United States v. Dennis ( 2002 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________
No. 01-20726
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UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
JAMES WILLIAM DENNIS,
Defendant-Appellant.
_________________________
Appeal from the United States District Court
for the Southern District of Texas
H-00-CR-819-ALL
_________________________
June 11, 2002
Before KING, Chief Judge, SMITH James Dennis pleaded no contest to fifteen
and PARKER, Circuit Judges. counts of theft from an organization receiving
federal funds and twelve counts of theft of
JERRY E. SMITH, Circuit Judge:* public money. The district court made a two-
level upward departure because Dennis’s theft
inflicted nonobvious, indirect financial harms
and directly tainted a nonprofit organization’s
* reputation. Dennis now argues that the guide-
Pursuant to 5TH CIR. R. 47.5, the court has
lines discourage counting consequential, tan-
determined that this opinion should not be pub-
lished and is not precedent except under the limited gible harms toward the loss calculation, even
circumstances set forth in 5TH CIR. R. 47.5.4. through departures.
Dennis did not make this argument to the tence Report (“PSR”) recommended increas-
district court. He admits that court could law- ing Dennis’s base offense level of four by ten
fully impose an identical sentence on remand levels because the loss was between $250,000
based only on the harm to reputation. We and $300,000; a two-level increase because the
conclude that the district court did not commit offense involved more than minimal planning;
plain error. and a two-level increase for abuse of a position
of public or private trust. These increases
I. yielded a total offense level of 18. Dennis’s
Dennis worked as vice president for Shel- criminal history category was I, yielding a
tering Arms Senior Services, Inc. (“SASS”), a guideline range of 27 to 33 months.
nonprofit organization administering grants
from various federal agencies. The Texas De- The PSR recommended an upward depar-
partment of Housing and Community Affairs ture for two reasons. First, Robert Phillips,
and the Harris County Community Develop- the president of SASS, explained that SASS
ment Department contracted with SASS to sustained additional costs not included in the
provide services for the elderly. Dennis or- original loss calculation: $160,000 in staff time
dered and tracked equipment such as heaters assessing the total financial damage, $109,500
and air conditioners. in audit fees, and $11,413 for Dennis’s unap-
proved equipment storage fees. The PSR
In April 1999, SASS learned of inventory found that these losses fell outside U.S.S.G.
irregularities and began reviewing its purchas- § 2B1.1’s definition of loss and 18 U.S.C.
es and installations. SASS discovered that § 3663A’s statutory definition of restitution.
Dennis had contracted, submitted, and ap- Second, Phillips stated that SASS’s reputation
proved payments to South Texas Supply Com- and fundraising suffered because of media re-
pany (“STSC”). Dennis had manually de- ports of Dennis’s criminal conduct. SASS is
livered payments to the vendor, which was not an agency of the United Way, and the media
located at the address listed in the file. publicized the theft just as a United Way fund-
raiser began. Phillips averred that Dennis’s
In 1994, Dennis had registered STSC as an crime harmed the United Way’s and SASS’s
unincorporated business and listed himself as public image, lowering donations.
the owner. SASS did not know that Dennis
owned the vendor or had used STSC to pro- Dennis filed objections to the PSR, includ-
vide heaters and air conditioners, in violation ing an objection to its recommendation for an
of SASS’s conflict of interest policy. From upward departure. The district court, relying
October 1994 through April 1995, Dennis had on a comment to § 2B1.1, departed upward
submitted thirty-three fraudulent invoices paid because the guidelines did not adequately cap-
to STSC, totaling $334,679.48. ture the tangible or intangible harms SASS had
suffered. The court noted that the tangible,
Dennis pleaded no contest to fifteen counts consequential harms totaled at least $281,000,
of theft from an organization receiving federal but the court did not rely on the entire amount
funds, 18 U.S.C. § 666, and twelve counts of to depart upward; it departed upward by two
theft of public money, 18 U.S.C. § 641. Based levels for a total offense level of twenty and a
on the 2000 sentencing guidelines, the Presen- corresponding guideline range of 33 to 41
2
months. The court sentenced Dennis to con- made to the district court. None of his initial
current 41-month prison terms on each count, objections to the sentence informed the district
three years of supervised release, a special court that relying on consequential, financial
assessment of $2,600, and restitution of harms was problematic. We therefore
$206,759.87. consider these arguments waived and review
the sentence only for plain error.1
II.
Ordinarily we review for abuse of discretion Under plain error review, the defendant
a decision to depart from the guidelines. Koon must show (1) error (2) that is plain and
v. United States, 518 U.S. 81, 98 (1996); (3) affects substantial rights.2 Even if the de-
United States v. Nevels, 160 F.3d 226, 229 fendant establishes all three factors, we retain
(5th Cir. 1998). A decision to consider an im- the discretion to refuse to correct the error,
permissible factor is legal error, which we re- United States v. McDowell, 109 F.3d 214, 216
view de novo. United States v. Reyes, 239 (5th Cir. 1997), and will not exercise our dis-
F.3d 722, 744 (5th Cir.) (“Whether a factor is cretion to correct it unless it seriously impairs
a permissible basis for departure is a question the fairness, integrity, or public reputation of
of law we review de novo.”), cert. denied, __ judicial proceedings. Id.
U.S. __, 122 S. Ct. 156, and cert. denied, 533
U.S. 961 (2001). Dennis admits that the district court could
permissibly depart upward for the intangible
Dennis, however, failed to raise his current harm caused to United Way’s reputation. The
argument in the district court. He made three
arguments to that court. First, in his written
objections to the PSR, he contended that there 1
United States v. Izaguirre-Losoya, 219 F.3d
was no causal connection between his criminal
437, 441-42 (5th Cir. 2000) (finding plain error
conduct and the auditing, staff, reporting, or review applicable where defendant failed to raise
fundraising costs. Second, at the sentencing objection in district court), cert. denied, 531 U.S.
hearing, he claimed that the district court 1097 (2001); United States v. Ocana, 204 F.3d
lacked a reliable standard or measure for the 585, 588 (5th Cir.) (“Failure to object to either the
indirect costs created by his theft. For PSR or the district court's sentence results in re-
example, he accused the accounting firm of view for plain error.”), cert. denied, 531 U.S. 880
tabulating the audit costs inaccurately. Third, (2000); United States v. Krout, 66 F.3d 1420,
he argued that SASS only incurred costs 1434 (5th Cir. 1995) (“A party must raise a claim
typical to all “federal government program of error with the district court in such a manner so
type cases,” so the district court could not that the district court may correct itself and thus,
reasonably conclude that the guidelines had obviate the need for our review.”) (citation
not taken the full costs into account. omitted).
2
United States v. Olano, 507 U.S. 725, 736-37
On appeal, Dennis contends only that (1993); United States v. Calverley, 37 F.3d 160,
courts should not depart upward from 162-64 (5th Cir. 1994) (en banc) (“[A]ppellate
§ 2B1.1’s loss table on the basis of consequen- courts possess the discretion to decline to correct
tial financial harms. His argument on appeal errors which do not “seriously affect the fairness,
bears no relation to any of the arguments he integrity, or public reputation of judicial
proceedings.”) (citation omitted).
3
district court noted that it did not rely on the On this basis, we affirm the upward
full indirect and consequential financial harms departure based on the harm caused to SASS’s
for the upward departure. Assuming arguen- and United Way’s reputations. We do not
do that the court erred by departing upward reach the question whether the district court
based on consequential financial harms, it properly considered consequential, financial
could have imposed the same departure based harms.
on the intangible harm to United Way’s
reputation.3 Under plain error review, where AFFIRMED.
the district court could impose the same
sentence on remand, we have the discretion to
affirm on one of the district court’s alternate
grounds. We need not reject the legally flawed
rationale and remand to see whether the court
will impose the same sentence.4
3
Two other circuits have affirmed upward de-
partures based on the reputational harm caused to
public or nonprofit institutions. United States v.
Robie, 166 F.3d 444, 455-56 (2d Cir. 1999) (af-
firming upward departure where theft resulted in
“the real but intangible loss inflicted in the form of
embarrassment and the appearance of
incompetence inflicted on the Postal Service”);
United States v. Medford, 194 F.3d 419, 425 (3d
Cir. 1999) (affirming departure based on intangible
harms caused by theft of museum antiques and suf-
fered by museum and members of general public).
4
United States v. Leonard, 157 F.3d 343, 346
(5th Cir. 1998) (“In the sentencing context, this
court has concluded that if the trial judge, on re-
mand, could reinstate the same sentence, it will up-
hold the sentence imposed despite the trial court’s
error.”); United States v. Ravitch, 128 F.3d 865,
869 (5th Cir. 1997) (“As we must uphold a
sentence reviewed for plain error if the court could
lawfully and reasonably reinstate it on remand, we
address each of these bases for departure in turn.”);
United States v. Brunson, 915 F.2d 942, 944 (5th
Cir. 1990) (“If the case were remanded the trial
judge could reinstate the same sentence (assuming
of course that he included a reasonable explanation
for the departure). We can find no miscarriage of
4
justice in the court’s failure to apply Guidelines (...continued)
(continued...) § 3B1.3. Finding no plain error, we AFFIRM.”).
4