U.S. v. Scott, 95-5661

• Decision Date: 19 January 1996
• Docket Number: No. 95-5661,95-5661
• Citation: 74 F.3d 107
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Thomas C. SCOTT, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 107

74 F.3d 107

UNITED STATES of America, Plaintiff-Appellee, v. Thomas C. SCOTT, Defendant-Appellant.

No. 95-5661.

United States Court of Appeals Sixth Circuit.

Argued Nov. 17, 1995.

Decided Jan. 19, 1996.

Carroll L. Andre, III, Asst. U.S. Atty. (argued and briefed), Office of the U.S. Atty., Memphis, TN, for U.S.

Leslie I. Ballin (argued and briefed), Ballin & Ballin, Memphis, TN, for Thomas C. Scott.

Before: MARTIN and JONES, Circuit Judges; COHN, District Judge. ^*

COHN, District Judge.

This is a sentencing appeal. Following defendant-appellant Thomas Scott's (Scott) plea of guilty to one count of bank fraud, 18 U.S.C. Sec. 1344, the district court sentenced Scott to a term of 12 months and one day imprisonment followed by a three year period of supervised release, and directed restitution in the amount of $74,547.00. Scott contends that the district court inflated the victim bank's "loss" figure for purposes of determining restitution and calculating his score under the United States Sentencing Guidelines (USSG). Scott also challenges the district court's failure to depart downward from the appropriate guideline range under Sec. 5K2.0 for substantial assistance and extraordinary acceptance of responsibility. For the reasons that follow, Scott's sentence will be affirmed in part and reversed in part.

I.

A.

Scott was employed as a senior vice-president in charge of leasing at United American Bank (UAB). Scott created a fictitious company called Office Design Group (ODG) and forged false documents reflecting UAB's purchase of office equipment from ODG and its placement with various fictitious lessees. In his role as Senior Vice-President, Scott approved the transactions and caused cashier's checks to be issued payable to ODG. Scott deposited the checks into a checking account he had opened in a name other than his own and then used the money for personal expenses. Scott created later purchase transactions to cover lease payments as they came due.

Scott was charged with one count of bank fraud. At the time the information was filed, although one of the fictitious lease accounts showed a gain due to interest in the amount of $1,709, a total of $75,546.22 was outstanding on the fictitious accounts. With counsel present, Scott immediately met with UAB officials. His employment was terminated. Scott informed the UAB officials that he was in the process of negotiating a $2.6 million lease transaction for UAB with Bell Atlantic. If completed, UAB stood to make approximately $250,000 in fees, and Scott would have been entitled to a commission of $64,712.40 which UAB could then keep to offset losses from the fraudulent lease transactions. UAB asked Scott to continue working on the Bell Atlantic lease to fruition. Within 30 days, Scott closed the deal. Skip Lynch, Vice-President of Bell Atlantic TriCon Leasing, later wrote Scott to express his disappointment at Scott's "decision to leave" UAB. The letter stated that the decision casted doubt on the future of Bell Atlantic's relationship with UAB given that Lynch "personally could not have authorized a two million dollar lease portfolio without the comfort level of having Tom Scott involved."

Counsel for Scott wrote to UAB indicating that within one week Scott would be able to pay the bank $7,500--the approximate amount he owed to the bank after subtracting the commission to which he would have been entitled for the Bell Atlantic deal from UAB's loss of $75,546.22. UAB responded that it considered its loss to be $75,546.22 and that any commissions Scott earned were pursuant to his employment at the bank and did not constitute an offset.

B.

Scott entered into a plea agreement with the government. Although it was not required by the plea agreement, Scott voluntarily gave the Federal Bureau of Investigation any information that he could. This amounted to background information which did not lead to a prosecution.

At sentencing, Scott argued that the "intended loss" to UAB from his fraudulent activities was zero because he intended to eventually pay-off the fictitious lease accounts, as indicated by his payment in full of one of the accounts which resulted in a $1,709 gain to UAB. Scott argued that the "actual loss" suffered by UAB should have been reduced by UAB's retention of the $64,712.40 commission and that this was relevant for purposes of both the sentencing guideline calculation and restitution. While he agreed that his cooperation did not warrant a USSG Sec. 5K1.1 motion by the government, Scott argued that he should be entitled to a Sec. 5K2.0 downward departure because he had voluntarily revealed information about the offense and other activities at UAB to the government and because his intent to pay-off the accounts during the offense and to provide virtually full restitution after the offense made the sentence unduly harsh.

The presentence report indicated an actual loss of $74,546.22. The district judge accepted this amount for sentencing purposes and restitution, stating:

[t]he situation with the opportunity for restitution, I mean that's just a situation where initially the bank made a decision that it would allow some other compensation that he was going to receive had his employment continued to be in effect and offset against the loss. That's the way the bank initially decided to treat it. They didn't have to treat it that way, and they ultimately decided not to, and I don't think that whole circumstance really affects in any way the loss. I think the bank had actual loss in the approximate amount of $75,000.00 as of the day the crime was discovered, and I don't think that whole circumstance either affects the amount of the loss or affects the amount of restitution that's owed.

The district court declined to depart downward for extraordinary efforts at restitution or cooperation with the government. Pursuant to USSG Sec. 2F1.1(b)(1)(G), the district court added six levels to the base offense level of six under USSG Sec. 2F1.1(a) for a loss over $70,000. The district court added two levels because the offense involved more than minimal planning, and two additional levels due to Scott's position of trust. The district court adjusted downward three levels due to Scott's acceptance of responsibility pursuant to USSG Sec. 3E1.1.3. This resulted in a guideline sentence range of 12 to 18 months. The district court sentenced Scott to 12 months and one day imprisonment, a three year period of supervised release, and restitution in the amount of $74,547.00, with $24,547 payable to UAB's insurer, Reliance Insurance Company, and $50,000 to UAB under its deductible. ¹

II.

On appeal, Scott first argues that the district court erred by requiring him to pay $74,547 in restitution given that UAB offset its loss by keeping the commission due him. Second, Scott argues that the commission retained by UAB should have been deducted from the amount of loss used in determining the sentencing guideline range. He contends that the "actual loss" to UAB was only $9,834.60 in that he returned $64,712.40 to UAB by way of the earned commission within 30 days after being charged. In this regard, Scott contends that the offense is similar to a fraudulent loan transaction where any collateral secured by the creditor offsets the loss amount. Scott relies on United States v. Moored, 38 F.3d 1419, 1427 (6th Cir.1994), a fraudulent loan case. Third, Scott argues that his sentence should have been reduced pursuant to USSG Sec. 5K2.0 because he fully cooperated with the government before even entering into the plea agreement and made extraordinary efforts toward restitution for which the guidelines do not adequately account.

III.

A.

Under the Victim and Witness Protection Act (VWPA), 18 U.S.C. Secs. 3663-3664, a court may order that a defendant provide restitution to a victim in compensation for the victim's loss. In determining whether to order restitution and in what amount, a court considers: "the amount of the loss sustained by any victim as a result of the offense, the financial resources of the defendant, the financial needs and earning ability of the defendant and the defendant's dependents, and such other factors as the court deems appropriate." 18 U.S.C. Sec. 3664(a). A district court's discretion in fashioning restitution is not unlimited. Amounts a victim receives that reduce the loss are not to be included in the restitution amount:

"The court shall not impose restitution with respect to a loss for which the victim has received or is to receive compensation, except that the court may, in the interest of justice, order restitution to any person who has compensated the victim for such loss to the extent that such person paid the compensation."

18 U.S.C. Sec. 3663(e)(1) (emphasis added). The proper inquiry is whether a payment results in the victim receiving compensation for the loss. See United States v. Oren, 893 F.2d 1057, 1066 (9th Cir.1990) ("[T]he crucial inquiry is whether, if accepted, the gift would result in [the victim's] having received compensation for its loss"). "Any dispute as to the proper amount of restitution shall be resolved by the court by the preponderance of the evidence." 18 U.S.C. Sec. 3664. The amount of restitution is reviewed for abuse of discretion while the authority to order restitution is subject to de novo review. United States v. Lively, 20 F.3d 193, 200 (6th Cir.1994).

Here, the restitution ordered by the district court was improper because it imposed restitution "with respect to a loss for which the victim has received ... compensation." There is no other way to characterize UAB's retention of the Bell Atlantic commission except as acceptance of partial compensation for the loss. At the time Scott revealed his fraudulent activities to UAB, Bell Atlantic was merely a prospective customer. As evidenced by Lynch's letter, it is Scott's involvement that brought the Bell Atlantic deal to fruition and no one disputes that,...