United States v. Mohammad Khan

FILED
NOT FOR PUBLICATION
JUL 05 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 15-10487
Plaintiff-Appellee, D.C. No.
2:12-cr-00180-MCE-1
v.
MOHAMMAD ADNAN KHAN, MEMORANDUM*
Defendant-Appellant.
UNITED STATES OF AMERICA, No. 15-10505
Plaintiff-Appellee, D.C. No.
2:12-cr-00180-MCE-2
v.
MOHAMMAD NAWAZ KHAN,
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of California
Morrison C. England, Jr., District Judge, Presiding
Argued and Submitted June 15, 2017
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: THOMAS, Chief Judge, FRIEDLAND, Circuit Judge, and CARNEY,**
District Judge.
Defendants-Appellants Mohammad Adnan Khan (“Adnan”) and Mohammad
Nawaz Khan (“Nawaz”), son and father (together, “the Khans”), appeal their 108
and 150 month sentences, respectively, following their guilty pleas to conspiracy to
commit mail fraud in violation of 18 U.S.C. § 1349.1 The Khans pled guilty to
devising and participating in a fictitious wage scheme to defraud the State of
California Employment Development Department (“EDD”) into paying
unemployment and disability benefits to many individuals who either did not work
for the Khans’ farm labor contractor companies or did not do so for the number of
hours that they reported to EDD. The Khans assert that the district court made
three significant errors at their sentencings: (1) it failed to make the findings
required under Federal Rule of Criminal Procedure 32 regarding the loss amounts,
**
The Honorable Cormac J. Carney, United States District Judge for the
Central District of California, sitting by designation.
1
At his plea hearing, Adnan was advised of the elements of conspiracy to
commit mail fraud, 18 U.S.C. § 1349, he then pled guilty to that crime, and certain
parts of his plea agreement correctly refer to that offense. However, the plea
agreement erroneously lists the elements of the substantive mail fraud offense
under 18 U.S.C. § 1341, his presentence investigation report references § 1341
rather than § 1349, the judgment entered against him states that he pled guilty to
violating § 1341, and the district court stated at his sentencing hearing that Adnan
pled guilty to violating § 1341. At resentencing, the district court shall correct
these errors in the record.
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which were relied on by the district court to apply a twenty-level increase to their
offense levels under § 2B1.1 of the Sentencing Guidelines for a loss exceeding $7
million; (2) it accepted as reasonable estimates the loss amounts set forth in the
Khans’ presentence investigation reports (“PSRs”); and (3) it denied the Khans’
request for an evidentiary hearing on the issue of loss amounts. We review
de novo whether the district court complied with Rule 32 in making its
determination of the loss amounts, United States v. Stoterau, 524 F.3d 988, 1011
(9th Cir. 2008), we review for clear error the factual findings underlying the
district court’s imposition of the sentencing enhancement for the loss amounts,2
United States v. Garro, 517 F.3d 1163, 1167 (9th Cir. 2008), and we review for
abuse of discretion the district court’s denial of the Khans’ request for an
evidentiary hearing, United States v. Sarno, 73 F.3d 1470, 1502 (9th Cir. 1995).
We vacate the Khans’ sentences and remand their cases for resentencing.
We agree with the Khans that the district court’s findings on the loss
amounts were inadequate under Rule 32. When a defendant makes a specific
factual objection to a matter that will affect sentencing, as both of the Khans did
2
Contrary to the government’s argument, the Khans repeatedly challenged
the loss amounts in the PSRs before the district court, and their arguments on
appeal are consistent with those challenges. Accordingly, we review for clear
error—not plain error. United States v. Pallares-Galan, 359 F.3d 1088, 1094–95
(9th Cir. 2004).
3
here, the district court must rule on the objection and make “express” or “explicit”
factual findings that resolve that objection. United States v. Doe, 705 F.3d 1134,
1153 (9th Cir. 2013) (quoting United States v. Houston, 217 F.3d 1204, 1208 (9th
Cir. 2000)). Strict compliance with Rule 32 is required. United States v. Job, 851
F.3d 889, 906 (9th Cir. 2017) (quoting Doe, 705 F.3d at 1153). Failure to make
the necessary findings under Rule 32 requires a defendant’s sentence to be vacated
and the case remanded for resentencing. United States v. Herrera-Rojas, 243 F.3d
1139, 1142 (9th Cir. 2001).
The district court here made no factual findings on the Khans’ objections
regarding the loss amounts. The PSRs estimated an actual loss of $6.7 million and
an intended loss of $13.2 million for Adnan, and estimated an actual loss of $7.1
million and an intended loss of $14.1 million for Nawaz. The Khans specifically
objected to these estimates of intended and actual loss, contending that the
estimates were inflated and wrongfully included amounts paid by EDD for
legitimate benefits claims. The district court summarily overruled those objections
and adopted the estimated loss amounts set forth in the PSRs without making any
specific factual finding on the Khans’ objections. A district court may not simply
rely on the factual statements in a PSR when a defendant objects to those facts.
4
United States v. Showalter, 569 F.3d 1150, 1160 (9th Cir. 2009) (citing United
States v. Ameline, 409 F.3d 1073, 1085–86 (9th Cir. 2005) (en banc)).
We also agree with the Khans that the district court clearly erred when it
accepted the estimates of the loss amounts set forth in the PSRs to apply a twenty-
level enhancement to their sentences under § 2B1.1 of the Sentencing Guidelines
for a loss exceeding $7 million. The district court must correctly calculate the
Sentencing Guidelines range before sentencing a defendant. Gall v. United States,
552 U.S. 38, 49 (2007). If the district court makes a material miscalculation, a
defendant’s sentence must be vacated and the case remanded for resentencing.
Showalter, 569 F.3d at 1159 (citing United States v. Zolp, 479 F.3d 715, 721 (9th
Cir. 2007)). The government bears the burden of proof when it seeks sentencing
enhancements, Ameline, 409 F.3d at 1086, and must demonstrate the basis for a
loss amount enhancement by a preponderance of the evidence, United States v.
Laurienti, 611 F.3d 530, 556 (9th Cir. 2010). The district court need not calculate
loss amount with “absolute precision” but rather only needs to make a “reasonable
estimate” of loss amount. Id. at 558 (quoting Zolp, 479 F.3d at 719).
The Sentencing Guidelines enhancement for loss amount unquestionably
had a material impact on the Khans’ sentences. Indeed, it was the most significant
factor in the calculation of their offense levels under the Sentencing Guidelines.
5
Yet we cannot discern from the record before us whether the estimates of the actual
and intended losses set forth in the PSRs and relied on by the district court to apply
the Sentencing Guidelines enhancement were reasonable. No explanation or
analysis of how those estimates were calculated, what proportion of those estimates
were attributable to legitimate payments made by EDD for legitimate benefits
claims, and why those payments were included in the estimates was provided by
the district court, set forth in the PSRs, or offered by the government before the
district court or in its evidentiary submissions on appeal. That omission is
particularly problematic given that the government’s own evidence demonstrates
that at least some proportion—perhaps as much as 30%—of EDD payments went
to legitimate claimants. We are thus left guessing as to the explanation or analysis
supporting the loss amounts. Because it is not apparent from the record whether
those loss amounts are a reasonable estimate of intended loss, we conclude that the
district court erred.
Finally, the district court did not abuse its discretion when it denied the
Khans’ request for an evidentiary hearing on the loss amounts. “There is no
general right to an evidentiary hearing at sentencing.” United States v. Laurienti,
731 F.3d 967, 972 (9th Cir. 2013) (alteration omitted) (quoting United States v.
Real-Hernandez, 90 F.3d 356, 362 (9th Cir. 1996)). A district court may refuse to
6
hold one as long as the defendant is allowed an opportunity to rebut the findings
and recommendations of a PSR through oral or written submissions. Sarno, 73
F.3d at 1502–03 (citing United States v. Baker, 894 F.2d 1083, 1084–85 (9th Cir.
1990)). Here, the Khans were provided extensive discovery months in advance of
their sentencings and were given ample opportunities to present both written and
oral sentencing submissions. Indeed, continuances of their sentencing hearings
were granted by the district court for this very purpose. It was therefore well
within the district court’s discretion to conclude that the Khans had been given an
ample opportunity to present their arguments.
VACATED AND REMANDED.
7