NOT RECOMMENDED FOR FULL-TEXT PUBLICATION File Name: 18a0443n.06
Nos. 17-3413/17-3454
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT FILED Aug 27, 2018 UNITED STATES of AMERICA, DEBORAH S. HUNT, Clerk
Plaintiff-Appellee, v. ON APPEAL FROM THE UNITED CHRISTOPHER J. HOWDER and STATES DISTRICT COURT FOR THE JASON J. KEATING, NORTHERN DISTRICT OF OHIO
Defendants-Appellants.
BEFORE: SUHRHEINRICH, CLAY, and GIBBONS, Circuit Judges.
CLAY, Circuit Judge. Defendants Christopher J. Howder and Jason J. Keating pleaded
guilty to numerous counts of mail and wire fraud, in violation of 18 U.S.C. § 1341, 18 U.S.C.
§ 1343, and 18 U.S.C. § 1349. Howder was sentenced to 84 months’ imprisonment. Keating was
sentenced to 108 months’ imprisonment. Both defendants appeal their sentences. For the reasons
set forth below, we AFFIRM Defendants’ sentences.
BACKGROUND
Factual Background
In March 2009, the federal government launched the Home Affordable Modification
Program (“HAMP”) to provide mortgage lenders with financial incentives to help distressed
homeowners stay in their homes. In 2011, Jason Keating invited his old friend Christopher
Howder to be the “underwriting manager” at an operation called “Making Homes Affordable Nos. 17-3413/17-3454
USA” (“MHAUSA”), which was operated primarily out of Toledo, Ohio. Keating was the self-
described “President” of this operation.
Keating, Howder, and others presented themselves as people who could assist distressed
homeowners in obtaining loan modifications that would reduce homeowners’ monthly mortgage
obligations. MHAUSA ran an “origination strategy” called the “Home Saver Program,” under
which clients were directed to deposit their mortgage payments into an escrow account at
MHAUSA and “were told this money was to be used for modification purposes for any arrearages
that needed to be paid prior to approval.” (R. 106, Howder Change of Plea Tr., PageID # 3800.)
But MHAUSA did not help distressed homeowners; it exploited them.
The scheme was to “convinc[e] at risk home owners to submit their mortgage payments to
Keating’s escrow account without telling the home owners there was no escrow account and the
funds were for personal use.” (R. 80, Howder Sent. Mem., PageID # 2038.) Eventually, Howder
broke with Keating, but he continued serving his own clients in the same manner, asking them to
make payments into an “escrow fund,” that was, in truth, a bank account from which he made daily
cash withdrawals to fund his $250-$300/day OxyContin habit.
Procedural History
On March 5, 2015, Howder and Keating were each charged with one count of wire fraud,
in violation of 18 U.S.C. § 1344, in connection with the home mortgage remodification business
in which they both participated. Shortly thereafter, on April 2, 2015, the government filed a
Superseding Indictment, charging Keating and Howder with 34 counts, alleging various fraud
offenses. Count 1 charged both defendants with conspiracy to commit mail and wire fraud, in
violation of 18 U.S.C. § 1349, 18 U.S.C. § 1341, and 18 U.S.C. § 1343; Counts 3, 4, and 6 charged
both defendants with mail fraud, in violation of 18 U.S.C. § 1341; and Counts 21–26 charged both
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defendants with wire fraud, in violation of 18 U.S.C. § 1343. Additionally, Keating was charged
individually in Counts 2, 5, 7, 8, 11–16, 18, and 19 with mail fraud and in Counts 27–34 with wire
fraud. And Howder was charged individually in Counts 9, 10, and 17 with mail fraud and in Count
20 with wire fraud.
Both defendants pleaded guilty without a plea agreement. On April 18, 2016, Howder
pleaded guilty to all 14 counts with which he was charged, including one count of Conspiracy to
Commit Mail & Wire Fraud, 6 counts of Mail Fraud, Aiding & Abetting, and 7 counts of Wire
Fraud, Aiding & Abetting. He was referred to the probation office for the preparation of a
Presentence Investigation Report (“PSR”). Howder submitted objections to the initial draft PSR
on October 19, 2016. Specifically, Howder objected to the scope of the jointly undertaken criminal
activity reflected in the PSR and its effect on calculating the loss amount, as relevant to the
application of USSG § 2B1.1(b)(1) enhancements. He further objected to the application of USSG
§ 2B1.1(b)(2)(C), an enhancement applied when twenty-five or more victims suffered substantial
financial hardship.
As for Keating, he ultimately pleaded guilty to 26 of the 30 counts with which he was
charged, including one count of Conspiracy to Commit Mail and Wire Fraud, 12 counts of Mail
Fraud, Aiding & Abetting, and 13 counts of Wire Fraud, Aiding & Abetting. He was also referred
to the probation office for the preparation of a PSR.
On October 24, 2016, the district court held a hearing to address Defendants’ objections
to their PSRs. Both defendants objected to the loss amount attributed to them for the period of
joint activity and to the proposed six-level enhancement for 25 or more victims incurring
substantial financial hardship. On December 5, 2016, the court held a second hearing to address
these objections and take victim impact statements. The government presented nine victims, two
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of whom appeared in person and made verbal statements and seven who appeared via telephone.
Three victims said that both Keating and Howder were the points of contact for their mortgage
loan remodifications that were part of the scheme to defraud charged in this case. Three other
victims stated that Keating alone was their main contact for their loan remodifications. In addition
to receiving the victim impact testimony and addressing sentencing enhancements, the court
discussed restitution and ordered the preparation of final PSRs. At the conclusion of this hearing,
the judge advised counsel for Defendants that he would strongly consider a six-level enhancement
for each defendant pursuant to USSG § 2B1.1(b)(2)(C) because the fraudulent activity resulted in
substantial financial hardship for 25 or more victims.
On February 28, 2017, final PSRs were submitted for Howder and for Keating. The
reported offense conduct alleged that Howder and Keating were primary conspirators in the
mortgage loan remodification scheme that ran from 2010 to 2015. The PSRs calculated the
guideline ranges for both defendants as follows: 7 levels for the base offense (USSG § 2B1.1),
plus 16 levels for a total loss amount of $1,842,894.87 (USSG § 2B1.1(b)(1)(I)), plus 6 levels for
offense conduct that resulted in substantial financial hardship to 25 or more victims (USSG §
2B1.1(b)(2)(C)), resulting in a total offense level of 29. After deducting 3 levels for acceptance
of responsibility, the total offense level for each defendant was 26. Keating’s criminal history was
a Category III, resulting in a guideline range of 78–97 months. Howder’s criminal history was a
Category IV, making his guidelines range 92–115 months.
Both Keating and Howder filed Sentencing Memoranda continuing to object to the PSR’s
loss calculation and substantial financial harm enhancement. Howder’s Sentencing Memorandum
also maintained his objection to the scope of the jointly undertaken criminal activity alleged in the
PSR, citing witness interviews that, he claims, “barely mentioned Mr. Howder or did not mention
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him at all.” (Brief for Appellant Howder at 7–8 (citing R. 80, Howder Sent. Mem., PageID # 2033,
2038–2039; R. 81, Sealed Exhibits, Ex. E, F, and G).) His memorandum also focused on his
recovery from an extensive OxyContin habit and his successful maintaining of a job at a home
remodeling company. In Keating’s memorandum, he objected to receiving a Criminal History
Category of III, arguing that a Category of II was more appropriate because one of the convictions
counted in the original calculation had been vacated and amended since the drafting of the original
PSR. The government filed a Sentencing Memorandum with respect to Keating but did not file
one for Howder.
On April 3, 2017, the court held Howder’s sentencing hearing. At the hearing, the
government agreed that the revised loss amount of $561,862.80, attributed solely to Howder,
reflected a 14-level enhancement under § 2B1.1(b)(1)(H), reducing his total offense level from 26
to 24. Combined with a Criminal History Category of IV, Howder’s sentence range was 77–96
months. Howder objected to this calculation, arguing that the court should have applied a 4-level
enhancement under USSG § 2B1.1(b)(2)(B), instead of the 6-level enhancement under
§ 2B1.1(b)(2)(C). At issue was the number of victims attributable to Howder’s conduct for which
the court could find evidence of “serious financial harm.” After hearing argument from both sides,
the court found that the six-level enhancement applied and noted Howder’s objection. The court
then sentenced Howder to a within-Guidelines sentence of 84 months on each count, to be served
concurrently. The court said of Howder’s conduct that it was “morally reprehensible to an almost
unimaginable degree,” and cited the vulnerability of the victims, the sanctity of the home, and the
need for punishment and deterrence as reasons for applying a sentence toward the middle of the
guidelines range. (R. 105, Howder Sent. Tr., PageID # 3766–69.) The court also ordered Howder
to pay $587,799.80 in restitution.
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On April 4, 2017, the court held a sentencing hearing for Keating. The court granted
Keating’s request to reduce his Criminal History Category to II. This brought him to a guidelines
range of 70–87 months. The court then applied a “substantial upward variance,” based in part on
its determination that Keating was “the defacto [sic] leader of this operation.” (R. 112, Keating
Sent. Tr., PageID # 4005.) The court sentenced Keating to 108 months on each count, to be served
concurrently. Keating was also ordered to pay $1,183,025.88 in restitution.
On April 21, 2017, Howder timely filed a Notice of Appeal. On April 28, 2017, Keating
did the same.
DISCUSSION
I. The district court correctly applied § 2B1.1 to enhance Howder’s sentence.
Standard of Review
“In reviewing a district court’s application of the Sentencing Guidelines, this Court will
‘accept the findings of fact of the district court unless they are clearly erroneous and [will] give
due deference to the district court’s application of the Guidelines to the facts.’” United States v.
Sexton, 894 F.3d 787, 793 (6th Cir. 2018) (alteration in original) (quoting United States v. Moon,
513 F.3d 527, 539–40 (6th Cir. 2008)). “Under the clear-error standard, we abide by the court’s
findings of fact unless the record leaves us with the definite and firm conviction that a mistake has
been committed.” Id. at 794 (quoting United States v. House, 872 F.3d 748, 751 (6th Cir. 2017)).
“We review a district court’s legal conclusions regarding the Sentencing Guidelines de novo.” Id.
at 793 (quoting Moon, 513 F.3d at 540).
Analysis
Howder challenges the district court’s application of the § 2B1.1 enhancement to his
criminal sentence. He argues that the record supports only a finding that, at most, seventeen of his
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victims suffered substantial financial hardship. Therefore, he argues, the Court should not have
applied a 6-level enhancement, under USSG § 2B1.1(b)(2)(C), for causing substantial financial
hardship to twenty-five or more victims. Instead, he argues, the court should have applied a 4-
level enhancement, under § 2B1.1(b)(2)(B), for causing substantial financial harm to only five or
more victims.
Section 2B1.1 of the Guidelines provides for increased offense levels for economic crimes
that “result[ ] in substantial financial hardship” to victims. USSG § 2B1.1(b)(2)(A)–(C). “This
enhancement is a recent addition to the Guidelines that took effect on November 1, 2015.” United
States v. Poulson, 871 F.3d 261, 267 (3d Cir. 2017). “It advises sentencing courts to consider the
extent of the harm rather than merely the total number of victims of the offense (as its predecessor
did) in an effort to ‘place greater emphasis on the extent of harm that particular victims suffer as a
result of the offense.’” Id. (quoting Sentencing Guidelines for the United States Courts, 80 Fed.
Reg. 25,782, 25,791 (May 5, 2015)). “The newly amended § 2B1.1 is thus ‘[c]onsistent with the
Commission’s overall goal of focusing more on victim harm’ and ‘ensures that an offense that
results in even one victim suffering substantial financial harm receives increased punishment,
while also lessening the cumulative impact of loss and the number of victims, particularly in high-
loss cases.’” Id. (quoting United States Sentencing Commission, Guidelines Manual, Supplement
to Appendix C 112–13 (Nov. 1, 2015)).
Although § 2B1.1 “effect[ed] a substantive change” to the Guidelines, United States v.
Jesurum, 819 F.3d 667, 672 (2d Cir. 2016), our Court has not yet had the opportunity to consider
it, and the challenge to its application presents us with a question of first impression. Despite the
dearth of case law, Application Note 4(F) offers instructive commentary that sentencing courts are
required to consider when applying § 2B1.1. See United States v. Young, 266 F.3d 468, 475 n.7
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(6th Cir. 2001) (“Sentencing courts are directed by statute, see 18 U.S.C. § 3553, to follow official
commentary, which includes application notes, of the Sentencing Commission in order to, among
other things, ‘interpret the guideline or explain how it is to be applied.’” (quoting USSG § 1B1.7)).
Application Note 4(F) provides as follows:
In determining whether the offense resulted in substantial financial hardship to a victim, the court shall consider, among other factors, whether the offense resulted in the victim—
(i) becoming insolvent; (ii) filing for bankruptcy under the Bankruptcy Code . . . ; (iii) suffering substantial financial loss of a retirement, education, or other savings or investment fund; (iv) making substantial changes to his or her employment, such as postponing his or her retirement plans; (v) making substantial changes to his or her living arrangements, such as relocating to a less expensive home; and (vi) suffering substantial harm to his or her ability to obtain credit.
USSG § 2B1.1(b)(2) cmt. n.4 (emphasis added).
Turning to Howder, an unobjected-to portion of Howder’s PSR reflects that there were
161 victims attributable to his conduct, either individually or in participation with others. Of those
161 victims, only some prepared victim impact statements. Indeed, of the 318 total victims of this
scheme, only 69 prepared statements. Howder claims to have combed through these 69 prepared
statements, “resolv[ed] any uncertainty in favor of a finding of substantial financial hardship,” and
reached a final tally of only 17 qualifying victims. (Brief for Howder at 19.)
Howder therefore argues that the district court arrived at a number of twenty-five or more
qualifying victims only by “presum[ing] substantial financial hardship without requiring
preponderant proof.” (Brief for Howder at 17.) At sentencing, the district court stated as follows:
THE COURT: And I agree on the substantial harm issue. I should have made that clear earlier, I suppose. Hey, these are people in serious and desperate financial straits. They don’t try to get a loan modification in case that [sic] either are or perceive that they may be under risk of not being able to pay foreclosure and loss
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of their home. And then people take the money and put it in their own pockets instead of doing what they promised it would do. I have no doubt that the substantial harm enhancement is entirely appropriate.
(R. 105, Howder Sent. Tr., PageID # 3745.) Further, the court agreed with the government that
making mortgage payments to Howder and Keating, instead of to their mortgagees, put victims at
“substantial risk of loan foreclosure proceedings” and that “[a] lot of people that stopped paying
the mortgages . . . lost all those months of payments and had them added on even if they did have
an opportunity to refinance the mortgage.” (R. 105, Howder Sent. Tr., PageID # 3748–49.)
Howder asserts that “[t]his line of reasoning assumes all victims were in or near home foreclosure,
not simply looking for a better interest rate or inquiring regarding mortgages on investment
properties.” (Brief for Howder at 18.)
We conclude that the district court committed no error in drawing reasonable inferences
about the financial position of victims who sought mortgage relief in the aftermath of the 2008
financial crisis. Moreover, the district court’s decision is supported by the relatively few courts to
have applied the amended § 2B1.1(b)(2) enhancements.
In United States v. Minhas, the Seventh Circuit explained that the “2015 amendment to
§ 2B1.1(b)(2) introduces a measure of relativity into the inquiry. That is, whether a loss has
resulted in a substantial hardship . . . will, in most cases, be gauged relative to each victim.”
850 F.3d 873, 877 (7th Cir. 2017). Further, “[m]uch of this will turn on a victim’s financial
circumstances, as the district court recognized when it noted that ‘[a] loss that may not be
substantial to Bill Gates may be substantial to a working person.’” Id. at 877–78. The court
explained as follows:
The inclusion of the word ‘substantial’ implies that the loss or hardship must be significant, meaning at least more than minimal or trivial. But between a minimal loss or hardship (occurring, perhaps, when a defendant fraudulently obtains five dollars a victim had intended to donate to a charity), and a devastating loss
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(occurring in the wake of a scheme to wipe out a victim’s life savings), there lies a wide range in which we rely upon the judgment of the district courts, guided by the non-exhaustive list of factors in Application Note 4. In the end, this is just one more determination of a fact that bears on the ultimate sentence; that determination is entitled to the normal deference that applies to all facts found at sentencing.
Id. at 878.
Applying this reasoning, the Seventh Circuit held that the district court did not err by
“[i]nferring that each [victim] was of modest economic circumstances” and finding that “losses
above a certain threshold to each one were substantial.” Id. Indeed, the court held that “[m]aking
an inference about an individual victim by virtue of his membership in a particular group is not
necessarily problematic, so long as a district court has reason to believe that the victims are in
similar economic circumstances.” Id. In Minhas, “[t]he district court was familiar with victims
who testified at trial and knew that Minhas’s schemes tended to target those looking for discounted
travel.” Id. at 879. “And while looking for discounted travel alone does not imply that a person
is not rich, it is at least some evidence that he or she is not so wealthy as to be purchasing luxury
airfare or travel packages.” Id. The Seventh Circuit held that targeting victims pursuing discount
travel was “at least some evidence” that the victims were particularly susceptible to financial harm;
the case is even stronger for victims who are actively pursuing mortgage remodifications.
Next, in United States v. Poulson, the defendant challenged his sentence for mail fraud
related to his operation of a scheme whereby he “tricked homeowners facing foreclosure into
selling him their homes and then engaged in a multi-million-dollar Ponzi scheme that defrauded
investors in those distressed properties.” 871 F.3d 261, 264 (3d Cir. 2017). The Third Circuit also
recognized the relativity introduced by the § 2B1.1(b)(2) enhancements and explained that “this
‘measure of relativity’ does not require the sentencing court to identify finite dollar amounts . . . .
To the contrary, it is axiomatic that sentencing courts may draw reasonable inferences from the
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factual record before them.” Id. at 268–69. The court further explained that “[w]hen applying the
term [substantial] to financial hardship in the sentencing context . . . we ought to consider not only
the pecuniary value of the loss but also such intangibles as its impact on the victim.” Id. at 269.
The court therefore held that the district court did not err by “t[aking] direct account of the impact
of each victim’s loss on his or her overall financial health and appropriately us[ing] its discretion
to infer the magnitude of financial hardship based on the actions each victim was forced to take as
a result.” Id. at 268 n.6.
In sum, these cases stand for the proposition that a sentencing court may make reasonable
inferences about the victims’ financial circumstances and about their level of financial harm, so
long as those inferences find some support in the record. In the instant case, the district court
inferred that at least twenty-five of Howder’s 161 victims suffered substantial financial harm.
Howder admits that 17 of the 69 victim impact statements demonstrate such harm. And he further
acknowledged that his victims were “at risk home owners.” (R. 80, Howder Sent. Mem., PageID
# 2038.) Given the likely financial circumstances of each of these “at risk homeowners,” given
further that each of these 161 victims share the characteristic of having sought out MHAUSA’s
services in order to refinance their mortgage payments, and, finally, given that Howder was hitting
them at precisely the point he knew they were most vulnerable—their mortgage payments, we hold
that the district court did not clearly err by finding it more probable than not that at least twenty-
five of Howder’s victims suffered substantial financial harm.
II. Howder’s 84-month sentence is procedurally and substantively reasonable.
Howder also challenges his 84-month sentence as both procedurally and substantively
unreasonable. He asserts that his sentence is procedurally unreasonable because: (1) his guideline
offense level was incorrectly calculated, (2) the reasons for the sentence were not adequately
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articulated, and (3) the court “relied on unresolved and erroneous facts to fashion the sentence.”
(Brief for Appellant Howder at 12.) He contends that his sentence was substantively unreasonable
because “the sentencing court put disproportionate weight on one sentencing factor and minimized
or disregarded others.” (Id.) He therefore asks us to remand for resentencing.
“This Court reviews sentencing decisions deferentially for abuse of discretion.” Sexton,
894 F.3d at 796 (citing Gall v. United States, 552 U.S. 38, 41 (2007)).
We review a criminal sentence for reasonableness. Id. (citing United Sates v. Payton,
754 F.3d 375, 377 (6th Cir. 2014)). “This review has two components: procedural reasonableness
and substantive reasonableness.” United States v. Solano-Rosales, 781 F.3d 345, 351 (6th Cir.
2015). We begin by “ensur[ing] that the district court committed no significant procedural error,
such as failing to calculate (or improperly calculating) the Guidelines range, treating the
Guidelines as mandatory, failing to consider the § 3553(a) factors, selecting a sentence based on
clearly erroneous facts, or failing to adequately explain the chosen sentence—including an
explanation for any deviation from the Guidelines range.” Gall, 552 U.S. at 51.
We then review the substantive reasonableness of the sentence, “tak[ing] into account the
totality of the circumstances, including the extent of any variance from the Guidelines range.” Id.
“To be substantively reasonable, the sentence ‘must be proportionate to the seriousness of the
circumstances of the offense and offender, and sufficient but not greater than necessary, to comply
with the purposes of § 3553(a).’” Sexton, 894 F.3d at 797 (citation and internal quotation marks
omitted) (quoting United States v. Vowell, 516 F.3d 503, 512 (6th Cir. 2008)). “A sentence may
be considered substantively unreasonable when the district court selects a sentence arbitrarily,
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bases the sentence on impermissible factors, fails to consider relevant factors, or gives an
unreasonable amount of weight to any pertinent factor.” Id. (quoting United States v. Conaster,
514 F.3d 508, 520 (6th Cir. 2008)). We “afford[] a rebuttable presumption of reasonableness to a
properly calculated, within-Guidelines sentence.” Id. (quoting United States v. Graham, 622 F.3d
445, 464 (6th Cir. 2010)).
1. Procedural Reasonableness
Howder first argues that his offense level of 24 was incorrectly calculated by the trial court.
The basis for this argument, however, is his claim that the district court should have applied the 4-
level enhancement under USSG § 2B1.1(b)(2)(B), instead of the 6-level enhancement under USSG
§ 2B1.1(b)(2)(C). Given our conclusion in the previous section that the district court did not err
by applying the 6-level enhancement in USSG § 2B1.1(b)(2)(C), this argument fails.
Howder next argues that the district court failed to adequately explain its reasons for
rejecting his arguments in mitigation. He asserts that “[t]he trial court dismissed [his] arguments
with no real explanation.” (See Brief for Howder at 20.) But the district court did consider his
mitigation arguments; it just did not find them overriding. After pronouncing its sentence, the
court explained its reasoning and directly addressed Howder’s arguments and the § 3553(a)
factors:
The reasons for my sentence, the Section 3553(a) factors . . . this conduct, regardless of the occasion for its occurrence, nonetheless is, at its core, morally reprehensible to an almost unimaginable degree . . . upon consideration of the kinds of offenses that you committed and the frequency with which you committed them and the extent to which you profited . . . a purpose of the sentence is to punish you in a way that I think society would find to be just and appropriate . . . this is a sentence that is sufficient but not greater than necessary to accomplish that purpose of sentencing . . . .
Also, significantly, I believe, the public deterrent effect. . . . And . . . the serious nature of the offense and the harm that was caused. I have taken into consideration the efforts you have made while on pretrial release to become and remain sober, to
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obtain and maintain employment, lawful employment, to support those to whom you owe support, and as well in however modest of way to undertake to make some modest restitution on your own . . . but nonetheless, the fundamental reason that I’m imposing a very severe sentence, less than I was contemplating, but nonetheless very severe, . . . is simply because of the nature of the criminal activity, the frequency of it, and the consequences that it inflicted not just upon those people, relatively small number of people who have filed victim impact statements, but also overall in terms of the victims, whether they’ve responded to that opportunity or not.
(R. 105, Howder Sent. Tr., PageID # 3766–69.)
In reviewing the district court’s application of the § 3553(a) factors, “there is no
requirement . . . that the district court engage in a ritualistic incantation to establish consideration
of a legal issue,” or that it “make specific findings related to each of the factors considered.”
United States v. Bolds, 511 F.3d 568, 580 (6th Cir. 2007) (internal quotation marks and citation
omitted). That the district court weighed Howder’s mitigation arguments and still applied a
sentence toward the middle of the Guidelines’ range does not mean that it failed to consider his
mitigation arguments. Therefore, Howder’s argument fails.
Howder’s final procedural reasonableness claim is that the district court relied on
“unresolved disputed facts to impose sentence.” (Brief for Howder at 21.) According to him, the
district court conflated his personal conduct with the conduct of Keating and of the entire
conspiracy. He claims that “[t]hroughout the proceedings below, Mr. Howder maintained that,
despite the assertions of the pre-sentence report and, to a lesser extent, the Government, the scope
of his jointly undertaken criminal conduct with Mr. Keating and the others was limited [to] three
months in 2010 and six months in 2011.” (Id.) Nonetheless, he claims, “the pre-sentence report
reads like Mr. Howder and Mr. Keating were joined at the hip for five years.” (Id. at 23.) Of
particular offense to Howder seems to be the PSR’s characterization of Howder and Keating as
the “primary conspirators” in the mortgage loan remodification scheme. (Id.) He claims that he
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“never wrote any employee handbooks, did not hire or fire anyone, did not create forms, did not
conduct meetings or supervise anybody . . . . did not have a[n] office or even a desk at any of Mr.
Keating’s locations.” (Id. at 23–24.) Thus, “[t]he characterization in the pre-sentence report of
Mr. Howder as a primary lead conspirator with Mr. Keating is erroneous and misleading, and the
Court was clearly misled.” (Id. at 24.)
The problem for Howder is that the district court did clearly distinguish between Keating
and Howder. Indeed, that distinction was the basis stated for the court’s decision to apply a within-
Guidelines sentence:
Okay. I’ll be very candid with you, coming in here I was quite seriously anticipating a variance upward in the guideline range. I know that I’ve heard what you said about Keating Howder, Howder Keating, they were not a partnership. I get that, but it was worthwhile that you underscored that. I’m going to impose a sentence within the guideline range.
(R. 105, Howder Sent. Tr., PageID # 3761–62.) Further, the PSR identified the limited timeframe
of Howder’s involvement, stating that he worked with Keating in 2010 and from approximately
June 2011 until November 2011. And the court found that Howder’s involvement in the scheme
was limited to the tune of approximately $550,000 in losses to the victims, not the entire
$1.8 million that the defendants received from the entire scheme.
Finally, there is nothing in the record to indicate that the district court placed any undue
weight on Howder’s role in the scheme by attributing another person’s conduct to Howder. Indeed,
it is revealing that despite Howder’s claim that the district court was misled into thinking that
Howder was one of the “lead conspirators,” the district court applied a substantial upward variance
when sentencing Keating in recognition that he was “the defacto [sic] leader of this operation,”
(R. 112 Keating Sent. Tr., PageID # 4005), but it did not apply the same variance to Howder.
Thus, Howder’s claims of procedural unreasonableness are without merit.
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2. Substantive Reasonableness
The district court sentenced Howder toward the middle of the Guidelines range after
explicitly mentioning and reviewing a number of § 3553(a) factors and after considering and
rejecting Howder’s mitigation arguments. The crux of Howder’s substantive reasonableness claim
is that the district court placed “disproportionate weight . . . on victim impact.” (Brief for Howder
at 26.) He also rehashes his prior arguments that the district court did not give enough weight to
his mitigation arguments, including the arguments that he voluntarily offered $14,500.00 in
restitution and that he was recovering from an expensive OxyContin habit. However, “the manner
in which a district court chooses to balance the applicable sentencing factors is beyond the scope
of the Court’s review.” United States v. Adkins, 729 F.3d 559, 571 (6th Cir. 2013) (citing United
States v. Norman Sexton, 512 F.3d 326, 332 (6th Cir. 2008); United States v. Ely, 468 F.3d 399,
404 (6th Cir. 2006)). And “where a district court explicitly or implicitly considers and weighs all
pertinent factors, a defendant clearly bears a much greater burden in arguing that the court has
given an unreasonable amount of weight to any particular one.” Id. (alteration omitted) (quoting
United States v. Thomas, 437 F. App’x 456, 458 (6th Cir. 2011)). The district court considered all
of the relevant § 3553(a) factors, including the nature and severity of the offense; the need for
public deterrence, to provide just punishment, and to protect the public; as well as Howder’s
history and characteristics. Moreover, the district court explained that its consideration of
Howder’s mitigation arguments was the reason it decided against varying upward, something it
was initially inclined to do.
Considering the totality of the circumstances, the district court did not place unreasonable
weight on any one of the sentencing factors, and Howder therefore fails to overcome the
presumption that his within-Guidelines sentence is reasonable.
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III. Keating’s 108-month sentence is procedurally and substantively reasonable.
“This Court reviews sentencing decisions deferentially for abuse of discretion.” Sexton,
894 F.3d at 796 (citing Gall, 552 U.S. at 41). We review a criminal sentence for reasonableness.
Id. (citing Payton, 754 F.3d at 377). “This review has two components: procedural reasonableness
and substantive reasonableness.” Solano-Rosales, 781 F.3d at 351. We begin by “ensur[ing] that
the district court committed no significant procedural error, such as failing to calculate (or
improperly calculating) the Guidelines range, treating the Guidelines as mandatory, failing to
consider the § 3553(a) factors, selecting a sentence based on clearly erroneous facts, or failing to
adequately explain the chosen sentence—including an explanation for any deviation from the
Guidelines range.” Gall, 552 U.S. at 51. Unpreserved procedural reasonableness challenges are
subject to plain error review. United States v. Davis, 751 F.3d 769, 773 (6th Cir. 2014).
We then review the substantive reasonableness of the sentence, “tak[ing] into account the
totality of the circumstances, including the extent of any variance from the Guidelines range.”
Gall, 552 U.S. at 51. “To be substantively reasonable, the sentence ‘must be proportionate to the
seriousness of the circumstances of the offense and offender, and sufficient but not greater than
necessary, to comply with the purposes of § 3553(a).’” Sexton, 894 F.3d at 797 (quoting Vowell,
516 F.3d at 512). “A sentence may be considered substantively unreasonable when the district
court selects a sentence arbitrarily, bases the sentence on impermissible factors, fails to consider
relevant factors, or gives an unreasonable amount of weight to any pertinent factor.” Id. (quoting
Conaster, 514 F.3d at 520).
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Keating’s primary argument is that the district court erroneously applied USSG § 3B1.1’s
leadership enhancement, characterized as an upward variance. He argues that this makes his
sentence procedurally unreasonable because the court did not give the prior notice required under
Federal Rule of Criminal Procedure 32,1 leaving counsel without the means to present an argument
against the enhancement. Keating concedes that he failed to raise this argument before the district
court and that it is therefore subject to plain-error review. To find plain error, this Court must find
“(1) error (2) that ‘was obvious or clear,’ (3) that ‘affected defendant’s substantial rights,’ and
(4) that ‘affected the fairness, integrity, or public reputation of the judicial proceedings.” United
States v. Vonner, 516 F.3d 382, 386 (6th Cir. 2008) (en banc) (quoting United States v. Gardiner,
463 F.3d 445, 459 (6th Cir. 2006)). Keating also challenges his sentence as substantively
unreasonable.
Section 3B1.1(a) of the Sentencing Guidelines mandates a 4-point offense-level increase
“[i]f the defendant was an organizer or leader of a criminal activity that involved five or more
participants or was otherwise extensive.” USSG § 3B1.1(a). Early in Keating’s sentencing
proceedings, the district court asked counsel whether this guideline should apply:
Let’s turn to an issue that is troublesome to me. Why shouldn’t there be an enhancement – let me ask you, [government counsel], first. Do you think there should be an enhancement for his leadership, organization and managerial role in this case? If not, that’s fine I’ll move on. If so, let me know what you think.
(R. 112, Keating Sent. Tr., PageID # 3976.) The government responded that the facts would
support such a finding. The court then asked Keating’s counsel, who responded as follows:
Your Honor, neither the initial disclosure nor the final disclosure of the PSR suggested an enhancement for being a leader or organizer, and if the Court is going to consider that, I’d ask for a continuance of this matter so that the defense can
1 Federal Rule of Criminal Procedure 32(d)(1)(A) requires that a presentence report “identify all applicable guidelines and policy statement of the Sentencing Commission.” Fed. R. Crim. P. 32(d)(1)(A).
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huddle up and brief that issue. It’s pretty clear from – I’m new to the table in this case. I got involved on behalf of Mr. Keating – THE COURT: I understand. -- after his plea and after he met with Ms. Sizemore, but I’m, you know, still just getting a grasp on the details. . . . So again, I would dissuade The Court from considering an enhancement for being a leader organizer and ask The Court to take that into consideration also when you determine a final loss amount in relation to Mr. Keating’s criminal culpability here.
(Id. at PageID # 3977–78.)
Ultimately, the court declined to apply the leader enhancement under USSG § 3B1.1(a),
seemingly because the government had failed to request it. When it came time to pronounce
Keating’s sentence, however, the court applied a “substantial upward variance” based in part on
the finding that Keating was “the defacto [sic] leader of this operation.” (R. 112 Keating Sent. Tr.,
PageID # 4003–05.)
A sentencing court is not required to give prior notice before applying a variance from the
Guidelines range. See United States v. Coppenger, 775 F.3d 799, 803 (6th Cir. 2015) (citing
Irizarry v. United States, 553 U.S. 708, 714–15 (2008)). Keating argues that the district court’s
decision to vary upward was procedurally improper insofar as it was “an adjustment/enhancement
clothed in a thin veil of ‘variance.’” (Brief for Keating at 14.) The problem for Keating is that the
district court’s upward variance was based only in small part on his leadership role. Indeed, the
court explained its decision to “vary upward substantially from the guidelines” as follows:
I have considered the Section 3553(a) factors. Without going on too long about it because I think I've made my views clear about the offenses that you committed and how serious they were, how reprehensible they were, how unnecessary they were, how devastating they were. To me it is unimaginable that 268 families were put at risk – who were at risk, had that risk enhanced probably greatly enhanced because you stole the money and applied it for your own use and purposes when they anticipated that you would do everything you possibly could to make certain that they could stay in their homes. The $5,600 you spent on a Louis Vuitton bag because you thought some woman ought to be well cared for, perhaps it was that $5,600 that put a family in a street because you cared more for tending to the
19 Nos. 17-3413/17-3454
impulsive needs, desires of a companion than you did of a family to whom you owed a much greater obligation.
The numbers of victims, at least 1/3 more than those of Mr. Howder. The profit. I believe I gave him an 84 month sentence, and he did have a more serious criminal history, I know that, and that factored into my decision yesterday. But you put twice the amount of money he did into your pocket while stealing from 1/3 more victims. And in an astonishing way, truly astonishing way, you kept right on doing what you were doing. No lawyer told you to keep doing what you were doing, running your business, sure, but continuing to steal $50,000 into a bank account a month after the FBI showed up. You know, that shows impulse or self grandiment [sic], self protection, self enrichment and self enhancement that is truly amazing and [] incomprehensible.
And finally, I am taking into account the fact that you were the defacto leader of this operation. You helped assemble the Keating Group, which I understand from time to time it was referred to as. They all operated under the Making Homes Affordable USA, which itself the very title mimicking the federal legislation that was intended to relieve the distress caused by the greater recession and the near collapse of the American financial institution Making Homes Affordable USA. That itself, the mere title of it, it contains an indication of the deceit that permeated your entire operation.
And truly at the end of the day, what seems to me to justify a very substantial upward variance from the guidelines, which is something I rarely do, is, again, the cumulative effect upon literally hundreds of people. It wasn't just the person on the note or the person who sent you the check. It was the families, those who lived under the same roof. Whether or not they got put into the street, and I have no doubt some did, if not many did, but every single one of those individuals accumulatively endured distress and anxiety about what was going to happen and what was going to come, and where would I be that I know you have endured [on] your own behalf, but multiply that similar kind, not of imprisonment, but of expulsion of being left homeless. So while I sympathize and understand with the distress that you've -- the anxiety that you felt and the uncertainty that you felt, I think it's been a fraction of what you caused others from whom you stole day in and day out, check by check by check, for a period of years, but a fraction. The distress and the toll that you caused because of your very deliberate continuing, almost unremitting and unrelenting crimes, trying to think of an apt analogy to express how deeply reprehensible or how deeply I feel the moral reprehensibility of that. In my view it's like somebody walking along a sidewalk and sees a few nickels in a blind beggar's cup and steals them from the blind beggar and walks down the street, spends it on whatever he wants to, same level of abject indifference and immorality that in my view is incomprehensible and ultimately, try as I have, I have been
20 Nos. 17-3413/17-3454
unable, I think and I fear to describe how horrible it was. And therefore, I think a substantial upward variance is justified.
(R. 112, Keating Sent. Tr., PageID # 4004–07.)
Rather than being premised on Keating’s leadership role in the operation, the court
appeared to place much greater emphasis on how “reprehensible,” “unnecessary,” and
“devastating” Keating’s offenses were, on “the cumulative effect upon literally hundreds of
people,” and on the “incomprehensible” “abject indifference and immorality” reflected by
Keating’s crimes. (R. 112, Keating Sent. Tr., PageID # 4004–07.) The district court explicitly
couched its considerations in an analysis of the 18 U.S.C. § 3553(a) factors. Although these same
facts may have also supported an enhancement under the Guidelines, that does not preclude the
district court from considering them in assessing the “nature and circumstances of the offense” or
the “history and characteristics” of the defendant. See United States v. Rodriguez, 628 F.3d 1258,
1264 (11th Cir. 2010) (“[A] district court can rely on factors in imposing a variance that it had
already considered in imposing an enhancement . . . and there is no requirement that the district
court must impose an enhancement before granting a variance.” (citation omitted)). Accordingly,
we find no plain error in the district court’s decision to vary upward.
Keating next argues that his sentence is substantively unreasonable for the same reasons
given above: namely, that the district court improperly relied on his position as the “defacto leader”
of the operation. (Brief for Keating at 15–16.) As articulated above, the district court did not rely
on an impermissible factor, but instead gave a thorough analysis of the relevant § 3553(a) factors
to explain why an upward variance was necessary. The court properly weighed Keating’s role in
the criminal enterprise along with numerous other factors in reaching its sentence. Therefore,
Keating has failed to demonstrate that his sentence was procedurally or substantively
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CONCLUSION
For the reasons set forth above, we AFFIRM the district court’s sentencing decisions.