U.S. v. Copple, 95-3119

• Decision Date: 01 February 1996
• Docket Number: No. 95-3119,95-3119
• Citation: 74 F.3d 479
• Parties: UNITED STATES of America v. John R. COPPLE, an individual; Mechem Financial Incorporated, a corporation, John R. Copple, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 479

74 F.3d 479

UNITED STATES of America v. John R. COPPLE, an individual; Mechem Financial

Incorporated, a corporation,

John R. Copple, Appellant.

No. 95-3119.

United States Court of Appeals, Third Circuit.

Argued Sept. 11, 1995.

Decided Feb. 1, 1996.

Leonard G. Ambrose, III (argued), Ambrose, Friedman & Weichler, Erie, PA, for Appellant.

Bonnie R. Schlueter (argued), Office of United States Attorney, Pittsburgh, PA, for Appellee.

Before: SLOVITER, Chief Judge, and ALITO, Circuit Judge, and RENDELL, District Judge. ^*

OPINION OF THE COURT

SLOVITER, Chief Judge.

This case is before us on the appeal of defendant John R. Copple from that portion of the district court's judgment of sentence ordering restitution in the amount of $4,257,940.45. In an earlier appeal in the same case, we vacated the judgment of sentence and remanded for resentencing. We directed the district court, inter alia, to make findings about Copple's ability to pay restitution. Following a hearing, the court reimposed the same amount of restitution. We conclude that Copple's argument that the restitution order is unreasonable and clearly excessive in light of the record developed at the resentencing hearing is well-taken.

I.

The facts are fully set forth in our prior opinion, United States v. Copple, 24 F.3d 535 (3d Cir.) (Copple I ), cert. denied, --- U.S. ----, 115 S.Ct. 488, 130 L.Ed.2d 400 (1994), and we therefore repeat only so far as is necessary in the context of this appeal. Copple, who was convicted on multiple counts of mail fraud and income tax evasion, had defrauded funeral directors of funds which he had promised to channel into low-risk/high-return investments. Copple and his investment firm obtained $12 million from the pre-paid funeral plans of a large number of funeral directors, but instead of investing the money as promised Copple used it to increase his personal assets and live extravagantly. Copple's firm filed for bankruptcy.

The bankruptcy trustee, who discovered Copple's misappropriation, was able to recoup only a limited amount of these assets, primarily several accounts and deposits totalling $389,356.51 and coins from Copple's rare coin collection that were later auctioned off for $209,045. The loss to the victims of Copple's swindle was $4,257,940.45. See Copple I, 24 F.3d at 538-40.

A jury convicted Copple on 34 counts of mail fraud and 3 counts of income tax evasion. Copple was sentenced to 71 months imprisonment, a $100,000 fine, a special assessment of $1850 and three years supervised release. The district court accepted the findings in the presentence report concerning money due victims, and ordered Copple to pay restitution of $4,257,940.45.

Copple appealed, challenging both his conviction and sentence. This court affirmed the conviction, but vacated the sentence because the district court impermissibly based an upward departure on the large number of victims and the amount of monetary loss involved.

More relevant for our purposes here is our discussion of the restitution portion of the district court's judgment. We emphasized our cases instructing that restitution orders be grounded on specific factual findings regarding the defendant's economic circumstances and other relevant financial information. We noted that the district court had failed to make any such findings to support its restitution order of $4,257,940.45, and "therefore remand[ed] for the district court to make the factual findings necessary to support such order of restitution as it may make." Id. at 549-50.

On remand, the district court conducted a resentencing hearing. Mary Copple, Copple's wife and the caretaker for their two minor children--Jennifer, 18 years old and John, 16 years old--testified that she could not work or even complete basic daily tasks because of chronic mental illness, that she required and had been receiving psychiatric treatment for three years, and that her husband and her daughter also suffered from mental illness and were under physicians' care. App. at 53-66. She stated that her only steady income was $403 in monthly welfare payments and $292 in monthly food stamps, and that the occasional commission checks she had received from her husband's insurance policy renewals totalled $300. She testified that her home was subject to foreclosure after her failure to pay mortgage payments for 15 months, that any remaining equity was subject to levy by the bankruptcy trustee, that the home's electricity and gas utilities had been discontinued for her inability to pay bills, and that her only other assets were $400 in a bank account, some furniture, and a 1987 Cadillac. Id. at 58-70.

Jennifer Copple, Copple's eighteen-year old daughter, testified that she suffered from manic depression, was on medication and had been undergoing regular therapy, and as a result could attend school only part-time. Id. at 73-75. The government presented no evidence at the hearing. The court resentenced Copple to a shorter term of 63 months imprisonment, vacated the $100,000 fine it had imposed earlier, and reimposed the $1,850 special assessment and three-year period of supervised release.

In addition, the court again ordered that Copple pay restitution of $4,257,940.45. After establishing that "[t]he identification of the various victims and the amounts of individual losses are consistent with the testimony of the various funeral directors at trial and were not challenged by the Defendant," App. at 103, the district court renewed its order of full restitution on the following basis:

With respect to the Defendant's ability to pay, obviously, according to the testimony of his wife, the family is in dire financial straits at this time. But Mr. Copple is a college graduate. He certainly has been successful, albeit in an unlawful way in many instances, but he's certainly been a successful businessman as far as gaining the ends which he hoped to gain in the business world. So I think certainly the potential is there for him to succeed with respect to his finances in the future.

App. at 104.

Copple challenges only the restitution order on this appeal. The district court had jurisdiction under 18 U.S.C. Sec. 3231, and we have jurisdiction pursuant to 28 U.S.C. Sec. 1291. We conduct plenary review to determine whether a restitution order is permitted under law, but review the specific order only for abuse of discretion. United States v. Graham, 72 F.3d 352, 355 (3d Cir.1995).

II.

The requirements according to which a district court may permissibly fashion and validly impose a restitution order are contained in the two provisions of the Victim and Witness Protection Act of 1982 (VWPA), since recodified at 18 U.S.C. Secs. 3663 and 3664 and incorporated into United States Sentencing Guideline Sec. 5E1.1 and its accompanying commentary. 18 U.S.C. Sec. 3663 authorizes a sentencing court to order that a defendant make restitution to any victims of the offense of conviction. 18 U.S.C. Sec. 3663(a)(1) (1994). Before the court does so, it must consider the following specific factors: "the amount of the loss sustained by any victim as a result of the offense, the financial resources of the defendant, the financial needs and earning ability of the defendant and the defendant's dependents, and such other factors as the court deems appropriate." 18 U.S.C. Sec. 3664(a) (1994).

In order to facilitate meaningful appellate review, this court has exercised its supervisory power to require the district courts "to make specific findings as to the factual issues that are relevant to the application of the restitution provisions of the VWPA." United States v. Palma, 760 F.2d 475, 480 (3d Cir.1985). In Copple I, we referred to our earlier opinion in United States v. Logar, 975 F.2d 958, 961 (3d Cir.1992), where we identified the following factual matters to be considered by the sentencing court before ordering restitution:

1) the amount of loss, 2) the defendant's ability to pay and the financial need of the defendant and the defendant's dependents, and 3) the relationship between the restitution imposed and the loss caused by the defendant's conduct.

See Copple I, 24 F.3d at 549. We also stated that the court

must point to the evidence ... supporting the calculation of loss to the victims.

Id. at 549-50. Copple argues that the district court failed to follow those explicit directions on remand.

Before it reinstated its restitution order, the district court noted that the government's "identification of the various victims and the amounts of individual losses" were undisputed and had been corroborated by testimony at trial. App. at 103. Thus, the court satisfied our instruction to make an explicit finding regarding the amount of the victims' loss, and Copple does not argue otherwise.

Instead, this appeal centers on the court's conclusion that Copple would be able to pay the amount of restitution it set. The court based that conclusion on the "findings" that "Copple is a college graduate" and that "[h]e certainly has been successful, albeit in an unlawful way in many instances, ... in the business world." App. at 104. It made no findings concerning Copple's financial resources. Nor did it make findings about Copple's financial needs, and observed only that "the family is in dire financial straits at this time," an assertion hardly supportive of the exceptionally large restitution amount it ultimately ordered.

The government makes essentially two arguments in its effort to sustain the district court's restitution order. First it argues that the order can be upheld on the bases given by the district court, and that the district court properly considered Copple's college education, skills and intelligence in determining his future ability to pay. We agree that if there is a reasonable basis for a projection of the defendant's future earning ability, a restitution order can be grounded on these factors. In this case, however, notwithstanding our...