Court Opinion

ID: 4183555
Source: CourtListenerOpinion
Date Created: 2017-07-05 20:01:13.205693+00
Date Added: 2024-06-11T14:13:55.596084
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            JUL 05 2017
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                        No. 15-10487

              Plaintiff-Appellee,                D.C. No.
                                                 2:12-cr-00180-MCE-1
  v.

MOHAMMAD ADNAN KHAN,                             MEMORANDUM*

              Defendant-Appellant.

UNITED STATES OF AMERICA,                        No. 15-10505

              Plaintiff-Appellee,                D.C. No.
                                                 2:12-cr-00180-MCE-2
  v.

MOHAMMAD NAWAZ KHAN,

              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 June 15, 2017
                             San Francisco, California

       *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: THOMAS, Chief Judge, FRIEDLAND, Circuit Judge, and CARNEY,**
District Judge.

      Defendants-Appellants Mohammad Adnan Khan (“Adnan”) and Mohammad

Nawaz Khan (“Nawaz”), son and father (together, “the Khans”), appeal their 108

and 150 month sentences, respectively, following their guilty pleas to conspiracy to

commit mail fraud in violation of 18 U.S.C. § 1349.1 The Khans pled guilty to

devising and participating in a fictitious wage scheme to defraud the State of

California Employment Development Department (“EDD”) into paying

unemployment and disability benefits to many individuals who either did not work

for the Khans’ farm labor contractor companies or did not do so for the number of

hours that they reported to EDD. The Khans assert that the district court made

three significant errors at their sentencings: (1) it failed to make the findings

required under Federal Rule of Criminal Procedure 32 regarding the loss amounts,

      **
            The Honorable Cormac J. Carney, United States District Judge for the
Central District of California, sitting by designation.
      1
         At his plea hearing, Adnan was advised of the elements of conspiracy to
commit mail fraud, 18 U.S.C. § 1349, he then pled guilty to that crime, and certain
parts of his plea agreement correctly refer to that offense. However, the plea
agreement erroneously lists the elements of the substantive mail fraud offense
under 18 U.S.C. § 1341, his presentence investigation report references § 1341
rather than § 1349, the judgment entered against him states that he pled guilty to
violating § 1341, and the district court stated at his sentencing hearing that Adnan
pled guilty to violating § 1341. At resentencing, the district court shall correct
these errors in the record.

                                            2
which were relied on by the district court to apply a twenty-level increase to their

offense levels under § 2B1.1 of the Sentencing Guidelines for a loss exceeding $7

million; (2) it accepted as reasonable estimates the loss amounts set forth in the

Khans’ presentence investigation reports (“PSRs”); and (3) it denied the Khans’

request for an evidentiary hearing on the issue of loss amounts.          We review

de novo whether the district court complied with Rule 32 in making its

determination of the loss amounts, United States v. Stoterau, 524 F.3d 988, 1011

(9th Cir. 2008), we review for clear error the factual findings underlying the

district court’s imposition of the sentencing enhancement for the loss amounts,2

United States v. Garro, 517 F.3d 1163, 1167 (9th Cir. 2008), and we review for

abuse of discretion the district court’s denial of the Khans’ request for an

evidentiary hearing, United States v. Sarno, 73 F.3d 1470, 1502 (9th Cir. 1995).

We vacate the Khans’ sentences and remand their cases for resentencing.

      We agree with the Khans that the district court’s findings on the loss

amounts were inadequate under Rule 32. When a defendant makes a specific

factual objection to a matter that will affect sentencing, as both of the Khans did

      2
        Contrary to the government’s argument, the Khans repeatedly challenged
the loss amounts in the PSRs before the district court, and their arguments on
appeal are consistent with those challenges. Accordingly, we review for clear
error—not plain error. United States v. Pallares-Galan, 359 F.3d 1088, 1094–95
(9th Cir. 2004).

                                           3
here, the district court must rule on the objection and make “express” or “explicit”

factual findings that resolve that objection. United States v. Doe, 705 F.3d 1134,

1153 (9th Cir. 2013) (quoting United States v. Houston, 217 F.3d 1204, 1208 (9th

Cir. 2000)). Strict compliance with Rule 32 is required. United States v. Job, 851

F.3d 889, 906 (9th Cir. 2017) (quoting Doe, 705 F.3d at 1153). Failure to make

the necessary findings under Rule 32 requires a defendant’s sentence to be vacated

and the case remanded for resentencing. United States v. Herrera-Rojas, 243 F.3d

1139, 1142 (9th Cir. 2001).

      The district court here made no factual findings on the Khans’ objections

regarding the loss amounts. The PSRs estimated an actual loss of $6.7 million and

an intended loss of $13.2 million for Adnan, and estimated an actual loss of $7.1

million and an intended loss of $14.1 million for Nawaz. The Khans specifically

objected to these estimates of intended and actual loss, contending that the

estimates were inflated and wrongfully included amounts paid by EDD for

legitimate benefits claims. The district court summarily overruled those objections

and adopted the estimated loss amounts set forth in the PSRs without making any

specific factual finding on the Khans’ objections. A district court may not simply

rely on the factual statements in a PSR when a defendant objects to those facts.

                                          4
United States v. Showalter, 569 F.3d 1150, 1160 (9th Cir. 2009) (citing United

States v. Ameline, 409 F.3d 1073, 1085–86 (9th Cir. 2005) (en banc)).

      We also agree with the Khans that the district court clearly erred when it

accepted the estimates of the loss amounts set forth in the PSRs to apply a twenty-

level enhancement to their sentences under § 2B1.1 of the Sentencing Guidelines

for a loss exceeding $7 million. The district court must correctly calculate the

Sentencing Guidelines range before sentencing a defendant. Gall v. United States,

552 U.S. 38, 49 (2007). If the district court makes a material miscalculation, a

defendant’s sentence must be vacated and the case remanded for resentencing.

Showalter, 569 F.3d at 1159 (citing United States v. Zolp, 479 F.3d 715, 721 (9th

Cir. 2007)). The government bears the burden of proof when it seeks sentencing

enhancements, Ameline, 409 F.3d at 1086, and must demonstrate the basis for a

loss amount enhancement by a preponderance of the evidence, United States v.

Laurienti, 611 F.3d 530, 556 (9th Cir. 2010). The district court need not calculate

loss amount with “absolute precision” but rather only needs to make a “reasonable

estimate” of loss amount. Id. at 558 (quoting Zolp, 479 F.3d at 719).

      The Sentencing Guidelines enhancement for loss amount unquestionably

had a material impact on the Khans’ sentences. Indeed, it was the most significant

factor in the calculation of their offense levels under the Sentencing Guidelines.

                                          5
Yet we cannot discern from the record before us whether the estimates of the actual

and intended losses set forth in the PSRs and relied on by the district court to apply

the Sentencing Guidelines enhancement were reasonable. No explanation or

analysis of how those estimates were calculated, what proportion of those estimates

were attributable to legitimate payments made by EDD for legitimate benefits

claims, and why those payments were included in the estimates was provided by

the district court, set forth in the PSRs, or offered by the government before the

district court or in its evidentiary submissions on appeal. That omission is

particularly problematic given that the government’s own evidence demonstrates

that at least some proportion—perhaps as much as 30%—of EDD payments went

to legitimate claimants. We are thus left guessing as to the explanation or analysis

supporting the loss amounts. Because it is not apparent from the record whether

those loss amounts are a reasonable estimate of intended loss, we conclude that the

district court erred.

       Finally, the district court did not abuse its discretion when it denied the

Khans’ request for an evidentiary hearing on the loss amounts. “There is no

general right to an evidentiary hearing at sentencing.” United States v. Laurienti,

731 F.3d 967, 972 (9th Cir. 2013) (alteration omitted) (quoting United States v.

Real-Hernandez, 90 F.3d 356, 362 (9th Cir. 1996)). A district court may refuse to

                                           6
hold one as long as the defendant is allowed an opportunity to rebut the findings

and recommendations of a PSR through oral or written submissions. Sarno, 73

F.3d at 1502–03 (citing United States v. Baker, 894 F.2d 1083, 1084–85 (9th Cir.

1990)). Here, the Khans were provided extensive discovery months in advance of

their sentencings and were given ample opportunities to present both written and

oral sentencing submissions. Indeed, continuances of their sentencing hearings

were granted by the district court for this very purpose. It was therefore well

within the district court’s discretion to conclude that the Khans had been given an

ample opportunity to present their arguments.

      VACATED AND REMANDED.

                                          7