United States v. Kinney

16-193-cr
United States v. Kinney
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A
COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 28th day of March, two thousand seventeen.
PRESENT: REENA RAGGI,
DEBRA ANN LIVINGSTON,
SUSAN L. CARNEY,
Circuit Judges.
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UNITED STATES OF AMERICA,
Appellee,
v. No. 16-193-cr
DEBRA J. KINNEY,
Defendant-Appellant,
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APPEARING FOR APPELLANT: AVI SPRINGER (Devin McLaughlin, on the
brief), Langrock Sperry & Wool, LLP,
Middlebury, Vermont.
APPEARING FOR APPELLEE: WILLIAM B. DARROW, Assistant United
States Attorney (Gregory L. Waples, Assistant
United States Attorney, on the brief), for Eric S.
Miller, United States Attorney for the District
of Vermont, Burlington, Vermont.
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Appeal from a judgment of the United States District Court for the District of
Vermont (William K. Sessions III, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment entered on January 5, 2016, is AFFIRMED.
Defendant Debra Kinney, former manager of the Border Lodge Credit Union,
stands convicted after a guilty plea to one count of embezzling funds from that savings
organization in violation of 18 U.S.C. § 657. Sentenced to a below-Guidelines prison
term of 36 months, following her sentencing representation that she would “cooperate
fully with the courts in [making] whatever they deem to be just . . . restitution complete,”
App’x 32, Kinney now appeals the $812,329 restitution order subsequently entered by the
district court, challenging both the dollar amount and the process by which that amount
was determined. Our standard of review is abuse of discretion, which we will identify
only where the decision rests upon an error of law or fact or otherwise cannot be located
within the range of permissible decisions. See United States v. Thompson, 792 F.3d
273, 276–77 (2d Cir. 2015); United States v. Gushlak, 728 F.3d 184, 193–94 (2d Cir.
2013).1 In so reviewing Kinney’s challenges, we assume the parties’ familiarity with
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The government urges plain error review, arguing that Kinney’s claims were not
preserved below. In the district court, Kinney argued that the government failed to
provide “supporting documentation” for any restitution exceeding the $499,757 claimed
by the National Credit Union Association. App’x 90–91. Assuming that this was
sufficient to “communicate the nature of [Kinney’s] claim[s],” even in the absence of
“precise or detailed legal arguments,” United States v. Huggins, 844 F.3d 118, 121 n.3
(2d Cir. 2016) (internal quotation marks omitted), we nevertheless conclude that she fails
to demonstrate abuse of discretion.
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the facts and procedural history of the case, which we reference only as necessary to
explain our decision to affirm.
1. Amount of Restitution
The challenged restitution order was in four parts: (1) $499,757 to the National
Credit Union Administration (“NCUA”); (2) $265,000 to CUMIS Insurance; (3) $2,572
to credit union member Gordon Chadburn; and (4) $45,000 to credit union member Lise
Fournier. Kinney does not dispute the award to CUMIS. Instead, she argues that the
award to NCUA was impermissibly duplicative of that award and that the Chadburn and
Fournier claims were insufficiently documented to be awarded without an evidentiary
hearing. We are not persuaded.
a. Duplicative Award
The Mandatory Victims Restitution Act (“MVRA”) requires a district court to
order restitution in the full amount of a victim’s loss from the offense of conviction. See
18 U.S.C. §§ 3663A(a)(1), 3664(f)(1)(A); United States v. Thompson, 792 F.3d at 278.
The law recognizes that victims’ losses cannot always be identified with “mathematical”
precision and, thus, has approved “a reasonable approximation of losses supported by a
sound methodology.” United States v. Gushlak, 728 F.3d at 196; see also Paroline v.
United States, 134 S. Ct. 1710, 1728 (2014). At the same time, however, the law does
not authorize restitution to victims “in excess of their losses.” United States v.
Pescatore, 637 F.3d 128, 139 (2d Cir. 2011). Thus, a district court cannot recompense
both a victim and his compensating insurer for the same loss. See United States v.
Thompson, 792 F.3d at 279.
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The district court here concluded that a $499,757 award to the NCUA and a
$265,000 award to CUMIS were not so duplicative because the loss to the NCUA far
exceeded the combination of awards to these victims. This conclusion finds support in
the record. The NCUA, the agency that insures members’ deposits in federal credit
unions, including the Border Lodge Credit Union, advised the district court that it had
limited its loss claim to $499,757 (reduced from an original $520,093) not because that
was the amount of loss sustained, but because that was the amount it could trace directly
to Kinney, her family, and their associates. The NCUA advised the district court that it
believed Kinney’s dishonesty to have caused the credit union’s insolvency, resulting in a
total loss of $2,300,051, of which it had thus far documented $1.3 million through
member affidavits and other proof, only $265,000 of which had been covered by CUMIS
(the limit of that insurer’s bond obligation for employee dishonesty and audit expenses).
Thus, the NCUA stated that it thought the amount of funds misappropriated by Kinney to
be “a lot higher” than its loss claim “because of the 33 member share accounts that were
understated by $1,308,987.” App’x 62. In the absence of cooperation from these
members, some of whom were relatives or close friends of the defendant who believed
she would “take care of everything for them,” the NCUA’s tracing abilities were limited
by the very nature of Kinney’s embezzlement scheme. Id.
A defendant’s restitution obligation is not limited to the amount that she has
realized from her crime but, rather, extends to the full loss sustained by victims. See
United States v. Zangari, 677 F.3d 86, 92 (2d Cir. 2012) (holding that measure of
restitution is victim’s loss, not defendant’s gain); United States v. Boccagna, 450 F.3d
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107, 115 (2d Cir. 2006) (stating that “primary and overarching” purpose of MVRA is “to
fully compensate these victims for their losses and to restore these victims to their
original state of well-being” (internal quotation marks omitted)). Thus, it is no matter
that the NCUA traced only approximately half a million embezzled dollars directly to
Kinney and her associates. The NCUA investigation into and documentation of some
$1.3 million missing from accounts of the insolvent credit union, considered together
with the proof of Kinney’s extensive embezzlement, provided a sufficient factual basis to
support a preponderance finding by the district court that Kinney’s criminal conduct had
caused a total loss so far in excess of the $499,757 NCUA claim and the $265,000 paid
by CUMIS as to preclude any concern of unwarranted duplication in the restitution
awards to both these victims. Accordingly, we identify no abuse of discretion in these
awards.
b. Sufficiency of Chadburn/Fournier Claims
Kinney argues that the affidavits of Chadburn and Fournier were insufficient to
raise their loss claims above the speculative. Indeed, she argues that the district court
could not rely upon such hearsay statements absent some minimal indicia of reliability.
See United States v. Martinez, 413 F.3d 239, 244 (2d Cir. 2005). The argument fails
because the requisite minimal indicia of reliability were provided by the specificity of the
statements, the fact that those statements were sworn under penalty of perjury, and, more
generally, by the evidence of Kinney’s extensive embezzlement throughout the accounts
of the Border Lodge Credit Union. See United States v. Ibanez, 924 F.2d 427, 429–30
(2d Cir. 1991) (observing that, where “sufficient indicia of reliability” are required to
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corroborate information presented at sentencing, affidavits “[may] themselves” be
sufficient to resolve disputes); United States v. Schwamborn, 542 F. App’x 87, 88 (2d
Cir. 2013) (holding that, under Ibanez, district court did not plainly err in relying on
sworn affidavits alone for determining amount of claimant’s restitution).
Although Kinney argues that, insofar as Fournier’s and Chadburn’s loss claims
were turned down by the NCUA, they should not have been believed by the district court,
we are obliged to defer on a sufficiency challenge to the district court’s contrary
conclusion, and we cannot say that it abused its discretion in crediting these sworn
accounts consistent with Kinney’s overall criminal conduct. In Chadburn’s case, the
NCUA compensated him for $108,780.27 of his claimed $111,352.76 loss, and Kinney
does not offer reason to credit the NCUA’s decision not to award the $2,572.49
difference at issue. 2 Nor does Kinney offer reason beyond conjecture to discredit
Fournier’s sworn affidavit. She does not, in other words, offer reason to conclude that
the district court abused its discretion in making a preponderance finding, on the record
before it, that the amounts Chadburn and Fournier claimed were more likely than not
valid. See United States v. Ibanez, 924 F.2d at 430. Accordingly, we grant no relief
from this part of the judgment.
2
Documentation in the record indicates that the additional $2,572.49 claimed by
Chadburn resulted from a dispute with the NCUA over its calculation of the amount to
which he was entitled based on the timing of transfers between accounts. Kinney did
not and does not rely upon that documentation, which, in any event, does not
unambiguously favor either Chadburn’s or the NCUA’s calculations.
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2. Failure To Conduct Evidentiary Hearing
Kinney argues that the district court’s failure to conduct an evidentiary hearing on
restitution denied her due process. The law does not support this argument. “[I]n the
context of contested issues regarding the propriety of a restitution award, . . . the
sentencing procedures employed to resolve such disputes are within the district court’s
discretion so long as the defendant is given an adequate opportunity to present his
position.” United States v. Gushlak, 728 F.3d at 194 (internal quotation marks omitted).
Here, the district court afforded Kinney that opportunity when it allowed her to
submit a memorandum raising any objections to the government’s restitution
calculations. Her two-page submission argued merely that the evidence established that
only $499,757 was attributable to Kinney’s malfeasance and that the evidence supporting
additional losses was “speculative.” App’x 90–91. It stated that “a large sum may also
have been lost through [Kinney’s] nonfeasance.” Id. at 91. The district court did not
abuse its discretion in concluding that no evidentiary hearing was necessary to pursue
those conclusory assertions. The sworn affidavits supporting Chadburn’s and
Fournier’s claimed losses, as discussed, sufficiently supported a preponderance finding of
their entitlement to restitution for those losses. The NCUA’s report of a total $2.3
million loss, $1.3 million of which was documented as understated accounts, when
viewed in light of the half million dollars in documented embezzled funds, convincingly
supported a preponderance finding that the overall loss was, more likely than not, caused
by Kinney’s criminal conduct and not by simple neglect. These findings, in turn,
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permitted the district court to order restitution in the lesser total amount of $812,329
without an evidentiary hearing.
3. Conclusion
We have considered Kinney’s remaining arguments and conclude that they are
without merit. Accordingly, the January 5, 2016 judgment of the district court is
AFFIRMED.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, Clerk of Court
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