U.S. v. Brisson

• Decision Date: 02 June 2006
• Docket Number: No. 05-1540.,05-1540.
• Citation: 448 F.3d 989
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Michael J. BRISSON, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

448 F.3d 989

UNITED STATES of America, Plaintiff-Appellee, v. Michael J. BRISSON, Defendant-Appellant.

No. 05-1540.

United States Court of Appeals, Seventh Circuit.

Argued April 4, 2006.

Decided June 2, 2006.

Scott A. Verseman, Office of the United States Attorney, Rockford, IL, for Plaintiff-Appellee.

Mark A. Byrd, Rockford, IL, for Defendant-Appellant.

Before POSNER, WOOD, and EVANS, Circuit Judges.

EVANS, Circuit Judge.

In late 2000, Michael Brisson decided to buy a hotel in Bloomington, Illinois. When it came time to make the down payment, Brisson didn't have the $100,000 that was due. So he embarked on a series of check-kiting transactions, causing a loss to one of his banks of $99,938.73.

But this was only the start of the brief but ambitious foray into financial crime which Brisson has admitted. In February 2001, he applied for a $3.5 million loan from another institution, Busey Bank, to pay for and renovate the hotel. Brisson misrepresented his assets, net worth, and personal stake in the venture and provided misleading profit and loss statements from the hotel. Although he had agreed to provide the bank with a security interest in all the hotel's room receipts, Brisson diverted more than $500,000 of these monies to a different account and used more than $380,000 to pay his personal expenses. This, in turn, caused large shortages in the hotel's operating revenue, which Brisson covered by retaining his employees' federal income and FICA taxes — a total of $239,472 — rather than paying them over to the IRS. He also submitted false construction loan draw requests to Busey Bank's escrow agent.

Brisson's career as a hotelier came to an end in June 2002, when the bank figured out what was happening with the hotel's room receipts, foreclosed on its loan, and removed Brisson from the executive offices. The bank's loss from Brisson's fraud totaled at least $492,843.

But Brisson still was not done. Having lost his source of income and by his own admission desperate for money, he filed fraudulent tax returns for 2001 and 2002, claiming total refunds of $163,686. The claims were based on taxes withheld from Brisson's hotel salary — taxes which Brisson had, of course, never actually sent to the IRS.

Brisson ultimately pled guilty to one count each of bank fraud, submitting a false claim for an income tax refund, and failing to pay over employment taxes to the IRS. He was sentenced to a term of 30 months. In this appeal, he challenges the manner in which the district court (Hon. Philip G. Reinhard) grouped the three counts to calculate the offense level under the United States Sentencing Guidelines. He also argues that his sentence was unreasonable.

We deal first with the grouping issue, reviewing the district court's legal interpretation of the guidelines de novo. United States v. Jackson, 410 F.3d 939, 941 (7th Cir.2005). In the plea agreement, Brisson and the government proposed that counts 1 and 2 be grouped together, since they both involved financial fraud. See U.S.S.G. § 2B1.1. Brisson also argued, over the government's objection — and reiterates the argument on appeal — that count 3 should have been grouped with the first two, since all three counts involved "economic offenses," and all three arose from "the same economic hardship which found its genesis during Defendant's running of the hotel . . . ."

The district court took a different approach. The government had charged count 2 under 18 U.S.C. § 287, a general statute covering fraudulent claims against the United States. Judge Reinhard determined, however, that since the conduct involved filing a false claim for a tax refund, Brisson's sentence should be governed by the tax guideline, see U.S.S.G. § 2T1.1, and should be calculated using the tax loss table provided by guideline § 2T4.1. Therefore, Judge Reinhard grouped the count 2 tax fraud offense together with the count 3 offense of failing to pay over employment taxes to the IRS. He further determined that the two tax offenses should not be grouped with count 1, since the count 1 conduct involved fraud loss to a separate party, namely Busey Bank, and was covered by § 2B1.1. In the end, this gave Brisson a 2-level grouping adjustment and a combined offense level of 22.

The record reflects that Judge Reinhard devoted considerable thought and research to the grouping issue, and we find his conclusions to be sound. While Appendix A of the guidelines indicates that guideline § 2B1.1 applies to violations of 18 U.S.C. § 287, a cross-reference instructs that if the count of conviction establishes an offense specifically covered by another guideline, that other guideline should be applied. U.S.S.G. § 2B1.1(c)(3). Judge Reinhard determined that Brisson's attempt to claim tax refunds to which he was not entitled caused a different type of loss than the fraud against his bank. Two other circuits have endorsed applying the tax guidelines rather than the fraud guidelines to false claims for tax refunds, see United States v. Barnes, 324 F.3d 135, 139-40 (3rd Cir.2003); United States v. Aragbaye, 234 F.3d 1101, 1105-06 (9th Cir. 2000), and we see no reason to disagree with them. Brisson's "offense conduct was at heart a scheme to file fraudulent tax returns and thus could be considered on par with tax fraud." Aragbaye, 234 F.3d at 1105 (citation and internal quotation marks omitted).

Furthermore, Judge Reinhard did not err in refusing to group the two tax offenses together with the bank fraud offense and thereby give Brisson a lower offense level. Grouping is appropriate when different counts involve substantially the same harm. U.S.S.G. § 3D1.2. Brisson notes that subsection 3D1.2(d) allows for grouping of offenses covered by guidelines §§ 2B1.1 and 2T1.1. We have joined most other courts in holding, however, that "there...