United States v. Harris , 418 F. App'x 767 ( 2011 )

FILED
United States Court of Appeals
Tenth Circuit
April 6, 2011
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
FOR THE TENTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
No. 10-1328
v. (D.C. No. 1:08-CR-00458-MSK-1)
(D. Colo.)
JEFFREY HARRIS,
Defendant-Appellant.
ORDER AND JUDGMENT *
Before MURPHY, HARTZ, and GORSUCH, Circuit Judges.
Jeffrey Harris appeals the district court’s prison sentence of 108 months on
his guilty plea to one count of conspiracy to defraud the government. He
contends that the court’s imposition of a variant sentence above the maximum
sentence calculated pursuant to the United States Sentencing Guidelines (U.S.S.G.
*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
or Guidelines) is procedurally and substantively unreasonable. We take
jurisdiction under 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a). We affirm.
I. Introduction
Harris was charged in two cases. In the first, he was charged in a 23-count
indictment with 17 counts of mail fraud and aiding and abetting, in violation of
18 U.S.C. § 1341; one count of conspiracy to defraud the government, in violation
of 18 U.S.C. § 286; and five counts of making false claims and aiding and
abetting, in violation of 18 U.S.C. § 287. In the second case, he was charged in a
40-count indictment with 19 counts of mail fraud and aiding and abetting, in
violation of § 1341; one count of conspiracy to defraud the government, in
violation of § 286, and 20 counts of making false claims and aiding and abetting,
in violation of § 287.
On November 30, 2009, Harris conditionally pleaded guilty to one count of
conspiracy to defraud the government, in violation of § 286, in exchange for the
government’s agreement to dismiss the remaining counts in both indictments. As
part of the plea agreement, the parties stipulated to a sentence of 60 months. The
district court deferred accepting the guilty plea until the sentencing hearing.
Thereafter, the United States Probation Office prepared a presentence report
(PSR), indicating an appropriate sentencing range under the Guidelines of 87 to
108 months. The government then filed a motion pursuant to section 5K1.1 of the
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Guidelines, requesting a 30 percent sentence reduction based on Harris’s
cooperation in the prosecution of a codefendant.
At the sentencing hearing convened on May 3, 2010, the parties requested a
sentence of 61 months, reached by reducing the low end of the Guidelines
sentence of 87 months by 30 percent. The district court stated that it would grant
the government’s § 5K1.1 motion, but would not impose the stipulated sentence.
Instead, the court informed Harris that it intended to vary upward from the
Guidelines sentence. Harris then accepted the court’s offer to withdraw his guilty
plea to afford him an opportunity to consult with counsel. Sentencing was
rescheduled for July 30, 2010, when Harris reinstated his guilty plea and the court
imposed a sentence of 108 months. 1
II. Background
Harris stipulated to the following facts. From 2001 through 2006, he ran a
scheme to defraud the Internal Revenue Service (IRS) and the Colorado
Department of Revenue (CDR), whereby he sought tax refunds for customers of
Olympia Financial and Tax Services (Olympia), 2 a corporation he owned and
1
In addition to a term of imprisonment, the district court imposed a $100
special assessment, restitution of $359,919.91, and three years’ supervised
release. Because Harris does not challenge these terms on appeal, any challenge
to them is waived. United States v. Wayne, 591 F.3d 1326, 1334 n.6 (10th Cir.
2010) (holding argument waived for failure to raise it in opening brief).
2
Harris initially ran the scheme by using Grand Peak Financial Services,
Inc., another corporation he owned and controlled.
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controlled. Harris had no specialized tax-preparation experience, nor was he a
certified public accountant or a former IRS agent. Olympia’s employees and
Harris directly solicited customers. They represented that: (1) Olympia could
amend the customers’ tax returns to claim legitimate tax refunds, (2) the tax
professionals who worked at Olympia were former IRS employees or were
otherwise qualified to amend tax returns, and (3) Olympia would use legal
methods and truthful information to amend customers’ returns. Harris also
developed and used promotional written and internet materials falsely
representing that Olympia employed experienced tax and legal professionals to
review the amended returns to ensure compliance with the law. He also
represented that all amendments to tax returns would be discussed with the
customer and supported with documentation.
To implement the scheme to defraud, Harris and others prepared amended
federal and state tax returns containing false information so as to entitle the
customer to a refund. Typical of the false claims were itemized deductions,
business profits or losses, educational expenses, amount of taxable income, and
the amount of refund owed to the taxpayer. Olympia charged its customers 40 to
50 percent of any refund they received. As a result of this scheme, Harris and
others caused over 800 fraudulent amended returns to be filed with the IRS
claiming $2,667,788 in refunds, R. Vol. 1 at 35, 37. In addition, over 500
fraudulent amended returns were filed with the CDR claiming $511,101 in
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refunds. Id. The grand total of fraudulent claims submitted to both agencies was
$3,178,889. The total loss was determined to be $351,919.91, less than the
amount fraudulently claimed, because once fraud was suspected, the agencies
stopped issuing refunds, and some of the loss was recouped from the participating
taxpayers. Id. Vol. 3 at 8-9.
III. Sentencing 3
Harris’s PSR noted that the base offense level for the crime of conviction
was 6 under U.S.S.G. § 2B1.1(a)(2). Id. at 9. An increase of 18 levels was
warranted because the actual loss and/or the intended loss was more than
$2,500,000 and less than $7,000,000 pursuant to U.S.S.G. § 2B1.1(b)(1)(J). Id.
The offense level was further increased by 2 levels because the offense involved
the abuse of trust and/or use of a special skill pursuant to U.S.S.G. § 3B1.3. Id.
Four more levels were added pursuant to U.S.S.G. § 3B1.1(a) because Harris was
an organizer or leader of criminal activity that was otherwise extensive. Id. at 10.
Lastly, a 3-level reduction was included for acceptance of responsibility under
U.S.S.G. § 3E1.1(a) & (b), id., for a total offense level of 27. Harris’s 6 criminal
3
10th Cir. R. 28.2(A)(1) & (2) require that pertinent written and oral
findings be included as attachments to the appellant’s brief. If the appellant’s
brief fails to include these attachments, the appellee’s brief must include them.
10th Cir. R. 28.2(B). In this case, the district court stated orally its reasons for
the sentence and those reasons are included in the sentencing transcript.
Although the sentencing transcript was in the record on appeal, the relevant pages
were not included as attachments to either party’s brief. We remind the parties of
their obligations to comply with this court’s rules.
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history points resulted in a criminal history category of III. Id. at 13.
Accordingly, the Guidelines sentencing range was 87 to 108 months. Id. at 20.
At the July 30, 2010, sentencing hearing, the district court clearly informed
Harris that it would not accept the parties’ stipulated sentence of 61 months.
Before pronouncing sentence, the court told defense counsel that he would have
an opportunity to make legal objections or to continue the hearing to address any
new issues raised by the sentence.
In announcing the sentence, the district court first stated that the sentence
was designed to satisfy the objectives and factors of 18 U.S.C. § 3553(a). 4 The
court then reviewed the applicable Guidelines for (1) the crime of conspiracy to
defraud the government; (2) the stipulated loss amount between $2,500,000 and
$7 million; (3) Harris’s role in the offense involving an abuse of trust and use of a
special skill; (4) his role in the offense as an organizer and leader of criminal
activity that was otherwise extensive; (5) his criminal history; and (6) a
downward adjustment for acceptance of responsibility. The court noted the
recommended Guidelines sentence of 87 to 108 months. The court granted the
4
Section 3553(a) directs a court to “impose a sentence sufficient, but not
greater than necessary,” to serve the following sentencing purposes: (1) to
consider “the nature and circumstances of the offense and the history and
characteristics of the defendant;” (2) to account for the “seriousness of the
offense, to promote respect for the law, and to provide just punishment for the
offense;” (3) to adequately deter criminal conduct; (4) “to protect the public from
further crimes of the defendant;” and (4) to provide appropriate training, medical
care, and other correctional treatment to the defendant.
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government’s motion for a 30 percent sentence reduction filed pursuant to
U.S.S.G. § 5K1.1.
Explaining the decision to impose a variant sentence, the district court
determined that the Guidelines calculation did not adequately take into account
Harris’s criminal history. 5 His first convictions were based on state charges in
1989, at age 29, and involved “communications fraud, computer crimes, unlawful
use of financial ATM card, and forgery, all of which are felonies.” R. Vol. 2 at
64. Although he was sentenced to concurrent terms of one to fifteen years, he
was released on parole after only two years. In 1991, he was convicted in federal
court for the felony of conspiracy to transport interstate and sell stolen computer
components. His sentence to probation for 60 months was terminated early.
In addition, although under the Guidelines Harris received an enhancement
for being a leader, the court was not satisfied that the enhancement adequately
considered his manner in dealing with the individuals who worked for him in the
scheme. In recalling the testimony of several of Harris’s subordinates who had
testified before the court, the court noted that they “did not feel free to avoid the
5
A “variant” sentence results when “a court enhances or detracts from the
recommended [Guidelines] range through application of § 3553(a) factors.”
United States v. Atencio, 476 F.3d 1099, 1101 n.1 (10th Cir. 2007), overruled in
part on other grounds by Irizarry v. United States, 553 U.S. 708 (2008). In
contrast, a “departure” refers to “a sentence above or below the recommended
Guidelines range [reached] through application of Chapters Four or Five of the
Sentencing Guidelines.” Id.
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unlawful conduct” of the enterprise. Id. at 67. This assessment was confirmed by
the court’s own observations of Harris’s “demeanor on the witness stand, his
arrogance, [and] his abusive demeanor toward counsel in the courtroom.” Id.
The court also commented on Harris’s allocution: he expressed no remorse, he
did not take responsibility for his conduct, he said sometimes he obeyed the law
and sometimes he did not, and he spoke of his plans to turn his incarceration to
his advantage by attending college on-line. The court found those remarks to be
focused on what would benefit him.
After remarking that Harris had been convicted and sentenced for crimes
involving fraud resulting in significant losses while in his 30’s, the district court
observed that Harris, now at a more advanced age, had not changed his behavior
or accepted responsibility for his criminal conduct, thus posing a risk to society.
Expressing concerns about “(1) the seriousness of the offense; (2) the necessity to
promote respect for the law; (3) [and] the necessity to protect the public from
further crimes by Mr. Harris,” the court imposed a sentence of 108 months’
incarceration. Id. at 68-69. Even though the sentence was within the Guidelines
range, the court acknowledged it was a variant sentence because it was the
government’s § 5K1.1 motion that brought the sentence to 108 months; without
the motion, the sentence would have been above the Guidelines range. After
announcing the sentence and the reasons for it, the court inquired whether any of
the parties requested further clarification or explanation. All parties declined.
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IV. Discussion
A. Standard of Review
“In reviewing a sentence on appeal, this court must first determine whether
the sentence is procedurally reasonable, . . . review[ing] the district court’s legal
conclusions regarding the Guidelines de novo and its factual findings for clear
error.” United States v. Munoz-Nava, 524 F.3d 1137, 1146 (10th Cir. 2008).
“Procedural reasonableness addresses whether the district court incorrectly
calculated or failed to calculate the Guidelines sentence, treated the Guidelines as
mandatory, failed to consider the § 3553(a) factors, relied on clearly erroneous
facts, or failed to adequately explain the sentence.” Id.
Substantive reasonableness addresses “whether the length of the sentence is
reasonable given all the circumstances of the case in light of the factors set forth
in . . . §3553(a).” United States v. Verdin-Garcia, 516 F.3d 884, 895 (10th Cir.
2008) (internal quotation marks omitted). This court reviews “all
sentences–whether inside, just outside, or significantly outside the Guidelines
range–under a deferential abuse-of-discretion standard.” Gall v. United States,
552 U.S. 38, 41 (2007); accord United States v. Smart, 518 F.3d 800, 806
(10th Cir. 2008). Under this standard, “[w]e afford substantial deference to the
district court,” United States v. Martinez, 610 F.3d 1216, 1227 (10th Cir.)
(citation omitted) (internal quotation marks omitted), cert. denied, 131 S. Ct. 543
(2010), and find an abuse of discretion only if the sentence imposed is “arbitrary
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capricious, whimsical, or manifestly unreasonable,” United States v. Huckins,
529 F.3d 1312, 1317 (10th Cir. 2008) (internal quotation marks omitted). “[W]e
will defer to the district court’s judgment so long as it falls within the realm of
the[] rationally available choices.” United States v. McComb, 519 F.3d 1049,
1053 (10th Cir. 2007).
B. Procedural Reasonableness
Harris first claims the sentence is procedurally unreasonable because the
district court considered factors already taken into account in calculating the
Guidelines sentencing range without explaining with sufficient specificity how
Harris’s situation differed from the typical Guidelines situation. He also argues
that the court’s stated reasons were not sufficiently compelling to justify the
sentence, which he characterizes as “more than 40 percent longer than the 61
month sentence contemplated under the Guidelines.” Aplt. Br. at 17.
Harris has forfeited his first argument challenging the adequacy of the
district court’s explanation by declining the court’s invitation to provide further
clarification or explanation at the conclusion of the sentencing hearing. United
States v. Uscanga-Mora, 562 F.3d 1289, 1294-95 (10th Cir.), cert. denied,
130 S. Ct. 289 (2009). Consequently, we review this issue for plain error. Id. at
1293. “Our plain error standard is satisfied when there is (1) error, (2) that is
plain, which (3) affects substantial rights, and which (4) seriously affects the
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fairness, integrity, or public reputation of judicial proceedings.” Id. at 1295
(internal quotation marks omitted).
Harris has not demonstrated that the district court’s explanation, even if
inadequate, affected his substantial rights. The district court’s sentencing
decision was fully supported by evidence in the PSR that Harris stipulated was
accurate. See United States v. Mateo, 471 F.3d 1162, 1166 (10th Cir. 2006)
(holding sentencing court “is entitled to rely on uncontested facts contained in the
PSR for certain sentencing purposes”). The court gave clear and specific reasons
for its decision to impose an upward variant sentence, concluding that application
of the Guidelines would not result in a sentence to achieve the purposes of
§ 3553(a), because they did not take into full consideration Harris’s criminal
history, his treatment of his subordinates, his arrogance and abusive demeanor,
his lack of remorse and failure to acknowledge responsibility, the seriousness of
the offense, the need to promote respect for the law, and the need to protect the
public. Accordingly, Harris has not established that any error affected his
substantial rights, “meaning that there is a reasonable probability that, but for the
error claimed, the result of the proceeding would have been different.” United
States v. Weiss, 630 F.3d 1263, 1274 (10th Cir. 2010) (internal quotation marks
omitted).
Turning to Harris’s second argument that the district court’s justification
was not sufficiently compelling, we reject as a matter of law his contention that
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extraordinary circumstances or conditions must be found before a district court
may impose an above-Guidelines sentence. To the contrary, the district court was
“allowed to contextually evaluate each § 3553(a) factor, including those factors
the relevant guideline(s) already purport to take into account, even if the facts of
the case are less than extraordinary.” Smart, 518 F.3d at 808. In addition,
Harris’s argument that his sentence is procedurally unreasonable because it
represents an increase of 40 percent above the minimum Guidelines sentence is
unavailing. Not only does he offer no authority for measuring from the lowest
point on the Guidelines range, but using “a rigid mathematical formula” to
evaluate reasonableness has been rejected, see Gall, 552 U.S. at 47. Accordingly,
we conclude that the sentence is procedurally reasonable.
C. Substantive Reasonableness
Harris also challenges the substantive reasonableness of his 108-month
sentence, arguing that the above-Guidelines sentence created unwarranted
sentencing disparities among similarly situated defendants. He claims that the
characteristics of his offense are addressed by the Guidelines, thus creating a
sentencing disparity. He maintains that the district court failed to identify
sufficient meaningful distinctions between him and others who committed similar
offenses to warrant the variant sentence.
“Unlike procedural reasonableness review, which focuses on the
permissibility of relying on a particular factor, substantive reasonableness review
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broadly looks to whether the district court abused its discretion in weighing
permissible § 3553(a) factors in light of the ‘totality of the circumstances.’”
United States v. Sayad, 589 F.3d 1110, 1118 (10th Cir. 2009) (quoting Gall,
552 U.S. at 51). “Because substantive reasonableness contemplates a range, not a
point, in this arena we recognize a range of rationally available choices that the
facts and law at issue can fairly support.” Martinez, 610 F.3d at 1227 (citations
omitted) (internal quotation marks omitted).
The district court was required to consider “the need to avoid unwarranted
sentence disparities among defendants with similar records who have been found
guilty of similar conduct,” § 3553(a)(6), but “this factor requires a district court
to take into account only disparities nationwide among defendants with similar
records and Guideline calculations,” Martinez, 610 F.3d at 1228 (internal
quotation marks omitted). The district court was not required to distinguish
Harris’s “characteristics and history from those of the ordinary offender
contemplated by the Guidelines.” Smart, 518 F.3d at 808 (internal quotation
marks and ellipsis omitted). Moreover, “[s]ince the District Judge correctly
calculated and carefully reviewed the Guidelines range, [she] necessarily gave
significant weight and consideration to the need to avoid unwarranted
disparities.” Gall, 552 U.S. at 54. Accordingly, based on the court’s
consideration of the appropriate factors, we reject Harris’s claim that his sentence
is substantively unreasonable based on alleged sentencing disparities.
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We next consider whether Harris’s sentence is within the range of
rationally available choices fairly supported by the facts and law. As discussed
above, the district court determined that a Guidelines sentence would produce a
sentence less than necessary to achieve the purposes of § 3553(a) because the
Guidelines failed to take into full consideration Harris’s criminal history, his
treatment of his subordinates in the fraudulent scheme, his arrogance and abusive
demeanor, or his lack of remorse and failure to acknowledge responsibility. See
§ 3553(a)(1) & (2)(A). The court further found that an upward-variant sentence
was warranted based on the seriousness of the offense, the need to promote
respect for the law, and the need to protect the public. See id. § 3553(a)(2)(A) &
(C). As a result, the court determined that a 108-month sentence would best
achieve the purposes of § 3553(a). “In examining a deviation from the advisory
Guidelines, this court may consider the extent of the deviation, but must give due
deference to the district court’s decision that the § 3553(a) factors, on a whole,
justify the extent of the variance.” Sayad, 589 F.3d at 1116 (internal quotation
omitted); see also Smart, 518 F.3d at 808 (stating deferential standard of review
precludes our examination of the weight the district court gave the § 3553(a)
factors or its balancing of those factors).
Applying our deferential standard of review, and “tak[ing] into account the
totality of the circumstances, including the extent of [the] variance from the
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Guidelines range,” Gall, 552 U.S. at 51, we determine that the above-Guidelines
sentence of 108 months is substantively reasonable.
V. Conclusion
The district court’s sentence in this case was both procedurally and
substantively reasonable. Accordingly, this court AFFIRMS the 108-month
sentence imposed on Jeffrey Harris.
Entered for the Court
Michael R. Murphy
Circuit Judge
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