United States v. Powell

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.  No. 02-4367
DANIEL L. POWELL,
Defendant-Appellant.

Appeal from the United States District Court
for the Southern District of West Virginia, at Beckley.
David A. Faber, Chief District Judge.
(CR-01-162)
Submitted: January 30, 2003
Decided: February 21, 2003
Before WIDENER, NIEMEYER, and LUTTIG, Circuit Judges.
Affirmed by unpublished per curiam opinion.
COUNSEL
Gregory J. Campbell, CAMPBELL & TURKALY, Charleston, West
Virginia, for Appellant. Kasey Warner, United States Attorney, Larry
R. Ellis, Assistant United States Attorney, Charleston, West Virginia,
for Appellee.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
2 UNITED STATES v. POWELL
OPINION
PER CURIAM:
Daniel L. Powell was convicted by a jury of nine counts of aiding
and abetting the making of false claims against the United States in
violation of 18 U.S.C. § 287 (2000). He was sentenced to a term of
sixty-three months imprisonment. Powell appeals his sentence, argu-
ing that the district court improperly calculated the amount of loss,
U.S. Sentencing Guidelines Manual § 2F1.1 (1998), clearly erred
when it found that the offense involved a conscious or reckless risk
of serious bodily injury, § 2F1.1(b)(6)(A), and violated the rule set
out in Apprendi v. New Jersey, 530 U.S. 466, 490 (2000), by increas-
ing his offense level for conduct not charged in the indictment or
proved to the jury. We affirm.
Powell was a quality assurance representative with the Department
of Defense. From 1996 to 1999, Powell was responsible for insuring
that Talon Manufacturing Company performed the work it had con-
tracted to do for the Army. Talon had been hired to "demilitarize" a
large number of artillery fuzes1 by removing all the explosive and
energetic material contained in the fuzes. The fuzes were metal cones
designed to screw onto an artillery shell. Each fuze contained a timing
mechanism and a firing train—a series of small explosives. To pre-
vent premature firing, the explosives were not aligned until the fuze
was screwed into place on the shell. The explosive material in the
fuze was equivalent to that of a blasting cap, or an M80.
Powell periodically signed "DD-250 Forms," which certified that
a specified number of fuzes had been demilitarized successfully.
Talon submitted these forms to the Army before receiving payment.
In September 2000, the Army discovered that more than 600,000
undemilitarized fuzes had been sold by Talon to SADCO Recovery,
Inc., and were being stored in Point Pleasant and Jumping Branch,
1
The spelling "fuze" is used by all parties in this case. "Fuze" and
"fuse" are alternative spellings for a detonating device used to set off an
explosive, to be distinguished from "fuse," the household safety device
designed to break a circuit when the electric current exceeds a specified
amperage. See Webster’s Third New International Dictionary.
UNITED STATES v. POWELL 3
West Virginia. SADCO was owned by former officers of Talon. At
the Jumping Branch site, fuzes were placed haphazardly in a large
cardboard box, which created a danger that some of them might deto-
nate and "propagate," i.e., cause a chain-reaction explosion.
Powell at first denied any knowledge of undemilitarized fuzes hav-
ing been sold or shipped from the Talon plant, but later told investiga-
tors that he signed false certifications after Talon executives asked
him to do so in order that they could obtain payment to meet their
payroll. Powell said the executives told him that Talon had not been
able to figure out how to demilitarize the fuzes economically, but
would continue to work on finding a process for doing so and would
not ship the fuzes elsewhere before they were demilitarized. Powell
said that when Army inspectors came to Talon the company showed
them workers who appeared to be demilitarizing fuzes. Powell said
he was aware of the deception. Subsequently, Powell reverted to his
original denial that he had ever signed DD-250 forms for work not
completed. At Powell’s trial, the government introduced nine fraudu-
lent DD-250 claim forms corresponding to the nine counts in the
indictment. At sentencing, the government took the position, based on
Powell’s statement, that Powell had filed at least thirty-five false
forms.
After it had paid Talon $553,320 for demilitarizing work that was
not performed, the Army removed over 636,000 fuzes from the
SADCO sites, repacked them, and shipped them to Army depots at a
cost of approximately $1 million. The Army’s anticipated cost for
demilitarization of the fuzes was $550,000.
In calculating Powell’s offense level, the probation officer used all
three amounts and recommended a 12-level enhancement based on a
loss of $2,103,320. USSG § 2F1.1(b)(1)(M) [loss of $1,500,000 to
$2,500,000]. Powell challenged only the $1 million consequential
loss. The district court found that it was reasonably foreseeable to
Powell that, if Talon did not perform the demilitarization, the Army
would eventually have to pay to have the work done elsewhere. On
appeal, Powell contends that the court’s finding was not supported by
evidence (1) that he knew of Talon’s sale to SADCO or that he bene-
fitted from it, or (2) that he knew or should have known that Talon
would violate its agreement with the Army by shipping undemilita-
4 UNITED STATES v. POWELL
rized fuzes to SADCO and that the fuzes would be improperly stored.
He suggests that he had no reason to believe Talon would move or
sell the undemilitarized fuzes because no evidence was introduced to
show that Talon lacked space to store them.
Application Note 8(c) to § 2F1.1 directs that loss in procurement
fraud and product substitution cases includes consequential damages.
This portion of the commentary also provides that, "in the case of
fraud affecting a defense contract award, loss includes the reasonably
foreseeable administrative cost to the government and other partici-
pants of repeating or correcting the procurement action affected, plus
any increased cost to procure the product or service involved that was
reasonably foreseeable." The district court’s finding that it was rea-
sonably foreseeable to Powell that his conduct would result in expen-
ditures by the government to repeat or correct the service involved is
a factual finding reviewed for clear error. United States v. Harrison,
272 F.3d 220, 223 (4th Cir. 2001) (sentencing findings that do not
require interpretation of guideline are fact findings not to be disturbed
absent clear error), cert. denied, 123 S. Ct. 162 (2002).
The sentencing court may hold a defendant accountable for reason-
ably foreseeable actions of another person involved with him in a
jointly undertaken criminal activity without finding that the defendant
had actual knowledge of the conduct. USSG § 1B1.3(a)(1)(B). Here,
the evidence showed that Powell signed between nine and thirty-five
false DD-250 forms between July 1997 and October 1998. During
this time, Talon made no progress in developing a procedure for
demilitarizing the fuzes as they had contracted to do, yet Powell con-
tinued to certify that the work had been done. Even if Powell thought
Talon would store the undemilitarized fuzes on its own premises
indefinitely, he could reasonably foresee that at some point the Army
would discover that the work it had paid Talon to do had not been
done. Therefore, Powell could reasonably foresee that, if the fraud
were discovered, the Army would incur considerable administrative
and other expense to have the fuzes demilitarized. Consequently, the
district court did not clearly err in finding that the $1 million
expended by the Army to remove the fuzes from SADCO was reason-
ably foreseeable to Powell and was properly included in the amount
of loss.
UNITED STATES v. POWELL 5
Powell also alleges that the district court erred by including in the
amount of loss both the $554,320 the Army paid to Talon and the
Army’s future $550,000 estimated cost of demilitarizing the fuzes
Talon failed to demilitarize. Because Powell failed to object to the
loss calculation on this ground in the district court, the issue is
reviewed for plain error. United States v. Olano, 507 U.S. 725, 732-
37 (1993). Powell contends that the Army has only lost the $553,320
it paid to Talon for work not performed because it expected to pay
$550,000 for demilitarization of the fuzes it sent to Talon for process-
ing. Therefore, if the Army spends $500,000 in the future to have
someone else do the work, that amount cannot properly be deemed a
loss. While this claim is persuasive, Powell has not shown that the
court plainly erred in making this enhancement because, even if the
$550,000 future cost of demilitarization is eliminated, the loss still
exceeds $1,500,000.
Powell next contends that the district court’s finding that the
offense involved a conscious or reckless risk of serious injury was
based on its speculative belief, unsupported by any evidence, that he
knew or should have known that Talon would ship fuzes away from
its premises before they had been demilitarized and that Talon did not
have space to store the fuzes until such time as they were demilita-
rized. The district court’s determination that a fraud offense involved
the conscious or reckless risk of a serious bodily injury is a factual
finding that is reviewed for clear error. United States v. Turner, 102
F.3d 1350, 1357 (4th Cir. 1996) (affirming enhancement where mine
owners falsely certified that miners had received required safety train-
ing).
The evidence at trial established that, once Talon obtained a certifi-
cation that a batch of fuzes had been demilitarized, it was free to ship
or dispose of them as it pleased under its contract with the Army.
Even if Talon executives indeed assured Powell that Talon would not
dispose of the fuzes before demilitarizing them, it should have been
foreseeable to him that persons willing to submit a stream of false cer-
tifications to the Army would not likely keep a promise to him. More-
over, he apparently made no effort to determine what Talon actually
did with the undemilitarized fuzes. The fuzes posed a danger to any-
one handling or storing them who was not trained to do so, and also,
as the court later noted, posed a graver danger to the public safety in
6 UNITED STATES v. POWELL
that they could have been acquired by groups who might wish to use
them for their original military purpose. Therefore, we conclude that
the district court did not clearly err in finding that the offense posed,
at the least, a reckless risk of serious bodily injury.
Last, Powell’s claim that the district court erred by increasing his
offense level based on loss amounts not charged in the indictment is
without merit. Apprendi is not implicated when the sentencing court
makes factual findings that increase the guideline range but the sen-
tence does not exceed the statutory maximum. Harris v. United
States, 122 S. Ct. 2406, 2418 (2002); United States v. Kinter, 235
F.3d 192, 199-202 (4th Cir. 2000), cert. denied, 532 U.S. 937 (2002).
In Powell’s case, the statutory maximum sentence for each of the nine
fraud counts was sixty months. 18 U.S.C. § 287. Powell’s guideline
range was 63-78 months. He received a sentence of sixty-three
months. The district court had authority to impose consecutive sen-
tences to the extent necessary to impose a sentence within the guide-
line range. USSG § 5G1.2(d); United States v. White, 238 F.3d 537,
543 (4th Cir.), cert. denied, 532 U.S. 1074 (2001).2
We therefore affirm the sentence imposed by the district court. We
dispense with oral argument because the facts and legal contentions
are adequately presented in the materials before the court and argu-
ment would not aid the decisional process.
AFFIRMED
2
To achieve a sentence of 63 months here, the district court imposed
a sentence of 7 months imprisonment for each count and made the sen-
tences consecutive.