Court Opinion

ID: 4567504
Source: CourtListenerOpinion
Date Created: 2020-09-21 20:00:39.603538+00
Date Added: 2024-06-11T09:26:28.725012
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        SEP 21 2020
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                       No.    18-10382

                Plaintiff-Appellee,
                                                D.C. No.
 v.                                             2:16-cr-00038-MCE-3

BRIAN STONE,
                                                MEMORANDUM*
                Defendant-Appellant.

                  Appeal from the United States District Court
                      for the Eastern District of California
                Morrison C. England, Jr., District Judge, Presiding

                       Argued and Submitted July 17, 2020
                           San Francisco, California

Before: SILER,** LEE, and BUMATAY, Circuit Judges.

      Brian Stone appeals the district court’s $243,680.84 restitution order under

the Mandatory Victim Restitution Act (MVRA), arguing that the court wrongly

imposed restitution for losses not caused by Stone and for insurance claims which

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
            The Honorable Eugene E. Siler, United States Circuit Judge for the
U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
were not fraudulent. We have jurisdiction under 28 U.S.C. § 1291. “The legality of

an order of restitution is reviewed de novo, and factual findings supporting the order

are reviewed for clear error. Provided that it is within the bounds of the statutory

framework, a restitution order is reviewed for abuse of discretion.” United States v.

Brock-Davis, 504 F.3d 991, 996 (9th Cir. 2007) (citations omitted). We vacate the

restitution sentence and remand for the district court to recalculate restitution.

      The district court did not err in imposing restitution for losses not directly

caused by Stone’s conduct but rather by his co-conspirators. “[R]estitution may be

ordered for all persons directly harmed by the entire scheme and is thus not confined

to harm caused by the particular offenses for which [the defendant] was convicted.”

United States v. Johnson, 875 F.3d 422, 425 (9th Cir. 2017) (citation and quotations

omitted). The evidence presented at trial and sentencing showed that Stone

participated in the scheme alleged in the indictment.

      The district court, however, erred in imposing restitution to insurance

companies for claims that may not have been tainted by fraud. Under the MVRA,

restitution “may only compensate a victim for actual losses caused by the

defendant’s criminal conduct.” United States v. Gaytan, 342 F.3d 1010, 1011 (9th

Cir. 2003). Thus, “restitution may be awarded only for losses for which the

defendant’s conduct was an actual and proximate cause.” United States v. Swor,

728 F.3d 971, 974 (9th Cir. 2013) (quotations and citations omitted) (finding

                                           2
victim’s loss too attenuated when defendant “introduce[ed] two people . . . in the

course of carrying out a fraudulent scheme, [and] the two later, and independently,

became involved in a separate, operationally different fraudulent scheme”); see also

United States v. Follet, 269 F.3d 996, 999–1101 (9th Cir. 2001) (holding that a crisis

center’s costs for counseling a rape victim were too attenuated to be included in the

rape defendant’s restitution order).

      The district court adopted the PSR’s restitution amount without requiring the

government to prove that the entire restitution amount resulted from fraud. It instead

apparently relied on the government’s assumption that the insurers would and could

void the entire policy due to fraud. But because restitution covers only “actual

losses” suffered by the insurers, the government had to provide evidence that no

claims would have been paid absent Stone and his co-conspirators’ fraud. To meet

this burden, the “government must provide the district court with more than just

general invoices ostensibly identifying the amount of their losses.” United States v.

Andrews, 600 F.3d 1167, 1171 (9th Cir. 2010) (quoting another source). Just

because the insurance companies potentially had the right to cancel coverage does

not mean they suffered those “actual losses.” Gaytan, 342 F.3d at 1011. The

government thus had the burden to prove which portion of the insurance payout was

fraudulent. It did not do so.

                                          3
      The government’s reliance on United States v. Torlai, 28 F.3d 932, 939 (9th

Cir. 2013), is misplaced. That case was interpreting the specific language for

calculating intended losses under the Sentencing Guidelines, not the MVRA’s

restitution provision. See id. at 939. The purposes behind the Sentencing Guidelines

and the MVRA are distinctly different: intended loss concerns culpability of the

offender, while restitution is about “actual losses” to the victim.

      VACATED AND REMANDED.

                                           4