Kok v. U.S.
| Decision Date | 18 February 1994 |
| Docket Number | No. 93-2708,93-2708 |
| Parties | Terry KOK, Appellant, v. UNITED STATES of America, Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Before RICHARD S. ARNOLD, Chief Judge, BEAM, Circuit Judge, and JACKSON, * District Judge.
Terry Kok appeals the 27-month sentence of imprisonment and the order of restitution imposed by the district court following his plea of guilty to violation of 18 U.S.C. Sec. 1014 (). Appellant argues that the district court erred (1) in using amended versions of 18 U.S.C. Sec. 1014 and the United States Sentencing Guidelines (U.S.S.G.) that were not in effect at the time of the offense; (2) by incorrectly calculating the amount of loss for purposes of U.S.S.G. Sec. 2F1.1; (3) by improperly determining that it lacked authority to grant a downward departure from the guideline range; and (4) in ordering payment of restitution. For the following reasons, we affirm in part and reverse in part and remand for resentencing.
From 1984 through 1989 Kok was employed as the controller for Component Manufacturing Company ("Component"). During this period, Component had a line of credit with Western Bank of Sioux Falls, South Dakota ("Western"). The line of credit was initially established at $200,000, but was eventually increased to $1,300,000.
In July 1985, Kok noticed a shortage of approximately $25,000 in Component's lumber inventory. In order to cover the shortage he altered the entries in the company's accounting system. Discrepancies continued throughout the years 1986, 1987, 1988 and 1989. Without advising any officer or director of Component, Kok continued to alter the accounts in an effort to make the profit and loss statements appear correct. In addition, Kok prepared false year-end financial statements and submitted them to Component's president. The financial statements were, in turn, forwarded to Western and were relied upon by the bank in evaluating Component's continuing line of credit. As a result of the false portrayal of the company's financial condition, Western continued to increase Component's line of credit. Further, in reliance on the false financial statements, Component paid bonuses to Kok and three other employees totalling $202,709.70. During his employment, Kok also took $300 from a petty cash fund without authorization.
Almost immediately upon discovering the falsity of the financial statements, Western reduced Component's line of credit from $1,300,000 to $750,000. Kok, pursuant to a private written agreement, repaid Component $72,334.87 representing the amount of the bonuses he received, including interest.
Kok was charged by indictment with four counts of violating 18 U.S.C. Sec. 1014 and one count of violating 18 U.S.C. Sec. 4 (). He pleaded guilty to Count 4 of the indictment which charged him with making a false statement on March 14, 1989 pertaining to Component's financial condition for the years 1985 through 1988 for the purpose of influencing Western's actions with respect to Component's line of credit.
The version of 18 U.S.C. Sec. 1014 that was in effect on the date of the offense provided for a maximum sentence of imprisonment of two years. An amendment to the statute which became effective on November 29, 1990 increased the maximum sentence of imprisonment to 20 years. See 18 U.S.C. Sec. 1014 (1992) (original at Pub.L. 101-647 (November 29, 1990)). At sentencing the district court applied the amended version of the statute and a revised version of the sentencing guidelines that was then in effect. As a result, the district court determined that the guideline range for imprisonment was 27 to 33 months. The government concedes, and we agree, that application of the amended version of Sec. 1014, resulting in punishment that was greater than that which existed at the time the offense was committed, violated the ex post facto clause of the United States Constitution. Weaver v. Graham, 450 U.S. 24, 28, 101 S.Ct. 960, 963-64, 67 L.Ed.2d 17 (1981). On remand, the district court should apply the pre-amendment version of Sec. 1014 such that the maximum sentence of imprisonment that Kok may receive is 24 months.
Appellant's second argument is that the sentencing court incorrectly applied the guidelines in determining the amount of the loss. We review a district court's finding regarding loss under U.S.S.G. Sec. 2F1.1 under the clearly erroneous standard. United States v. Earles, 955 F.2d 1175, 1180 (8th Cir.1992). The district court in this case determined that the amount of loss was $1,000,000, of which $800,000 was attributed to the amount of jeopardy to Western and the balance attributed to the bonuses paid by Component to Kok and three other employees.
Section 2F1.1 of the guidelines provides that the base offense level for an offense involving fraud or deceit is to be increased according to the amount of the loss. The amount of loss used to increase the offense level is either the actual loss resulting from the fraudulent conduct or the amount of loss the defendant intended to inflict, whichever is greater. United States v. Edgar, 971 F.2d 89, 93 (8th Cir.1992). In the instant case, there was no evidence of actual loss with regard to the line of credit. All loans, plus interest, obtained during the period in question were repaid by Component to Western in a timely fashion. Therefore, the focus for purposes of sentencing should be on the amount of the possible loss that Kok attempted to inflict. United States v. Johnson, 908 F.2d 396, 398 (8th Cir.1990). 1
In this case, as a result of Kok's false representations, Western extended the line of credit beyond the amount it would have allowed had it been aware of Component's true financial status. Thus, the measure of the loss that Kok intended to inflict is the difference between the amount of credit the bank extended based on the false representations and the amount of credit the bank would have extended had it known the company's true financial condition. On remand, the district court should calculate the amount of the loss in this manner in determining the offense level under U.S.S.G. Sec. 2F1.1.
Kok also challenges the district court's inclusion of the bonuses paid by Component in the loss computation. He argues that the bonuses should not have been included because Western was the only victim of the offense. For sentencing purposes the task of the district court is to determine the amount of loss that is attributable to the defendant's criminal conduct. United States v. Wilson, 980 F.2d 259, 261 (4th Cir.1992). The guidelines do not define who may be considered a "victim" for the purpose of calculating the loss. Component's president testified at the sentencing hearing that based on the false financial statements Kok prepared the company paid $202,709.70 in bonuses to Kok and three other employees. As a result of the scheme perpetrated by Kok, Component suffered actual losses. When the offense involves a false statement, "the inquiry to determine loss must focus on the amount of loss related to the false statement." Id. (amount repaid to financial institution by guarantor could be included as a loss for purposes of calculating the sentence for making false statement to a financial institution). We believe the district court properly included Component's actual losses in determining the intended loss under U.S.S.G. Sec. 2F1.1.
Kok's third point is that the district court erroneously determined that it lacked authority to grant a downward departure. A district court's refusal to depart may be reversed if the refusal is based on the belief that the court lacked the power to depart. Johnson, 908 F.2d at 399. In this case the district court stated, "[I]n examining all of the evidence which has been submitted here this morning, I am of the--of the opinion and therefore, find that the Court will not provide for its--its discretion to depart downward." (Sentencing Transcript, p. 118). Thus, the district Court clearly recognized that it had authority to consider a downward departure, but determined that no departure was warranted. This aspect of the district court's determination is not subject to review. Johnson, ...
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