United States v. Arnold (Richard Sr.)

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT July 3, 2017
_________________________________
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v. No. 16-6152
(D.C. No. 5:14-CR-00347-D-1)
RICHARD M. ARNOLD SR., (W.D. Okla.)
Defendant - Appellant.
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ORDER AND JUDGMENT*
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Before HARTZ, MATHESON, and MORITZ, Circuit Judges.
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Richard Arnold Sr. appeals the district court’s restitution award arising from a
scheme involving vehicle-financing rebates. Arnold argues that the district court
erred in awarding restitution to certain lenders and in calculating the amount of
restitution owed. Finding no reversible error, we affirm.
*
This order and judgment is not binding precedent, except under the doctrines
of law of the case, res judicata, and collateral estoppel. But it may be cited for its
persuasive value. See Fed. R. App. P. 32.1; 10th Cir. R. 32.1.
I
Arnold pleaded guilty to one count each of wire fraud and conspiracy to
commit wire fraud. See 18 U.S.C. §§ 1343, 1349. According to the indictment,
Arnold—along with his wife Robyn and his sons Ricky and Robert (collectively, the
Arnolds)—concocted a scheme to defraud individuals out of the financing-incentive
rebates those individuals received when they purchased new vehicles. Specifically,
the Arnolds represented to their victims that if they relinquished their rebates to the
Arnolds, a charitable trust would then pay off their car loans. But while the Arnolds
made some payments on the loans, they eventually stopped making payments and
instead used the remaining rebate funds for their own personal expenses. Eventually,
the individual victims either took over the loan payments or relinquished the vehicles
to the lenders. The lenders then resold the vehicles for less than the remaining
balance on each loan.
After sentencing, the district court ordered Arnold to pay restitution to, inter
alia, those lenders who repossessed vehicles and resold them at deficiencies. This
included both so-called “captive” lenders, Aplt. Br. 11—i.e, financing units owned
and operated by the automobile companies—and their successors—i.e., lenders that
assumed the financial interests of the original lenders. While not entirely clear from
either the record or the parties’ briefing, it appears that the district court calculated
the restitution due to the captive lenders as the amount of principal remaining on the
loans after the repossession and sale of the vehicles.
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The district court ultimately ordered Arnold to pay $280,075.15 in restitution.
Arnold appeals.
II
On appeal, Arnold argues that the district court erred in (1) finding that the
captive and successor lenders were victims entitled to mandatory restitution under the
Mandatory Victims Restitution Act (MVRA) of 1996, 18 U.S.C. § 3663A, and (2)
failing to credit Arnold with interest that he paid prior to repossession and resale of
the vehicles. In evaluating these arguments, we review the district court’s application
of the MVRA de novo and its factual findings for clear error. See United States v.
Shengyang Zhou, 717 F.3d 1139, 1152 (10th Cir. 2013).
A
Arnold first argues the district court erred when it concluded that the captive
lenders constitute victims for purposes of the MVRA.
The MVRA defines the term “victim” to mean, in relevant part, “a person
directly and proximately harmed as a result of the commission of an offense.” §
3663A(a)(2). A victim is “proximately harmed as a result of” a defendant’s crime,
id., “if either there are no intervening causes, or, if there are any such causes, [they]
are directly related to the defendant’s offense,” United States v. Speakman, 594 F.3d
1165, 1172 (10th Cir. 2010).
Arnold argues that the government failed to meet its burden to show that he
“was the proximate cause of the losses claimed by the [captive] lenders” because the
government failed to prove that the employees of the captive lenders—and therefore
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the captive lenders themselves—weren’t involved in the Arnolds’ fraudulent scheme.
Aplt. Br. 9.
For this proposition, Arnold relies on Speakman, 594 F.3d 1165. There, Merrill
Lynch financial consultant Larry Speakman illegally transferred money from the
Merrill Lynch account of his wife, Carolyn Speakman. Id. at 1166-67. Unrelated to
the criminal case the government subsequently brought against Larry, Carolyn also
initiated an arbitration suit against Merrill Lynch. Id. at 1168. The arbitration panel
found some liability on Merrill Lynch’s part and, as a result, ordered it to pay
Carolyn $1,225,000. Id.
Larry ultimately pleaded guilty to wire fraud, and the district court ordered
him to pay $1,225,000 in restitution to Merrill Lynch, finding that Merrill Lynch was
a “victim” under the MVRA. Id. at 1168, 1170. The district court based this decision
on the facts contained in Larry’s presentence investigation report, which explained
the amount of—but not the basis for—Merrill Lynch’s liability to Carolyn. Id. at
1168.
On appeal, we reversed and remanded for the district court to determine the
basis for the arbitration panel’s finding of Merrill Lynch’s liability. Id. at 1172-73. In
doing so, we noted that Merrill Lynch was only a “victim” of Larry’s fraud under the
MVRA if, inter alia, Larry’s fraud proximately caused Merrill Lynch’s loss. See id. at
1171. And we explained that intervening causes break the chain of proximate cause
unless they are directly related to the offensive conduct. See id. at 1172. Finally, we
determined that two such potential intervening causes existed. Id.
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First, Carolyn’s initiation of the arbitration action was an intervening cause of
Merrill Lynch’s harm. But because the initiation of that action was directly related to
Larry’s fraud, we held that it didn’t break the chain of causation for purposes of
determining whether Merrill Lynch was a victim. Id.
Second, we noted that Merrill Lynch’s own wrongdoing, if any, might
constitute an intervening cause. See id. at 1172. And we reasoned that if the basis of
Merrill Lynch’s liability to Carolyn was its own intentional acts, those acts would
indeed break the chain of causation between Larry’s fraud and Merrill Lynch’s loss.
See id. at 1173-74. But that wouldn’t be the case if the basis of Merrill Lynch’s
liability to Carolyn instead sounded in respondeat superior or negligence. Id. at 1173.
Thus, we remanded for the district court to determine whether Merrill Lynch’s
liability to Carolyn was based on respondeat superior, its own negligence, or its own
intentional involvement in Larry’s fraud. Id. at 1172-74.
Here, Arnold argues that the government failed to show by a preponderance of
the evidence that he proximately caused harm to the captive lenders because the
government didn’t show that the captive lenders weren’t complicit in the Arnolds’
fraud. Arnold suggests that Speakman requires as much. In other words, he suggests
that Speakman required the government to disprove the existence of any possible
intervening causes in order to satisfy its burden of showing that the captive lenders in
this case are victims under the MVRA.
We disagree. In Speakman, the arbitration award constituted evidence that at
least arguably suggested an intervening cause may have broken the chain of
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proximate causation. See 594 F.3d at 1172-73. Thus, Speakman doesn’t stand for the
proposition that the government must disprove any and all potential intervening
causes before the district court can characterize an entity as a victim under the
MVRA. Instead, Speakman merely establishes that the government must address
potential intervening causes when at least some evidence suggests those intervening
causes might break the chain of proximate causation.
Arnold points to no such evidence here. That is, he doesn’t identify any
evidence that would even hint that the captive lenders or their employees
intentionally participated in Arnold’s fraud. And in the absence of such evidence, the
district court didn’t err in finding that the captive lenders and their successors were
victims—even though the government didn’t disprove the possibility of their
involvement in Arnold’s fraud.
Finally, in passing, Arnold cites United States v. Washington, 634 F.3d 1180
(10th Cir. 2011), and asserts that the government failed to prove that “successor
lenders were a standard practice within the automobile sales and distribution system.”
Aplt. Br. 14. But Arnold provides no context, argument, or explanation for this
assertion. Accordingly, any argument that Arnold might be attempting to advance
here is inadequately briefed, and we decline to consider it. See Fed. R. App. P.
28(a)(8)(A) (requiring argument section of appellant’s brief to contain “appellant’s
contentions and the reasons for them”); Bronson v. Swensen, 500 F.3d 1099, 1104
(10th Cir. 2007) (explaining that court routinely declines to consider inadequately
briefed arguments).
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B
Next, Arnold challenges the district court’s method of calculating restitution.
At the outset, we note that Arnold makes no effort to explain how, precisely,
the district court actually determined the amount of restitution owed to each lender.
Nor is the district court’s method entirely clear from its restitution order. True, that
order notes that the amount of restitution owed is the amount of the loan deficiency
remaining after the lenders applied any proceeds from the sale of each repossessed
vehicle. But the order doesn’t specify whether the final amount owed consists solely
of the remaining undischarged principal after subtracting the sale proceeds from the
principal due, or whether it instead includes other components, such as additional
accumulated interest. Based on our review of the record, however, it appears that the
amount the district court ultimately relied on in imposing restitution was simply the
outstanding principal remaining on the loans after the lenders resold each vehicle and
applied the proceeds. That is, while the lenders’ records do note additional
accumulated interest, it doesn’t appear that the district court added that amount to the
remaining principal after applying the resale proceeds.
Arnold suggests that the district court erred in simply subtracting the sale
proceeds from the remaining principal balance on each loan. Instead, he appears to
assert, the district court should have also subtracted from the remaining principal
balance any interest paid prior to repossession. Failure to do so, Arnold complains,
“would allow [each] lender to collect the interest twice.” Aplt. Br. 16.
Arnold makes no attempt to explain how the district court’s failure to subtract
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from the principal balance any interest paid over the life of each loan would allow the
lenders to “collect . . . interest twice.” Id. Instead, as we see it, Arnold’s proposed
method of calculating restitution—i.e., his suggestion that the district court should
have subtracted from the principal balance owed the amount of interest already
paid—would deprive the lenders of the opportunity to collect interest at all.
We decline to adopt this approach. First, Arnold cites no authority suggesting
that the lenders aren’t entitled to interest under the MVRA. We could reject his
argument on this basis alone. See Fed. R. App. P. 28(a)(8)(A); Bronson, 500 F.3d at
1104.
Second, as the government points out, our cases indicate that the lenders are
entitled to interest as a component of restitution. Cf. United States v. Williams, 292
F.3d 681, 687, 689 (10th Cir. 2002) (“The car was not sold at auction until July 9,
1997. Accrued interest at the contract rate of 9.5 percent during the intervening time
period as well as credit union expenses and fees incurred in the repossession and sale
of the Jaguar reasonably account for [amount of restitution that district court imposed
under MVRA].”); United States v. Patty, 992 F.2d 1045, 1050 (10th Cir 1993)
(approving prejudgment interest as a component of restitution under Victim Witness
Protection Act because it reflects victim’s “inability to use the money for a
productive purpose, and is therefore necessary to make the victim whole”—
particularly when “victim is a financial institution”). Thus, we reject Arnold’s
assertion that the restitution order somehow overcompensates the lender-victims by
failing to subtract from the restitution owed any interest those lenders previously
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collected.
As a final matter, Arnold complains that “some of the claims” for which the
district court imposed restitution also “included costs associated with repossession
and processing.” Aplt. Br. 16. But because the argument section of his brief doesn’t
contain any citations to the record that might support this factual assertion, Arnold
has waived any challenge to the district court’s alleged inclusion of such costs. See
Fed. R. App. P. 28(a)(8)(A); Bronson, 500 F.3d at 1104.
* * *
Arnold fails to demonstrate that the district court erred in (1) concluding that
the captive lenders and their successors constitute “victims” for purposes of the
MVRA or (2) calculating the amount of restitution owed. Accordingly, we affirm.
Entered for the Court
Nancy L. Moritz
Circuit Judge
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