United States v. J.L. Menefee, II

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 15-12022
Non-Argument Calendar
________________________
D.C. Docket No. 1:09-cr-00499-RWS-CCH-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
J. L. MENEFEE, II,
a.k.a. J. L. Menefee,
a.k.a. JL Menefee,
a.k.a. JL Menefee, II,
a.k.a. James L. Menefee,
Defendant-Appellant.
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Appeal from the United States District Court
for the Northern District of Georgia
________________________
(February 3, 2016)
Before WILSON, MARTIN, and ANDERSON, Circuit Judges.
PER CURIAM:
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J. L. Menefee, II stands convicted of uttering false statements in violation of
18 U.S.C. § 1001 when he made fraudulent statements in a loan application for a
$1.8 million loan from the victim, Branch Bank & Trust Company (BB&T). He
appeals the district court’s order crediting against his $1.8 million restitution
judgment a total of $1.375 million for collateral property received by the victim;
crediting against the judgment $75,000 plus $1,953.74 in interest for a Certificate
of Deposit (CD) seized by the victim; denying his requested credit of $200,000 for
a cash injection made at the loan closing; and directing garnishee, SunTrust Bank
(SunTrust), to turn over all of his property, including the contents of his
companies’ accounts.
On appeal, Menefee first argues that the district court erred in applying the
credits to his restitution judgment. He should have been credited $1.6 million for
the collateral property received by the victim and $200,000 for a cash injection he
made at closing. In addition, the interest calculated on the CD was incorrect.
Second, the government violated his Brady 1 rights, as it had access to two
appraisals of the collateral property at sentencing but did not disclose them. Third,
the district court incorrectly upheld a garnishment, despite an insufficient showing
that his companies’ accounts were used for personal expenses.
1
Brady v. Maryland, 373 U.S. 83, 83 S. Ct. 1194 (1963).
2
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I. Restitution Credit
“We review the legality of a restitution order de novo and the factual
findings underlying the order for clear error.” United States v. Cavallo, 790 F.3d
1202, 1238 (11th Cir. 2015). The Mandatory Victims Restitution Act (MVRA)
states that if the property at issue cannot be returned to the owner, then the
defendant should pay the value of the property minus “the value . . . of any part of
the property that is returned.” 18 U.S.C. § 3663A(b)(1)(B). The restitution award
must be based on the loss the victim actually suffers, so the court must deduct as an
offset any value the victim might have derived. Cavallo, 790 F.3d at 1239.
Menefee argues that the district court erred in crediting the restitution
amount because it (i) improperly valued the subject property, (ii) failed to give
credit for a $200,000 cash injection paid at closing, and (iii) improperly calculated
interest on a CD. We address each argument in turn.
First, Menefee argues that the district court improperly valued the foreclosed
property and that the offset should be based on the highest appraisal, $1.6 million.
In Robers v. United States, Robers, who also submitted fraudulent loan
applications, argued that because the banks sold the collateral properties in a
falling real estate market, they were worth more when the banks took title and
restitution should be credited with this higher value. 572 U.S. ___, ___, 134 S. Ct.
1854, 1857 (2014). The Supreme Court found that “property . . . returned” under
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the MVRA referred to the money that the banks lent to Robers and subsequently
lost, not the collateral property the banks received in foreclosure. Id. (internal
quotation marks omitted). Therefore, the Court held that “a sentencing court must
reduce the restitution amount by the amount of money the victim received in
selling the collateral, not the value of the collateral when the victim received it.”
Id. at 1856.
The Supreme Court also acknowledged that the statute has a proximate
cause requirement, which turns on “whether the harm alleged ha[d] a sufficiently
close connection to the conduct at issue.” Id. at 1859 (internal quotation marks
omitted). Menefee, like Robers, argues that the delay in the sale of the property
caused a lower sale price and broke the causal connection necessary for proximate
cause. However, the Supreme Court held in Robers that fluctuation in property
values is common and its existence is foreseeable. See id. at 1859. Therefore, the
fact that property values were lower when BB&T sold the property did not break
the causal connection, and Menefee failed to point to any compelling facts in the
record that would definitively break the causal connection required for proximate
cause.
In light of the above, it was not clearly erroneous for the district court to find
that Menefee was entitled to a credit of $1.375 million for the collateral received
by the victim, an equitable sum considering the property only sold for $550,000.
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Second, the district court did not clearly err in denying Menefee’s request
that the $200,000 cash injection qualify as an offset. By Menefee’s own
admission, this sum did not constitute a direct payment to the loan principal.
Rather, it served as a prerequisite payment for closing costs that did not reduce the
actual amount of the loan and therefore should not be credited towards any
restitution amount owed on the loan principal.
Finally, while the district court did not clearly articulate its $1,953.75
interest calculation on the $75,000 CD seized by BB&T, Menefee has failed to
meet his burden of proving this was clear error. See United States v. Sheinbaum,
136 F.3d 443, 449 (5th Cir. 1998) (“Logically, the burden of proving an offset
should lie with the defendant.”).2
II. Brady Violation
We review de novo an alleged Brady violation. United States v. Jones, 601
F.3d 1247, 1266 (11th Cir. 2010). Menefee argues that the government’s failure to
disclose two prior appraisals of the subject property at sentencing constitutes a due
process violation pursuant to Brady. See 373 U.S. at 87.
Under Brady, “the defendant must prove that (1) the government possessed
evidence favorable to him; (2) the defendant did not possess the evidence and
2
Because the CD originated at BB&T, Menefee’s argument rests on the assumption that BB&T
would continue to pay out interest on the CD to itself after seizure from Menefee. Not only is
this a questionable assumption, but Menefee has failed to cite any law in support.
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could not have obtained it with reasonable diligence; (3) the government
suppressed the favorable evidence; and (4) the evidence was material.” LeCroy v.
Sec’y, Fla. Dep’t of Corr., 421 F.3d 1237, 1268 (11th Cir. 2005). Therefore, if a
defendant “had within [his] knowledge the information by which [he] could have
ascertained the alleged Brady material, there is no suppression by the government.”
Maharaj v. Sec’y for the Dep’t of Corr., 432 F.3d 1292, 1315 (11th Cir. 2005)
(internal quotation marks omitted). The materiality requirement is “satisfied if
there is a reasonable probability that, had the evidence been disclosed to the
defense, the result of the proceeding would have been different.” Allen v. Sec’y,
Fla. Dep’t of Corr., 611 F.3d 740, 746 (11th Cir. 2010) (internal quotation marks
omitted).
Here, Menefee did not prove a violation of his Brady rights, as he could
have obtained the $1.6 million appraisal with reasonable diligence prior to
sentencing. That appraisal was appended to a motion BB&T filed in the
bankruptcy proceedings for Menefee’s company, a motion which Menefee
references in his brief to this court. See LeCroy, 421 F.3d at 1268 (finding no
Brady violation where defendant’s counsel could have obtained the relevant
evidence by exercising “reasonable diligence”).
Moreover, while Menefee may not have received the $1.375 million
appraisal, missing such evidence would not be material here. Since the court
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accorded that precise amount in restitution offset for the collateral property, there
would be no change to the ultimate result. See Allen, 611 F.3d at 746.
III. Garnishment
Under 28 U.S.C. § 3205(a), “[a] court may issue a writ of garnishment
against property . . . in which the debtor has a substantial nonexempt interest.”
After the garnishee files an answer, the judgment debtor can object, stating the
grounds for the objection while carrying the burden of proving such grounds. 28
U.S.C. § 3205(c)(5).
Menefee has failed to carry his burden of proving the grounds of his
objection to the answer filed by the garnishee, SunTrust. Specifically, Menefee
had the burden of proving that his accounts were subject to a statutory exemption,
and he has failed to make any such arguments both at the district court and on
appeal. See id. At a hearing regarding restitution (during which garnishment
issues were formally addressed) and in his post-hearing brief, Menefee failed to
articulate and prove why his accounts were exempt from garnishment. Therefore,
there was no statutory rationale for an additional hearing and the district court did
not err in holding the accounts subject to garnishment. 3
3
Menefee also claims that the government seized money from his minor child’s account, but
points to nothing in the record for support, and the court’s order does not appear to address any
such account.
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IV. Conclusion
We find no error as to the district court’s findings that (i) restitution would
be offset by $1.375 million for the subject property but not the $200,000 cash
injection; (ii) the CD interest credited as an offset amounts to $1,953.75; (iii) the
government did not commit a Brady violation with respect to the two property
appraisals; and (iii) garnishment of Menefee’s SunTrust accounts were proper.
Thus, we affirm.
AFFIRMED.
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