United States v. Khan

• Court: Court of Appeals for the Fifth Circuit
• Decided: April 12, 2002
• Docket: 01-10379
• Status: Unpublished

Opinion

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 01-10379

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

versus

MAHMMADU ZZAMAN KHAN,

Defendant - Appellant.

Appeal from the United States District Court for the Northern District of Texas (No. 3:00-CR-242-2)

April 11, 2002

Before ALDISERT,* DAVIS and PARKER, Circuit Judges.

PER CURIAM:**

Defendant Mahmmadu Zzaman Khan appeals his conviction on

nine counts of making a false statement to a federal agency in

violation of 18 U.S.C. § 1001 and for a single count of

conspiracy to violate the same. He also appeals the district

* Circuit Judge of the Third Circuit, sitting by designation. ** Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. court’s determination that certain other false statements were

relevant conduct and its calculation of loss under the sentencing

guidelines. We affirm in all respects.

BACKGROUND

This case arises from Khan’s attempt to secure several loans

from the Small Business Administration through the Money Store, a

private lender. Khan’s brother, Shahidu, supposedly wanted to

purchase Khan’s business, Dollar Auto Service and Body Shop. To

do so, he applied for an S.B.A.-backed loan through the Money

Store. In order to qualify, Shahidu offered a tax return and

certain records from his own business, Frank Equipment & Tools.

The tax return showed his income from the previous year was

approximately $70,000; the business records were two invoices

showing amounts due for equipment purchased by Dollar Auto and

six checks showing cash Shahidu had paid into Frank Equipment.

The application was approved, and the funds were wired to Frank

Equipment.

Unbeknownst to the Money Store and the S.B.A., Khan had

previously asked one of his employees, Frank Acala, to set up a

bank account in the name of Frank Equipment & Tools. He also had

Acala arrange a mail drop for the new company. At trial, Acala

testified that Frank Equipment existed only on paper; that the

company never received any cash infusions from Khan’s brother;

and that no invoices were paid by Dollar Auto. (Shahidu’s real

-2- tax return showed that he had made only $48 that year.) After

the funds arrived from the S.B.A. loan, Khan several times asked

Acala to write him checks drawn on the Frank Equipment account.

From the loan proceeds, Khan used $130,000 to purchase a filling

station.

Enter Jose and Juan Villanueva. The Villanueva brothers

wanted to purchase the filling station from Khan, but first they

needed money. Jose went to the Money Store and secured an S.B.A.

loan for $260,000. It is not clear what Jose had to do to get

the proceeds, but once he did, he handed them over to Kahn. Kahn

kept the filling station.

Then, roughly a year after Shahidu allegedly applied for the

first loan, Khan himself applied for a loan through the Money

Store. He requested $390,000, but the loan was refused, the

Money Store having been informed that Khan was under

investigation for fraud. The government contends that six

falsified tax returns were submitted in support of the loan

application.

Khan was indicted on nine counts of making a false statement

to a federal agency, 18 U.S.C. § 1001 (False Claims Act), and on

one count of conspiracy. At trial, the district court instructed

the jury that it had to find that Khan specifically intended to

mislead a federal agency. The jury convicted him on all 10

counts. In addition to the conspiracy conviction, Khan received

a separate conviction for each of the false documents (nine in

-3- all) submitted by his brother in applying for the first loan.

The district court determined that Khan’s criminal history

category was I, and the probation office recommended an eight-

level enhancement for loss of more than $200,000 but not more

than $350,000. The P.S.R. concluded that the other loans

involved different conspirators and different businesses and were

therefore not related conduct under the sentencing guidelines.

The government objected, urging the district court to include the

loss amounts from the other two loans. The district court did,

and Khan was sentenced to 37 months’ imprisonment, the longest

term for someone of Khan’s category and offense level (19).

I.

Khan failed to move for a judgment of acquittal at the close

of evidence. As a result, we must uphold Khan’s conviction

absent “a manifest miscarriage of justice.” See United States v.

Laury, 49 F.3d 145, 151 (5th Cir. 1995). That standard is met

when “the record is devoid of evidence pointing to guilt, or the

evidence on a key element of the offense is so tenuous that a

conviction would be shocking.” Id. (internal quotation omitted).

It is apparent that the district court erroneously instructed the

jury that conviction under the False Claims Act requires the

government to prove that the defendant by his false statement

intended to mislead a government agency. Such a showing is not

required. See United States v. Yermain, 468 U.S. 63, 68-70

-4- (1984). The government failed to object to the court’s charging

it with this additional burden, which made the erroneous

instruction the law of the case. See United States v. Jokel, 969

F.2d 132, 136 (5th Cir. 1992). Nevertheless, the government’s

failing to prove a nonessential element cannot result in a

manifest miscarriage of justice. As we noted above, to set aside

a conviction under that standard there must be a paucity of

evidence on a key element. An element not described in the

statute of which the defendant is accused of violating cannot by

definition be a key one.

II.

Under the sentencing guidelines, “relevant conduct” is

defined as “all acts and omissions . . . that occurred during the

commission of the offense of conviction [or] in preparation for

that offense . . . and were part of the same course of conduct or

common scheme or plan as the offense of the conviction.” U.S.

SENTENCING GUIDELINES MANUAL (U.S.S.G.) § 1B1.3(a)(1)&(2)(2001).

Whether two or more offenses are part of the same course of

conduct turns on “the degree of similarity of the offenses, the

regularity (repetitions) of the offenses, and the time interval

between the offenses.” Id. § 1B1.3 cmt. n.9(A). Similarly,

multiple offenses that are part of a common scheme or plan are

“substantially connected to each other by at least one common

factor, such as common victims, common accomplices, common

-5- purpose, or similar modus operandi.” We review the district

court’s determination of relevant conduct for clear error. See

United States v. Anderson, 174 F.3d 515, 526 (5th Cir. 1999).

We discern no reversible error in the district court’s

determination of relevant conduct. The time between the first

loan application and the last was 13 months. All three loans

used the same modus operandi: applying for an S.B.A.-backed loan

through the Money Store using false income tax returns and other

falsified documents. In each case, the victims were the same,

the Money Store and the S.B.A. And the proceeds of each loan

were intended to or did make their way into Khan’s hands, even if

Khan was not himself the applicant to all of them.

Khan makes much of this court’s opinions in United States v.

Ford, 996 F.2d 83 (5th Cir. 1993), and United States v. Garcia,

962 F.2d 479 (5th Cir. 1992). In those two cases we were

concerned with whether defendants’ having been sentenced for

prior offenses made them career offenders under the sentencing

guidelines, which requires that separate sentences for “related

offenses” be treated as one. See generally U.S.S.G. § 4A1.2(a).

To determine whether a prior offense is related or not, the

commentary directs the sentencing court back to § 1B1.3(a), which

gives the definition for “relevant conduct.” See id. § 4A1.2

cmt. n.1. Thus, an offense that subjects a defendant to being

sentenced as a career offender cannot also subject him to an

-6- enhancement for its being part of the “same course of conduct or

a common scheme or plan as the offense of conviction.” This is

the teaching of our recent opinion in United States v. Cade, 279

F.3d 265 (5th Cir. 2002).

But we need not try to square our conclusion that the

sentences in Ford and Garcia did not arise from related conduct

with ours that the three fraudulent loans in this case did. In

both of those cases, this court reviewed the district court’s

determination of relatedness de novo, a practice that the Supreme

Court has since rejected as one for which the courts of appeal

are not well positioned. See Buford v. United States, 121 S. Ct.

1276, 1280 (2001). Thus, even if we disagree with the district

court’s determination regarding relatedness, the court cannot

reverse unless it was clear error. For the reasons stated above,

the facts in this case do not support such a conclusion. Second,

possible inconsistency between this court’s construction of the

term “related offense” under § 4A1.2(a) in Ford and Garcia and

our construction of “relevant conduct” under § 1B1.3(b) does not

prevent us from affirming the district court’s finding of

relatedness now, for § 4A1.2(a) did not tie the meaning of its

term to § 1B1.3(b) until after those cases were decided. See

U.S.S.G. app. C, amendment 493 (effective Nov. 1, 1993); see also

Garcia, 962 F.2d at 481-82 (noting that the guidelines do not

define “common scheme or plan” for purposes of § 4A1.2(a)).

-7- III.

Khan failed to object to the district court’s calculation of

loss under the sentencing guidelines. We must therefore uphold

the district court’s determination unless plain error is evident.

See United States v. Chung, 261 F.3d 536, 539 (5th Cir. 2001).

The face value of the loans was $996,000; the actual loss

suffered by the victims was $506,203. For sentencing purposes,

counting intended loss resulted in a one-level increase, which in

turn had the effect of raising Khan’s term of imprisonment by up

to four months.

According to the application notes to the guideline under

which Khan was sentenced, “[i]n fraudulent loan application

cases[,] . . . . the loss is the amount of the loan not repaid at

the time the offense is discovered, reduced by the amount the

lending institution has recovered (or can expect to recover) from

any assets pledged to secure the loan.” U.S.S.G. § 2F1.1 cmt.

n.8(b)(2000), consolidated at U.S.S.G. § 2B1.1 cmt. n.2 (2001).

The same application notes also state that in some cases actual

loss “will tend not to reflect adequately the risk of loss

created by the defendant’s conduct.” Id. Here, as noted before,

Khan sought but was not approved for the third loan, whose face

value was $350,000. Not counting this amount as loss would have

the effect of understating the seriousness of Khan’s conduct.

Furthermore, the reason there was no actual loss on the third

-8- loan was that the Money Store had learned that Khan was suspected

of making other bad loans, not because that Khan had done some

salutary act. Cf. id. Finally, there being no findings

regarding the value of any collateral Khan might have pledged in

support of the third loan, we have no way of evaluating whether

Khan could not have intended to convert the full amount, as he

now argues. For these reasons, we discern no plain error in the

district court’s counting the full $350,000.

CONCLUSION

Khan’s convictions and sentence are AFFIRMED.

-9-