United States v. Brian Stone ( 2020 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS SEP 21 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 18-10382
Plaintiff-Appellee,
D.C. No.
v. 2:16-cr-00038-MCE-3
BRIAN STONE,
MEMORANDUM*
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of California
Morrison C. England, Jr., District Judge, Presiding
Argued and Submitted July 17, 2020
San Francisco, California
Before: SILER,** LEE, and BUMATAY, Circuit Judges.
Brian Stone appeals the district court’s $243,680.84 restitution order under
the Mandatory Victim Restitution Act (MVRA), arguing that the court wrongly
imposed restitution for losses not caused by Stone and for insurance claims which
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Eugene E. Siler, United States Circuit Judge for the
U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
were not fraudulent. We have jurisdiction under 28 U.S.C. § 1291. “The legality of
an order of restitution is reviewed de novo, and factual findings supporting the order
are reviewed for clear error. Provided that it is within the bounds of the statutory
framework, a restitution order is reviewed for abuse of discretion.” United States v.
Brock-Davis, 504 F.3d 991, 996 (9th Cir. 2007) (citations omitted). We vacate the
restitution sentence and remand for the district court to recalculate restitution.
The district court did not err in imposing restitution for losses not directly
caused by Stone’s conduct but rather by his co-conspirators. “[R]estitution may be
ordered for all persons directly harmed by the entire scheme and is thus not confined
to harm caused by the particular offenses for which [the defendant] was convicted.”
United States v. Johnson, 875 F.3d 422, 425 (9th Cir. 2017) (citation and quotations
omitted). The evidence presented at trial and sentencing showed that Stone
participated in the scheme alleged in the indictment.
The district court, however, erred in imposing restitution to insurance
companies for claims that may not have been tainted by fraud. Under the MVRA,
restitution “may only compensate a victim for actual losses caused by the
defendant’s criminal conduct.” United States v. Gaytan, 342 F.3d 1010, 1011 (9th
Cir. 2003). Thus, “restitution may be awarded only for losses for which the
defendant’s conduct was an actual and proximate cause.” United States v. Swor,
728 F.3d 971, 974 (9th Cir. 2013) (quotations and citations omitted) (finding
2
victim’s loss too attenuated when defendant “introduce[ed] two people . . . in the
course of carrying out a fraudulent scheme, [and] the two later, and independently,
became involved in a separate, operationally different fraudulent scheme”); see also
United States v. Follet, 269 F.3d 996, 999–1101 (9th Cir. 2001) (holding that a crisis
center’s costs for counseling a rape victim were too attenuated to be included in the
rape defendant’s restitution order).
The district court adopted the PSR’s restitution amount without requiring the
government to prove that the entire restitution amount resulted from fraud. It instead
apparently relied on the government’s assumption that the insurers would and could
void the entire policy due to fraud. But because restitution covers only “actual
losses” suffered by the insurers, the government had to provide evidence that no
claims would have been paid absent Stone and his co-conspirators’ fraud. To meet
this burden, the “government must provide the district court with more than just
general invoices ostensibly identifying the amount of their losses.” United States v.
Andrews, 600 F.3d 1167, 1171 (9th Cir. 2010) (quoting another source). Just
because the insurance companies potentially had the right to cancel coverage does
not mean they suffered those “actual losses.” Gaytan, 342 F.3d at 1011. The
government thus had the burden to prove which portion of the insurance payout was
fraudulent. It did not do so.
3
The government’s reliance on United States v. Torlai, 28 F.3d 932, 939 (9th
Cir. 2013), is misplaced. That case was interpreting the specific language for
calculating intended losses under the Sentencing Guidelines, not the MVRA’s
restitution provision. See id. at 939. The purposes behind the Sentencing Guidelines
and the MVRA are distinctly different: intended loss concerns culpability of the
offender, while restitution is about “actual losses” to the victim.
VACATED AND REMANDED.
4