United States v. Harvey

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 09-4970
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
KENNETH N. HARVEY,
Defendant – Appellant.
No. 09-5030
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
MICHAEL G. KRONSTEIN,
Defendant – Appellant.
Appeals from the United States District Court for the Western
District of Virginia, at Charlottesville. Norman K. Moon,
Senior District Judge. (3:06-cr-00023-nkm-mfu-1; 3:06-cr-00023-
nkm-2)
Submitted: November 29, 2010 Decided: December 16, 2010
Before WILKINSON, AGEE, and KEENAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Larry W. Shelton, Federal Public Defender, Frederick T. Heblich,
Jr., Assistant Federal Public Defender, Christine Madeleine Lee,
Research and Writing Attorney, Charlottesville, Virginia;
Franklin B. Reynolds, Jr., FRANKLIN B. REYNOLDS, JR., P.C.,
Washington, Virginia, for Appellants. Lanny A. Breuer,
Assistant Attorney General, Greg D. Andres, Acting Deputy
Assistant Attorney General, Jack Smith, Edward J. Loya, Jr.,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
A jury convicted Kenneth N. Harvey and Michael G.
Kronstein of honest services wire fraud and bribery arising from
a scheme in which Harvey, a civilian employee with U.S. Army
Intelligence and Security Command (INSCOM), orchestrated the
award of a sole-source contract to Program Contract Services,
Inc. (“PCS”), a corporation wholly owned and controlled by
Kronstein, in exchange for financial remuneration. On appeal,
we affirmed the defendants’ convictions and sentences but
vacated a restitution award and remanded for further
proceedings. United States v. Harvey, 532 F.3d 326 (4th Cir.
2008). On remand, the district court held an evidentiary
hearing and awarded restitution to INSCOM in the amount of
$319,923.30. Harvey and Kronstein have again appealed. We
affirm.
In our previous opinion, we concluded that the
Government had failed to prove actual loss, as required for
restitution awards under 18 U.S.C.A. § 3663 (West 2000 & Supp.
2010). Harvey, 532 F.3d at 339-40. We held that PCS’s gain was
not a permissible proxy for actual loss and remanded “so that
[the district court] may determine whether the amount of loss
can be calculated.” Id. at 341. On remand, the district court
ordered briefing and held an evidentiary hearing, at which the
Government presented testimony from two witnesses. After the
3
hearing, the district court issued a written order awarding
restitution to the Government. The court rejected the
Government’s theory that the contract was unnecessary but
adopted the theory that the Government paid for nine employees
in 1999 but received the services of only six. The court
specifically found (1) that PCS’s contract was a level-of-effort
contract, not a firm-fixed-price contract; (2) that Kronstein’s
contract proposal identified nine positions but filled only six;
(3) that Kronstein submitted work invoices to INSCOM billing for
a total of nine employees; and (4) that Harvey approved payment
for the invoices.
Harvey and Kronstein make two arguments on appeal.
First, they argue that the district court violated the mandate
rule in awarding restitution. In the alternative, they argue
that the district court’s new restitution order is an abuse of
discretion.
The mandate rule is “merely a specific application” of
the law of the case doctrine, which “forecloses relitigation of
issues expressly or impliedly decided by the appellate court.”
United States v. Bell, 5 F.3d 64, 66 (4th Cir. 1993) (internal
quotation marks omitted). “Although the doctrine applies both
to questions actually decided as well as to those decided by
necessary implication, it does not reach questions which might
have been decided but were not.” Sejman v. Warner-Lambert Co.,
4
845 F.2d 66, 69 (4th Cir. 1988) (internal quotation marks
omitted).
Applying these standards, we conclude that the
district court did not violate the mandate rule on remand. Our
prior opinion decided only a single question regarding
restitution: whether a defendant’s gain could be used as a
proxy for actual loss, and answered that question in the
negative. In so doing, we noted that there was “no evidence of
actual loss” presented during trial or sentencing and that,
although there was testimony that PCS failed to comply with
certain aspects of the contract by, “for example, failing to
hire the contractually required number of employees,” there was
no testimony to “establish the amount of loss INSCOM actually
suffered.” Harvey, 532 F.3d at 340. We also concluded,
however, that INSCOM was appropriately considered a “victim” for
restitution purposes and remanded for the district court to
determine “whether the amount of actual loss can be calculated”
and, “[i]f so . . . whether . . . new restitution orders should
issue and in what amount and form.” Id. at 341.
On remand, the Government offered testimony regarding
two potential theories supporting restitution, and we find the
district court did not violate the mandate rule in awarding
restitution based on this testimony. Our earlier opinion
mentioned that the Government had previously submitted evidence
5
that PCS did not have the requisite number of employees but that
the Government had failed to show an actual loss emanating from
PCS’s failure. We did not decide whether the Government could
ever establish loss from PCS’s failure to hire the requisite
employees and the Government was clearly permitted to put forth
such evidence, which it did with the testimony. Our earlier
opinion stated only that the district court erred by equating
PCS’s gain with INSCOM’s loss; on remand, the district court
fully complied with our mandate in holding an evidentiary
hearing and awarding restitution based upon the amount of actual
loss to INSCOM.
Harvey and Kronstein argue in the alternative that the
district court again abused its discretion in awarding
restitution. We review court-ordered restitution for abuse of
discretion. United States v. Vinyard, 266 F.3d 320, 325 (4th
Cir. 2001). A district court may impose restitution in any case
resulting in harm to a “victim.” 18 U.S.C.A. § 3663(a)(1)(A),
(a)(2). In awarding restitution, the district court must
determine the “amount of loss sustained by any victim.” 18
U.S.C.A. § 3664(a) (West 2000 & Supp. 2010). The Government
bears the burden of proving the amount of restitution by a
preponderance of the evidence. Harvey, 532 F.3d at 339.
We hold that the district court did not abuse its
discretion in awarding $319,923.30 in restitution. Harvey and
6
Kronstein note that three INSCOM employees testified during
trial that the contract was a firm-fixed-price contract. None,
however, was responsible for the direct administration of the
contract. The contracting officer, in contrast, testified that
the contract was a “firm-fixed-price, level-of-effort” contract
with a “ceiling” for the number of hours the Government would
pay. In addition, the contract itself contained the notation
“FFP-LOE,” bolstering the reliability of this construction of
the contract.
Harvey and Kronstein also contend that the district
court incorrectly found that PCS was required to supply nine
employees by examining the contract proposal, which was not
included in the contract. The district court found that the
contract proposal was part of the contract, based upon the
contracting officer’s testimony. In addition, during the period
when PCS submitted detailed invoices, those invoices applied the
rates in the contract proposal.
Accordingly, we affirm the district court’s
restitution award. We dispense with oral argument because the
facts and legal contentions are adequately presented in the
materials before the court and argument would not aid the
decisional process.
AFFIRMED
7