Court Opinion

ID: 72822
Source: CourtListenerOpinion
Date Created: 2010-04-26 07:45:54+00
Date Added: 2024-06-11T14:58:57.870704
License: Public Domain

[PUBLISH]

                  IN THE UNITED STATES COURT OF APPEALS

                           FOR THE ELEVENTH CIRCUIT

                             ________________________

                                    No. 96-3225
                             ________________________
                          D. C. Docket No. 96-72-CR-T-25A

UNITED STATES OF AMERICA,
                                                                     Plaintiff-Appellee,

                                        versus

NANCY TATUM, a.k.a. Nancy Fullilove,
GENE TATUM, a.k.a. Dois Gene Tatum, a.k.a.
Chip Tatum,

                                                                Defendants-Appellants.

                             ________________________

                     Appeals from the United States District Court
                          for the Middle District of Florida
                           _________________________
                                  (April 13, 1998)

Before ANDERSON and MARCUS, Circuit Judges, and HANCOCK*, Senior District
      Judge.

PER CURIAM:
__________________
* Honorable James H. Hancock, Senior U.S. District Court Judge for the Northern District
of Alabama, sitting by designation.
       After a jury trial, appellants Gene and Nancy Tatum, were convicted of conspiracy

in violation of 18 U.S.C. § 371. The conspiracy had two objects: (1) making a false

statement for the purpose of influencing the Federal Deposit Insurance Corporation

(“FDIC”) in violation of 18 U.S.C. § 1007; and (2) defrauding and embezzling money

from the FDIC in violation of 18 U.S.C. § 641. Both defendants were also convicted of

the substantive violation of section 1007.

       Because of a bank failure, the FDIC in 1989 became the receiver for the Ironwood

Golf Course and Villas (“Ironwood”). In 1991, the FDIC entered into a property

management contract for the management of the Ironwood properties. Gene Tatum was

the on-site property manager, and in that capacity he signed a one-page attachment to the

property management contract representing to the FDIC that he was “hereby disclos[ing]

any and all parties that are directly or indirectly related ... who are to receive payments for

any proposed goods or services related to the management of the Property.” As the on-site

property manager, Gene Tatum had the ultimate management responsibility for the

property.

       At the time he signed the property management agreement, Gene Tatum had set up

and become a principal in a company called Tee Time Management, Inc. (“Tee-Time”).

The plan was to subcontract with Tee-Time for performance of the work maintaining

Ironwood’s greens, fairways, swimming pool, etc. Gene Tatum and his co-conspirators

thought that Tee-Time would be an extra source of income for them. Although Tee-Time

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was clearly a related party, Gene Tatum did not disclose his arrangement with Tee-Time

when he signed the above-mentioned form. Rather, his relationship to Tee-Time was

concealed. Nancy Tatum, then known as Nancy Fullilove, was Gene Tatum’s girlfriend

at the time of the criminal conspiracy. She worked at Ironwood. She assisted Gene Tatum

in the foregoing criminal conspiracy, including depositing checks intended for the FDIC

into unauthorized bank accounts.

       In this appeal, appellants challenge both their convictions and their sentences.

Their challenges to their convictions are without merit.1 We address the challenge to their

sentences.

       Both appellants challenge the amount of the loss used by the district court in its

calculation of the total offense level. With respect to Gene Tatum, the district court

calculated an eight-level increase on account of $75,837.78 of losses caused by Gene

Tatum’s crimes. With respect to Nancy Tatum, the district court calculated a six-level

increase on account of $39,944.00 of losses involved in Nancy Tatum’s participation in the

crimes.

       Although it is not entirely clear from the sentencing transcripts, the loss amounts used

by the district court apparently represented the gross amount of funds with respect to which

       1
           We reject appellants’ argument that there was no false statement as
contemplated by 18 U.S.C. § 1007. On the particular facts of this case, we readily
conclude that Gene Tatum made an affirmative statement that he was disclosing all
related parties who were to receive payments. He did not do so, and therefore his
statement was false. Appellants’ other arguments challenging their convictions are
without merit and warrant no discussion.

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each defendant was a participant. For example, the $78,000 figure apparently consisted of

the gross amount of monies paid by the FDIC to Tee-Time plus the gross amounts of monies

paid by golfing patrons which Gene Tatum diverted to bank accounts under his control

(rather than depositing same to the bank accounts under the FDIC supervision or control as

required by the management contract). With respect to Nancy Tatum, the $39,000 figure

apparently represented the gross amounts that were deposited into her personal account

(rather than the accounts supervised or controlled by the FDIC as required by the contract).

These gross amounts apparently were not reduced by the services actually performed by

Tee-Time on the Ironwood properties, or to the extent that some or all of the dollars diverted

to inappropriate bank accounts were actually used for legitimate Ironwood expenses.

       Appellants argue that the district court’s use of such gross amounts as the loss figure

was error. They argue that the evidence established no loss at all suffered by the FDIC.

They also argue that there was no intended loss. Although conceding that the contracts with

Gene Tatum and Tee-Time were procured by fraud (because Gene Tatum failed to disclose

the relationship), appellants argue that Tee-Time actually performed the services in

maintaining the greens, fairways, etc., and thus the FDIC suffered no loss. They argue that

there was no intended loss, because appellants intended all along to perform the required

services.

       The appropriate treatment of victim losses in the total offense level calculation will

vary with the nature of the offense. For example, in the case of a simple theft, United States

Sentencing Guidelines Manual (“U.S.S.G.”), § 2B1.1 provides that “‘[l]oss’ means the value

                                              4
of the property taken, damaged, or destroyed.” The theft guideline, U.S.S.G. § 2B1.1,

Application Note 2, indicates that the theft “loss” is not affected by recovery of any portion

of the stolen property. In the district court, the government took the position that the

foregoing was the applicable standard, and apparently, the district court acceded to the

government’s position and used the gross amounts as above described.

       However, this case does not involve a simple theft. Rather, this case has been litigated

upon the assumption2 by all of the parties (and the district court) that the crimes involved

were not simple theft, but rather were in the nature of the fraudulent procurement of a

contract. 3 As pointed out by the Third Circuit in United States v. Kopp, 951 F.2d 521 (3rd

Cir. 1991), and by the Seventh Circuit in United States v. Schneider, 930 F.2d 555 (7th Cir.

1991), the analysis in a case of fraud is not as simple as in a case of simple theft. In a simple

theft, there is almost always an intent to deprive the victim of the value of the property taken.

Thus, it is appropriate to allow no reduction for the recovery of any portion of the stolen

property. In some cases of fraud, there will be a similar intent to deprive the victim of the

full amount fraudulently taken. However, in other cases of fraud, the perpetrator may intend

no loss. Appellants argue that their crimes fall in the latter category.

       2
          For this reason, we treat the case as one involving solely the fraudulent
procurement of a contract. Thus, we need not decide whether a different treatment
would be appropriate in a case in which the fraud was in the nature of embezzlement.
       3
         In other words, Gene Tatum fraudulently obtained the contract by failing to
disclose his relationship to subcontractor Tee-Time.

                                               5
      We conclude that the U.S. Sentencing Guidelines do stake out a treatment of “loss”

for cases of fraudulent procurement of a contract which is different from that for simple

theft. U.S.S.G. § 2F1.1, Application Note 7, provides in relevant part:

      7. Valuation of loss is discussed in the Commentary to § 2B1.1 (Larceny,
      Embezzlement, and Other Forms of Theft). As in theft cases, loss is the value
      of the money, property, or services unlawfully taken; it does not, for example,
      include interest the victim could have earned on such funds had the offense not
      occurred. Consistent with the provisions of § 2X1.1 (Attempt, Solicitation, or
      Conspiracy), if an intended loss that the defendant was attempting to inflict can
      be determined, this figure will be used if it is greater than the actual loss.
      Frequently, loss in a fraud case will be the same as in a theft case. For
      example, if the fraud consisted of selling or attempting to sell $40,000 in
      worthless securities, or representing that a forged check for $40,000 was
      genuine, the loss would be $40,000.

      There are, however, instances where additional factors are to be considered in
      determining the loss or intended loss:

      ...

      (b)    Fraudulent Loan Application and Contract Procurement Cases

             In fraudulent loan application cases and contract procurement cases, the
             loss is the actual loss to the victim (or if the loss has not yet come
             about, the expected loss). For example, if a defendant fraudulently
             obtains a loan by misrepresenting the value of his assets, the loss is the
             amount of the loan not repaid at the time the offense is discovered,
             reduced by the amount the lending institution has recovered (or can
             expect to recover) from any assets pledged to secure the loan.
             However, where the intended loss is greater than the actual loss, the
             intended loss is to be used.

             In some cases, the loss determined above may significantly understate
             or overstate the seriousness of the defendant’s conduct. For example,
             where the defendant substantially understated his debts to obtain a loan,
             which he nevertheless repaid, the loss determined above (zero loss) will
             tend not to reflect adequately the risk of loss created by the defendant’s
             conduct. Conversely, a defendant may understate his debts to a limited

                                                 6
              degree to obtain a loan (e.g., to expand a grain export business), which
              he genuinely expected to repay and for which he would have qualified
              at a higher interest rate had he made truthful disclosure, but he is unable
              to repay the loan because of some unforeseen event (e.g., an embargo
              imposed on grain exports) which would have caused a default in any
              event. In such a case, the loss determined above may overstate the
              seriousness of the defendant’s conduct. Where the loss determined
              above significantly understates or overstates the seriousness of the
              defendant’s conduct, an upward or downward departure may be
              warranted.

U.S.S.G. § 2F1.1, Application Note 7. We conclude that the above-quoted guideline

is applicable to this case, and that the district court erred in failing to apply it.

Therefore, we must vacate appellants’ sentences and remand for resentencing. If on

remand the district court finds that there is no actual loss and no intended loss, then

there should be no enhancement of the base offense level on account of the amount

of the losses, unless of course an upward departure is found appropriate. See id. (“In

some cases, the loss determined above may significantly understate . . . the

seriousness of the defendant’s conduct. For example, . . . the loss determined . . .

[may] tend not to reflect adequately the risk of loss,” and thus “an upward . . .

departure may be warranted.”).

       For the foregoing reasons, the convictions of appellants are AFFIRMED, but

the sentences are VACATED, and the case is REMANDED for resentencing.

       AFFIRMED IN PART, VACATED IN PART, AND REMANDED.

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