U.S. v. Strozier, 91-3829

• Decision Date: 04 December 1992
• Docket Number: No. 91-3829,91-3829
• Citation: 981 F.2d 281
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Michael A. STROZIER, also known as M. Kirt Strozier, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 281

981 F.2d 281

UNITED STATES of America, Plaintiff-Appellee, v. Michael A. STROZIER, also known as M. Kirt Strozier,

Defendant-Appellant.

No. 91-3829.

United States Court of Appeals, Seventh Circuit.

Argued May 19, 1992.

Decided December 4, 1992.

Mark L. Rotert, Sean B. Martin, Asst. U.S. Attys., Crim. Div., Barry R. Elden, Asst. U.S. Atty., Crim. Receiving, Appellate Div., Eddie A. Stephens (argued), Office of the U.S. Atty., Chicago, IL, for plaintiff-appellee.

Stanley L. Hill, Christopher W. Graul (argued), Hill & Associates, Chicago, IL, for defendant-appellant.

Before CUMMINGS and COFFEY, Circuit Judges, and GIBSON, Senior Circuit Judge. ^*

COFFEY, Circuit Judge.

The defendant Michael Angelo Strozier was indicted on one count of mail fraud in violation of 18 U.S.C. § 1341, two counts of credit card fraud in violation of 18 U.S.C. § 1029(a)(2), and one count of using a false social security number in violation of 42 U.S.C. § 408(a)(7)(B). Pursuant to a plea agreement with the Government, Strozier pled guilty to the mail fraud count, and, in return, the other three counts were dismissed. The district court sentenced Strozier to 24 months imprisonment under the United States Sentencing Guidelines ("U.S.S.G." or "Guidelines"). The defendant appeals his sentence, arguing that it "was imposed as a result of an incorrect application of the sentencing guidelines." 18 U.S.C. § 3742(a)(2). ¹ We affirm.

I.

A. Defendant's Criminal Conduct

In his plea agreement with the Government, Strozier acknowledged that in mid-February, 1990, he used two personal checks to open a cash management account in the Chicago offices of Fidelity USA, an investment house headquartered in Boston, Massachusetts. One check, drawn on the Gainer Bank of Hammond, Indiana, was for $5,000 and the other, drawn on the Royal Bank of Canada in Toronto, Canada, was for $40,000. Strozier knew when he deposited the two checks that neither was supported with sufficient funds. While at the Fidelity offices, Strozier also made an application to open a checking account at Shawmut Bank of Boston. Shawmut is a Fidelity affiliate and allows Fidelity customers to draw funds from their cash management accounts through Shawmut checking accounts. The defendant also ordered printed bank checks for use in connection with his Shawmut checking account.

After opening these two accounts, Strozier traveled to Las Vegas, Nevada, and checked into the Golden Nugget Hotel and Casino. During his three-day stay at the Golden Nugget, the defendant negotiated and cashed three casino checks totaling $12,000 to be drawn against his Fidelity cash management account. Strozier then returned to the Chicago Fidelity offices where he deposited a $160,000 check, again drawn on the Royal Bank of Canada, in his cash management account. The defendant knew this check would bounce as well. On March 1, 1990, Fidelity issued a monthly statement for the defendant's account which reflected a positive balance of $205,000. The statement, which the defendant admits was in furtherance of his scheme to defraud, was sent through the U.S. mails.

Late in February, 1990, Strozier received the printed Shawmut bank checks he ordered when he opened his Fidelity account. From March 2 to March 8, the defendant issued and negotiated twelve of the Shawmut checks, receiving in return $24,000 worth of goods and services. On March 6, 1990, Strozier presented a third Royal Bank of Canada check, this one for $200,000, at Fidelity. He used this check to open a corporate cash management account in the name of "Leverage International." Strozier was also aware that this check was not covered by sufficient funds.

All in all, Strozier admitted that he fraudulently deposited $405,000 in his two Fidelity accounts by means of what he knew to be worthless checks, and wrote $36,000 in checks to be drawn against these accounts before his scam was brought to a halt by his arrest in San Francisco on March 19, 1990. Strozier also acknowledged that this misconduct occurred while he was under a post-conviction release order issued by an Ohio federal court for bank fraud in violation of 18 U.S.C. § 1344. Strozier was scheduled to report to a federal correctional institution on March 27, 1990, in connection with this conviction, for which he had received a term of seven months imprisonment.

Pursuant to U.S.S.G. § 1B1.2(c), ² the defendant also stipulated in the plea agreement he entered into with the Government that he engaged in other fraudulent conduct in which he falsified his name and his social security number in order to obtain credit cards and charge accounts. The defendant acknowledged that through these schemes, which formed the factual basis of the three dismissed counts of the indictment, he defrauded victims of roughly $63,000.

B. Sentencing Calculations

At the sentencing hearing, the district court adopted the sentencing calculations recommended by the probation department in its presentence report. The applicable guideline for the defendant's mail fraud offense is § 2F1.1(a), which provides for a base offense level of six. Nine levels were added to the defendant's base offense level because his offense involved a "loss" between $350,000 and $500,000. § 2F1.1(b)(1)(J). This loss amount was calculated by adding the bogus checks totaling $405,000 which the defendant fraudulently deposited in his Fidelity accounts to the roughly $63,000 in losses he inflicted by way of his other relevant conduct, see U.S.S.G. § 1B1.2(c), which involved falsifying his name and social security number in order to obtain credit cards and charge accounts. Another two levels were added to the defendant's base offense level for "more than minimal planning," § 2F1.1(b)(2)(A), but this increase was cancelled out by a two level reduction for the defendant's acceptance of responsibility for his crime, § 3E1.1(a). Strozier's adjusted offense level was thus 15, and with his criminal history category of II, the applicable Guidelines sentencing range was 21-27 months. The district court imposed a sentence of 24 months imprisonment. ³

II.

The district court's determination of the amount of loss involved in the defendant's offense under § 2F1.1(b)(1) is a finding of fact which we review for clear error only. United States v. Haddon, 927 F.2d 942, 952 (7th Cir.1991). However, the meaning of "loss" in § 2F1.1(b)(1) is "a legal question on which our review is plenary." United States v. Mount, 966 F.2d 262, 265 (7th Cir.1992).

Strozier argues on appeal, as he did at his sentencing hearing, that the district court incorrectly calculated his offense level, and contends that the appropriate adjusted offense level is not 15, but 12, a reduction which would make the applicable Guidelines sentencing range 12-18 months. ⁴ Strozier offers two different rationales in arriving at an offense level calculation of 12. In his first argument he contends that the district court erred in determining the appropriate amount of loss attributable to his fraud under § 2F1.1(b)(1). Strozier maintains that only losses he inflicted in connection with his § 1B1.2(c) relevant conduct ($63,000) and the amount of funds he withdrew from his fraudulent Fidelity accounts ($36,000) can properly be considered in his sentencing. The remaining $359,000 which he fraudulently deposited, but never withdrew, from his Fidelity accounts should not, he insists, be considered part of the loss under § 2F1.1(b)(1). Under the defendant's proposed calculations, the loss would be placed at roughly $99,000, increasing his base offense level by only 6, rather than by 9 as the district court calculated. § 2F1.1(b)(1)(G).

The district court, in rejecting the defendant's "loss" argument, relied on the Guidelines commentary to § 2F1.1 which provides that "if an intended loss that the defendant was attempting to inflict can be determined, this figure will be used if it is greater than the actual loss." U.S.S.G. § 2F1.1, comment. (n.7). ⁵ Our case law supports the district court's determination. In United States v. Schneider, 930 F.2d 555, 556 (7th Cir.1991), we made clear that when determining a Guidelines sentence "[i]n the case of fraud, the loss need not be actual; it is enough if it is probable or intended." ⁶ We explained that " 'loss' within the meaning of the Guidelines includes intended, probable, or otherwise expected loss, a qualification of vital importance in a case such as this where the fraud is discovered or otherwise interrupted before the victim has been fleeced." Id. at 558. In this connection, we noted that it is "fraud to impose an enormous risk on one's [victim] through deliberate misrepresentation even when the risk does not materialize." Id.

Strozier's activities in connection with his Fidelity accounts leave no doubt that the "intended, probable, or otherwise expected loss" he created was for the full $405,000 he fraudulently deposited. Strozier opened an account with rubber checks purportedly worth $45,000, flew to Las Vegas where he withdrew $12,000 of those funds, and then returned to Chicago to make another fraudulent deposit, this one for $160,000. The defendant next spent $24,000 from the account using the printed checks he had ordered for that purpose, and opened a second account, this time with a fraudulent $200,000 check. It is true that Strozier had only spent $36,000 of the Fidelity account funds by the time he was arrested on March 19, 1990, but that was barely one month after he had set his scam into motion. The district court could reasonably infer that the defendant intended to withdraw more than $36,000 from his accounts, and would have had he not been apprehended. Only his arrest prevented Strozier from spending the rest of the fraudulently deposited funds. If that was not his plan, why deposit such large amounts? Why order printed checks to draw against the account? Why increase the fraudulent deposit amounts with every visit to the Fidelity...