United States v. Allen Smith , 751 F.3d 107 ( 2014 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
Nos. 13-1390, 13-1546, 13-1640 & 13-1718
_____________
UNITED STATES OF AMERICA
v.
ALLEN SMITH,
Appellant
(D.C. Crim. No. 06-cr-00377-002)
______________
UNITED STATES OF AMERICA
v.
ANTOINE NORMAN,
a/k/a Ant
ANTOINE NORMAN,
Appellant
(D.C. Crim. No. 06-cr-00377-004)
______________
UNITED STATES OF AMERICA
v.
CHARLES WHITE,
a/k/a Pooch
a/k/a Pooh
CHARLES WHITE,
Appellant
(D.C. Crim. No. 06-cr-00377-001)
______________
UNITED STATES OF AMERICA
v.
MICHAEL MERIN,
Appellant
(D.C. Crim. No. 06-cr-00377-003)
______________
APPEAL FROM THE UNITED STATES DISTRICT
COURT FOR THE EASTERN DISTRICT OF
PENNSYLVANIA
District Judge: Honorable R. Barclay Surrick
____________
Submitted Under Third Circuit LAR 34.1(a)
April 8, 2014
____________
Before: HARDIMAN, SLOVITER and BARRY,
Circuit Judges
(Opinion Filed: May 9, 2014)
____________
Peter A. Levin, Esq.
1927 Hamilton Street
Philadelphia, PA 19130
Counsel for Appellant Allen Smith
Kenneth C. Edelin, Jr., Esq.
Suite 1410
1500 John F. Kennedy Boulevard
Two Penn Center Plaza
Philadelphia, PA 19102
Counsel for Appellant Antoine Norman
David S. Rudenstein, Esq.
9411 Evans Street
Philadelphia, PA 19115
2
Counsel for Appellant Charles White
Lawrence J. Bozzelli, Esq.
Suite 701
211 North 13th Street
Philadelphia, PA 19107
Counsel for Appellant Michael Merin
Zane David Memeger, Esq.
United States Attorney
Robert A. Zauzmer, Esq.
Assistant U.S. Attorney
Chief of Appeals
David J. Ignall, Esq.
Assistant U.S. Attorney
Office of the United States Attorney
615 Chestnut Street
Suite 1250
Philadelphia, PA 19106
Counsel for Appellee
____________
OPINION OF THE COURT
____________
BARRY, Circuit Judge
Allen Smith, Antoine Norman, Charles White, and
Michael Merin were sentenced in 2008 for offenses related to
their participation in a conspiracy to defraud banks. On direct
appeal, we affirmed their convictions, but vacated their
sentences and remanded for the District Court to reconsider
two sentencing issues. Now, following resentencing, and in
four separate appeals that have been consolidated for
disposition, they challenge their new sentences and Smith
challenges his new order of restitution. We will vacate the
order of restitution and, in all other respects, we will affirm
the judgments of sentence.
3
I. BACKGROUND
A. Trial and the Initial Sentencing1
Between February 2004 and November 2005,
appellants participated in a scheme to defraud four banks—
Commerce Bank, Wachovia Bank, M&T Bank, and PNC
Bank—out of hundreds of thousands of dollars. Although
appellants each had individual responsibilities in the scheme,
they worked together to steal the personal identification
information of account holders at the four banks. Check-
runners, sometimes using false identification cards provided
by appellants, would then pose as those account holders and
withdraw money from their accounts, at times doing so by
cashing counterfeit or closed-account checks.
On July 26, 2006, appellants and six co-defendants
were charged with various offenses in a 22-count indictment.
Following trial, appellants were each convicted of one count
of conspiracy to commit bank fraud and aggravated identity
theft, in violation of 18 U.S.C. § 371. They were also
convicted of one or more substantive counts of bank fraud, in
violation of 18 U.S.C. § 1344, and multiple counts of
aggravated identity theft, in violation of 18 U.S.C. § 1028A.
The District Court sentenced appellants at separate
hearings between September and December 2008, applying to
all of them several offense-level enhancements pursuant to
the Sentencing Guidelines. One was a four-level
enhancement under U.S.S.G. § 2B1.1(b)(2) for an offense
involving at least fifty victims. Various within-Guidelines
sentences of imprisonment were thereafter imposed, as well
as terms of supervised release, special assessments, and
orders of restitution. As relevant here, Smith was ordered to
pay restitution of $68,452.
1
Facts regarding the underlying offense conduct are taken
from United States v. Norman, 465 F. App’x 110 (3d Cir.
2012), in which we resolved the issues appellants raised on
direct appeal.
4
B. The Direct Appeal
On direct appeal, appellants alleged a number of trial
and sentencing errors. As we noted above, we affirmed their
convictions, but vacated their sentences and remanded for
reconsideration of certain sentencing issues.
The government conceded on direct appeal that
resentencing was necessary in light of our decision in United
States v. Kennedy, 554 F.3d 415 (3d Cir. 2009), which issued
subsequent to the sentencings in this case. The District Court
had found that appellants’ conduct injured 146 victims,
including many account holders who were eventually
reimbursed by the banks for their losses. Kennedy held,
however, that account holders who suffer only temporary
losses are not victims for purposes of the victim enhancement
under § 2B1.1(b)(2). 554 F.3d at 419. We, thus, determined
that it was appropriate to remand the case “for proceedings
consistent with our opinion in Kennedy.” Norman, 465 F.
App’x at 121. In doing so, we noted that, even under
Kennedy, reimbursed account holders “may nevertheless
qualify as victims if they ‘spent time or money seeking
reimbursement.’” Id. (quoting Kennedy, 554 F.3d at 422).
We left it “to the District Court’s discretion as to whether to
allow additional evidence” regarding the number of victims.
Id. We also determined that the District Court erred in
calculating Smith’s criminal history category. We vacated
appellants’ sentences and remanded for reconsideration of
these two issues.2
C. Resentencing Proceedings
On November 2, 2012, before it held individual
sentencing hearings, the District Court held a joint hearing to
ascertain, as to all appellants, the number of victims for
purposes of § 2B1.1(b)(2).
The government’s first witness was Marion Marcuggi,
2
On resentencing, the District Court lowered Smith’s
criminal history category from IV to III. Smith does not
challenge that before us, and we will not address it further.
5
a Commerce Bank customer. Marcuggi testified that, in
2004, Commerce Bank reported that a person using her name
made a number of suspicious withdrawals from various bank
locations. The next day, Marcuggi drove to her local branch,
reported that the transactions were fraudulent, and worked
with bank representatives to close her existing accounts and
open new ones. Within a few days, Commerce Bank
reimbursed the funds that had been taken from the account.
Before then, Marcuggi made several trips to the police station
to fill out reports and provide information for purposes of the
criminal investigation that ensued. She was not, however,
reimbursed for any of her time or travel expenses.
Elaine Ford, a PNC Bank customer, was next to
testify. After noticing a discrepancy between her bank
statement and check register in April 2005 and receiving
several late-payment notices during the following month,
Ford stated that she drove to her bank to report that money
was missing from her account. There, she met with the
branch manager, who flagged her account and, together, they
contacted the police. One week later, Ford closed her account
and opened a new one. She returned to the bank on another
occasion to confirm that she was not the individual captured
in surveillance footage conducting a transaction on her
account and that the signature the unidentified person
provided was not Ford’s own. Her two trips to the bank took
several hours. She also spent approximately three hours on
the phone with the bank to resolve the unauthorized activity.
PNC Bank replaced the stolen funds one month after Ford
first reported the suspicious transactions. The bank did not
reimburse her for her time or the cost of transportation to and
from the bank.
Postal Inspector Thomas Ninan, the agent assigned to
the case, was the government’s final witness. He testified
that, during the week leading up to the hearing, he
interviewed Sandra Posey, Arelis Diaz, Kim Cogswell,
Angela Peffley, Michelle Rosmarin, and Joanne Ponzio, all of
whom discovered fraudulent activity in their accounts that
was traced to appellants’ bank fraud operation, and all of
whom were eventually reimbursed by their respective banks
for the funds fraudulently taken. With the exception of
6
Ponzio, each of those account holders also prepared a written
statement.3 Ninan identified the written statements, and they
were admitted into evidence.
According to those statements, Posey, Diaz, Peffley,
and Rosmarin discovered that money had been removed from
their accounts without their authorization and Cogswell
learned from Commerce Bank’s fraud department that her
account had been closed when fraudulent activity was
detected.4 Each of the account holders traveled to her bank at
least once to report that she had not consented to the
transactions and to resolve issues related to the fraud. Two of
them, Posey and Diaz, were required to go to their banks
more than once. Posey went twice, initially to submit a
reimbursement form and four or five weeks later because the
money had not yet been restored to her account. Diaz visited
her bank, located five miles from her home, once or twice a
week for a period of two or three weeks, and called the bank
every other day inquiring about the status of its fraud
investigation and her promised reimbursement.
Some of the account holders stated that they needed to
take time off from work to tend to these matters. Cogswell
used a vacation day to meet with bank personnel, and Peffley
took two unpaid days to try to find out why money was
missing and her account overdrawn. Peffley and her husband
took another day without pay to attend court proceedings
relating to this case. For her part, Diaz cut short a planned
vacation to address the unaccounted-for withdrawal on her
account and, without adequate funds at her disposal, had to
use money intended for her vacation to pay bills that came
due.
3
Diaz, Cogswell, Peffley, and Rosmarin provided their
written statements directly to Ninan. Posey gave her
statement to another inspector, but Ninan confirmed that the
written statement matched in substance what Posey said
during his interview of her.
4
Cogswell did not specifically claim in her statement that
money was taken from her account, although Ninan’s
testimony suggests that she was at some point reimbursed for
stolen funds.
7
With respect to Ponzio, Ninan testified that she had
planned to appear as a witness but was unable to attend the
hearing due to complications from Hurricane Sandy and was
unable to provide a written statement. Ninan, therefore,
testified as to what she told him during the course of their
multiple conversations. In addition, he had prepared a
memorandum memorializing those conversations, a
memorandum the government provided to appellants on the
morning of the hearing. According to Ninan’s testimony,
Ponzio informed him that, in 2004, she discovered that money
was missing from her Commerce Bank account, leaving her
with a negative balance and causing some of her checks to
bounce. She took a vacation day from work and drove to the
bank to resolve the problem and seek reimbursement and to
the police station to report the theft. At some point after her
visit, Commerce Bank reimbursed Ponzio for the money
taken from her account, but did not reimburse her for her time
or travel expenses. Ninan testified that Posey, Diaz,
Cogswell, Peffley, and Rosmarin similarly made at least one
trip to their banks before being reimbursed.
Following the joint hearing, the parties submitted
supplemental memoranda addressing the application of the
victim enhancement. Appellants objected to the introduction
of additional evidence, arguing that the government could
have presented this evidence at the initial sentencing hearings
but failed to do so. They further asserted that the introduction
of witness testimony through Inspector Ninan violated their
constitutional rights both under the Confrontation Clause,
because they had no opportunity to cross-examine the account
holders themselves, and the Due Process Clause, because the
witness statements were unreliable and because appellants did
not receive those statements from the government until a day
or two before the hearing. The District Court rejected their
arguments and concluded that the offenses involved twelve
victims: the four banks that reimbursed their account holders’
losses and the eight account holders who provided statements
in court or through Ninan. That finding triggered a two-level
enhancement under § 2B1.1(b)(2)(A) for a theft or fraud
offense involving ten or more victims.
The District Court subsequently resentenced appellants
8
at individual hearings. The Court reduced the term of
imprisonment as to each one, imposed the same special
assessment, and maintained or lowered the term of supervised
release. It also confirmed the existing orders of restitution
against White, Norman, and Merin, but increased Smith’s
order of restitution by $9,000, from $68,452 to $77,452.
Appellants timely filed separate appeals that have been
consolidated for purposes of disposition.
II. ANALYSIS5
On appeal, appellants, in varying configurations, press
many of the same arguments presented to the District Court.
We address each in turn.
A. Reopening the Record
Smith and White renew their contention that the
District Court acted improperly by reopening the record and
permitting the government to introduce at the joint hearing
additional evidence regarding the number of victims. The
District Court’s decision to reopen the record is reviewed for
abuse of discretion. United States v. Coward, 296 F.3d 176,
180 (3d Cir. 2002).
When determining whether to reopen a proceeding, the
paramount factor for a district court to consider is whether
reopening, if permitted, would prejudice the party opposing it.
United States v. Kithcart, 218 F.3d 213, 220 (3d Cir. 2000).
Timing is key to this analysis. “If [reopening] comes at a
stage in the proceedings where the opposing party will have
an opportunity to respond and attempt to rebut the evidence
introduced,” the possibility of prejudice is greatly lessened.
Coward, 296 F.3d at 181 (quoting United States v.
Blankenship, 775 F.2d 735, 741 (6th Cir. 1985)). In addition,
a party that seeks to reopen a proceeding must provide a
reasonable explanation for its failure to initially present the
evidence. Kithcart, 218 F.3d at 220. In this regard,
5
The District Court had jurisdiction pursuant to 18 U.S.C. §
3231. We have jurisdiction pursuant to 18 U.S.C. § 3742(a)
and 28 U.S.C. § 1291.
9
“[c]onsideration should be given to whether the law on point
at the time was unclear or ambiguous.” Coward, 296 F.3d at
182.
Appellants were not prejudiced by reopening the
record. They received notice of the evidence to be offered by
the government prior to the November 2012 hearing and were
afforded an opportunity to respond to and rebut that evidence
through cross-examination of the witnesses who testified and
by the submission of post-hearing memoranda. Appellants
also had the opportunity to offer evidence of their own at the
hearing, and declined to do so.
Moreover, the government provided a reasonable
explanation for why it had not previously offered evidence
specifically addressing the unreimbursed costs incurred by
the account holders who were victimized by appellants. At
the time of the initial sentencings, we had not yet decided
whether an individual who recovers his or her losses is a
victim under § 2B1.1(b)(2), and the District Court accepted
the government’s theory that temporary losses were sufficient
to confer victim status. Certainly, the “prevailing rule of our
sister circuits” was that, to be a victim, an individual must
suffer a permanent monetary loss. Norman, 465 F. App’x at
121 (citing United States v. Conner, 537 F.3d 480, 489 (5th
Cir. 2008); United States v. Icaza, 492 F.3d 967, 969-70 (8th
Cir. 2007); United States v. Yagar, 404 F.3d 967, 971-72 (6th
Cir. 2005)). The decisions of the courts of appeals were not
unanimous, however. In United States v. Lee, 427 F.3d 881,
895 (11th Cir. 2005), the Eleventh Circuit suggested that even
a temporary loss rendered one a victim under the Guidelines.
Critically, we had not yet addressed the question, first doing
so and rejecting the government’s approach in United States
v. Kennedy, after appellants were sentenced. Thus, the
District Court was warranted in determining that the law on
point was “unclear or ambiguous” at the time of initial
sentencing.6 Coward, 296 F.3d at 182. In view of our
6
Disagreement over § 2B1.1(b)(2)’s definition of “victim”
has, in fact, persisted. Shortly after we decided Kennedy, the
First Circuit squarely rejected our interpretation, concluding
that, regardless of whether account holders are reimbursed,
10
acknowledgement that we would “leave it to the District
Court’s discretion as to whether to allow additional
evidence,” Norman, 465 F. App’x at 121, the District Court
did not overstep the bounds of that discretion when it decided
to do just that.
B. Adequacy of Evidence and Notice
Appellants also contend that the government’s
introduction of evidence at the joint hearing violated their
constitutional rights and did not comply with the Federal
Rules of Evidence. They maintain that the hearing in
question was not a sentencing hearing, but was instead an
evidentiary hearing at which their Sixth Amendment rights
applied. Consequently, according to appellants, the
introduction of witness testimony through the witnesses’
written statements and Ninan’s testimony deprived them of
their right under the Confrontation Clause to confront adverse
witnesses and constituted impermissible hearsay. In addition,
they argue that the unreliability of the hearsay statements and
the government’s failure to provide them with adequate
notice of the evidence it intended to present abridged their
right to due process. We review de novo whether the
Constitution and Federal Rules of Evidence incorporate the
rights envisioned by appellants. United States v. One Toshiba
Color Television, 213 F.3d 147, 151-52 (3d Cir. 2000) (en
banc); United States v. Pelullo, 964 F.2d 193, 199 (3d Cir.
1992).
As a preliminary matter, appellants are simply wrong
when they argue that the November 2012 joint hearing was
something other than part of, and integral to, the resentencing
process, even though each appellant may have been sentenced
individually at a subsequent proceeding. The joint hearing
was held to resolve the applicability of a particular Guideline
enhancement pertinent to all appellants. The fact that the
District Court heard evidence on this subject, a practice
they sustain an “actual loss” in economic terms and qualify as
“victims” if money is taken out of their accounts without
authorization. United States v. Stepanian, 570 F.3d 51, 55-58
& n.6 (1st Cir. 2009).
11
contemplated by both Federal Rule of Criminal Procedure
32(i) and § 6A1.3 of the Guidelines, does not alter the nature
of the hearing. Indeed, on direct appeal we made clear that
the only substantive matter on remand was sentencing, and
that the District Court could, if it chose, allow additional
evidence. See Norman, 465 F. App’x at 126-27.
That being so, appellants were not entitled, as a
constitutional matter, to confront the account holders whose
statements were introduced as evidence at the joint hearing.
Indeed, we have held that, according to “well settled”
precedent, “the Confrontation Clause does not apply in the
sentencing context and does not prevent the introduction of
hearsay testimony at a sentencing hearing.” United States v.
Robinson, 482 F.3d 244, 246 (3d Cir. 2007); accord United
States v. Powell, 650 F.3d 388, 392-93 (4th Cir. 2011)
(explaining that the courts of appeals have uniformly held and
recent Supreme Court cases further suggest that
Confrontation Clause rights apply only “during the
determination of [defendants’] guilt or innocence” and not
during the sentencing phase).
This conclusion also disposes of appellants’ hearsay
objection. In sentencing proceedings, the Federal Rules of
Evidence do not apply and a district court may rely on
hearsay. Fed. R. Evid. 1101(d)(3); United States v. Miele,
989 F.2d 659, 663 (3d Cir. 1993).
That does not mean, of course, that a sentencing
court’s consideration of hearsay is unbounded. Pursuant to
the Due Process Clause, hearsay statements may be used at
sentencing only if they bear “some minimal indicium of
reliability beyond mere allegation.” Robinson, 482 F.3d at
246 (internal quotation omitted). The evidence offered
through Inspector Ninan surely satisfied that standard. The
statements of the account-holder victims, just like the victim-
impact statements routinely considered at sentencing
hearings, involved matters within the knowledge of each
declarant and were made in the course of interviews by one or
more law enforcement officials. Ninan confirmed that he had
interviewed each victim and that each statement submitted to
the District Court was either drafted during the course of his
12
interview or, in the case of Posey, consistent with information
she had provided to him and to another inspector. Ninan’s
testimony as to what Ponzio told him during their
conversations is also sufficiently reliable. We have long
accepted an agent’s recitation of information obtained from a
third party who appears credible, and the District Court was
presented with no reason to doubt Ponzio’s credibility. See,
e.g., United States v. Paulino, 996 F.2d 1541, 1548 (3d Cir.
1993) (finding at least minimally reliable an agent’s
recounting of a conversation with “a reliable confidential
informant”).
We are not unmindful of appellants’ argument that
Ninan did not interview the account holders until days before
the hearing, the topics discussed in each statement were quite
similar, none of the interviews was taped, and—with the
exception of the Ponzio interview—Ninan did not take notes.
Nevertheless, these arguments are not sufficient to render the
account holders’ statements unreliable, particularly given that
the record was devoid of anything to contradict their
recounting of events. Indeed, appellants offered nothing
aside from bare speculation to suggest that Ninan exercised
undue influence over what the account holders reported in
their statements. As the District Court noted, it was
reasonable for Ninan to ask each one similar questions given
the narrow sentencing issue before the Court, i.e., whether she
suffered unreimbursed losses due to the fraud on her account.
And there was nothing in Ninan’s testimony to suggest that
the questions posed were in any way leading or improper.
Moreover, the District Court, before which, of course, Ninan
testified, deemed his testimony to be credible. That
assessment is entitled to substantial deference. United States
v. Givan, 320 F.3d 452, 464 (3d Cir. 2003).
Finally, appellants offer no authority—either binding
or even persuasive—for the proposition that due process
obligates the government to supply a criminal defendant with
advance notice of evidence it intends to present at a
sentencing hearing. Certainly, neither the Supreme Court nor
this Court has interpreted the Due Process Clause to require
13
any such thing.7 United States v. Reynoso, 254 F.3d 467, 473
(3d Cir. 2001); United States v. Jackson, 649 F.2d 967, 978-
79 (3d Cir. 1981) (observing the lack of any precedent
holding that due process requires the government to give
notice of the evidence it will offer at sentencing). Appellants’
due process challenge is, therefore, unavailing.
C. Judicial Factfinding
White and Norman argue, as they did on direct appeal,
that the District Court violated their Sixth Amendment rights
by enhancing their Guidelines range on the basis of judge-
found facts. They contend that a jury, not a sentencing judge,
must find any facts that increase a defendant’s sentence, even
if, as in this case, the sentence implicated neither a mandatory
minimum nor a statutory maximum. Our review over this
issue of law is plenary. United States v. Barbosa, 271 F.3d
438, 452 (3d Cir. 2001).
Whatever support White and Norman’s position may
find from non-authoritative sources, it is foreclosed by our
precedent. We have stated, sitting en banc, that the
constitutional rights to a jury trial and proof beyond a
reasonable doubt attach only to facts that “constitut[e] the
elements of a crime,” which are those facts that increase the
maximum statutory punishment to which the defendant is
exposed. United States v. Grier, 475 F.3d 556, 562 (3d Cir.
2007) (en banc) (relying on Apprendi v. New Jersey, 530 U.S.
466 (2000)). Facts relevant to the application of various
Guidelines provisions, which are advisory only, do not
implicate these rights. Id. at 567-68. A district court may,
7
We have, on the other hand, interpreted Federal Rule of
Criminal Procedure 32 to require pre-hearing disclosure of
documents on which a district court will rely at sentencing.
United States v. Nappi, 243 F.3d 758, 764 (3d Cir. 2001).
Appellants have not lodged an objection under Rule 32,
however, and, even if they had, there was no violation of that
Rule. Given the limited number and uncomplicated nature of
the statements here, notice of that evidence one or two days
prior to the hearing was sufficient to satisfy the Rule’s
disclosure requirement. See id. at 765.
14
consistent with the Fifth and Sixth Amendments, engage in
additional factfinding, using a preponderance-of-the-evidence
standard, to select an appropriate sentence up to the statutory
maximum based on application of the Guidelines. Id. at 562-
68. Indeed, we held as much when this very issue was raised
on direct appeal. Norman, 465 F. App’x at 120-21.
The Supreme Court’s recent decision in Alleyne v.
United States, 133 S. Ct. 2151 (2013), has not changed the
field of play. Alleyne simply held that, as with facts
necessary for the imposition of a statutory maximum
sentence, facts that trigger a statutory mandatory minimum
sentence must, under the Sixth Amendment, also be
submitted to a jury. Alleyne, 133 S. Ct. at 2160. Alleyne did
not curtail a sentencing court’s ability to find facts relevant in
selecting a sentence within the prescribed statutory range. Id.
at 2163. Thus, the District Court did not commit legal error
in so doing.
D. 10-Victim Enhancement
The central issue on appeal is whether the District
Court correctly determined the number of appellants’ victims,
as defined in § 2B1.1(b)(2). We exercise plenary review over
the District Court’s interpretation of the Guidelines and
review its factual findings for clear error. Grier, 475 F.3d at
570.
Under the Guidelines, a defendant convicted of a theft
or fraud offense is subject to a two-offense-level
enhancement if the offense “involved 10 or more victims.”
U.S.S.G. § 2B1.1(b)(2)(A). The Commentary to the 2005
version of the Guidelines, which all parties agree is the
version applicable to sentencing in this case, defined “victim”
as “any person who sustained . . . actual loss.” Id. § 2B1.1
cmt. n.1.8 “Actual loss,” in turn, is defined as “the reasonably
8
Guidelines Commentary “that interprets or explains a
guideline is authoritative unless it violates the Constitution or
a federal statute, or is inconsistent with, or a plainly erroneous
reading of, that guideline.” Stinson v. United States, 508 U.S.
15
foreseeable pecuniary harm that resulted from the offense.”
Id. cmt. n.3(A)(i). The Application Notes explain that
“‘[p]ecuniary harm’ means harm that is monetary or that
otherwise is readily measurable in money,” and, therefore,
does not include non-economic harm. Id. cmt. n.3(A)(iii).
Certain forms of economic damages are also excluded from
the Guidelines’ definition of “actual loss.” These include
“costs incurred by victims primarily to aid the government
in[] the prosecution and criminal investigation of an offense.”
Id. cmt. n.3(D).
As we mentioned at the outset of this Opinion, we
interpreted § 2B1.1(b)(2)’s victim enhancement provision in
United States v. Kennedy. The defendant in Kennedy used
her position as a manager of senior citizen benefits accounts
to steal money from 34 individual account holders. After
reviewing the statutory language in light of the Commentary
which, we note, is still applicable in this case, we held that
only those parties who suffer permanent “pecuniary harm”
constitute “victims” under § 2B1.1(b)(2). Kennedy, 554 F.3d
at 419. We, therefore, found that the district court in Kennedy
erred by including as victims individual account holders who
were later reimbursed the money that the defendant had
removed from their accounts. The government, we stated,
“failed to meet its burden to prove that the account holders
even knew that their funds had been stolen before they were
completely reimbursed.”9 Id.
36, 38 (1993); see also United States v. Keller, 666 F.3d 103,
108 (3d Cir. 2011).
9
The government correctly points out that, later in 2009, the
Commentary to § 2B1.1 was amended and expanded the
definition of “victim” to include not only persons who
suffered actual loss but also those “whose means of
identification [were] used unlawfully or without authority.”
U.S.S.G. § 2B1.1 cmt. n.4(E)(ii). In making this change, the
Sentencing Commission cited our decision in Kennedy. The
Commission explained that any individual whose identity is
stolen should be considered a victim for purposes of the
enhancement, “even if fully reimbursed,” because a target of
identity theft “must often spend significant time resolving
credit problems and related issues, and such lost time may not
16
Our opinion in Kennedy went on to explain that our
interpretation was consistent with the law of other circuits,
and we surveyed opinions of several of our sister courts of
appeals. Chief among them was the Sixth Circuit’s decision
in United States v. Yagar. Yagar held that an account holder
who is fully reimbursed for stolen funds cannot be considered
a victim under the Guidelines. Id. at 419-20 (reviewing
Yagar, 404 F.3d at 971). Yagar suggested, however, that
account holders who recoup those monies might still be
victims if, as a practical matter, they suffered some additional
pecuniary harm. Id. at 420. Drawing on this “Yagar carve-
out,” the Second, Ninth, and Eleventh Circuits found that
individuals who expend time, effort, and money before
successfully obtaining reimbursement suffer an actual loss
and remain victims under § 2B1.1(b)(2). 10 Id. at 421-22
be adequately accounted for in the loss calculations under the
guidelines.” Id. app. C (2011) (discussing amendment 726).
No party contends that this change has any bearing on this
case.
10
For his part, Norman contends that the account holders
cannot be victims because their monetary losses were not
specifically calculated and counted as part of the District
Court’s loss calculation. The Second, Ninth, and Tenth
Circuits have all found that a party may be considered a
victim only if the party’s loss was included in the court’s
overall loss estimate. Armstead, 552 F.3d at 780-81;
Abiodun, 536 F.3d at 169; United States v. Leach, 417 F.3d
1099, 1106-07 (10th Cir. 2005). Norman did not raise this
argument in the District Court, however, and we, therefore,
review for plain error. United States v. Russell, 564 F.3d 200,
203 (3d Cir. 2009); Fed. R. Crim. P. 52(b). To prevail on
appeal under plain error review, a defendant “must establish
an error that is plain, which affect his substantial rights, and
which, if not rectified, would seriously affected the fairness,
integrity or public reputation of judicial proceedings.” United
States v. Ward, 626 F.3d 179, 183 (3d Cir. 2010). Here,
Norman fails to satisfy that standard because he has not
established an error that was plain. We note that, unlike the
Second, Ninth, and Tenth Circuits, we have not spoken as to
how district courts must account for the number of victims in
the loss calculation, and we decline to do so here.
17
(discussing United States v. Abiodun, 536 F.3d 162 (2d Cir.
2008); United States v. Armstead, 552 F.3d 769 (9th Cir.
2008); United States v. Pham, 545 F.3d 712 (9th Cir. 2008);
Lee, 427 F.3d at 895). We agreed with the general approach
of those courts, and stated that “had the Government shown
that the account holders that Kennedy defrauded spent time or
money seeking reimbursement, this would be a closer case.”
Id. at 422. No such evidence had been presented, however.
Our apparent approval of the carve-out recognized in “the
Yagar line of cases” was, therefore, obiter dictum. Id.
This case presents the opportunity to adopt Kennedy’s
dicta as a holding of our Court: a party that is reimbursed for
stolen funds but, as a practical matter, suffers additional
pecuniary harm may qualify as a victim suffering “actual
loss” under § 2B1.1(b)(2).11 We see no need to define the full
scope of pecuniary harm capable of conferring victim status.
For purposes of this case, it is sufficient to hold that one
example of cognizable pecuniary harm is the expenditure of
time and money to regain misappropriated funds and replace
compromised bank accounts. This interpretation of “actual
loss” and “victim” comports with both the Guidelines and the
conclusions of coordinate appellate courts, not to mention the
commonsense proposition that an account holder who must
spend time and resources to dispute fraudulent activity,
recoup stolen funds, and repair his or her credit and financial
security has suffered a monetizable loss that is a reasonably
foreseeable and direct consequence of the defendant’s theft or
fraud. See, e.g., Pham, 545 F.3d at 721; Abiodun, 536 F.3d at
168-69.
Here, the District Court did not clearly err in
determining that appellants’ offenses involved twelve victims,
11
Again, the 2009 amendments to the Guidelines
Commentary, which do not apply in this case, appear to make
it easier for targets of identity theft to qualify as victims.
Thus, what we say here regarding the requirements for victim
status may not necessarily extend to the subjects of identity
theft under the revised Guidelines Commentary. See Keller,
666 F.3d at 108 (finding that we are bound by amendments to
Guidelines Commentary).
18
a number sufficient to trigger the ten-or-more-victims
enhancement. The parties, save one, agree that the four banks
from which funds were taken constitute victims of appellants’
bank fraud conspiracy.12 The government also presented
evidence that the eight individual account holders suffered
actual, pecuniary losses as a result of appellants’ conduct.
Appellants are correct that the time and money spent by these
account holders to assist in the investigation by law
enforcement and the eventual prosecution—their trips, e.g., to
the police station and to court—cannot be deemed actual loss.
U.S.S.G. § 2B1.1 cmt. n.3(D)(ii). Even so, the account
holders suffered monetizable harm in their efforts to regain
the funds taken from their accounts, efforts that necessarily
included reporting the fraud to their respective banks and
disputing the unauthorized activity in the first instance.
After noticing suspicious activity and prior to being
reimbursed by her bank, each of the eight account holders
traveled to a branch office at least once to deal with the fraud.
Some of them were required to make multiple trips or phone
calls to have their funds restored and establish new accounts,
spending hours of their time to do so. These account holders
were not reimbursed for the expenses involved with their trips
or the time spent in communication with the banks.
Additionally, Ponzio, Cogswell, and Peffley had to take time
off from work and use vacation days to attend meetings at
their banks, Diaz was forced to cut short her vacation to
resolve her financial troubles, and Rosmarin paid a credit
service to investigate her credit rating in the wake of the
unauthorized account activity she had suffered. These are the
very sorts of actual losses recognized by courts following
Yagar, and are sufficient to confirm the eight account
holders’ status as victims under the Guidelines. See Pham,
545 F.3d at 721 (finding forfeited vacation days and the cost
12
Only Smith disagrees. He challenges the inclusion of M&T
Bank as a victim of his conduct, as he was acquitted of the
bank fraud charge with respect to it. His claim is of dubious
merit, given that he was convicted of conspiracy to commit
bank fraud and the conspiracy’s activity targeted that bank.
But even if we do not consider M&T Bank’s victim status as
to Smith, there remain ten or more victims of his conduct.
19
of gas for trips to and from banks, telephone calls, stamps,
and replacement checks related to resolution of disputed
account activity and initiation of fraud investigations with
credit reporting services could constitute “actual loss” under
the Guidelines); Abiodun, 536 F.3d at 168-69 (finding the
value of “lost time” spent securing reimbursement could
constitute “actual loss”); cf. Conner, 537 F.3d at 491 (noting
the possibility that the value of “business time” spent paying
fraudulent charges could be considered an “actual loss”).
Appellants counter that it is only the expenditure of
substantial or appreciable amounts of time and money that
constitutes actual loss—far more, they suggest, than that
spent by the account holders here. It is certainly true that
Yagar found that the account holders in that case could not
qualify as victims because the money taken from their
accounts was “immediately covered by a third-party” and
their losses were “short-lived.” Yagar, 404 F.3d at 971.
Other courts, relying on this language, have intimated that the
speed of reimbursement or the magnitude of costs realized
bears on whether an account holder has suffered an actual
loss. See, e.g., Pham, 545 F.3d at 719-20; Lee, 427 F.3d at
895. But the controlling question for the Yagar court was
whether the account holders “suffered [an] adverse effect as a
practical matter from [the defendant’s] conduct,” not the
number of days or amount of money it took to regain their
stolen funds.13 Yagar, 404 F.3d at 971. In Yagar’s factual
recitation, there is simply no indication that the account
holders had to expend any time or resources to secure
reimbursement.
In view of Yagar’s rationale, which we adopt, we see
no principled reason to treat only appreciable or substantial
13
Indeed, the Yagar court went so far as to analyze whether
there was sufficient evidence to find that six account holders
suffered pecuniary harm when they had to order new checks.
Yagar, 404 F.3d at 971-72. Although the court found that the
record failed to establish who ultimately paid for the new
checks, the account holders or their banks, it did not find that
reordering checks, which assuredly requires minimal time and
money, was too small a cost to constitute an “actual loss.”
20
expenditures of time and money as “actual losses” under the
Guidelines. The size of the loss has no bearing on its ability
to be monetized, its foreseeability to the defendant, or its
nexus to the offense conduct. Nor would the lack of an
“appreciable” loss requirement transform every customer
whose account is invaded into a Guidelines victim, rendering
superfluous the “actual loss” element. As the facts of
Kennedy demonstrate, some account holders may be
reimbursed before they even realize that money has been
taken from their accounts. See Kennedy, 554 F.3d at 419. In
sum, the account holders in this case suffered unreimbursed,
albeit small, losses in attempting to redress the fraudulent
activity perpetrated by appellants. We hold that they are
victims under the Guidelines.
Smith makes one last argument against application of
the victim enhancement, an argument that need not long
detain us. He argues that a separate Guideline provision, §
2B1.6, renders the § 2B1.1(b)(2) victim enhancement
inapplicable. The Application Notes to § 2B1.6 state that, if a
sentence for aggravated identity theft under 18 U.S.C. §
1028A is imposed in conjunction with a sentence for a
separate, underlying offense, as it was in this case, the district
court should not apply an enhancement “for the transfer,
possession, or use of a means of identification when
determining the sentence for the underlying offense.”
U.S.S.G. § 2B1.6 cmt. n.2. Quite plainly, the victim
enhancement under § 2B1.1(b)(2) is not an enhancement
based on the use of a “means of identification”; it is an
enhancement based on the number of victims. Section 2B1.6
does not preclude application of the victim enhancement with
respect to appellants’ bank fraud offenses.
E. The Order of Restitution as to Smith
In its initial judgment of sentence, the District Court
ordered Smith to pay restitution in the amount of $68,452.
This amount reflected losses incurred by Commerce Bank
and Wachovia Bank. Although Smith’s pre-sentence report
identified a $9,000 loss to M&T Bank, as well, the Probation
Department took no position as to whether Smith should be
held responsible for that amount or for any loss to PNC Bank.
21
(Smith PSR ¶¶ 68, 170.) Those losses were certainly
attributable to the activities of the conspiracy, but Smith had
been acquitted of the substantive fraud counts relating to
those institutions. At sentencing, the District Court did not
hold Smith responsible for the losses to M&T Bank or PNC
Bank, and neither Smith nor the government appealed that
ruling.
During Smith’s resentencing, however, the District
Court, at the parties’ urging, revisited the matter of his
restitution. The government argued that Smith should be held
jointly and severally liable for repaying the $9,000 loss
incurred by M&T Bank because it was a reasonably
foreseeable consequence of and attributable to the conspiracy
of which he was a member. Smith maintained that his order
of restitution should be reduced to $0. He argued that his
acquittal on the substantive count relating to M&T Bank
precluded any responsibility as to him for the loss realized by
that institution, and that he should not be ordered to pay
restitution to the other banks because they failed to submit
loss reports to the Probation Department. The District Court
agreed with the government, and increased the amount of
Smith’s restitution by $9,000 to $77,452.
On this appeal, Smith again contends that his
restitutionary obligation should be extinguished; however, the
government has altered its position. It now contends that the
initial order of restitution in the amount of $68,452 should be
reinstated, and concedes that the District Court exceeded the
scope of our remand by reconsidering that issue. We exercise
plenary review as to whether the District Court properly
interpreted and applied our mandate. Kilbarr Corp. v. Bus.
Sys. Inc., B.V., 990 F.2d 83, 87-88 (3d Cir. 1993).
The government is correct. The District Court
exceeded the scope of our mandate when it revisited its initial
order of restitution against Smith, although in so doing it was
clearly doing what counsel had asked it to do. Our mandate
identified only two sentence-related issues for the District
Court to reconsider on remand: (1) the determination of the
number of victims for purposes of a particular Guideline
enhancement and (2) the calculation of Smith’s criminal
22
history category. Norman, 465 F. App’x at 126-27;
Judgment, United States v. Norman, 465 F. App’x 110 (3d
Cir. 2012) (No. 08-3969). At no point did we authorize the
parties to reargue or the District Court to revisit its ruling on
the amount of restitution ordered against Smith.
That aside, the parties waived any argument that the
amount of restitution as to Smith should be different. A party
may not litigate on remand or subsequent appeal issues that
“were not raised in [the] party’s prior appeal and that were
not explicitly or implicitly remanded for further proceedings.”
Skretvedt v. E.I. DuPont De Nemours, 372 F.3d 193, 203 (3d
Cir. 2004). We will, therefore, vacate the revised restitution
order as to Smith and remand for the District Court to
reinstate its initial order in the amount of $68,452.
F. Merin’s Remaining Argument
Merin raises one additional argument. He contends
that the evidence at trial failed to establish an agreement on
his part to undertake or aid all of the conspiracy’s bank fraud
activity, and so the District Court erred in attributing to him
the full loss caused by the conspiracy. Merin raised, and we
rejected, this same loss-calculation argument on direct appeal.
Norman, 465 F. App’x at 123-25. That decision is law of the
case, and Merin has not shown the “extraordinary
circumstances” we generally require before we will revisit a
prior decision in the same action.14 Feesers, Inc. v. Michael
Foods, Inc., 591 F.3d 191, 207 (3d Cir. 2010).
III. CONCLUSION
For the foregoing reasons, we will affirm the
judgments of sentence, but will vacate the order of restitution
imposed against Smith and remand with instructions to
reinstate the initial order of restitution of $68,452.
14
To the extent that Merin also challenges the sufficiency of
the evidence underlying his conspiracy conviction, he failed
to raise this argument on direct appeal and it is, accordingly,
waived. See Skretvedt, 372 F.3d at 203.
23