United States v. Joshua Eaden

37 F.4th 1307

• Court: Court of Appeals for the Seventh Circuit
• Decided: June 23, 2022
• Docket: 20-2763
• Status: Published

Opinion

In the

United States Court of Appeals For the Seventh Circuit ____________________ No. 20‐2763 UNITED STATES OF AMERICA Plaintiff‐Appellee, v.

JOSHUA W. EADEN Defendant‐Appellant. ____________________

Appeal from the United States District Court for the Southern District of Indiana, Evansville Division. No. 3:17‐cr‐00025 — Richard L. Young, Judge. ____________________

ARGUED SEPTEMBER 27, 2021 — DECIDED JUNE 23, 2022 ____________________

Before ROVNER, HAMILTON, and KIRSCH, Circuit Judges. KIRSCH, Circuit Judge. Over a three‐year period, Joshua Eaden defrauded his employer and its business partners of more than $200,000. Eaden’s crimes eventually caught up with him, and a jury convicted him of seventeen counts of mail and wire fraud. On top of 46 months’ imprisonment, the district court ordered Eaden to pay restitution to his victims and to forfeit his ill‐gotten gains. 2 No. 20‐2763

Eaden argues on appeal that he is entitled to a new trial for two reasons. First, he contends that the district court de‐ prived him of a fair trial by making prejudicial comments to prospective jurors during voir dire. Second, he argues that the district court wrongly admitted a lay witness’s opinion testi‐ mony regarding a subset of his fraud charges. And if not granted a new trial, Eaden seeks at least the reduction of his forfeiture and restitution obligations, which he contends were miscalculated. Yet Eaden failed to raise these objections with the district court, meaning we review only for plain error. The government concedes (and we agree) that two of Eaden’s res‐ titution and forfeiture arguments merit relief, so we reduce Eaden’s financial obligations accordingly. But when it comes to Eaden’s remaining claims, we see either no error or nonob‐ vious error; we affirm as to those. I From 2002 to 2016, Joshua Eaden worked for Best One Tire, a tire store owned by Southern Indiana Tire, Incorpo‐ rated (SIT). He eventually became Best One’s manager, but from 2014 to 2016 he abused that position by defrauding SIT and its business partners of more than $200,000. This fraud took two forms. First, Eaden falsely inflated the profits at his store (to obtain unearned performance‐based bonuses) by billing SIT’s largest customer—Gibson County Coal—for products it did not purchase. Second, Eaden submitted false claims to a rewards program sponsored by tire manufacturer Bridgestone Firestone, through which Best One’s employees could claim gift cards and other prizes for selling Bridgestone tires. In early 2016, a community member’s tip alerted SIT’s CEO to Eaden’s misdeeds. Police and internal investigations No. 20‐2763 3

soon followed. On the internal side, SIT hired forensic ac‐ counting firm BKD to assess the scope of Eaden’s overbilling scheme. To that end, BKD produced a report concluding that Eaden had billed Gibson County Coal for more than $180,000 in never‐received products, netting Eaden more than $47,000 in unearned bonuses. Additionally, SIT forwarded Eaden’s Bridgestone rewards program records to Bridgestone repre‐ sentative Don Anderson, who upon review found that more than 75 percent of Eaden’s submitted claims contained false information. With his fraud now uncovered, Eaden faced a 23‐count in‐ dictment alleging multiple fraudulent schemes, including those just described. Although he was eventually acquitted on six counts, the jury convicted him of the remaining seven‐ teen. At sentencing, the district court imposed 46 months’ im‐ prisonment, three years of supervised release, and ordered restitution of $244,673.00, as well as the forfeiture of all Eaden’s bonuses from 2014 to 2016, which totaled $88,106.78. Eaden now appeals, contending that he is entitled to a new trial or, failing that, at least to reduced forfeiture and restitu‐ tion obligations. II We note from the outset that Eaden has (at a minimum) forfeited his claims by failing to raise them with the district court. But we needn’t decide whether he has crossed the line into waiver; the government concedes that two of Eaden’s ar‐ guments merit relief, and the standard of review makes no difference for the others. We therefore assess Eaden’s claims for plain error, meaning he can obtain relief only by demon‐ strating: (1) an error (under whatever standard of review would apply had the issue been preserved); (2) that is plain; 4 No. 20‐2763

(3) that affected his substantial rights; and (4) that, if not cor‐ rected, would impugn the fairness, integrity, or public repu‐ tation of judicial proceedings. United States v. Butler, 777 F.3d 382, 388 (7th Cir. 2015). We begin with Eaden’s arguments for a new trial and then move to his restitution and forfeiture challenges. A Eaden contends that the district court deprived him of a fair trial in violation of the Fifth Amendment by informing prospective jurors during voir dire that a grand jury had is‐ sued Eaden’s indictment based on probable cause, which the district court defined as meaning “it’s probably true that [Eaden] had some connection with criminal activity[.]” In Eaden’s view, this definition predisposed the petit jury to find him guilty and carried the government halfway to the goal line in proving his guilt beyond a reasonable doubt. And so, he insists, retrial is necessary. Yet this argument misses the mark. For starters, Eaden ig‐ nores the broader context of the district court’s comments. Although the district court undeniably invoked the “probably true” language that Eaden challenges on appeal, it immedi‐ ately dispelled any notion that the grand jury’s finding had some bearing on Eaden’s guilt or innocence. Just moments af‐ ter that unfortunate utterance, the district court inquired of a potential juror: “the fact that Mr. Eaden has been indicted … does that mean he’s guilty?” When another potential juror re‐ plied that it did not, the district court confirmed—“[t]hat’s ex‐ actly right. … he’s just exercising his rights to a trial by jury.” In an exchange with another venire member, the dis‐ trict court highlighted that “probably” wouldn’t suffice for the petit jury’s guilt‐or‐innocence determination: No. 20‐2763 5

COURT: I mentioned the word “probable cause.” That’s a burden of proof as well, all right. The defendant probably had some con‐ nection to criminal activity. … [I]f you come back, after listening to all the evidence in this case, and you think: Well I think the defendant probably committed this crime, is that enough to convict? PROSPECTIVE JUROR: I would say no. COURT: Right. Probably tells you what? What’s the word “probably” tell you? PROSPECTIVE JUROR: That there might be doubt that he didn’t do it. COURT: Could be, could not be, right? Do we convict people and take away their liberty based on could be, could not be? PROSPECTIVE JUROR: I would hope not. COURT: Right. Exactly. We don’t do that … . Moreover, the district court took great pains to impress upon the jurors—both prospective and actual—that the gov‐ ernment bears the full burden of proof at trial, notwithstand‐ ing the issuance of an indictment. It stated during voir dire, for instance, that “the fact that someone’s been charged with a crime … [is] not evidence of their guilt,” and admonished the venire that Eaden maintained a “cloak of innocence” de‐ spite his indictment. An exchange with one prospective juror is illustrative: 6 No. 20‐2763

COURT: [W]hat does [Eaden] have to do in this case to prove to you that he is innocent of these charges? PROSPECTIVE JUROR: He really doesn’t have to prove his innocence. … COURT: You mean that [Eaden] can sit here throughout the entire trial, not say one thing, not present any evidence, not do one darn thing … ? PROSPECTIVE JUROR: Yes. COURT: You’re exactly right. Finally, the district court’s end‐of‐trial instructions were unimpeachable. They reminded the jury that an indictment is not evidence, that it “does not even raise a suspicion of guilt,” and that Eaden was presumed innocent until proven guilty. Trial judges have substantial discretion in conducting voir dire, and we interfere only where there has been “a clear abuse of that discretion[.]” United States v. Betts‐Gaston, 860 F.3d 525, 530–31 (7th Cir. 2017). One of our prior decisions il‐ lustrates that the district court did not abuse its discretion in this case. In United States v. Garcia, the defendant challenged the district court’s jury instructions, which described the grand jury as the “first screening process” in the criminal jus‐ tice system. 562 F.2d 411, 417 (7th Cir. 1977). Yet we required only that the instructions, “taken as a whole, fairly and ade‐ quately stated the law pertinent to the case.” Id. at 416. Be‐ cause the instructions, viewed holistically, “ma[d]e manifest the jury’s duty to decide the case on the basis of the evidence presented at trial,” we held in Garcia that the district court had not erred. Id. at 417. No. 20‐2763 7

Despite the somewhat different context (voir dire versus jury instructions), the same conclusion is appropriate here. The district court carefully cabined its discussion of the grand jury’s function, emphasizing repeatedly that Eaden’s indict‐ ment—even if it meant he “probably” had some connection with criminal activity—was not evidence of guilt, that the government bore the full burden of proving him guilty be‐ yond a reasonable doubt at trial, and that Eaden himself bore no burden at all. Considering these extensive efforts, we can‐ not see how the jury could misunderstand the government’s burden of proof, regardless of the district court’s “probably true” utterance during voir dire. Although we are confident the jury understood its duty in this case, we nonetheless take this opportunity to remind dis‐ trict courts that comments about the grand jury are usually unnecessary and should be avoided. “[T]he fact of the indict‐ ment has some emphasis” in virtually any criminal case, id., but that fact warrants no comment in the ordinary case be‐ yond the typical admonition that the indictment is not evi‐ dence of guilt or of anything else, as the district judge rightly stated. The grand jury’s finding of probable cause and deci‐ sion to return an indictment is meaningless at trial and need not be mentioned by the court. In fact, the safer course is to redact any reference to the grand jury’s role, as is commonly done. But that the district court did not take that course in this case is not a basis for a new trial. B If denied retrial for all counts, Eaden seeks a redo at least as to counts 17–23 (those related to the Bridgestone rewards program) because he believes that the district court erred by admitting unhelpful witness testimony from Bridgestone 8 No. 20‐2763

representative Don Anderson in violation of the Federal Rules of Evidence. The parties agree that Anderson testified as a lay (rather than expert) witness, meaning that the admissibility of his testimony was governed by Federal Rule of Evidence 701, which requires that a lay witness’s opinion testimony be: (a) rationally based on the witness’s perception; (b) helpful to clearly understanding the witness’s testimony or determining a fact in issue; and (c) not based on scientific, technical, or other specialized knowledge. Anderson’s testimony focused on Eaden’s submissions to the Bridgestone rewards program’s online claims system. This system enabled salespersons like Eaden to obtain points redeemable for gift cards and other rewards by inputting cer‐ tain required information, such as the quantity and type of tire sold, the purchaser’s identity, the date of sale, and the rel‐ evant invoice number. At trial, Anderson testified that, in re‐ viewing over 200 such submissions from Eaden, he discov‐ ered factual inaccuracies in more than 75 percent. Along the way, Anderson described these inaccuracies as “fraudulent,” meaning (in his view) that they could not have resulted from “simple clerical errors.” Eaden homes in on the term “fraud‐ ulent,” contending that Anderson’s testimony provided only the bare legal conclusion of “fraud” without being helpful as Rule 701 requires. Our precedents have repeatedly upheld a witness’s use of the term “fraudulent” when testifying in fraud cases. In United States v. Locke, for instance, we upheld lay witness tes‐ timony that the defendant’s submissions to a loan provider (the witness’s employer) had been “fraudulent,” in the sense that they would have been denied had they been accurate. 643 F.3d 235, 237–38 (7th Cir. 2011). We viewed such testimony as No. 20‐2763 9

helpful under Rule 701 because it helped establish a key ele‐ ment—materiality—of the fraud charges pressed by the gov‐ ernment. Id. at 241. In the same vein, in a real estate fraud case we upheld a witness’s use of the term “fraudulent” to de‐ scribe home appraisal reports submitted by the defend‐ ant. United States v. Owens, 301 F.3d 521, 527 (7th Cir. 2002). The Owens defendant insisted that this amounted to state‐of‐ mind testimony regarding his intent, which is disallowed by Rule 704(b). Id. Yet we disagreed, concluding that “fraudu‐ lent” as used in context applied only to the reports them‐ selves, rather than to the ultimate issue of the defendant’s in‐ tent. Id. No one disputed that the testimony was helpful: it went directly to materiality. Locke and Owens show why Anderson’s testimony was properly admitted. In describing Eaden’s submissions as fraudulent, Anderson was not addressing Eaden’s mental state or the ultimate question of fraud. Instead, he was ex‐ pressing with a layperson’s vernacular that those submissions were false, with the further indication that, in his view, that falsity could not have resulted from mere negligence. This tes‐ timony was helpful under Rule 701. To prove Eaden’s fraud charges, the government needed to show that his submissions were both intentional and false. Anderson’s testimony touched on both considerations. In addition, Anderson’s tes‐ timony was rationally based on his own perceptions from re‐ viewing Eaden’s Bridgestone claim submissions, and Eaden does not contend that Anderson’s testimony was based on specialized knowledge. It therefore satisfied Rule 701’s three requirements and was properly admitted. 10 No. 20‐2763

C Eaden’s final arguments all pertain to the restitution and forfeiture amounts assessed by the district court. The govern‐ ment concedes that two of these arguments are meritorious, and we reduce Eaden’s financial obligations accordingly. But for the remainder we find that any error is not plain and there‐ fore affirm. We consider each argument in turn. 1 Eaden asserts that the district court erred in ordering him to pay $189,709 in restitution to SIT—the same amount that SIT repaid to Gibson County Coal to remedy Eaden’s over‐ billing. In fraud cases like Eaden’s, restitution is required by the Mandatory Victim Restitution Act for any victim “directly harmed by the defendant’s criminal conduct.” 18 U.S.C. §§ 3663A(a)(1)–(2), (c). But (as Eaden correctly notes) restitu‐ tion is limited solely to “actual losses caused by the specific conduct underlying the offense.” United States v. Meza, 983 F.3d 908, 918 (7th Cir. 2020). Eaden argues—and the government concedes—that the $189,709 was not a loss to SIT. Instead, SIT merely repaid un‐ earned funds that it had obtained from Gibson County Coal solely by reason of Eaden’s fraud. The government has never argued, either at trial or on appeal, that this amount was a loss to SIT, and so it appears that the district court had no basis for ordering this amount as restitution. Consequently, we accept the government’s concession on this issue and modify the res‐ titution order to reduce Eaden’s financial obligations by $189,709. See, e.g., United States v. Oliver, 873 F.3d 601, 609 (7th Cir. 2017) (directly modifying district court’s restitution or‐ der). No. 20‐2763 11

2 Eaden also contends that the district court erred in order‐ ing him to forfeit all the performance‐based bonuses he was awarded from 2014 to 2016, which totaled $88,106.78. Civil forfeiture, like restitution, is authorized by statute and is lim‐ ited to “the gross receipts obtained [by mail or wire fraud].” 18 U.S.C. § 981(a)(1)(D). BKD’s forensic accounting report attributed $47,288.97 in bonuses to Eaden’s overbilling scheme yet said nothing about the remaining $40,817.81. Be‐ cause none of the evidence presented at trial or sentencing at‐ tacked the validity of Eaden’s bonuses beyond the $47,288.97 indicated in BKD’s report, the government concedes that Eaden’s forfeiture obligation should be reduced by $40,817.81. As with Eaden’s restitution arguments, we accept the government’s concession on this point and reduce Eaden’s forfeiture order by $40,817.81. See Oliver, 873 F.3d at 609. 3 Eaden asks us to further reduce his forfeiture and restitu‐ tion amounts as they relate to his bonus payments, which in his view BKD attributed excessively to fraud. The size of Eaden’s bonuses depended, in part, on his store’s net profits; BKD determined that, because of Eaden’s fraud, those profits had been inflated by $332,803.68, netting Eaden $47,288.97 in unearned bonuses. But Eaden contends that this calculation is an overestimate because it takes into account profits that, alt‐ hough deemed fraudulent by BKD, were not attributable to the overbilling scheme for which he was convicted, instead being associated with other schemes for which he was either acquitted or never charged. In support, Eaden points to other portions of BKD’s forensic accounting report, which 12 No. 20‐2763

designate $168,572.47 as the overstated net profits attributable to the specific conduct for which Eaden was convicted. In es‐ sence, Eaden argues that the district court and government erred in relying on BKD’s topline fraud calculation with re‐ spect to Eaden’s bonuses—$47,288.97—without drawing se‐ lectively from BKD’s report to exclude the underlying profits attributable to never‐proven fraudulent schemes. But while Eaden might be correct, the plain error standard permits relief only where the error is plain, and any error here is not. We’ve said that an error is plain where it is “clear” or “ob‐ vious.” United States v. Burns, 843 F.3d 679, 687 (7th Cir. 2016). Yet this definition leaves unanswered a key question: Plain to whom? The answer, although not always explicit in our prec‐ edents, is that the error must be plain to us on appeal, rather than to those involved in the trial process. See id. (“We have never required … that the error be obvious to the district court[.]”) This answer has important implications in this case. As an appellate court, legal errors are in our wheelhouse, and so we’ve reversed where an error was “obvious under the law” although not obvious below. Id.; see also United States v. Jenkins, 772 F.3d 1092, 1098 (7th Cir. 2014) (plain error where district court, relying on PSR, calculated Guidelines sentenc‐ ing range by factoring in prior conviction under statute that had been deemed unconstitutional). Factual errors, by con‐ trast, tend to be more obscure on appeal. See, e.g., Gall v. United States, 552 U.S. 38, 51–52 (2007) (noting that the district judge “is in a superior position to find facts and judge their import [for sentencing purposes]”, and that district courts “have an institutional advantage over appellate courts in making these sorts of determinations”). For that reason, we’ve held that an error is not plain where it is “subtle, arcane, de‐ batable, or factually complicated.” United States v. Pierson, 925 No. 20‐2763 13

F.3d 913, 922 (7th Cir. 2019), cert. granted, judgment vacated on other grounds, 140 S. Ct. 1291 (2020) The error Eaden asserts is of the latter sort. He argues that BKD’s overpaid‐bonus calculation overestimates his restitu‐ tion and forfeiture obligations because it takes into account profits derived from never‐proven schemes. Yet he cannot tell us the precise figure by which his restitution and forfeiture orders should be reduced (setting aside, of course, the gov‐ ernment’s concession regarding part of his bonus payments). Nor does Eaden dispute that the district court relied in part on a topline number explicitly provided by BKD’s forensic ac‐ counting report—$47,288.97—in calculating these obliga‐ tions. This is, as our cases say, a “subtle … [and] factually complicated” issue, id., based on intricate accounting calcula‐ tions, and therefore any error is not plain under our prece‐ dents. 4 Last, Eaden argues that the district court erred in ordering him to repay the entire $7,676 he obtained from the Bridge‐ stone rewards program. In making this argument, Eaden once again attacks the testimony of Don Anderson, who indicated that he reviewed more than 200 of Eaden’s submissions to the Bridgestone rewards program and found that, of those, more than 75 percent contained inaccuracies. Eaden faults this tes‐ timony in two respects: first because Anderson testified that “more than” 75 percent of the entries contained inaccuracies, rather than 100 percent, and second because Anderson re‐ viewed only roughly half of Eaden’s submissions to the re‐ wards program. As Eaden sees it, this evidence is too thin to deem all of his rewards restitution‐worthy. 14 No. 20‐2763

Yet as with Eaden’s preceding bonus arguments, any error here is not plain. The district judge had evidence before him that more than 75 percent of the Bridgestone submissions re‐ viewed by Anderson contained false information of a non‐ trivial nature. For all we know, “more than” 75 percent— which indicates that at least 75 percent were false—could have been 100 percent; Anderson’s testimony never ruled out that possibility. Beyond that, the district judge could have also in‐ ferred that Bridgestone would have denied all rewards to Eaden, even for legitimate claims, had it known of his fraud. This is enough to place any error here in the camp of subtle and factually complicated, short of what the plain error stand‐ ard requires. * * * We accept the government’s concessions on Eaden’s resti‐ tution and civil forfeiture arguments, and so modify the dis‐ trict court’s judgment, reducing those obligations by $189,709 and $40,817.81, respectively. The judgment is otherwise AF‐ FIRMED as modified.