U.S. v. Olis, 04-20322.

• Citation: 429 F.3d 540
• Decision Date: 31 October 2005
• Docket Number: No. 04-20322.,04-20322.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Jamie OLIS, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 540

429 F.3d 540

UNITED STATES of America, Plaintiff-Appellee, v. Jamie OLIS, Defendant-Appellant.

No. 04-20322.

United States Court of Appeals, Fifth Circuit.

October 31, 2005.

Kathlyn Giannaula Snyder (argued), Jimmy Ried Sledge, Jr., James Lee Turner, Asst. U.S. Attys., Houston, TX, for U.S.

David Benjamin Gerger (argued), David Gerger & Associates, Houston, TX, for Olis.

Appeal from the United States District Court for the Southern District of Texas.

Before GARWOOD, JONES and STEWART, Circuit Judges.

EDITH H. JONES, Circuit Judge:

Jamie Olis appeals from a judgment of conviction for which he was sentenced to 292 months in prison for securities fraud, mail and wire fraud, and conspiracy. The charges arose from Olis's work as a tax lawyer and accountant at Dynegy Corporation ("Dynegy") on a transaction called "Project Alpha." Olis argues that the evidence was insufficient for conviction and that the district court improperly calculated his sentence. We hold that the conviction is factually supported, but Olis must be resentenced. Olis sufficiently preserved a Booker challenge to the court's application of the sentencing guidelines as a mandatory scheme, and the district court overstated the loss caused by Olis's crimes. We therefore AFFIRM the conviction, and VACATE and REMAND for resentencing.

I. BACKGROUND

The conviction arises from Olis's position as Senior Director of Tax Planning and International (and later, Vice President of Finance) at Dynegy on a transaction called "Project Alpha,"¹ a complex five-year deal involving natural gas transactions. Project Alpha was a plan to borrow $300 million and make it appear to the outside world (and in particular to Dynegy's auditor Arthur Andersen) as if the money was generated by Dynegy's business operations. Project Alpha was designed to generate positive cash flow to Dynegy "from operations" during 2001 and negative cash-flow in 2002-05. Specifically, a special purpose entity ("SPE") called ABG Gas Supply was created and owned by Deutsche Bank and Credit Suisse. During 2001, ABG Gas bought natural gas at market prices and sold it to Dynegy at a discount. Dynegy then sold the gas at market prices, netting $300 million. During 2002-05, Project Alpha arranged that ABG Gas would buy gas at market prices and resell it to Dynegy at above-market prices. That money would flow to the banks, which would recoup the $300 million, plus interest.

To support the accounting characterization of the deal as cash from operations, ABG Gas and the lenders could not be guaranteed full repayment on their investment. Further, ABG Gas had to be sufficiently "independent" from Dynegy, and the owners of ABG Gas had to bear risk. But contrary to these requirements, Olis, his boss Gene Foster and his colleague Helen Sharkey, secretly put into place the "parent level" hedge and the "tear-up" agreements among Dynegy, ABG's owner banks, and Citibank to ensure that the banks would not lose any money. The Government's proof indicated that Olis, Foster, and Sharkey intentionally concealed the parent level hedge and tear-ups from Jim Hecker, the Arthur Andersen partner responsible for signing off on Dynegy's SEC statements, in order to obtain the desired accounting treatment of the transaction.

On April 25, 2002, following its review of Project Alpha, the SEC required Dynegy to restate the cash flow as derived from a "financing" rather than "operations." Because Dynegy was now seen to be borrowing rather than earning money from Project Alpha, Dynegy's stock price was adversely affected.

Foster, Sharkey, and Olis were indicted for conspiracy to commit mail fraud, wire fraud, and securities fraud (count 1), securities fraud (count 2), mail fraud (count 3) and wire fraud (counts 4-6). Foster and Sharkey pled guilty to one count each in exchange for maximum sentences of five years.² Foster testified against Olis at trial. The jury convicted Olis on all counts.

The district court sentenced Olis, applying the Sentencing Guidelines as mandatory, to 292 months in prison, three years supervised release, and a $25,000 fine. The offense level was extraordinarily high based on the court's findings that the fraudulent scheme caused a loss of $105 million to one shareholder, the University of California Retirement System ("UCRS"); that Olis employed "sophisticated means" and a "special skill" to carry out the fraud; and that there were more than fifty victims of the fraud. Olis has appealed.

II. SUFFICIENCY OF EVIDENCE

Olis contends, almost perfunctorily, that the evidence does not support his conviction. In particular, he disputes the proof that he conspired to conceal two critical features of Project Alpha from Dynegy's outside auditor Arthur Andersen — the "parent level" hedge and the "tear-up" agreements. This court will not disturb a jury's verdict unless the record demonstrates that a rational jury could not have found each of the elements of the offense beyond a reasonable doubt. United States v. Dahlstrom, 180 F.3d 677, 684 (5th Cir.1999). The evidence, and all inferences reasonably drawn from it, must be viewed in the light most favorable to the verdict, regardless whether the conviction is based on direct or circumstantial evidence. Id.³

Olis asserts that the evidence demonstrated that everyone working on Project Alpha, including Arthur Andersen accountants, knew that the bank owners of ABG Gas were fully hedged against the risk of loss from variable gas prices. Olis's boss Foster, testified, however, as a star prosecution witness and co-indictee that he and Olis wrongly agreed to the tear-ups and the parent hedge and hid them from Arthur Andersen. Jim Hecker, an audit partner at Arthur Andersen, testified that he advised Dynegy against tear-ups, and Dynegy subsequently did not reveal this aspect of Project Alpha to him. A reasonable jury, basing its conclusion on the testimony of Foster and Hecker, together with the incriminating emails among Olis and his co-indictees and a wealth of other evidence, could easily have found Olis guilty beyond a reasonable doubt of all the charged crimes.⁴

III. SENTENCING

Far more problematic are some of the issues Olis raises concerning his Booker objection, the district court's use of the 2001 version of the Sentencing Guidelines, and the reasonableness of the district court's loss calculation, all of which contributed to Olis's sentence of imprisonment. We address each in turn.

A. Booker Objection

Olis first argues that under Booker, his Sixth Amendment right to a jury trial was violated because the district court enhanced his sentence under the mandatory guidelines regime based on facts not proved to the jury beyond a reasonable doubt. See United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 756, 160 L.Ed.2d 621 (2005)("any fact (other than a prior conviction) which is necessary to support a sentence exceeding the maximum authorized by the facts established by a plea of guilty or a jury verdict must be admitted by the defendant or proved to the jury beyond a reasonable doubt.").

During sentencing, the district court determined the following facts: (1) Olis was responsible for an approximately $105 million loss to UCRS, which enhanced his base offense by twenty-six levels under the Sentencing Guidelines; (2) Olis's offense involved sophisticated means, requiring a two-level enhancement; (3) Olis used a special skill, in a manner that significantly facilitated the commission or concealment of the offense, resulting in another two-level enhancement; and (4) Olis's scheme included fifty or more victims, requiring a four-level sentencing enhancement. None of these findings was proven beyond a reasonable doubt to the jury or admitted by Olis.

Relying on these judge-found facts, and as mandated by the Guidelines, the court calculated Olis's total offense level to be 40. Olis had no criminal history for guidelines purposes. These two determinations yielded a sentencing range of 292 to 365 months in prison. See U.S.S.G. Ch. 5 Pt. A. The district court, noting that it was "required to follow... the Federal Sentencing Guidelines," stated that it took "no pleasure in sentencing [Olis] to 292 months," but that it was the court's job "to follow the law." The district court's findings on the enhancements dramatically increased Olis's sentencing range beyond the minimum span permitted by the jury's verdict.

The Government asserts, however, that Olis did not properly preserve his Booker objection and that we should review Olis's sentencing points for plain error. We disagree. Olis repeatedly objected before and during his sentencing hearing to both the district court's loss calculation and the burden of proof utilized by the court. His objections regarding the loss calculation alerted the court to cases that acknowledged the potential for a constitutional violation when sentencing facts are not found by at least clear and convincing evidence.⁵ Olis's objections were overruled and there is nothing to indicate that the district court made its findings on any basis other than a preponderance of the evidence. In United States v. Akpan, 407 F.3d 360, 375-76 (5th Cir.2005), this court held that although one defendant "never explicitly mentioned the Sixth Amendment, Apprendi, or Blakely until his Rule 28(j) letter," his objections during sentencing that the court's loss calculation had not been proven at trial adequately apprised the district court of a Sixth Amendment objection. Although Olis, like the defendant in Akpan, never explicitly mentioned the Sixth Amendment, Apprendi, or Blakely, his repeated objections also adequately apprised the court that he was raising a constitutional error with respect to the loss calculation.

Because Olis preserved his error by objecting in the district court, we must "`vacate the sentence and remand, unless we can say the error is harmless under Rule 52(a) of the Federal Rules of Criminal Procedure.'" Akpan, 407...