United States v. Nelson

• Court: Court of Appeals for the Sixth Circuit
• Decided: January 28, 2004
• Docket: 02-2022
• Status: Published

Opinion

5RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 2 United States v. Nelson No. 02-2022 ELECTRONIC CITATION: 2004 FED App. 0034P (6th Cir.) File Name: 04a0034p.06 _________________ COUNSEL UNITED STATES COURT OF APPEALS ARGUED: Paul D. Muller, Farmington, Michigan, for FOR THE SIXTH CIRCUIT Appellant. Kathleen Moro Nesi, ASSISTANT UNITED _________________ STATES ATTORNEY, Detroit, Michigan, for Appellee. ON BRIEF: Paul D. Muller, Farmington, Michigan, for UNITED STATES OF AMERICA , X Appellant. Kathleen Moro Nesi, ASSISTANT UNITED Plaintiff-Appellee, - STATES ATTORNEY, Detroit, Michigan, for Appellee. - - No. 02-2022 _________________ v. - > OPINION , _________________ WALTER NELSON , - Defendant-Appellant. - BOYCE F. MARTIN, JR., Circuit Judge. This case was - presented as part of a consolidated appeal with United States - v. Sims, No. 02-1734, which will be discussed in a separate N opinion. In this case, Walter Nelson appeals his sentence Appeal from the United States District Court following his guilty plea conviction for identity theft and for the Eastern District of Michigan at Detroit. bank and mail fraud. For the following reasons, we affirm the No. 01-80583—Lawrence P. Zatkoff, Chief District Judge. district court’s sentencing decision in part and vacate in part.

Argued: October 21, 2003 I. On August 8, 2001, Walter Nelson was named in a thirty- Decided and Filed: January 28, 2004 two count indictment for various offenses including conspiracy to commit federal crimes, identity theft, bank and Before: MARTIN and SUTTON, Circuit Judges; MILLS, credit card fraud, and mail fraud. Nelson entered a plea of not District Judge.* guilty on all counts. On December 6, Nelson was named in a forty-four count first superseding indictment that named him in four additional charges and added four defendants. Nelson pleaded not guilty to all counts contained in the superseding indictment and was released on bond. All charges against Nelson arose from a large-scale fraud scheme in which Nelson played an active role. Nelson stole * personal information of individuals from mortgage The Hon orable R ichard M ills, United States District Judge for the Central District of Illinois, sitting by designation. applications they filed at his places of employment and sold

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that information to his co-conspirators, Vanessa Phillips and On appeal, Nelson challenges his sentence on two grounds. Tanisha Hollman, and others. For his part, Nelson demanded First, Nelson argues that the district court erred when it payment upon receipt of the information as well as a one-third granted him a two level decrease in his offense level for share of any proceeds attributable to his theft. Thereafter, acceptance of responsibility instead of a three level decrease. Nelson apparently began his own operation and recruited Second, Nelson argues that the district court erred in finding others to assist him in fraudulently adding authorized users to him responsible for more than $400,000 in losses for his existing credit card accounts and then intercepting the cards fraudulent activities pursuant to section 2B1.1(b)(1)(H) of the upon their shipment. Sentencing Guidelines. Each of these arguments will be addressed in turn. On January 30, 2002, while on release for the charges contained in the first superseding indictment, Nelson was II. arrested after a traffic stop uncovered an open beer can underneath Nelson’s seat. Upon Nelson’s removal from the A. police vehicle, the authorities discovered paperwork containing the names, dates of birth, social security numbers Sentencing Guideline section 3E1.1(a) grants sentencing and addresses of several individuals. On February 1, a courts discretion to reduce by two levels the offense level for warrant was issued to search Nelson’s vehicle and a search the defendant who has “demonstrate[d] acceptance of revealed paperwork containing the personal information of responsibility for his [or her] offense.” Additionally, pursuant over sixty individuals. to section 3E1.1(b), a district court may award an additional one level reduction in the offense level of a defendant who Because of these new offenses, on March 7, 2002, a second has demonstrated “super acceptance” of responsibility by superseding indictment was issued against Nelson that added either “(1) timely providing complete information to the five defendants. On March 15, Nelson pleaded not guilty to government concerning his own involvement in the offense; all counts charged in the second superseding indictment. On or (2) timely notifying authorities of his intention to enter a May 7, however, Nelson changed his plea to guilty of plea of guilty, thereby permitting the government to avoid conspiracy to commit federal crimes, bank fraud, identity preparing for trial and permitting the court to allocate its theft, mail fraud and credit card fraud, in return for the United resources efficiently.”1 Nelson argues that he should have States’ dismissal of several charges. The parties did not enter into a written Rule 11 plea agreement. Nelson was sentenced to seven years, three months and one day imprisonment, 1 Congress’s recent enactment of the Prosecutorial Remedies and which included a two level reduction in his offense level for Other Tools to end the Exploitation of Children Today Act, Pub. L. No. acceptance of responsibility, a fourteen level increase for 108-21, 117 Stat. 650 (2003) (“PROT ECT Act”), has changed the law committing conduct which resulted in more than $400,000 in with respe ct to the d efendant’s entitlement to the additional adjustment of a one level decrease in offense level. Under the PROTE CT Act the losses pursuant to United States Sentencing Guideline section additional one level adjustment may only be granted upon the 2B1.1(b)(1)(H), and a one-day consecutive sentence for prosecuto r’s motion at the pretrial stage. See PROT ECT Act, Pub. L. No. committing an offense while on release in violation of 28 108-21, § 401(g)(1)(A). Because, as discussed, we conclude that Nelson U.S.C. § 3147. Nelson filed a timely notice of appeal. was not entitled to the additional adjustment even under prior law, we find it unnecessary to decide the question of whether this new pro vision would app ly to a case pending review at the time of the PRO TE CT Act’s enactment. No. 02-2022 United States v. Nelson 5 6 United States v. Nelson No. 02-2022

received this additional reduction in his offense level because superseding indictment. As the United States noted at he informed the United States in a timely fashion of his intent Nelson’s sentencing hearing, Nelson’s belated acceptance of to plead guilty. We disagree. responsibility for his criminal actions caused its “investigation to continue,” forced the expenditure of an Nelson’s appeal presents a simple argument–he met the “incredible” amount of resources, and simply did not “spare[ guilty plea cut-off date and therefore should have received the the government] any work.” Thus, we affirm the decision of additional one level decrease in his offense level. That district court granting Nelson only a two level reduction in his argument, however, ignores the policy reason behind such a offense level for his acceptance of responsibility. departure. As explained in the Guideline itself and expounded upon in the application notes following the B. Guideline, such a departure is warranted where the defendant’s timely actions spared the government the expense Next, we address Nelson’s argument that the district court of trial preparation. U.S.S.G. § 3E1.1(b)(2). The “timely erred in finding him responsible for more than $400,000 in actions” that merit the additional one level decrease generally damages, which resulted in a fourteen level increase in his occur very early in the case. U.S.S.G. § 3E1.1 (Application offense level pursuant to section 2B1.1(b)(1)(H) of the Note 6) (“In general, the conduct qualifying for a decrease in Sentencing Guidelines. offense level under subsection (b)(1) or (2) will occur particularly early in the case.”). On August 1, 2002, at the first sentencing hearing, Nelson objected to that portion of his presentence report holding him In determining whether the district court erred by granting accountable for somewhere between $400,000 and only a two level departure for Nelson’s acceptance of $1,000,000 in losses for his fraudulent activities. responsibility, we consider Nelson’s unlawful actions taken Specifically, Nelson argued that he should not be held after his initial indictment relevant to our inquiry. See United responsible for losses that occurred before May 2000, the date States v. Harper, 246 F.3d 520, 525-27 (6th Cir. 2001) on which he admittedly entered into the conspiracy. (allowing consideration of all of the defendant’s post- Additionally, Nelson argued that he could not be held indictment behavior in determining whether the district court responsible for the losses of all of his alleged co-conspirators erred in denying an acceptance of responsibility departure), because the full scope of the conspiratorial activities was rev’d on other grounds, United States v. Leachman, 309 F.3d unknown and unforseen by him. The United States conceded 377 (6th Cir. 2002). Upon examination of the record, we that its calculations included amounts from before May 2000. conclude that the district court did not err in granting Nelson It argued, however, that it would be nearly impossible to a two level reduction for his acceptance of responsibility, calculate the loss as to the specific date that Nelson entered rather than a three level reduction. the conspiracy. The district judge, who was given the United States’ calculation exhibits only a short time before the first Nelson indicated his intention to plead guilty only after the sentencing hearing and had not had the time to review them, United States expended considerable resources to investigate adjourned the hearing until October 3, 2002, to give the his role in the large-scale conspiracy. Indeed, Nelson’s government the time it needed to do the calculations that refusal to accept responsibility and his demand for a trial Nelson requested. Seven days later, on August 8, the district caused an extensive investigation that not only required the court reconvened and accepted the United States’ initial issuance of a first superseding indictment, but also a second calculations over Nelson’s objection. No. 02-2022 United States v. Nelson 7 8 United States v. Nelson No. 02-2022

On appeal, Nelson argues that the district court’s summary factual matters that formed the basis of its calculation.” Id. acceptance of the United States’ calculations did not comply (internal citations omitted).2 with its burden under Rule 32 of the Federal Rules of Criminal Procedure. See F E D . R. C R IM . P. With respect to the Rule 32 issue, this case is virtually 32(i)(3)(B)(formerly FED . R. CRIM . P. 32(c)(1)). Rule 32 indistinguishable from Monus. In this case, the only response requires that the district court “for any disputed portion of the to Nelson’s objections to the calculations was when the presentence report or other controverted matter–rule on the district judge announced, “I have had an opportunity to dispute or determine that a ruling is unnecessary either review the submissions by both the defendant and the because the matter will not affect sentencing, or because the government and I have concluded that the government is court will not consider the matter in sentencing.” We have correct and that it is no longer necessary to go through the recently reiterated that “the purpose of this rule [is] ‘to ensure exercise of doing further research.” Similar to Monus, the that sentencing is based on reliable facts found by the court district court gave no indication as to how it calculated the itself after deliberation,’ and thus, the district court cannot loss and determined that the government’s calculations were ‘summarily adopt the factual findings in the presentence correct nor did it respond to Nelson’s specific objections. report or simply declare that the facts are supported by a preponderance of the evidence.’” United States v. Darwich, Moreover, even a cursory glance at the United States’ loss 337 F.3d 645, 666 (6th Cir. 2003) (quoting United States v. exhibits raises concerns. For example, some of the sheets Tarwater, 308 F.3d 494, 518 (6th Cir. 2002)). contain no dates and there are several people who are identified, presumably as part of the conspiracy, but there is This Court requires literal compliance with Rule 32 when no indication as to how they fit into the conspiracy in relation sentencing issues are contested by the parties. See United to Nelson. Indeed, there are several names mentioned for the States v. Monus, 128 F.3d 376, 396 (6th Cir. 1997); Darwich, first time on these loss exhibits that are not found in any of 337 F.3d at 666. In Monus, we vacated the defendant’s the indictments against Nelson or in his presentence report. sentencing enhancement and remanded the case for re- sentencing when the district court, over the objection of the In response, the United States cites United States v. defendant, simply stated that it was “convinced that the Jackson, 25 F.3d 327 (6th Cir. 1994), for the proposition that defendant is at least . . . responsible for in excess [of] 80 Nelson bears a heavy burden in establishing that the district million dollars . . . .” Id. The fact that the district court failed court erred in calculating the loss amount. Indeed, in Jackson to explain how it calculated the amount of loss and failed this Court stated that the defendant carries “a heavy burden of explicitly to respond to the defendant’s “specific factual persuading this Court that the evaluation of the loss was not objections to the methods of calculation” troubled this Court. only inaccurate, but was outside the realm of permissible Id. at 396-97. Moreover, we found that the district court computations.” 25 F.3d at 330 (citing U.S.S.G. § 2F1.1, violated Rule 32 by failing to make written findings on the comments (now U.S.S.G. § 2B1.1, comment (2(C))). controversy. Id. at 397. Indeed, we noted that while “the However, whether the district court erred in its calculations is court need not establish the value of the loss with precision, Rule 32 requires it to publish the resolution of contested 2 Since Monus, Rule 32 has been amended, but the essence of the rule’s requirements remain unchanged. Thus, our analysis is guided by Monus. No. 02-2022 United States v. Nelson 9

a separate question from whether the district court failed to meet its burden under Rule 32. Properly understood, Nelson’s argument is not so much a challenge to the final calculation decision made by the district court, but rather to the fact that the district court failed specifically to respond to his objections to these calculations. Moreover, in Jackson the district court noted that it had “carefully considered [the] evidence,” 25 F.3d at 330, before finding “that the aggregate losses were in excess of $800,000.” Id. From the record before us, we cannot determine whether the district court “carefully considered the evidence” precisely because it failed to respond to Nelson’s objections. Thus, we find Jackson distinguishable. In short, “[a]lthough the evidence may justify holding [Nelson] accountable for [$593,366.60 in loss], the district court’s failure to explain its factual determination requires [this Court] to remand the case for his resentencing.” United States v. Orlando, 281 F.3d 586, 601 (6th Cir. 2002) (finding that the district court erred in failing to determine the date the defendant entered into the conspiracy and the scope of unlawful behavior that the defendant had agreed to undertake). Thus, we VACATE Nelson’s fourteen level sentencing enhancement and REMAND for re-sentencing at which time the district court should issue findings with respect to Nelson’s specific objections to the United States’ loss calculations.