United States v. Jeremy Drake ( 2020 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUN 2 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 19-50110
Plaintiff-Appellee, D.C. No.
2:18-cr-00058-CAS-1
v.
JEREMY JOSEPH DRAKE, MEMORANDUM*
Defendant-Appellant.
Appeal from the United States District Court
for the Central District of California
Christina A. Snyder, District Judge, Presiding
Submitted April 3, 2020**
Pasadena, California
Before: PAEZ and CALLAHAN, Circuit Judges, and LYNN,*** District Judge.
Jeremy Joseph Drake appeals his sentence for wire fraud, in violation of 18
U.S.C. § 1343. Drake was ordered to pay $1,228,912.20 in restitution—
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Barbara M. G. Lynn, Chief United States District
Judge for the Northern District of Texas, sitting by designation.
$928,912.20 to his victims and $300,000 to his former employer, HCR Wealth
Advisors (“HCR”).
We have jurisdiction under 18 U.S.C. § 3742 and 28 U.S.C. § 1291. We
review a restitution order “for an abuse of discretion, provided it is within the
bounds of the statutory framework.” United States v. Waknine, 543 F.3d 546, 555
(9th Cir. 2008) (internal quotation marks omitted).
The district court correctly reduced the restitution ordered to be paid directly
to the victims by $300,000. The victims received $300,000 from HCR to settle any
claims against HCR related to Drake’s misconduct. Under 18 U.S.C.
§ 3663A(b)(1)(B)(i)–(ii), an order of restitution shall require that the defendant
compensate a victim for lost or damaged property “less . . . the value . . . of any
part of the property that is returned.” The $300,000 settlement received by the
victims constitutes returned property. See Robers v. United States, 572 U.S. 639,
643, 134 S. Ct. 1854, 1857, 188 L. Ed. 2d 885 (2014) (holding that, because money
is fungible, it “need not be the very same bills or check” that are returned to a
victim). The district court, therefore, correctly subtracted the $300,000 settlement
from the victim’s agreed loss of $1,228,912.20, and ordered Drake to pay
$928,912.20 to the victims.
However, the district court also correctly ordered Drake to pay $300,000 in
restitution to HCR. “If a victim has received compensation from insurance or any
2
other source with respect to a loss, the court shall order that restitution be paid to
the person who provided or is obligated to provide the compensation.” 18 U.S.C.
§ 3664(j). Drake argues that HCR cannot qualify as “any other source” because
HCR benefited from Drake’s offense and was, essentially, a culpable co-
conspirator. However, 18 U.S.C. § 3664(j) does not contain any limitation on the
definition of “any other source.” See United States v. Williams, 659 F.3d 1223,
1225 (9th Cir. 2011) (“If the plain meaning of the statute is unambiguous, that
meaning is controlling.”). Moreover, even assuming that 18 U.S.C. § 3664(j)
disallows the ordering of restitution for culpable co-conspirators, the evidence in
the record does not establish that HCR was such. Indeed, the district court found
that HCR merely “innocently employed someone who defrauded people.”
Accordingly, the district court correctly held that HCR qualified as “any other
source” under 18 U.S.C. § 3664(j), and ordered Drake to pay it $300,000 in
restitution.
In doing so, the district court did not impermissibly shift the burden to
Drake. The parties agree, and the district court found, that the Government bore
the burden of establishing that HCR qualified for restitution. See Waknine, 543
F.3d at 556 (“The government bears the burden of proving that a person or entity is
a victim for purposes of restitution, and of proving the amount of the loss.”)
(internal citations omitted). At sentencing, the Government satisfied its burden
3
because it was undisputed that the victims sustained a loss and that part of that loss
was paid for by HCR. The district court found that HCR “has stepped in, and it
has advanced money and it is entitled to reimbursement.” The district court’s
single statement that there was “no information from Mr. Drake that would suggest
that” HCR was complicit in his scheme, made while discussing Defendant’s
request for additional discovery before sentencing, does not constitute a shifting of
the burden of proof to the defense on restitution.
In his reply brief, Drake raises, for the first time, that HCR recently settled a
related Securities and Exchange Commission enforcement action, which requires,
in part, that HCR make additional payments to the victims. The administrative
order imposing the terms of that settlement was entered after Drake filed his appeal
and opening brief, and the impact of that administrative order on his restitution
amount was thus not raised before the district court. The issue is thus not properly
before us on appeal, and Drake should first request any appropriate relief from the
district court. See Harik v. Cal. Teachers Ass’n, 326 F.3d 1042, 1052 (9th Cir.
2003) (“[W]e do not ordinarily consider on appeal issues not raised below.”).
AFFIRMED.
4