United States v. James Simon ( 2020 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 19-1317
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
JAMES A. SIMON,
Defendant-Appellant.
Appeal from the United States District Court for the
Northern District of Indiana, South Bend Division.
No. 3:10-cr-00056-RLM-1 — Robert L. Miller, Jr., Judge.
ARGUED NOVEMBER 5, 2019 — DECIDED MARCH 6, 2020
Before FLAUM, ROVNER, and HAMILTON, Circuit Judges.
ROVNER, Circuit Judge. James Simon appeals the district
court’s decision denying his motions to reconsider amend-
ments to his restitution obligations. See United States v. Simon,
2019 WL 422447 (N.D. Ind. Feb. 4, 2019). We conclude that the
majority of the challenges Simon is making could and should
have been raised at sentencing and on direct appeal from his
2 No. 19-1317
conviction and were therefore waived; as to the remainder, his
appeal is untimely. We therefore affirm the judgment.
I.
In 2010, a jury convicted Simon of filing false tax returns,
failing to file reports related to foreign bank accounts, mail
fraud related to financial aid, and federal financial aid fraud.
Simon, a certified public accountant and entrepreneur, had
under-reported his taxable income by millions of dollars, failed
to file the requisite reports as to foreign bank accounts over
which he had signature authority, and falsely pleaded poverty
in order to secure need-based scholarships for his children at
private schools. The district court ordered him to serve a six-
year prison term, followed by a three-year period of super-
vised release, and to pay restitution totaling $1,053,572.04:
$886,901.69 to the Internal Revenue Service, $48,070.35 to the
Department of Education, $17,000 to Canterbury School, and
$101,600 to Culver Academies. Although Simon had filed
numerous objections to the pre-sentence report, he made no
objections to the probation officer’s restitution calculations,
which the court adopted, and he voiced no objections to the
restitution obligations that the court imposed. We affirmed
Simon’s convictions in 2013; in that appeal, Simon raised no
objections to his restitution obligations. United States v. Simon,
727 F.3d 682 (7th Cir. 2013).
In 2014, Simon moved to vacate his conviction pursuant to
28 U.S.C. § 2255, alleging that his trial counsel was ineffective
in multiple respects, but not with respect to sentencing,
including the restitution component of the sentence. The
district court denied his motion, and neither the district court
No. 19-1317 3
nor we issued a certificate of appealability. See United States v.
Simon, 2016 WL 3597579 (N.D. Ind. Jul. 15, 2016), certif. of
appealability denied, 2017 WL 3397345 (7th Cir. Mar. 30, 2017),
cert. denied, 138 S. Ct. 337 (2017).
Simon was released from prison in 2016. He completed his
term of supervised release in May 2019. The bulk of his
restitution debt remains outstanding, however.
In March 2016, the government filed a motion asking the
district court to amend Simon’s restitution obligations in
limited respects. The government asked the court to remove
Canterbury School as a payee, in view of Canterbury’s ongoing
declarations that it was not interested in restitution.1 Removing
Canterbury would have the effect of directing Simon’s future
restitution payments to Culver until such time as it was made
whole, as private victims receive restitution payments ahead
of the United States and its agencies. See 18 U.S.C. § 3664(i).
The government asked the court to further amend the restitu-
tion order to indicate that Culver was owed an updated
balance of $48,376, an amount considerably less than the
$101,600 originally ordered. R. 231.
On the day after it was filed, the court granted the govern-
ment’s motion without a hearing. The restitution order was
amended to reflect the revised balance owed to Culver:
$48,376; Canterbury was removed as a restitution payee; and
1
Both Culver and Canterbury had indicated prior to sentencing that they
did not want restitution. Nonetheless, the court ordered Simon to make
restitution to both schools, explaining that “[o]ddly, it’s mandatory even
though Canterbury and Culver say they don’t want the money back.”
R. 174, Sentencing Tr. 455.
4 No. 19-1317
the restitution previously ordered to the Internal Revenue
Service and the Department of Education were deemed not
amended and reinstated. The court “directed the Clerk to make
all future disbursements consistent with this order.” R. 232.
Within a week, Simon received by mail notice of both the
government’s motion and the district court’s order.
Seven months later, in October 2018, Simon filed the first of
two pro se motions to reconsider. He argued that he had a due
process right to be heard on the government’s motion to
amend the restitution order; that the restitution he was
originally ordered to make to Culver and Canterbury was
based solely on financial aid, but that the revised figure for
Culver set forth in the amended order as due to Culver
constituted a new obligation based on non-financial aid and
was therefore improper; and that the government had pre-
sented incomplete documentation to support the revised figure
owed to Culver. Noting that both Canterbury and Culver had
disclaimed any interest in restitution, Simon urged the court to
eliminate his restitutions to both schools or, in the alternative,
grant him a hearing and the opportunity to argue for a lower
restitution figure. In a second motion filed in December 2018,
Simon asked that the court strike all of the restitution due to
the Department of Education based on his representation that
his daughter had paid off her student loans and, consequently,
the Department was no longer at any risk of having to honor
its guarantee of those loans.
The district court denied Simon’s motions. 2019 WL 422447.
The court reasoned in the first instance that because the
amendment to the restitution order had actually reduced
Simon’s total restitution obligation by $17,000 (by eliminating
No. 19-1317 5
Canterbury as a payee), Simon could not show that he had
been deprived of a cognizable property interest and conse-
quently had no viable due process claim. Id., at *2. The court
proceeded to reject Simon’s argument that the amended
restitution improperly included “non-financial aid.” The
balance owed to Culver as reflected in the amended order was
“in no way ‘new’ restitution” nor was it unrelated to the
financial aid fraud of which Simon had been convicted. Id., at
*3. The court also rejected Simon’s assertion that an evidentiary
hearing was required as to the amended order on the ground
the documentation the government had submitted to establish
the remaining restitution owed to Culver was incomplete, as
Simon had not given the court any reason to believe that
Culver had misled the court or the parties as to what it was
owed. Id., at *4. Finally, although Simon argued that he should
no longer be obliged to make restitution to the Department of
Education, the court found his arguments to be a “rehash[ ]” of
those made at sentencing and that he could not re-litigate the
obligations imposed by the original restitution order after the
fact. Id.
Simon filed a timely notice of appeal from the district
court’s order denying his motions for reconsideration.
II.
The district court’s order denying Simon’s motions for
reconsideration was a final order, and as such we have
appellate jurisdiction under 28 U.S.C. § 1291. See Autotech
Techs. LP v. Integral Research & Dev. Corp., 499 F.3d 737, 745 (7th
Cir. 2007) (order which disposes of all issues raised in post-
6 No. 19-1317
judgment motion will be treated as final for purposes of
§ 1291).
The primary challenges Simon advances on appeal are
aimed at the validity of the restitution obligations imposed by
the original sentencing order. These include his arguments that
the district court improperly ordered restitution (1) for losses
associated with relevant conduct; (2) to parties (including
Culver as well as Canterbury) who, from the outset, disclaimed
any interest in receiving restitution.
The first of these arguments was not made below, as Simon
acknowledges, with the consequence that it was waived. E.g.,
United States v. Valenzuela, 931 F.3d 605, 609 n.1 (7th Cir. 2019),
cert. denied, 2019 WL 6257440 (U.S. Nov. 25, 2019).
Moreover, the time to raise these sorts of arguments was at
sentencing and on direct appeal from the judgment. See
Barnickel v. United States, 113 F.3d 704, 706 (7th Cir. 1997)
(“Nonconstitutional claims like this one, which could have
been raised on direct appeal but were not, are deemed waived
even without taking cause and prejudice into account.”) (citing
Bontkowski v. United States, 850 F.2d 306, 313 (7th Cir. 1988));
United States v. Bania, 787 F.3d 1168, 1171–72 (7th Cir. 2015)
(collecting cases). Simon’s argument regarding the propriety of
awarding restitution based on relevant conduct explicitly
references and is based upon the pre-sentence report, so there
can be no doubt that he could have made this same argument
at sentencing and in his direct appeal. Likewise, the parties and
the court were aware at the time of sentencing that Culver and
Canterbury both disclaimed their right to restitution, so that
too was an issue that Simon could have raised at that time. His
No. 19-1317 7
failure to advance these claims in a timely manner amounts to
a waiver.
Simon suggests that the March 2016 amendment of the
restitution order opened the door to any and all challenges to
his restitution obligations, even those that would otherwise be
deemed procedurally defaulted. We disagree. We may assume
that a new obligation imposed by the amended order might be
fair game for challenge, but the amended order neither
imposed a new obligation nor materially altered the nature of
Simon’s existing restitution obligations. The amendment to the
restitution order did not amount to a re-sentencing or even a
de novo reconsideration of restitution. It simply eliminated one
restitution payee and updated the amount owed to another.
The sole challenge that Simon directed to the amended, as
opposed to the original, restitution order posited that the
updated balance owed to Culver was not adequately substanti-
ated. He renews that contention here, adding that the district
court improperly assigned to him the burden of showing that
something was amiss with the revised figure. He requests that,
in the event we do not strike the restitution due to Culver
altogether, we remand for an evidentiary hearing.
Here we run into yet another timeliness problem. Simon
did not immediately appeal the district court’s decision
amending the restitution order, nor did he file a motion to
reconsider within the 14-day time period to appeal so as to
render the order non-final and postpone the appeals deadline.
See United States v. Rollins, 607 F.3d 500, 501–02, 504 (7th Cir.
2010). The 14-day time period of Federal Rule of Appellate
Procedure 4(b)(1)(A) controls, because Simon’s restitution
8 No. 19-1317
obligations were part of his original sentence. See United States
v. Apampa, 179 F.3d 555, 556–57 (7th Cir. 1999) (per curiam)
(“the core of a ‘criminal case’ to which Rule 4(b) applies is the
sentence”) (emphasis in original); see also United States v. Segal,
938 F.3d 898, 902–03 (7th Cir. 2019) (noting that civil appeal
deadlines may apply “under the umbrella of criminal cases”
where appealable order is “collateral to criminal punishment,”
but criminal deadlines control where order or issue is “part of
the criminal sentence”) (cleaned up). Simon’s motions were
filed well outside this period—more than seven months after
the district court revised the restitution order—with the result
that the notice of appeal he filed after the court disposed of his
motions to reconsider was untimely as to the court’s March 7
order. See id. at 502. And because the government is standing
on its rights as to the timeliness of Simon’s notice of appeal, we
are obliged to deem the appeal too late to preserve Simon’s
challenges to the amended restitution order. See Rollins, 607
F.3d at 501–02.
Simon has also renewed his argument that he should be
given the opportunity himself to seek an amendment to the
restitution order to relieve him of the obligation to make
payments to the Department of Education. Simon represents
that his daughter had paid off her student loans, and as a result
the Department of Education no longer faces any liability on its
guarantee of those loans. But even if we assume arguendo that
the district court was wrong to characterize this line of argu-
ment as a “rehashing” of the position he took at sentencing,
2019 WL 422447, at *4, Simon has not, as the district court
pointed out, identified a mechanism to seek a substantive
change in his restitution obligations so many years after
No. 19-1317 9
sentencing, id. “Once a court sentences a criminal defendant,
it has jurisdiction to continue hearing related issues only when
authorized by statute or rule.” United States v. Goode, 342 F.3d
741, 743 (7th Cir. 2003). Here, the fourteen-day deadline for
correcting a sentencing error under Federal Rule of Criminal
Procedure 35(a) had long passed by the time Simon filed his
motions. A second motion under section 2255 would be
unavailable to address Simon’s concerns, given that restitution
does not meet the “custody” element of the statute. Barnickel,
113 F.3d at 706. A material change in the defendant’s economic
circumstances affecting his ability to pay restitution might
allow some adjustments to the restitution order, see 18 U.S.C.
§ 3364(k), but even if Simon’s daughter has repaid the underly-
ing school loans, that does not constitute a material change in
his economic circumstances. And none of the other avenues
referred to in section 3664(o)(1) appear available to Simon. See
United States v. Puentes, 803 F.3d 597, 607–08 (11th Cir. 2015)
(surveying these possibilities).
Having said all this, we add that we are not without our
doubts as to whether the district court had the authority to
entertain the government’s motion to amend the restitution
order.2 See Puentes, 803 F.3d at 607 (“every circuit court to
2
On appeal, the government has framed the issue as jurisdictional;
however, we agree with our sister circuits that “the question before us does
not implicate the district court’s subject matter jurisdiction.” United States
v. Wyss, 744 F.3d 1214, 1217 (10th Cir. 2014); see also Puentes, 803 F.3d at
605–08; United States v. Grant, 715 F.3d 552, 558 (4th Cir. 2013). Instead, it
implicates “the district court[‘s] lack[] [of] statutory authority to order a
belated reduction in Defendant’s restitution ….” Wyss, 744 F.3d at 1217. This
(continued...)
10 No. 19-1317
consider this issue has indicated that a district court may only
modify a mandatory restitution order through the means
specified in § 3664(o)”); see also id. at 608 (“a district court may
not modify a mandatory order of restitution unless one of the
circumstances in § 3664(o) applies”); cf. United States v.
Pawlinski, 374 F.3d 536, 540-41 (7th Cir. 2004) (emphasizing that
federal courts do not have discretion to redirect restitution in
a manner that ignores the statutory limits Congress placed on
restitution orders). When we inquired about this at oral
argument, the government’s counsel indicated that it was
relying on section 3664(k). But as is true with respect to
Simon’s challenges, section 3664(k) would appear to be
inapplicable, as the government’s motion was not premised on
a material change in Simon’s economic circumstances. In any
case, Simon’s attempt to challenge the order granting the
2
(...continued)
determination “does not utilize ‘authority’ in the jurisdictional sense, but in
the sense in which a court lacks ‘authority’ to impose, for instance, a
sentence below a statutory minimum.” Id. (citing Dolan v. United States, 560
U.S. 605, 626, 130 S. Ct. 2533, 2547 (2010) (Roberts, C.J., dissenting)). We take
this opportunity to clarify that district courts have subject-matter jurisdic-
tion to consider a motion to correct, modify, amend, or adjust restitution
consistent with § 3664(o) regardless of whether the movant is in fact
statutorily eligible for such relief. See United States v. Ceballos, 302 F.3d 679,
692 (7th Cir. 2002) (explaining that “judges and legislators sometimes use
the term jurisdiction to erroneously refer to a court’s authority to issue a
specific type of remedy, rather than to the court’s subject-matter jurisdic-
tion”); see also United States v. Taylor, 778 F.3d 667, 669–71 (7th Cir. 2015)
(holding that a district court had jurisdiction—meaning the power to
adjudicate—a motion for a reduced term of imprisonment even though it
was without the authority to grant the motion because the defendant did
not satisfy the statutory criteria for relief).
No. 19-1317 11
government’s motion comes too late. We end by noting, as the
district court did, that the revisions to Simon’s restitution
obligations were not to his detriment, as they eliminated one
payee altogether and simply reflected a lower, updated balance
owed to another. 2019 WL 422447, at *2.
III.
Finding none of Simon’s challenges to his restitution
obligations, as established by either the original or amended
restitution order, to be timely, we AFFIRM the denial of his
motions to reconsider.
12 No. 19-1317
HAMILTON, Circuit Judge, concurring. I join the court’s
opinion in all respects, including our concerns about the dis-
trict court’s authority to grant the government’s original mo-
tion to modify the restitution portion of the sentence. There
was no timely appeal regarding that modification, though,
and without a proper appeal, we do not have the power to
correct a non-jurisdictional error. See Greenlaw v. United
States, 554 U.S. 237 (2008).
I write additionally to highlight a related issue that arose
here and that may arise in other cases: the district court’s au-
thority to resolve post-sentencing disputes about restitution,
particularly with respect to credit for payments made. During
oral argument, this court raised the issue of the district court’s
authority, statutory or otherwise, to amend the restitution
portion of the judgment as the government asked in its mo-
tion. Counsel had given thoughtful consideration to the prob-
lem, but no fully satisfactory answer emerged. I offer not a
fully satisfactory answer but in essence a tracing of steps so
that the choices are clear. Perhaps a better answer will arise
from litigation or legislation.
The total amount of restitution for each victim and relative
priorities among them are part of the core criminal judgment.
18 U.S.C. §§ 3663 & 3663A. Challenges to those numbers and
priorities need to be raised in a direct appeal. United States v.
Bania, 787 F.3d 1168, 1172 (7th Cir. 2015) (rejecting late chal-
lenge to restitution order); Barnickel v. United States, 113 F.3d
704, 706 (7th Cir. 1997) (same). The procedures for issuing and
enforcing restitution orders as part of criminal sentences are
set forth in 18 U.S.C. § 3664.
No. 19-1317 13
Counsel suggested § 3664(k) as a source of the court’s au-
thority here. I’m not so sure. If the defendant’s economic cir-
cumstances have changed in a way that may affect his ability
to pay restitution, § 3664(k) authorizes a district court to ad-
just a payment schedule or to require immediate repayment
in full. Those statutory terms do not seem to apply to this case,
nor to a perhaps more routine disagreement about crediting
restitution payments actually made. There was no change in
defendant Simon’s economic circumstances, and the court’s
amendment to the restitution order was not merely an adjust-
ment of a payment schedule or an order of immediate repay-
ment.
A second suggested possibility is § 3664(o). That provi-
sion, however, explains only that a sentence with an order of
restitution is a final, appealable judgment notwithstanding
the fact that the sentence might be modified in any of several
ways. Most of the cited paths to modification are not specific
to restitution. The paths specific to restitution also don’t seem
to apply here. Subsection 3664(o) mentions § 3664(k), but that
doesn’t add anything new. Subsection 3664(o) also mentions
amendment under § 3664(d)(5), which allows some later
amendments to a restitution order where a victim is not able
to identify or calculate full losses at the time of original sen-
tencing. That’s also not the problem here.
Next, § 3664(o) mentions 18 U.S.C. § 3572. That statute
governs fines as part of criminal sentences and authorizes
some limited forms of amendment after sentencing. It can be
applied to restitution orders pursuant to § 3664(m)(1), but the
government has not relied on it. Finally, § 3664(o) mentions
14 No. 19-1317
18 U.S.C. § 3613A, which authorizes a district court to take
measures when a defendant fails to make payments toward a
fine or restitution as ordered. While Mr. Simon has made only
modest payments toward his restitution obligation, the gov-
ernment has not invoked § 3613A, which also would not ap-
ply to a dispute about credits for payments or, as in this case,
one victim’s decision not to seek or accept restitution.
Still, there may be some better statutory answers to my
question than have been raised so far. Paragraph 3664(m)(1)
provides cryptically: “An order of restitution may be enforced
by the United States in the manner provided for in subchapter
C of chapter 227 and subchapter B of chapter 229 of this title”
or by “all other available and reasonable means.” The cross-
references direct the reader to 18 U.S.C. §§ 3571–3573 and
§§ 3611–3615. With one exception in § 3572(d)(3), those stat-
utes put the ball in the government’s court to initiate enforce-
ment efforts and modifications. They clearly contemplate that
the district court will resolve such issues. See 18 U.S.C.
§§ 3573, 3613, & 3613A. See also § 3664(j)(2) & (n) (using pas-
sive voice—“shall be reduced” and “shall be required”—
where district court is obvious candidate to “reduce” or “re-
quire”).
Where does that leave us in terms of resolving administra-
tive disputes (as distinct from the doubtful authority to mod-
ify each victim’s total amount and priorities among them)? I
would point to either the tools available under § 3664(m) or
the district court’s inherent authority to administer a part of
its judgment that imposes continuing obligations. I offer the
inherent authority idea with diffidence. The specific statutory
No. 19-1317 15
authority for other types of amendments tends to weigh
against finding other authority implied regarding a subject—
restitution—that is established by statute and governed by
statute in such detail. More generally, I am aware of how cau-
tious courts must be with exercises of inherent authority. See,
e.g., Degen v. United States, 517 U.S. 820, 823 (1996) (discussing
general need for restraint in resorting to inherent authority);
Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991) (affirming use
of inherent authority to impose sanctions for litigation con-
duct, but cautioning need for restraint); Young v. U.S. ex rel.
Vuitton et Fils S.A., 481 U.S. 787, 798 (1987) (contempt power
is inherent but must be exercised with restraint); Fuery v. City
of Chicago, 900 F.3d 450, 463–64 (7th Cir. 2018) (discussing in-
herent power generally and affirming district court’s inherent
authority to enter judgment against parties who willfully mis-
led court and disobeyed court orders).
Despite this need for caution, however, there is a practical
need for someone to be in charge of the continuing admin-
istration of the restitution obligation and disputes that may
arise under it that do not involve the total amount and victim-
specific amounts and priorities that should be resolved at sen-
tencing or on direct appeal. The restitution obligations are
part of the sentence, and I see no candidate better than the
sentencing court for resolving such disputes that cannot be
resolved by agreement of the parties.
If there is a better statutory answer, and § 3664(m) may
provide it, I would welcome it. If not, I hope those not satis-
fied with inherent authority would endorse legislation ex-
pressly authorizing such continuing supervision by a district
16 No. 19-1317
court, perhaps akin to a court’s continuing authority over a
defendant on supervised release. See 18 U.S.C. § 3583(e)(2)
(court may modify conditions at any time prior to expiration
of term).