U.S. v. Jewett

• Decision Date: 26 October 1992
• Docket Number: No. 91-1769,91-1769
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. George W. JEWETT, Jr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 248

978 F.2d 248

UNITED STATES of America, Plaintiff-Appellee, v. George W. JEWETT, Jr., Defendant-Appellant.

No. 91-1769.

United States Court of Appeals Sixth Circuit.

Argued June 19, 1992.

Decided Oct. 26, 1992.

Kathleen Moro Nesi, Asst. U.S. Atty. (argued and briefed), Detroit, Mich., for plaintiff-appellee.

Cynthia J. Oberg (argued), David F. DuMouchel (briefed), Butzel, Long, Gust, Klein & Van Zile, Detroit, Mich., for defendant-appellant.

Before: MERRITT, Chief Judge; and KEITH and RYAN, Circuit Judges.

RYAN, Circuit Judge.

Defendant George W. Jewett, Jr. pleaded guilty to two counts of mail fraud and aiding and abetting, 18 U.S.C. §§ 1341, 2, committed in the course of a bid-rigging scheme to defraud the Ford Motor Company. As part of his sentence, Jewett was ordered to pay restitution in the amount of $665,677, the entire amount allegedly lost by Ford as the result of his fraudulent scheme. We are asked to determine whether the district court exceeded its authority to order restitution under the Victim and Witness Protection Act (VWPA or Act), 18 U.S.C. §§ 3663-64. ¹

I.

Jewett was employed as a consultant to Arc Rubber, Inc., a manufacturer of extruded and molded rubber products. In a nine-count mail fraud indictment, the government alleged that Jewett and the president of Arc Rubber, codefendant Robert W. Johnson, Sr., secured Ford business through kickbacks paid to Ludwig A. Schafer, a Ford employee who "steered Ford business to Arc Rubber, Inc. by selecting which suppliers were invited to bid on Ford jobs and by rigging the bids." The indictment stated, and Jewett admitted before the district court, that between February 1984 and March 1989, Arc Rubber issued checks for approximately $650,000 payable to Interglobal Consultants, a business name assumed by Schafer to receive kickbacks.

Jewett agreed to plead guilty to Counts I and II of the indictment in exchange for the government's promise to dismiss all other charges. Count I sets forth fully Jewett's fraudulent scheme and refers specifically to a Ford check payable to Arc Rubber in the amount of $44,924, which Jewett, for the purpose of executing his scheme to defraud, knowingly caused to be mailed on or about March 25, 1987. Count II incorporates by reference the description of the scheme to defraud established in Count I and refers to another Ford check, in the amount of $24,054.60, mailed by Ford to Arc Rubber on or about May 21, 1987. The Rule 11 plea agreement was signed on December 4, 1990 and filed on December 7, 1990. Jewett entered his guilty plea to Counts I and II before the district court on December 10, 1990.

At sentencing on February 27, 1991, the district court ordered Jewett to pay $665,677 in restitution pursuant to the provisions of the VWPA. Jewett filed a motion to correct sentence, Fed.R.Crim.P. 35(a), asserting that restitution should have been limited to a maximum of $68,978.60, the amount of the checks specified in the two counts to which he offered his guilty plea. He appeals the district court's denial of his Rule 35 motion.

II.

Jewett challenges the legality of the sentence imposed under the VWPA. We review this question of law de novo. E.g., United States v. Snider, 957 F.2d 703, 705 (9th Cir.1992).

III.

In pertinent part, the Victim Witness and Protection Act provides:

The court, when sentencing a defendant convicted of an offense under this title ... may order, in addition to or ... in lieu of any other penalty authorized by law, that the defendant make restitution to any victim of such offense.

18 U.S.C. § 3663(a)(1) (1988).

Jewett argues that the amount of restitution ordered was impermissible under the terms of the VWPA and in light of the Supreme Court's interpretation of the Act in Hughey v. United States, 495 U.S. 411, 110 S.Ct. 1979, 109 L.Ed.2d 408 (1990). In Hughey, the Supreme Court examined questions concerning the scope of restitution authorized by the VWPA in a factual situation similar to this case. An indictment charged Hughey with three counts of theft by a postal service employee and three counts of unauthorized use of credit cards. He entered a plea of guilty to Count IV, charging unauthorized credit card use, in exchange for the dismissal of all other charges arising from the scheme alleged in the indictment. Count VI alleged that "on or about October 18, 1985, ... [Hughey] did knowingly and with intent to defraud use an unauthorized [MBank Mastercard credit card] issued to Hershey Godfrey ... [to] obtain things of value aggregating more than $1,000...." Id. at 413-14, 110 S.Ct. at 1981. Hughey was ordered to pay restitution of $90,431, the total of MBank's losses relating to Hughey's alleged theft and use of 21 credit cards issued by MBank to various cardholders, even though MBank lost only $10,412 as the result of Hughey's unauthorized use of the Godfrey credit card. At issue in Hughey was whether the VWPA "allow[s] a court to order a defendant who is charged with multiple offenses but who is convicted of only one offense to make restitution for losses related to the other alleged offenses." Id. at 412-13, 110 S.Ct. at 1981. Following an examination of the statutory language, the Court held that the Act "authorize[s] an award of restitution only for the loss caused by the specific conduct that is the basis of the offense of conviction." Id. at 413, 110 S.Ct. at 1981. Because "the restitution order encompassed losses stemming from alleged fraudulent uses of cards issued to persons other than Godfrey," the Court ruled that such portions of the order were invalid. Id. at 422, 110 S.Ct. at 1986.

Jewett asserts that in light of Hughey, the scope of restitution authorized by the VWPA was limited to the losses caused by the two mailings specified in Counts I and II. His position is supported by United States v. Stone, 948 F.2d 700, 704 (11th Cir.1991) and United States v. Sharp, 941 F.2d 811, 815 (9th Cir.1991).

The government responds that, unlike the credit card fraud conviction at issue in Hughey, the offense of mail fraud requires proof of the existence of a scheme to defraud as an essential element of the crime, ² and that restitution is not, therefore, limited to the losses caused by the particular mailings for which defendant was convicted, but extends to all losses attributable to defendant's fraudulent scheme. According to the government, because the existence of a fraudulent scheme is necessary to commit mail fraud and the scheme was described in the counts to which Jewett pleaded guilty, all losses resulting from the scheme are caused by "conduct underlying the offense of conviction," Hughey, 495 U.S. at 420, 110 S.Ct. at 1984, and may be included in a restitution order. This position was adopted in United States v. Bennett, 943 F.2d 738, 740 (7th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 2970, 119 L.Ed.2d 590 (1992). The government stresses that Jewett's scheme to defraud Ford was described in the indictment and included in the counts of conviction, and that the full extent of the losses caused by the scheme was also listed, and admitted by defendant in offering his guilty plea.

The district court accepted the government's arguments and denied the motion to correct sentence, holding that because the indictment included a specific description of the entire fraudulent scheme in paragraphs one through three of Count I, and by reference in paragraph one of Count II, the court was "of the belief that the defendant pled guilty to that period of time [February 1984 to March 1989] also by pleading guilty to Count I." The district court concluded:

[in] this particular case the Court doesn't believe [Hughey is] applicable because of the nature [of the indictment]--the way it was drafted, and because ... what he pled guilty to was Count I, which specifically mentions the higher amount; and, therefore, the Court will deny the motion.

We disagree with the district court's application of law. We believe, as stated well by the court in Sharp, that the fact that an offense requires, as an essential element, the existence of a scheme to defraud "is too fine a point on which to distinguish Hughey...." 941 F.2d at 815. In this case, we believe the "specific conduct that is the basis of the offense of conviction," Hughey, 495 U.S. at 413, 110 S.Ct. at 1981, can only reasonably refer to the two mailings which serve as the bases for Jewett's convictions, and that the losses attributable to the particular mailings specified in Count I and II "establish[ ] the outer limits of [the] restitution order." Id. at 420, 110 S.Ct. at 1984.

The government's argument that to limit restitution to the losses stemming from the particular mailings specified in Counts I and II would unduly confine restitution to addressing a single element of the offense of conviction--the use of the mails--to the exclusion of the other--the existence of a fraudulent scheme advanced by the mailing--is misguided. The offense of mail fraud describes the use of the mails for the purpose of executing a scheme to defraud, Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 362, 98 L.Ed. 435 (1954), and it is that specific conduct, and the losses caused by it, that establishes the scope of the district court's authority in ordering restitution under the VWPA. Acts other than the particular mailing described in a count of conviction, even when committed during the course of or in furtherance of the same fraudulent scheme, do not state independent "offenses of conviction." A restitution order encompassing losses attributable to these acts is, therefore, beyond the scope of a sentencing court's authority to order restitution to "any victim of [an] offense." 18 U.S.C. § 3663(a)(1).

The "specific conduct" for which defendant Jewett was convicted was mail fraud, not executing a fraudulent scheme. The existence of a scheme to defraud Ford of over $650,000 does not, and cannot, alter the statutory command that...