U.S. v. Erhart

• Decision Date: 29 July 2005
• Docket Number: No. 03-1414.,03-1414.
• Citation: 415 F.3d 965
• Parties: UNITED STATES of America, Appellee, v. Stephen ERHART, also known as Stephen Anthony Erhart, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

415 F.3d 965

UNITED STATES of America, Appellee, v. Stephen ERHART, also known as Stephen Anthony Erhart, Appellant.

No. 03-1414.

United States Court of Appeals, Eighth Circuit.

Submitted: February 11, 2004.

Filed: July 29, 2005.

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Richard F. Koch, argued, Minneapolis, MN (Andrew S. Garvis, Minneapolis, MN. on the brief), for appellant.

John R. Marti, Asst. U.S. Attorney, Minneapolis, MN, for appellee.

Before MELLOY, SMITH, and COLLOTON, Circuit Judges.

SMITH, Circuit Judge.

Stephen Erhart pleaded guilty to twenty-nine counts, including conspiracy, false statements, health-care fraud, and money laundering charges. The district court¹ also found Erhart guilty of two separate drug and gun charges, and sentenced him to a term of 108 months' imprisonment and three years' supervised release. He was also required to pay a $3,100 special assessment to the crime-victims fund, and required to pay restitution in the amount of $1,234,270. On appeal, Erhart argues that the district court erred (1) in its conclusion that he was guilty of the firearm offense, (2) erred in setting the fraud rate at seventy-five percent, (3) erred in not granting an acceptance of responsibility adjustment, (4) erred in granting an abuse of a public trust and a role enhancement, and (5) erred in its restitution calculation. Finding no error, we affirm Erhart's conviction and sentence.

I. Background

The substantive facts of the case are not in dispute. Advantage Plus Chiropractic Clinic (APCC) was formed in 1996 by Stephen Erhart and Coral Peterson. Erhart, a licensed Doctor of Chiropractic, treated individual patients and drafted treatment notes for the care provided.

Sometime in 2000, the Federal Bureau of Investigation ("FBI") commenced a health-care fraud investigation of APCC. The FBI used two cooperating witnesses, Tyrone Robinson and Mollie Robinson. Audio and video devices were used to conduct an undercover surveillance of APCC for several months. Based upon its investigation, the FBI concluded that Erhart had engaged in extensive health-care fraud schemes through APCC. The fraud schemes included paying "runners" to refer patients, falsifying documents, and submitting fraudulent bills to insurance companies for services not rendered.

In October 2001, a grand jury indicted Erhart on thirty-one counts of illegal conduct involving his chiropractic billing, cocaine possession, and unlawful possession of a firearm.² In March 2002, Erhart entered guilty pleas to most of the charges. Specifically, he confessed to his involvement in a fraudulent billing scheme, acknowledged Peterson's involvement, provided the names of the runners involved in the fraud, admitted that ninety-five percent of his business was fraudulent, and provided the names of individual patients who participated in the scheme. Erhart also pleaded guilty to one count of conspiracy to defraud health-care benefit programs, four counts of false statements related to health-care matters, ten counts of health-care fraud, and fourteen counts of money laundering.

Peterson signed a plea agreement acknowledging that seventy-five percent of APCC's business was fraudulent, which amounted to $1.2 million. Erhart was offered a similar agreement, but declined. He also elected to contest the drug and firearm possession charges. After a bench trial, Erhart was convicted on all offenses. In addition to the counts to which Erhart pleaded guilty, the district court also found him guilty of one count of possession with intent to distribute cocaine, and one count of unlawful possession of a firearm.

At sentencing, Erhart disputed the seventy-five percent fraud figure, arguing that it should have been lower. Erhart stated that he did not recall admitting to a ninety-five percent fraud rate and contended that any estimate that he may have given resulted from FBI pressure. The government presented evidence that Erhart was responsible for $3.7 million in reasonably foreseeable losses sustained by insurance companies. In rebuttal, Erhart introduced evidence that the amount of fraudulent business that he conducted was actually around forty percent or about $400,000. The district court sentenced Erhart to 108 months' incarceration, three years' supervised release, a special assessment to the crime-victims fund, and ordered him to pay restitution of $1.2 million. Erhart timely appealed the issues set out above.

II. Discussion

A. Firearm Conviction

Erhart first argues that the district court erred in convicting him of possession of a firearm with a barrel less than eighteen inches. Specifically, he argues that there was insufficient evidence to show that he knew the characteristics of the prohibited weapon. "In passing upon the sufficiency of the evidence to sustain an ultimate finding of guilt following a bench trial, we apply the same standard of review that is applied where a defendant has been found guilty by a jury; that is to say, the finding must be sustained if it is supported by substantial evidence." United States v. Barletta, 565 F.2d 985, 991 (8th Cir.1977). On review, we will consider the evidence in the light most favorable to the guilty verdict. United States v. Carter, 270 F.3d 731, 734 (8th Cir.2001).

We begin our analysis by noting that it is unlawful for any person to receive or possess certain firearms that are not registered to him in the National Firearms Registration and Transfer Record or that are not identified by serial number. 26 U.S.C. § 5861(d). One weapon prohibited by this statute is "a shotgun having a barrel or barrels of less than 18 inches in length." 26 U.S.C. § 5845(a)(1). Although the statute is silent as to the requisite mens rea for illegal possession, we have concluded that the "only knowledge required to support a conviction under the [National Firearms] Act is knowledge that the weapon is a `firearm' as that term is generally defined." United States v. Barr, 32 F.3d 1320, 1323 (8th Cir.1994) (emphasis in original). The Supreme Court has held that to violate the National Firearms Act, the owner of the weapon must have known that the weapon he possessed had the characteristics that brought it within the statutory definition of a firearm. Staples v. United States, 511 U.S. 600, 602, 114 S.Ct. 1793, 128 L.Ed.2d 608 (1994). Following the logic of Staples, we have further concluded that if the characteristics of the weapon render it "quasi-suspect,"³ then the owner of the weapon does not have to know the specific characteristics to violate the Act. Barr, 32 F.3d at 1324.

The government argues that Erhart's weapon was "quasi-suspect," and he had knowledge that it was a sawed-off shotgun. Erhart responds that he did not know that the shotgun barrel was less than eighteen inches.⁴ Erhart claims that "there is no principled reason to suggest that Congress intended the eight categories of firearms listed in the definition section of the [National Firearms] statute to have different mens rea elements." United States v. Reyna, 130 F.3d 104, 109 n. 5 (5th Cir. 1997). We disagree.

The Staples decision involved a fully-automatic machine gun. Staples, 511 U.S. at 602, 114 S.Ct. 1793, 128 L.Ed.2d 608 (1994). However, to discover its automatic firing capacity, one had to fire it. Id. Staples testified that he had never fired the gun, and the Court found that, essentially, Staples innocently owned a machine gun. Id. The Court decided that it would be unfair to convict Staples of possessing the firearm because he had no way of knowing that it was illegal. Id.

In contrast, Erhart possessed a sawed-off shotgun that was visibly altered to such a degree that the weapon was "quasi-suspect." Further, Erhart made several admissions demonstrating that he knew the weapon unlawfully shortened. He acknowledged his nervousness about owning the gun, and he repeatedly referred to it as a "sawed-off." Erhart described the gun's usefulness by stating, "Well, I'll tell you what. This is some definite protection." He also told Tyrone Robinson that a prior owner has "shot it a couple [of] times ... [and] said he blew a hole right through the damn door." When Robinson inquired if the gun would be useful for hunting, Erhart responded "I don't know [], I don't think it works for ducks though. I think you need a longer barrel though."

Sufficient evidence supported the finding that Erhart knew that the gun he possessed was an illegal sawed-off shotgun. We affirm Erhart's conviction under § 5861(d).

B. Booker Error

After his case was submitted for oral argument, but before we issued an opinion, the United States Supreme Court issued its ground shifting decision in Blakely v. Washington, 542 U.S. 296, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004). The Blakely decision was extended to the United States Sentencing Guidelines in United States v. Booker, ___ U.S. ___, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), which rendered the Guidelines advisory. Nonetheless, the Court explained that a Booker claim not argued at the district court would be subject to application of the plain error test. Booker, 125 S.Ct. at 769. In United States v. Pirani, 406 F.3d 543, 550 (2005) (en banc), we held that there must be "a specific reference to Apprendi or Blakely or the Sixth Amendment" to preserve a Booker claim. Under our plain error analysis, Erhart is required to show "a `reasonable probability,' based on the appellate record as a whole, that but for the error he would have received a more favorable sentence" to show that his substantial rights were affected. Id. at 552 (applying the third prong of the plain error test found in United States v. Olano, 507 U.S. 725, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993)).

In this case, Erhart did not argue Apprendi, Blakely, or the Sixth Amendment to the district court, and, thus, we review his Booker argument for plain error. Nothing in the record indicates that the district court would have given Erhart a lesser sentence had it viewed the Guidelines...