United States v. Randle, William H.

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 02-1828
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
WILLIAM H. RANDLE,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 95 CR 310—James B. Zagel, Judge.
____________
ARGUED JANUARY 13, 2003—DECIDED APRIL 1, 2003
____________
Before POSNER, KANNE, and DIANE P. WOOD, Circuit
Judges.
KANNE, Circuit Judge. William H. Randle appeals that
aspect of his sentence ordering restitution to three vic-
tims of his fraudulent bankruptcy scheme. Because we
find that the district court was without statutory author-
ity to order restitution with respect to two of the victims,
we vacate that portion of the restitution ordered and
remand the case for resentencing.
I. HISTORY
The sentence at issue in this appeal was imposed pur-
suant to Randle’s conviction on one count of bankruptcy
2 No. 02-1828
fraud. This fraud was perpetrated as part of a scheme
in which Randle would approach homeowners facing fore-
closure on their mortgages, promising the owners that
he would use his “special knowledge and expertise” in the
areas of bankruptcy and real estate to halt the foreclo-
sure sales of their homes. This “special knowledge and
expertise” apparently amounted to preparing and filing
fraudulent Chapter 13 bankruptcy petitions on an owner’s
behalf in order to trigger the automatic stay of foreclo-
sure proceedings granted to bankruptcy petitioners.
Randle would review the public notices of pending
foreclosure sales and mail letters to distressed homeown-
ers advising them of his ability to stop a sale. In return for
a fee, Randle would have willing homeowners sign blank
Bankruptcy Petitions, Schedules, and Plans of Reorgan-
ization, which he would then file as pro se proceedings.
These petitions concealed Randle’s role in preparing them
and contained false information intended solely to procure
a postponement of the foreclosure sale.
The government eventually uncovered the scheme
and charged Randle in a four-count indictment. The first
three counts alleged mail fraud in violation of 18 U.S.C.
§ 1341. The final count alleged bankruptcy fraud in viola-
tion of 18 U.S.C. §152. Each count of mail fraud involved
mailings relating to three separate homeowners facing
foreclosure.1 Count One involved mail fraud stemming
from Randle’s relationship with Odell Terry. Terry was
charged $677 in return for the preparation and filing of
a bankruptcy petition, solely for the purpose of delaying
the foreclosure sale of his home. Count Two involved mail
fraud with respect to similar work done on behalf of M.C.
Gibson, who paid $6,850.00 for the advertised services.
1
In two of the three mail frauds—those involving Odell Terry
and M.C. Gibson—Randle was aided by Emanuel Belloumini.
No. 02-1828 3
Count Three involved mail fraud arising from services
performed for Christina Luna-Perez, who was charged
$1,160.00 for Randle’s bankruptcy filing.
Count Four of the indictment charged Randle with
bankruptcy fraud solely with respect to the filings he
prepared for Ms. Luna-Perez. Specifically, that count al-
leged that on March 22, 1994, Randle fraudulently filed a
Statement of Financial Affairs in the name of Ms. Luna-
Perez that falsely claimed no payment for debt or bank-
ruptcy counseling had been paid within the past year.
Pursuant to a written plea agreement, Randle pleaded
guilty solely to Count Four. Among its provisions, the
plea agreement made four references to restitution. First,
it stated that Randle “admits the following facts: . . .
Defendant fraudulently obtained (or caused a loss [of]) . . .
a total of $8,687 from three different debtors.” (R. at 84-4.)
Second, the agreement noted that for purposes of deter-
mining Randle’s base offense level under the federal
sentencing guidelines, “the amount of loss to the victims
resulting from the offense of conviction and relevant con-
duct was $8,687, which is more than $5,000.00, but not
more than $10,000.00.” (R. at 84-4.) Third, the agreement
recited that Randle understood the maximum penalties
he faced under the statute, including imprisonment and
a fine, “as well as any restitution ordered by the Court.”
(R. at 84-6.) Finally, the agreement stated that “Defendant
will cooperate fully with the United States Attorney’s Office
and the United States Probation Office in their deter-
mination of the appropriate amount of restitution to be
ordered by the Court.” (R. at 84-8.)
Randle’s presentence report (“PSR”) recommended that
he be sentenced under the federal sentencing guidelines
according to a base offense level of 8 and a criminal his-
tory category of I. The base offense level was reached in
part by reference to the total amount of loss involved in
the offense: under sentencing guideline § 2B1.1, if the of-
4 No. 02-1828
fense caused a loss exceeding $5,000, but not more than
$10,000, then the base offense level is increased by two
levels. U.S.S.G. § 2B1.1(b)(1)(B) (2003). The PSR, relying
on the relevant conduct guideline § 1B1.3(a)(2) to take
into account unconvicted conduct, found the total loss to
be $8,687, and after several other adjustments not rele-
vant here, arrived at an ultimate base offense level of
eight. These calculations correspond to a sentence range
of zero to six months imprisonment. In addition, the PSR
determined that restitution in the amount of $8,687 was
appropriate. Randle filed two Sentencing Memoranda
raising objections to various aspects of the PSR, but neith-
er memorandum objected to the PSR’s calculation of an
appropriate restitution amount.
At Randle’s sentencing hearing, the district court ques-
tioned the parties about restitution for the victims of
Randle’s fraud. When the court asked where the restitu-
tion money would go, the government listed the three
victims of Randle’s scheme and noted the amounts paid
by each. Defense counsel’s only response was to empha-
size that Randle’s colleague Belloumini would be jointly
and severally liable for any restitution amount.
After some additional questioning, the district court sen-
tenced Randle to two months imprisonment followed by
a term of supervised release, a fine of $100, and restitu-
tion in the amount of $8,687. The court then noted that
the restitution was to be paid to “the individuals as set
forth in the presentence investigation report.” (Sent. Tr. at
14.) Randle made no objection, but now appeals that part
of his sentence ordering restitution to victims Terry and
Gibson.
II. ANALYSIS
Because Randle did not raise any objection to the restitu-
tion order at his sentencing, his challenge is reviewed here
No. 02-1828 5
for plain error. United States v. Noble, 246 F.3d 946, 955
(7th Cir. 2001). “To justify a finding of plain error, ‘there
must be an “error” that is “plain” and that “affects substan-
tial rights.” ’ ” Id. (quoting United States v. Olano, 507 U.S.
725, 732 (1993)). Even then, a court maintains discretion
to decide whether to notice and remedy the error, the
exercise of which depends on whether the error “ ‘seriously
affects the fairness, integrity or public reputation of judi-
cial proceedings.’ ” Id. (quoting Olano, 507 U.S. at 732).
Randle argues, and the government at least partially
concedes, that the district court committed an error in
calculating its restitution order, as it had no authority to
order restitution with respect to the two victims not af-
fected by the bankruptcy fraud to which Randle pleaded
guilty. According to Randle, neither Odell Terry nor M.C.
Gibson qualify as “victims” under the statutory language
authorizing restitution, as interpreted by the Supreme
Court and this Court. The government agrees that the
district court erred by ordering restitution on this basis.
In addition, Randle argues that he never agreed, as part
of his plea agreement, to pay these victims restitution. The
government contends that it was clearly Randle’s “inten-
tion” to pay them, whether the explicit terms of the writ-
ten plea agreement say so or not, and this provided the
district court with the authority to make its order.
We begin by noting that “[f]ederal courts possess no
inherent authority to order restitution, and may do so
only as explicitly empowered by statute.” United States
v. Hensley, 91 F.3d 274, 276 (1st Cir. 1996) (citation
omitted). Congress has, however, provided statutory author-
ization for court-ordered restitution in certain circum-
stances. For example, the Victim and Witness Protection
Act (“VWPA”), 18 U.S.C. § 3663, authorizes a court to or-
der “in addition to or . . . in lieu of any other penalty
authorized by law, that the defendant make restitution to
any victim of such offense.” 18 U.S.C. § 3663(a)(1)(A) (2003).
6 No. 02-1828
The Mandatory Victims Restitution Act (“MVRA”), 18
U.S.C. § 3663A, requires that “the court shall order”
restitution to the victims of certain specified offenses,
including those which result in “an identifiable victim or
victims [who] has suffered . . . pecuniary loss.” 18 U.S.C.
§ 3663A(a)(1) & (c)(1)(B) (2003) (emphasis added).2
These two statutory provisions authorize federal courts
to order offenders to pay restitution to “victims” of cer-
tain crimes. Both the VWPA and the MVRA define a “vic-
tim” either as “a person directly and proximately harmed
as a result of the commission of an offense for which res-
titution may be ordered” or “in the case of an offense that
involves as an element a scheme, conspiracy, or pat-
tern of criminal activity, any person directly harmed by
the defendant’s criminal conduct in the course of the
scheme, conspiracy, or pattern.” 18 U.S.C. §§ 3663(a)(2) &
3663A(a)(2). In addition, courts are authorized to or-
der restitution to persons other than a “victim” only “if
agreed to by the parties in a plea agreement.” 18 U.S.C.
§ 3663A(a)(3).
Court decisions reviewing awards of restitution to “vic-
tims” under the VWPA and MVRA have generally required
a direct nexus between the offense of conviction and the
2
The provisions of the VWPA and the MVRA are nearly identical
in authorizing an award of restitution. The primary difference
between the two statutes is that for certain offenses specified
in the MVRA, an award of restitution is mandatory and is
calculated by looking to the victim’s loss, without regard to the
defendant’s ability to pay an award. See United States v.
McIntosh, 198 F.3d 995, 1003-04 (7th Cir. 2000). In this appeal,
Randle does not challenge the determination that bankruptcy
fraud falls within the list of offenses to which the MVRA is
applicable. See 18 U.S.C. § 3663A(c)(1). Whether a restitution
award is authorized in this case is thus appropriately analyzed
under the provisions of the MVRA, rather than the VWPA.
No. 02-1828 7
loss being remedied. In Hughey v. United States, the Su-
preme Court interpreted the VWPA to authorize a restitu-
tion award only with respect to that loss caused by “the
specific conduct that is the basis of the offense of con-
viction.” 495 U.S. 411, 413 (1990).3 Thus, under Hughey,
both the amount of the restitution award and the per-
sons to whom such an award may be directed are limited
by the circumstances of the offense for which the defen-
dant has been convicted.
In United States v. Braslawsky, this Court applied the
rule of Hughey and reversed a restitution order under the
VWPA that included an amount of loss not directly attrib-
utable to the conduct for which the defendant was con-
victed. 951 F.2d 149, 152 (7th Cir. 1991). Under this in-
terpretation, charged but unconvicted conduct cannot
form the basis for an award of restitution. In fact, in
United States v. Menza, we noted that, under the VWPA,
“Congress intended restitution to be precisely tied to the
loss caused by the offence of conviction. Examination of
the conduct constituting the commission of a crime only
involves consideration of the conduct to which the defen-
dant pled guilty and nothing else.” 137 F.3d 533, 537 (7th
Cir. 1998) (citations omitted); see also United States v.
Scott, 250 F.3d 550, 553 (7th Cir. 2001) (noting that “rele-
vant conduct” may not be the basis of a restitution award
under the MVRA unless it is also “charged [convicted]
conduct” or covered in a plea agreement).
From the statutory language and the court interpre-
tations of that language, we distill three situations in
which restitution is authorized under the MVRA: first, to
a victim directly harmed by the offender’s “specific con-
3
Because of the similarity of the statutory language in the VWPA
and MVRA, court decisions interpreting the language of the
VWPA are helpful in construing the language of the MVRA.
8 No. 02-1828
duct that is the basis of the offense of conviction”; second,
to a victim who is directly harmed by the offender’s con-
duct in the course of committing an offense that involves
“as an element a scheme, conspiracy, or pattern”; third, if
the parties so agreed in a plea agreement.
Odell Terry and M.C. Gibson were not directly harmed
by the bankruptcy fraud perpetrated by Randle with re-
gard to Ms. Luna-Perez—the basis for Court Four of the
indictment.4 In addition, the government has conceded
that proof of a scheme, conspiracy or pattern is not an
element of the offense of bankruptcy fraud.5 Cf. United
States v. Bennett, 943 F.2d 738, 740 & n.1 (7th Cir. 1991)
(discussing the difference between offenses which require
as an element proof of a scheme and those which do
not). Thus, the district court was without authority under
§ 3663A(a)(2) to award restitution to either Terry or Gib-
4
We need make mention here that, as the government noted in
its brief, bankruptcy fraud under § 152 is generally thought to
involve fraud on the court, the debtor’s creditors, and the bank-
ruptcy trustee. See, e.g., United States v. Lowell, 256 F.3d 463,
465-66 (7th Cir. 2000). Thus, there is some question as to whether
Ms. Luna-Perez was “directly and proximately harmed” for
purposes of § 3663A by Randle’s violation of § 152. (Indeed,
because the fraudulent filings prepared by Randle led to an
automatic stay of the foreclosure proceedings on Luna-Perez’s
home, she may more appropriately be thought of as a benefici-
ary of that fraud.) Randle, however, does not challenge the
restitution award to Ms. Luna-Perez, so we do not reach that
question.
5
Section 152 provides in part: “A person who . . . knowingly and
fraudulently makes a false declaration, certificate, verification,
or statement under penalty of perjury as permitted under section
1746 of title 28 [unsworn declarations under penalty of perjury],
in or in relation to any case under title 11 . . . shall be fined un-
der this title, imprisoned not more than 5 years, or both.” 18
U.S.C. § 152 (2003).
No. 02-1828 9
son, as neither qualified as a “victim” under the definition
provided in the MVRA.
The only other basis on which the district court could
have awarded restitution to these two individuals would
be if Randle had agreed to pay such restitution in his
plea agreement with the government, as provided in
§ 3663A(a)(3). As noted earlier, the written plea agree-
ment makes four references to restitution; none of these
references, however, explicitly states Randle’s agreement
to pay restitution to Terry or Gibson. Two of those refer-
ences speak only of “any restitution ordered by the Court”
and “the appropriate amount of restitution to be ordered
by the Court.” (R. at 84-6 & 84-8.) Certainly such references
do not express Randle’s intention to repay each of the
victims; they could just as easily refer to a restitution
award to Ms. Luna-Perez alone. The remaining two refer-
ences are more specific: the first notes that the total loss
resulted from “three different debtors,” while the second
speaks of several “victims”—both note the aggregate
amount of loss suffered by the three debtors. (R. at 84-4.)
While the government suggests that these references
indicate an intention to pay restitution in the full amount
of the loss, they are just as easily seen as a necessary fac-
tor for the calculation of Randle’s base offense level under
the federal sentencing guidelines. See U.S.S.G. § 2B1.1(b)
(providing for increases in the offense level based on total
amount of loss involved). In any event, none of these
four references are specific enough to qualify as an agree-
ment by Randle to pay restitution to each of the three
victims of his scheme.
Turning to an argument of “implied agreement,” the
government strenuously argues that it was the “intention
of both parties” that Randle would pay restitution to
each of the three victims, despite the failure to memori-
alize such an intention in the written plea agreement.
The government asserts that, taken together, the refer-
10 No. 02-1828
ences to restitution in the written agreement, the failure
to object to the recommendation of restitution in the PSR,
and Randle’s actions at the sentencing hearing (most
notably his failure to object to the characterization of
the restitution agreed upon), clearly evidence this “inten-
tion” to pay restitution to each victim.
The bottom line, however, is that the written plea agree-
ment says nothing about Randle agreeing to pay restitu-
tion to specific persons, and we decline to imply such an
agreement. Plea agreements are contracts and must be
interpreted according to principles of contract law. United
States v. Williams, 102 F.3d 923, 926-27 (7th Cir. 1996). To
be valid, a plea agreement must encompass “a meeting
of the minds on all of its essential terms.” United States
v. Barnes, 83 F.3d 934, 938 (7th Cir. 1996). We hesitate
to find such a meeting of the minds as to the amount
of restitution agreed upon based on the scanty evidence
present here. The better approach, it seems to us, is to
rely on what the parties have included in their written
contract, avoiding the need to engage in close interpretive
questions of ambiguous discussions.6 The absence of any
explicit language in the written plea agreement incor-
porating an agreement on restitution to persons beyond
the victim precludes the invocation of § 3663A(a)(3) to
authorize restitution to Terry and Gibson.
In awarding restitution to Odell Terry and M.C. Gibson
the district court committed error, and that error was
plain (we note that the error was apparently obvious to
the government, which admits in its brief that Randle
“correctly identifie[d] an error in the restitution order”). In
requiring Randle to pay several thousand dollars in restitu-
6
Indeed, the government concedes that the MVRA requires
that plea agreements “expressly” state a defendant’s agreement
to pay restitution to victims beyond the offense of conviction.
No. 02-1828 11
tion, without a statutory basis for doing so, the error af-
fects Randle’s substantial rights.
Given that the three requirements for a finding of
plain error have been met, we must further determine
whether we will exercise our discretion to correct the
error. Such discretion should be exercised to avoid any
harm to “the fairness, integrity or public reputation of
judicial proceedings.” Noble, 246 F.3d at 955. As in this
case, calculating and providing for restitution can be
difficult to sort out. Determining who are victims and
the amount of loss are often not easy tasks for the dis-
trict court. However, in this case, the district court acted
where no statutory authority existed. Therefore, to ensure
the fairness of the judicial process, we exercise our dis-
cretion to remedy the error.
III. CONCLUSION
Because the district court did not have the statutory
authority to impose restitution with respect to Odell
Terry and M.C. Gibson, that portion of the court’s sen-
tence requiring restitution be paid to those two individ-
uals is hereby VACATED; and this case is REMANDED for
resentencing in accordance herewith.
POSNER, Circuit Judge, dissenting. The defendant
defrauded three individuals, Terry, Gibson, and Luna-
Perez, but was permitted to plead guilty to only bank-
ruptcy fraud and only against the last of these. The plea
agreement states that the defendant admits to having
defrauded the trio of a total of $8,687 and that he under-
12 No. 02-1828
stands that his plea subjects him to “any restitution or-
dered by the Court” and that he agrees to cooperate with
the U.S. Attorney’s office and the probation service “in
their determination of the appropriate amount of restitu-
tion to be ordered by the Court.” The district judge sen-
tenced the defendant to 60 days in jail and—pursuant
to the recommendation of the probation service and with-
out objection by the defendant or his lawyer—ordered
the defendant to pay restitution to his three victims in the
total amount of $8,687 ($677 to Terry, $6,850 to Gibson,
and $1,160 to Luna-Perez). However, the parties and the
district judge overlooked 18 U.S.C. § 3663A(a)(3), which
permits ordering a convicted defendant to make restitu-
tion to persons other than the victims of the offense for
which he was convicted (here, bankruptcy fraud against
Luna-Perez) if he agrees to do so in the plea agreement,
but, by implication, not otherwise.
The defendant argues that the text of the plea agree-
ment ties restitution to the offense of conviction by stat-
ing that the “defendant understands the count to which
he will plead guilty carries [various penalties], as well as
any restitution ordered by the Court” (emphasis added).
Although “any restitution ordered by the Court” sounds
expansive, the defendant argues that the most natural
interpretation of the quoted clause in its entirety is
that restitution is one part of the penalty for “the count,”
and is limited to the maximum restitution for the count.
Extrinsic evidence demonstrates with unusual clarity
that the parties nevertheless meant to agree to restitu-
tion for all victims. This was the basis for their bargain
and the only number used at the sentencing hearing. As
in United States v. Schrimsher, 58 F.3d 608, 609-10 (11th
Cir. 1995) (per curiam), and United States v. Koeberlein, 161
F.3d 946, 951 (6th Cir. 1998), cases comparable to this,
no one objected to or sought clarification of the district
court’s identical understanding. It is no objection that
No. 02-1828 13
the parties were probably laboring under a mistake of
law, that they thought the statute required restitution
to all victims for conviction on the single count, perhaps
on a mistaken analogy to the operation of relevant con-
duct in sentencing. Their mistake strengthens my inter-
pretation because it reconciles the parties’ intentions with
the troublesome clause: they thought that the count
and hence the clause entailed the broader restitution.
Even if my interpretation of the plea agreement is
wrong, there was no objection at sentencing and therefore
the question is whether the error was plain and if so
whether we should exercise our discretion to notice (that
is, reverse on the basis of) a plain error. (The error was
not jurisdictional; section 3663A(a)(3) is just a statute of
frauds for restitution orders.) Since it is a close interpre-
tive question, the error was not plain in the sense either
of being apparent to anyone knowledgeable about the
relevant law (“obvious,” as the cases say), United States
v. Frady, 456 U.S. 152, 163 and n. 13 (1982), or (what
amounts as a practical matter to the same thing) of be-
ing determinable with certainty to be an error, United
States v. Caputo, 978 F.2d 972, 974–75 (7th Cir. 1992), as
opposed to being subtle or (what again is usually the
same thing) debatable. And it was not plain in the fur-
ther sense, essential to invoke the doctrine of plain
error, that it was prejudicial, in the sense of likely to
have made a difference in the outcome. Id.; United States
v. Galbraith, 200 F.3d 1006, 1013 (7th Cir. 2000). We
must ask what would have happened had the judge at
the sentencing hearing realized that the plea agreement
did not contain a promise to pay restitution to the other
victims. He would have rejected the agreement and told
the parties to go back to the drawing board, and the
parties would then have agreed expressly that the defen-
dant would pay restitution to the other victims. For we
know that that is the deal that the defendant agreed to,
even if it wasn’t properly memorialized.
14 No. 02-1828
But if this is wrong too, still the question whether to
notice a plain error is one addressed to the discretion of
the reviewing court, as the majority opinion acknowl-
edges. United States v. Olano, 507 U.S. 725, 735–37
(1993); United States v. Trennell, 290 F.3d 881, 887 (7th
Cir. 2002); United States v. Ross, 77 F.3d 1525, 1538 (7th
Cir. 1996); United States v. Zillgitt, 286 F.3d 128, 140–41
(2d Cir. 2002). At first glance this seems paradoxical, for
how could an error be sufficiently “harmless” to be ex-
cused when by definition it was prejudicial? The answer
is that it may be prejudicial in the sense that it requires
a different outcome, yet harmless in the sense that when
the case is remanded and the error corrected the out-
come will again be the same. This is such a case. The
government will not allow Randle to plead guilty unless
he agrees to make restitution to all three of his victims,
and he will readily agree to that since (1) otherwise he
will face a longer jail term, for remember that the dis-
trict court sentenced him to only 60 days in jail and
unless he is ordered to pay restitution to the other two
victims the total restitution that he will be ordered to
pay will be a derisory $1,100; and (2) as he is unlikely
ever to come up with the money required to make restitu-
tion to his victims, the “cost” to him of agreeing is slight.
Randle would not prefer more jail time to being ordered
to pay additional restitution, which he probably cannot
do anyway, and so it is hard to see why “justice” requires
sending this case back. I do not even understand why
he appealed, as I do not see how he is made better off
by prevailing. Randle “appears to believe that he can
have the benefits of the plea agreement (four counts
dismissed, reduced time in prison) without the
detriments. That’s not an option. The whole plea agreement
stands, or the whole thing falls.” United States v. Peterson,
268 F.3d 533 (7th Cir. 2001). If it falls, Randle will prob-
ably be worse off, and is very unlikely to be better off.
The reversal is therefore pointless, as well as erroneous.
No. 02-1828 15
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—4-1-03