U.S. v. Kim

• Decision Date: 30 March 2004
• Docket Number: No. 03-11016.,No. 03-11022.,03-11016.,03-11022.
• Citation: 364 F.3d 1235
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. Kyung Sik KIM, a.k.a. John Kim, Defendant-Appellee. United States of America, Plaintiff-Appellant, v. In Ok Kim, a.k.a. Cindy Kim, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

364 F.3d 1235

UNITED STATES of America, Plaintiff-Appellant, v. Kyung Sik KIM, a.k.a. John Kim, Defendant-Appellee.

United States of America, Plaintiff-Appellant, v. In Ok Kim, a.k.a. Cindy Kim, Defendant-Appellee.

No. 03-11016.

No. 03-11022.

United States Court of Appeals, Eleventh Circuit.

March 30, 2004.

Randy S. Chartash, Amy Levin Weil, Atlanta, GA, for Plaintiff-Appellant.

Craig A. Gillen, Gillen, Dailey, Cromwell, Withers & Brantley, LLC, Atlanta, GA, for Defendants-Appellees.

Appeals from the United States District Court for the Northern District of Georgia.

Before ANDERSON and BLACK, Circuit Judges, and NANGLE^*, District Judge.

BLACK, Circuit Judge:

In this sentencing guidelines case, Appellee Kyung Sik Kim pled guilty to conspiracy to defraud the United States, in violation of 42 U.S.C. § 1760(g) and 18 U.S.C. § 371. His wife, Appellee In Ok Kim, pled guilty to fraudulently obtaining government assistance, in violation of 42 U.S.C. § 1760(g). At sentencing, the district court granted each Appellee a downward departure from the guidelines based on their extraordinary restitution. The Government appeals. We hold extraordinary restitution, whether paid before or after adjudication of guilt, may, in the unusual case, support a departure from the guidelines, so we affirm the downward departure.

I. BACKGROUND

This case arises from Appellees' scheme to defraud the Special Supplemental Food Program for Women, Infants, and Children (WIC). WIC is a federal program designed to provide "supplemental foods and nutrition education" to "pregnant, postpartum, and breastfeeding women, infants, and young children from families with inadequate income." 42 U.S.C. § 1786(a). WIC is administered in Georgia by the Georgia Department of Human Resources through local offices. WIC operates much like a food stamp program. Individuals who qualify to receive WIC benefits receive food vouchers through local WIC offices.

Here, the relevant local WIC office was Southside Healthcare, Inc. At all relevant times, Southside employed Valencia Grant as a senior WIC clerk. Through her employment, Grant became acquainted with Carolyn Mitchell, an eligible recipient of Southside's WIC vouchers.

During May 1996, Mitchell recruited Grant into a scheme to defraud WIC. Grant used her position to steal unclaimed WIC vouchers from Southside. Mitchell then approached Appellees to sell these vouchers because Appellees were retailers who participated in WIC. Appellees bought vouchers from Mitchell at a discount while depositing the full amount of the voucher into their bank accounts. Over the three years that this scheme lasted, Appellees, Mitchell, and Grant defrauded the United States of $268,237.03. Appellees' share was roughly two-thirds of these fraudulently obtained funds.

After they were indicted, Appellees negotiated plea agreements. Mr. Kim pled guilty to conspiracy to defraud the United States, in violation of 42 U.S.C. § 1760(g) and 18 U.S.C. § 371. Mrs. Kim, on the other hand, pled guilty to fraudulently obtaining government assistance, in violation of 42 U.S.C. § 1760(g).¹ Under their plea agreements, Appellees agreed to pay restitution in the amount of the entire fraud, $268,237.03, before sentencing, but expressly reserved the right to move the sentencing judge pursuant to U.S.S.G. § 5K2.0 (1997) for a downward departure on the basis of "extraordinary restitution."

On the same day Appellees pled guilty, they tendered $50,000 in personal funds as restitution. At sentencing, Appellees paid their remaining restitution by presenting a check for $218,237.03, and moved for a downward departure under U.S.S.G. § 5K2.0 (1997) on the basis of their extraordinary restitution. In support of their motion, Appellees asserted they went to significant lengths to obtain this money in the three short months between their guilty pleas and the sentencing hearing. Appellees contacted their family and friends in the United States and South Korea to secure loans so they could pay the United States full restitution. After receiving permission from the trial court Mrs. Kim traveled to South Korea and executed $97,000 in promissory notes, to be repaid within the following year at 9 percent interest, from four families who were friends of her parents. Mrs. Kim's brother-in-law, Nelson Ahn, liquidated $50,000 of his stock portfolio to make another loan to the Kims at no interest. Mrs. Kim also asked her parents to lend her and her husband $25,000 at no interest. Mr. Kim obtained additional loans of $10,000 and $11,000 from two friends in Georgia. Finally, Appellees withdrew the remaining balance of $25,000 from their savings account.

Applying the 1997 sentencing guidelines,² the pre-sentence investigation report recommended that the district court sentence Mr. Kim at level 13, criminal history category II, with a resulting guideline range of 15-27 months' imprisonment, and Mrs. Kim at level 10, criminal history category I, with a resulting guideline range of 6-12 months' imprisonment. The district court, however, found Appellees' restitution was extraordinary and granted their motion for a downward departure. Although the Government argued that Appellees were providing restitution only as an attempt to receive a reduced sentence, the district court rejected that argument and found as a fact that their real reason was remorse. Specifically, the district court explained:

The comments that [Appellees and their lawyers] all have made about the embarrassment, the humiliation, the shame, the sorrow they exhibited by finding themselves in this situation was so apparent to me. In my view their efforts to come up with this large amount of money [are] extraordinary, and the steps they've undertaken to come up with this money [are] extraordinary.

Accordingly, the district court departed downward and sentenced both Appellees at offense level 9. Mrs. Kim was sentenced to two years' probation, four months of which to be served as in-home detention. Likewise, Mr. Kim was sentenced to five years' probation, six months of which to be served as in-home detention. The Government appealed.

II. STANDARD OF REVIEW

Whether extraordinary post-adjudication restitution is a discouraged or prohibited factor is a question of law subject to de novo review. 18 U.S.C. § 3742(e)(3)(B)(ii) (requiring de novo review when a sentence departure "is not authorized under section 3553(b)"); Koon v. United States, 518 U.S. 81, 100, 116 S.Ct. 2035, 2047, 135 L.Ed.2d 392 (1996) ("[W]hether a factor is a permissible basis for departure under any circumstances is a question of law, and the court of appeals need not defer to the district court's resolution of the point."); see also 18 U.S.C. 3553(b) (allowing sentencing courts to depart when they find "that there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission"). Since Congress passed the PROTECT Act, the district court's conclusion that Appellees' restitution was extraordinary enough on these facts to warrant a departure is now also subject to de novo review.³ 18 U.S.C. § 3742(e)(3)(B)(iii) (requiring de novo review when "the sentence is outside the applicable guideline range, and the sentence departs from the applicable guideline range based on a factor that is not justified by the facts of the case"). Nevertheless, we emphasize that the PROTECT Act does not remove any of the district court's traditional discretion in conducting fact finding, so the district courts' factual findings remain subject to clearly erroneous review.⁴ Id. § 3742 (stating that appellate courts "shall accept the findings of fact of the district court unless they are clearly erroneous").

III. DISCUSSION

A. Extraordinary Restitution as a Permissible Basis for Departure

"To determine whether a factor which takes a case outside the heartland should result in a different sentence, a district court must first decide whether the factor is forbidden, encouraged, discouraged, or unaddressed by the guidelines as a potential basis for departure." United States v. Hoffer, 129 F.3d 1196, 1200 (11th Cir.1997) (citation omitted). Accordingly, we first analyze whether extraordinary restitution is a prohibited or discouraged factor⁵ upon which to depart downward. This distinction is critical. While district courts may never depart on the basis of prohibited factors, Koon, 518 U.S. at 95-96, 116 S.Ct. at 2045, district courts may occasionally depart on the basis of discouraged factors, id. at 96, 116 S.Ct. at 2045. However, discouraged factors support departures "only if the factor is present to an exceptional degree or in some other way makes the case different from the ordinary case where the factor is present." Id. (citation omitted).

We now join the Second, Third, Fourth, Sixth, Seventh, Eighth, and Ninth Circuits and hold that extraordinary restitution is not a prohibited factor.⁶ See United States v. Broderson, 67 F.3d 452 458-59 (2d Cir.1995) (affirming a district court's downward departure based in part on the defendant's restitution even though it could be justified "only as a `discouraged departure'" given that, "[o]rdinarily, payment of restitution is not an appropriate basis for downward departure under Section 5K2.0 because it is adequately taken into account by Guidelines Section 3E1.1"); United States v. Lieberman, 971 F.2d 989, 996 (3d Cir.1992) (affirming a district court's downward departure on the basis of the defendant's acceptance of responsibility as primarily demonstrated by his restitution); United States v. Hairston, 96 F.3d 102, 108 (4th Cir.1996) (holding that "restitution, although taken into account in the guideline permitting a reduction for acceptance of responsibility, can provide a basis for a departure when present to such an exceptional degree that it cannot be characterized as typical or `usual'" (citation omitted)); United States v....