Court Opinion

ID: 4383943
Source: CourtListenerOpinion
Date Created: 2019-04-04 00:00:17.826017+00
Date Added: 2024-06-11T14:22:52.258112
License: Public Domain

Case: 18-50190      Document: 00514900559         Page: 1    Date Filed: 04/03/2019

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                     United States Court of Appeals
                                                                              Fifth Circuit

                                      No. 18-50190                          FILED
                                                                         April 3, 2019
                                                                       Lyle W. Cayce
UNITED STATES OF AMERICA,                                                   Clerk

              Plaintiff - Appellee

v.

RANDALL VARIAN HANKS,

              Defendant - Appellant

                   Appeal from the United States District Court
                        for the Western District of Texas
                             USDC No. 7:16-CR-192-1

Before JOLLY, COSTA, and, ENGELHARDT, Circuit Judges.
GREGG COSTA, Circuit Judge:*
       Randall Hanks defrauded two employers by convincing them to
repeatedly reimburse him for phony electrical jobs. Hanks does not contest
that he committed this long and profitable fraud, but now argues that his
conviction should be vacated because he did not use the mail in a way that
implicates federal jurisdiction. He also contends that the district court erred in
sentencing him. We reject both challenges, so affirm.

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
    Case: 18-50190    Document: 00514900559     Page: 2   Date Filed: 04/03/2019

                                 No. 18-50190

                                       I.
      Hanks owned Sandhills Electric, LLC, which did electrical work for oil
and gas providers. At the end of 2012, he went to work for Well 2 Web (W2W),
a larger company providing similar services. W2W paid Hanks more than just
a salary: it also compensated him for the use of Sandhills-owned service trucks
and reimbursed him when he used parts remaining from Sandhills’s inventory.
When Hanks submitted field tickets describing his work and the parts he used
at jobs for previous Sandhills customers, W2W paid him promptly. The only
problem: Hanks had not done the work. So when W2W mailed invoices to its
“customers,” they did not pay because they had not received those services.
Even more than that, they often did not even have an interest in the land where
the services purportedly occurred.
      After these invoices went unpaid for many months, W2W took notice.
Hanks took steps to diffuse their attention. At one point he told his superiors
that two customers had been purchased by a company named Kendler
Resources and instructed W2W to send the invoices there. W2W attempted to
send Kendler invoices multiple times, but as it turns out, no such company
existed. W2W ended Hanks’s employment, but not before he made nearly
$400,000 from his scheme.
      Hanks then managed to secure employment at SCS Technologies. In
many ways W2W and SCS are similar—they do similar work and agreed to
compensate Hanks similarly. Relying on information Hanks provided, SCS
mailed a large number of invoices that went unpaid. Though Hanks again took
steps to conceal the deceit—trying to force his technicians to sign for work they
had not done and creating elaborate excuses for why invoices were not paid—
SCS discovered the scheme within a year. But this time Hanks fared even
better, clearing well over a million dollars before he was caught.
                                       2
     Case: 18-50190      Document: 00514900559        Page: 3     Date Filed: 04/03/2019

                                     No. 18-50190
      A grand jury indicted Hanks on four counts of mail fraud and three
counts of failure to file a tax return. The first two charged mailings are follow-
up invoices that his first employer sent to the fictitious Kendler Resources at
Hanks’s suggestion. The final two are invoices his second employer sent to a
customer.    At trial, Hanks sought an acquittal on the mail fraud counts,
arguing that the federal court did not have jurisdiction. The court denied that
request, and the jury convicted him on all counts. The court later sentenced
him to concurrent sentences of 97 months in prison for each count of mail fraud
and 12 months for each tax count.
                                            II.
      Hanks argues that the charged mailings did not sufficiently relate to his
scheme and thus his fraud should have been handled in state rather than
federal court. As a jurisdictional issue, we review de novo. 1 United States v.
Traxler, 764 F.3d 486, 488 (5th Cir. 2014).
      Jurisdiction exists under the venerable mail fraud statute when a
mailing is used “for the purpose of executing [a] scheme or artifice” that the
statute criminalizes. 18 U.S.C. § 1341. Use of the mail does not need to be an
essential part of the fraud. Traxler, 764 F.3d at 488. It need only “promote the
scheme in some manner.” United States v. Hoffman, 901 F.3d 523, 546 (5th
Cir. 2018); see also United States v. Tencer, 107 F.3d 1120, 1125 (5th Cir. 1997)
(discussing requirement that the mailing must “contribute[] to the execution
of the scheme”). But a mere accounting between victims will not cut it; the
mailing must “further[] the execution of the fraud.” See Schmuck v. United
States, 489 U.S. 705, 711 (1989).

      1  Our court has never answered whether, if facts were contested in connection with
the mailing requirement, we owe deference to a jury’s finding on that question. We need not
reach that issue today either. Hanks did not present any witnesses and does not contest the
factual presentation the government makes, only the legal effect of those facts.
                                            3
    Case: 18-50190    Document: 00514900559     Page: 4   Date Filed: 04/03/2019

                                 No. 18-50190
      The fraudulent invoices Hanks had his defrauded employers mail the
supposed customers furthered the fraud.        They made it appear that the
services he was billing for were business as usual. By following the normal
course of having the company bill the supposed end user for those services, he
prevented the immediate detection of his fraud. His employer almost certainly
would have asked questions had Hanks sought reimbursement for significant
charges that he did not pass on to a customer. So having the invoices sent to
“customers” bought Hanks time.        His employers would not start to get
suspicious until months down the road when they noticed that multiple bills
tied to his services were not being paid. Meanwhile, the time the mailings
provided allowed Hanks to steal more money. The mailings to the customers
thus advanced the scheme by allowing Hanks to defraud his victims of more
money. Cf. id. at 711–12; United States v. Mills, 199 F.3d 184, 189–90 (5th
Cir. 1999) (both finding mailings sufficiently tied to the fraud when they helped
foster good relations with the victim). That, of course, is the whole point of a
fraud.
      And it does not matter that Hanks himself did not place the invoices in
the mail. It is enough if he caused the mailings. 18 U.S.C. §1341; Traxler, 764
F.3d at 488. He did just that by telling his employers he provided services to
the purported customers, which resulted in the invoices being sent.
      The mailings furthered Hanks’s fraud. His crime was a federal one.
                                     III.
      Hanks also challenges his sentence on two grounds. Hanks first argues
that the district court clearly erred in calculating his loss amount.   He says
the $124,000 W2W paid to his wife per his instructions should not have been
added to the just over $1.4 million he directly received from the defrauded
companies.

                                       4
    Case: 18-50190      Document: 00514900559        Page: 5    Date Filed: 04/03/2019

      There is nothing to this complaint. The Presentence Report (PSR) was
reliable; it established that Hanks had W2W pay his wife though she did
nothing to earn that money. For the dollar amount, the PSR cited a 1099 IRS
Form for miscellaneous income that the company generated. 2 Hanks does not
meaningfully dispute that his wife’s receipt of this money was part of his
fraudulent scheme. There was no error, let alone a clear one, in the loss
calculation.
      The district court also departed upward from the guidelines by finding
that Hanks’s criminal history category underrepresented a pattern of property
offenses. See U.S.S.G. § 4A1.3. Such decisions are reviewed for an abuse of
discretion. See United States v. Zuniga-Peralta, 442 F.3d 345, 347 (5th Cir.
2006). Hanks had convictions for theft and check forgery that were too old to
be included in his criminal history calculation, and a pending charge for
automobile theft. The district court determined, not unreasonably, that these
incidents were similar to the mail fraud that Hanks committed and thus
indicated an especially high risk of recidivism.            There was no abuse of
discretion. What is more, even after making this justifiable upward departure,
the district court still gave Hanks a sentence (97 months) that fell within the
available range under his original criminal history category (78–97 months).
                                             ***
      The judgment of the district court is AFFIRMED.

      2   The PSR said the tax form “revealed Randall Hanks and Christi Hanks received at
least $385,034 from SCS…” Hanks seizes on the erroneous reference to SCS—it should be
W2W—to argue that the PSR is unreliable. But the context, including a reference to W2W
in the very next sentence, show this was just a mistake that does not undermine the
reliability of the loss calculation.