United States v. Reaume

• Court: Court of Appeals for the Sixth Circuit
• Decided: July 28, 2003
• Docket: 02-1112
• Status: Published

Opinion

RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 2 United States v. Reaume No. 02-1112 ELECTRONIC CITATION: 2003 FED App. 0254P (6th Cir.) File Name: 03a0254p.06 STATES ATTORNEY, Detroit, Michigan, for Appellee. ON BRIEF: Richard B. Ginsberg, Ann Arbor, Michigan, for Appellant. Stephen L. Hiyama, ASSISTANT UNITED UNITED STATES COURT OF APPEALS STATES ATTORNEY, Detroit, Michigan, for Appellee. FOR THE SIXTH CIRCUIT _________________ _________________ OPINION UNITED STATES OF AMERICA , X _________________ Plaintiff-Appellee, - R. GUY COLE, JR., Circuit Judge. Defendant-Appellant - - No. 02-1112 Scott A. Reaume was convicted by a jury of committing bank v. - fraud, in violation of 18 U.S.C. § 1344. Reaume admits to > opening several checking accounts at a federally insured , financial institution, making an initial deposit of a small sum, SCOTT A. REAUME, - Defendant-Appellant. - writing checks from these accounts for goods and services throughout the country with the knowledge that the accounts N did not contain sufficient funds to cover the value of the Appeal from the United States District Court checks, and returning the majority of the items purchased by for the Eastern District of Michigan at Detroit. check to branches of stores in different locations in exchange No. 97-81475—Gerald E. Rosen, District Judge. for cash.

Argued: June 20, 2003 After proceeding to trial on the theory that his scheme was not intended to defraud a federally insured financial Decided and Filed: July 28, 2003 institution, Reaume was found guilty by a jury. The final judgment of conviction and sentence was entered on Before: KENNEDY and COLE, Circuit Judges; January 3, 2002, and this timely appeal followed. WILLIAMS, Senior District Judge.* For the reasons that follow, we AFFIRM the judgment of _________________ the district court.

COUNSEL I.

ARGUED: Richard B. Ginsberg, Ann Arbor, Michigan, for On August 19, 1999, a federal grand jury returned a Appellant. Stephen L. Hiyama, ASSISTANT UNITED one-count indictment charging Reaume with bank fraud. The indictment alleged that Reaume knowingly executed a scheme to defraud Monroe Bank and Trust (“the Bank”). * Reaume’s jury trial began on August 14, 2001. At trial, The Honorable Glen M. Williams, Senior United States District Judge for the Western District of Virginia, sitting by designation. testimony was presented that Reaume opened two checking

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accounts at the Bank using the aliases Steven D. McIlveen II. and Robert Sandor. Accounts also were opened at the Bank by Adam Rodriguez and Danny K. Drummond in their own A. Sufficiency of the Evidence and Intent to Defraud names. Drummond opened an additional account under the alias of John S. Woods. Reaume argues that there was insufficient evidence to find that he specifically intended to defraud the Bank, as opposed Reaume, Rodriguez, and Drummond used checks drawn to the merchants or their insurers. He contends that an intent from their accounts to purchase merchandise at various to defraud the payee of an NSF check does not provide a basis branches of national-chain retailers, and subsequently for a finding that there was an intent to subject the issuing returned most of the merchandise for cash refunds at other bank to a loss. Accordingly, Reaume argues that the district branches of the stores. The Bank flagged the five accounts court erred in denying his motion for a judgment of acquittal. early on and refused to honor the checks for which there were The denial of a motion for a judgment of acquittal is reviewed insufficient funds (“NSF checks”). The losses resulting from de novo. United States v. Kone, 307 F.3d 430, 433 (6th Cir. the passing of these NSF checks, therefore, fell on either the 2002). retailers themselves or the check-guarantee companies that insured the retailers. Three elements are required for a conviction of bank fraud pursuant to § 1344: (1) the defendant must have knowingly On August 16, 2001, the jury returned a guilty verdict. On executed or attempted to execute a scheme to defraud a January 3, 2002, the district court determined that Reaume’s financial institution; (2) the defendant must have done so with guideline range was twenty-seven to thirty-three months, the intent to defraud; and (3) the financial institution must sentenced Reaume to thirty months of imprisonment and four have been insured by the Federal Deposit Insurance years of supervised release, and ordered him to pay restitution Corporation. United States v. Everett, 270 F.3d 986, 989 (6th in the amount of $95,649.26. Cir. 2001).

On appeal, Reaume raises four points of error. First, he This Court previously addressed the intent element of the argues that the evidence presented at trial was insufficient to bank fraud statute in United States v. Hoglund, 178 F.3d 410 maintain a conviction under the federal bank fraud statute (6th Cir. 1999), and Everett. While neither of these cases are because there was no evidence that he intended to defraud the directly controlling, their explication here is critical because bank itself, as opposed to the individual merchants or their it is from these cases that we distill the principle which we respective insurance companies. Second, Reaume contends apply to the present case. that the district court erred in refusing to award him a two-point reduction in offense level for acceptance of In Hoglund, an attorney was convicted under § 1344 after responsibility. Third, he asserts that the district court erred in settling his clients’ cases without their permission, forging overruling his objections at sentencing to the amount of their signatures on the settlement checks he received, and money at issue in the fraud. Fourth, Reaume argues that the depositing the money into his own account. 178 F.3d at 411. district court erred in ordering him to pay restitution in excess In Hoglund, we addressed the issue of whether the of $95,000 without considering his ability to pay. Government must prove that the defendant exposed a bank to a risk of loss as part of the “scheme to defraud” element. Id. at 413. Hoglund resolved this question by holding that “risk No. 02-1112 United States v. Reaume 5 6 United States v. Reaume No. 02-1112

of loss” is simply “one way of establishing intent to defraud Unlike the defendant in Hoglund, Reaume contends that he in bank cases.” Id. Thus, this Court found that a defendant harbored no intent to expose the financial institution to a risk need not have exposed a bank to a risk of loss as an element of loss. Moreover, unlike the situation in Everett, Reaume of bank fraud. Id. Instead, proof that the defendant “intended contends, and the evidence substantiates, that the Bank never to put a bank at a risk of loss” was sufficient to maintain a transferred any funds in connection with the fraudulent bank fraud conviction. Id. Thus, Hoglund held that the bank activity. Thus, it appears that Reaume’s particular fact pattern fraud statute is violated, even when there is no actual risk of does not fall neatly under the Hoglund or Everett rubric, loss on the part of the bank, if the defendant’s intent is to which consider both the intended victim and actual loss. expose the bank to such a risk. While informative, Hoglund is not controlling in the present case. Here, in contrast to We nevertheless affirm Reaume’s conviction. The specific Hoglund, the defendant claims that, regardless of whether issue that Reaume appeals is the evidence of his intent to there was an actual risk of loss, there was no intent to expose defraud the Bank itself. In Everett, this Court held that an the Bank to a risk of loss. intent to put the financial institution at a risk of loss is not required, and that the fact that the defendant defrauded In Everett, the defendant, a certified public accountant, was someone was sufficient, given that the fraud caused the bank found guilty of bank fraud by a jury. 270 F.3d at 989. On to transfer funds. 270 F.3d at 991. In the present case, the appeal, the defendant argued that the Government failed to Bank was clearly at a risk of loss. Evidence was presented at prove the specific intent required by § 1344, namely, the trial to demonstrate that, when the Bank receives an NSF intent to defraud a federally insured bank, or at least to put the check, it makes a decision to either honor the check anyway bank at a risk of loss. Id. at 990. The defendant or to dishonor the check. If the check is dishonored, the Bank acknowledged that there was evidence that she intended to does not lose any money, but if the check is honored, and the defraud her client, but argued that the manner in which she account holder fails to pay back that debt to the Bank, the defrauded her client did not impose a risk of loss on the bank Bank suffers a loss. Therefore, it is clear that Reaume’s in question. Id. In affirming the conviction, we held that the fraudulent activity, regardless of the intended victim, could specific intent required for bank fraud does not require putting have caused the Bank to transfer funds. If in fact the Bank the bank at a risk of a loss or intending to do so “in the usual had transferred funds, then this case would clearly be sense.” Id. at 991. “It is sufficient if the defendant in the governed by Everett, because an intent to defraud someone course of committing fraud on someone causes a federally would have caused the Bank to transfer funds. The issue of insured bank to transfer funds under its possession and Reaume’s intent simply cannot logically turn on the course of control.” Id. Everett, therefore, can be said to stand for the action chosen by the Bank after receiving the NSF checks. proposition that the bank fraud statute is violated, even if the Accordingly, it is a necessary extension of Everett to find the intended victim of the fraudulent activity is an entity other intent element of § 1344 satisfied in this case. than a federally insured financial institution, when the fraudulent activity causes the bank to transfer funds. Thus, Everett contains language to support this outcome. In the holding of Everett is also instructive but not squarely on Everett, this Court stated that the Government is probably point, as there was no evidence in the present case indicating better advised to proceed under the wire or mail fraud statutes that the Bank actually did transfer funds in connection with where the bank has “minimal involvement, such as where a Reaume’s fraudulent activities. swindler deceives someone into voluntarily writing checks to the swindler on a good account.” Id. Nevertheless, the Court No. 02-1112 United States v. Reaume 7 8 United States v. Reaume No. 02-1112

indicated that even such a minimal involvement of the bank district court’s finding that a defendant is not entitled to a is sufficient to find liability under § 1344 when the specific sentencing reduction for acceptance of responsibility for clear intent to defraud someone is present. Id. Therefore, we need error. United States v. Childers, 86 F.3d 562, 563 (6th Cir. not address the question of whether the evidence presented at 1996). However, if the only issue presented is the propriety trial was sufficient for a reasonable jury to find that Reaume of applying the reduction to the uncontested facts, the intended to defraud the Bank specifically. Applying the decision is reviewed de novo. United States v. Tilford, 224 reasoning of Hoglund and Everett, we find that intent to F.3d 865, 867 (6th Cir. 2000). defraud the federally insured institution itself is satisfied where: (1) the intent to defraud some entity was present; and The United States Sentencing Guidelines (the “Guidelines”) (2) that intended fraud placed a federally insured financial provide that a two-point reduction in offense level is institution at a risk of loss. applicable where the defendant clearly demonstrates acceptance of responsibility for his offense. U.S. In providing the jury with instructions at the close of trial, SENTENCING GUIDELINES MANUAL § 3E1.1. While a guilty the district court stated that the Government not only needed plea is ordinarily a prerequisite for this reduction, Application to prove that Reaume knowingly executed or participated in Note 2 of this provision states that conviction by trial does not a scheme to defraud a federally insured financial institution, automatically exclude a defendant from consideration for this but also that Reaume “did so with the intent to defraud reduction. U.S. SENTENCING GUIDELINES MANUAL § 3E1.1, Monroe Bank & Trust.” The district court later stated that comment. 2. The Guidelines provide that, under rare “the Government must prove beyond a reasonable doubt that circumstances, a defendant may clearly demonstrate an the scheme to defraud was employed by the defendant to acceptance of responsibility despite exercising his defraud Monroe Bank & Trust.” Given our holding in Everett constitutional right to trial. Id. For instance, where a that the intent to have a bank be the victim of the fraudulent defendant goes to trial to assert issues that do not relate to conduct is not a prerequisite to maintaining a conviction factual guilt, such as a challenge to the applicability of a under the bank fraud statute, the jury instructions given by the statute to his conduct, a reduction may be warranted. Id. district court benefitted Reaume.1 In light of Everett, Even in such an instance, however, “a determination that a therefore, Reaume’s argument that the evidence presented at defendant has accepted responsibility will be based primarily trial was insufficient to demonstrate the intent required by the upon pre-trial statements and conduct.” Id. bank fraud statute fails. Reaume’s position is that he did not contest the B. Sentence Reduction for Acceptance of Responsibility Government’s factual allegations at trial, but rather, merely contested the applicability of the bank fraud statute to the Reaume appeals the decision of the district court refusing conduct in which he participated. In contrast, the to grant him a two-point reduction in his offense level for Government maintains that Reaume did in fact contest the acceptance of responsibility. Because such a finding issue of whether he participated in the scheme with an intent generally presents a question of fact, this Court reviews a to defraud the Bank. According to the Government, Reaume’s specific intent to defraud the Bank is a factual matter. 1 It should be no ted that Eve rett was decided on October 12, 2001, and Reaume’s trial conclude d on Augu st 16, 2 001 . No. 02-1112 United States v. Reaume 9 10 United States v. Reaume No. 02-1112

We agree with the Government. At the time of Reaume’s younger brother; and (3) $10,865.62 for the losses caused by trial, the district court and the parties accepted that the Pamela Reaume, the defendant’s sister. Government’s burden included demonstrating that Reaume intended to place the Bank at a risk of loss. Whether this At the sentencing hearing, the district court expressed intent is required under § 1344 is a question of law, but concern about attributing to Reaume the losses caused by his whether Reaume actually harbored such an intent is a siblings. Accordingly, the district court decided not to question of fact for the jury to decide. Reaume elected to put impose a sentence until it had the opportunity to hear the Government to its burden of proof at trial by denying testimony from the two siblings and make a determination as what was understood to be an essential factual element of to whether their conduct was connected to Reaume’s conduct guilt. Accordingly, the refusal of the district court to award in a manner that was sufficient to satisfy the relevant conduct Reaume a reduction for acceptance of responsibility was not criteria for sentencing purposes. clear error. In its second sentencing memorandum, the Government C. Amount of Loss abandoned its position that the activity of Reaume’s siblings should be attributed to Reaume and instead argued that the Reaume argues that the district court erred by scoring his additional relevant conduct for which Reaume should be held Guidelines range based on a finding that the relevant conduct responsible involved Reaume’s own fraudulent conduct contributed to between $200,000 and $350,000 in losses. beyond that charged in the indictment. According to the This Court will only set aside a district court’s factual finding Government, Reaume opened numerous fraudulent checking with regard to the amount of loss attributed to a defendant accounts at other financial institutions throughout the country. under Guidelines § 2F1.1(b) if it concludes that the district The evidence of this activity consisted of: (1) Reaume’s 1991 court’s finding of fact was clearly erroneous.2 United States arrest in Illinois for attempting to purchase clothing with a v. Ware, 282 F.3d 902, 907 (6th Cir. 2002). bad check; (2) Reaume’s admission, subsequent to the 1991 arrest, that he had made as much as $70,000 per year through In its first sentencing memorandum, the Government his NSF-checking scheme; (3) Adam Rodriguez’s testimony attributed $211,193.99 in losses to Reaume, comprising the that he and Reaume had been traveling the country writing following sums: (1) $108,328.37 for the losses caused by bad checks for about three years, obtaining thousands of Reaume, Rodriguez, and Drummond through the use of NSF dollars a month by doing so; (4) numerous canceled checks checks from the Bank; (2) $92,000.00 for the losses caused by obtained by the FBI; (5) a number of fake identification cards the use of NSF checks by Jamie Reaume, the defendant’s possessed by Reaume; (6) Reaume’s 1993 arrest in Florida for passing bad checks; and (7) the absence of any record of legitimate employment. The district court accepted the Government’s rationale and found Reaume to be responsible 2 Guideline § 2F1.1 has been repea led and replaced by the for between $200,000 and $350,000 in losses. consolidated property-crime provisions in § 2B1.1. Section 2F1.1 was repealed prior to Reaume’s sentencing. N evertheless, due to ex po st facto Reaume contends that this finding was in error for two concerns that arise as a result of the harsher penalties contained in reasons. First, Reaume argues that the district court erred by § 2B1 .1, the probation officer was correct to use the version of the fraud allowing the Government to change its theory on which the guideline, § 2F1.1 , in effect when Reaum e’s offense occu rred. See U.S. amount of loss was based without providing him with S ENTENCING G UIDELINES M ANUAL § 1B 1.11 (b)(1 ). No. 02-1112 United States v. Reaume 11 12 United States v. Reaume No. 02-1112

adequate notice. Second, Reaume maintains that even if the This Court reviews de novo whether a restitution order is district court had ruled properly in permitting the Government permitted under the law. United States v. Dunigan, 163 F.3d to advance its new theory, the basis for holding Reaume 979, 981 (6th Cir. 1999). Generally, if the restitution order is responsible for more than $200,000 in losses was too legally permissible, the amount ordered is then reviewed for speculative in nature to satisfy the Government’s burden of an abuse of discretion. Id. However, here, because Reaume proving Reaume’s responsibility for that sum by a did not object to the restitution order at his sentencing, the preponderance of the evidence. sentencing decision is reviewed for plain error. See United States v. Koeberlein, 161 F.3d 946, 949 (6th Cir. 1998). To Reaume’s contention that the district court erred in establish plain error, a defendant must show: (1) that an error permitting the Government to change theories between occurred in the district court; (2) that the error was plain, i.e., sentencing hearings is without merit. The rationale on which obvious or clear; (3) that the error affected substantial rights the amount of losses was calculated was perfectly reasonable, of the defendant; and (4) that this adverse impact seriously and Reaume received notice of this change in position when affected the fairness, integrity, or public reputation of the a copy of the Government’s second sentencing memorandum judicial proceedings. Id. was sent to him. There was no error in the district court’s decision to permit the Government to proceed on its new The parties agree that a restitution order here is legally theory regarding relevant conduct. permissible pursuant to the Victim and Witness Protection Act (“VWPA”). 18 U.S.C. § 3663. Accordingly, the only Similarly, Reaume’s argument that the district court erred issue before this Court with regard to the restitution order is in finding him responsible for over $200,000 in losses is also whether the district court committed plain error in ordering without merit. The district court’s findings with respect to restitution in the amount of $95,649.26. relevant conduct are only disturbed if clearly erroneous, United States v. Collins, 78 F.3d 1021, 1040 (6th Cir. 1996), At Reaume’s sentencing, the district court made no and need only be based on the preponderance of the evidence, reference to Reaume’s ability to pay the restitution order in United States v. Meacham, 27 F.3d 214, 216 (6th Cir. 1994). full. In determining the amount of restitution that should be The evidence brought forth by the Government to substantiate ordered, a sentencing court is required to consider the factors the relevant conduct is sufficient to support the district court’s listed in 18 U.S.C. § 3664(a). Dunigan, 163 F.3d at 981. The findings. § 3664(a) factors include the economic circumstances of the defendant. The Government argues that all of the information D. Order of Restitution relevant to the restitution order was contained in the Presentence Investigation Report. The district court ordered Reaume to pay restitution in the amount of $95,649.26. Reaume was ordered to “pay any While it is true that “a district court must have, at a restitution obligations still outstanding according to a monthly minimum, some indication that a defendant will be able to schedule recommended by the probation department and pay the amount of restitution ordered in order to comply with approved by [the district] court.” Reaume argues that the 18 U.S.C. § 3664(a),” Dunigan, 163 F.3d at 982, this Court district court erred in imposing this amount of restitution has also held that “[s]pecific findings in the imposition of without considering his ability to pay. restitution are not required.” United States v. Jackson-Randolph, 282 F.3d 369, 386 (6th Cir. 2002). Given No. 02-1112 United States v. Reaume 13

the findings in the Presentence Investigation Report that Reaume has an Associate Degree in Applied Science, lives with his parents when in the United States, and has only a very small amount of debt, the amount of restitution ordered by the district court is not clear error. Moreover, the district court did not order that the restitution be paid during any particular period of time. A restitution order is permissible even if the defendant lacks the present ability to pay. United States v. Faasse, 265 F.3d 475, 494 (6th Cir. 2001) (en banc). The burden is on the defendant to demonstrate that a restitution order far exceeds his resources and earning potential, United States v. Adams, 214 F.3d 724, 730 (6th Cir. 2000), and Reaume has not met this burden here. While it may have been preferable for the district court to have engaged in a more explicit analysis of Reaume’s ability to pay this restitution amount, it cannot be said that the failure to do so in this instance meets the requirements of the plain error standard. III. For the foregoing reasons, we AFFIRM the judgment of the district court.