United States v. Haehle, Jeffrey ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-4077
United States of America,
Plaintiff-Appellee,
v.
Jeffrey Haehle,
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 99-CR-8--Charles N. Clevert, Judge.
Argued June 5, 2000--Decided September 14, 2000
Before Easterbrook, Diane P. Wood, and Evans, Circuit
Judges.
Diane P. Wood, Circuit Judge. Jeffrey Haehle
pleaded guilty to charges of bank fraud and money
laundering for a practice known as "property
flipping," whereby he would purchase inner city
real estate at low prices and then create sham
transactions designed to lure lenders to send
money his way. On appeal, he raises a number of
challenges to the sentence he received: 46 months
in prison, which was the top of his sentencing
range, and a restitution obligation of
approximately $1,449,000. While we disagree in
part with the district court’s application of the
Sentencing Guidelines, we conclude that any
errors it may have made were harmless, and we
thus affirm Haehle’s sentence.
I
Haehle’s line of business was real estate and
mortgages. The casual observer might not have
realized this, however, because he did not
operate using his own name. Instead, because he
was a convicted felon and he faced a multi-
million dollar civil judgment in Illinois (a
judgment that he apparently was making some
effort not to pay), he operated solely through a
variety of corporate entities. Their names are
not important to this appeal, however, and so for
convenience we will refer only to Haehle himself.
The scheme that caused Haehle’s present legal
difficulties, his "property flipping," took place
in the City of Milwaukee, and operated as
follows. He first would purchase inner city real
estate at a very low price. Then he would sell
the property to a straw buyer at an inflated
price. Using the straw buyer, the inflated price,
and a fictional down payment, Haehle would
convince a target bank to loan the straw
purchaser the remaining balance due. The proceeds
from the loan would first go through Haehle’s
loan brokering corporation; later, Haehle and the
straw buyer would split up the proceeds. The
scheme had only one flaw: no one was really
improving any of the properties, and so the City
of Milwaukee eventually condemned them, causing
some 62 parcels to wind up in receiverships.
Obviously, Haehle’s system collapsed at that
point.
One of Haehle’s co-conspirators was Arlen
Amundson. Along with Arlen’s wife Sherri (who had
better credit than either Arlen or Haehle), Arlen
bought properties from Haehle using Haehle’s
various corporate entities as intermediaries.
Either Arlen or Sherri would pay the inflated
price and purport to make a substantial down
payment in connection with the purchase. This
made it appear that there was equity in the
property when they shopped for third-party
financing. In fact, Arlen never actually paid any
money to Haehle. Instead, Haehle would take the
loan proceeds and pay Sherri $1,500 for her
participation in the scheme. Arlen received an
additional $500 for preparation of the necessary
documents, and Haehle and Arlen had some kind of
profit-sharing arrangement. According to the
government, Haehle paid Arlen a total of nearly
$133,000 between March and June of 1997. Haehle
also engaged in similar transactions with Alia
Museitif, but he "flipped" only nine properties
with Museitif.
II
As noted above, after all was said and done
Haehle pleaded guilty to one count of conspiracy
to commit bank fraud, in violation of 18 U.S.C.
sec. 371, and one count of conspiracy to commit
money laundering, in violation of 18 U.S.C. sec.
1956(h). Because U.S.S.G. sec. 2X1.1(a) states
that the base offense level for conspiracy is the
same as the adjusted base offense level for the
underlying substantive offense, the district
court computed Haehle’s sentence as follows. For
the bank fraud count, the court attributed a loss
of $1,449,000 to Haehle, based on recent
appraisals of the properties. Looking at U.S.S.G.
sec. 2F1.1, the guideline for fraud and deceit
offenses, this yielded a base offense level of 6
plus an increase of 11 more levels under sec.
2F1.1(b)(1)(L), or a level of 17. The court also
found more than minimal planning, which required
it to add another two levels under sec.
2F1.1(b)(2)(A), for a level of 19. Next, another
two levels were added on pursuant to sec.
3B1.1(c) for Haehle’s role as a leader or
organizer, which yielded a final offense level of
21 for count 1. For count 4, the court concluded
that the base offense level was 23, relying on
U.S.S.G. sec. 2S1.1(a)(1), which specifies that
level for someone "convicted under 18 U.S.C. sec.
1956(a)(1)(A), (a)(2)(A), or (a)(3)(A)." It then
engaged in the grouping exercise required by sec.
3D1.2; because the 23 for count 4 was higher than
the 21 for count 1, it took level 23 as the
governing offense level. At that point, it
granted Haehle a three-level decrease for
acceptance of responsibility under sec. 3E1.1,
which left him with an offense level of 20 for
that count. With a criminal history category of
II and offense level of 20 (after grouping under
sec. 3D1.2), this left Haehle with a sentencing
range of 37-46 months. As noted, the district
court imposed a sentence at the top of that
range, along with a restitution order and the
usual supervised release.
III
Haehle argues that the court made a number of
errors in its application of the guidelines,
which entitle him to resentencing. First, he
claims that the court clearly erred in its
calculation of the loss for purposes of sec.
2F1.1(b)(1), principally because Judge Clevert
used a different methodology and different data
than Judge Adelman had used in Arlen Amundson’s
sentencing hearing. Second, he asserts that the
court should not have found that he was an
organizer or leader under sec. 3B1.1(c). Finally,
he claims that the court should not have imposed
the base offense level of 23 for his money
laundering claim, because he was charged with
conspiracy to commit money laundering in
violation of 18 U.S.C. sec. 1956(h), not one of
the offenses listed in sec. 2S1.1(a) (i.e.,
sec.sec. 1956(a)(1)(A), (a)(2)(A), or (a)(3)(A)).
We consider these arguments in turn.
A. Loss Calculation for sec. 2F1.1(b)(1)
When Arlen Amundson reached the sentencing phase
of his case, Judge Adelman calculated the amount
of loss caused by the scheme by taking the value
of the properties and subtracting that from the
aggregate loan proceeds. This yielded the
estimated scope of the fraud perpetrated against
the lenders. Judge Adelman then added in various
administrative costs, and he finally gave Arlen
a 1/3 deduction to reflect the fact that he was
involved in only 40 of the 60 or so transactions.
At that time, the best evidence available for the
value of the properties was their 1996 assessed
values, which were then adjusted by 5% to reflect
1997 value. This produced a net loss after all
adjustments of $450,000 for Haehle after the 33%
discount, or a total of $675,000 in value.
By the time Haehle’s own sentencing hearing
took place, newer appraisals of the value of the
properties were available (in large part because
the government went out and got them after
Arlen’s hearing). Information before the court
showed that the outstanding loan balances were
$2.7 million; that all the loans were in default;
that the City of Milwaukee had suffered $500,000
in expenses because of its receivership; and that
the present value of the property was $1.8
million (a number that was generous to Haehle, as
other evidence indicated a value of only $1.3
million). This produced approximately $1.4
million in loss, as indicated earlier.
Haehle pitches his argument on the fact that
Judge Clevert used different figures for the loss
calculation than Judge Adelman had used. This is
unfair, in his view, given the undisputed fact
that both were on trial for exactly the same
conduct. Unfair it may seem, but this is not the
kind of problem that undermines an otherwise
valid calculation of loss under the sentencing
guidelines. We have often held that co-defendants
have no enforceable right to have sentences that
are precisely congruent with one another. See,
e.g., United States v. Dillard, 43 F.3d 299, 311
(7th Cir. 1994); see also United States v.
McMutuary, 217 F.3d 477, 490 (7th Cir. 2000). The
only thing that matters is that the sentence
complies with the guidelines, and Haehle’s did.
We note that Haehle has not argued that the
district court erred in applying sec. 2F1.1, the
guideline for fraud and deceit crimes, rather
than sec. 2X1.1, the guideline for conspiracy
crimes. This is probably sensible, as the
ultimate result (a base offense level of 17)
would probably have been the same. Looking at
U.S.S.G. sec. 2X1.1(a), we see that the base
offense level for a conspiracy is the same as the
level for the substantive offense, after
adjustments are made for specific offense
characteristics. Section 2X1.1(b)(2) then
instructs the court to subtract three levels,
unless the defendant or a co-conspirator has
completed all the acts the conspirators believed
necessary for the successful completion of the
substantive offense. On this record, with some 62
completed transactions, it seems inevitable that
the district court would have made such a
finding, and thus that the offense level would
have remained just where the judge put it, at 17.
B. Organizer Enhancement, sec. 3B1.1(c)
Also looking at the bank fraud count, the court
decided that Haehle had been an organizer or
leader, and thus that two levels had to be added
on under sec. 3B1.1(c). Haehle complains about
this as well. The government, however, argues
that he forfeited this objection during the
sentencing proceedings, and that the applicable
standard of review is therefore plain error under
Fed. R. Crim. P. 52(b). We agree that Haehle at
least forfeited his argument--waiver is also
conceivable, but as the government does not argue
this, we do not consider it.
During sentencing, Haehle’s lawyer made the
following statement to the court:
I said certain things to Mr. Haehle that he’s
agreed with that I can proffer to the Court at
this time. Clearly under the law he had a role in
the offense and he acknowledges that. That’s
going to increase the level. That the law
indicates that someone who has done the kind of
things that Mr. Haehle has admitted to doing will
most assuredly run the risk of having additional
points added to the base offense level. And he
recognizes that.
Sent. Tr. at 42-43. Haehle tries to avoid the
force of this statement by suggesting that he
waived only an objection to the increase under
sec. 2F1.1(b)(2)(A) for more than minimal
planning, but the record does not support that
view. Instead, it reveals that just after the
statement excerpted above, Haehle’s lawyer also
discussed the minimal planning adjustment. Id. at
43. Later on, Judge Clevert specifically said
that he "construe[d] the defense position as
withdrawal of objections to the points awarded
for more than minimal planning and role in the
offense." Id. at 52. Haehle never objected to
this characterization, nor did he try to clarify
that he meant to concede only the "more than
minimal planning" point.
Assuming generously that Haehle merely forfeited
the point, our review is for plain error only. We
see none here. The factual record in the Pre-
Sentencing Report indicates that Haehle was the
person who came up with the plan. He admitted at
sentencing that "the primary responsibility for
going out and securing the properties rested on
[him]." Id. at 33. That is certainly not the
stuff of plain error (or, indeed, error of any
kind).
C. Base Offense Level 23 for Money Laundering
We come, then, to the most troublesome part of
the district court’s decision: its decision to
assign a base offense level of 23 for Haehle’s
offense of conspiring to launder money. The
statute under which he was convicted was 18
U.S.C. sec. 1956(h), which reads as follows:
Any person who conspires to commit any offense
defined in this section or section 1957 shall be
subject to the same penalties as those prescribed
for the offense the commission of which was the
object of the conspiracy.
Importantly, as we shall see, this is a special
conspiracy rule for money laundering, not the
general conspiracy statute found in 18 U.S.C.
sec. 371, and it is a conspiracy statute in which
Congress has given explicit instructions about
sentencing.
As was proper under U.S.S.G. sec. 2X1.1(a), the
guideline for conspiracy, the court turned to the
guidelines for the substantive offense that
Haehle was charged with conspiring to commit,
namely, the money laundering guideline sec.
2S1.1. That guideline provides as follows, in
relevant part:
(a) Base Offense Level:
(1) 23, if convicted under 18 U.S.C. sec.
1956(a)(1) (A), (a)(2)(A), or (a)(3)(A);
(2) 20, otherwise.
(b) Specific Offense Characteristics
* * *
(2) If the value of the funds exceeded $100,000,
increase the offense level as follows:
* * *
(F) More than $1,000,000 add 5
(G) More than $2,000,000 add 6
Haehle objected to the court’s use of the level
23 in the district court, so the issue is
properly before us. In addition, contrary to the
government’s argument, he is presenting a pure
question of interpretation of the guidelines, and
our review is therefore de novo. See United
States v. Mancillas, 183 F.3d 682, 709 (7th Cir.
1999); United States v. Yusuff, 96 F.3d 982, 989
(7th Cir. 1996).
Haehle’s argument is simple--but in the end,
too simple, as we will see. He contends that the
use of the level 23 was wrong because he pleaded
guilty to a violation of sec. 1956(h), not sec.
1956(a)(1)(A), (a)(2)(A), or (a)(3)(A). Because
sec. 2S1.1(a)(1) identifies very specifically the
three offenses that give rise to the base level
23, and sec. 2S1.1(a)(2) specifies a level 20
"otherwise," Haehle reasons that he should have
received a level 20 for his crime. After
grouping, that would have made his conviction on
count 1 the higher offense, because that was a
level 21. He then believes that the three-level
acceptance of responsibility adjustment would
have left him with a level of 18 and a guideline
range of 30-37 months.
Suppose, however, that Haehle is correct on the
first of his points, and the court should have
used a base offense level of 20. Haehle has
overlooked the fact that sec. 2S1.1, like sec.
2F1.1, requires increases in the base level
according to a chart that lists the value of the
funds in question. Here, that value was
approximately $1.5 million, which requires an
increase of 5 levels under sec. 2S1.1(b)(2)(F).
That puts him at a level 25, or a level 22 after
a three level downward adjustment for acceptance
of responsibility. Once again, the requirement in
sec. 2X1.1(b)(2) that the substantive offense
level should be reduced by three for uncompleted
conspiracies would not apply, given the extensive
evidence that Haehle and his co-conspirator in
fact did successfully complete all the acts they
believed necessary for the successful completion
of their scheme. Because the government did not
take a cross-appeal, Haehle is not at risk of
receiving a higher sentence. We need only hold
that any error the court may have made in
selecting the base level 23 and in failing to
make a specific offense characteristic adjustment
was harmless.
It is also not clear to us that the choice of
the level 23 was an obvious error, though we
leave this question for another day. Section
2S1.1(a)(1) requires the higher base level of 23
for the offenses that involve intent under the
money laundering statute, and it leaves the
concealment offenses of sec. 1956(a)(1)(B),
(a)(2)(B), and (a)(3)(B) and (C) at the lower
base level of 20. The Sentencing Commission may
have thought that money launderers who act with
"the intent to promote the carrying on of
specified unlawful activity," as sec.
1956(a)(1)(A)(i) puts it, required a more severe
sentence than those who acted knowing that the
transaction was designed to conceal or disguise
the nature of the funds, or who try to avoid a
reporting requirement. From that point of view,
sec. 2S1.1(a)(1) may therefore be directed to any
offenses for which the sentence is determined
according to (a)(1)(A), (a)(2)(A), or (a)(3)(A).
Looking at sec. 1956(h), as we did earlier, we
see that persons who conspire to commit any
offense defined in sec.sec. 1956 or 1957 "shall
be subject to the same penalties as those
prescribed for the offense the commission of
which was the object of the conspiracy." So, for
a person who conspires to violate sec.
1956(a)(1)(A), the sentence under sec. 1956(h)
must be the same as for the person who commits
the substantive offense. For a person who
conspires to violate sec. 1956(a)(1) (B), the
sentence follows that substantive offense. See
United States v. Monem, 104 F.3d 905, 908 (7th
Cir. 1997) (holding that 23 is the correct base
offense level for both a substantive violation of
sec. 1956(a)(1)(A) and conspiracy to violate sec.
1956(a)(1)(A)); United States v. Acanda, 19 F.3d
616, 618-20 (11th Cir. 1994) (same); United
States v. Restrepo, 936 F.2d 661, 665 (2d Cir.
1991) (same). Under this "derivative" view of the
sentence that applies to sec. 1956(h) violators,
the base level under sec. 2S1.1(a) will depend on
which substantive offense underlay the
conspiracy. Although it is unclear which part of
the money laundering statute the government had
in mind when charging Haehle with conspiracy to
launder money under sec. 1956(h), it is possible
that not only should the district court have
begun with level 23, but also that another 5
levels should have been added on to that one.
Either way, our basic point remains the same.
Haehle cannot show that any error in working from
the level 23 was harmful to him. Indeed, he may
have gotten a substantial break. We therefore
Affirm the sentence imposed by the district court.