United States v. Sykes, Joseph V. ( 2004 )

In the
United States Court of Appeals
For the Seventh Circuit
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No. 03-1406
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
JOSEPH V. SYKES,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 01 CR 647-1—John W. Darrah, Judge.
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ARGUED OCTOBER 1, 2003—DECIDED FEBRUARY 4, 2004
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Before KANNE, ROVNER, and EVANS, Circuit Judges.
KANNE, Circuit Judge. Between November 1998 and
December 2001, Joseph Sykes manufactured counterfeit
checks on his home computer and used them to defraud
approximately 20 different banks and investment compa-
nies. Before being caught he caused over $1 million of
actual loss to his victims. In August 2002 Sykes pleaded
guilty to one count of bank fraud, 18 U.S.C. § 1344. The
court sentenced him to 100 months’ imprisonment and 5
years’ supervised release and ordered him to pay over
$1 million in restitution. He argues that the court erred in
setting his offense level and calculating his criminal history
points. We affirm.
2 No. 03-1406
I. History
Before this case, 32-year-old Sykes had already accumu-
lated at least nine state convictions involving bad checks
and one federal conviction for bank fraud. Sykes’s current
bank fraud scheme was quite straightforward. First, he
made counterfeit checks on his home computer, replicating
real checks but substituting fictitious account numbers.
Then he deposited some of these checks along with real
ones written against closed or overdrawn accounts into new
accounts that he opened in his own name or one of his seven
aliases. Sykes usually used each new account just long
enough to deposit a few checks over the course of several
days and then withdraw what he could before the bank
discovered the fraud. Sykes also generated other counterfeit
checks with real account numbers and used them to initiate
fraudulent wire transfers. He would tender a counterfeit
check at a bank where he already had an existing account,
but instead of making a deposit, he would use it as “proof”
of an account at the drawee bank and initiate a wire
transfer out of that account and into one of his own ac-
counts. Again he was able to withdraw some funds before
the banks detected the fraud and reversed the wire trans-
fers.
Sykes pleaded guilty to one count of bank fraud and
proceeded to sentencing. He made several objections to the
probation officer’s and government’s sentencing recommen-
dation, including one to his offense level and one to his
criminal history category. His offense level was set at 24,
including 15 points for intending to cause more than $10
million in loss. See U.S.S.G. § 2F1.1 (1998) (now incorpo-
rated into U.S.S.G. § 2B1.1). He was assessed 16 criminal
history points, which placed him in criminal history
category VI. See U.S.S.G. Ch. 5, Pt. A, Sentencing Table.
The court gave him the minimum term of imprisonment
possible for his offense level and criminal history category,
100 months.
No. 03-1406 3
II. Analysis
Sykes argues first that the district court failed to explain
its conclusion that he intended to inflict over $10 million of
loss. He says that the district court should have explained
why it was accepting the government’s calculation of
intended loss instead of the figures he proposed. He con-
tends that the district court’s explanation for its conclusion
is so deficient that he “cannot challenge, and this court
cannot evaluate, the district court’s conclusion until the
district court has completed its job.” Sykes’s argument is
very narrowly focused on the district court’s reasoning and
not on its ultimate calculation of loss, though Sykes says
that he “believes that if the district court is forced to artic-
ulate its rationale, it will come to a different conclusion.”
Sykes’s argument is without merit. Federal Rule of
Criminal Procedure 32(i)(3) requires a district court to rule
on all controverted matters that will affect sentencing. See
Fed. R. Crim. P. 32(i)(3) (formerly Rule 32(b)(6)(d)); see
United States v. Burke, 148 F.3d 832, 835 (7th Cir. 1998).
This requirement ensures that the court addresses all of the
defendant’s objections and provides a record of how the
objections were resolved for later reference. United States
v. Cureton, 89 F.3d 469, 473 (7th Cir. 1996). But Rule 32
does not impose an onerous burden. The district court can
often satisfy the rule by adopting the proposed findings in
the presentence report (PSR), even as to contested facts,
Burke, 148 F.3d at 836, so long as the PSR articulates a
sufficiently clear basis for the sentence, see United States v.
Schaefer, 291 F.3d 932, 938-39 (7th Cir. 2002), and the
reviewing court can be sure that “the district court made a
decision of design rather than of convenience,” Burke, 148
F.3d at 836. The district court did not set Sykes’s sentence
simply by adopting the PSR, but these cases demonstrate
the court’s minimal burden.
4 No. 03-1406
In this case the controverted matter was the amount
of loss, and the court clearly resolved the controversy and
then provided a basis for its ruling. Sykes’s attorney argued
that his client intended to steal only as much as necessary
to satisfy his personal and business debts. The government
countered that Sykes intended to steal the total amount of
the fraudulent deposits and wire transfers. As evidence of
its calculation, the government offered a detailed list of all
the fraudulent deposits and wire transfers totaling approxi-
mately $13 million. The government also described a
conversation between Sykes and an investigator from
Merrill Lynch during which Sykes explained that there was
a window of opportunity for him to steal fraudulently
transferred funds before the fraud was detected (suggesting
that Sykes could have stolen all of the money in that
window of opportunity). When the district court settled on
the government’s theory, the court cited the relevant case
law, explained that it agreed with the government’s analy-
sis of the facts (which tracked the analysis articulated in
the PSR) and then explained that it was rejecting Sykes’s
calculations because it believed that Sykes intended to steal
the total amount of money he deposited into the accounts.
The court was especially persuaded by Sykes’s statement to
the Merrill Lynch investigator. The district court’s explana-
tion is sufficient to serve the purposes of Rule 32. And
Sykes’s contention that the district court’s analysis is too
inadequate to facilitate his appeal is disingenuous; just as
he understood the PSR analysis well enough to urge its
rejection in a 22-page memorandum to the district court, he
could also understand equally well the district court’s loss
calculation, which matched the total offered by the govern-
ment and the probation officer.
Perhaps the reason Sykes attacks only the court’s reason-
ing and then professes his inability to attack the ultimate
loss calculation is that the law would be against him if he
No. 03-1406 5
were to attack to the loss calculation directly. We would
review the court’s factual conclusion about Sykes’s intended
loss only for clear error. United States v. Kipta, 212 F.3d
1049, 1051 (7th Cir. 2000). There is ample case law that in
a bank fraud case the total amount of fraudulent deposits
is an acceptable calculation of intended loss. Id. at 1052
(affirming district court’s conclusion that defendant in-
tended to defraud bank out of total amount of checks drawn
on account with insufficient funds); United States v. Yusufu,
63 F.3d 505, 513-14 (7th Cir. 1995) (affirming district
court’s calculation of intended loss as inflated face amount
of money orders and checks that defendant had altered
before depositing them); United States v. Strozier, 981 F.2d
281, 282, 284-85 (7th Cir. 1992) (affirming district court’s
calculation of intended loss based on total amount of
worthless checks deposited into an account). Certainly the
district court was not required to accept as true Sykes’s own
representation—made through his lawyer and supported
with only documents and charts rather than with sworn
testimony—about the portion of the worthless deposits he
hoped to access. Cf. Campania Mgmt. Co. v. Rooks, Pitts, &
Poust, 290 F.3d 843, 853 (7th Cir. 2002) (statements by
attorneys are not evidence).
Sykes’s second argument is that the court incorrectly
counted his criminal history points. The district court
assessed 16, and he contends that he should have received
only 7 because some of his prior sentences were imposed in
“related cases,” U.S.S.G. § 4A1.2(a)(2), and should thus be
treated as one sentence. Sykes’s point total of 16 put him in
criminal history category VI. A point total of 13 is sufficient
to support that criminal history category. Sykes does not
challenge the two points he received for committing the
current crime within two years of being released from
prison. He also leaves unchallenged the three points he
received for his prior federal conviction in Florida for bank
6 No. 03-1406
fraud, except to argue that several other sentences should
be grouped with the bank fraud. Five points, then, are
undisputed.
Sykes contends that his state conviction for grand theft
auto (two points) was related to his prior federal bank fraud
conviction in Florida because both offenses were part of the
same scheme or plan. We have said that offenses are part
of the same scheme or plan only if they were “jointly
planned” or if “one crime entails the commission of the
other.” United States v. Brown, 209 F.3d 1020, 1023
(7th Cir. 2000). And defendants have the burden to show
relatedness because they are in the best position to know
whether they jointly planned two crimes and whether one
entailed the commission of the other. Id. Sykes argued to
the district court that the two crimes were related because
the only reason he committed the bank fraud was to
“amass[ ] as much money as possible . . . so that he could
then write checks to buy various products and pay off his
creditors.” The district court concluded that Sykes had not
met his burden, a conclusion we must give due deference.
See Buford v. United States, 532 U.S. 59, 66 (2001). Sykes
reasserts on appeal that the two crimes were related be-
cause he planned to purchase “various products” when he
initiated the bank fraud, but that is different from saying
that he planned to pass a bad check for a car at the same
time he planned the bank fraud. He also does not explain
how his plan to pass a bad check for a car would entail
perpetrating a complex bank fraud scheme. The district
court was correct to assign the three points for the previous
bank fraud conviction and two more for the grand theft.
That brings the point total to seven.
Sykes presents a similar argument that three state
crimes he committed in 1994 were related, specifically, two
convictions for obtaining property in return for worthless
checks (two points each) and one for passing a worthless
check (one point). All three checks apparently were written
No. 03-1406 7
out of the same First Union account but on different days
and to different payees. Sykes argued to the district court
that the three convictions were part of a common scheme
because “[a]s with the 1991 federal case, [he] wrote these
checks to amass false balances in order to obtain goods
fraudulently.” Once again, there is no evidence that he
formed the intent to write these separate bad checks
all at the same time or that writing one entailed writing
the others. They were written on different days to different
people and do not appear to be written to “amass false
balances” at all but instead to obtain goods or services. The
simple fact that Sykes repeatedly used the same modus
operandi does not make the crimes related. Brown, 209 F.3d
at 1024. These five points move the total to 12.
Next, Sykes argues that his Florida conviction for unlaw-
ful possession of a driver’s license is related to his prior
federal bank fraud conviction. His attorney argued to the
district court (without a supporting affidavit from Sykes)
that the two crimes were part of a common scheme because
“Mr. Sykes used false identification to open bank accounts
in furtherance of his scheme to defraud.” Sykes appears to
be arguing that the commission of the bank fraud entailed
the commission of the license offense. The district court
commented that the conviction for false use of a driver’s
license “arguably supports an inference that the driver’s
license was used in the furtherance of or in connection with
one of these other offenses . . . in facilitating the commis-
sion of these other fraudulent security offenses,” but
ultimately concluded that Sykes had not met his burden to
prove relatedness. Giving due deference to the district
court, we find no error in its determination. That brings the
point total to 13, which supports the current criminal
history category of VI. Sykes’s arguments about the remain-
ing three points could not alter his criminal history cate-
gory.
8 No. 03-1406
III. Conclusion
Accordingly, we AFFIRM the judgment of the district court.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—2-4-04