U.S. v. Bright

• Citation: 353 F.3d 1114
• Decision Date: 05 January 2004
• Docket Number: No. 02-50492.,02-50492.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Dennis BRIGHT, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

353 F.3d 1114

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

No. 02-50492.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted September 9, 2003 — Pasadena, California.

Filed January 5, 2004.

COPYRIGHT MATERIAL OMITTED

H. Dean Steward, Capistrano Beach, CA, for the defendant-appellant.

Edward R. McGah, Jr., Executive Assistant United States Attorney, Los Angeles, CA, for the plaintiff-appellee.

Appeal from the United States District Court for the Central District of California, Alicemarie H. Stotler, District Judge, Presiding. D.C. No. CR-01-00043-AHS-1.

Before: RAYMOND C. FISHER and JAY S. BYBEE, Circuit Judges, and JAMES C. MAHAN, District Judge.^*

Opinion by Judge Fisher.

OPINION

FISHER, Circuit Judge:

Appellant Dennis Bright pled guilty to five counts of mail fraud arising of a scheme in which Bright falsely offered nurses the opportunity to work at home processing medical surveys. Bright now appeals his sentence, claiming that the district court improperly calculated the amount of his victims' total losses, resulting in a 10-level rather than a 9-level adjustment of his base offense. Bright also challenges the district court's restitution order, arguing that the court improperly ordered restitution for dismissed counts and that the court should have made forfeited funds available for restitution.

We conclude that the district did not err in calculating the total loss or in ordering restitution for dismissed counts. We also hold that the district court was not required to attempt to transfer forfeited funds to Bright's victims. Therefore, we affirm the district court.

I.

Beginning in July 1997, Bright, a registered nurse, owned and operated five businesses that purported to offer nurses the opportunity to earn extra income by processing medical surveys out of their homes. Bright sent letters to nurses throughout the United States, representing that (1) one of his five companies would pay the nurses between $20 and $45 for each survey processed; (2) the surveys would come directly from the company; (3) participating nurses would have to sell nothing; and (4) the companies were conducting a medically supervised clinical trial. Codefendant Stephen Chandler assisted Bright in operating the companies and in carrying out the mail order scheme. Nurses who chose to participate in Bright's work-at-home programs paid a registration fee of approximately $65. Upon receipt of the fee, Bright would send letters to the nurses advising them that they would have to post signs soliciting customers for a weight-loss product that Bright was selling. The nurses would be paid only if customers purchased the weight-loss products from Bright. The medical surveys to be processed by the nurses would come from people who purchased the weight loss products — not directly from Bright's companies, as stated in the initial solicitation letter. Moreover, none of the five companies was conducting a medically supervised clinical trial. In response to the solicitations, Bright's companies received a total of $641,999 in registration fees.

In October 1998, federal agents investigating Bright's mail order businesses searched Bright's home and seized $72,402 in cash. Agents also seized $13,792.60 from the bank account of one of Bright's companies. The United States Postal Inspection Service subsequently forfeited the $86,194.60 in seized funds.

In March 2001, Bright was indicted on 14 counts of mail fraud and nine counts of money laundering. A superseding indictment narrowed the charges to the 14 counts of mail fraud. Bright pled guilty without a plea agreement to five counts of the indictment, under 18 U.S.C. § 1341.

Bright's presentence report recommended a base offense level of 6. The presentence report valued the total amount of loss at $641,999. Accordingly, the report recommended a 10-level enhancement under United States Sentencing Guidelines § 2F1.1(b)(1)(K) (2000), for an offense involving victim loss of more than $500,000. Other adjustments not at issue here brought Bright's total offense level to 20.

At sentencing, the district court deducted $4,333 that Bright had paid to victims for completed surveys from the total amount of loss. Bright asked the court to make further deductions for (1) refunds paid to the victims, (2) victim payments allegedly diverted by Chandler for his own personal use and (3) the $86,194 seized by the Postal Inspection Service. The court refused. Because the deduction for the completed surveys was not enough to bring the victim loss below $500,000, the district court imposed the 10-level adjustment under § 2F1.1(b)(1)(K), resulting in a total offense level of 20. The court then granted Bright's request for a downward departure, reduced his offense level to 18 and imposed a low-end sentence of 27 months.

The district court ordered Bright to pay a fine of $6,000, a $500 special assessment and $15,188 in restitution. Before doing so, the court asked the prosecutor about the availability of the forfeited funds, but was informed that they were not available for restitution.

II.

Bright contends that the district court erred by failing to make three deductions from its calculation of a total victim loss of $637,666: (1) approximately $30,000 in customer refunds, (2) approximately $25,000 of program funds that codefendant Chandler allegedly stole without Bright's knowledge and (3) the $86,194 in seized funds. If these funds were deducted, the total loss would be approximately $496,000, which would result in only a 9-level enhancement for amount of loss, rather than the 10-level enhancement the district court applied. U.S.S.G. § 2F1.1(b)(1)(J). The total amount of loss will not fall below $500,000 — and thus Bright's offense level will not change — unless we conclude that the district court erred in refusing to make each one of the three proposed deductions.

We review for clear error the district court's factual findings with respect to monetary loss to victims. See United States v. Lawrence, 189 F.3d 838, 844 (9th Cir.1999). Findings of fact must be supported by a preponderance of the evidence. Id. We review de novo the district court's interpretation of the Sentencing Guidelines. See United States v. Bonilla-Montenegro, 331 F.3d 1047, 1049 (9th Cir.2003).

A.

A fraud defendant is entitled to credit for refunds paid prior to the discovery of the offense. United States v. Stoddard, 150 F.3d 1140, 1146 (9th Cir.1998) (applying the "economic reality approach" of United States v. Allison, 86 F.3d 940, 943-44 (9th Cir.1996)). Stoddard concerned the defendant's misappropriation of escrow funds at a bank. There, we held that the offense was discovered when the bank's chief financial officer notified Stoddard of discrepancies in his escrow accounts, resulting from Stoddard's illicit activity. Accordingly, we refused to credit against the actual loss calculation the escrow repayments Stoddard made after that discovery. Id. at 1146. "Repayments before detection show an untainted intent to reduce any loss," whereas "[r]epayments after detection may show no more than an effort to reduce accountability." Id.; see also United States v. Blitz, 151 F.3d 1002, 1012 (9th Cir.1998) (refusing to deduct refunded amounts from calculation of loss because refunds were paid to avoid detection and to "mak[e] the operation look legitimate").

Here, Bright paid refunds to certain nurses who discovered his fraud and wrote to him demanding their money back. Bright claims that he is entitled to credit for such refunds because he paid them before his crimes were detected by law enforcement. Bright also claims that there is insufficient evidence in the record that he paid refunds to escape detection. But Stoddard held that a defendant is not entitled to credit for refunds paid after detection by a victim, regardless of any evidence that the refunds were in fact paid to avoid detection by law enforcement. Therefore, even if Bright were correct that there is insufficient evidence regarding his motive for paying the refunds, the district court did not err in refusing to deduct the refunded amounts from its calculation of total loss.

B.

The district court also did not err in refusing to deduct from the total loss amount the $25,000 that Chandler allegedly stole. Bright was not aware of these funds or of the specific nurses who supplied them. However, the sentencing guidelines provide that a defendant shall be held responsible for "all reasonably foreseeable acts and omissions of others in furtherance of [] jointly undertaken criminal activity." U.S.S.G. § 1B1.3(a)(1)(B) (2000).

Chandler, who pled guilty to three counts of mail fraud arising out of his role in the scheme, plainly was involved in a jointly undertaken criminal activity with Bright. According to the presentence report, Chandler helped Bright operate several of the companies. At Bright's direction, Chandler filed fictitious business name statements, opened bank accounts and made deposits, retrieved mail from commercial mail drops, assisted with the mailing of solicitation letters and supervised the activities of other participants in the scheme. Moreover, the money Chandler allegedly misappropriated came from nurse-victims of this jointly undertaken scheme.

It is reasonably foreseeable that a participant in a jointly undertaken criminal venture may obtain funds from the targets of that venture. Here, Chandler allegedly siphoned off $25,000 through his and Bright's fraudulent scheme. That Chandler may not have shared this money with Bright or told Bright which victims supplied it does not mean that Chandler was involved in a separate venture. See Blitz, 151 F.3d at 1012-13 (holding telemarketer defendants responsible under § 1B1.3 for losses caused to other victims by other telemarketers in defendants' fraudulent company). The district court, therefore, properly refused to deduct the amounts that Chandler...