United States v. Khan ( 2002 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 01-10379
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
MAHMMADU ZZAMAN KHAN,
Defendant - Appellant.
Appeal from the United States District Court
for the Northern District of Texas
(No. 3:00-CR-242-2)
April 11, 2002
Before ALDISERT,* DAVIS and PARKER, Circuit Judges.
PER CURIAM:**
Defendant Mahmmadu Zzaman Khan appeals his conviction on
nine counts of making a false statement to a federal agency in
violation of 18 U.S.C. § 1001 and for a single count of
conspiracy to violate the same. He also appeals the district
*
Circuit Judge of the Third Circuit, sitting by
designation.
**
Pursuant to 5TH CIR. R. 47.5, the Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
court’s determination that certain other false statements were
relevant conduct and its calculation of loss under the sentencing
guidelines. We affirm in all respects.
BACKGROUND
This case arises from Khan’s attempt to secure several loans
from the Small Business Administration through the Money Store, a
private lender. Khan’s brother, Shahidu, supposedly wanted to
purchase Khan’s business, Dollar Auto Service and Body Shop. To
do so, he applied for an S.B.A.-backed loan through the Money
Store. In order to qualify, Shahidu offered a tax return and
certain records from his own business, Frank Equipment & Tools.
The tax return showed his income from the previous year was
approximately $70,000; the business records were two invoices
showing amounts due for equipment purchased by Dollar Auto and
six checks showing cash Shahidu had paid into Frank Equipment.
The application was approved, and the funds were wired to Frank
Equipment.
Unbeknownst to the Money Store and the S.B.A., Khan had
previously asked one of his employees, Frank Acala, to set up a
bank account in the name of Frank Equipment & Tools. He also had
Acala arrange a mail drop for the new company. At trial, Acala
testified that Frank Equipment existed only on paper; that the
company never received any cash infusions from Khan’s brother;
and that no invoices were paid by Dollar Auto. (Shahidu’s real
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tax return showed that he had made only $48 that year.) After
the funds arrived from the S.B.A. loan, Khan several times asked
Acala to write him checks drawn on the Frank Equipment account.
From the loan proceeds, Khan used $130,000 to purchase a filling
station.
Enter Jose and Juan Villanueva. The Villanueva brothers
wanted to purchase the filling station from Khan, but first they
needed money. Jose went to the Money Store and secured an S.B.A.
loan for $260,000. It is not clear what Jose had to do to get
the proceeds, but once he did, he handed them over to Kahn. Kahn
kept the filling station.
Then, roughly a year after Shahidu allegedly applied for the
first loan, Khan himself applied for a loan through the Money
Store. He requested $390,000, but the loan was refused, the
Money Store having been informed that Khan was under
investigation for fraud. The government contends that six
falsified tax returns were submitted in support of the loan
application.
Khan was indicted on nine counts of making a false statement
to a federal agency, 18 U.S.C. § 1001 (False Claims Act), and on
one count of conspiracy. At trial, the district court instructed
the jury that it had to find that Khan specifically intended to
mislead a federal agency. The jury convicted him on all 10
counts. In addition to the conspiracy conviction, Khan received
a separate conviction for each of the false documents (nine in
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all) submitted by his brother in applying for the first loan.
The district court determined that Khan’s criminal history
category was I, and the probation office recommended an eight-
level enhancement for loss of more than $200,000 but not more
than $350,000. The P.S.R. concluded that the other loans
involved different conspirators and different businesses and were
therefore not related conduct under the sentencing guidelines.
The government objected, urging the district court to include the
loss amounts from the other two loans. The district court did,
and Khan was sentenced to 37 months’ imprisonment, the longest
term for someone of Khan’s category and offense level (19).
I.
Khan failed to move for a judgment of acquittal at the close
of evidence. As a result, we must uphold Khan’s conviction
absent “a manifest miscarriage of justice.” See United States v.
Laury, 49 F.3d 145, 151 (5th Cir. 1995). That standard is met
when “the record is devoid of evidence pointing to guilt, or the
evidence on a key element of the offense is so tenuous that a
conviction would be shocking.” Id. (internal quotation omitted).
It is apparent that the district court erroneously instructed the
jury that conviction under the False Claims Act requires the
government to prove that the defendant by his false statement
intended to mislead a government agency. Such a showing is not
required. See United States v. Yermain, 468 U.S. 63, 68-70
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(1984). The government failed to object to the court’s charging
it with this additional burden, which made the erroneous
instruction the law of the case. See United States v. Jokel, 969
F.2d 132, 136 (5th Cir. 1992). Nevertheless, the government’s
failing to prove a nonessential element cannot result in a
manifest miscarriage of justice. As we noted above, to set aside
a conviction under that standard there must be a paucity of
evidence on a key element. An element not described in the
statute of which the defendant is accused of violating cannot by
definition be a key one.
II.
Under the sentencing guidelines, “relevant conduct” is
defined as “all acts and omissions . . . that occurred during the
commission of the offense of conviction [or] in preparation for
that offense . . . and were part of the same course of conduct or
common scheme or plan as the offense of the conviction.” U.S.
SENTENCING GUIDELINES MANUAL (U.S.S.G.) § 1B1.3(a)(1)&(2)(2001).
Whether two or more offenses are part of the same course of
conduct turns on “the degree of similarity of the offenses, the
regularity (repetitions) of the offenses, and the time interval
between the offenses.” Id. § 1B1.3 cmt. n.9(A). Similarly,
multiple offenses that are part of a common scheme or plan are
“substantially connected to each other by at least one common
factor, such as common victims, common accomplices, common
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purpose, or similar modus operandi.” We review the district
court’s determination of relevant conduct for clear error. See
United States v. Anderson, 174 F.3d 515, 526 (5th Cir. 1999).
We discern no reversible error in the district court’s
determination of relevant conduct. The time between the first
loan application and the last was 13 months. All three loans
used the same modus operandi: applying for an S.B.A.-backed loan
through the Money Store using false income tax returns and other
falsified documents. In each case, the victims were the same,
the Money Store and the S.B.A. And the proceeds of each loan
were intended to or did make their way into Khan’s hands, even if
Khan was not himself the applicant to all of them.
Khan makes much of this court’s opinions in United States v.
Ford, 996 F.2d 83 (5th Cir. 1993), and United States v. Garcia,
962 F.2d 479 (5th Cir. 1992). In those two cases we were
concerned with whether defendants’ having been sentenced for
prior offenses made them career offenders under the sentencing
guidelines, which requires that separate sentences for “related
offenses” be treated as one. See generally U.S.S.G. § 4A1.2(a).
To determine whether a prior offense is related or not, the
commentary directs the sentencing court back to § 1B1.3(a), which
gives the definition for “relevant conduct.” See id. § 4A1.2
cmt. n.1. Thus, an offense that subjects a defendant to being
sentenced as a career offender cannot also subject him to an
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enhancement for its being part of the “same course of conduct or
a common scheme or plan as the offense of conviction.” This is
the teaching of our recent opinion in United States v. Cade, 279
F.3d 265 (5th Cir. 2002).
But we need not try to square our conclusion that the
sentences in Ford and Garcia did not arise from related conduct
with ours that the three fraudulent loans in this case did. In
both of those cases, this court reviewed the district court’s
determination of relatedness de novo, a practice that the Supreme
Court has since rejected as one for which the courts of appeal
are not well positioned. See Buford v. United States, 121 S. Ct.
1276, 1280 (2001). Thus, even if we disagree with the district
court’s determination regarding relatedness, the court cannot
reverse unless it was clear error. For the reasons stated above,
the facts in this case do not support such a conclusion. Second,
possible inconsistency between this court’s construction of the
term “related offense” under § 4A1.2(a) in Ford and Garcia and
our construction of “relevant conduct” under § 1B1.3(b) does not
prevent us from affirming the district court’s finding of
relatedness now, for § 4A1.2(a) did not tie the meaning of its
term to § 1B1.3(b) until after those cases were decided. See
U.S.S.G. app. C, amendment 493 (effective Nov. 1, 1993); see also
Garcia, 962 F.2d at 481-82 (noting that the guidelines do not
define “common scheme or plan” for purposes of § 4A1.2(a)).
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III.
Khan failed to object to the district court’s calculation of
loss under the sentencing guidelines. We must therefore uphold
the district court’s determination unless plain error is evident.
See United States v. Chung, 261 F.3d 536, 539 (5th Cir. 2001).
The face value of the loans was $996,000; the actual loss
suffered by the victims was $506,203. For sentencing purposes,
counting intended loss resulted in a one-level increase, which in
turn had the effect of raising Khan’s term of imprisonment by up
to four months.
According to the application notes to the guideline under
which Khan was sentenced, “[i]n fraudulent loan application
cases[,] . . . . the loss is the amount of the loan not repaid at
the time the offense is discovered, reduced by the amount the
lending institution has recovered (or can expect to recover) from
any assets pledged to secure the loan.” U.S.S.G. § 2F1.1 cmt.
n.8(b)(2000), consolidated at U.S.S.G. § 2B1.1 cmt. n.2 (2001).
The same application notes also state that in some cases actual
loss “will tend not to reflect adequately the risk of loss
created by the defendant’s conduct.” Id. Here, as noted before,
Khan sought but was not approved for the third loan, whose face
value was $350,000. Not counting this amount as loss would have
the effect of understating the seriousness of Khan’s conduct.
Furthermore, the reason there was no actual loss on the third
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loan was that the Money Store had learned that Khan was suspected
of making other bad loans, not because that Khan had done some
salutary act. Cf. id. Finally, there being no findings
regarding the value of any collateral Khan might have pledged in
support of the third loan, we have no way of evaluating whether
Khan could not have intended to convert the full amount, as he
now argues. For these reasons, we discern no plain error in the
district court’s counting the full $350,000.
CONCLUSION
Khan’s convictions and sentence are AFFIRMED.
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