United States v. James Carpenter

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 09a0819n.06
No. 07-4496 FILED
Dec 22, 2009
UNITED STATES COURT OF APPEALS LEONARD GREEN, Clerk
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA )
)
) ON APPEAL FROM THE
Plaintiff-Appellee, ) UNITED STATES DISTRICT
) COURT FOR THE
v. ) NORTHERN DISTRICT OF
) OHIO
JAMES P. CARPENTER )
) OPINION
Defendant-Appellant. )
BEFORE: DAUGHTREY, COLE, and GIBBONS, Circuit Judges.
COLE, Circuit Judge. Defendant-Appellant James P. Carpenter pleaded guilty to eighteen
counts of mail fraud, pursuant to 18 U.S.C. §§ 1341 and 1342, and was sentenced to 108 months in
prison under the Sentencing Guidelines. Carpenter appeals his sentence. For the reasons set forth
below, we AFFIRM.
I. BACKGROUND
A. Factual Background
Carpenter incorporated and controlled several Ohio entities that purported to be in the
business of operating, promoting, or underwriting investments in various business ventures. In
reality, however, between November of 1997 and December of 2001, Carpenter was operating a
“Ponzi” scheme, in which he solicited investments in businesses that were either unprofitable or
No. 07-4496
United States of America v. James P. Carpenter
unable to pay interest on the promissory notes Carpenter gave to investors as security. Instead,
Carpenter used his investors’ money for other purposes and solicited additional investments in order
to pay interest to earlier investors and prolong the scheme. He also provided guarantees from a
number of entities claiming to be insurance companies. But, like the above-mentioned corporations,
these insurance companies did not have the capacity, ability, or intent to repay the notes if the
corporations defaulted.
Further, Carpenter failed to inform agents and brokers that he was a disbarred attorney, that
he previously had been convicted of bank fraud and related offenses, and that he had been previously
involved with sales of promissory notes where the ventures had failed. Carpenter was convicted of
several crimes in 1991, including federal bank fraud and theft in the State of Ohio. Overall,
Carpenter was convicted of aggravated theft on three separate counts. Also, in 2004, he was
convicted in Indiana on three separate charges of conspiracy to sell unregistered securities.
On December 14, 2005, a federal grand jury indicted Carpenter on eighteen counts of mail
fraud in violation of 18 U.S.C.§§ 1341 and 1342.
B. Plea Agreement
On July 6, 2007, the district court held a change-of-plea hearing, and Carpenter pleaded
guilty to all eighteen counts of the indictment pursuant to a written agreement between Carpenter
and the Government (“Plea Agreement” or “agreement”). The parties arrived at the terms of the Plea
Agreement by examining the 2001 U.S. Sentencing Guidelines Manual and calculated the Total
Offense Level as twenty-eight before deducting two points for Acceptance of Responsibility.
Additionally, Carpenter and the Government agreed that the court should apply Criminal History
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Category II. The Plea Agreement stated, in relevant part, that “[p]ursuant to Rule 11(c)(1)(A) and
(B) of the Federal Rules of Criminal Procedure”:
13. Defendant agrees to make restitution . . . for the losses caused by the
defendant’s conduct . . .
16. Recommendation to Use the Advisory Sentencing Guideline
Computation. . . . [T]he parties agree to recommend that the Court impose
a sentence within the range determined pursuant to the advisory Sentencing
Guidelines . . . . The parties agree that the appropriate sentence within that
range is a period of 78 months . . . . The government will not request a
sentencing higher than the advisory Sentencing Guidelines range and the
defendant will not request a sentence lower than the advisory Sentencing
Guidelines Range.
However, it is agreed that the parties may argue the question as to
whether the sentence served by the defendant in Indiana in 2004 . . .
should or should not be considered by the court as a credit for time
served . . . .
21. Sentencing Recommendations Not Binding on the Court. Defendant
understands that the recommendations of the parties will not be binding upon
the Court, that the Court alone will decide the applicable sentencing range
under the advisory Sentencing Guidelines . . . . Defendant further understands
that once the Court has accepted Defendant’s guilty pleas, Defendant will not
have the right to withdraw such pleas if the Court does not accept any
sentencing recommendations made on Defendant’s behalf or if Defendant is
otherwise dissatisfied with the sentence.
At the change-of-plea hearing, Carpenter acknowledged that he understood the Plea Agreement.
C. Presentence Investigation Report
Although the Plea Agreement stipulated that an appropriate sentence was seventy-eight
months, the probation officer who wrote the presentence investigation report (“PSR”) came to a
different conclusion. The probation officer determined that Carpenter had eight total criminal history
points, which corresponds to Criminal History Category IV (not Category II, as determined in the
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Plea Agreement). The probation officer came to this conclusion because under this Court’s
precedent, crimes are part of the same scheme or plan only if the offenses were jointly planned or,
at a minimum, the commission of one offense necessarily required the commission of another. The
probation officer determined that Carpenter’s three convictions in 1991 for aggravated theft were
separate crimes and warranted eight criminal history points. Accordingly, the probation officer
calculated a Guidelines range of ninety-two to 115 months.
The probation officer also noted that, while the Plea Agreement stipulated that there were
more than fifty but not more than 250 victims in this case, the indictment charged that there were
approximately 300 victims, and the United States Attorney’s Office indicated that there were
approximately 400 victims. The probation officer recognized that if the court determined there were
more than 250 victims, the offense level could be increased by six levels under U.S.S.G. §
2B1.1(b)(2)(C), resulting in a Total Offense Level of twenty-eight and a Guidelines range of 110 to
137 months.
D. Sentencing Hearing
In part, the district court agreed with the PSR. The court concluded that Carpenter’s offenses
in 1991 were not part of a common scheme but did accommodate Carpenter’s request to apply the
2007 U.S. Sentencing Guidelines Manual on this point. Under the 2007 Guidelines, Carpenter’s
criminal history rendered a Criminal History Category III, rather than IV. The court declined,
however, to apply the 2007 Guidelines to the rest of Carpenter’s sentence, noting that the 2007
version of the Guidelines could have increased Carpenter’s sentence. The court then arrived at a
Sentencing Guidelines range of ninety-seven to 108 months.
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Explaining that the number of Carpenter’s victims is “staggering” and previous incarceration
“didn’t make a dent on [Carpenter],” the court imposed a within-Guidelines sentence of 108 months.
Additionally, the district court considered but rejected Carpenter’s argument that he deserved a
downward departure or variance due to his medical conditions. As for restitution, the court
permitted the parties to submit briefs on the issue and, on March 28, 2008, ordered Carpenter to pay
$14,631,221.00.
II. ANALYSIS
Carpenter argues that he did not receive the benefit of his bargain under the Plea Agreement
and that his sentence is unreasonable. He also argues that the district court’s restitution order
improperly included amounts related to unindicted conduct. We reject his arguments.
A. The Plea Agreement
Carpenter claims that the district court erred by not honoring the agreed-upon sentence of
seventy-eight months. Carpenter’s argument misses the mark for three reasons. First, Carpenter and
the Government signed a plea agreement pursuant to Rule 11(c)(1)(A) and (B) of the Federal Rules
of Criminal Procedure. Rule 11(c)(1)(B) states that “an attorney for the government will . . .
recommend, or agree not to oppose the defendant’s request, that a particular sentence or sentencing
range is appropriate.” Fed. R. Crim. P. 11(c)(1)(B). The rule goes on to say that “such a
recommendation or request does not bind the court.” Id. (emphasis added). Thus, the text of the rule
precludes Carpenter’s argument that the Plea Agreement binds the court. Moreover, this Court has
held that plea agreements under Rule 11(c)(1)(B) do not bind the court. See, e.g., United States v.
Davidson, 409 F.3d 304, 310-11 (6th Cir. 2005) (holding that plea agreement under Fed. R. Crim.
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P. 11(c)(1)(B) did not bind the court).
Second, the language of the Plea Agreement makes clear that the agreement is not binding
on the court. For example, paragraph nineteen of the agreement stated that the court should apply
a Criminal History Category II but added that “the Defendant understands . . . that the Court may
apply a different Criminal Category other than what the parties have recommended.” Similarly,
paragraph twenty-one provided that the Plea Agreement did not bind the court and that “the Court
alone” would decide both the sentencing range and the sentence to impose. At the change-of-plea
hearing, the district court recited these provisions and reiterated that, even if the court did not follow
the Government’s recommendation, Carpenter still forfeited the right to withdraw his plea. Thus,
the Plea Agreement and the district court made clear that the agreement provided a recommendation
that did not bind the court.
Third, the party that was bound by the Plea Agreement––the Government––complied with
the agreement’s terms. Throughout his brief, Carpenter argues that he wants only what he bargained
for, but that is what he got. At sentencing, the Government did not argue that the Criminal History
Level should be higher than II, nor that the sentence imposed be higher than seventy-eight months.
Therefore, we conclude that the Plea Agreement was not breached and that Carpenter received the
benefit of his bargain.
B. Reasonableness of Carpenter’s Sentence
Next, Carpenter argues that the district court imposed an unreasonable sentence. Sentences
imposed under an advisory Sentencing Guidelines regime are reviewed for procedural and
substantive reasonableness. United States v. Webb, 403 F.3d 373, 383-85 (6th Cir. 2005). We have
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held that whether a sentence is procedurally reasonable depends on three factors: (1) whether the
district court correctly calculated the applicable Guidelines range and used it as a starting point for
its sentence analysis; (2) whether the parties were given the opportunity to argue for sentences they
deemed appropriate and the district court made an individualized sentencing decision based upon
the facts and § 3553(a) factors; and (3) whether the district court explained its reasoning with enough
detail to allow for meaningful appellate review and to give the impression of fair sentencing. United
States v. Bolds, 511 F.3d 568, 579-80 (6th Cir. 2007). Procedurally reasonable sentences are
reviewed for substantive reasonableness under an abuse-of-discretion standard, regardless of whether
the sentence is within or outside the Guidelines range. Gall v. United States, 552 U.S. 38, 51 (2007).
Under an abuse-of-discretion standard, the district court’s substantive conclusions about the relative
significance of the various sentencing factors is beyond the scope of appellate review. United States
v. Sexton, 512 F.3d 326, 332 (6th Cir. 2008).
Carpenter argues that his 108-month sentence is greater than necessary to comply with the
purposes of 18 U.S.C. § 3553. In particular, Carpenter claims that the district court erred by not
considering his previous time served and by failing to consider adequately his poor health.
1. Credit for time served
Carpenter argues that the district court should have granted him credit for the time he served
in Indiana for selling unregistered securities. While Carpenter raised this issue in his Sentencing
Memorandum, he did not raise it at the sentencing hearing, and the district court did not address the
issue. If, however, Carpenter was not entitled to credit for his time served, there is no harm resulting
from the district court’s failure to address the question. See United States v. Smith, 510 F.3d 603,
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608 (6th Cir. 2007) (“[A] district court need not explain its reasons for rejecting each argument made
by the defendant.”). We conclude that the district court did not err because the two provisions on
which Carpenter relies, 18 U.S.C. § 3585(b) and U.S.S.G. § 5G1.3, do not apply here.
Under 18 U.S.C. § 3585(b), “[a] defendant shall be given credit toward the service of a term
of imprisonment for any time he has spent in official detention prior to the date the sentence
commences” in two situations: “(1) as a result of the offense for which the sentence was imposed;
or (2) as a result of any other charge for which the defendant was arrested after the commission of
the offense . . . .” In United States v. Wilson, the United States Supreme Court held that it is the
Attorney General, through the Bureau of Prisons (“BOP”), and not the district court, who has the
authority to grant credit for time served. 503 U.S. 329, 333 (1992) (construing 18 U.S.C. § 3585(b));
see also United States v. Sylvester, 289 F. App’x 860, 867 (6th Cir. 2008) (applying Wilson and
rejecting defendant’s argument that the district court should have considered his time served).
In addition, Carpenter does not qualify for a departure under U.S.S.G. § 5G1.3(b) or (c)
because he seeks credit for a fully discharged conviction. U.S.S.G. § 5G1.3 provides that a district
court may effect a downward departure for an undischarged sentence but does not provide for a
downward departure for a discharged sentence. See United States v. Mohler, Nos. 97-3586/97-3671,
1999 U.S. App. Lexis 16211, at *10-11 (6th Cir. July 9, 1999) (per curiam) (“We find it is neither
irrational nor arbitrary for § 5G1.3(b) to mandate that a sentence be imposed concurrently with any
undischarged term of imprisonment . . . but not to require that a credit be granted when the defendant
completed the term of imprisonment . . . .”). Moreover, as the PSR indicates, the state crimes for
which Carpenter served time and now seeks credit were not a basis for increasing his offense level,
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meaning that he cannot qualify for a downward departure for his discharged sentence. See U.S.S.G.
§ 5K2.23 (referring to § 5G1.3(b) and requiring that a prior offense be the basis for an increase in
offense level for an offender to receive credit for a discharged sentence). Thus, the district court did
not err by not giving Carpenter credit for time served.
2. Carpenter’s medical condition
Carpenter also claims that the district court did not adequately consider his poor health and,
therefore, his sentence should be reduced under either 18 U.S.C. § 3553(a)(2)(D) or U.S.S.G. §
5H1.4. Section 3553(a)(2)(D) provides that a district court must consider “the need for the sentence
imposed--to provide the defendant with needed . . . medical care.” Similarly, U.S.S.G. § 5H1.4
allows a district court to depart for “extraordinary physical impairment.” Carpenter argues that his
108-month sentence, given his health, is effectively a life sentence and his family is better equipped
than is the BOP to address his medical needs.
Carpenter does have medical problems. He underwent a kidney transplant in January 1985;
suffers from high blood pressure, Hepatitis C, and cataracts; and developed skin cancer several years
ago. At the sentencing hearing, however, the district court acknowledged Carpenter’s poor health
and concluded that the BOP’s facilities are equipped to treat him. Once the court considered
Carpenter’s health conditions, it had discretion to vary or depart from the Guidelines range because
of those conditions and decided not to do so. See United States v. Clark, 469 F.3d 568, 571 (6th Cir.
2006) (affirming district court’s rejection of defendant’s argument that his health conditions
warranted a below-Guidelines sentence); United States v. Bostic, 371 F.3d 865, 873-74 (6th Cir.
2004) (applying plain-error standard to district court’s decision to depart for medical infirmity and
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age). As an initial matter, we note that a district judge’s decision denying a downward departure
from the Sentencing Guidelines is not reviewable, provided that the judge understood his discretion
to depart downward. United States v. Puckett, 422 F.3d 340, 345 (6th Cir. 2005). Here, because the
judge understood his discretion, his decision not to depart is not reviewable.
Of course, Carpenter also argues that the district court should have varied from the
Guidelines range under 18 U.S.C. § 3553(a)(2)(D). The district court did not abuse its discretion.
Carpenter was only fifty-seven years old when he was sentenced, and while he does have health
problems, he has offered no evidence that the BOP is unable to provide adequate medical care.
Thus, we hold that the district court did not abuse its discretion by not reducing Carpenter’s sentence
due to his medical conditions and conclude that Carpenter’s sentence is reasonable.
C. Restitution
Finally, Carpenter argues that, by setting restitution at $14,631,221.00, the district court
exceeded its authority under 18 U.S.C. § 3663. “This Court reviews the district court’s order of
restitution for abuse of discretion, but reviews the district court’s application of a statute de novo.”
United States v. Blanchard, 9 F.3d 22, 24 (6th Cir. 1993). Here, 18 U.S.C. § 3663, known as the
Mandatory Victims’ Act (“MVA”), sets forth the basis for determining restitution and provides that
the district court “may require [a] defendant” to “pay an amount equal” to “the value of the property”
lost. 18 U.S.C. § 3663(b)(1)(B).
Carpenter relies on Hughey v. United States, 495 U.S. 411 (1990), to argue that a restitution
order must be limited to the losses caused by the offense of conviction. In particular, Carpenter
argues that the district court’s restitution calculation includes checks mailed to Lomas de la Bara
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Development, Inc (“Lomas”) and Serengeti Diamonds U.S.A., Inc. (“Serengeti”)––companies that
were not included in the counts for mail fraud––and, therefore, the district court’s restitution order
improperly included conduct outside the scope of the indictment. In United States v. Jewett,
however, this Court acknowledged that the amended version of 18 U.S.C. § 3663(a)(2) “expand[ed]
the definition of ‘victim’ in cases such as mail fraud” and “authorize[d] restitution . . . for all losses
attributable to [the defendant]’s scheme to defraud.” 978 F.2d 248, 252 (6th Cir. 1992). Under
Jewett’s reasoning, Hughey does not apply to the amended version of the statute because restitution
orders are no longer limited to the harm caused by the particular offense of conviction. In fact, on
several occasions since Jewett, this Court has affirmed restitution orders that take into account losses
attributable to a fraudulent scheme as a whole. See, e.g., United States v. Coffee, 110 F. App’x 654,
656 (6th Cir. 2004) (“[R]estitution is authorized for all losses attributable to [the defendant]’s
scheme . . . . Restitution is not confined to the harm caused by the particular offense of conviction.”).
The indictment listed Lomas and Serengeti as companies that Carpenter used as part of his
“scheme to defraud.” It was through these companies, among others, that Carpenter swindled his
victims. Under 18 U.S.C. § 3663(a)(2), “any person directly harmed by the defendant’s criminal
conduct in the course of the scheme” is a victim. Accordingly, the restitution order properly
“included all losses attributable to [Carpenter]’s scheme to defraud,” Jewett, 978 F.2d at 252, and
we affirm the restitution order.
III. CONCLUSION
For the foregoing reasons, we AFFIRM Carpenter’s 108-month sentence and the district
court’s restitution order.
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