U.S. v. Havens

• Decision Date: 12 September 2005
• Docket Number: No. 04-2956.,04-2956.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Patricia A. HAVENS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 535

424 F.3d 535

UNITED STATES of America, Plaintiff-Appellee, v. Patricia A. HAVENS, Defendant-Appellant.

No. 04-2956.

United States Court of Appeals, Seventh Circuit.

Argued January 12, 2005.

Decided September 12, 2005.

Joe Vaughn (argued), Office of the United States Attorney, Indianapolis, IN, for Plaintiff-Appellee.

William H. Dazey, Jr. (argued), Indiana Federal Community Defenders, Inc., Indianapolis, IN, for Defendant-Appellant.

Before FLAUM, Chief Judge, and EASTERBROOK and WOOD, Circuit Judges.

WOOD, Circuit Judge.

Patricia A. Havens pleaded guilty to various offenses relating to identity theft. She was sentenced to 12 months in prison and ordered to pay $30,000 in restitution to the person whose identifying information she stole. Havens does not challenge her prison sentence; rather, her appeal is limited to the order of restitution, which, she argues, imposed obligations on her that were not authorized by the Mandatory Victim Restitution Act of 1996 (MVRA), 18 U.S.C. § 3663A. We conclude that the order indeed went too far, and we therefore vacate it and remand to the district court for further proceedings.

I

On November 18, 1998, Havens applied (using her maiden name, Brown) to AmerUS Home Equity for a mortgage loan in the amount of $144,000, which she planned to use to refinance the outstanding mortgage on her Indianapolis home. Concerned that the application would be rejected because of her poor credit rating, Havens fraudulently filled out the application using the date of birth, social security number, and various credit card accounts of a more creditworthy Patricia Brown, a certified public accountant (CPA) with an office in nearby Carmel, Indiana. Havens had obtained this information from credit reports to which she had access in her capacity as a real estate broker. In support of her application, Havens also submitted two false payroll checks made payable to Patricia Brown, showing the stolen social security number. Relying on the information Havens provided, AmerUS approved the application and executed a loan in the name of Patricia A. Brown, under the social security number assigned to Brown, but secured by Havens's property.

The fraud went undetected until 1999, when Havens fell behind on the mortgage payments and AmerUS contacted Brown. At first Brown believed that the problem was the result of a mistake on the part of AmerUS, but in short order, more creditors began to contact her about other lines of credit that she had not opened. After looking into the problem, Brown discovered that in addition to the AmerUS mortgage loan, Havens had also obtained a second mortgage loan and opened a credit card account using Brown's identifying information. The records indicated that both these accounts were also delinquent. The new accounts that Havens had opened were not the only way in which she damaged Brown's credit history; in addition, parts of Havens's earlier credit history, including a bankruptcy, various civil judgments entered against her, and other delinquent accounts, had migrated over to Brown's credit reports. As a result, Brown's once positive credit rating had suffered greatly. According to Brown, a poor credit rating is particularly harmful to someone in her profession, as it calls into question her integrity and reliability as a CPA.

Upon uncovering Havens's fraud, Brown notified the relevant authorities and then sued Havens in Indiana state court for damages under Ind.Code § 34-24-3-1,which allows a person who suffered pecuniary losses as a result of theft or fraud to bring an action against the person causing the loss and to recover treble damages, reasonable attorney's fees, and compensation for lost time. Although Brown was not required to repay any of the debts incurred by Havens's use of her identifying information, she requested damages consisting of the amount of credit stolen, attorney's fees incurred in the litigation, and the value of the time she spent investigating the fraud and correcting her credit history. The trial court awarded Brown $30,000 in damages and $14,000 in attorney's fees, and the Indiana Court of Appeals affirmed. See Brown, C.P.A. v. Brown, 776 N.E.2d 394 (Ind.App.2002). Brown also requested and was granted a court order directing the credit agencies to correct her credit reports and restore her credit rating.

On October 9, 2003, a federal grand jury indicted Havens on two counts of wire fraud, in violation of 18 U.S.C. § 1343, three counts of using a false social security number, in violation of 42 U.S.C. § 408(a)(7)(B), and one count of fraud in connection with access devices, in violation of 18 U.S.C. § 1029(a)(2) and (c)(1), in connection with the AmerUS mortgage loan. Havens entered into a plea agreement with the government under which she pleaded guilty to all six counts in the indictment. In the agreement, the parties stipulated that the U.S. Sentencing Guidelines called for a base offense level of 12 and a two-level reduction for acceptance of responsibility, but they agreed that the court would determine Havens's sentence and that the stipulations served only as a recommendation. In addition, the government reserved the right to request an upward departure as well as an order of restitution.

At the sentencing phase, the government requested an upward departure from the Guideline range, arguing in reliance on U.S.S.G. § 2B1.1 Application Note 15(A)(vii)(i) that Havens's conduct caused substantial harm to Brown's credit record and Brown incurred substantial inconvenience in repairing the damage. The Presentence Investigation Report recommended restitution to Brown in the amount of $42,099.70, based on the amount outstanding from the civil judgment award obtained in state court. Havens objected to both the request for upward departure and amount of restitution, arguing that Brown suffered no monetary losses because she was not required to pay back the debts and that the restitution amount could not mirror the state court judgment as it reflected losses not covered under the MVRA.

The district court denied the government's motion to depart upward and sentenced Havens to 12 months in prison and three years of supervised release. It rejected the attorney's fee portion of the civil judgment as restitution, but it ordered Havens to pay the principal sum of $30,000 to Brown. On appeal, Havens challenges this amount.

II

The MVRA requires a court to order a defendant to make full restitution to the victim of an offense involving fraud or deceit. 18 U.S.C. § 3663A(a)(1) and (c)(1)(A)(ii). A victim under the Act is "a person directly and proximately harmed as a result of the commission of an offense." § 3663A(a)(2); see also United States v. Donaby, 349 F.3d 1046, 1052 (7th Cir.2003) (citing United States v. Randle, 324 F.3d 550, 556 (7th Cir.2003) (recognizing that the MVRA authorizes restitution to a victim directly harmed by the offender's specific conduct that is either the basis of the offense of conviction or an element of a scheme)).

In the case of an offense resulting in damage to property, the MVRA requires the defendant to return the property to the victim or if that is not possible, to pay the victim an amount equal to the loss of value of the property. See § 3663A(b)(1). We have noted that "[t]his measure of relief is less generous than common law damages, since it does not extend to consequences beyond the diminution of the value of the property stolen or damaged." United States v. Scott, 405 F.3d 615, 618 (7th Cir.2005). This is because criminal restitution refers only "to the restoration of something that the...