U.S. v. Cseplo

• Decision Date: 13 December 1994
• Docket Number: No. 94-3571,94-3571
• Citation: 42 F.3d 360
• Parties: -7389 UNITED STATES of America, Plaintiff-Appellee, v. Robert E. CSEPLO, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 360

42 F.3d 360

74 A.F.T.R.2d 94-7389

UNITED STATES of America, Plaintiff-Appellee, v. Robert E. CSEPLO, Defendant-Appellant.

No. 94-3571.

United States Court of Appeals, Sixth Circuit.

Argued Oct. 3, 1994.

Decided Dec. 13, 1994.

John M. Siegel, Asst. U.S. Atty. (argued and briefed), Office of U.S. Atty., Cleveland, OH, for plaintiff-appellee.

Phillip J. Campanella (argued and briefed), Calfee, Halter & Griswold, Cleveland, OH, for defendant-appellant.

Before: KENNEDY, MARTIN, and NELSON, Circuit Judges.

DAVID A. NELSON, Circuit Judge.

Convicted both of willfully underreporting income on his wholly-owned corporation's federal income tax return (a violation of 26 U.S.C. Sec. 7206(1)) and of willfully attempting to evade individual income taxes by preparing and signing a return that failed to report the receipt of sums skimmed from the corporation (a violation of 26 U.S.C. Sec. 7201), the defendant was sentenced to imprisonment for a term of four months. He now appeals his sentence, contending, among other things, that in calculating the "tax loss" under the sentencing guidelines the district court ought to have reduced the unreported individual income by the amount of additional tax that the corporation would presumably have paid if its return had been accurate. We find no error in the district court's methodology, and we shall therefore affirm the sentence.

I.

The defendant, Robert E. Cseplo, is the president and sole shareholder of Kimco Products, Inc., a manufacturer of stainless steel items. During 1987, and for several years thereafter, Kimco sold scrap metal to a purchaser that paid for the scrap with checks made out to cash. Mr. Cseplo converted most of these checks to his own use, skimming off more than a quarter of a million dollars of corporate revenues.

The corporate income reported on tax returns signed by Mr. Cseplo for the fiscal years ending August 31, 1988, through August 31, 1990, was understated by a total of $262,366. Mr. Cseplo converted $250,491 of this money to his personal benefit. On the individual income tax returns he filed for calendar years 1988 and 1989, Mr. Cseplo failed to report the receipt of diverted funds totaling $195,871.

In an information filed against him in February of 1994 by the United States Attorney for the Northern District of Ohio, Mr. Cseplo was charged with three counts of making and subscribing false corporate tax returns and two counts of attempting to evade individual income taxes. Pursuant to a plea bargain, he pleaded guilty to counts 3 and 4 of the information. Count 3 dealt with the corporate return for fiscal year 1989, where Mr. Cseplo understated Kimco's income by $113,335. Count 4 dealt with the individual return for calendar year 1989, where Mr. Cseplo understated his individual income by $114,779. Both returns were filed in 1990, one in May and the other in October.

In calculating the guideline sentencing range, the district court (Dowd, J.) used the edition of the guidelines manual that became effective on November 1, 1989. (This edition, which was in effect at the time Mr. Cseplo committed the crimes charged in counts 3 and 4 of the information, prescribed a lower sentencing range than did the version that was in effect during May of 1994, when the sentence was imposed.)

For purposes of determining the "base offense level" under 1989 U.S.S.G. Secs. 2 T1.1 and 2T4.1, the district court put the tax loss at $144,048. This sum was arrived at by applying a corporate tax rate of 34 percent to the unreported corporate income of $262,366 and applying an individual tax rate of 28 percent to the unreported individual income of $195,857. ¹ The figures so produced--$89,204 for the corporate taxpayer and $54,844 for the individual taxpayer--were added together, making a total of $144,048. The central issue on appeal is whether it was proper to aggregate the corporate tax loss and the individual tax loss in this manner.

The tax table set forth at 1989 U.S.S.G. Sec. 2 T4.1 prescribes an offense level of 13 where the tax loss is more than $120,000 and not more than $200,000. ² The district court therefore started with an offense level of 13 and allowed a two-level reduction for acceptance of responsibility. This produced a final offense level of 11.

Mr. Cseplo's record placed him in Criminal History Category I. Under the matrix set forth in the sentencing table of the guidelines, the indicated sentence of imprisonment for a person who is in Criminal History Category I and who has an offense level of 11 is 8-14 months. A "split sentence" is allowed in this range, however, with at least half of the minimum term taking the form of imprisonment and an additional segment taking the form of supervised release with a condition substituting community confinement or home detention. See 1989 U.S.S.G. Sec. 5 C1.1(d)(2). The district court utilized the split sentence option, sentencing Mr. Cseplo to imprisonment for a term of four months and supervised release for a term of two years, of which 120 days is to be served in home confinement. ³ Mr. Cseplo was also ordered to pay restitution and a $20,000 fine. He has not yet begun to serve his sentence, the district court having granted a motion to stay the sentence pending appeal.

II.

A

Citing Miller v. Florida, 482 U.S. 423, 430-31, 107 S.Ct. 2446, 2451-52, 96 L.Ed.2d 351 (1987), Mr. Cseplo argues that because the relevant conduct used in determining his sentence began prior to November 1, 1989, and because the preceding edition of the manual, which became effective on November 1, 1988, prescribed an offense level of only 12 for tax losses exceeding $120,000, it was fundamentally unfair, and a violation of the ex post facto clause of Article I, Section 9 of the Constitution, not to use the 1988 edition. We disagree.

The crimes of which Mr. Cseplo was convicted were not committed until May and October of 1990. Nothing in Miller suggests that it would be impermissible to calculate Mr. Cseplo's sentence under the guidelines in effect at that time. Miller merely held that guideline amendments adopted after the date of an offense for which the defendant has been convicted may not be used to increase the sentencing range--and nothing of that sort was done here.

It is true that some of the conduct deemed relevant by the district court antedated both the offenses for which Mr. Cseplo was convicted and the issuance of the edition of the manual under which he was sentenced. This does not entitle Mr. Cseplo to be sentenced under the earlier manual, however. See United States v. Pierce, 17 F.3d 146, 150 (6th Cir.1994), where we held that the ex post facto clause is not violated by taking into account relevant conduct that antedated the adoption of any sentencing guidelines.

It is clear, finally, that the version of the guidelines manual in effect at the time of sentencing did not instruct the district court to use an edition issued prior to commission of the crimes of which Mr. Cseplo was convicted. "The court shall use the Guidelines Manual in effect on the date the defendant is sentenced," U.S.S.G. Sec. 1B1.11(a) provides, unless "the court determines that [this] would violate the ex post facto clause of the United States Constitution...." U.S.S.G. Sec. 1B1.11(b)(1). If the court makes such a determination--as it did in the case at bar--"the court shall use the Guidelines Manual in effect as of the date that the offense of conviction was committed." Id. This is precisely what the district court did. The court also took cognizance of U.S.S.G. Sec. 1B1.11(b)(2), which provides as follows:

"The Guidelines Manual in effect on a particular date shall be applied in its entirety. The court shall not apply, for example, one guideline section from one edition of the Guidelines Manual and another guideline section from a different edition of the Guidelines Manual. However, if a court applies an earlier edition of the Guidelines Manual, the court shall consider subsequent amendments, to the extent that such amendments are clarifying rather than substantive changes."

B

Working our way through the language of the guidelines manual in effect on the date of the crimes of which Mr. Cseplo was convicted, it seems to us that the manual requires use of the base offense level--13--that was employed by the district court.

We start with Appendix A of the manual, which, as the introduction to the appendix explains, contains a statutory index specifying the guideline section or sections ordinarily applicable to the statute of conviction. The guideline section specified for a conviction under 26 U.S.C. Sec. 7201 (attempt to evade or defeat tax) is U.S.S.G. Sec. 2T1.1. The guideline section specified for a conviction under 26 U.S.C. Sec. 7206(1) (making false return) is U.S.S.G. Sec. 2T1.3.

Part D of chapter 3 of the manual requires that the counts of conviction be grouped together, for sentencing purposes, "if the offense level is determined largely on the basis of the total amount of harm or loss...." U.S.S.G. Sec. 3D1.2(d). Sections 2T1.1 and 2T1.3 do peg the offense level to the total amount of the loss, and Sec. 3D1.2(d) explicitly provides that offenses covered by these particular sections are to be grouped together.

The offense level applicable to counts grouped together pursuant to Sec. 3D1.2(d), the manual goes on to say, "is the offense level corresponding to the aggregated quantity [of the losses]...." U.S.S.G. Sec. 3D1.3(b) (emphasis supplied). As applied to the facts of the instant case, this means that the $89,204 loss associated with count 3 of the information must be "aggregated" with the $54,844 loss associated with count 4. The aggregation of these two losses produces a total of $144,048.

Both the base offense level for tax evasion and the base offense level for making a false return are determined under the "Tax Table" set forth in Sec. 2T4.1. See Sec. 2T1.1(a) ("Base Offense Level: From Sec. 2T4.1 (Tax...