United States v. Norman Kyle Jarrard , 301 F. App'x 839 ( 2008 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
NOV 24, 2008
No. 07-11458 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 05-00021-CR-006-HL-7
UNITED STATES OF AMERICA,
Plaintiff-Appellee
Cross-Appellant,
versus
NORMAN KYLE JARRARD,
RICHARD ERIC JARRARD, et al.,
Defendants-Appellants
Cross-Appellees.
________________________
Appeals from the United States District Court
for the Middle District of Georgia
_________________________
(November 24, 2008)
Before ANDERSON, BLACK and PRYOR, Circuit Judges.
PER CURIAM:
Norman Kyle Jarrard (Kyle), Richard Eric Jarrard (Eric), and Steven Larry
Jarrard (Steven) appeal their convictions and 41-month sentences for conspiring to
defraud Bank of Milan and Colony Bank, in violation of 18 U.S.C. § 371 in
combination with 18 U.S.C. § 1344, and knowingly defrauding a financial
institution, in violation of 18 U.S.C. § 1344. Kyle, Eric, and Steven assert multiple
arguments on appeal, which we address in turn. The Government also asserts one
issue on cross-appeal. After review, we affirm their convictions and sentences.
I.
Kyle, Eric and Steven assert the evidence was insufficient to find that Bank
of Milan was a member of the Federal Deposit Insurance Corporation (FDIC), as a
fax cover letter stating “Member [FDIC]” did not establish the bank was federally
insured.
If, at the close of all evidence, the defendant did not move for a judgment of
acquittal, we may only reverse a conviction to prevent a manifest miscarriage of
justice. United States v. Bender, 290 F.3d 1279, 1284 (11th Cir. 2002). In order
for us to find a manifest miscarriage of justice, we must find the evidence, viewed
in the light most favorable to the government, was so tenuous the defendant’s
conviction was shocking. Id. To sustain a conviction under § 1344, the
government must prove that the bank was insured by the FDIC, which is both a
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substantive element of the crime and a jurisdictional prerequisite. United States v.
Dennis, 237 F.3d 1295, 1303 (11th Cir. 2001).
In Dennis, the defendant conducted a check-kite scheme and was indicted
for bank fraud. Dennis, 237 F.3d at 1303-04. At trial, an FBI agent testified the
two banks involved were FDIC insured, but, on cross-examination, he admitted he
had not seen the insurance certificates and simply had accepted the banks officials’
word they were insured. Id. at 1304. We held the FBI agent’s testimony did not
establish the banks were federally insured, but stated a letter sent from the vice
president of one of the banks to the FBI was sufficient to establish beyond a
reasonable doubt the bank was federally insured because the bank stationary on
which the letter was written stated “MEMBER FDIC.” Id. We reversed the
conviction, however, because there was no evidence the second bank was federally
insured. Id. at 1305.
Because Kyle, Eric, and Steven did not renew their motions for judgment of
acquittal after the district court reopened the case and admitted the fax cover sheet,
we determine only whether their convictions resulted in manifest injustice. See
Bender, 290 F.3d at 1284. The fax cover sheet stating “Member [FDIC]” was
sufficient to establish the Bank of Milan was federally insured. See Dennis, 237
F.3d at 1304. Accordingly, their convictions did not result in a manifest injustice.
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II.
Kyle, Eric, and Steven contend the district court applied the wrong standard
of proof in determining the loss amount for purposes of sentencing. We review
sentencing issues not raised before the district court for plain error. See United
States v. Mangaroo, 504 F.3d 1350, 1353 (11th Cir. 2007). The Guidelines
provide that, when a defendant is convicted of conspiracy to commit multiple
offenses, he shall be sentenced as if he had been convicted on a separate count of
conspiracy for each offense. U.S.S.G. § 1B1.2(d). The commentary to § 1B1.2
provides:
Particular care must be taken in applying subsection (d) because there
are cases in which the verdict or plea does not establish which
offense(s) was the object of the conspiracy. In such cases, subsection
(d) should only be applied with respect to an object offense alleged in
the conspiracy count if the court, were it sitting as a trier of fact,
would convict the defendant of conspiring to commit that object
offense. Note, however, if the object offenses specified in the
conspiracy count would be grouped together under § 3D1.2(d) (e.g., a
conspiracy to steal three government checks) it is not necessary to
engage in the foregoing analysis, because § 1B1.3(a)(2) governs
consideration of the defendant’s conduct.
Id. § 1B1.2(d), cmt. (n.4).
Because the counts were grouped together, pursuant to § 3D1.2(d), the
district court was not required to find, beyond a reasonable doubt, that Kyle, Eric,
and Steven committed each object of the conspiracy. Instead, the general rule that
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a sentencing court is permitted to find facts by a preponderance of the evidence
applied, and thus, the district court did not plainly err in finding the loss amount by
a preponderance of the evidence. See Mangaroo, 504 F.3d at 1353; United States
v. Campbell, 491 F.3d 1306, 1314 n.11 (11th Cir. 2007) (stating a district court
may consider facts proven by a preponderance of the evidence during sentencing).
III.
Kyle, Eric, and Steven assert the district court incorrectly determined the
loss amount that Bank of Milan suffered as a result of their fraud. We review the
district court’s fraud loss calculation for clear error. United States v. Hernandez,
160 F.3d 661, 666-67 (11th Cir. 1998). Our review of a restitution order under the
Mandatory Victim Restitution Act (MVRA) involves three standards of review.
United States v. Robertson, 493 F.3d 1322, 1330 (11th Cir. 2007), cert. denied, 128
S. Ct. 1295 (2008). The legality of a restitution order is reviewed de novo, the
value of the lost property is reviewed for an abuse of discretion, and the restitution
order’s underlying factual findings are reviewed for clear error. Id. A defendant
can be held responsible for all losses resulting from a co-conspirator’s reasonably
foreseeable acts conducted in furtherance of the conspiracy. United States v.
Dabbs, 134 F.3d 1071, 1082 (11th Cir. 1998).
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Under the MVRA, the district court is required to order a defendant to pay
restitution to the victim of a loss of property. 18 U.S.C. § 3663A. Under U.S.S.G.
§ 2B1.1, a defendant’s offense level is determined by the amount of loss attributed
to the fraud. See U.S.S.G. § 2B1.1(b)(1). The district court is only required to
make a reasonable estimate of the loss, but the court cannot base its calculation on
mere speculation. Id. § 2B1.1(b)(1), cmt. (n.2(c)); United States v. Gupta, 463
F.3d 1182, 1200 (11th Cir. 2006) (discussing former U.S.S.G. § 2F1.1, which has
been consolidated with § 2B1.1), cert. denied, 127 S. Ct. 2446 (2007). The
government must establish the loss calculation with specific evidence. Gupta, 463
F.3d at 1200.
A. Kyle and Steven
The district court found that all of Bank of Milan’s loss was fraud loss
because Kyle and Steven fraudulently misrepresented the purpose for which the
loan was obtained, and concealed their debt to Colony Bank at the time of the SBA
loan, but the court did not identify the specific fraudulent misrepresentations to
which it was referring or the facts that it found that Kyle and Steven concealed.
Based on the Government’s arguments during the sentencing hearing, it appears
that Kyle and Steven are correct in assuming, with regard to the fraudulent
misrepresentations, that the court must have found that they did not intend to
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concentrate on increasing Eagle Carpet Mills’ sales, as they indicated in the SBA
loan application. It also appears that Kyle and Steven are correct that they did not
shut down Eagle Carpet Mills as soon as the company received the SBA loan, as it
had gross receipts of $1,302,910 and $456,785 in 2001 and 2002, respectively.
Additionally, Kyle and Steven are correct that their repayment history indicates
that, at the time they received the loan, they intended to repay it, as they made all
but two of the monthly payments on time for the first two-and-a-half years after the
loan.
Contrary to Kyle’s and Steven’s assertions, however, other evidence in the
record supports the court’s finding they made a material misrepresentation in the
SBA loan application when they stated they would use the loan to concentrate on
increasing Eagle Carpet Mills’ sales. Specifically, the spreadsheet listing Express
Carpet Sales loans from Colony Bank shows that, in the 9 months after the SBA
loan closed, the company received 12 different loans, totaling $504,958.99, which
implies that Kyle and Steven were concentrating on increasing the business of
Express Carpet Sales immediately after receiving the SBA loan. Therefore, the
Government presented evidence from which the district court could have found, by
a preponderance of the evidence, that Kyle and Steven did not intended to focus on
increasing the sales of Eagle Carpet Mills, as stated in the SBA loan application,
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but were focused on increasing business at Express Carpet Sales, and thus, the
court did not clearly err in finding that all of Bank of Milan’s loss was attributed to
material misrepresentations. Robertson, 493 F.3d at 1330; Gupta, 463 F.3d at
1200;; Hernandez, 160 F.3d at 666-67. Because the evidence supports the district
court’s finding based on the fact that Kyle and Steven made a material
misstatement in the SBA loan application, this Court does not need to address
Kyle’s and Steven’s additional argument that they did not conceal their Colony
Bank debt from Bank of Milan.
B. Eric
The district court did not err in finding Eric was responsible for Bank of
Milan’s loss, to the extent that Kyle and Steven were responsible, despite the fact
that he no longer was with the bank at the time of the SBA loan. Eric was
convicted of conspiring with Kyle and Steven to defraud banks through the use of
fraudulent statements, and, since Eric was aware that Kyle and Steven were
defrauding Colony Bank, it was reasonably foreseeable to him that they also would
defraud Bank of Milan, as he knew that their business was struggling financially.
Dabbs, 134 F.3d at 1082.
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IV.
Kyle, Eric, and Steven contend the district court erred in finding their fraud
involved sophisticated means. We review a district court’s findings of fact for
clear error and its interpretation of the Sentencing Guidelines de novo. United
States v. Dorman, 488 F.3d 936, 938 (11th Cir.), cert. denied, 128 S. Ct. 427
(2007). A finding that sophisticated means were used is a finding of fact reviewed
for clear error. United States v. Barakat, 130 F.3d 1448, 1456-57 (11th Cir. 1997).
The Guidelines provide for a two-level enhancement when a fraud involves
“sophisticated means.” U.S.S.G. § 2B1.1(b)(8)(C) (2003). The Guidelines define
sophisticated means as:
especially complex or especially intricate offense conduct pertaining
to the execution or concealment of an offense. For example, in a
telemarketing scheme, locating the main office of the scheme in one
jurisdiction but locating soliciting operations in another jurisdiction
ordinarily indicates sophisticated means. Conduct such as hiding
assets or transactions, or both, through the use of fictitious entities,
corporate shells, or offshore financial accounts also ordinarily
indicates sophisticated means.
Id. cmt. (n.6(B)). While we have not expressly stated what qualifies as
sophisticated means, we have held “sophisticated means involves more than
minimal planning.” United States v. Humber, 255 F.3d 1308, 1314 (11th Cir.
2001) (holding “sophisticated means” and the now defunct “more than minimal
planning” enhancements could be applied cumulatively).
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The district court did not clearly err in applying a sophisticated means
enhancement for Kyle and Steven, as their fraudulent scheme occurred over a
period of time, involved the use of a bank insider, and involved hiding the true
purposes for which the loaned money was going to be used. Additionally, the
district court did not clearly err in applying a sophisticated means enhancement for
Eric, as he used “straw borrowers” to hide from Colony Bank that he was
approving loans for a business that he owned.1
V.
On cross-appeal, the Government asserts the district court erred in finding
that Kyle, Eric, and Steven were not responsible for the full amount of Colony
Bank’s loss.
The district court found the Government failed to meet its burden of
establishing Colony Bank’s specific loss amounts attributable to specific acts of
fraud, with the exception of the counts for which Eric was convicted, as the
Government simply argued Eric had committed fraud in making loans to Kyle and
Steven, but it did not provide the court with evidence of the exact loss amount
attributed to the acts of fraud. Therefore, the Government’s argument the district
1
To the extent Eric asserts the district court erred in applying the sophisticated means
enhancement because he also received an enhancement for use of a special skill, he has waived
the argument, as he does not provide any support for his assertion the enhancements could not be
applied together.
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court did not make any factual findings is inaccurate. Additionally, the
Government’s argument there was no other explanation for the entire loss amount,
other than that it resulted from fraud, is inaccurate, as there was evidence presented
at trial from which the court could have found that not all loans made by Colony
Bank involved an act of fraud. Specifically, the court heard the following
testimony: (1) Dampier testified Eric did not mail most of the assignment letters to
Kyle’s and Steven’s customers, but this statement implies Eric did send some of
the letters, (2) Eric included the debt to Bank of Milan in several of the credit
memoranda that he prepared for the loan committee; (3) Taylor testified it was his
understanding that Express Carpet Sales, Kyle’s business, was independent from
Steven’s business; and (4) Express Carpet Sales had its own tax identification
number and filed taxes independent of Jarrard Textile Sales and Eagle Carpet
Mills. Since it was possible for some of the loans to have been made without
fraud, the Government was required to prove Colony Bank’s loss amount resulting
from the acts of fraud by doing more than arguing there were some acts of fraud
and the total loss was $736,650.41. See 18 U.S.C. § 3664(e); Gupta, 463 F.3d at
1200. The Government failed, however, to provide the district court with any
evidence connecting specific loss amounts to acts of fraud, and thus, the district
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court did not clearly err in finding the Government failed to meet its burden of
proof.
AFFIRMED.
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