United States v. Freeman
| Citation | 741 F.3d 426 |
| Decision Date | 17 January 2014 |
| Docket Number | No. 12–4636.,12–4636. |
| Parties | UNITED STATES of America, Plaintiff–Appellee, v. Robert J. FREEMAN, a/k/a Dr. Shine, Defendant–Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (4th Circuit) |
OPINION TEXT STARTS HERE
ARGUED:Nancy Susanne Forster, Kadish, Forster & Fastovsky, Baltimore, Maryland, for Appellant. Thomas Patrick Windom, Office of the United States Attorney, Greenbelt, MD, for Appellee. ON BRIEF:Rod J. Rosenstein, United States Attorney, Office of the United States Attorney, Baltimore, MD, for Appellee.
Before DUNCAN, WYNN, and THACKER, Circuit Judges.
Reversed and remanded by published opinion. Judge THACKER wrote the opinion, in which Judge DUNCAN and Judge WYNN joined.
Robert J. Freeman, a/k/a “Dr. Shine” (“Appellant”), appeals the order of the district court directing him to pay $631,050.52 in restitution to four individuals (the “purported victims”) as part of his sentence for obstructing federal bankruptcy proceedings. On appeal, Appellant argues the district court erred because the purported victims to whom he was ordered to pay restitution are not victims of the offense to which he pled guilty. Rather, he contends, the purported victims suffered losses when Appellant caused them to take out significant loans for the benefit of his church—conduct with which he was not charged or convicted. The Government contends that the purported victims are entitled to restitution because Appellant's untruthfulness during his bankruptcy proceedings rendered them otherwise unable to be repaid for their loans and/or recoup their ensuing losses.
We hold that, because the specific conduct that is the basis for Appellant's conviction did not cause the purported victims' losses, they are not entitled to restitution. Therefore, we reverse the judgment of the district court to the extent it orders restitution. Given that the district court ordered restitution in lieu of a fine, we remand this matter so that it may consider whether or not to impose a fine.
On November 10, 2010, Appellant was charged by a superseding indictment with two counts of obstruction of an official proceeding, two counts of making false statements in a bankruptcy proceeding, and one count of providing false records in a bankruptcy proceeding. On July 18, 2011, Appellant pled guilty to one count of obstructing an official proceeding, pursuant to 18 U.S.C. § 1512(c)(2). The plea agreement generally stated, “This Court may ... order [Appellant] to make restitution pursuant to 18 U.S.C. §§ 3663, 3663A, and 3664,” but it did not evince an agreement between Appellant and the Government with regard to restitution. J.A. 24.1
The statement of facts addendum to the plea agreement (the “Statement of Facts”) provided the following: Appellant purported to be a minister, and between 1991 and 2003 he incorporated Save the Seed Ministry, Inc., Save the Seed International Church, and Seed Faith International Church. He served as pastor and leader of all three. Shortly after forming these entities, Appellant began using church funds to “accumulate substantial assets, including a $1.75 million residence and luxury automobiles, in the names of members of the church.” J.A. 30. For example, Appellant caused one church member to buy a Bentley Arnage and lease a Maybach luxury automobile, valuing more than $340,000 combined, and another to buy a $1.75 million home, in which Appellant and other church members lived. The Government contends that for each of these purchases, the church members understood that although their names were on the loan documents, Appellant and/or the church would take care of the appropriate payments.
By October 2005, Appellant and his spouse owed debts in their names totaling more than $1.3 million, “including $846,000 in back rent; more than $87,000 in lease payments on a jet airplane; more than $160,000 for payments on musical instruments; and $220,000 in loan payments on a bus.” J.A. 31.
Appellant and his spouse filed for Chapter 13 bankruptcy on October 14, 2005. In addition to the information recounted above, the Statement of Facts also set forth the following ways in which Appellant obstructed the bankruptcy proceedings:
• He reported no real property in which he had any “legal, equitable or future interest.”
• He reported no “personal property of whatever kind, including property being held for the debtor by someone else.”
• He reported no “property owned by another that the debtor held or controlled.”
• He reported that his “occupation” was “consultant of a maintenance company.”
• He reported receiving no gross income from employment, trade, or profession, or from operation of a business in 2003 and 2004, and only receiving $4,000 for 2005. He reported receiving no other income during the two years immediately preceding the filing of bankruptcy.
J.A. 31–32 (emphases supplied).
On December 2, 2005, Appellant attended a creditors' meeting. At that meeting, he testified that he and his spouse rented a house at a certain address, which was not true. He further testified, “we lost our ministry, went out of business,” but “[i]n fact, Freeman had not lost his ministry, which had not gone out of business.” J.A. 32. Appellant also presented to the trustee seven documents purporting to be earning statements from a business called Automatic Data Processing, Inc., but “in fact, the statements were wholly fictitious.” Id.
On December 12, 2005, Appellant's Chapter 13 petition was converted to a Chapter 7 petition, and the bankruptcy court granted the Chapter 7 petition on March 8, 2006, resulting in the discharge of “hundreds of thousands of dollars in debt[ ].” J.A. 32. Appellant was neither charged with nor convicted of any conspiracy or scheme to defraud the purported victims.
The Presentence Report (“PSR”), which was filed August 29, 2011, did not recommend restitution. To the contrary, it stated, “The government has advised there is no restitution or forfeiture in this case.” J.A. 235. The PSR also stated, Id. at 228. The Government filed no objections to the PSR.
Nonetheless, on June 21, 2012, the Government submitted to the district court a number of victim impact statements, including statements from the purported victims. About a month later, on July 16, 2012, the Government filed its sentencing memorandum, requesting for the first time on the record that the court order Appellant to pay restitution as part of his sentence, theorizing:
The church members who acted as nominees to purchase luxury automobiles and a mansion for the defendant ... suffered significant losses as a result of the defendant causing them to purchase expensive assets under the mistaken belief that the defendant, through the church, would pay for the assets. As a result of the defendant's failure to pay for the assets purchased by the nominee victims, several of the nominee victims suffered harm to their credit scores, lost properties they had owned, and/or had to file bankruptcy.
J.A. 85. On the day of sentencing, July 30, 2012, the Government filed a more specific request for restitution, for 6 the first time mentioning the victims' names in a public court filing.2 The request stated,
The government requests that the defendant be ordered to pay the following amounts:
Brenton and Wendy Cloud [ (collectively, the “Clouds”) ]: $301,050.52. Mr. and Mrs. Cloud owned their residence prior to serving as nominees for the defendant. As a result of serving as nominees for the defendant, however, Mr. and Mrs. Cloud incurred significant debts. Ultimately, the Clouds had to sell their residence at a short sale to pay the debts they had incurred on behalf of the defendant. $301,050.52 represents the equity that the Clouds lost as a result of having to sell their residence in order to repay the debts they incurred as nominees for the defendant.
Cecil Dixon: $230,000. Mr. Dixon was employed as an investigator with WMATA [Washington Metropolitan Area Transit Authority] prior to serving as a nominee for the defendant. As an investigator, Mr. Dixon earned $76,000 per year. After serving as a nominee for the defendant, Mr. Dixon incurred significant debts that ultimately forced him to resign from his job. Although Mr. Dixon is currently employed, he now earns only $30,000 per year. $230,000 represents five years' worth of the wages Mr. Dixon lost as a result of being victimized by the defendant.
Scott Washel: $100,000. Mr. Washel owned his residence prior to serving as a nominee for the defendant. As a result of serving as a nominee for the defendant, however, Mr. Washel incurred significant debts. Ultimately, Mr. Washel had to sell his residence to pay the debts he had incurred on behalf of the defendant. $100,000 represents the equity that Mr. Washel lost as a result of having to sell his residence in order to repay the debts he incurred as a nominee for the defendant.3
Id. at 106–07. The Government did not cite a statutory basis for its restitution request.
At sentencing on July 30, 2012, the district court calculated Appellant's offense level at 16 and criminal history category at I. His Sentencing Guideline range was, thus, 21–27 months. The court sentenced Appellant to 27 months. Notably, the court also ordered three years of supervised release and imposed total restitution of $631,050.52 to the purported victims, in the exact amounts requested by the Government. The court stated, “I'll impose the mandatory and standard conditions of supervision, with the additional provision[ ] ... that [Appellant] make payments ... to the clerk of this court for distribution to the victims in the monthly amount of at least $750 a month.” J.A. 211. The district court did not, however, cite a statutory basis for the restitution award. The court also noted that no fine would be imposed because...
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