DocketNumber： 91-2293
Filed Date： 11/20/1992
Status： Precedential
Modified Date： 3/3/2016
November 20, 1992
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 91-2293
UNITED STATES,
Appellee,
v.
LLOYD R. HAGGERT,
Defendant, Appellant.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. D. Brock Hornby, U.S. District Judge]
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Before
Torruella, Circuit Judge,
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Brown,* Senior Circuit Judge,
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and Bownes, Senior Circuit Judge.
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Charles F. Dalton, Jr., with whom Dalton, Baron & London
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were on brief for appellant.
F. Mark Terison, Assistant United States Attorney, with whom
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James L. McCarthy, Assistant United States Attorney, and Richard
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S. Cohen, United States Attorney, were on brief for appellee.
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*of the Fifth Circuit, sitting by designation.
1
BOWNES, Senior Circuit Judge. Defendant-Appellant,
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Lloyd Haggert, appeals the sentence imposed by the district
court following his conviction for bank fraud.
Specifically, Haggert challenges the court's imposition of a
five-level increase from his base offense under Sentencing
Guideline 2F1.1, which mandates such an increase when the
"loss" attendant to fraud is "more than $40,000." U.S.S.G.
2F1.1(b)(1)(F) (Nov. 1991). The district court looked to the
amount of loss that Haggert intended to obtain fraudulently
from the bank, in assessing loss at $62,508.50, the sum total
of Haggert's fraudulent sight drafts. Haggert asserts that
the court ought instead to have used the actual loss
resulting from his criminal conduct, which the court had
determined was $5,511.30. We affirm the sentence imposed by
the district court.
I.
I.
Background
Background
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Lloyd Haggert was convicted by a jury in the United
States District Court for the District of Maine of violating
Title 18 U.S.C. 1344, by defrauding the federally-insured
Skowhegan Savings Bank. The act underlying Haggert's
conviction was his attempt to pay delinquent real estate
mortgages with valueless sight drafts. On May 30, 1989,
Haggert presented two sight drafts, totalling $62,508.50, to
the assistant manager of the Skowhegan Savings Bank who, at
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that time, believed them to be cashier's checks and stamped
them as paid. The bank later discovered that these drafts
lacked a financial institution identification number.
Further investigation revealed that the financial institution
upon which they were drawn was not a legitimate, operating
institution.
When the Skowhegan Savings Bank refused to discharge
Haggert's mortgages, Haggert obtained a judgment to enforce
the sight drafts.1 The bank eventually foreclosed on
Haggert's mortgages. After accounting for the proceeds from
foreclosure, the bank suffered a loss of $20,248.10. In
addition, the bank incurred costs of $5,511.30, in fending
off Haggert's attempts to force the bank to honor the
fraudulent sight drafts.
Prior to his sentencing, Haggert responded to the
pre-sentence report prepared by the government. Haggert
objected to the determination of the amount of restitution,
which had been set at $25,759.40, to reflect the total loss
to the bank in its dealings with Haggert. In addition,
Haggert challenged two factual assertions that are not
pertinent to the issue before us. Haggert made no further
objections either at the pre-sentence stage or during the
sentencing hearing. In fact, the district judge directly
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1 It would appear that the defendant obtained the judgment
himself, without going through any judicial procedures.
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asked Haggert whether he had any additional objections, at
the beginning of the sentencing hearing, and whether he had
anything to add, near the end of the hearing.
The district court determined that the amount of the
defendant's fraud was $62,508.50, and added the mandatory
five-level increase for loss of more than $40,000 to
Haggert's sentence. For the purpose of calculating
restitution, the court determined that the bank's actual
damages were limited by statute to the loss directly related
to the criminal conduct of the defendant and thus exclusive
of the bank's foreclosure costs. See 18 U.S.C. 3664
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(1988). The court established that the actual damage caused
by the defendant's fraud was $5,511.30, the cost to the bank
of Haggert's attempts to enforce the fraudulent sight drafts.
Haggert was sentenced to a term of fifteen months in prison,
followed by a two-year term of supervised release, and was
ordered to pay $5,511.30 in restitution to the Skowhegan
Savings Bank.
II.
II.
Discussion
Discussion
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A. Standard of Review
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We have repeatedly stated in the sentencing context,
as well as in other areas, that issues not presented to the
district court will not be addressed for the first time on
appeal. See, e.g., United States v. Shattuck, 961 F.2d 1012,
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1015 (1st Cir. 1992)("[w]e do not review sentencing guideline
disputes which were not preserved before the district
court.")(citing United States v. Dietz, 950 F.2d 50, 55 (1st
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Cir. 1991)); United States v. Uricoechea-Casallas, 946 F.2d
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162, 166 (1st Cir. 1991)(failure to raise sentencing
guideline issue at district court precludes raising it on
appeal); United States v. Curzi, 867 F.2d 36, 44 (1st Cir.
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1989)("an issue not presented in the district court will not
be addressed for the first time on appeal."). As we observed
in the case of Hernandez-Hernandez v. United States, 904 F.2d
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758, 763 (1st Cir. 1990), "[w]e have applied this proposition
in well over a hundred cases since Johnston v. Holiday Inns,
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595 F.2d 890 (1st Cir. 1979)."
In Johnston, this court explained that while the rule
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governing issues raised for the first time on appeal is not
absolute, it is relaxed only in extreme cases. Arguments not
raised below will be entertained on appeal only in
"``horrendous cases where a gross miscarriage of justice would
occur'" and, in addition, where the newly asserted ground is
"``so compelling as virtually to insure appellant's success'."
Id. at 894. The Johnston standard was recently affirmed in
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United States v. McMahon, 935 F.2d 397, 400 (1st Cir. 1991).
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In this case, Haggert had ample opportunity to
challenge the sentence imposed. The pre-sentence report
assessed the amount of fraud as $62,508.50, and expressly
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recommended the five-level increase eventually adopted by the
district court. In his memorandum responding to the pre-
sentence report, Haggert offered three objections, none of
which concerned either the calculation of the amount of fraud
or the five-level increase. Moreover, during the sentencing
hearing, the district court judge took care to inquire
whether Haggert had further objections or comments, and
Haggert voiced no additional concerns. See generally, United
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States v. McMahon, 935 F.2d at 399 (failure to object to pre-
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sentence report); United States v. Fox, 889 F.2d 357, 359
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(1st Cir. 1989)(failure to challenge facts set forth in pre-
sentence report either in responsive memorandum or during
sentencing hearing precluded raising challenge as to same
issue on appeal).
Because Haggert neglected to raise before the
district court the sole basis of his appeal, Haggert's appeal
is precluded subject only to the narrow exception articulated
in Johnston. Our reading of the Sentencing Guidelines and
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the supporting case law convinces us that no error of such
proportion exists in this case. Far from implicating a
miscarriage of justice, or evoking a new ground of almost
assured success, the district court's sentence was a proper
interpretion and application of the Sentencing Guidelines.2
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2 Had Haggart preserved his claim below, our inquiry would
have been two-fold. In Sentencing Guideline cases, we first
determine de novo the scope of the Guideline at issue and
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6
Indeed, we are convinced that Haggert would not have
prevailed on the merits even if the issue had been preserved
for appeal.
B. The Sentencing Guidelines
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The issue raised on appeal is the meaning of "loss"
in the Sentencing Guideline covering fraud. The district
court measured loss by the amount that the defendant intended
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to obtain fraudulently from the bank. Defendant argues that
the actual loss resulting from his criminal conduct should
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have provided the basis for augmenting his sentence. We
begin with an examination of the Sentencing Guidelines.
Guideline 2F1.1 covers crimes involving fraud and
deceit. That Guideline begins with a base offense level of
six, which level is adjusted upward in accordance with the
dollar value of the loss involved in the crime. Section
2F1.1 mandates an increase of five levels when the "loss" is
"more than $40,000." U.S.S.G. 2F1.1(b)(1)(F) (Nov. 1991).
Application Note 7 of the Commentary accompanying the
Guideline deals with the valuation of loss. In relevant
part, Application Note 7 provides:
Consistent with the provisions of 2X1.1
(Attempt, Solicitation or Conspiracy), if an
intended loss that the defendant was
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then assess the district court's fact-finding for clear
error. See United States v. St. Cyr, No. 92-1639, slip op.
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at 6 (1st Cir. October 15, 1992).
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attempting to inflict can be determined, this
figure will be used if it is greater than the
actual loss.
U.S.S.G. 2F1.1, comment. (n.7).2 This explication of the
Guideline has been relied upon in the First Circuit and in
other circuits. See United States v. Cesar Resurreccion, No.
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91-2015, slip op. at 7 (1st Cir. October 30, 1992) (even
where it cannot be stated precisely, the intended loss will
be used if it is larger than the actual loss). See also
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United States v. Schneider, 930 F.2d at 556; United States v.
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Palinkas, 938 F.2d 456, 465 n.19 (4th Cir. 1991); United
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States v. Smith, 951 F.2d 1164, 1166 (10th Cir. 1991); United
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States v. Shattuck, 961 F.2d at 1016 (citing United States v.
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Kopp, 951 F.2d 521 (3rd Cir. 1991)).
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2 The first sentence in Application Note 7 refers the reader,
for a discussion of valuation of loss, to the Commentary in
2B1.1 (Larceny, Embezzlement, and Other Forms of Theft). The
Commentary in 2B1.1, in turn, refers for discussion of
partially completed offenses to 2X1.1 (Attempt,
Solicitation, or Conspiracy). The example provided in
2B1.1 of a partially completed offense is a completed theft
that is part of a larger, attempted theft. This example is
closely analogous to the case at hand where the defendant was
not successful in reaping the anticipated profits of his
fraud. See generally, United States v. Schneider, 930 F.2d
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555, 556 (7th Cir. 1991)("Many fraudulent schemes are
interrupted before they reach fruition. From a practical
standpoint they are attempts, and their gravity depends in
significant degree on the size of the loss that would have
been inflicted had the scheme not been interrupted.").
The second sentence in Application Note 7, which
begins the quote cited above, also refers to 2X1.1.
Whichever road is taken, the result is the same. A
sentencing judge must look to the amount that the defendant
intended to defraud or to steal, or to the actual loss,
whichever is greater.
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8
Application Note 7 contains an example of intended
loss that closely approximates the crime committed by
Haggert. The example provides that, "if the fraud consisted
in . . . representing that a forged check for $40,000 was
genuine, the loss would be $40,000." U.S.S.G. 2F1.1,
comment. (n.7). The fraudulent sight drafts that Haggert
presented to the bank as genuine totalled $62,508.50. By
analogy to this example, the loss would be $62,508.50, the
assessment made by the district court.
Notwithstanding the general rule whereby loss for the
purpose of sentencing is the greater of the actual or
intended losses, Haggert urges us to apply to his case an
exception narrowly created for loan application and contract
procurement cases. The exception, articulated in subpart (a)
of Application Note 7, defines a category of fraudulent
actions for which the expected or actual loss to the victim
provides the basis for the sentence enhancement. Application
Note 7(a), in pertinent part, provides as follows:
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9
In fraudulent loan application cases and
contract procurement cases where the
defendant's capabilities are fraudulently
represented, the loss is the actual loss to
the victim (or if the loss has not yet come
about, the expected loss). For example, if a
defendant fraudulently obtains a loan by
misrepresenting the value of his assets, the
loss is the amount of the loan not repaid at
the time the offense is discovered, reduced
by the amount the lending institution has
recovered, or can expect to recover, from any
assets pledged to secure the loan.
In some cases, the loss determined above
may significantly understate or overstate the
seriousness of the defendant's conduct . . .
.
U.S.S.G. 2F1.1, comment. (n.7(a)). We fail to see the
relevance of this exception for the factually distinct crime
of fraudulent loan payments made well after loans have been
secured. Nevertheless, we examine the scope of this
exception in order to underscore our conclusion that
Haggert's fraud is precisely the sort of criminal conduct
that the exception does not cover.
The Seventh Circuit has explained the scope of the
exception for fraudulent information in a loan application or
in contract procurement by distinguishing between two types
of fraud. See United States v. Schneider, 930 F.2d at 558.
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The first type of fraud implicates the "true con artist," who
never intends to perform the undertaking, such as the terms
of the contract or loan repayments, but who intends only to
pocket the money without rendering any service in return.
The second type of fraud involves a person who would not have
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attained the contract or loan but for the fraud, but who
fully intends to perform.3 Id. In the latter case, and only
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in the latter case, is the intended loss not to be considered
for sentencing.
Contrary to Haggert's attempt to place himself in the
latter category of offenders, Haggert's conduct is a paradigm
of the first type of fraud. Haggert had no intention of
paying the loans for which he was in default. He drafted
valueless forms of payment which he presented to the bank as
valid. When he succeeded momentarily in his ploy, Haggert
went so far as to attempt to enforce a judgment against the
bank for the amount of his fraudulent sight drafts. When the
bank had difficulty locating the financial institution upon
which the fraudulent drafts were drawn, Haggert evaded the
bank's requests for his assistance, and obstructed the bank's
attempts to determine the facts, by continuing to insist upon
the veracity of the information he provided the bank.
Finally, Haggert knowingly presented the sight drafts that
had been falsely stamped as "paid" to another financial
institution to support new loan applications. Any of these
actions alone would suffice to establish Haggert's intention
not to pay the debts he owed to the bank; together, they
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3 See generally, United States v. Smith, 951 F.2d at 1167 ("A
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thief who steals $100,000 is more culpable than a salesman
who obtains $100,000 by selling a victim an $80,000 house he
fraudulently represents as being worth $100,000.").
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underscore that Haggert fully intended to defraud the
Skowhegan Savings bank in the amount of $62,508.50.
As the Schneider distinction between two types of
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fraud illustrates, even under the exception for loan
application and contract procurement cases, the intent of the
defendant is the measure by which the loss is to be assessed.
See United States v. Schneider, 930 F.2d at 558. In each of
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the cases upon which defendant relies where the court held
that the loss should be offset to reflect collateral pledged
by the defendant, or that the actual loss should constitute
the loss for sentencing purposes, the defendants lacked the
intent to inflict the full amount of the fraud. See United
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States v. Smith, 951 F.2d at 1169 (finding no evidence that
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the defendant intended to inflict the amount of loss
established by the district court); United States v. Hughes,
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775 F. Supp. 348, 349 (E.D. Cal. 1991) (noting that the
defendant neither intended nor desired that his loans would
go into default). Contrawise, in loan application cases
where there was no intent to perform, the intended loss has
provided the basis for augmenting the defendant's sentence.
See United States v. Johnson, 908 F.2d 396, 398 (8th Cir.
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1990).
The Guidelines are concerned with assessing the
seriousness of the defendant's conduct, given the wide array
of conduct covered by fraud. See U.S.S.G. 2F1.1 comment.
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(backg'd.).4 See also United States v. Rothberg, 954 F.2d
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217, 218 (4th Cir. 1992). What the Guidelines do not
envision is rewarding a defendant for her or his lack of
skill in executing a criminal act. Haggert's failure to reap
the full financial benefits of his fraud cannot provide a
basis for lowering the sentence imposed by the district
court.
Affirmed.
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4 Note 7(a), which articulates the exception for loan
applications and contract procurement, contains language that
underscores the importance of assessing the seriousness of
the defendant's conduct as well. We refer to the first
sentence of the second paragraph quoted supra at p. 9.
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13
alfred-m-johnston-individually-alfred-m-johnston-trustee-and-daniel , 595 F.2d 890 ( 1979 )
United States v. Carolyn L. Fox , 889 F.2d 357 ( 1989 )
United States v. Sharon Kay Johnson , 908 F.2d 396 ( 1990 )
United States v. Larry W. McMahon , 935 F.2d 397 ( 1991 )
United States v. William A. Dietz , 950 F.2d 50 ( 1991 )
United States v. Lewis Donald Shattuck , 961 F.2d 1012 ( 1992 )
United States v. Alfred James Smith , 951 F.2d 1164 ( 1991 )
United States v. Barbara J. Curzi , 867 F.2d 36 ( 1989 )
United States v. Stephen Palinkas, United States of America ... , 938 F.2d 456 ( 1991 )