United States v. Gregory Kuczora

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 17-2725
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
GREGORY J. KUCZORA,
Defendant-Appellant.
____________________
Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 15-CR-214 — William C. Griesbach, Chief Judge.
____________________
ARGUED SEPTEMBER 18, 2018 — DECIDED DECEMBER 14, 2018
____________________
Before SYKES, BARRETT, and ST. EVE, Circuit Judges.
SYKES, Circuit Judge. Gregory Kuczora falsely represented
to unwary investors that he could help them secure millions
of dollars in financing. In return they paid him large sums of
money to cover fees, which Kuczora pocketed for personal
use before disappearing. For this conduct he pleaded guilty
to one count of wire fraud, and the district judge imposed an
above-Guidelines prison sentence of 70 months. Kuczora
argues that the judge did not adequately explain the upward
2 No. 17-2725
variance and failed to give him advance notice of the
grounds that supported it. He also argues that the sentence
is substantively unreasonable.
We affirm. The district judge thoroughly explained his
reasoning, and we have never held that a judge must give
advance warning of an upward variance. To the contrary,
every defendant is on notice that the court has the discretion
to impose a sentence above, below, or within the Guidelines
range based on the factors listed in 18 U.S.C. § 3553. Finally,
the 70-month sentence is not substantively unreasonable.
Although the Guidelines can be a rough approximation of
what § 3553(a) warrants, the judge did not exceed his broad
discretion in concluding that a heavier penalty was justified
here.
I. Background
After Kuczora lost his finance job in 2007, he styled him-
self as the managing director of KCS Financial, a phony
finance firm he ran out of his basement in Elgin, Illinois. In
an attempt to lure loan applicants, he falsely represented
that KCS Financial had been operating for more than a
decade in 12 different countries. Two years later he began
telling applicants that he could secure financing for their
proposals through Kensington Capital Partners, Ltd., anoth-
er fake company whose London mailing address forwarded
straight back to the basement in Elgin.
Once a potential applicant showed interest, Kuczora
would ask for a wire transfer of $10,000 to $25,000 as an
underwriting fee. But as soon as he had his fee, he would
gradually disappear. At first he would make up excuses for
delay—for instance, that his nonexistent legal department
No. 17-2725 3
was considering the application. Eventually he stopped
responding altogether. Over four years Kuczora defrauded
as many as 68 victims of as much as $1,216,755. He spent
that money largely on personal expenses—everything from
his family’s necessities to a luxury car and an expensive
horse.
In November 2015 a grand jury indicted Kuczora on two
counts of wire fraud in violation of 18 U.S.C. § 1343. 1 Sur-
prisingly, even that did little to curb his appetite for fraud. In
2016 he devised a new scheme in which he represented that
he could obtain funding for humanitarian groups from a
fictional source of U.S. notes and bonds purportedly worth
billions of dollars.
After his indictment for the first scheme, Kuczora de-
layed the progress of his criminal case for as long as possible
before finally pleading guilty to one count of wire fraud.
Kuczora did not object to the factual findings in the Presen-
tence Report (“PSR”), including a finding that he defrauded
68 victims. The judge accordingly adopted the PSR findings
as undisputed. The judge also heard testimony from six
victims. They shared heartbreaking stories of the toll the
fraud took on their lives—among other things, bankruptcy,
depression, and homelessness. Kuczora likewise called
several witnesses, including one person who claimed to have
1 Although Kuczora lived in Illinois, the government brought charges in
the Eastern District of Wisconsin where several victims lived and used
local banks. See United States v. Balsiger, No. 17-1708, 2018 WL 6441478, at
*9 (7th Cir. Dec. 10, 2018) (holding that venue was proper in a wire-fraud
case brought under 18 U.S.C. § 1343 because some of the victims lived in
the relevant district and because the defendant “caused wire transfers in
and out of the district in furtherance of the fraudulent scheme”).
4 No. 17-2725
received some legitimate financing help from KCS Financial.
But when pressed, even that witness conceded that his
projects never received the promised funds and he had to
file for bankruptcy.
The Sentencing Guidelines recommended a sentence of
33 to 41 months in prison. The judge accepted that range as a
starting point but concluded that it fell short of what was
appropriate under § 3553(a). He found that a 70-month
sentence was necessary to reflect the seriousness and sophis-
tication of the offense and to deter similar white-collar crime.
II. Discussion
On appeal Kuczora raises two claims of procedural error.
He challenges the adequacy of the judge’s explanation for
the above-Guidelines sentence and the judge’s failure to give
advance notice of the grounds on which he was considering
an upward variance. We review both procedural challenges
de novo. United States v. Lockwood, 840 F.3d 896, 900 (7th Cir.
2016). Kuczora also raises a substantive challenge to the
reasonableness of the sentence, which we review for abuse
of discretion. See id. at 903.
Kuczora first argues that the judge failed to give a suffi-
cient explanation for the upward variance from the Guide-
lines range. To be sure, a judge must “adequately explain the
chosen sentence to allow for meaningful appellate review
and to promote the perception of fair sentencing.” Gall v.
United States, 552 U.S. 38, 50 (2007). But contrary to
Kuczora’s argument, there is no need to identify “‘extraor-
dinary’ circumstances to justify a sentence outside the
Guidelines range.” Id. at 47. In fact, so long as the judge
explains why the result is appropriate under § 3553(a), there
No. 17-2725 5
is no need to directly “explain why a sentence differs from
the Sentencing Commission’s recommendation.” United
States v. Kirkpatrick, 589 F.3d 414, 416 (7th Cir. 2009).
Here, the judge calculated the correct Guidelines range,
which he properly observed was the starting point for his
deliberations. The judge then provided a full and adequate
explanation for an upward variance. He emphasized that the
fraud was deliberate, lasted for four years, and affected
68 people—a significant number of victims. 2 The judge also
highlighted the fraud’s devastating impact on the six victims
who testified at the sentencing hearing. And although
Kuczora pleaded guilty, the judge found that he nonetheless
failed to show real remorse. Finally, the judge stressed the
sophisticated nature of the offense and the special role
deterrence plays in the context of white-collar crime, where
the decision to break the law is generally calculated rather
than impulsive.
Kuczora’s primary complaint is that the Guidelines ac-
count for many of these factors. For instance, the Guidelines
range already reflected the fact that Kuczora defrauded
more than ten victims. Likewise, the judge could have
applied a Guidelines enhancement based on the sophistica-
tion of the scheme. See U.S.S.G. § 2B1.1(b)(10)(C). He did not
do so, yet he relied on the degree of sophistication as a
justification for imposing a sentence above the range.
Kuczora contends that the judge was required to explain
why the Guidelines did not adequately capture those factors.
2 Kuczora disputes this number, but it comes from the PSR’s factual
statement, which he did not object to.
6 No. 17-2725
But our precedent is clear that “the sentencing court need
not frame its explanation of a sentence in terms of a depar-
ture from the guidelines range.” United States v. Courtland,
642 F.3d 545, 550 (7th Cir. 2011). All the judge must do is
“explain why the sentence is appropriate under the statutory
criteria.” Kirkpatrick, 589 F.3d at 416. (emphasis added). And
the judge did exactly that.
Kuczora contends that we applied a different rule in
Lockwood, where we said that a sentencing court’s reasoning
must “includ[e] an explanation for any deviation from the
Guidelines range.” 840 F.3d at 900. That simply means that
in deviating from the Guidelines range, a judge must explain
why the higher sentence is appropriate—which the judge
did here. Even if the Guidelines and § 3553(a) sometimes
overlap, we have never held that a judge must go further
and articulate why specific Guidelines factors inadequately
account for the nature of the crime, the defendant’s back-
ground, or any other statutory factor. In fact, we have used
the exact language from Lockwood in cases explicitly rejecting
Kuczora’s interpretation. See, e.g., Courtland, 642 F.3d at 550
(“[W]e ask whether the sentencing court erred by … failing
to adequately explain the chosen sentence—including an
explanation for any deviation from the Guidelines range. But
recent case law indicates that the sentencing court need not
frame its explanation of a sentence in terms of a departure
from the guidelines range … .”) (internal quotation marks
and citation omitted). To be perfectly clear, we hold once
again that as long as a judge uses a properly calculated
Guidelines range as a starting point, he may explain a
decision to vary from that range with reference to the statu-
tory factors alone.
No. 17-2725 7
Kuczora’s second procedural challenge is that the judge
failed to provide him with advance notice of the grounds on
which he might deviate from the Guidelines range. Yet our
precedent is clear that a judge “is not required to give ad-
vance notice of a sentence above the guidelines range.”
United States v. Hayden, 775 F.3d 847, 851 (7th Cir. 2014). To
the contrary, defendants are always “on notice post-Booker
that sentencing courts have discretion to consider any of the
factors specified in § 3553(a).” United States v. Walker,
447 F.3d 999, 1007 (7th Cir. 2006). Here, like in Walker,
Kuczora had “full knowledge of all the facts on which the
district court relied.” Id. The judge’s analysis was rooted in
the PSR, and Kuczora affirmatively chose not to object to
that information. No forewarning was required.
Kuczora insists nonetheless that the judge should have
given him advance notice of which facts in the PSR might
form the basis of an above-Guidelines sentence so his law-
yers could prepare accordingly. But we have never required
that, and for good reason. A notice requirement would
significantly limit a judge’s ability to consider a sentence
outside the Guidelines range: unless the judge were to
formally preview his own reasoning, he could vary upward
only when justified by prehearing arguments already raised
by the parties or the probation office. To curb a judge’s
sentencing discretion in this way would be fundamentally
inconsistent with United States v. Booker, 543 U.S. 220 (2005),
and its successors.
In addition to the procedural challenges, Kuczora claims
that the 70-month sentence is substantively unreasonable.
We review that challenge for abuse of discretion. See
Lockwood, 840 F.3d at 903. Even though the judge settled on
8 No. 17-2725
a sentence above the advisory range, “[t]here is no presump-
tion that a sentence outside the [G]uidelines[] range is
unreasonable.” United States v. Aldridge, 642 F.3d 537, 544
(7th Cir. 2011).
And this particular above-Guidelines sentence lies well
within the judge’s broad Booker discretion. Kuczora’s fraudu-
lent scheme was both deliberate and calculated, and it
wreaked havoc in dozens of lives. The Guidelines range was
enhanced because Kuczora took advantage of more than ten
victims. Yet his scheme defrauded almost seven times that
many. And while the Guidelines range was increased be-
cause more than $550,000 was at stake, the fraud was almost
twice that amount according to the government’s estimate.
(Kuczora himself puts the number at around $750,000.) Most
importantly, Kuczora preyed on those desperate for funding,
so the numbers alone may fail to capture the damage he
inflicted. The judge heard six victims’ tragic stories, and it
was not unreasonable to elevate the sentence accordingly.
Nor do we have any reason to second-guess the judge’s
conclusion that Kuczora has not shown remorse. He waited
until the eleventh hour to plead guilty, and after his indict-
ment he devised yet a second fraudulent scheme. It was
reasonable to think a much longer sentence was necessary to
deter a third.
In sum, the judge did not err. He fully explained why the
§ 3553(a) factors justified an above-Guidelines sentence, and
that sentence was well within his discretion.
AFFIRMED.