United States v. Ben R. Bush, Jr. ( 2001 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 99-2390
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United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the Eastern
* District of Arkansas.
Ben R. Bush, Jr., *
*
Appellant. *
___________
Submitted: November 16, 2000
Filed: June 7, 2001
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Before LOKEN, JOHN R. GIBSON, and MORRIS SHEPPARD ARNOLD, Circuit
Judges.
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MORRIS SHEPPARD ARNOLD, Circuit Judge.
After Ben Bush pleaded guilty to conspiring to commit securities fraud, see
15 U.S.C. § 78j(b), 18 U.S.C. § 371, the district court sentenced him to 33 months
imprisonment and ordered him to pay restitution in the amount of approximately
$985,500 to the victims of his crime. Mr. Bush appeals his sentence, arguing that the
district court miscalculated the amount of loss attributable to him in determining his
offense level, erroneously increased his offense level pursuant to U.S.S.G. § 3B1.3, and
ordered him to pay excessive restitution. We affirm the district court's finding of the
amount of loss and the district court's decision to increase Mr. Bush's offense level
under § 3B1.3, but vacate and remand for recalculation of the order for restitution.
I.
Mr. Bush contends first that the district court determined his criminal offense
level incorrectly because it miscalculated the amount of loss attributable to him. During
sentencing, the district court found that Mr. Bush had caused a loss in excess of
$800,000 and was thus subject to an eleven-level increase in his offense level. See
U.S.S.G. § 2F1.1(b)(1)(L). Mr. Bush argues that losses that Carolyn Cowden, Bob
Warden, and Sue Warden suffered should not have been included in the district court's
calculations because those losses resulted from dealings unrelated to the offense for
which Mr. Bush was convicted.
As relevant here, the conspiracy with which Mr. Bush was charged involved his
sale of unregistered promissory notes issued by his company, Global Productions, Inc.
According to the indictment, Mr. Bush diverted the money generated by these sales and
never used it for Global's business purposes. Mr. Bush maintains that since he never
sold unregistered promissory notes for Global Productions, Inc., to either Ms. Cowden
or the Wardens, their losses should not be counted in calculating the loss attributable
to him. We disagree.
Under § 1B1.3, a district court is authorized to take into account certain relevant
conduct, in addition to offense conduct, when determining the sentencing range of an
offender. Because Mr. Bush's crime was of a character that could have permitted
grouping for his multiple transactions, see § 3D1.2, the pertinent guideline with respect
to relevant conduct is § 1B1.3(a)(2). The district court therefore was allowed to take
into account all acts and omissions by Mr. Bush that constituted "the same ... common
scheme or plan as the offense of conviction," see § 1B1.3(a)(2); see also United States
v. Ballew, 40 F.3d 936, 943-44 (8th Cir. 1994), cert. denied, 514 U.S. 1091 (1995).
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Mr. Bush borrowed money from Ms. Cowden promising that it would be used
to further the business of Global Productions, Inc. He took money from the Wardens
purportedly to buy stock in Global Productions, Inc., and gave them a handwritten note
promising repayment. In both of these instances he diverted the proceeds to other uses.
It is plain that the dealings with Ms. Cowden and the Wardens bear a strong
resemblance to the sales of unregistered promissory notes with which the indictment
charged Mr. Bush. In all of these transactions, Mr. Bush used Global Productions, Inc.,
as an investment lure, and a promise of repayment to convince his victims to give him
money, and then diverted the money rather than devoting it to the purposes that he
originally proposed. The district court thus found that Mr. Bush's dealings with
Ms. Cowden and the Wardens were part of "the same ... common scheme or plan" as
the offense conduct, see § 1B1.3(a)(2), and therefore constituted relevant conduct for
sentencing purposes. We do not think that this conclusion was error. These
transactions share a "common purpose" and a "similar modus operandi," see § 1B1.3,
application note 9(A), and so could be deemed part of a common scheme or plan. See
also Ballew, 40 F.3d at 943-44.
II.
Mr. Bush also argues that the district court erred when it added two levels to his
offense level because it determined that he had used a special skill to further his
fraudulent scheme. See U.S.S.G. § 3B1.3. We give "great deference" to the district
court's factual determinations regarding the use of a special skill and review those
findings under the clearly erroneous standard. United States v. Roggy, 76 F.3d 189,
193 (8th Cir. 1996), cert. denied, 517 U.S. 1200 (1996).
A district court may order a two-level sentencing enhancement for a defendant
if it believes that "the defendant ... used a special skill, in a manner that significantly
facilitated the commission or concealment of the offense," see § 3B1.3. " 'Special skill'
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refers to a skill not possessed by members of the general public and usually requiring
substantial education, training or licensing," id., application note 3.
The district court found that Mr. Bush, as a former investment counselor and
manager at a major national brokerage firm, had a special skill that helped him defraud
his victims. Mr. Bush maintains, however, that no special skill was required to sell
unregistered promissory notes and that anyone, even an unskilled person, could have
carried out the transactions involved in this case. This argument is without merit. "The
legal question is not whether the task could be performed by a person without special
skills, but whether the defendant's special skills aided him in performing the task,"
United States v. Covey, 232 F.3d 641, 647 (8th Cir. 2000). See also United States v.
Graham, 60 F.3d 463, 469, 469 n.3 (8th Cir. 1995).
In this case, the district court reasoned that Mr. Bush's extensive training and
experience allowed him to draw victims into his fraud much more easily than someone
without his skill could have. It also found that Mr. Bush's understanding of the
intricacies of executing promissory notes and collateralizing them helped him establish
a scheme that an otherwise unskilled person might have found more difficult to set up.
We do not think that the district court's finding was clearly erroneous, and we thus hold
that it did not err in applying the two-level enhancement. See Roggy, 76 F.3d
at 193-94.
III.
Mr. Bush maintains finally that the district court ordered him to pay an excessive
amount of restitution. Under 18 U.S.C. § 3663(a)(1)(A), a district court has the
authority to order a defendant to "make restitution to any victim" of the offense of
conviction. We review the district court's application of the restitution statute de novo.
See United States v. Ross, 210 F.3d 916, 924 (8th Cir. 2000), cert. denied, 121 S. Ct.
405 (2000).
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During his sentencing hearing, Mr. Bush presented copies of personal checks
supposedly documenting his partial repayments to some of the victims of his fraud.
The district court, however, declined to give Mr. Bush credit for the amount of these
checks because it was unable to determine what the checks were for. Mr. Bush insists
that he should have received credit, and that the amount of the restitution that he was
ordered to pay should be reduced pro tanto.
We disagree. A defendant ordered to make restitution is not entitled to credit if
he fails to offer proper proof of his repayments. See United States v. Bartsh, 985 F.2d
930, 933 (8th Cir. 1993), cert. denied, 510 U.S. 1170 (1994); see also United States v.
Baker, 200 F.3d 558, 561 (8th Cir. 2000). In this case, the district court was unable
to determine whether Mr. Bush had repaid some of his victims because the checks that
he provided as proof contained no facial indication of their purpose. The district court
offered to hold a hearing to consider the evidence further, but Mr. Bush turned down
the opportunity to substantiate his allegations. Because the district court was presented
only with ambiguous evidence of repayment, we hold that it did not err in denying
Mr. Bush credit when it calculated the amount of restitution that he owed.
Mr. Bush also contends that the district court should not have ordered him to pay
restitution to Ms. Cowden, the Wardens, Lorenzo Stigger, and Herbert Sudbury,
because his transactions with them were not part of the conduct laid in the indictment.
He points out that, in his dealings with these individuals, he never once sold them
unregistered promissory notes issued by Global Productions, Inc., or any other
securities. Mr. Bush therefore argues that the district court lacked the authority to
order him to pay restitution to these individuals because they did not qualify as victims
of the charge of which he was convicted.
For purposes of sentencing, the term "victim" includes any "person directly and
proximately harmed as a result of the commission of an offense for which restitution
may be ordered including, in the case of an offense that involves as an element a
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scheme, conspiracy, or pattern of criminal activity, any person directly harmed by the
defendant's criminal conduct in the course of the scheme, conspiracy, or pattern," see
18 U.S.C. § 3663(a)(2). We have previously interpreted this statute to mean that a
district court may award restitution to individuals who suffered from a defendant's
criminal activity beyond what was described with particularity in the indictment, so
long as the indictment "details a broad scheme encompassing transactions 'beyond
those alleged in the counts of conviction,' " United States v. Manzer, 69 F.3d 222, 230
(8th Cir. 1995), quoting United States v. Welsand, 23 F.3d 205, 207 (8th Cir. 1994),
cert. denied, 513 U.S. 1045 (1994). We therefore " 'look to the scope of the
indictment' to determine whether an award is 'within the outer limits of a permissible
restitution order,' " United States v. Ramirez, 196 F.3d 895, 900 (8th Cir. 1999),
quoting United States v. Jackson, 155 F.3d 942, 949, 950 (8th Cir. 1998), cert. denied,
525 U.S. 1059 (1998).
In this case, we think that Mr. Stigger can fairly be considered a victim of
Mr. Bush's offense conduct. Mr. Stigger was an investment counselor who encouraged
some of his clients to do business with Mr. Bush. Many of these clients eventually
became victims of Mr. Bush's fraud when they purchased unregistered promissory
notes issued by Global Productions, Inc., from him. Although Mr. Stigger never
directly gave any money to Mr. Bush for the notes, he paid money from his own pocket
to cover some of the losses that his clients incurred from their dealings with Mr. Bush.
The district court determined that he was entitled to restitution of the amount he paid
out. We find no error in this conclusion since it appears to us that this situation simply
involves a substitution of one victim for others: Any other result would allow Mr. Bush
to escape paying restitution that he quite obviously owed.
We conclude, however, that the district court erred in ordering Mr. Bush to pay
restitution to Ms. Cowden, the Wardens, and Mr. Sudbury because we do not think that
they were "victims" within the meaning of the relevant statute. The conduct for which
Mr. Bush was indicted had to do with the sale of unregistered promissory notes issued
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by Global Productions, Inc. Therefore, for an individual to be a victim of the
conspiracy with which Mr. Bush was charged, he or she must have been a party to a
transaction of this description.
Ms. Cowden, the Wardens, and Mr. Sudbury did not participate in any
transaction with Mr. Bush that corresponded with the conduct laid in the indictment,
because Mr. Bush did not sell them any promissory notes that Global Productions, Inc.,
issued. While the transactions with Ms. Cowden, the Wardens, and Mr. Sudbury were
fraudulent and constituted crimes on Mr. Bush's part, and the conduct involved in those
transactions was, as we have said, relevant for sentencing purposes, we cannot say that
these crimes were committed pursuant to the conspiracy for which Mr. Bush was
charged and of which he was convicted. Although similar in purpose and design, these
offenses were different from the offense laid in the indictment. We thus hold that
Ms. Cowden, the Wardens, and Mr. Sudbury were not "directly harmed," see 18
U.S.C. § 3663(a)(2), by Mr. Bush's conspiracy and were not entitled to restitution. See
Ramirez, 196 F.3d at 900.
IV.
For the reasons indicated, we affirm the district court's judgment in part and
remand the case for recalculation, consistent with our holdings, of the order for
restitution.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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