U.S. v. Cutter

• Decision Date: 10 December 2002
• Docket Number: No. 01-1807.,01-1807.
• Citation: 313 F.3d 1
• Parties: UNITED STATES, Appellee, v. Lionel CUTTER, Plaintiff, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 1

313 F.3d 1

UNITED STATES, Appellee, v. Lionel CUTTER, Plaintiff, Appellant.

No. 01-1807.

United States Court of Appeals, First Circuit.

Heard March 4, 2002.

Decided December 10, 2002.

Jonathan R. Saxe, Assistant Federal Public Defender, Federal Defender Office, for appellant.

Mark E. Howard, Assistant United States Attorney, with whom Thomas P. Colantuono, United States Attorney, and Donald Feith, Assistant United States Attorney, were on brief, for appellee.

Before LYNCH, Circuit Judge, CAMPBELL and MAGILL,^* Senior Circuit Judges.

CAMPBELL, Senior Circuit Judge.

Lionel Cutter ("Cutter") appeals from his conviction and his 20-month sentence in the district court for concealing assets and making a false oath in bankruptcy. 18 U.S.C. § 152(1)-(2) (2000). Cutter also appeals from a $21,000 restitution award to his niece, Adele Bailey ("Bailey"), ordered by the district court. While we affirm his conviction and sentence, we reverse the district court's restitution order.

I. Background

Cutter's conviction for making a false oath in bankruptcy and concealing assets stemmed from statements he made in his bankruptcy petition, and during subsequent bankruptcy proceedings, to the effect that he had sold his home to his niece, Bailey, for $40,000.

In the summer of 1996, to satisfy several outstanding debts, including approximately $36,000 in taxes and interest owed the Internal Revenue Service ("IRS"), Cutter placed his home on the market. At the same time, his twenty year old niece, Bailey, was preparing to receive $72,500 in settlement of injuries received in a car accident. Cutter agreed to sell his home to Bailey. To prepare the necessary paperwork, Cutter hired Attorney Craig Evans ("Evans" or "Attorney Evans"). Cutter informed Evans that the house, which had earlier been listed for $95,000 (and was ultimately appraised for the bankruptcy court at $102,000), was sold to Bailey for $40,000.

On November 1, 1996, the closing date for the sale of the house, Cutter instructed Bailey to prepare and deliver a check for $40,000 to Franklin Savings Bank which held a $26,000 mortgage on the home. She complied. Bailey, who understood the sale price to be $72,000, also provided Cutter personally with a check for an additional $30,000. Cutter, who had since negotiated a settlement with the IRS, returned the $30,000 check to Bailey, telling her to instead prepare a check for $18,000 made payable to the IRS. According to Bailey, Cutter also instructed her to pay him $12,000 in cash in two lump-sum payments of $6,000 over a period of several weeks. Bailey's bank records show that on two separate occasions in November 1996 she withdrew $6,000 in cash, and Bailey testified that she made these cash payments to Cutter. Cutter steadfastly denied that he received an additional $12,000 from Bailey. In consideration for the home, Bailey also paid $2,250 in outstanding property taxes.

On March 20, 1997, Cutter filed for bankruptcy. The bankruptcy petition was prepared by Attorney Evans, the same attorney who prepared the real estate documents for the sale of Cutter's home. In the Statement of Financial Affairs, Evans reported that Cutter had transferred his home on November 1, 1996, for $40,000 to his niece Bailey. On the same page listing the sale price of his home, Cutter signed his name under the statement: "I declare under the penalty of perjury that I have read the answers contained in the foregoing statement of financial affairs and any attachments thereto and that they are true and correct."

At the section 341 meeting,¹ Attorney Timothy Smith ("Attorney Smith"), the appointed trustee for the bankruptcy estate, questioned Cutter about the transfer of his home to his niece. Under oath, Cutter reported to Attorney Smith that the house was sold for $40,000 and that "[$]26,000 went to pay the mortgage, and we put the money with the remainder of the money to pay the IRS."

Because it appeared that the house had been sold for less than its full value, Attorney Smith instituted a fraudulent conveyance action against Bailey to recover the property for the benefit of the creditors.² To prepare for the action, the estate, through Attorney Michael Askenaizer ("Attorney Askenaizer"), conducted a Rule 2004 examination in which Cutter testified. Attorney Askenaizer asked Cutter if the house was sold for $40,000, to which Cutter replied "yes and no." Cutter explained that the price included $40,000 plus Cutter's outstanding IRS taxes and property tax. The disclosure of these additional amounts raised the disclosed sale price to approximately $60,000. To support the revised sale price, Bailey, through Attorney Evans, submitted an affidavit to the court averring that she had bought the house for $58,000.

The estate and Bailey settled the fraudulent conveyance action. Bailey agreed to pay the estate $20,000. To do so, she was forced to sell the house. The house, appraised for the bankruptcy court at approximately $102,000, sold for $87,500.

On September 28, 2000, Cutter was indicted on one count of concealing assets in a bankruptcy proceeding in violation of 18 U.S.C. § 152(1) and one count of making a false oath in bankruptcy in violation of 18 U.S.C. § 152(2).³ After a two-day jury trial, the jury convicted Cutter under both counts. The district court thereafter sentenced him to a 20-month imprisonment; and ordered him to pay Bailey $21,000 in restitution — $20,000 representing the amount she paid to the bankruptcy estate and $1,000 to compensate her for attorney fees. This appeal followed.

II. Discussion

A. Sufficiency of the Evidence

Cutter contends that there was insufficient evidence that he "knowingly" made a false oath in bankruptcy.⁴ While Cutter concedes that he had sold his home for more than the $40,000 he listed on his bankruptcy petition, he contends he was unaware the bankruptcy petition was inaccurate. He argues that Attorney Evans' testimony shows his lack of awareness and undercuts the government's other evidence.

It is the jury's role, however, not that of appellate courts, to weigh the evidence. Evans conceded that during the period he represented Cutter he was suffering from severe depression that adversely affected his memory of events. Even at face value, moreover, Evans' testimony was less helpful to Cutter then Cutter now contends. His testimony did not unequivocally contradict the proposition that Cutter had knowingly provided a false oath in the bankruptcy proceeding. When asked on direct examination whether Cutter reviewed the petition prior to signing it, Evans merely responded: "I don't have any recollection that he took the form and went over it in any detail." Evans testified that when he prepared the paperwork for the real estate transaction Cutter informed him the house had sold for $40,000, a misrepresentation upon which Evans said he relied when completing the bankruptcy petition. Evans' testimony did not explain the false statements that Cutter provided at the section 341 meeting and during the Rule 2004 examination.

Viewed in the light most favorable to the prosecution, the evidence permitted a rational jury to find that Cutter knowingly made a false oath in bankruptcy. Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979); United States v. Woodward, 149 F.3d 46, 56 (1st Cir. 1998), cert. denied, 525 U.S. 1138, 119 S.Ct. 1026, 143 L.Ed.2d 37 (1999). When Cutter signed the bankruptcy petition he represented, under the penalty of perjury, that all the information was correct. His signature appears on the same page as, and just below, the incorrect sales price. The transcript of the section 341 meeting reveals that Cutter stated, under oath, that he had sold the house for $40,000, and intimated that he used the proceeds remaining after payment of the mortgage to pay his tax obligation to the IRS. It was not until the 2004 examination that Cutter admitted that Bailey had paid at least $60,000 for the home — $40,000 payment to Franklin Savings Bank, $18,000 to the IRS, and property taxes in excess of $2,000. Even this statement by Cutter was incorrect. The jury heard Bailey testify that she had paid $72,000 for the property including two cash payments of $6,000 each made directly to Cutter. Bailey's testimony was corroborated by her bank statements.⁵

As there was ample evidence from which the jury could conclude that Cutter knowingly made a false oath in a bankruptcy proceeding in violation of 18 U.S.C. § 152(2), we need not address Cutter's secondary argument that his conviction for concealing assets must fall as well.

B. Base Level Offense Enhancement

Cutter is likewise unpersuasive that the district court erred when it enhanced his sentence by four levels based on an intended loss calculation. See U.S.S.G. § 2F1.1(b)(1)(E) (2001). A district court's findings of intended loss are reviewed only for clear error. See United States v. Robbio, 186 F.3d 37, 43 (1st Cir.), cert. denied, 528 U.S. 1056, 120 S.Ct. 602, 145 L.Ed.2d 500 (1999). We have said that "a party dissatisfied with [a] sentencing court's quantification of the amount of loss ... must go a long way to demonstrate clear error." United States v. Rowe, 202 F.3d 37, 42 (1st Cir.2000) (internal quotations omitted).

In determining that the intended loss fell within the $20,000 to $40,000 range, the district court offered three different rationales: (1) that the intended loss was $32,000 — the $72,000 that Bailey actually paid for the house minus the $40,000 reported by Cutter on the bankruptcy petition; (2) that the intended loss was the $20,000 Bailey paid into the bankruptcy estate plus her $1,000 in attorneys fees; or (3) that the intended loss was the $12,000 paid in cash to Cutter by Bailey, plus the approximately $14,000 in cash that Cutter and his wife received after their mortgage was satisfied, plus the $943 that was held in escrow and paid to the Cutters by the bank. In opposing the...