United States v. Debra Schultz ( 2018 )

NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued July 5, 2018
Decided July 20, 2018
Before
DIANE P. WOOD, Chief Judge
MICHAEL Y. SCUDDER, Circuit Judge
AMY J. ST. EVE, Circuit Judge
No. 17-2544
UNITED STATES OF AMERICA, Appeal from the United States District
Plaintiff-Appellee, Court for the Northern District of Illinois,
Eastern Division.
v.
No. 14-cr-467-3
DEBRA A. SCHULTZ,
Defendant-Appellant. Robert M. Dow, Jr.,
Judge.
ORDER
Debra Schultz participated in a scheme that stole over $500,000 from a non-profit
organization that facilitates human-organ transplants. A jury found her guilty of three
counts of wire fraud and the district court sentenced her to 21 months’ imprisonment,
well below the advisory guidelines range. Schultz appeals her sentence, contending that
the district court erroneously applied a guideline adjustment for obstruction of justice
and offered inconsistent explanations for what she sees as an unreasonably long
sentence. We affirm, as the sentencing transcript shows that Schultz’s sentence is
procedurally sound and substantively reasonable.
No. 17-2544 Page 2
I
For her part in the overall fraud scheme, Schultz helped her cousin, Shari
Hansen, embezzle over $280,000 from Hansen’s non-profit employer, Gift of Hope. The
organization works with doctors, hospitals, and families to procure organ donations for
ailing patients in Illinois and Indiana. The fraud scheme ran between 2008 and 2010 and
was straightforward, but costly for Gift of Hope. Hansen, who worked for the
organization as an internal auditor, submitted fake invoices (for services never
performed) from two fictitious doctors—including Schultz’s then-minor son and
Hansen’s neighbor. Gift of Hope then issued checks to Schultz’s son, with Hansen or
Schultz in turn depositing the checks into a savings account that Schultz owned jointly
with her son. Schultz also wrote checks to Hansen from the stolen proceeds.
The IRS learned of the deposits into Schultz’s son’s bank account and notified the
son that he owed $20,000 in back income taxes. Schultz and Hansen responded not by
ending the scheme, but by doubling down and stealing more money from Gift of Hope
to pay the taxes. Everything fell apart for Schultz and Hansen when the organization
conducted an internal audit and discovered that funds were missing. The government’s
ensuing investigation showed that Schultz pocketed approximately $6,000 from the
scheme. For its part, Gift of Hope found that the scheme harmed the organization’s
ability to attract organ donors and partner hospitals.
During an interview with an investigating postal inspector, Schultz voluntarily
provided handwriting exemplars for comparison to signatures on the embezzled
checks. On nearly each exemplar, Schultz signed her entire name in cursive, whereas
the embezzled checks showed that she ordinarily signed by using block letters for the
capital “D” and “S” of her first and last name.
Schultz chose to testify in her own defense at trial and denied knowing that
Hansen had stolen the funds deposited into her son’s account. According to Schultz,
Hansen asked to use this account to hide money from her husband, whom she wanted
to divorce. Hansen testified for the government and disputed Schultz’s version of
events, explaining that Schultz knew of and played a central role in the scheme. The
jury returned a guilty verdict, and the case proceeded to sentencing.
Sentencing began with the district court focusing on the Sentencing Guidelines
and determining the advisory range to be 46 to 57 months’ imprisonment. This range
reflected a total offense level of 23, with upward adjustments imposed for obstructing
justice by submitting false handwriting exemplars (2 levels per U.S.S.G. § 3C1.1),
No. 17-2544 Page 3
involving a minor in the offense (2 levels per U.S.S.G. § 3B1.4), and engaging in conduct
that resulted in a loss of $286,283 to Gift of Hope (12 levels per U.S.S.G.
§ 2B1.1(b)(1)(G)).
With the advisory guidelines range in place, the district court then shifted its
focus to applying the sentencing factors delineated in 18 U.S.C. § 3553(a). The court
emphasized that Schultz’s conduct reflected serious wrongdoing—stealing from a
nonprofit organization, failing to accept responsibility for her misconduct, obstructing
justice by submitting “false” handwriting exemplars to the postal investigator,
involving her minor son in the fraud, and, perhaps “most damning” of all, stealing yet
more money from Gift of Hope to cover the income tax liability. The district judge also
highlighted the need he saw to impose a sentence that would deter others from
committing fraud.
On the mitigating side, the district court underscored Schultz’s lack of any
criminal history and the fact that she pocketed a small portion of the total loss amount,
only about $6,000. Indeed, this latter point led the district court to find that the advisory
guidelines range of 46 to 57 months, driven as it was by the 12-level upward adjustment
for a loss amount of $286,283, substantially overstated Schultz’s culpability.
To further mitigate her sentence, Schultz presented data to the district court
purporting to show that defendants found guilty of fraud in the Northern District of
Illinois typically received sentences below the advisory guidelines range. This data
prompted a substantial exchange between the district court and Schultz’s counsel
regarding the cases offered for comparison purposes. Ultimately, the district court did
not find Schultz’s data persuasive, observing that the data left unknown what, if any,
guidelines’ adjustments (in terms of aggravating and mitigating factors) were present in
each of the cases and sentences proffered for comparison.
The district court determined that each of these considerations combined to
warrant a sentence of 21 months’ imprisonment. This appeal then followed.
II
Schultz invites us to vacate her sentence and to remand for resentencing on the
basis of three alleged errors: that the district court improperly applied the obstruction-
of-justice adjustment as part of computing the advisory guidelines range, failed to
adequately explain the sentence, and imposed a substantively unreasonable sentence.
The record belies each of these contentions.
No. 17-2544 Page 4
A
Schultz challenges the district court’s determination that a two-level obstruction-
of-justice upward adjustment was warranted, contending that the district judge failed to
find that the alleged obstruction occurred during the government’s investigation. This
contention is at odds with the trial testimony, which (over no objection from Schultz)
established that Schultz submitted the handwriting exemplars to a postal inspector
during the government’s investigation. The district court saw the facts precisely this
way, explaining at sentencing that the obstruction adjustment was warranted because
“when you know you’re under investigation,” the “only thing that could explain”
altering a signature is an attempt “to obstruct justice.”
Continuing her focus on the obstruction adjustment, Schultz argues that the
district court was required but failed to find that the handwriting exemplars were
material to the government’s investigation. This contention also misses the mark. The
sentencing transcript makes clear that the district court found Schultz’s submission of
the false handwriting exemplars was material to the government’s investigation: “So
why would she sign her name differently, then, if she wasn’t trying to push th[e]
[government] off the scent?” If not, “why [else] would you do it?” Nothing more is
required under the Guidelines. See U.S.S.G. § 3C1.1 cmt. n. 6 (defining “material”
evidence as any “evidence, fact, statement, or information that, if believed, would tend
to influence or affect the issue under determination”). Regardless, Application Note
4(C) to U.S.S.G. § 3C1.1—without any mention of materiality—makes plain that the
adjustment is authorized where a defendant “produc[es] or attempt[s] to produce a
false, altered or counterfeit document or record during an official investigation or
judicial proceeding.” That is exactly what the facts show happened here.
On this record, the district court committed no error imposing the two-level
obstruction adjustment to the advisory guidelines range. Accordingly, we need not
consider the government’s argument that any error would be harmless in light of the
reasons contained in the district court’s post-sentencing minute entry.
B
Schultz next argues that the district court committed procedural error at
sentencing by offering inconsistent reasons for the imposed sentence. Here, too, the
record shows otherwise.
No. 17-2544 Page 5
There was no inconsistency in the reasons offered by the district judge in open
court at sentencing. Contrary to Schultz’s assertions, the district court was free to
consider her obstructive conduct during its application of the section 3553(a) factors.
See United States v. Musgraves, 883 F.3d 709, 715 (7th Cir. 2018) (explaining that a district
judge was entitled to consider a defendant’s conduct under section 3553(a) regardless of
whether that same conduct affected the advisory guidelines determination); United
States v. Sanner, 565 F.3d 400, 405–06 (7th Cir. 2009) (same). This is the path taken by the
district court at sentencing, and there is nothing inconsistent with the district judge
relying on the same facts that provided the foundation for guidelines’ adjustments to
inform the determination of the proper sentence as part of applying the factors in
section 3553(a). Indeed, it makes little sense to say that the district court was allowed to
consider any obstructive conduct for purposes of computing the advisory guidelines
range but not for determining the appropriate term of imprisonment.
Nor do we agree with Schultz that the district judge’s statements at sentencing
conflicted with those contained in its post-sentencing statement of reasons. The
statement of reasons simply set forth several of the aggravating factors that the district
court relied on when imposing the sentence: “In aggravation … [Schultz] attempted to
obstruct justice during the investigation of the offense, went to trial and testified in a
manner that the jury clearly rejected, and has not manifested through her trial
testimony, allocution, or otherwise any genuine remorse for the harm that she caused or
acceptance of responsibility for her actions.” This statement cannot be fairly read as the
district court changing its justification for applying the obstruction adjustment.
The record demonstrates that the district court properly applied the guidelines
and diligently considered the section 3553(a) factors before sentencing Schultz to
21 months’ imprisonment. No more was required to ensure the procedural soundness
of her sentence.
C
Finally, Schultz contends that her sentence is substantively unreasonable. To
succeed on this path Schultz bears the burden of overcoming the presumption of
reasonableness afforded to a sentence that falls below the advisory guidelines range.
See United States v. Solomon, 892 F.3d 273, 278 (7th Cir. 2018). Here, the district court
imposed a sentence (21 months) that was less than half of the advisory guidelines range
(of 46 to 57 months).
No. 17-2544 Page 6
Schultz is mistaken in her argument that the district court anchored its
sentencing decision in the loss amount suffered by Gift of Hope. Indeed, the record
shows nearly the opposite, as the district court made plain that it believed the loss
amount resulted in an advisory guidelines range that overstated Schultz’s culpability
and thus required substantial discounting to arrive at a just and fair sentence. The total
loss amount for purposes of the guidelines calculation had no punitive anchoring effect,
but instead served as the basis for the district court exercising the discretion afforded by
section 3553(a) to arrive at a sentence of 21 months’ imprisonment.
We also find no support in the record for Schultz’s contention that there is an
unwarranted disparity between her sentence and those sentences of fraud defendants
nationally. On this score, the district judge reasonably observed that the data on which
Schultz relied was unsuitable for comparison, because there was no way to know (from
what Schultz put before the district court) whether the cases selected for comparison
contained the aggravating and mitigating circumstances present here. No further
explanation or finding was necessary in these circumstances.
Lastly, and for the first time on appeal, Schultz points to various academic
articles questioning the empirical foundation for considerations of general deterrence as
part of arguing that the district court committed error in identifying deterrence as a
reason to justify a sentence of 21 months’ imprisonment. Beyond the prospect of being
waived, this position runs headlong into Congress’s express enumeration in 18 U.S.C. §
3553(a)(2)(B) of deterrence (general and specific) as a proper sentencing factor. The
district court’s consideration of general deterrence was therefore entirely appropriate.
See United States v. Brown, 880 F.3d 399, 405 (7th Cir. 2018) (explaining that general
deterrence was a “legitimate consideration” for the sentencing court to consider). At
bottom Schultz has not rebutted the presumption that her sentence is reasonable.
In the end, we see no procedural or substantive infirmity with the district court’s
decision to sentence Schultz to 21 months’ imprisonment following her conviction for
participating in a scheme to defraud Gift of Hope. Accordingly, the judgment of the
district court is AFFIRMED.