Court Opinion

ID: 2709684
Source: CourtListenerOpinion
Date Created: 2014-08-05 15:19:10.923559+00
Date Added: 2024-06-11T10:01:30.265570
License: Public Domain

In the

United States Court of Appeals
              For the Seventh Circuit

No. 12-1470

U NITED S TATES OF A MERICA,
                                              Plaintiff-Appellee,
                               v.

V ICTORIA M C G EE H ARRIS,
                                          Defendant-Appellant.

            Appeal from the United States District Court
                  for the Southern District of Illinois.
     No. 3:11-cr-30022-DRH-1—David R. Herndon, Chief Judge.

     A RGUED N OVEMBER 1, 2012—D ECIDED M AY 29, 2013

  Before E ASTERBROOK, Chief Judge, and R OVNER and
H AMILTON, Circuit Judges.
  H AMILTON, Circuit Judge. As a broker-representative
affiliated with MetLife, Inc., defendant-appellant Victoria
McGee Harris sold insurance, annuities, and other
financial investments to individual and family clients.
Over the course of nearly eight years she stole more
than $6 million of her clients’ money. She pled guilty
to mail fraud and money laundering and was sentenced
2                                             No. 12-1470

to 210 months in prison. She now appeals her sentence,
arguing that the district court erred by (a) applying
the sentencing guidelines by counting married couples
as two separate victims for purposes of the total victim
count, (b) denying her a fourth continuance of the sen-
tencing hearing to give her more time to dispute
the total loss amount used for guideline calculations,
and (c) imposing an objectively unreasonable sentence.
We affirm.

I. Factual and Procedural Background
  Harris was a registered representative of Tower Square
Securities, which is an affiliated broker of MetLife.
Doing business as Metro East Insurance Group (MEIG),
Harris sold insurance, annuities, and other MetLife fi-
nancial investments and products.
  Investigations by the Illinois Securities Division,
MetLife’s Compliance Department, and the Internal
Revenue Service revealed that for almost eight years,
Harris had been diverting client investment funds
into accounts that she used for personal and family pur-
poses instead of investing those funds on behalf of
her clients. She manipulated these client funds for her
own purposes by using depositing and accounting meth-
ods that substantially departed from MetLife’s standard
practices for affiliated brokers.
  MetLife had a standard procedure for affiliated
brokers handling client investments. When a broker sold
an investment to a client, the client paid for the invest-
No. 12-1470                                            3

ment with a check written to MetLife. The broker then
entered the check into a log and within 24 to 48 hours
forwarded the check to the appropriate recipient
within MetLife.
  Instead of following these procedures, Harris di-
rected her clients to write their investment checks to
her brokerage firm — MEIG. Instead of actually using
the money to purchase the investment on behalf of the
client, Harris would then deposit the check into one of
two accounts in MEIG’s name. Harris created a paper
trail so that her check log and MetLife’s records
showed that she had actually deposited the funds on
the client’s behalf. She did this by putting cashier’s
checks in the client’s file with the client’s name as
remitter, so it appeared that she had properly invested
the client’s funds, and she manipulated MetLife’s invest-
ment tracking software to generate account summaries
that falsely displayed the investments that her clients
intended to purchase. Through this scheme, Harris was
able to pocket her clients’ money while making it seem
as though she had actually invested it. Sometimes,
Harris would later invest funds on a client’s behalf, but
often long after the client had written the check, and
not for the correct amount.
  Harris used the client money she deposited into the
two MEIG accounts for personal and family purposes.
She transferred large sums to several other bank
accounts and investments that she used for herself
and her family: credit cards, a trust account used to
purchase family property, two clothing stores for her
4                                            No. 12-1470

daughters to run, and several other personal and
family accounts.
  The Illinois Securities Division began an audit of Har-
ris’ office after receiving a tip that Harris was not
investing client funds properly. MetLife was notified of
ISD’s audit and began an independent investigation.
The state agency notified the federal Internal Revenue
Service and asked for its help with the investigation.
The investigations proceeded by comparing deposits of
client checks into the commingled MEIG account with
actual client investments purchased from MetLife to
see which client funds were properly invested and
which were not. Because Harris occasionally later
invested funds on a client’s behalf after improperly
depositing the original check into one of the MEIG ac-
counts, investigators had to go through a tedious pro-
cess of tracing each check individually and searching
for possible investment matches to determine the total
amount of funds that Harris stole from her clients.
MetLife and state investigators were able to determine
which client funds Harris had reinvested on a client’s
behalf and which funds remained in the accounts for
her personal purposes.
  Investigators concluded that Harris received nearly
$11 million ($10,938,986.58) in client funds, of which
she reinvested approximately $4 million ($4,055,945.73)
on the clients’ behalf. Of the remaining difference, she
deposited more than $6.7 million into one MEIG
account and approximately $112,000 into a different
account in MEIG’s name, both of which she ultimately
No. 12-1470                                             5

used for personal purposes. MetLife settled with all of
Harris’ clients who suffered a loss, ultimately paying
more than $7 million. Investigators concluded that
Harris had diverted funds from or caused losses to
79 victims, including MetLife, which incurred a loss
by compensating the direct victims.
  Harris pled guilty to one count of mail fraud under
18 U.S.C. § 1341 and to money laundering under 18
U.S.C. § 1957. The initial presentence investiga-
tion report used Guideline section 2B1.1, with a base
offense level of seven, and recommended the following
enhancements based on specific offense characteristics:
18 levels for a loss amount of more than $2.5 million
but less than $7 million, four offense levels for more
than 50 but fewer than 250 victims, two offense levels
for using sophisticated means, and four offense levels
for being a registered broker-dealer.
   After receiving the initial report, Harris asked for
four extensions of time to file objections and filed three
motions to continue the sentencing. She argued in each
continuance motion that she needed more time to de-
termine an accurate loss amount and to object to the
report’s recommendations. The court granted all of
them. When Harris filed a fourth motion to continue
sentencing, though, the government objected and the
court heard argument on the continuance. The court
denied the motion and ordered that the sentencing
hearing go forward as it had been scheduled. Harris
filed an objection to the revised report arguing that the
loss amount was less than $2.5 million, that the victim
6                                            No. 12-1470

count was fewer than 50, and that her conduct did not
use sophisticated means but was only “typical fraud.”
  At the sentencing hearing, the court heard testimony
from the chief investigator from MetLife and from the
special agent with the criminal division of the IRS who
had led the government investigation. The court also
heard from several of Harris’ victims and their family
members. They recounted how Harris had ingratiated
herself with her clients, who tended to be elderly,
with exaggerated, friendly overtures such as visiting
them in the hospital — often becoming close family
friends — to manipulate their money and convince them
to make the investments she suggested. Several victims
explained that, in addition to the financial loss, they
or their family members suffered deep emotional
trauma upon discovering the extent of Harris’ betrayal
of their trust.
  At sentencing, the court calculated a sentencing guide-
line range based on the testimony at the sentencing
hearing. The court’s calculation started with a base
level of seven and included an additional 18 offense
levels for a loss amount in excess of $2.5 million, an
additional four offense levels for more than 50 victims,
an additional two offense levels for sophisticated
means, and several other offense level additions and
reductions, amounting to a total offense level of 35.
The final guideline range was 168 to 210 months. After
hearing from Harris herself, the court sentenced her to
210 months in prison. The court reserved judgment on
a final restitution amount and later issued an order re-
No. 12-1470                                               7

quiring Harris to pay $6,812,764.98 in restitution to
MetLife to reimburse it for what it had paid to her clients.

II. Analysis
  Harris raises three arguments on appeal. First,
she argues that the court counted too many victims by
counting each married couple as two separate victims.
Second, Harris argues that the court abused its discre-
tion in denying her fourth motion to continue, which
she claims was needed to dispute the total loss amount.
Third, Harris argues that the court abused its discretion
by imposing a sentence that was substantively unrea-
sonable. We consider these issues in turn.

  A. Number of Victims
  The relevant sentencing guideline enhancement for
number of victims provides for an enhancement of four
levels for 50 or more victims. U.S.S.G. § 2B1.1(b)(2)(B).
At sentencing, the district court made a factual finding
that the number of victims for guidelines purposes was
75, counting each married couple as two separate
victims, and that the number would be 57 if each
married couple counted as a single victim. Harris main-
tained that a victim count treating each married couple
as a single victim would bring the total to 46, resulting in
8                                                  No. 12-1470

a lesser sentence enhancement.1 Harris now argues that
the district court improperly applied the sentencing
guidelines by counting both spouses as victims without
evidence that each spouse suffered a loss.
  We review de novo the district court’s legal interpreta-
tion of sentencing guidelines and review factual findings
for clear error. United States v. McKinney, 686 F.3d 432,
434 (7th Cir. 2012). We reject Harris’ challenge to the
victim enhancement on both legal and factual grounds.
  We agree with the district court’s legal interpretation
of the victim number adjustment in section 2B1.1(b)(2).
Where, as Harris conceded here, all of the accounts held
by married couples were held jointly, there was no need
for additional evidence to determine actual loss to
each spouse. When a broker sells investment products
to married clients who hold those accounts jointly, it
is reasonable to conclude that both spouses suffer the
loss or enjoy the gain, depending on the performance of
the investment. See United States v. Ellisor, 522 F.3d
1255, 1275 (11th Cir. 2008) (finding no error for district

1
  Harris appears to have derived this number from the initial
presentence report, which did not include several victims
that the government later urged the court to include. The
difference between the initial presentence report and the
district court’s factual finding of 75 resulted from including
MetLife itself and several of Harris’ clients who did not suffer
a direct investment loss but suffered other types of loss, such
as incurring fees for withdrawing funds prematurely and
losses from Harris’ choice of unsuitable investments.
No. 12-1470                                                   9

court to count individually, for section 2B1.1(b)(2) pur-
poses, students and parents who purchased tickets to
fraudulent school event, and relying on United States v.
Densmore, 210 F. App’x 965, 971 (11th Cir. 2006), comment-
ing that “even in the case of money held jointly by a
marital couple, both the husband and wife count as victims
because each sustains ‘part of the actual loss’ ”). Thus,
it was proper for the district court to count a married
couple holding investments jointly as two individual
victims for the purposes of applying the section 2B1.1(b)(2)
sentence enhancement.
  On factual grounds, we also find no clear error in
the district court’s factual finding that the number of
victims would still be 57, so the guideline range would
not change, even if each married couple counted as
a single victim. The district court did not err in its ap-
plication of guideline section 2B1.1(b)(2).2

2
  One might fairly wonder why the ultimate legal and moral
judgment about a defendant’s sentence should turn on a
question as abstract and artificial as whether to count a
married couple as one or two victims. This is the sort of issue
that helps remind those of us with responsibilities in the
federal criminal justice system that the Sentencing Guidelines
are advisory, not mandatory, and that district judges are free
to deal with such abstract and artificial issues by telling the
parties and reviewing courts that the decision on the final
sentence did not depend on their resolution. See, e.g., United
States v. Sanner, 565 F.3d 400, 406 (7th Cir. 2009) (affirming
sentence where district court made clear that resolution of
                                                  (continued...)
10                                              No. 12-1470

    B. Motion to Continue
  Harris argues that the district court abused its discre-
tion in denying her fourth continuance because it denied
her the opportunity to challenge the total loss amount
upon which the court based a guideline enhancement.
We review the district court’s denial of a motion to con-
tinue for abuse of discretion and actual prejudice.
United States v. Crowder, 588 F.3d 929, 936 (7th Cir. 2009).
  Harris argued that the district court should grant her
fourth motion to continue sentencing because the gov-
ernment’s account of the total loss amount could
have been inaccurate for several reasons. First, Harris
pointed to one client deposit — a check from a Betty
Shivley — that the investigators had included in the
loss amount but that had actually been deposited on
Ms. Shivley’s behalf. Harris argued that there could
be more deposits like the Shivley check, which the in-
vestigators had mistakenly counted toward the loss
amount even though the funds were actually reinvested
on the client’s behalf. In the sentencing hearing, the
MetLife investigator testified that the Shivley deposit
was an error, but that she was confident in the investi-
gation’s results notwithstanding the error because it was

2
   (...continued)
knotty issue under Guidelines did not affect final sentence);
cf. United States v. Lopez, 634 F.3d 948, 954 (7th Cir. 2011)
(reversing sentence where district court applied Guidelines
erroneously and did not indicate that disputed Guide-
line issue would not affect final sentence).
No. 12-1470                                              11

a single oversight, not an indication of the inadequacy
of the overall investigation process.
  Second, Harris points to 133 cashier’s checks that she
claims the government labeled as “follow-up.” She
argues that the government failed to confirm whether
those checks had ultimately been invested on the cli-
ents’ behalf. At the hearing on Harris’ fourth motion
to continue, the IRS investigator testified that 131 of
those checks had been accounted for and that the total
amount of the 133 checks was approximately $440,000.
  Third, Harris claims that the investigators did not have
access to the bank records for the smaller MEIG
account (into which Harris deposited approximately
$112,000) for four of the relevant years, from 2004 to 2008.
   The district court denied the continuance, finding
that more time to dispute the loss amount would do
little to change the sentencing guideline enhancement
for the total loss amount. Harris’ ultimate loss amount
enhancement was based on a range of more than
$2.5 million but less than $7 million. The district court
observed that even if Harris’ objections to the method
of calculating the loss amount were valid, they would
not affect the guideline range. The 133 checks amounted
to only $440,000. The court also found that the essence
of Harris’ objections about whether the investigation
might have missed more checks such as the Shivley
check went to the weight and credibility of the investi-
gators’ testimony at sentencing on the accuracy of the
tracing process, so that additional time would not
reveal new information relevant to the loss amount.
12                                              No. 12-1470

  We find no abuse of discretion or prejudice here.
The court acted within its discretion when it deter-
mined that additional time to prepare was unlikely to
affect the final guideline range because the amounts at
stake in Harris’ objections could not have reduced the
total loss amount below the $2.5 million floor of the
relevant guideline range. There was no need for the
court to make an exact calculation of the loss, see U.S.S.G.
§ 2B1.1, Note 3(C) (“The Court need only make a rea-
sonable estimate of the loss.”), and the possibility
that further investigation would alter the guideline cal-
culation was remote. See United States v. Knorr, 942
F.2d 1217, 1222 (7th Cir. 1991) (“mere possibility that
some additional evidence would be obtained to further
contest the nature of the defendant’s role in the offense
is insufficient”). The total amount in the MEIG
account with allegedly missing bank statements was
approximately $112,000, and the 133 “follow-up” checks
totaled approximately $440,000. Because the loss
amount was more than $6 million and the relevant guide-
line enhancement would have changed only if the
amount had dropped below $2.5 million, neither could
change the enhancement.
   The district court’s denial of this motion for a continu-
ance was especially reasonable, of course, in light of the
fact that it was Harris’ fourth such motion. Sentencing
had already been delayed for eight months on Harris’
first three motions to continue, and the government had
made all of its investigation files available during dis-
covery. Given this history of Harris’ repeated motions
for continuances and the resulting delays, the district
No. 12-1470                                                13

court acted well within its discretion in denying Harris
more time to investigate further the loss amount. This
situation is similar to United States v. Rinaldi, where we
upheld a district court’s denial of a fourth motion to
continue for further investigation of loss calculations.
461 F.3d 922, 929 (7th Cir. 2006) (“Considering the span
of years between the entry of Rinaldi’s guilty plea, the
multiple continuances granted by the district court, and
the questionable value of the analysis, we cannot find
that no reasonable person would agree with the dis-
trict court’s denial of defendant’s motion.”). The
district court did not abuse its discretion in denying
Harris’ fourth motion for a continuance where it had
reasonably determined that additional time would not
affect the relevant guideline enhancement and that
Harris had received sufficient time to contest the
loss amount.

  C. Substantive Reasonableness
  Finally Harris argues that her sentence is substan-
tively unreasonable on several grounds: she is a first-time
offender and therefore less likely to re-offend; her crime
was a “white-collar crime,” a category she argues is not
deterred by longer sentences; the seriousness of her
offense was overstated; and her sentence is not rea-
sonable compared to other similar cases because her
victims received restitution from MetLife.
  In considering such a challenge to a sentence, we con-
sider whether the sentence is unreasonable with regard
to 18 U.S.C. § 3553(a). United States v. Booker, 543 U.S. 220,
14                                               No. 12-1470

261 (2005). A sentence is reasonable if the district court
gives “meaningful consideration” to the factors listed
in section 3553(a) and the resulting sentence is “ob-
jectively reasonable in light of the statutory factors and
the individual circumstances of the case.” United States
v. Shannon, 518 F.3d 494, 496 (7th Cir. 2008). The court
need not consider all the factors but must give an “ade-
quate statement of reasons . . . for thinking the sentence it
selects is appropriate.” Id. A sentence that is within the
relevant guidelines range is presumed to be reasonable on
appeal. United States v. Meschino, 643 F.3d 1025, 1030
(7th Cir. 2011), citing Rita v. United States, 551 U.S. 338,
347 (2007).
  Here, the sentence was within the applicable guide-
line range and the district court gave meaningful con-
sideration to Harris’ sentence in light of the section 3553(a)
factors, especially the nature and seriousness of the
crimes, § 3553(a)(1), (2)(A), the need for deterrence,
§ 3553(a)(2)(B), and comparison to other similar
cases, § 3553(a)(6). After hearing statements from several
of Harris’ victims or their family members, the court
explained its reasons for imposing a sentence at the
top of the guideline range. In addressing the nature of
the crime, the court noted Harris’ unique approach of
ingratiating herself to victims so that they would not
question her decisions with regard to their money, her
“obvious pattern of targeting older persons” who may
have been especially vulnerable, and how this harm to
victims was especially serious and intangible. On the
seriousness of the crime, the court noted that even if the
guidelines changed to recommend a lower sentence, the
No. 12-1470                                            15

court would impose a long sentence because “the effect
on these victims in this case and the amount of loss in
this case is such that it simply does not overrepresent
the defendant’s criminal acts.”
  The court also considered the defendant’s arguments
about deterrence and comparison to similar cases. Har-
ris’ counsel argued that she should receive a lower sen-
tence because empirical studies indicate that first-
time offenders are unlikely to re-offend and long sen-
tences have little deterrent effect on white-collar crimi-
nals. In response, the court noted that, because of
her age and approach with vulnerable victims, Harris
was “quite unique” and “not in any way typical or one
who can be appropriately measured by the empirical
studies. . . .” The court was not persuaded that a lower
sentence was appropriate or that a longer sentence would
be unnecessary. Rather, the court found that “there is
a reason for the court to be concerned about deterrence
and protecting the public.”
  In response to Harris’ argument that a long sentence
would be unreasonable compared to similar cases
because her victims received restitution, the court noted
that Harris’ victims were not made whole in every
respect and that “[t]his argument fails to take into
account many of the intangibles in this case that
we’ve heard about in terms of the losses felt by the vic-
tims.” The court also noted “how the defendant wove
herself in the fabric of the victims’ lives through her
hugs and kisses and assurances, these sales tactics
that made them trust the defendant and believe in her,
16                                            No. 12-1470

and her criminal acts of fraud and deception that ulti-
mately left them so devastated.”
  Given the court’s thorough consideration of the
specific circumstances of Harris’ crime, the court
imposed a reasonable sentence in light of the
section 3553(a) factors and adequately explained its
consideration of those factors. Harris’ arguments
on appeal do not overcome our presumption that the
within-guideline sentence was reasonable.
 The judgment of the district court is A FFIRMED.

                         5-29-13