U.S. v. Henoud

• Decision Date: 18 April 1996
• Docket Number: No. 94-5936,94-5936
• Citation: 81 F.3d 484
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. John Maurice HENOUD, a/k/a V.J. Gupta, a/k/a Jerry Davis, a/k/a Alex Reyes, a/k/a Jay Chapman, a/k/a J.D. Chapman, a/k/a Jefferey Berg, a/k/a Gerry Davison, a/k/a Gerry G. Davidson, a/k/a Jerry M. Davidson, a/k/a Jerry G. Davidson, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 484

81 F.3d 484

UNITED STATES of America, Plaintiff-Appellee, v. John Maurice HENOUD, a/k/a V.J. Gupta, a/k/a Jerry Davis a/k/a Alex Reyes, a/k/a Jay Chapman, a/k/a J.D. Chapman a/k/a Jefferey Berg, a/k/a Gerry Davison, a/k/a Gerry G Davidson, a/k/a Jerry M. Davidson, a/k/a Jerry G. Davidson Defendant-Appellant.

No. 94-5936.

United States Court of Appeals, Fourth Circuit.

Argued Feb. 1, 1996.

Decided April 18, 1996.

Appeal from the United States District Court for the Eastern District of Virginia, at Norfolk; J. Calvitt Clarke, Jr., Senior District Judge. (CR-92-183-N).

ARGUED: Henry Kowalchick, Norfolk, Virginia, for Appellant. George Maralan Kelley, III, Assistant United States Attorney, Norfolk, Virginia, for Appellee. ON BRIEF: Helen F. Fahey, United States Attorney, Norfolk, Virginia, for Appellee.

Before WIDENER and MURNAGHAN, Circuit Judges, and SPENCER, United States District Judge for the Eastern District of Virginia, sitting by designation.

Affirmed by published opinion. Judge MURNAGHAN wrote the opinion, in which Judge WIDENER and Judge SPENCER joined.

OPINION

MURNAGHAN, Circuit Judge:

Appellant, John Maurice Henoud, was convicted of conspiracy and fraud in connection with an overseas call-selling scheme and ordered to pay restitution to the local and long-distance telephone companies he defrauded. He has challenged the district court's order of restitution contending that it improperly requires him to pay certain companies not named in the indictment and an amount in excess of that alleged in the indictment. He has also argued that the evidence was insufficient to warrant the sum awarded. Because we find no merit in Henoud's claims, we affirm the district court's order.

I.

On October 20, 1992, a federal grand jury in Norfolk, Virginia, returned a 14-count indictment against Henoud, charging that he had established and operated an overseas call-selling scheme, known as an "Amigo scam," ¹ from an office at Parliament Drive in Virginia Beach. The scheme involved the order and installation of a five-line telephone service to that location on September 16, 1992, and the use of those lines to place overseas calls from September 22 to September 25, 1992.

A federal jury convicted Henoud of all counts on March 5, 1993. ² At sentencing, Henoud acknowledged his liability for the toll fees incurred at the office, promised to pay those charges, and twice stipulated to the amount of loss as $24,442.53. ³ On May 18, 1993, the district court ordered that, as part of his sentence, Henoud pay restitution to the local telephone company, Chesapeake and Potomac Telephone Company ("C & P"), ⁴ and four long-distance carriers--AT & T, Sprint, Metro Media and Allnet--in the amount of $24,338.23. ⁵ Henoud appealed the restitution order chiefly on the basis that the court failed to consider his financial condition and ability to pay the amount awarded. He did not challenge, either in his brief or at oral argument, the district court's identification of the victims of the fraud or its determination of the amount due.

In July 1994, we rejected all of Henoud's arguments and affirmed his convictions and sentence, except for the amount of restitution owed. Because we noted inconsistencies in the record as to the amounts of restitution due each victim, we vacated the restitution order and remanded "for a determination of the restitution amount actually owed." United States v. Henoud, No. 93-5418, 1994 WL 369485, at * 7 (4th Cir. July 15, 1994) (per curiam) (unpublished).

On remand, the district court held an evidentiary hearing. There, for the first time, Henoud argued that the court should not count C & P as a victim in its restitution order because the company was not so labelled in the indictment. The United States presented evidence pertaining to the amount of loss through the testimony of Mary S. Coulsting, a C & P security officer and former service representative. ⁶ Coulsting testified that C & P billed subscribers for local services it provided, as well as for services supplied by long-distance carriers. Thus, C & P acted as both a billing agent and a collection agent for the long-distance carriers providing services to the subscriber. Coulsting explained that each long-distance company whose services the subscriber used reported its billing information to C & P, which then prepared the final bill. Because C & Ps billing cycle for the Parliament Drive office was on the fourth day of the month but each long-distance carrier had a different schedule, each monthly bill C & P prepared for that location did not necessarily contain charges for all calls made prior to that time. ⁷ Therefore, three C & P bills--dated October 4, November 4, and November 25, 1992--contained all long-distance calls and charges incurred at the Parliament Drive office during the period of the scheme. The bills included charges for services provided by AT & T, Sprint, Metro Media and Allnet, as well as fees for C & P services.

Because of slight discrepancies between Coulsting's trial testimony as to the amount charged and the actual sums as they appeared on the bills themselves, the United States stipulated at the remand hearing that it would be bound by the lowest figure for which any testimony appeared. After considering post-hearing briefs filed by the parties, the district court issued a written memorandum on December 1, 1994, ordering Henoud to pay restitution in the amount of $24,032.22 to C & P, AT & T, Sprint, Metro Media and Allnet. Henoud filed a timely notice of appeal to this court.

II.

A. Restitution Order

In general, criminal restitution orders should not be overturned in the absence of an abuse of discretion. United States v. Hoyle, 33 F.3d 415, 420 (4th Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 949, 130 L.Ed.2d 892 (1995); United States v. Bailey, 975 F.2d 1028, 1031 (4th Cir.1992). We have repeatedly observed that a trial court's discretion in ordering restitution "is circumscribed by the procedural and substantive protections" in the Victim and Witness Protection Act ("VWPA"), 18 U.S.C. §§ 3663, 3664. Bailey, 975 F.2d at 1031; United States v. Bruchey, 810 F.2d 456, 458 (4th Cir.1987). Here, Henoud has challenged the restitution order both as to the victims named and the amount awarded. We must review each aspect of the district court's order for an abuse of discretion. ⁸ Bailey, 975 F.2d at 1033.

Under the VWPA, a district court may order a convicted criminal to pay restitution to "any victim" of his offense. 18 U.S.C. § 3663(a)(1). In determining the amount of restitution to be paid, the court "shall consider the amount of the loss sustained by any victim as a result of the offense ... and other factors as the court deems appropriate." 18 U.S.C. § 3664(a). In general, restitution pursuant to the VWPA is permissible "only for the loss caused by the specific conduct that is the basis of the offense of conviction." Hughey v. United States, 495 U.S. 411, 413, 110 S.Ct. 1979, 1981, 109 L.Ed.2d 408 (1990). A proper restitution award must be limited to the losses caused by the specific conduct of which the defendant is convicted. While not necessarily fixed by the description given in the corresponding charge itself, the award may not include losses unrelated to the count of conviction. Bailey, 975 F.2d at 1033-34 (observing that courts have applied Hughey to reverse improper restitution orders "mainly where the trial court orders restitution for acts of which the defendant was not convicted"); accord United States v. Jackson, 982 F.2d 1279, 1283 (9th Cir.1992).

In 1990, Congress added to the VWPA a broad description of victims which provides:

For the purposes of restitution, a victim of an offense that involves as an element a scheme, a conspiracy, or a pattern of criminal activity means any person directly harmed by the defendant's criminal conduct in the course of the scheme, conspiracy, or pattern.

18 U.S.C. § 3663(a)(2). ⁹ The amendment is widely viewed as partially overruling Hughey 's restrictive interpretation of the VWPA and expanding district courts' authority to grant restitution. See United States v. Kones, 77 F.3d 66, 69 (3rd Cir.1996); United States v. Broughton-Jones, 71 F.3d 1143, 1147 n. 1 (4th Cir.1995). The majority view is that the 1990 amendment "did have a substantive impact on the amount of restitution a court could order when a defendant is convicted of an offense involving a scheme, conspiracy, or pattern." United States v. DeSalvo, 41 F.3d 505, 515 (9th Cir.1994). Federal courts therefore now allow broader restitution orders encompassing losses that result from a criminal scheme or conspiracy, regardless of whether the defendant is convicted for each criminal act within that scheme. See, e.g., United States v. Manzer, 69 F.3d 222, 230 (8th Cir.1995). The harm must be a direct result of the defendant's criminal conduct, though, or "closely related to the scheme." Kones, 77 F.3d 66, 70

For a judge properly to order payment of restitution for losses arising from a fraudulent scheme, many courts have held that the indictment must "specifically define" the scheme. See, e.g., United States v. Bennett, 943 F.2d 738, 741 (7th Cir.1991) ("The scheme concept is by its nature an amorphous one, and may only support an award of restitution if it is defined with specificity."), cert. denied, 504 U.S. 987, 112 S.Ct. 2970, 119 L.Ed.2d 590 (1992); see also Manzer, 69 F.3d at 230; DeSalvo, 41 F.3d at 514; United States v. Stouffer, 986 F.2d 916, 928-29 (5th Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 115, 126 L.Ed.2d 80 (1993); United States v. Brothers, 955 F.2d 493, 497 (7th Cir.), cert. denied, 506 U.S. 847, 113 S.Ct. 142, 121 L.Ed.2d 94 (1992). When the scheme is clearly described in the indictment, courts have affirmed restitution orders to victims not specifically named, see, e.g., Stouffer, 986 F.2d at 928; Jackson, 982 F.2d at 1283, or in amounts not precisely stated in the...