U.S. v. Evans, 97-3445

• Decision Date: 03 September 1998
• Docket Number: No. 97-3445,97-3445
• Citation: 155 F.3d 245
• Parties: UNITED STATES of America v. Curtis EVANS, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 245

155 F.3d 245

UNITED STATES of America v. Curtis EVANS, Appellant.

No. 97-3445.

United States Court of Appeals, Third Circuit.

Argued June 12, 1998.

Decided Sept. 3, 1998.

Shelley Stark, Federal Public Defender, Karen S. Gerlach (argued), Assistant Federal Public Defender, Pittsburgh, Pennsylvania, for Appellant, Curtis Evans.

Linda L. Kelly, United States Attorney, Bonnie R. Schlueter (argued), Assistant United States Attorney, Pittsburgh, Pennsylvania, for Appellee, United States.

Before: BECKER, Chief Judge, WEIS, Circuit Judge, and DOWD, District Judge. ^*

BECKER, Chief Judge.

OPINION OF THE COURT

Curtis Evans appeals from his conviction on various fraud-related charges. The primary question presented, which arises out of Evans' judgment of sentence, is whether the district court erred in conditioning his supervised release on reimbursement of the cost of court-appointed counsel. See 18 U.S.C. § 3583(d). We conclude that it did, and therefore vacate that portion of the judgment. We also remand for further sentencing proceedings because of the inadequacy of the district court's findings supporting its determination of the amount of loss from fraudulent conduct. See U.S.S.G. § 2F1.1(b)(1) (1997). ¹

I.

A federal grand jury returned a forty-six count indictment against Evans and eleven other individuals. Evans was convicted by a jury of nineteen counts of mail fraud in violation of 18 U.S.C. § 1341; two counts of use of a fictitious name to commit mail fraud in violation of 18 U.S.C. § 1342; three counts of wire fraud in violation of 18 U.S.C § 1343; and one count of conspiracy in violation of 18 U.S.C. § 371. The fraud inhered in a scheme of staging automobile accidents and then submitting insurance claims for non-existent medical treatment. The scheme, which operated in New York, Pennsylvania, and New Jersey, was masterminded by Alexander Grichener, but Evans played an apparently significant role in its Pittsburgh, Pennsylvania operations, particularly those involving the Keystone Medical clinic. Evans was sentenced to forty-two (42) months imprisonment and three (3) years supervised release for each count, to run concurrently; a $1250 special assessment; and payment of $2500 in restitution. The supervised release was conditioned upon the reimbursement of the costs of Evans' court-appointed counsel, in a monthly amount of not less than ten percent of his gross monthly income.

During the trial it was revealed that Evans' financial affidavit, submitted as part of his application for court-appointed counsel, inaccurately represented Evans' and his wife's annual joint income as $48,000, when their actual joint income was $104,000. Evans testified that the court clerk filling out the affidavit had asked about joint take-home pay ($48,000), not gross pay ($104,000). At the sentencing hearing the court found that Evans had made "material misstatements" in his affidavit, and ordered Evans to repay the cost of his attorney as a condition of supervised release. Upon further questioning by Evans' counsel, the court explained that the condition was imposed because Evans "had enough income that he was not entitled to a Public Defender," and that the condition was not punishment for the misrepresentation.

The presentence investigation report stated that the amount of loss incurred by the insurance companies was $2,851,872.42, and thus exceeded $2.5 million for sentencing guideline purposes. A government agent testified at the sentencing hearing that he had calculated the amount of loss based on insurance company reimbursement checks deposited to the bank accounts of the eleven medical clinics and supply companies involved in the scheme. On cross-examination, the agent indicated that he did not know whether every deposit was associated with a staged accident. The district court then found "from the preponderance of the evidence [at the sentencing hearing] and the trial ... that the amount of loss as a result of the conspiracy for which defendant knowingly took part and was expected and foreseeable exceed[ed] 2.5 million dollars." Accordingly, Evans' base offense level of six was increased thirteen levels pursuant to U.S.S.G. § 2F1.1(b)(1). ² Evans filed this timely appeal. ³

II.

Evans contends that the conditioning of his supervised release on the reimbursement of counsel fees is violative of the supervised release statute, 18 U.S.C. § 3583. This contention was not raised in the district court, and thus we review it under the familiar plain error standard set forth infra in Part II.D. For the reasons that follow, we find that the district court committed plain error requiring the exercise of our discretion to vacate the judgment.

The supervised release statute is not open-textured. An order may be a condition of supervised release only to the extent that it:

(1) is reasonably related to the factors set forth in § 3553(a)(1), (a)(2)(B), (a)(2)(C), and (a)(2)(D);

(2) involves no greater deprivation of liberty than is reasonably necessary for the purposes set forth in § 3553(a)(2)(B), (a)(2)(C), and (a)(2)(D); and

(3) is consistent with any pertinent policy statements issued by the Sentencing Commission pursuant to 28 U.S.C. § 994(a).

18 U.S.C. § 3583(d). Section 3553(a), referenced in paragraphs (1) and (2) above, provides for consideration of:

(1) the nature and circumstances of the offense and the history and characteristics of the defendant; [and]

(2) the need for the sentence imposed--

...

(B) to afford adequate deterrence to criminal conduct;

(C) to protect the public from further crimes of the defendant; and

(D) to provide the defendant with needed educational or vocational training, medical care, or other correctional treatment in the most effective manner.

The question before us is whether a reimbursement order authorized by the Criminal Justice Act ("CJA"), 18 U.S.C. § 3006A, which permits a court to order repayment of fees for appointed counsel whenever it finds that funds are available, ⁴ satisfies the requirements of the supervised release statute. This is a question of first impression for us. The only other court of appeals to have addressed this issue in a published opinion was the Ninth Circuit in United States v. Eyler, 67 F.3d 1386 (9th Cir.1995). The Eyler court concluded that a condition requiring reimbursement of attorney fees violated the supervised release statute because it was not related to the defendant's underlying criminal conduct of unlawful possession of firearms and "simply bears no relationship" to the pertinent statutory goals. See 67 F.3d at 1394; see also United States v. Lorenzini, 71 F.3d 1489, 1492-93 (9th Cir.1995) (relying on Eyler to conclude without discussion that reimbursement of counsel fees is not related to offense of bank fraud). Evans contends that his reimbursement condition violates the first prong of the supervised release statute because it is not "reasonably related" to the nature and circumstances of his insurance fraud or to his history and characteristics, and does not further the statutory goals of deterrence, protection, and rehabilitation. See 18 U.S.C. § 3583(d)(1); 18 U.S.C. § 3553(a)(1), (a)(2)(B)-(D).

A.

As to the factors identified in § 3553(a)(1), we considered a cognate question in United States v. Spiropoulos, 976 F.2d 155, 165 (3d Cir.1992), where we held that "[r]ecouping the costs of imprisonment has nothing to do with the nature or the seriousness of the offense, and hence is not authorized under § 3553(a)(1)." In the same vein, reimbursement of counsel fees is not related in any tangible way to insurance fraud. Furthermore, the reason for imposing the condition--Evans' financial ability to obtain a private attorney--is not a relevant "nature and circumstance" of insurance fraud nor, in our view, is it a "history and characteristic" of Evans himself. Even if Evans had the finances to afford an attorney because of profits attained from the fraudulent insurance scheme in which he was involved, we do not believe that the profitable nature of an offense alone is sufficient to establish a reasonable relationship between a reimbursement condition of supervised release and the offense of the defendant. Otherwise, any financially profitable crime, such as robbery or drug dealing, would necessarily be related to the repayment of counsel fees (or any other financial condition) merely because of the likely financial gain from the crime and regardless of the specific "nature and circumstances" of the offense, resulting in a defendant's "ability to pay" overriding all other relevant considerations.

The government submits that Evans' material misstatements on his financial affidavit, which qualified him for appointment of counsel, are directly related to his filing of fraudulent insurance claims because they represent a continuation of the same criminal conduct. It is possible that without the misstatements Evans may not have been eligible for court-appointed counsel, 18 U.S.C. § 3006A(b), or would have otherwise been subject to a reimbursement order, see discussion infra. Furthermore, making misstatements on an affidavit is similar in nature and character to making fraudulent insurance claims in that both acts involve deception and lying. However, as we have explained, the district court made it quite clear that the reimbursement condition was not imposed because of Evans' misstatements, but rather because of his financial ability.

Moreover, even if the district court had imposed the reimbursement condition because of Evans' misstatements, the condition is nonetheless not reasonably related to the statutory goals of § 3553(a)(2)(B)-(D). As in Spiropoulos, where we found no "reason to believe" that assessing the costs of imprisonment acts as a deterrent, protects the public, or rehabilitates the defendant, see 976 F.2d at 165-66, the government has presented no evidence (nor made any argument) that the reimbursement condition...