U.S. v. Ingles, 05-30155.

• Decision Date: 11 April 2006
• Docket Number: No. 05-30155.,05-30155.
• Citation: 445 F.3d 830
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Dennis INGLES, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

445 F.3d 830

UNITED STATES of America, Plaintiff-Appellee, v. Dennis INGLES, Defendant-Appellant.

No. 05-30155.

United States Court of Appeals, Fifth Circuit.

April 11, 2006.

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Cristina Walker (argued) and C. Mignonne Griffing, Asst. U.S. Attys., Shreveport, LA, for U.S.

Joseph Samuel Woodley (argued), Pettiette, Armand, Dunkelman, Woodley, Byrd & Cromwell, Shreveport, LA, for Ingles.

Appeal from the United States District Court for the Western District of Louisiana.

Before HIGGINBOTHAM, DeMOSS and OWEN, Circuit Judges.

OWEN, Circuit Judge:

Dennis Ingles was convicted of mail fraud, wire fraud, and conspiracy to commit mail and wire fraud because of his involvement in an arson scheme to defraud State Farm Insurance Company. Dennis challenges his convictions and sentences on three primary grounds, claiming that: 1) there is insufficient evidence to support his convictions; 2) the district court erred in ordering excessive restitution; and 3) the district court made improper factual determinations at sentencing. We affirm in part, reverse in part, and remand for resentencing.

I

Ronald Ingles, son of appellant Dennis Ingles, held legal title to two camp houses near Lake Bistineau in Louisiana. Willie Hilson, Dennis's friend of eighteen years, set fire to one of the camp houses late one night. After leaving the scene, Hilson called Dennis and told him that "it was over with." The next morning, when Dennis's girlfriend, Michelle Wilhite, asked Dennis why Hilson called the night before, Dennis said, "If Willie did what he said he was gonna do, then the camp was burned down."

The next day, Dennis's son Ronald filed a claim with State Farm under his homeowner's insurance policy for the damaged camp house and its contents. Under the policy, State Farm was obligated to pay the lienholder of the property, Mid-State Homes, regardless of the fire's cause and was required to pay Ronald unless he was involved in the arson. As part of the claims process, State Farm mailed at least three letters to Ronald and one letter to Mid-State Homes. State Farm eventually made two payments as a result of the fire: one to Mid-State Homes for $11,889.65, the amount Ronald owed on the mortgage at the time of the fire, and the other to Michelle Wilhite for $4,802.09 under her homeowner's policy for personal property that was destroyed in the fire.¹ State Farm, however, did not pay Ronald because it concluded that he was involved in the arson.

After discovering that the fire was set intentionally, the government charged Ronald, Dennis, and Hilson with one count of wire fraud² based on the telephone conversation between Dennis and Hilson, four counts of mail fraud³ based on the four letters mentioned above, and conspiracy to commit mail and wire fraud.⁴ Hilson pleaded guilty to the wire fraud charge, but Dennis and Ronald proceeded to trial.

At trial, both Dennis and Hilson testified that Ronald had nothing to do with the arson. Hilson testified that several weeks before the fire, Dennis, alone, asked him to set fire to Ronald's camp for $5,000, and Hilson understood this payment would come from insurance proceeds. However, the evidence also revealed that Dennis was not legally entitled to any of the insurance proceeds. Both Dennis and Bobby Patterson Kerr, a State Farm claims representative, testified that Dennis never filed a claim with State Farm for any damages arising out of the fire and that even if he had, State Farm would not have paid Dennis because he was not the owner of either the property or the insurance policy.

Wilhite testified that Dennis instigated the acquisition of the camp houses and had given Ronald money to purchase them. She testified that Dennis had told her that the property really belonged to him and that he put it in Ronald's name because he (Dennis) was planning to file for bankruptcy. She testified that Dennis made most of the payments and took care of the maintenance. Ronald initially denied that his father helped pay for the camp, but he later admitted that Dennis had made a few payments. Ronald also testified that, although he was unsure exactly how often Dennis went to the camp, he thought it was about once a month, more frequently than Ronald.

The jury acquitted Ronald but convicted Dennis on all counts. United States Probation determined in a presentence report ("PSR") that Dennis's base offense level was 24 pursuant to U.S.S.G. § 2K1.4(a)(1)(B) because the fraud involved arson of a "dwelling." The PSR also recommended: 1) a two-level upward adjustment pursuant to § 3B1.1(c) because Dennis was the organizer of the conspiracy; 2) a two-level upward adjustment pursuant to § 3C1.1 because Dennis obstructed justice by threatening a witness, Michelle Wilhite; and 3) a two-point increase in Dennis's criminal history score pursuant to § 4A1.1(d) because he was on probation at the time he became involved in the conspiracy. Dennis objected to the recommendations in the PSR.

At sentencing, which occurred after the United States Supreme Court decided United States v. Booker,⁵ the district court adopted each of the recommendations in the PSR except for the recommended obstruction of justice and leadership enhancements. Dennis was sentenced to prison terms of 60 months for the conspiracy count and 78 months for the mail and wire fraud counts, to run concurrently. The district court also imposed a three-year term of supervised release and ordered Dennis to pay $16,691.74 in restitution to State Farm. Dennis timely filed a notice of appeal.

II

Dennis first challenges the sufficiency of the evidence to support his four mail fraud convictions under 18 U.S.C. § 1341.⁶ We review a claim of insufficiency of the evidence in the light most favorable to the verdict, affording the government the benefit of all reasonable inferences.⁷ "The verdict must be affirmed if a rational trier of fact could have found the essential elements of the offense beyond a reasonable doubt."⁸ We conclude that there is insufficient evidence to support Dennis's mail fraud convictions.

"The mail fraud statute declares it a federal crime to use the mail in furtherance of a scheme to defraud . . . ."⁹ "Each separate use of the mails to further a scheme to defraud is a separate offense."¹⁰ To sustain a mail fraud conviction, the government must prove "(1) a scheme to defraud (2) which involves a use of the mails (3) for the purpose of executing the scheme."¹¹ However, "[t]he government need not prove that the accused used the mails himself or actually intended that the mail be used."¹² The mail fraud statute requires only that the mailing caused by the defendant's actions be "incident to an essential part of the scheme."¹³ One "causes" the mails to be used "[w]here one does an act with knowledge that the use of the mails will follow in the ordinary course of business, or where such use can reasonably be foreseen . . . ."¹⁴ To show that a mailing is "incident to an essential part of the scheme," the government must demonstrate that "completion of the alleged scheme . . . depend[ed] in some way on the information or documents that passed through the mail."¹⁵

In United States v. McClelland, for example, an insured restaurant-owner devised a scheme to defraud his insurance company by causing an explosion adjacent to his restaurant.¹⁶ After the explosion, the insurance company began processing McClelland's claim, and letters were mailed as part of the claims process — letters that later formed the basis of McClelland's mail fraud convictions. On appeal, we concluded that the mailings were in furtherance of the scheme because "[n]o one who makes a claim on a fire policy could reasonably expect an insurer to make payment without [supporting] documentation [being sent in the mail]."¹⁷ Because we determined that the success of McClelland's scheme depended "in some way" on each letter that was mailed, we affirmed his mail fraud convictions.¹⁸

The facts in this case, however, are distinguishable from McClelland. Here, unlike McClelland, the insured party (Ronald) was not involved in the scheme, and therefore the letters that form the basis of Dennis's mail fraud convictions were not the result of a fraudulent claim.¹⁹ State Farm concedes that it was obligated to pay Mid-State Homes regardless of the cause of the fire. As for Ronald, the evidence demonstrated that he had no knowledge of Dennis's scheme to defraud State Farm, and the jury acquitted him. As a result, Ronald's claim was not fraudulent.

Dennis argues that because the claims submitted by Ronald and Mid-State were not fraudulent, they cannot form the basis for his mail fraud convictions. Dennis's position finds support in our opinion in United States v. Martino,²⁰ a case also involving an arson scheme. In Martino, John Lostracco, a real estate agent, arranged the sale of his in-laws' house to Lostracco's co-conspirators, who were to burn it down for the insurance proceeds after the sale was consummated. The in-laws did not have any knowledge of the scheme. Although a contract to sell was executed, the scheme went awry when the co-conspirators burned the house before title transferred, after which the in-laws innocently filed a claim with their insurance company. Lostracco was convicted of mail fraud based on the mailings between the insurance company and the in-laws. On appeal, we reversed Lostracco's mail fraud convictions because there was "no evidence that the [in-laws] submitted a claim . . . intending to deliver over or share the insurance payment with any member of the [scheme]."²¹ Instead, the evidence revealed that the in-laws' "claim was not fraudulent; their policy was valid and they were not aware of the arson."²² It was not enough that Lostracco and his co-conspirators hoped that the in-laws would share the proceeds and had actually coerced and threatened them into doing so — the in-laws' legitimate, non-fraudulent...