United States v. Schmidt (Janice)

FILED
United States Court of Appeals
Tenth Circuit
November 13, 2009
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 08-1136
JANNICE MCLAIN SCHMIDT, (D.C. No. 04-CR-103-REB)
(D. Colo.)
Defendant-Appellant.
ORDER AND JUDGMENT *
Before HARTZ, BALDOCK, and TYMKOVICH, Circuit Judges.
As a consequence of her participation in a ponzi scheme which cost defrauded
investors upwards of $50 million, Defendant Jannice McLain Schmidt pled guilty to
two counts of Securities Fraud in violation of 15 U.S.C. §§ 77q(a) and 77x. The
district court sentenced her to 60 months imprisonment on the first count of a
superceding information, and 48 months imprisonment on the second count, to be
served consecutively. To make a long story short, the parties from the outset of
the sentencing process have wrangled over the amount of loss properly attributable
to Defendant. Prior to the first sentencing hearing, the Government supplied a loss
*
This order and judgment is not binding precedent except under the doctrines
of law of the case, res judicata, and collateral estoppel. It may be cited, however,
for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
figure attributable to Defendant of $25,656,958.96. Defendant meanwhile initially
calculated the loss due to her participation in the scheme at $11,384,617.00. The
Presentence Investigation Report (PSIR) set the loss attributable to Defendant at
$27,276,442.93. For a loss between $20 million and $50 million, the United States
Sentencing Guidelines (U.S.S.G.) provide an offense level increase of 22. See
U.S.S.G. § 2B1.1 Over Defendant’s objection, the court at the first sentencing
hearing accepted the PSIR’s findings without independent inquiry, and concluded
that a 22 offense level increase was appropriate. Based upon an adjusted offense
level of 31 and a criminal history category of I, the advisory guidelines set
Defendant’s imprisonment range between 108–135 months. But because the
statutory maximum sentence for the two offenses was five years each, the PSIR
reduced the high end of the range to 120 months.
Following the district court’s imposition of a 108 month sentence, Defendant
appealed, arguing the district court did not comply with Fed. R. Crim. P. 32(i)(3)(B).
Rule 32 requires that when a defendant alleges a factual inaccuracy in the PSIR, the
district court may not simply refer back to the PSIR to defeat the objection.
Defendant pointed out that the court failed to make a clear and independent ruling
on the disputed amount of loss and instead merely adopted the factual findings and
guideline applications of the PSIR. We agreed with Defendant and remanded for
resentencing:
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The evidence showed that Schmidt was originally recruited as a
victim into the scheme, and only later became a participant. The plea
agreement lacks detail concerning her participation in specific aspects
of the scheme. Given her objection to the PSIR, the nature and extent
of her participation were key factors to be resolved in determining the
appropriate advisory Guideline range and her appropriate sentence.
United States v. Schmidt, 244 Fed. App’x 902, 907 (10th Cir. 2007) (unpublished).
On remand, the district court conducted a three day evidentiary hearing on the issue
of loss, and the probation office prepared an addendum to the original PSIR. This
time, both the Government and the PSIR estimated the loss attributable to Defendant
at $24,709,954.02. See Gov’t Exh. 4. Following the hearing, the court made
independent findings on the record consistent with the PSIR, and resentenced
Defendant to 108 months imprisonment. See Rec. vol. VI, at 17-21. Defendant
again appeals, steadfastly disputing the amount of loss attributable to her.
Under the Sentencing Guidelines (specifically the applicable 2002 version),
a defendant for purposes of sentence calculation generally may be held responsible
for “relevant conduct,” i.e., conduct “that occurred during the offense of conviction,
in preparation for that offense, or in the course of attempting to avoid detection or
responsibility for that offense.” U.S.S.G. § 1B1.3(a)(1). Such conduct includes “all
acts and omissions committed, aided, abetted, counseled, commanded, induced,
procured, or willingly caused by the defendant.” Id. § 1B1.3(a)(1)(A). In the event
of “jointly undertaken criminal activity (a criminal plan, scheme, endeavor, or
enterprise undertaken by the defendant in concert with others, whether or not charged
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as a conspiracy)” a defendant also may be held responsible for “all reasonably
foreseeable acts and omissions of others in furtherance of the jointly undertaken
criminal activity.” Id. § 1B1.3(a)(1)(B).
Defendant first argues (as she did in the district court) that application of
U.S.S.G. § 1B1.3(a)(1) is restricted per the terms of her plea agreement to that time
period beginning in the spring of 2003—that period encompassing the fraudulent
misconduct charged in the second count of the superceding information. Defendant
asserts the Government breached the plea agreement when it insisted at sentencing
that the time period of Defendant’s relevant conduct commenced in the winter of
2002—that period encompassing the fraudulent misconduct charged in the first count
of the superceding information. We review de novo the legal question of whether
the Government breached the plea agreement in this case. See United States v.
Trujillo, 537 F.3d 1195, 1200 (10th Cir. 2008). We look to the language of the
agreement as a whole to ascertain both the nature of the Government’s promise and
Defendant’s reasonable understanding of that promise. Id.Applying this standard, we need not detail Defendant’s argument. Suffice
to say we have carefully reviewed the record, in particular the plea agreement, and
arguments presented (written and oral), and conclude the district court interpreted
the plea agreement consistent with the applicable law, thereby properly rejecting
Defendant’s claim of breach. Where the district court accurately analyzes an issue
and articulates a cogent rationale, it serves no useful purpose for us to write at
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length. See Metro. Life Ins. Co. v. Zaldivar, 413 F.3d 119, 120 (1st Cir. 2005) (per
Baldock, J.). Thus, we reject Defendant’s first argument substantially for the reasons
set forth in the district court’s written order which ably explains why the
Government did not breach the plea agreement. United States v. Schmidt, No. 04-
CR-00103-REB-05, Order Denying Defendant’s Oral Motion to Preclude Breach of
the Plea Agreement (D. Colo., Feb. 13, 2008). We add only that ¶ 12 of the
agreement, contained in a section entitled “Stipulation of Factual Basis and Facts
Relevant to Sentencing” (emphasis added), expressly states “[t]he parties agree that
the government’s evidence would show that the date on which conduct relevant to
the offense (§ 1B1.3) began is approximately the fall of 2001.” Defendant fails to
provide any persuasive explanation as to why we, considering the plea agreement as
a whole, should deem facts commencing around that period as inconsequential to the
determination of her relevant conduct under U.S.S.G. § 1B1.3.
Defendant’s second argument posits that the district court, in calculating the
amount of loss attributable to her, relied upon erroneous findings of fact to conclude
“the defendant was engaged in jointly undertaken criminal activity, involving the
fraudulent solicitation of investments from January 11, 2002, the date of her
conviction in Count 1 of the Superceding Information, through mid-2004.” 1 Rec.
1
Defendant’s third and final argument, that her sentence is procedurally
unreasonable, is based upon the proposition that the district court relied on clearly
erroneous factual findings in calculating her guideline range. In other words,
(continued...)
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vol. VI, at 17. Rather, Defendant asserts she had no understanding of the fraudulent
scheme prior to the spring of 2003 as evidenced by the fact she was investing her
own money in the illicit enterprise up to that time. The district court’s determination
of “relevant conduct” is a factual finding subject to a preponderance of the evidence
standard, and clear error review. United States v. Zapata, 546 F.3d 1179, 1192 (10th
Cir. 2008). To constitute clear error, the finding must be “simply not plausible or
permissible in light of the entire record on appeal.” Id. (internal quotations omitted).
Having carefully reviewed the transcript of the sentencing hearing in this case,
we have little difficulty sustaining as plausible and permissible the district court’s
underlying findings supporting its determination regarding Defendant’s knowledge
of and willing participation in the fraudulent scheme from January 2002. Based upon
the testimonial and documentary evidence presented, the court justifiably found
Defendant solicited investments from numerous investors from January 11, 2002
forward in cooperation with her cohort Charles Lewis without ever disclosing the
material fact of Lewis’ prior felony conviction. Equally as damaging to her cause
was evidence from which the district court could properly infer that from March
2002, Defendant knew of a Nebraska cease and desist order regarding the
1
(...continued)
Defendant simply attacks the court’s factual findings regarding her involvement in
the scheme from a different angle. Because such argument is subsumed within her
ill-fated second argument, we need not address it further. See United States v.
Zapata, 546 F.3d 1179, 1192-93 (10th Cir. 2008).
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“investments” she was touting. She sought to avoid the impact of that order by
directing Nebraska investors to use her Colorado post office box as their address and
misrepresenting the nature of the Nebraska regulatory proceedings to investors. That
same month, Defendant was present at a business meeting during which her husband,
Norman Schmidt, stated “he had withdrawn money from a non-depleting account and
used it for other purposes.” Rec. vol. IV, at 114. The court could properly infer that
Defendant was aware of the fraudulent activities associated with the scheme by her
attendance at this meeting as well as subsequent sales meetings and social events
where the schemers gathered. The court’s finding of relevant conduct further rests
on evidence from which it could infer that Defendant, through her role as bookkeeper
and subsequently through her role as sole signatory on two purportedly “non-
depleting” accounts, understood, in the words of the district court, “that investors’
money was not being deposited into non-depleting accounts, that no profits were
being generated from any trading activity, and that payments to investors [including
herself] were funded by deposits from other investors.” Rec. vol. VI, at 19. As we
noted in our prior opinion, Defendant, to be sure, was recruited into the scheme as
a victim. But the record belies any conclusion that the district court committed clear
error in concluding that things changed in January 2002. The factual arguments that
Defendant makes on appeal relating to her knowledge of and participation in the
scheme were most emphatically for the fact-finder.
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Accordingly, the judgment of the district court is AFFIRMED.
Entered for the Court,
Bobby R. Baldock
United States Circuit Judge
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