United States v. Nelson ( 2004 )

5RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206 2 United States v. Nelson No. 02-2022
ELECTRONIC CITATION: 2004 FED App. 0034P (6th Cir.)File Name: 04a0034p.06 _________________
COUNSEL
UNITED STATES COURT OF APPEALS
ARGUED: Paul D. Muller, Farmington, Michigan, for
FOR THE SIXTH CIRCUIT Appellant. Kathleen Moro Nesi, ASSISTANT UNITED
_________________ STATES ATTORNEY, Detroit, Michigan, for Appellee.
ON BRIEF: Paul D. Muller, Farmington, Michigan, for
UNITED STATES OF AMERICA , X Appellant. Kathleen Moro Nesi, ASSISTANT UNITED
Plaintiff-Appellee, - STATES ATTORNEY, Detroit, Michigan, for Appellee.
-
- No. 02-2022 _________________
v. -
> OPINION
, _________________
WALTER NELSON , -
Defendant-Appellant. - BOYCE F. MARTIN, JR., Circuit Judge. This case was
- presented as part of a consolidated appeal with United States
- v. Sims, No. 02-1734, which will be discussed in a separate
N opinion. In this case, Walter Nelson appeals his sentence
Appeal from the United States District Court following his guilty plea conviction for identity theft and
for the Eastern District of Michigan at Detroit. bank and mail fraud. For the following reasons, we affirm the
No. 01-80583—Lawrence P. Zatkoff, Chief District Judge. district court’s sentencing decision in part and vacate in part.
Argued: October 21, 2003 I.
On August 8, 2001, Walter Nelson was named in a thirty-
Decided and Filed: January 28, 2004 two count indictment for various offenses including
conspiracy to commit federal crimes, identity theft, bank and
Before: MARTIN and SUTTON, Circuit Judges; MILLS, credit card fraud, and mail fraud. Nelson entered a plea of not
District Judge.* guilty on all counts. On December 6, Nelson was named in
a forty-four count first superseding indictment that named
him in four additional charges and added four defendants.
Nelson pleaded not guilty to all counts contained in the
superseding indictment and was released on bond.
All charges against Nelson arose from a large-scale fraud
scheme in which Nelson played an active role. Nelson stole
* personal information of individuals from mortgage
The Hon orable R ichard M ills, United States District Judge for the
Central District of Illinois, sitting by designation. applications they filed at his places of employment and sold
1
No. 02-2022 United States v. Nelson 3 4 United States v. Nelson No. 02-2022
that information to his co-conspirators, Vanessa Phillips and On appeal, Nelson challenges his sentence on two grounds.
Tanisha Hollman, and others. For his part, Nelson demanded First, Nelson argues that the district court erred when it
payment upon receipt of the information as well as a one-third granted him a two level decrease in his offense level for
share of any proceeds attributable to his theft. Thereafter, acceptance of responsibility instead of a three level decrease.
Nelson apparently began his own operation and recruited Second, Nelson argues that the district court erred in finding
others to assist him in fraudulently adding authorized users to him responsible for more than $400,000 in losses for his
existing credit card accounts and then intercepting the cards fraudulent activities pursuant to section 2B1.1(b)(1)(H) of the
upon their shipment. Sentencing Guidelines. Each of these arguments will be
addressed in turn.
On January 30, 2002, while on release for the charges
contained in the first superseding indictment, Nelson was II.
arrested after a traffic stop uncovered an open beer can
underneath Nelson’s seat. Upon Nelson’s removal from the A.
police vehicle, the authorities discovered paperwork
containing the names, dates of birth, social security numbers Sentencing Guideline section 3E1.1(a) grants sentencing
and addresses of several individuals. On February 1, a courts discretion to reduce by two levels the offense level for
warrant was issued to search Nelson’s vehicle and a search the defendant who has “demonstrate[d] acceptance of
revealed paperwork containing the personal information of responsibility for his [or her] offense.” Additionally, pursuant
over sixty individuals. to section 3E1.1(b), a district court may award an additional
one level reduction in the offense level of a defendant who
Because of these new offenses, on March 7, 2002, a second has demonstrated “super acceptance” of responsibility by
superseding indictment was issued against Nelson that added either “(1) timely providing complete information to the
five defendants. On March 15, Nelson pleaded not guilty to government concerning his own involvement in the offense;
all counts charged in the second superseding indictment. On or (2) timely notifying authorities of his intention to enter a
May 7, however, Nelson changed his plea to guilty of plea of guilty, thereby permitting the government to avoid
conspiracy to commit federal crimes, bank fraud, identity preparing for trial and permitting the court to allocate its
theft, mail fraud and credit card fraud, in return for the United resources efficiently.”1 Nelson argues that he should have
States’ dismissal of several charges. The parties did not enter
into a written Rule 11 plea agreement. Nelson was sentenced
to seven years, three months and one day imprisonment, 1
Congress’s recent enactment of the Prosecutorial Remedies and
which included a two level reduction in his offense level for Other Tools to end the Exploitation of Children Today Act, Pub. L. No.
acceptance of responsibility, a fourteen level increase for 108-21, 117 Stat. 650 (2003) (“PROT ECT Act”), has changed the law
committing conduct which resulted in more than $400,000 in with respe ct to the d efendant’s entitlement to the additional adjustment of
a one level decrease in offense level. Under the PROTE CT Act the
losses pursuant to United States Sentencing Guideline section additional one level adjustment may only be granted upon the
2B1.1(b)(1)(H), and a one-day consecutive sentence for prosecuto r’s motion at the pretrial stage. See PROT ECT Act, Pub. L. No.
committing an offense while on release in violation of 28 108-21, § 401(g)(1)(A). Because, as discussed, we conclude that Nelson
U.S.C. § 3147. Nelson filed a timely notice of appeal. was not entitled to the additional adjustment even under prior law, we find
it unnecessary to decide the question of whether this new pro vision would
app ly to a case pending review at the time of the PRO TE CT Act’s
enactment.
No. 02-2022 United States v. Nelson 5 6 United States v. Nelson No. 02-2022
received this additional reduction in his offense level because superseding indictment. As the United States noted at
he informed the United States in a timely fashion of his intent Nelson’s sentencing hearing, Nelson’s belated acceptance of
to plead guilty. We disagree. responsibility for his criminal actions caused its
“investigation to continue,” forced the expenditure of an
Nelson’s appeal presents a simple argument–he met the “incredible” amount of resources, and simply did not “spare[
guilty plea cut-off date and therefore should have received the the government] any work.” Thus, we affirm the decision of
additional one level decrease in his offense level. That district court granting Nelson only a two level reduction in his
argument, however, ignores the policy reason behind such a offense level for his acceptance of responsibility.
departure. As explained in the Guideline itself and
expounded upon in the application notes following the B.
Guideline, such a departure is warranted where the
defendant’s timely actions spared the government the expense Next, we address Nelson’s argument that the district court
of trial preparation. U.S.S.G. § 3E1.1(b)(2). The “timely erred in finding him responsible for more than $400,000 in
actions” that merit the additional one level decrease generally damages, which resulted in a fourteen level increase in his
occur very early in the case. U.S.S.G. § 3E1.1 (Application offense level pursuant to section 2B1.1(b)(1)(H) of the
Note 6) (“In general, the conduct qualifying for a decrease in Sentencing Guidelines.
offense level under subsection (b)(1) or (2) will occur
particularly early in the case.”). On August 1, 2002, at the first sentencing hearing, Nelson
objected to that portion of his presentence report holding him
In determining whether the district court erred by granting accountable for somewhere between $400,000 and
only a two level departure for Nelson’s acceptance of $1,000,000 in losses for his fraudulent activities.
responsibility, we consider Nelson’s unlawful actions taken Specifically, Nelson argued that he should not be held
after his initial indictment relevant to our inquiry. See United responsible for losses that occurred before May 2000, the date
States v. Harper, 246 F.3d 520, 525-27 (6th Cir. 2001) on which he admittedly entered into the conspiracy.
(allowing consideration of all of the defendant’s post- Additionally, Nelson argued that he could not be held
indictment behavior in determining whether the district court responsible for the losses of all of his alleged co-conspirators
erred in denying an acceptance of responsibility departure), because the full scope of the conspiratorial activities was
rev’d on other grounds, United States v. Leachman, 309 F.3d unknown and unforseen by him. The United States conceded
377 (6th Cir. 2002). Upon examination of the record, we that its calculations included amounts from before May 2000.
conclude that the district court did not err in granting Nelson It argued, however, that it would be nearly impossible to
a two level reduction for his acceptance of responsibility, calculate the loss as to the specific date that Nelson entered
rather than a three level reduction. the conspiracy. The district judge, who was given the United
States’ calculation exhibits only a short time before the first
Nelson indicated his intention to plead guilty only after the sentencing hearing and had not had the time to review them,
United States expended considerable resources to investigate adjourned the hearing until October 3, 2002, to give the
his role in the large-scale conspiracy. Indeed, Nelson’s government the time it needed to do the calculations that
refusal to accept responsibility and his demand for a trial Nelson requested. Seven days later, on August 8, the district
caused an extensive investigation that not only required the court reconvened and accepted the United States’ initial
issuance of a first superseding indictment, but also a second calculations over Nelson’s objection.
No. 02-2022 United States v. Nelson 7 8 United States v. Nelson No. 02-2022
On appeal, Nelson argues that the district court’s summary factual matters that formed the basis of its calculation.” Id.acceptance of the United States’ calculations did not comply (internal citations omitted).2
with its burden under Rule 32 of the Federal Rules of
Criminal Procedure. See F E D . R. C R IM . P. With respect to the Rule 32 issue, this case is virtually
32(i)(3)(B)(formerly FED . R. CRIM . P. 32(c)(1)). Rule 32 indistinguishable from Monus. In this case, the only response
requires that the district court “for any disputed portion of the to Nelson’s objections to the calculations was when the
presentence report or other controverted matter–rule on the district judge announced, “I have had an opportunity to
dispute or determine that a ruling is unnecessary either review the submissions by both the defendant and the
because the matter will not affect sentencing, or because the government and I have concluded that the government is
court will not consider the matter in sentencing.” We have correct and that it is no longer necessary to go through the
recently reiterated that “the purpose of this rule [is] ‘to ensure exercise of doing further research.” Similar to Monus, the
that sentencing is based on reliable facts found by the court district court gave no indication as to how it calculated the
itself after deliberation,’ and thus, the district court cannot loss and determined that the government’s calculations were
‘summarily adopt the factual findings in the presentence correct nor did it respond to Nelson’s specific objections.
report or simply declare that the facts are supported by a
preponderance of the evidence.’” United States v. Darwich, Moreover, even a cursory glance at the United States’ loss
337 F.3d 645, 666 (6th Cir. 2003) (quoting United States v. exhibits raises concerns. For example, some of the sheets
Tarwater, 308 F.3d 494, 518 (6th Cir. 2002)). contain no dates and there are several people who are
identified, presumably as part of the conspiracy, but there is
This Court requires literal compliance with Rule 32 when no indication as to how they fit into the conspiracy in relation
sentencing issues are contested by the parties. See United to Nelson. Indeed, there are several names mentioned for the
States v. Monus, 128 F.3d 376, 396 (6th Cir. 1997); Darwich, first time on these loss exhibits that are not found in any of
337 F.3d at 666. In Monus, we vacated the defendant’s the indictments against Nelson or in his presentence report.
sentencing enhancement and remanded the case for re-
sentencing when the district court, over the objection of the In response, the United States cites United States v.
defendant, simply stated that it was “convinced that the Jackson, 25 F.3d 327 (6th Cir. 1994), for the proposition that
defendant is at least . . . responsible for in excess [of] 80 Nelson bears a heavy burden in establishing that the district
million dollars . . . .” Id. The fact that the district court failed court erred in calculating the loss amount. Indeed, in Jackson
to explain how it calculated the amount of loss and failed this Court stated that the defendant carries “a heavy burden of
explicitly to respond to the defendant’s “specific factual persuading this Court that the evaluation of the loss was not
objections to the methods of calculation” troubled this Court. only inaccurate, but was outside the realm of permissible
Id. at 396-97. Moreover, we found that the district court computations.” 25 F.3d at 330 (citing U.S.S.G. § 2F1.1,
violated Rule 32 by failing to make written findings on the comments (now U.S.S.G. § 2B1.1, comment (2(C))).
controversy. Id. at 397. Indeed, we noted that while “the However, whether the district court erred in its calculations is
court need not establish the value of the loss with precision,
Rule 32 requires it to publish the resolution of contested
2
Since Monus, Rule 32 has been amended, but the essence of the
rule’s requirements remain unchanged. Thus, our analysis is guided by
Monus.
No. 02-2022 United States v. Nelson 9
a separate question from whether the district court failed to
meet its burden under Rule 32. Properly understood,
Nelson’s argument is not so much a challenge to the final
calculation decision made by the district court, but rather to
the fact that the district court failed specifically to respond to
his objections to these calculations. Moreover, in Jackson the
district court noted that it had “carefully considered [the]
evidence,” 25 F.3d at 330, before finding “that the aggregate
losses were in excess of $800,000.” Id. From the record
before us, we cannot determine whether the district court
“carefully considered the evidence” precisely because it failed
to respond to Nelson’s objections. Thus, we find Jackson
distinguishable.
In short, “[a]lthough the evidence may justify holding
[Nelson] accountable for [$593,366.60 in loss], the district
court’s failure to explain its factual determination requires
[this Court] to remand the case for his resentencing.” United
States v. Orlando, 281 F.3d 586, 601 (6th Cir. 2002) (finding
that the district court erred in failing to determine the date the
defendant entered into the conspiracy and the scope of
unlawful behavior that the defendant had agreed to
undertake). Thus, we VACATE Nelson’s fourteen level
sentencing enhancement and REMAND for re-sentencing at
which time the district court should issue findings with
respect to Nelson’s specific objections to the United States’
loss calculations.