheme; were it not for the

scheme, these transmissions would not have sought reimbursement of the grant funds

Defendant had fraudulently taken. The fact that the transmissions also furthered

legitimate purposes does not insulate Defendant from liability for this foreseeable use of

the wires incident to an essential part of his fraudulent scheme. Indeed, these

circumstances are similar to the “classic mail fraud” case in which defendants knowingly

send illegally inflated invoices to customers, including fraudulent as well as legitimate

charges on the invoices and thus altering the contents of the transmission that would have

been sent absent the fraud. Sandwich Chef of Tex., Inc. v. Reliance Nat. Indem. Ins. Co.,

319 F.3d 205, 215 (5th Cir. 2003). In such a case, both the inflated invoice and the

payment check sent in response can support a mail fraud conviction, even though an

invoice and check would still have been sent absent the fraud, albeit in a lower amount.

See United States v. Shyres, 898 F.2d 647, 652-53 (8th Cir. 1990). This situation is

analogous. Defendant’s fraud caused the contents of both the BIA fax and the ACH

transfer to differ from the transmissions which would have occurred absent the fraud, and

these differences furthered the fraudulent scheme.

       Based on all of the evidence, the jury could rationally find that Defendant’s

fraudulent scheme set forces in motion which foreseeably led to the use of wire

                                            -21-
transmissions incident to an essential part of the scheme. We accordingly affirm his

convictions on both wire fraud counts.

       The third issue Defendant raises on appeal is a conditional challenge to his money

laundering conviction. He argues that if we reverse his mail and wire fraud convictions,

we should also reverse his conviction for laundering the money obtained through his

alleged fraud. He does not otherwise challenge his money laundering conviction.

Because we affirm his fraud convictions, we likewise affirm his conviction for money

laundering.

       Defendant’s fourth argument on appeal is a challenge to the procedural

reasonableness of his 68-month sentence. He contends the district court erred in applying

the 12-level sentencing enhancement applicable to losses between $200,000.00 and

$400,000.00, rather than the PSR’s recommended 10-level enhancement for a loss

between $120,000.00 and $200,000.00. See U.S.S.G. § 2B1.1(b)(1). He argues the court

erred by including $3,595.94 for the Tribe’s lost wages and travel costs, $13,910.00 for

the Tribe’s attorneys fees, and $8,339.98 for Defendant’s unemployment benefits, to

reach a total loss figure of $202,543,92.

       The government concedes at least some of these costs were improperly included in

the loss calculation and the loss calculation should have fallen within the

$120,000.00–$200,000.00 range, resulting in a lower offense level and corresponding

advisory guideline range. Based on the government’s concession, we will reverse and

remand for resentencing in accordance with this corrected loss calculation.

                                            -22-
       Finally, Defendant argues the district court erred in awarding the Tribe

$202,543.92 in restitution. He objects to the court’s inclusion of the same losses he

objected to with respect to the court’s loss calculation: lost wages and travel costs,

attorneys fees, and unemployment benefits. He contends these losses are not the types of

direct damages covered by the Mandatory Victim Restitution Act, 18 U.S.C. § 3663A.

       The government argues we should review this issue only for plain error because

Defendant failed to raise below the specific arguments he makes on appeal.5 Defendant

contends he sufficiently raised these arguments, particularly given the fact that he was not

       5
         The government also argues that Defendant waived even plain error review by
failing to address the plain error standard in his opening brief on appeal. For support, the
government relies on our statement in Richison v. Ernest Group, Inc., 634 F.3d 1123,
1131 (10th Cir. 2011), that “the failure to argue for plain error and its application on
appeal . . . surely marks the end of the road for an argument for reversal not first
presented to the district court.”
        In United States v. MacKay, 715 F.3d 807, 831-82 & n. 17 (10th Cir. 2013), we
noted that there is an open question in this circuit as to whether an appellant can satisfy
Richison by addressing plain error review in a reply brief rather than an opening brief.
While we did not resolve this issue in MacKay, we suggested that allowing a plain error
argument to be raised for the first time in a reply brief would arguably still serve the
purposes of permitting the appellee to be heard and the adversarial process to be served.
        Moreover, if we were to adopt the opposite rule, appellants would be required to
anticipate and raise an alternative plain error argument whenever the government might
disagree with the appellant’s view that he has sufficiently preserved an issue for appeal.
While raising an alternative plain error argument might be a prudent practice for
appellants to follow, we are not persuaded that it is mandated by Richison or our other
precedents. We hold that Defendant adequately addressed the issue of plain error review
in his reply to the government’s brief, after arguing in his opening brief that his objections
below were sufficiently raised to be preserved for review on appeal. We need not here
resolve the question of whether this same rule would apply when there is no dispute that
the appellant failed to raise an issue below and the appellant fails to address any standard
of review in his opening brief on appeal.

                                            -23-
on notice of the court’s intention to sua sponte award an amount of restitution higher than

the amount recommended in the PSR. We need not resolve this dispute because we

conclude the award of restitution must be remanded even if we review under the plain

error standard advocated by the government.

       Under the Mandatory Victim Restitution Act, “the general rule [is] that restitution

may only be ordered for losses caused by the offense of conviction.” United States v.

West, 646 F.3d 745, 751 (10th Cir. 2011) (internal quotation marks omitted). Thus,

before awarding restitution, the district court must determine whether the crime of

conviction was the proximate cause of the victim’s loss. Id.; see also, e.g., United States

v. Diamond, 969 F.2d 961, 967-68 (10th Cir. 1992). The crime of conviction will not be

considered the proximate cause of the loss if there was an intervening cause, unless this

intervening cause was “directly related to the offense conduct.” United States v.

Speakman, 594 F.3d 1165, 1172 (10th Cir. 2010). Restitution also may not be based on

consequential damages. Diamond, 969 F.2d at 968. “Expenses generated in recovering a

victim’s losses, [for instance], generally are too far removed from the underlying criminal

conduct to form the basis of a restitution order.” Id.

       We have repeatedly held that a restitution order which exceeds the amount of loss

actually caused by the offense of conviction is an illegal sentence. See, e.g., United States

v. Griffith, 584 F.3d 1004, 1019 (10th Cir. 2009); United States v. Smith, 156 F.3d 1046,

1057 (10th Cir. 1998); United States v. Wainwright, 938 F.2d 1096, 1098 (10th Cir.

1991). We have also repeatedly held that the imposition of such an illegal sentence

                                            -24-
constitutes plain error, thus requiring reversal even when the defendant failed to preserve

an objection below. See, e.g., United States v. Gordon, 480 F.3d 1205, 1212 (10th Cir.

2007); Wainwright, 938 F.2d at 1098. Moreover, the government bears the burden of

proving the amount of loss, 18 U.S.C. § 3664(e), and a district court commits plain error

if it orders restitution where the government has failed to present evidence that the

victim’s claimed losses were actually caused by the underlying criminal conduct. United

States v. Herndon, 982 F.2d 1411, 1422 (10th Cir. 1992).

       A review of the Tribe’s claimed loss of $8,339.98 for unemployment benefits

demonstrates the error that occurred in this case. While the district court found the

amount of the claimed loss to be substantiated, it failed to consider whether the

government had presented evidence that this loss was directly and proximately caused by

the crime of conviction. Our review of the record convinces us that such evidence was

entirely lacking. The Tribe’s victim impact statement and related documents indicate that

Defendant began working for an unrelated employer in California after he was terminated

from employment with the Tribe. A few months later, his California employer also

terminated him. According to the newspaper articles the Tribe attached to its victim

impact statement, the California employer denied that his termination had anything to do

with his background, including his fraudulent conduct during his previous employment

with the Tribe. Following this second, unrelated termination, Defendant sought and

obtained unemployment benefits from California, which billed the Utah Department of

Workforce Services through an interstate wage claim. The Utah agency then billed the

                                            -25-
Tribe because Defendant had worked there for an extended period, and the Tribe paid this

claim in full to avoid legal penalties.

       The government presents no evidence or argument to support the conclusion that

Defendant’s crimes of convictions were the proximate cause of the Tribe’s later payment

of unemployment benefits arising out of a subsequent termination from an unrelated

California employer for reasons allegedly unrelated to his fraud on the Tribe. Without

such evidence, the district court imposed an illegal sentence when it included this claimed

loss in the award of restitution, thus committing plain error. This error requires us to

remand for reconsideration of the restitution award under the correct legal standards.

       The district court likewise failed to consider whether the Tribe’s other claimed

losses were directly and proximately caused by Defendant’s crimes of conviction. We

will not attempt to resolve these disputed, fact-intensive questions for the first time on

appeal, but rather leave these questions for the district court to decide in the first instance

on remand.

                                              III.

       For the foregoing reasons, we AFFIRM Defendant’s convictions. We REVERSE

and REMAND his sentence and order of restitution for further consideration.

                                             -26-