RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 2 United States v. McBride No. 02-3931 ELECTRONIC CITATION: 2004 FED App. 0093P (6th Cir.) File Name: 04a0093p.06 _________________ OPINION UNITED STATES COURT OF APPEALS _________________ FOR THE SIXTH CIRCUIT RONALD LEE GILMAN, Circuit Judge. James Thomas _________________ McBride was convicted of (1) presenting a false claim against the IRS, and (2) various obstruction of justice and bankruptcy UNITED STATES OF AMERICA , X fraud charges based upon certain financial transactions he Plaintiff-Appellee, - initiated that were related to a tax evasion case against his - girlfriend. He insisted on proceeding without the assistance - No. 02-3931 of counsel at his trial. The jury convicted him on all counts. v. - McBride seeks to overturn his conviction on the basis that his > waiver of counsel was ineffective and because the evidence , against him was allegedly insufficient. For the reasons set JAMES THOMAS MCBRIDE, - Defendant-Appellant. - forth below, we AFFIRM the district court’s determination that McBride effectively waived his right to counsel at all N stages of the proceedings and that there was sufficient Appeal from the United States District Court evidence to convict him on Counts 2-6, but REVERSE for the Southern District of Ohio at Columbus. McBride’s conviction on Count 1 because there was No. 02-00060—George C. Smith, District Judge. insufficient evidence to support the verdict on that charge. We also VACATE McBride’s sentence and REMAND for Argued: February 5, 2004 resentencing consistent with this opinion.
Decided and Filed: March 30, 2004 I. BACKGROUND
Before: NELSON, GILMAN, and ROGERS, Circuit A. Factual background Judges. Katina Kefalos was convicted by a jury, in proceedings _________________ before District Judge Algenon L. Marbley, of evading $12,990.67 in federal income taxes. Kefalos was McBride’s COUNSEL girlfriend. During the course of her trial, Kefalos fired the two attorneys—David Axelrod and Terry Sherman—who ARGUED: Robert J. Dunn, Bay City, Michigan, for were appointed to represent her. Prior to Kefalos’s Appellant. Daniel Allen Brown, ASSISTANT UNITED sentencing, McBride sent a check for the $12,990.67 to IRS STATES ATTORNEY, Columbus, Ohio, for Appellee. revenue agent Margaret Nypaver, who had unsuccessfully ON BRIEF: Robert J. Dunn, Bay City, Michigan, for attempted to collect this sum from Kefalos and who testified Appellant. Daniel Allen Brown, ASSISTANT UNITED against her at trial. McBride knew that his check would STATES ATTORNEY, Columbus, Ohio, for Appellee. “bounce” because it was drawn on an account that he had
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closed one year earlier. He then submitted bad checks from McBride responded that he had been a criminal defendant the same account to the Franklin County Treasurer’s Office before, that he had assisted other people in representing to purportedly pay the real estate taxes for the first half of themselves in several cases, and that he had participated in 2001 on the residences of Judge Marbley, attorneys Axelrod both federal and state criminal proceedings. The court then and Sherman, and agent Nypaver. went over each count of the indictment in detail and stressed the severity of the penalties involved, including the possibility The Treasurer’s Office, without waiting to see if the checks of consecutive sentences. With the following exchange, the would clear, issued statements to McBride acknowledging court closed this line of questioning: that he had paid these real estate taxes. McBride then used the statements as evidence of his creditor status when he THE COURT: So, you know just exactly how much subsequently filed four involuntary bankruptcy petitions in jeopardy that you are in, in this the United States Bankruptcy Court for the Southern District proceeding? You realize that if you of Ohio against Judge Marbley, attorneys Axelrod and represent yourself, you are on your own? Sherman, and agent Nypaver. He also paid the $200 filing fee Do you realize that, Mr. McBride? for each of the bankruptcy petitions with more bad checks that were drawn on his closed account. MCBRIDE: Yes, sir, I do.
B. Procedural background The court proceeded to ask McBride about his familiarity with the trial process, the Federal Rules of Evidence, and the McBride was indicted on the following six felony charges: Federal Rules of Criminal Procedure. McBride expressed presenting a false claim against the government in violation comfort with these procedural matters. He was then advised of 18 U.S.C. § 287, obstructing justice in violation of 18 that should he take the stand, he would have to ask questions U.S.C. § 1503, obstructing the due administration of the of himself and would not be permitted to testify in narrative internal revenue laws in violation of 26 U.S.C. § 7212(a), and form. Finally, the court issued the following warnings to three counts of bankruptcy fraud in violation of 18 U.S.C. McBride: § 157. THE COURT: In looking at the charges against you, Mr. In two appearances before the designated magistrate judge, McBride, and the complexity of this case, McBride was advised of his right to counsel, including his this is not an ordinary - - this isn’t some right to appointed counsel if he could not afford to retain an fender bender accident? attorney. At his arraignment, McBride elected to proceed pro se. David Graeff was appointed as standby counsel. MCBRIDE: Exactly, sir.
During a pretrial conference, the district court extensively ... questioned McBride about his decision to represent himself. McBride was first asked about his educational background THE COURT: At least in the opinion of the Court, you and then questioned to verify that he was not under the would receive a far better defense if you influence of prescription medication, narcotics, or alcohol. would proceed with a lawyer, rather than The court also inquired about McBride’s legal experience. being on your own. And I think it is No. 02-3931 United States v. McBride 5 6 United States v. McBride No. 02-3931
unwise for you to try and represent under the United States Sentencing Guidelines in accordance yourself. And while you are familiar with with Offense Level 26, Criminal History Category IV, within the law, you are not familiar to the depth a range of 92-115 months of imprisonment. It decided that that would be necessary to give yourself McBride should instead be sentenced under Offense Level 22, the best possible defense, considering the Criminal History Category IV. The court then sentenced complexity of what you are charged with. McBride to 78 months of imprisonment on Count 2; 60 months on Counts 1, 4, 5, and 6; and 36 months on Count 3, MCBRIDE: I understand. all to be served concurrently. THE COURT: And while you have been in a court II. ANALYSIS proceeding or maybe more than one, different things come up at different A. McBride knowingly and intelligently waived his right proceedings that you may never have seen to counsel or heard of before. . . . And you have at your elbow there someone who has had 1. Standard of review many years of experience in this and other courts and would be termed probably an McBride argues on appeal that he did not effectively waive expert on federal trial work. his right to counsel at trial or at sentencing. Both parties agree that the standard of review for such claims is de novo, Let me ask you this, Mr. McBride. Is your but neither party provides any citations to applicable Sixth decision entirely voluntary on your part? Circuit precedent directly on point. Our sister circuits uniformly apply a de novo standard of review to a district MCBRIDE: Yes, sir. court’s conclusion of law that a defendant has waived his right to counsel. See, e.g., United States v. Kimball, 291 F.3d The district court then concluded that McBride had 726, 730 (11th Cir. 2002); United States v. Turner, 287 F.3d knowingly and voluntarily waived his right to counsel, that he 980, 983 (10th Cir. 2002); Lopez v. Thompson, 202 F.3d was competent to do so, and that he had demonstrated an 1110, 1116 (9th Cir. 2000) (en banc). understanding of the proceedings and the charges he faced. Graeff was nonetheless requested by the court to continue in In this circuit, however, two trends have developed. We his role as standby counsel. have on occasion applied “plain error” review to examine the validity of a defendant’s waiver of counsel. See United States McBride represented himself throughout his trial with the v. Modena, 302 F.3d 626, 630-31 (6th Cir. 2002) (holding assistance of Graeff. The jury found him guilty on all counts. that the plain error standard applies where the defendant fails At sentencing, McBride raised no objections to the to object to continuing his self-representation); United States Presentence Report and used the hearing to state his view that v. Herrera-Martinez, 985 F.2d 298, 301 (6th Cir. 1993) the district court and the U.S. Attorney’s Office were engaged (holding that because no specific objection was made at trial in fraudulent “smoke and mirrors” accounting practices. The to the defendant’s proceeding pro se, the plain error standard district court sua sponte raised concerns about the probation applied). officer’s determination that McBride should be sentenced No. 02-3931 United States v. McBride 7 8 United States v. McBride No. 02-3931
Other panels have approached the waiver-of-counsel issue also Miller, 910 F.2d at 1324 (holding that literal adherence by omitting discussion of the standard of review and to the recommended battery of questions is not required). proceeding to engage in a thorough review of the colloquy After the questioning, the district court should make an between the district court judge and the defendant. See, e.g., express finding on the record that the accused has knowingly United States v. Colbert, No. 00-1481, 2002 WL 31873484, and voluntarily waived his right to counsel. McDowell, 814 at *3 (6th Cir. Feb. 12, 2002) (unpublished opinion) F.2d at 250. (reviewing the hearing transcript to determine whether the judge conducted the model inquiry); Noble v. Wilkinson, No. The model inquiry encompasses thirteen questions and one 92-4121, 1993 WL 436850, at *1 (6th Cir. Oct. 27, 1993) strongly worded admonishment. In the present case, the (unpublished opinion) (“When reviewing on direct appeal a district court asked McBride, verbatim, twelve of the thirteen claim of error regarding a waiver of counsel, we examine the questions, and delivered the requisite warning. The only substantive, detailed inquiry required of the district court question that was not specifically asked was the following: pursuant to United States v. McDowell”) (citation omitted); United States v. Miller, 910 F.2d 1321, 1324 & n.3 (6th Cir. Now, in light of the penalty that you might suffer if you 1990) (reproducing the colloquy and holding that it are found guilty and in light of all the difficulties of constituted an effective waiver). representing yourself, is it still your desire to represent yourself and to give up your right to be represented by a Because the result in this case would be the same under lawyer? either plain error or de novo review, we have no need to resolve the ambiguity created by the above cases. Instead, we Id. at 252. But the court substantially complied with the will proceed to examine the district court’s colloquy to essence of this inquiry when it reviewed the maximum determine whether McBride made an effective waiver of his penalty for each count that McBride faced, asked McBride right to counsel. whether he realized the jeopardy he was in, and informed him that he would be on his own if he chose to represent himself. 2. McBride’s waiver of counsel at trial The court also advised McBride that his case was complex and would be better handled by his standby counsel, who was Before a criminal defendant may represent himself at trial, an expert at federal trial work. he must knowingly and intelligently waive his right to counsel. Faretta v. California, 422 U.S. 806, 835 (1975) After the lengthy colloquy with McBride, the district court (“[H]e should be made aware of the dangers and asked McBride whether his decision to represent himself was disadvantages of self-representation, so that the record will “entirely voluntary” and, based upon McBride’s affirmative establish that he knows what he is doing and his choice is response, made the following finding: made with eyes open.”) (citation and quotation marks omitted). Whenever a district court in the Sixth Circuit is The Court finds that the defendant has knowingly and faced with an accused who wishes to represent himself, the voluntarily waived his right to counsel. The Court also court must ask the defendant a series of questions drawn finds the defendant is competent to waive his right, as he from, or substantially similar to, the model inquiry set forth has demonstrated an understanding of the proceedings in the Bench Book for United States District Judges. United and the factual allegations against him, and I will permit States v. McDowell, 814 F.2d 245, 250 (6th Cir. 1987); see you to represent yourself. No. 02-3931 United States v. McBride 9 10 United States v. McBride No. 02-3931
Because the district court substantially adhered to the model United States v. Fazzini, 871 F.2d 635, 643 (7th Cir. 1989) inquiry as prescribed by McDowell, we affirm the court’s (“Once the defendant has knowingly and intelligently waived conclusion that McBride knowingly and voluntarily waived his right to counsel, only a substantial change in his right to counsel at trial. circumstances will require the district court to inquire whether the defendant wishes to revoke his earlier waiver.”); Arnold 3. McBride’s waiver of counsel at sentencing v. United States, 414 F.2d 1056, 1059 (9th Cir. 1969) (holding that, after a competent waiver of the right to counsel, McBride next argues that the district court should have a new waiver need not be obtained at every subsequent court obtained a second, independent waiver of his right to counsel appearance of the defendant); Davis v. United States, 226 at the sentencing phase. The “plain error” standard of review F.2d 834, 840 (8th Cir. 1955) (same). is appropriate for this contention because, at the start of the sentencing proceeding, McBride could have objected to This court has held, in a somewhat analogous situation, that continuing his self-representation. He in fact failed to do so. where a magistrate judge has engaged in the McDowell See United States v. Modena, 302 F.3d at 630-31. “Plain colloquy with the defendant and found an effective waiver, error is defined as an egregious error, one that directly leads the district judge is under no obligation to repeat the inquiry to a miscarriage of justice, or error that is obvious, affects at trial in the absence of any indication from the defendant substantial rights, and seriously impairs the fairness or that he has had a change of heart. Modena, 302 F.3d at 631. integrity of the judicial proceedings.” United States v. Both Modena and Napier lead us to adopt the rule set forth Camejo, 333 F.3d 669, 672 (6th Cir. 2003) (citation and above by our sister circuits that a defendant’s waiver of quotation marks omitted). counsel at trial carries over to subsequent proceedings absent a substantial change in circumstances. Because we find the In an unpublished opinion, this court has held that “[t]he rule to be a sound one, we adopt it as part of this circuit’s elaborate waiver procedure outlined in McDowell does not jurisprudence. apply to waiver of counsel during sentencing. The dangers of self-representation at trial are simply not present at McBride’s behavior at the sentencing hearing also sheds sentencing.” United States v. Napier, Nos. 88-164, 88-1693, light on the continuing validity of his waiver of counsel. See 88-1763, 88-1765, and 88-1766, 1989 WL 100865, at *5 (6th United States v. Gangler, No. 95-2406, 1997 WL 618783, at Cir. Sept. 1, 1989). We need not decide whether this is a *2 (6th Cir. Oct. 6, 1997) (unpublished opinion) (holding that correct holding in the present case. The issue here is the “waiver can be inferred from a defendant’s actions”) (citation narrower one of whether a defendant’s waiver of counsel at omitted). At sentencing, the district court first asked trial carries over to the sentencing phase. Other circuits have McBride’s standby counsel if he believed that McBride held that a valid waiver remains in effect at subsequent understood the Presentence Report. After receiving an proceedings in the absence of an explicit revocation by the affirmative response, the court asked for any objections to the defendant or a change of circumstances that would suggest report, resulting in the following exchange: that the district court should make a renewed inquiry of the defendant. See, e.g., United States v. Unger, 915 F.2d 759, THE COURT: Mr. McBride, do you wish to have 762 (1st Cir. 1990) (holding that the district court was free to [standby counsel] say anything on your find that the defendant’s earlier waiver was still in force at the behalf? sentencing hearing in the absence of intervening events); No. 02-3931 United States v. McBride 11 12 United States v. McBride No. 02-3931
MCBRIDE: May I speak on my own behalf? In the present case, the district court explicitly told McBride that it would be unable to assist him in the conduct THE COURT: You may speak on your own behalf, but of the trial: please answer the question I asked you. I just asked you, do you wish to have THE COURT: I cannot tell you how to try your case. I [standby counsel] speak? can keep everyone, including the prosecutor under a certain amount of MCBRIDE: I only wish to speak on my own behalf. control, but I can’t tell you what to do or when to do it. THE COURT: Okay. So, the answer is no? You may speak on your own behalf. MCBRIDE: Right. McBride’s conduct at sentencing demonstrates that he did THE COURT: And I can’t question witnesses for you or not wish to revoke his previous waiver of counsel. He cross-examine them or give you a word of refused to let his standby counsel speak on his behalf to voice advice. The Court desires to be and is, any objections to the Presentence Report. Because nothing neutral in this and in every other case. occurred between trial and sentencing that would have prompted the district court to make a more thorough inquiry MCBRIDE: I understand. of McBride’s wish to continue to represent himself, we reject McBride’s claim that his waiver of counsel at trial was not in THE COURT: I will not provide you with personal force at the sentencing hearing. instruction on courtroom procedure or perform any legal duties that counsel B. The district court had no duty to assist McBride in would normally carry out. the conduct of his own defense The court then inquired whether McBride was familiar with McBride also argues that the district court should have both the Federal Rules of Evidence and the Federal Rules of informed him that he had a right to bring a Rule 29 motion for Criminal Procedure, to which McBride answered in the a judgment of acquittal either at the close of the government’s affirmative. Under these circumstances, we find McBride’s evidence or after the close of all the evidence. Fed. R. Crim. contention that the district court had a duty to suggest that he Proc. 29. The Supreme Court, however, has made clear that make a Rule 29 motion to be without merit. “[a] defendant does not have a constitutional right to receive personal instruction from the trial judge on courtroom C. Sufficient evidence supports McBride’s conviction on procedure.” McKaskle v. Wiggins, 465 U.S. 168, 183 (1984). Counts 2-5, but not on Count 1 “Nor does the Constitution require judges to take over chores for a pro se defendant that would normally be attended to by McBride next argues that the evidence was insufficient to trained counsel as a matter of course.” Id. sustain the jury’s guilty verdict on the five counts that he contests. In order to appeal a jury’s verdict on the basis of insufficient evidence, the defendant must have moved for acquittal in the district court pursuant to Rule 29. United States v. Charles, 138 F.3d 257, 265 (6th Cir. 1998). No. 02-3931 United States v. McBride 13 14 United States v. McBride No. 02-3931
McBride made no such motion. Because of this failure, the 845 F.2d 1374 (6th Cir. 1988). In both of these situations the evidence against McBride is reviewed under a “manifest defendant is using fraudulent means to secure an unjustified miscarriage of justice” standard and “we only reverse a monetary payment from the government. McBride, on the conviction if the record is devoid of evidence pointing to other hand, convincingly argues that he cannot fall within the guilt.” United States v. Carnes, 309 F.3d 950, 956 (6th Cir. ambit of this statutory provision because, by sending the IRS 2002) (citation and quotation marks omitted). a bad check for Kefalos’s outstanding tax obligation, he could not possibly have obtained any money, property, credit, or In McBride’s brief, he appears at first glance to question the reimbursement from the government in return. sufficiency of the evidence only for Counts 3-5. But embedded in his discussion of his waiver of the right to The government devotes only three sentences to McBride’s counsel is a challenge to the sufficiency of the evidence for contention in its brief. Its position is essentially that “the his conviction on Counts 1 and 2 as well. McBride concedes presentation of the claim, in this case the bad check, with the that there was sufficient evidence to convict him on Count 6. knowledge that it is false, . . . comprises the offense.” But no We will therefore address below the sufficiency of the authority was cited to support its contention, and we have evidence for Counts 1-5 solely to determine if the record is so found none. One of the citations that the government did devoid of evidence pointing to guilt as to constitute a provide on this issue actually confirms the plain-meaning miscarriage of justice. Carnes, 309 F.3d at 956. understanding of § 287, which does not cover McBride’s conduct. See United States v. Miller, 545 F.2d 1204, 1212 1. Count 1: false claim against the government n.10 (9th Cir. 1976) (observing that the filing of a false tax return pursuant to a scheme to obtain an unjustified tax refund The jury found McBride guilty of presenting a false claim constitutes a false claim under § 287) (citation omitted). against the government, in violation of 18 U.S.C. § 287, because he sent a governmental agency, the IRS, a bad check Another case relied upon by the government is United to cover the outstanding tax liability of Kefalos. Section 287 States v. Jackson, 845 F.2d 880 (9th Cir. 1988), cited for the provides in pertinent part as follows: proposition that § 287 covers situations where the defendant seeks a “reduction in liability from the government.” Id. at Whoever makes or presents to any . . . department or 882. The facts in Jackson, however, do not support the agency . . . any claim upon or against the United States, government’s position in the case before us. In Jackson, the or any department or agency thereof, knowing such claim defendant received and cashed nine educational benefits to be false, fictitious, or fraudulent, shall be imprisoned checks from the Veterans Administration (VA) for which he not more than five years and shall be subject to a fine was later found ineligible. Id. at 881. With the knowledge .... that he was both ineligible for the benefits and that he had already deposited the checks, Jackson submitted a claim form The word “claim” is not defined in the statute. Typical § 287 to the VA stating he had never received the checks and cases in this circuit have involved the filing of a false tax requesting that they be reissued to him. Id. return seeking an unjustified tax refund, see, e.g., United States v. Nash, 175 F.3d 429 (6th Cir. 1999), or the filing of In analyzing the meaning of a false “claim,” the Jackson a fraudulent claim for Medicare reimbursement for services court stated that the “focus must be on the substance of the that were never rendered, see, e.g., United States v. Campbell, transaction, the disbursement of government funds, and not on No. 02-3931 United States v. McBride 15 16 United States v. McBride No. 02-3931
the timing or form of the entry in the government’s 301 F.3d 1000, 1002-3 (9th Cir. 2002) (describing accounting ledgers.” Id. at 882 (emphasis added). The court Schweitzer’s seminars on the use of fraudulent financial held that Jackson’s conduct fell within the ambit of § 287 instruments with which to “satisfy” outstanding tax liability because, by denying that he had received the first set of and seek unjustified refunds from the IRS); United States v. checks, Jackson sought to avoid reimbursing the government. Wells, 163 F.3d 889, 893 (4th Cir. 1998) (same). In the Id.; see also United States v. Duncan, 816 F.2d 153, 155 (4th absence of additional information, we will assume for the Cir. 1987) (holding that submitting a false travel voucher to purposes of analyzing Morgan that the false lien drafts were obtain credit for previously advanced government funds the equivalent of a bad check. constitutes a false claim because the government is at risk of suffering a monetary loss). The key factor that distinguishes Morgan from McBride’s case is that the defendant in Morgan sought an unjustified Jackson is easily distinguishable from the present case. payment from the government—a tax refund. McBride, on The defendant in Jackson did two things that involved the the other hand, did not attempt to elicit a payment from the disbursement of government funds. He first sought to reduce IRS when he sent it a bad check; he was at most, according to his liability to the government in the sense that he attempted his brief, trying to harass the IRS and its agent. to avoid refunding to the government the VA payments that he had received but to which he was not entitled. Second, he The Morgan court considered the defendant’s false lien made a false claim upon the government by requesting that draft as a “claim” because “the government would suffer a these checks be reissued to him. Nothing McBride did, on the monetary loss if she were successful.” 3 Fed. Appx. at 635. other hand, involved the disbursement of government funds. Morgan’s concern with the potential loss to the government He neither received any undue payments from the indicates that the real focus of the court was on the unjustified government nor tried to induce the government to send him refund sought by the defendant, because the government’s duplicate payments. McBride simply sent the IRS a bad financial position does not change when a proposed payment check in purported payment of his girlfriend’s tax liability. for taxes owed is returned for insufficient funds; the tax liability remains outstanding both before and after the bad The closest case that we have found to the one before us is check or false lien draft is tendered. United States v. Morgan, 3 Fed. Appx. 633, 2001 WL 123838 (9th Cir. Feb. 12, 2001) (unpublished opinion). In Morgan, The unpublished Morgan opinion has little independent the Ninth Circuit affirmed the defendant’s conviction under reasoning, relying on Jackson for the proposition that a § 287 where she “sought both to pay her tax liability and to “‘claim’ includes seeking a reduction in liability to the obtain a refund based on lien drafts that she knew to be government.” Id. This phrase—“seeking a reduction in false. . . .” Id. at 635. We surmise, based on the only other liability to the government”—is taken out of context. As we federal case to use the term “lien draft,” United States v. have already pointed out, the defendant in Jackson had Rudd, No. 98-30218, 1999 WL 98618 (9th Cir. Feb. 17, 1999) received prior VA payments from the government for which (unpublished opinion), which also originates from the United he was ineligible and for which he was seeking replacement States District Court in Idaho, that these documents were checks. There is a significant difference between filing a fictitious comptroller warrants distributed by Leroy form to deceive the government about funds that have been Schweitzer, a ringleader of the Freemen of Montana who advanced and to which one is not entitled, as occurred in assisted others in tax evasion. See United States v. Finley, Jackson, and simply sending a bad check to purportedly No. 02-3931 United States v. McBride 17 18 United States v. McBride No. 02-3931
“cover” a person’s tax liability. Similarly, there is a big unjustified refunds); United States v. Hebeka, 25 F.3d 287, difference between McBride’s conduct, which had no 289, 292 (6th Cir. 1994) (affirming a § 287 conviction for potential for causing any payment to emanate from the making an unjustified request to the government for government, and the Morgan lien drafts whose very purpose redemption of $7.2 million worth of food stamps); Campbell, was to obtain an unjustified tax refund. Because the 845 F.2d at 1381-83 (affirming a § 287 conviction for billing reasoning of Morgan is unpersuasive and not even a the government’s Medicare program for unperformed medical permissible citation in its own circuit, see U.S. Ct. of App. services). Because “any ambiguity in criminal statutes [is] 9th Cir. Rule 36-3, we decline to apply it to the present case. resolved against the government and in favor of the criminal defendant,” United States v. Jolivette, 257 F.3d 581, 584 (6th Our decision on this issue would have been greatly Cir. 2001), we are loath to adopt a meaning of “false claim” simplified if § 287 had defined the word “claim,” but it does that is contrary to both the plain meaning of the term and our not. “When the text of a statute contains an undefined term, circuit’s precedent. that term receives its ordinary and natural meaning.” The Limited, Inc. v. Comm’r of Internal Revenue, 286 F.3d 324, After scouring the federal case law, we can find no case 332 (6th Cir. 2002). The leading law dictionary defines a holding that the sending of an insufficient-funds check to the “claim” as a “[d]emand for money or property as of right.” IRS constitutes a false claim under § 287. We decline, for all BLACK’S LAW DICTIONARY 247 (6th ed. 1990). Even more the reasons set forth above, to be the first court to do so. on point, the False Claims Act, 31 U.S.C. §§ 3729-3733, the Because McBride never received any advance payments from civil counterpart to § 287, defines a “claim” as the government to which he was not entitled, nor could his action of sending the IRS a bad check have possibly elicited any request or demand, whether under a contract or any payment from the government, he cannot, as a matter of otherwise, for money or property which is made to a law, be found liable under § 287. We therefore reverse contractor, grantee, or other recipient if the United States McBride’s conviction on Count 1. Government provides any portion of the money or property which is requested or demanded, or if the 2. Count 2: impeding the administration of justice Government will reimburse such contractor, grantee, or other recipient for any portion of the money or property The jury convicted McBride of corruptly endeavoring to which is requested or demanded. influence, intimidate, or impede the administration of justice, in violation of 18 U.S.C. § 1503. To sustain a conviction 31 U.S.C. § 3729(c) (emphasis added). under this section, the government must prove that McBride acted with the intent to influence, in the sense of interfering Both definitions reaffirm the prevailing understanding in with, judicial proceedings. United States v. Atkin, 107 F.3d this circuit that a “false claim” for the purposes of § 287 is an 1213, 1218 (6th Cir. 1997). A defendant must “undertake unjustified demand for money or property from the action from which an obstruction of justice was a reasonably government. See United States v. Logan, 250 F.3d 350, 357- foreseeable result,” but he need not be successful in his 59 (6th Cir. 2001) (affirming a §287 conviction for filing endeavor. Id. (quotation marks omitted). forms to induce the government to pay on false HUD/FHA loan insurance claims); Nash, 175 F.3d at 436-37 (affirming In United States v. Fleming, 215 F.3d 930, 933-38 (9th Cir. a § 287 conviction for filing fictitious tax returns to obtain 2000), the Ninth Circuit affirmed the conviction of a No. 02-3931 United States v. McBride 19 20 United States v. McBride No. 02-3931
defendant who attempted to file a $10 million dollar lien on 410 (8th Cir. 1992) (holding that the filing of a false federal real property owned by the judge who had dismissed the tort claim against an IRS agent was sufficient evidence to defendant’s civil case. Although the lien was never filed, the allow a jury to conclude that the defendant intended to defendant’s conduct was considered an attempt to influence impede the administration of the internal revenue laws under or intimidate the judge, in violation of § 1503. Similar 26 U.S.C. § 7212(a)); United States v. Reeves, 752 F.2d 995, circumstances are presented here. McBride filed a fraudulent 1001-02 (5th Cir. 1985) (holding that the defendant’s filing of involuntary bankruptcy petition against Judge Marbley, the frivolous common law liens against an IRS agent constituted district judge presiding over Kefalos’s trial, in the period a prohibited corrupt endeavor under 26 U.S.C. § 7212(a)). between her conviction and sentencing. He admitted at his We see no miscarriage of justice in affirming the jury’s trial that he filed the petition in response to what he perceived verdict on Count 3. as “injustices” in the Kefalos trial. A reasonable jury could find that McBride acted with the intent to intimidate Judge 4. Counts 4 and 5: bankruptcy fraud Marbley as the latter prepared to sentence Kefalos, even though McBride was unlikely to be successful. We see no The jury convicted McBride of devising or intending to miscarriage of justice in affirming McBride’s conviction on devise a scheme to defraud Kefalos’s two defense attorneys, Count 2. Axelrod and Sherman, in violation of 18 U.S.C. § 157. Section 157 “contains three elements: 1) the existence of a 3. Count 3: impeding the administration of the IRS scheme to defraud or intent to later formulate a scheme to defraud and 2) the filing of a bankruptcy petition 3) for the McBride was convicted of corruptly endeavoring to purpose of executing or attempting to execute the scheme.” obstruct or impede the administration of the internal revenue United States v. DeSantis, 237 F.3d 607, 613 (6th Cir. 2001). laws, in violation of 26 U.S.C. § 7212(a). “[T]o act corruptly Filing the petition “itself is the forbidden act. . . . Success of means to act with the intent to secure an unlawful benefit the scheme is not an element of the crime.” Id. either for oneself or another.” United States v. Winchell, 129 F.3d 1093, 1098 (10th Cir. 1997) (collecting cases). The McBride does not dispute that he filed false involuntary defendant must also be acting in response to “some pending bankruptcy petitions against Axelrod and Sherman. Attached IRS action of which [he is] aware.” United States v. Kassouf, to the petitions were official acknowledgments from the 144 F.3d 952, 957 (6th Cir. 1998). Franklin County Treasurer’s Office showing that McBride had purportedly paid the real estate taxes on Axelrod’s and McBride filed a fraudulent petition to place Nypaver, the Sherman’s residences for the first half of 2001, thus making IRS revenue agent assigned to Kefalos’s case, into McBride one of their creditors. A reasonable jury could find involuntary bankruptcy. Although Kefalos had already been that McBride’s actions evidenced an intent to defraud them of convicted of tax evasion when McBride filed the petition, the their property. “The statute makes the crime complete upon IRS still had a pending claim against Kefalos of which the filing of the bankruptcy petition” as long as the scheme or McBride was aware. A reasonable jury could find that intent to formulate the scheme exists. Id. (emphasis in McBride’s filing of a false petition against Nypaver was original). Under the circumstances of this case, we see no intended to intimidate Nypaver or otherwise interfere with the miscarriage of justice in affirming McBride’s conviction on revenue agent’s efforts to collect the unpaid taxes from Counts 4 and 5. Kefalos. See, e.g., United States v. Rosnow, 977 F.2d 399, No. 02-3931 United States v. McBride 21 22 United States v. McBride No. 02-3931
D. McBride’s sentence attorneys Sherman and Axelrod, and agent Nypaver ($1,125,970). The market value of these individuals’ Embedded in McBride’s claim that he did not waive his residences was included because had McBride been right to counsel at sentencing is a separate complaint about successful in forcing his victims into involuntary bankruptcy, the district court’s calculation of loss to the victims. But he could have obtained a creditor’s interest in their property. McBride made no objection to the Presentence Report’s Even though McBride would never have succeeded in calculation of loss at his sentencing hearing. “[A]bsent plain obtaining possession of his victims’ residences, the district error, this Court will not address claims of alleged court nonetheless felt obliged to use the residences’ value misapplication of the [sentencing] guidelines unless the because intended loss is defined as including “harm that defendant first raised the claim before the district court.” would have been impossible or unlikely to occur.” The U.S. United States v. Thomas, 24 F.3d 829, 832 (6th Cir. 1994). Sentencing Guidelines provide that where the cumulative loss exceeds $1 million, the court should increase the base offense U.S. Sentencing Guidelines § 2B1.1, which addresses level of 6 by 16 levels. offenses involving fraud and deceit, establishes the sentencing range for Counts 1, 4, 5, and 6. By operation of the rules for Because it was highly improbable that McBride intended, aggregating multiple counts, the offense level for the latter or would have been able, to obtain ownership of these counts also determines the sentencing range for Counts 2 and residences, the district court was troubled by the inclusion of 3. U.S. Sentencing Guidelines Manual ch. 3, pt. D (2003). A the full value of each victim’s home in the loss calculation. decision to vacate McBride’s sentence for Counts 1, 4, 5, and But the district court concluded that Amendment 617 to the 6 would therefore require remand and resentencing on all of U.S. Sentencing Guidelines, which clarified that “intended the counts. loss” included unlikely or impossible losses, effectively overruled the Sixth Circuit’s practice of vacating sentences Determination of the offense level under § 2B1.1 depends where “the total intended loss bore no relation to ‘economic on the amount of loss caused or intended by the defendant. reality,’ . . . because . . . the plan had no chance of success.” The Application Note to this section provides as follows: United States v. Fleming, 128 F.3d 285, 288 (6th Cir. 1997) (collecting cases); see also United States v. Watkins, 994 F.2d “Intended loss” (I) means the pecuniary harm that was 1192, 1196 (6th Cir. 1993) (holding that a defendant “may not intended to result from the offense; and (II) includes be sentenced on the basis of harm that he or she was intended pecuniary harm that would have been incapable of inflicting”). impossible or unlikely to occur (e.g., as in a government sting operation, or an insurance fraud in which the claim The district court nonetheless decided that there were many exceeded the insured value). variables that can affect a residence’s market value and, “out of an abundance of caution,” sua sponte reduced the U.S. Sentencing Guidelines Manual § 2B1.1, cmt. n. 3 (2003). probation officer’s loss figure by 15 percent. This reduced In the Presentence Report, the probation officer estimated the the total loss that McBride intended to inflict to $970,865.17. total intended loss at $1,139,760.67, which represented the McBride’s base offense level was thus increased by 14, rather sum of the bad checks written by McBride to the IRS than 16, levels. ($12,990.67) and to the bankruptcy court ($800), plus the total market value of the residences of Judge Marbley, No. 02-3931 United States v. McBride 23 24 United States v. McBride No. 02-3931
On appeal, McBride argues for the first time that the district warranted.” The Sentencing Commission has provided no court misapplied § 2B1.1. He contends that he did not further guidance regarding the application of this downward actually intend to acquire his victims’ homes, but rather only departure. We agree, however, with the observation by one intended to harass the individuals. McBride correctly notes district court that “[b]ecause the loss determination essentially that pecuniary harm does not include emotional distress. U.S. dictates the severity of the sentence, it is this determination Sentencing Guidelines Manual § 2B1.1., cmt. n.3. He that will almost always be the subject of departure scrutiny.” therefore contends that the intended loss was at most only United States v. Roen, 279 F. Supp. 2d 986, 990 (E.D. Wisc. $800, which is the sum of the four filing fees paid with bad 2003). checks to the bankruptcy court. The Roen court described four scenarios in which a loss The district court properly recognized that Amendment 617 determination may significantly overstate the severity of the resolved a circuit split regarding the meaning of “intended offense. Id. at 990-91 Only one concerns us here. Where loss” by clarifying that the definition reached “unlikely or sentencing is based largely or solely on intended loss, a impossible losses . . . because their inclusion better reflects downward departure may be warranted under the “economic the culpability of the offender.” U.S. Sentencing Guidelines reality” principle. Id. at 991; see also United States v. Manual app. C. at 181 (2003). We have previously Stockheimer, 157 F.3d 1082, 1089 (7th Cir. 1998) (same). acknowledged that “the amendments abandon this circuit’s The underlying theory behind this principle is that “where a interpretation of intended loss . . . .” United States v. defendant devises an ambitious scheme obviously doomed to Anderson, 353 F.3d 490, 505 n.13 (6th Cir. 2003). On the fail and which causes little or no actual loss, it may be unfair other hand, there is surely some point at which a perpetrator’s to sentence based on the intended (but highly improbable) misperception of the facts may become so irrational that the loss determination from the [§ 2B1.1] table.” United States words “intended loss” can no longer reasonably apply. For v. Forchette, 220 F. Supp. 2d 914, 924-25 (E.D. Wisc. 2002). instance, if someone vandalized a federal building by spray painting an incantation that all government gold shall A court should therefore consider “whether there was any disappear, the “intended loss” would presumably not be the reasonable possibility that the scheme could have caused the value of all the gold in Fort Knox, even if the vandal loss the defendant intended.” Roen, 279 F. Supp. 2d at 991. genuinely believed that all the gold would disappear. This is so because the Sentencing Commission is using intended loss as a proxy for the defendant’s degree of McBride’s actions in the case before us, however, do not culpability. U.S. Sentencing Guidelines § 2B1.1 cmt. rise to that level of irrationality. The probation officer’s background (stating that “loss serves as a measure of . . . the calculation of intended loss thus appropriately included the defendant’s relative culpability”). The Roen court total market value of the residences of McBride’s victims, persuasively pointed out that despite the fact that McBride could never have caused them to lose their homes. But that is not the end of the matter. [t]hose who devise ridiculous schemes (1) do not ordinarily have the same mental state and (2) do not Application Note 18(C) to § 2B1.1 provides: “There may create the same risk of harm as those who devise cunning be cases in which the offense level determined under this schemes. In short, they are not as dangerous. Thus, it is guideline substantially overstates the seriousness of the entirely proper to mitigate their sentences by a departure. offense. In such cases, a downward departure may be No. 02-3931 United States v. McBride 25 26 United States v. McBride No. 02-3931
Roen, 279 F. Supp. 2d at 991. $80 million and the actual loss was only $200,000, a downward departure was warranted). In Roen, the defendant had a life insurance policy valued at approximately $9,700. He induced the insurance company to The quixotic nature of McBride’s activities had far less issue him loans against the policy, which he “repaid” by chance of success than the defendant’s scheme in Roen. writing checks drawn on a closed account. Defendant’s Conceivably, in Roen, a vendor could have provided the scheme cost the insurance company approximately $19,000. defendant with goods or services before realizing that the Id. at 986. But the defendant wrote other bad checks, to the check was drawn on a closed account, thereby triggering tune of $1.2 million, for various high-priced items. None of actual losses. In McBride’s case, it defies common sense to the recipients of the checks provided defendant with any believe that McBride would have succeeded in forcing Judge goods or services. Id. at 987. According to the Presentence Marbley, attorneys Axelrod and Sherman, and agent Nypaver Report, the total loss was approximately $1.26 million—the into involuntary bankruptcy and thereby obtained possession sum of the actual loss to the insurance company and the of their residences. intended loss based on the other bad checks. Id. For losses over $1 million, § 2B1.1 dictates a 16-level enhancement to The disparity between the presumed actual loss of $800 (as the base offense level of 6. Roen’s total offense level was measured by the bad checks actually deposited by the thus placed at 22 in the Presentence Report. Id. at 987. bankruptcy court in payment of filing fees) and the intended loss of $1,139,760.67 is also far greater in McBride’s case—a Because Roen’s scheme was not so improbable as to defeat ratio of 1:1425— than the disparity in Roen (1:67) and a finding of intent, the court in Roen accepted Offense Level Stockheimer (1:400). We conclude that the impossibility that 22 as the starting point for sentencing. Id. at 989. But the McBride’s scheme would succeed and the gross disparity court determined that a downward departure was necessary between the actual loss and the intended loss demonstrate that because there was no reasonable possibility that Roen’s there is a significant risk that “the offense level determined scheme could have caused over a million dollars in losses. Id. under this guideline substantially overstates the seriousness at 992. of the offense. . . [and] a downward departure may be warranted.” U.S. Sentencing Guidelines Manual § 2B1.1, The Roen court also discussed a second measure of the cmt. 18(C); see also United States v. Coffman, 94 F.3d 330, economic reality of the intended harm: “the variance between 336-337 (7th Cir. 1996) (applying the economic reality the intended loss and the realistic possibility of such a loss.” principle in considering a downward departure under §2B1.1). Id. at 991 (citing Stockheimer,157 F.3d at 1091). “Of course, the best evidence of a scheme’s probable success is its actual Despite our conclusion on the merits of this issue, we success.” Roen, 279 F. Supp. 2d at 991. In Roen, the court recognize the general rule that “a court’s failure to . . . grant held that “the discrepancy between the actual a downward departure is not reviewable.” United States v. loss—$19,000—and the intended loss—over $1.2 million— Coleman, 188 F.3d 354, 357 (6th Cir. 1999) (en banc). We was extreme.” Id. at 992. Because of this disparity, the court will review a failure to depart, however, “if the district court concluded that a downward departure was warranted. Id.; see judge incorrectly believed that he lacked any authority to also Stockheimer, 157 F.3d at 1090-92 (holding that where it consider defendant’s mitigating circumstances as well as the was highly unlikely that the intended loss would have reached discretion to deviate from the guidelines.” Id. (citation omitted). In such circumstances, we will vacate the No. 02-3931 United States v. McBride 27 28 United States v. McBride No. 02-3931
defendant’s sentence and remand for reconsideration. United prohibited under the Sentencing Guidelines. The implication States v. Truman, 304 F.3d 586, 589 (6th Cir. 2002). is that the court was unaware that it could apply the economic reality principle in considering a downward departure. To determine whether the district judge believed that there was no authority to depart, we review the sentencing hearing There is additional evidence to suggest that the district transcript. United States v. Ebolum, 72 F.3d 35, 37 (6th Cir. court wanted to depart but did not recognize that it could do 1995). Omission from the Presentence Report of any so. First, the court found another way to decrease McBride’s discussion concerning an applicable downward departure may offense level when it reduced the intended loss figure by 15 also suggest that the court was not aware of its ability to percent because “too many variables exist in determining the depart. United States v. Hall, 71 F.3d 569, 573 (6th Cir. fair market value of the victims’ homes to use the probation 1995) (holding that the failure of the Presentence Report and officer’s calculations.” The court thus did depart, albeit in a the district court to consider the applicability of a particular nontraditional manner. Second, the Presentence Report downward-departure provision, given defendant’s contains no discussion of the circumstances in McBride’s circumstances, indicated that the court was not aware of its case that might have warranted a downward departure. The discretion to depart). probation officer in fact recommended enhancing McBride’s offense level for misrepresentation during a bankruptcy We typically invoke the above standards when a defendant proceeding and obstruction of justice. Both of these has made a motion for a downward departure that was recommendations were rejected by the district court. rejected by the district court. Here, McBride neither objected to the Presentence Report nor made a motion for a downward The sentencing proceedings strongly suggest that the departure. The court’s failure to consider sua sponte a district court was disposed to depart downward from the downward departure must therefore rise to the level of plain initial offense level but, because it erroneously believed that error before we will consider granting any relief to McBride. the economic reality principle was completely discredited, it did not invoke the principle in considering a downward An examination of the sentencing transcript indicates that departure. We are mindful, however, that we are reviewing the district court was predisposed to reducing McBride’s McBride’s sentence under the plain error standard because he offense level. The court “question[ed] the appropriateness of failed to object to the Presentence Report and failed to make including the value of each victim’s home in the loss a motion for a downward departure. calculation,” recognizing that it did not fit with longstanding Sixth Circuit practice to “limit[] intended loss to harms the Both the D.C. and Seventh Circuits have held that plain defendant was actually capable of inflicting.” But the court error may be shown where a defendant fails to make the assented to the use of the value of the victims’ homes because appropriate objections or motions and the record indicates Sentencing Guidelines “Amendment [617] resolved . . . the that the district court erroneously believed that it lacked the application of the economic reality test, and in effect, authority to depart on a particular ground. See United States prohibited the use of this doctrine under the Sentencing v. Draffin, 286 F.3d 606, 610 (D.C. Cir. 2002) (concluding Guidelines.” (Emphasis added.) Although Amendment 617 that plain error may lie, notwithstanding defendant’s silence, did bar the court from applying the economic reality principle where the sentencing court makes plain that it is choosing not when calculating “intended loss,” there is no basis for the to depart on a particular ground because of the mistaken district court’s conclusion that the test was categorically belief that it lacks the authority to do so); United States v. No. 02-3931 United States v. McBride 29 30 United States v. McBride No. 02-3931
Stockheimer, 157 F.3d 1082, 1091 (7th Cir. 1998) (holding the apparently unprecedented magnitude of the that even where defendants fail to make a motion for a discrepancy between the actual and intended loss, we downward departure, plain error may be shown where “the conclude that the error seriously affected the fairness of district court has both a substantive basis and an inclination [McBride’s] sentencing proceedings. to consider a downward departure”). Id. at 1092. We therefore vacate McBride’s sentence and Stockheimer is of particular relevance because, like remand to the district court for resentencing. McBride, the defendants in that case were sentenced under § 2B1.1 and the estimated intended loss significantly As a final caveat, we note that even though our opinion overstated the seriousness of the actual fraud committed. 153 “reflect[s] a strong conviction that on the basis of the record, F.3d at 1089-90. Because the defendants failed to make a consideration of a downward departure is appropriate, the motion for a downward departure, the Seventh Circuit applied actual decision is entirely in the hands of the district court.” plain error review to this issue. Id. at 1091. Id. The district court has already reduced McBride’s offense level by somewhat arbitrarily deflating the intended loss Reviewing the sentencing hearing transcript, the figure. Our point is that this adjustment—and any other Stockheimer court concluded that the district court appropriate adjustment—should be made through the erroneously decided that circuit precedent barring downward departure mechanism. consideration of economic reality when calculating intended loss also barred the principle from being taken into account in III. CONCLUSION considering a downward departure. Id. at 1090. This was held to be an error of law. The Seventh Circuit reaffirmed For all of the reasons set forth above, we AFFIRM that “the place for mitigation on the basis of a large McBride’s conviction on Counts 2-6, REVERSE his discrepancy between intended and probable loss is, under the conviction on Count 1, VACATE his sentence, and guidelines, in the decision whether to depart downward, REMAND for resentencing consistent with this opinion. rather than in the calculation of the intended loss.” Id. at 1091 (citation omitted). We agree with our sister circuit that this court should “not blithely recognize plain error in a sentencing court’s decision not to depart downward.” Id. But, as in Stockheimer, the district court below erred in believing that it could not apply the economic reality principle at all, when in fact it remains a valid basis for a downward departure. We therefore adopt the Seventh Circuit’s conclusion that the plain error standard is met here because the record suggests that the district court had a legal basis and some predilection to depart downward, [so] the error affected [McBride’s] substantial rights. . . . [B]ecause of