United States v. Rand, Daniel D.

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 04-1572
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
DANIEL D. RAND,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Northern District of Indiana, Hammond Division.
No. 2:02-CR-59—Rudy Lozano, Judge.
____________
ARGUED NOVEMBER 9, 2004—DECIDED APRIL 5, 2005
____________
Before FLAUM, Chief Judge, and CUDAHY and POSNER,
Circuit Judges.
CUDAHY, Circuit Judge. Appellant Daniel Rand pleaded
guilty to a charge of conspiracy relating to an identity-theft
scheme. Pursuant to this scheme, Rand and his co-conspira-
tors stole personal information from (among others) employ-
ees of the Gary, Indiana public school system, used that
information to obtain credit cards and made purchases with
those credit cards. Based upon his guilty plea, Rand was sen-
tenced to 21 months in prison and ordered to pay restitution
in excess of $57,000. Rand now appeals this restitution
2 No. 04-1572
order, claiming that the district court impermissibly in-
cluded in its calculation losses of identity-theft victims not
listed in the indictment or specifically identified in Rand’s
guilty plea.
I. FACTUAL BACKGROUND & DISPOSITION
BELOW
On March 3, 2003, Appellant Daniel Rand pleaded guilty
to a charge of conspiring to steal identification information
from employees of the Gary, Indiana public school system
and to use that information to fraudulently obtain credit
cards, in violation of 18 U.S.C. § 371. This charge repre-
sented Count 1 of a seven-count indictment brought against
Rand, and the other six counts were dismissed after entry
of Rand’s guilty plea. Count 1 stated specifically that four
street addresses had been used in the scheme, and it de-
scribed the general nature of the conspiracy as follows:
It was part of the conspiracy that the defendants: (1)
obtained the names and social security numbers of
employees of the Gary Community School Corporation,
Gary, Indiana, in order to establish credit in the em-
ployees’ names without their knowledge, authority and
permission for the defendants’ own personal purposes
and benefit; (2) obtained credit cards in the employees’
names in order to purchase merchandise for the
defendants’ own personal purposes and benefit; . . . (4)
obtained and redirect[ed] the fraudulent credit cards,
credit card statements, billing statements, and other
mail in order to conceal the deceptive use of the [sic] of
the employees’ identification for the defendants’ own
personal purpose and benefit.
(Grand Jury Charges, 8/22/2002 at 2.) The indictment then
listed 28 separate overt acts of identity theft, specifying the
individual victims whose identities were used and the
approximate time of the theft. Rand initially entered a plea
No. 04-1572 3
of not guilty to the charges, but on February 27, 2003, he
filed a Petition to Enter a Change of Plea, in which he
pleaded guilty to Count 1 of the indictment. In the plea, he
specifically admitted to several acts of fraud involving the
identity information of five individual victims. Rand reiter-
ated his admission at his plea hearing on March 3, 2003.
After entry of Rand’s guilty plea, pre-sentence reports were
drafted, the last of which asserted that the conspiracy
actually implicated fraudulently obtained credit cards sent
to nine different street addresses (not just four addresses as
indicated in Count 1) and that Rand could be held responsi-
ble for 25 additional incidents of identity theft not men-
tioned specifically in the indictment. Based on these figures,
the report concluded that Rand was responsible for
$90,744.30 in actual losses and $8,915.49 in intended losses
under a theory of relevant conduct. Rand challenged this
calculation, alleging that he should be held responsible only
for the specific fraudulent acts he affirmatively admitted in
his guilty plea, which gave rise to losses totaling just
$12,594.90.
At sentencing, the district court adopted neither of these
figures. The court found that the evidence conclusively
linked Rand to only four street addresses: One that he had
already admitted to using in the conspiracy, two that he
referenced in his Change of Plea hearing and one that was
identified by his sister (and co-conspirator), whose testimony
on the matter was never refuted. (R. at 4-236-37.) Based on
these findings, the court settled on a sum of $57,431.67,
which included the damages caused by all the overt fraud-
ulent acts perpetrated using these four addresses. Most of
this total reflected losses resulting from acts of fraud expli-
citly listed in the original indictment, but $7,241.76 was
associated with identity theft victims who were identified
during court proceedings but were neither employees of the
Gary public school system nor mentioned specifically in the
indictment. (See R. at 4-234-44.) The district court ruled
4 No. 04-1572
that Rand was required to pay the entire $57,431.67 in
restitution, and the court sentenced Rand to 21 months in
prison (the highest term allowable under the applicable
sentencing range).
The remaining counts of Rand’s indictment were dismissed
on February 27, 2004. The district court entered its judg-
ment, including the $57,431.67 restitution order, on
March 3, 2004. The judgment was subsequently amended
on March 5, 2004, and Rand timely filed his Notice of Appeal
on the same day. Rand now asserts that the district court’s
restitution calculation was impermissible since it included
damages relating to individual identity theft victims whom
Rand did not affirmatively identify in his guilty plea, who
were not identified specifically in the original indictment or
who were not employees of the Gary, Indiana public school
system.1 For the reasons that follow, we affirm.
II. JURISDICTION
This is a direct appeal from a conviction pursuant to a
guilty plea and a sentence entered on February 26, 2004.
The final judgment in this case was entered by amended
order on March 5, 2004, and Appellant’s timely Notice of
Appeal was filed on that same day. The jurisdiction of the
district court rested on 18 U.S.C. § 3231. Accordingly, we
now have jurisdiction pursuant to 28 U.S.C. § 1291, which
provides for appeals from final orders of the district courts,
and 18 U.S.C. § 3742, which covers appeals from final crim-
inal sentences entered in the district courts.
1
This last point is significant because the charges against Rand
identify the victims of the conspiracy as “employees of the Gary
Community Schools Corporation, Gary, Indiana.” (Grand Jury
Charges, 8/22/2002 at 2.)
No. 04-1572 5
III. DISCUSSION
The district court’s authority to issue a restitution order
is an issue of law that we review de novo. U.S. v. Wells, 177
F.3d 603, 608 (7th Cir. 1999). The government bears the
burden of demonstrating the correct amount of the restitu-
tion award by a preponderance of the evidence, see 18 U.S.C.
§ 3664(e); United States v. Sensmeier, 361 F.3d 982, 988 (7th
Cir. 2004), and “[w]e review the district court’s calculation
of the amount of restitution for an abuse of discretion.”
Sensmeier, 361 F.3d at 988 (citing U.S. v. Newman, 144 F.3d
531, 542 (7th Cir. 1998)). Reversal is warranted under this
standard if the district court relied on “inappropriate fac-
tors” in arriving at the restitution amount. Id.
Rand pleaded guilty to conspiring to commit identity theft
in violation of 18 U.S.C. § 371. He does not dispute that
federal law authorized—indeed required—the district court
to order restitution for such an offense under the Victim and
Witness Protection Act (VWPA), 18 U.S.C. § 3663, and the
Mandatory Victims Restitution Act (MVRA), 18 U.S.C.
§ 3663A(c)(1). The only controversy here concerns the
amount of the restitution order. Specifically, Rand alleges
that the order is invalid because it holds him responsible for
acts of identity theft relating to victims that were not
specifically identified in the original indictment and thus
not covered by his guilty plea. This claim is without merit.
It is well-settled that, as a general matter, “[f]ederal courts
possess no inherent authority to order restitution, and may
do so only as explicitly empowered by statute.” United States
v. Randle, 324 F.3d 550, 555 (7th Cir. 2003) (internal quo-
tations omitted). As such, restitution orders are subject to
certain important strictures. The most basic of these is the
requirement that there be a “direct nexus between the
offense of conviction and the loss being remedied.” Id. at
556. That is, a restitution award is authorized only with
respect to that loss caused by “the specific conduct that is the
6 No. 04-1572
basis of the offense of conviction.” Hughey v. United States,
495 U.S. 411, 413 (1990).2 Thus “both the amount of the
restitution award and the persons to whom such an award
may be directed are limited by the circumstances of the
offense for which the defendant has been convicted.”
Randle, 324 F.3d at 556.
Restitution normally “tracks ‘the recovery to which [the
victim] would have been entitled in a civil suit against the
criminal,’ ” but § 3663A(a)(3) also “permits the defendant to
undertake additional restitution obligations via a plea
agreement.” United States v. Behrman, 235 F.3d 1049, 1052
(7th Cir. 2000) (quoting United States v. Martin, 195 F.3d
961, 968 (7th Cir. 1999)). Thus, in a case such as this one,
where a defendant enters a guilty plea, “[e]xamination of
the conduct constituting the commission of a crime only
involves consideration of the conduct to which the defendant
pled guilty and nothing else.” Randle, 324 F.3d at 556. Sim-
ilarly, consideration of “relevant conduct” for sentencing
purposes may not serve as the basis of a restitution award
unless it is also “charged conduct” or covered in a plea agree-
ment. United States v. Scott, 250 F.3d 550, 553 (7th Cir.
2001); see also Randle, 324 F.3d at 556 (citing Scott for the
same proposition).
However, while federal law carefully circumscribes the
type of conduct upon which restitution orders may be based,
it defines the “victims” of such conduct somewhat more
broadly:
For the purposes of this section, the term ‘victim’ means
a person directly and proximately harmed as a result of
the commission of an offense for which restitution may
be ordered including, in the case of an offense that
2
A portion of Hughey’s holding was superceded by subsequent
amendments to 18 U.S.C. § 3663, though these changes are not
germane to the general rules cited here.
No. 04-1572 7
involves as an element a scheme, conspiracy, or pattern
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) (emphasis added). Our
prior constructions of this language have “distill[ed] three
situations in which restitution is authorized under the
MVRA: first, to a victim directly harmed by the offender’s
‘specific conduct that is the basis of the offense of conviction’;
second, to a victim who is directly harmed by the offender’s
conduct in the course of committing an offense that involves
‘as an element a scheme, conspiracy, or pattern’; and third,
if the parties so agreed in a plea agreement.” Randle, 324
F.3d at 556 (citations omitted).
Absent a specific contrary provision in a plea agreement,
a court ordinarily may not order restitution for individuals
not included within the statutory definition of “victim,”
Behrman, 235 F.3d at 1052-53, nor for individuals who were
not affected by the specific offense conduct to which a
defendant pleaded guilty, Randle, 324 F.3d at 557-58. How-
ever, where a defendant has consented to restitution for
specifically charged conduct, the judge may determine the
exact amount at a later sentencing hearing, United States
v. Peterson, 268 F.3d 533, 534-35 (7th Cir. 2001), and in some
cases restitution may be ordered for certain “direct and
foreseeable consequence[s]” of a crime, even if the conduct
at issue does not constitute an element of the crime itself,
United States v. Donaby, 349 F.3d 1046, 1055 (7th Cir. 2003)
(allowing restitution for damages caused by police pursuit
following a bank robbery).
Thus, while the conduct underlying a restitution order must
be specifically articulated in the charge or a plea agreement,
specific victims need not be, especially in a case involving
“as an element a scheme, conspiracy, or pattern of criminal
activity.” 18 U.S.C. §§ 3663(a)(2), 3663A(a)(2). Rand’s guilty
8 No. 04-1572
plea, concerning an organized identity-theft conspiracy,
clearly qualifies as such a case. Accordingly, any individual
“directly harmed” by Rand’s “criminal conduct in the course
of the [fraud] scheme, conspiracy, or pattern” is presump-
tively included in the restitution calculus. 18 U.S.C.
§ 3663A(a)(2).3
Moreover, Rand may be held responsible for losses caused
by the foreseeable acts of his co-conspirators. Co-conspira-
tors generally are jointly and severally liable for injuries
caused by the conspiracy, and this principle applies to the
restitution context no less than to sentencing. See
United States v. Martin, 195 F.3d 961, 968-69 (7th Cir.
1999). In fact in Martin we stated that even a defendant not
charged with conspiracy could be held responsible for losses
caused by co-defendants where there was evidence of a
common “scheme”or plan. 195 F.3d at 968-69.4
Contrary to Rand’s characterization of things, the district
court’s restitution order fell squarely within these parame-
ters. The authorities in this circuit instruct that the conduct
for which the restitution is ordered must be properly
charged, and here Rand was charged with conspiring to de-
fraud a host of unwitting victims. Under such circumstances,
the trial court must determine, based on the evidence before
it, the scope of the conspiracy and the damages it caused,
3
It is also important to note that, since restitution is essentially
“[a] civil remedy included with a criminal judgment,” the facts
underlying a restitution order need not be established beyond a
reasonable doubt and thus are not governed by Apprendi, Booker
and the other recent jurisprudence addressing sentencing issues.
Behrman, 235 F.3d at 1054; see also United States v. Szarwark,
168 F.3d 993, 998 (7th Cir. 1999).
4
In Martin we also observed that “in determining the scope and
consequence of the scheme the judge was not limited to the
evidence presented at the trial.” 195 F.3d at 969.
No. 04-1572 9
and Rand may be held responsible for any and all such
damages. Here the district court properly looked to the
evidence adduced in proceedings before it to determine the
extent of this conspiracy and the victims it affected.
Rand’s attempts to limit the scope of his liability by listing
in his plea agreement acts relating to only a few individual
victims is thus unavailing. Rand may not evade the clear
import of the MVRA and leave his victims in the proverbial
lurch simply by artful pleading. Having pleaded guilty to
conspiracy, he may not then pick and choose the victims for
which he will be held responsible. Similarly, it is irrelevant
that certain victims identified by the district court were not
employees of the Gary, Indiana public school system; the
district court found that the damages to each victim were
caused by the same common scheme, perpetrated using one
of four addresses identified in proceedings below.
In sum, all of the losses included in the restitution order
stemmed from fraudulent acts taken pursuant to a single
identity theft conspiracy—the specific criminal conduct to
which Rand pleaded guilty—and related to individuals who
were “directly harmed by the defendant’s [or his co-conspira-
tors’] criminal conduct in the course of the scheme, con-
spiracy, or pattern.” 18 U.S.C. § 3663A(a)(2); Randle, 324
F.3d at 556. Moreover, all the included losses related to
street addresses that Rand or his co-conspirators specifi-
cally admitted to using in the course of the conspiracy. The
order thus was supported by the requisite preponderance of
the evidence. See 18 U.S.C. § 3664(e); Sensmeier, 361 F.3d
at 988. In light of these considerations, we cannot say that
the district court abused its discretion in calculating Rand’s
restitution order, nor that its calculation was based on
“inappropriate factors.” Sensmeier, 361 F.3d at 988. There
was no error.
10 No. 04-1572
IV. CONCLUSION
The restitution order issued by the district court is hereby
AFFIRMED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—4-5-05