Court Opinion

ID: 1085873
Source: CourtListenerOpinion
Date Created: 2013-10-18 17:29:08.246244+00
Date Added: 2024-06-11T13:16:57.844580
License: Public Domain

FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT

 UNITED STATES OF AMERICA,                       No. 11-50392
            Plaintiff-Appellee,
                                                  D.C. No.
                   v.                       5:09-cr-00005-TJH-1

 WILLENA STARGELL,                              ORDER AND
         Defendant-Appellant.                    OPINION

        Appeal from the United States District Court
            for the Central District of California
       Terry J. Hatter, Senior District Judge, Presiding

                   Argued and Submitted
             March 7, 2013—Pasadena, California

                        Filed October 17, 2013

  Before: Sidney R. Thomas, Andrew D. Hurwitz, Circuit
   Judges, and Ralph R. Beistline, Chief District Judge.*

                   Opinion by Judge Beistline

  *
    The Honorable Ralph R. Beistline, Chief United States District Judge
for the District of Alaska, sitting by designation.
2                 UNITED STATES V. STARGELL

                           SUMMARY**

                           Criminal Law

    The panel withdrew an opinion filed August 2, 2013, and
filed a new opinion affirming a defendant’s convictions and
sentence for fraud by wire affecting a financial institution,
aiding and assisting in the preparation of a false return, fraud
by wire, and aggravated identity theft, arising out of the
defendant’s work as a tax preparer.

    The panel held that new or increased risk of loss is
sufficient to establish that wire fraud “affects” a financial
institution within the meaning of 18 U.S.C. § 1343, and that
the fraudulent tax returns prepared by the defendant in
schemes to obtain refund anticipation loans “affected” banks,
regardless of whether the banks ultimately paid out on such
a loan or suffered any loss, because the banks’ risk of loss on
the loans was increased by the fraudulent nature of the
returns.

    Because the wire fraud that was the predicate to the
aggravated identity theft did not occur until after 18 U.S.C.
§ 1028A’s enactment date, the panel rejected the defendant’s
contention that the jury may have convicted the defendant
based solely on pre-enactment conduct.

    The panel rejected the defendant’s contention that
government and the district court infringed on the core of her
defense counsel’s role, in violation of the defendant’s Sixth

  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                UNITED STATES V. STARGELL                      3

Amendment rights, by allowing the defendant’s former
attorney to testify at sentencing regarding the loss and
restitution calculations, where the former attorney was called
by the defendant’s new attorney. Because the former
attorney’s testimony did not contain privileged
communications, the panel rejected the defendant’s
contention that admission of the testimony violated the
attorney-client privilege.

    The panel held that the district court did not clearly err in
calculating the loss and restitution amounts.

                         COUNSEL

Marisa L. D. Conroy (argued), Encinitas, California, for
Defendant-Appellant.

André Birotte, Jr., United States Attorney; Antoine F.
Raphael, Assistant United States Attorney, Chief; Joseph B.
Widman, Assistant United States Attorney, Deputy Chief;
and Ryan White (argued), Assistant United States Attorney,
United States Attorneys’ Office, Riverside, California, for
Plaintiff-Appellee.

                           ORDER

    In response to the parties’ filings regarding Appellant’s
Rehearing Petition of August 28, 2013, the opinion filed on
August 2, 2013, is hereby WITHDRAWN. Furthermore,
Appellant’s Motion For Leave To File Reply To Opposition
of October 4, 2013, is hereby DENIED.
4               UNITED STATES V. STARGELL

                          OPINION

BEISTLINE, Chief District Judge:

     Willena Stargell appeals her convictions of twelve
felonies arising out of her work as a tax preparer for various
clients.

    The superseding indictment charged fraud by wire
affecting a financial institution (Counts 1 to 6); aiding and
assisting in the preparation of a false return (Counts 7 to 12);
fraud by wire (Counts 13 to 15); and aggravated identity theft
(Counts 16 to 18). The district court dismissed Counts 6, 12,
and 18 on the government’s Motion. After the district court
granted her Motion For Acquittal on Counts 3, 9, and 15,
Stargell was convicted on the remaining charges. She claims
that the district court erred by: (1) failing to grant her Motion
For Judgment Of Acquittal as to Counts 1, 2, 4, and 5 of the
superseding indictment despite the government’s failure to
prove that the underlying conduct affected a financial
institution; (2) permitting convictions on Counts 16 and 17
without excluding the possibility that they were based on
conduct that preceded the enactment of 18 U.S.C. § 1028A;
(3) allowing Stargell’s former attorney to testify at the
sentencing hearing; and (4) improperly calculating loss and
restitution amounts.

    We have jurisdiction under 28 U.S.C. § 1291, and we
affirm the convictions and sentences.
                UNITED STATES V. STARGELL                     5

                               I

                               A

    After completing a course on tax preparation and
receiving state certification, Stargell began preparing taxes
for Liberty Tax Service (“LTS”) in Moreno Valley,
California. LTS terminated Stargell’s employment in 2003,
and Stargell began her own tax preparation business called
Liberty Bell Tax Service (“LBTS”).

    The evidence at trial established that while operating
LBTS, Stargell prepared federal income tax returns
containing false statements and engaged in schemes to obtain
refund anticipation loans (“RAL”) based on these fraudulent
returns. In some instances, the IRS detected the fraud and
declined to issue a tax refund, resulting in a loss to the banks
that made the loans. The government also proved that
Stargell engaged in identity theft by using the names and
social security numbers of former clients or other individuals,
without their knowledge or consent, to file tax returns and to
request RALs.

                               B

    Before sentencing, the district court held two evidentiary
hearings to determine loss and restitution. At the latter
hearing, Kay Otani, former counsel for Stargell, testified as
a witness. Stargell’s current counsel, the district court, and
the government inquired as to Otani’s method of calculating
loss and restitution, what documents he sought to obtain from
the government, how those documents would have assisted or
disadvantaged him, and what was ultimately provided to him.
6               UNITED STATES V. STARGELL

    At the conclusion of the hearing, the district court found
an offense level of twenty-two, a criminal history category of
I, and an advisory guideline range of forty-one to fifty-one
months. The district court imposed a $1200.00 special
assessment, restitution in the amount of $362,796.07, and
incarceration for forty-two months. This appeal followed.

                               II

                               A

    Stargell contends that the district court erred in failing to
grant her motion for acquittal as to Counts 1, 2, 4, and 5
because the government failed to prove that such counts
“affected a financial institution” as required by 18 U.S.C.
§ 1343. Stargell’s argument is unpersuasive.

    “Where a defendant moves for acquittal at the close of the
government’s evidence, we review de novo whether sufficient
evidence exists to support a guilty verdict.” United States v.
Stewart, 420 F.3d 1007, 1014–15 (9th Cir. 2005) (citing
United States v. Carranza, 289 F.3d 634, 641 (9th Cir.
2002)). Our review of the sufficiency of the evidence
supporting a criminal conviction is to determine “whether the
record evidence could reasonably support a finding of guilt
beyond a reasonable doubt.” Jackson v. Virginia, 443 U.S.
307, 318 (1979). We do not ask whether we “believe[] that
the evidence at the trial established guilt beyond a reasonable
doubt.” Id. at 319 (quoting Woodby v. INS, 385 U.S. 276, 282
(1966)). “Instead, the relevant question is whether, after
viewing the evidence in the light most favorable to the
prosecution, any rational trier of fact could have found the
essential elements of the crime beyond a reasonable doubt.”
Id.
                 UNITED STATES V. STARGELL                          7

    Special Agent Juan Marquez of the IRS’s Criminal
Investigations Division (“IRS-CID”) testified as a summary
witness pursuant to Rule 1006 of the Federal Rules of
Evidence. Agent Marquez presented a summary chart based
upon his review of 143 tax returns,1 all of which either listed
Stargell as the tax preparer or were connected to her
company, LBTS. The summary chart demonstrated that each
of the 143 tax returns contained false wage or withholding
figures. The vast majority contained both false wage and
false withholding figures. Every return listed in the summary
chart sought a refund. The total amount of refunds sought in
these returns was $598,657.00. The IRS issued $276,331.74
of refunds in connection with these returns before it stopped
the remaining claimed refunds. Yet, when a bank issued a
RAL and the IRS later stopped the refund for the related
return, the bank was not able to recoup the value of the RAL
and suffered a financial loss.

    To the government, the lost refund money was the main
“effect” that Stargell’s actions had on the banks. Yet, the
banks only lost money on one of the four fraudulent returns:
Count 4 ($6,013.00). The summary chart clearly shows that
the banks did not lose any refund money on the other three
returns in question here.

    The government, nevertheless, argues that because the
returns were fraudulent, the banks “were exposed to the risk
of loss on each loan involved in the scheme.” Because RALs
based on fraudulent returns are riskier than RALs based on

  1
     IRS maintains tax records and information in its Integrated Data
Retrieval System (“IDRS”). The IDRS contains information regarding
filed tax returns and information provided by third parties, including
employers and financial institutions.
8               UNITED STATES V. STARGELL

non-fraudulent returns, the government argues that
fraudulent returns “affected” the banks regardless of whether
there was actual financial loss.

    We agree. The increased risk of loss presented by
fraudulent terms is sufficient to “affect” a financial
institution. Regarding the definition of “affects” in 18 U.S.C.
§ 1343, we join our sister circuits in defining such term to
include new or increased risk of loss to financial institutions.
See United States v. Mullins, 613 F.3d 1273, 1278–79 (10th
Cir. 2010) (a new or increased risk of loss is sufficient to
establish that wire fraud affects a financial institution);
United States v. Serpico, 320 F.3d 691, 694 (7th Cir. 2003)
(fraud affects a financial institution if a bank is exposed to a
risk of loss even if the institution never suffers an actual loss).

    Here, the fraudulent returns affected the banks regardless
of whether or not the banks ultimately paid out a RAL and
suffered any loss. The banks were affected because the risk
of loss on the RALs was increased by the fraudulent nature of
the related returns. Thus, the district court did not err in
denying Stargell’s Motion as to Counts 1, 2, 4, and 5.

                                B

    Stargell claims for the first time on appeal that because
the government’s case regarding Counts 13 and 14 (wire
fraud, 18 U.S.C. § 1343), the predicate offenses for Counts 16
and 17 (aggravated identity theft, 18 U.S.C. § 1028A),
focused significantly on conduct that pre-dated the enactment
of § 1028A on July 15, 2004, the jury may have convicted
Stargell based solely on pre-enactment conduct. However,
because the wire fraud did not occur until January 15 and 18,
2005, the predicate offenses for the aggravated identity theft
                  UNITED STATES V. STARGELL                           9

transpired well after § 1028A’s enactment date, and Stargell’s
argument fails.

     Under 18 U.S.C. § 1028A(a)(1), “[w]hoever, during and
in relation to any felony violation . . . , knowingly transfers,
possesses, or uses, without lawful authority, a means of
identification of another person shall, in addition to the
punishment provided for such felony, be sentenced to a term
of imprisonment of 2 years.”                (emphasis added).2
Additionally, under 18 U.S.C. § 1343, “[w]hoever, having
devised . . . any scheme for obtaining money or property by
means of false or fraudulent pretenses, representations, or
promises, transmits or causes to be transmitted by means of
wire, radio, or television communication in interstate or
foreign commerce, any writings . . . for the purpose of
executing such scheme or artifice, shall be fined under this
title or imprisoned not more than 20 years, or both.”
(emphasis added).

    In proving its case on wire fraud and on the related
identity theft, the government referenced Stargell’s ongoing
wire fraud scheme starting in February 2004 and ending on
approximately January 27, 2005. Although the government
demonstrated that the scheme partially took place prior to the
enactment date of § 1028A, the superseding indictment
clearly shows that the tax returns in question were not filed,
and thus were not transmitted, until January 2005.
Transmission is a required element of wire fraud under
§ 1343. Consequently, the wire fraud did not occur until the
returns were filed in January 2005, a full six months after

 2
   For purposes of 18 U.S.C. § 1028A, the term “any felony violation” is
specifically defined as one of the felonies enumerated in § 1028A(c).
Counts 13 and 14 fall under § 1028A(c)(5).
10              UNITED STATES V. STARGELL

§ 1028A was enacted. The predicate offenses for Counts 16
and 17, therefore, happened after § 1028A was enacted.
Accordingly, the jury was not wrong in convicting Stargell of
aggravated identity theft while relying on the predicate wire
fraud offenses.

                               C

    Stargell argues, again for the first time on appeal, that the
government and the district court infringed on the core of her
defense counsel’s role by allowing Stargell’s former attorney,
Otani, to testify at sentencing regarding the loss and
restitution calculations. Stargell also contends that since she
did not expressly consent to Otani giving testimony, the
attorney-client privilege was violated. We disagree.

                               1

    “Government violates the right to effective assistance
when it interferes in certain ways with the ability of counsel
to make independent decisions about how to conduct the
defense.” Perry v. Leeke, 488 U.S. 272, 279–80 (1989)
(internal quotation marks and citation omitted). There was no
error here because it was Peter Swarth, Stargell’s new defense
attorney, who called Stargell’s former attorney to testify at
the sentencing hearing. Swarth examined Otani concerning
the discovery of audit files and other documents requested
from the IRS. The transcript is clear that Swarth acted
independently in calling Otani to testify in the second
sentencing hearing and that there was no interference of any
kind with Swarth’s presentation of the defense. Swarth was
not restricted in any way. Because there was no interference,
Stargell’s Sixth-Amendment rights were not violated, and the
district court committed no error.
                UNITED STATES V. STARGELL                    11

                               2

    Stargell additionally contends that Otani’s testimony
violated the attorney-client privilege. Because Otani’s
testimony did not contain privileged communications, the
argument fails.

    Otani’s testimony did not include protected attorney-
client communications of any kind. The majority of Otani’s
testimony dealt with audit documents requested by Otani
from the IRS through discovery while Otani was Stargell’s
defense attorney. In the entirety of Otani’s testimony,
nothing he said or referenced came from Stargell. The
attorney-client privilege was not implicated.

                               D

    Stargell alleges that the district court committed three
errors in computing the amounts of loss and restitution in this
case: (1) never actually making a finding regarding the
amount of loss; (2) if a loss finding were made, such finding
was unsupported by the evidence because the amount should
not have included qualified refunds; and (3) the restitution
amount should not have included refunds the taxpayers were
legally entitled to claim. We find that the district court did
not clearly err in calculating the loss and restitution amounts.

    “A calculation of the amount of loss is a factual finding
reviewed for clear error.” United States v. Garro, 517 F.3d
1163, 1167 (9th Cir. 2008). Under the clearly-erroneous
standard, a reviewing court will not reverse a lower court
merely because the reviewing court “‘would have decided the
case differently.’” Easley v. Cromartie, 532 U.S. 234, 242
(2001) (quoting Anderson v. Bessemer City, 470 U.S. 564,
12              UNITED STATES V. STARGELL

573 (1985)). “[A] reviewing court must ask whether, ‘on the
entire evidence,’ it is ‘left with the definite and firm
conviction that a mistake has been committed.’” Id. (quoting
United States v. United States Gypsum Co., 333 U.S. 364, 395
(1948)). In short, the clearly-erroneous “‘standard is
significantly deferential.’” Lentini v. Cal. Ctr. for the Arts,
370 F.3d 837, 843 (9th Cir. 2004) (quoting N. Queen Inc. v.
Kinnear, 298 F.3d 1090, 1095 (9th Cir. 2002)).

                               1

    When determining an amount of loss for sentencing
purposes, a district court must “provide reasoning to explain
its determination of [such] loss . . . .” Yeung, 672 F.3d at
604–05. “Although the district court’s findings . . . must be
‘express[ed],’ they need only state the court’s resolution of
the disputed issues.” United States v. Karterman, 60 F.3d
576, 583 (9th Cir. 1995). If a district court does not provide
such a resolution, “we must remand for the district court to
recalculate and provide its reasoning for th[e] award.” Yeung,
672 F.3d at 604–05.

    Stargell argues that the district court should have made an
explicit finding regarding the loss amount or, at a minimum,
explicitly adopted the government’s loss position. But the
district court did adopt the government’s suggested loss
amount. The district court stated, “[i]t just appears to me that
as had been suggested by you [the government] previously
that using either standard that you’ve been able to meet your
burden. And it very well may be that under this set of
circumstances, that clear and convincing would be proper.
And I’m satisfied with it.” The district court adequately
established its resolution of the loss-amount dispute in favor
of the government by holding that the government had
                UNITED STATES V. STARGELL                    13

established the loss-amount by clear and convincing
evidence. In total, the banks lost $107,931.96 in connection
with the 143 fraudulent tax returns listed in the summary
chart.

                               2

    Stargell further alleges that the district court mistakenly
included in the loss amount the refunds to which the affected
taxpayers were entitled. Stargell’s argument is unpersuasive.

    Under the Sentencing Guidelines, “[i]f the offense
involved tax evasion or a fraudulent or false return, statement,
or other document, the tax loss is the total amount of loss that
was the object of the offense (i.e., the loss that would have
resulted had the offense been successfully completed).”
U.S.S.G. § 2T1.1(c)(1) (emphasis added). Here, the
government recommended that tax loss equal the entire loss
that would have resulted had Stargell’s schemes been
successfully completed, i.e., the total refund amount claimed
on all of the fraudulent returns. The district court adopted the
government’s total loss figure.

    Concerning the tax-loss amount, a district court should
“make a reasonable estimate based on the available facts.”
U.S.S.G. § 2T1.1 cmt. n. 1. Moreover, if higher than the
actual loss amount, the intended loss amount should be used.
United States v. Riley, 143 F.3d 1289, 1291–92 (9th Cir.
1998). It is not the government’s or the district court’s
responsibility to establish that defendant’s filed returns were
entitled to refunds if no entitled-refund information was
offered by the defendant. See United States v. Bishop,
291 F.3d 1100, 1116 (9th Cir. 2002) (“It is not the
government’s or the court’s responsibility to establish the
14                UNITED STATES V. STARGELL

defendants’ itemized deductions if no itemized deduction
information was offered by the defendants.”).

    Stargell failed to provide any substantial evidence to
support her contention that she gave, or intended to give, the
involved taxpayers the refunds to which they were entitled.
The district court’s conclusion that Stargell intended to keep
the total amount of refunds claimed in the fraudulent returns
was reasonable based on the evidence in the record.
Likewise, using that amount as the “total tax loss” was also
reasonable.

    At sentencing, the onus was on Stargell to establish a
lower tax-loss amount based on the allegedly entitled refunds
and to evidentially support such amount; yet, she did not. See
Bishop, 291 F.3d at 1116. Even at the appellate level,
Stargell has neither pointed to any evidence establishing that
the involved taxpayers were entitled to a refund nor provided
an entitled-refund amount by which the tax-loss figure should
be decreased.

     Based on the record and in light of the dearth of evidence
to the contrary, the district court’s acceptance of the
government’s loss figure, the total refund amount claimed on
all of the fraudulent returns, was a “reasonable estimate based
on the available facts.” U.S.S.G. § 2T1.1 cmt. n. 1.3

 3
    Absent evidence to the contrary, it is also reasonable to presume that
each of the involved taxpayers would have had to file a non-fraudulent
return in order to obtain any refund to which he or she would have been
entitled. Carrying out Stargell’s fraud schemes to their completion,
therefore, would have required the IRS to pay the total amount of refunds
claimed by Stargell in her 143 fraudulent returns as well as any potential
refunds for the non-fraudulent returns filed by the persons named in
Stargell’s returns, conceivably requiring the IRS to pay a refund twice.
               UNITED STATES V. STARGELL                    15

                              3

    Stargell also argues that the restitution amount determined
by the district court, like the tax-loss amount, included
refunds that the affected taxpayers were potentially entitled
to claim. A restitution amount can be calculated from “losses
proximately resulting from [a defendant’s] criminal conduct.”
Yeung, 672 F.3d at 606. Therefore, it was not error for the
district court to base Stargell’s restitution amount on the
actual losses minus the amount of paid-in withholding.

                             III

    For all the reasons above, we affirm the judgment of the
district court.

   AFFIRMED.