U.S. v. Sensmeier, 02-3548.
| Decision Date | 22 March 2004 |
| Docket Number | No. 02-3548.,No. 02-3549.,02-3548.,02-3549. |
| Citation | 361 F.3d 982 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Kevin P. SENSMEIER and Neil E. Sensmeier, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
James M. Warden (argued), Office of the United States Attorney, Indianapolis, IN, for Plaintiff-Appellee.
Richard H. Parsons, Johanna M. Christiansen (argued), Office of the Federal Public Defender, Peoria, IL, John P. Brinson, Evansville, IN, for Defendants-Appellants.
Before POSNER, KANNE, and WILLIAMS, Circuit Judges.
Jasper Engine Exchange, Inc., located in Jasper, Indiana, specializes in the remanufacturing and resale of various automotive parts, including drive-train components, engines, transmissions, and differentials.1 One of the two defendants, Kevin Sensmeier, began working for Jasper as a customer-service representative in the warranty department in November of 1996. Defendant Neil Sensmeier worked in the quality control analysis department from February of 1998 until June of 1999, when he transferred into the warranty department and worked, along with his brother Kevin, as a customer-service representative. Both defendants were supervised by Randall Bauer and were terminated in February of 2000, after the discovery of the fraudulent scheme described below.
Early during his term of employment, Kevin Sensmeier began to sell "cores," which include defective transmissions, engines, and differentials, to Jasper. These sales were wholly independent of his duties and salary as a customer-service representative. Jasper paid Kevin for these cores, which could be refurbished and then resold by the company for a profit. At some point, a disagreement arose between Alan Hinky, Jasper's core purchaser, and Kevin. As a result, Jasper refused to purchase any additional cores from Kevin. In 1998, perhaps partly due to this falling out, but admittedly due to greed, (KR. 31 at 48-49, 56-57; NR. 28 at 47), the defendants developed a complex scheme of fraud, whereby they, along with the unwitting or knowing assistance of at least four other persons, were able to steal approximately $80,000 from their employer.
Between 1998 and 2000, Jasper customers with malfunctioning products contacted field representatives or directly phoned customer-service representatives, like Kevin or Neil, in the warranty department. Once the customer was in contact with a customer-service representative, the representative would then diagnose the problem, recommend that the part be repaired or replaced, and advise the customer about how to execute the repair, when appropriate. In either case, Jasper would refund the cost of the part and, if defective, the customer was also instructed to return the part. Last, the customer-service representative assigned a case number to the complaint. These claims, whether resulting in the return of a part or a repair, were documented and "processed" by a customer-service representative, including the entry of the claim into a computer database. Once processed, a check was then issued to the complaining customer. All such claims included the initials of the processing customer-service representative. (KR. 13 at 19; NR. 28 at 23-26.)
Beginning on or about June 19, 1998 and continuing through February of 2000, the defendants falsified customer complaints using third-party names, causing refund checks to be issued to these third parties. (KR. 13 at 21-33; NR. 13 at 21-33.) Although it is undisputed that many of the fraudulent claims submitted by the defendants were never tied to any actual Jasper parts, (KR. 13 at 39-40; NR. 13 at 39-40), the defendants claim that in some instances they did purchase defective Jasper parts still under warranty, and sent those real parts in to Jasper under a third-party name. However, the record contains no evidence whatsoever of any such parts. And even if such parts were sent in to support the warranty claim, defendants admit that the claim itself was nonetheless fraudulent as there never were any actual customers who called in with any true complaints about any Jasper parts. (NR. 28 at 31-33.)
As aforementioned, the defendants used fictional and real third-party names as the complaining consumers to conceal their fraud, none of whom ever had legitimate warranty claims with Jasper Engine. To receive the refund checks, the defendants caused fifty-six post-office boxes to be opened. And to further obfuscate their fraud, the postoffice boxes were opened in a six-state area, including Indiana, Illinois, Kentucky, Ohio, Tennessee, and Missouri. Either Kevin or Neil personally negotiated the refund checks, or instructed third parties to negotiate the checks on their behalf and turn the proceeds over. The brothers also opened several checking accounts to deposit the proceeds of the fraud.
Both brothers were actively involved in the fraudulent scheme from the beginning. While true that only Kevin physically created the paperwork to support the false warranty claims, (NR. 13 at 31), Kevin also stated, "Neil and I came up with [the] idea on how to work around the warranty system and receive money." (KR. 31 at 47.) Neil personally opened at least six post-office boxes, including the very first box opened to facilitate the fraud, on June 19, 1998. Kevin opened at least seven post-office boxes, the first of which on June 27, 1998. Each post-office box included the name of at least one person other than the defendants as an authorized recipient of mail at the box.
Both brothers enjoyed the profits of the fraud. Neil personally negotiated at least one check (KR. 31 at 29-30; NR. 13 at 32, 45), directed his girlfriend, Jill Heck, and his roommate, Michael Knapp, to negotiate at least two checks, each on his behalf, and to turn the proceeds over to him and/or his brother. (KR. 31 at 29-30; NR. 13 at 32-33.) These three checks totalled approximately $2000. Neil admitted he was aware that this $2000 he directly received as a result of this scheme was obtained fraudulently. (NR. 13 at 45-46.) Kevin negotiated numerous checks, recruited his girlfriend Rebecca Goldmann and others to participate in the fraud, and generally oversaw the operation. (KR. 13 at 16-20; KR. 31 at 32-33, 37.) Furthermore, the defendants "split" or shared the funds received from Jasper based upon "how much work each of us had done on it," regardless of who specifically negotiated the check. (KR. 31 at 47; NR. 28 at 13, 17.) Lastly, Neil's initials, "N.S.", appeared on a number of the fraudulent claims, indicating that he was the customer-service representative who processed those claims.
In total, the defendants caused Jasper to issue 178 warranty checks in the amount of $100,254.88. (KR. 31 at 9; NR. 28 at 8-9.) The defendants successfully negotiated 157 checks in the amount of $88,456.74. (KR. 13 at 32; KR. 31 at 9-10; NR. 13 at 32.) Approximately $3,760.00 was recovered by the Indiana State Police, thus reducing the total amount obtained by the defendants to $84,696 .74. (KR. 31 at 15; NR. 28 at 9.)
On January 28, 2002, both defendants pled guilty to a conspiracy, 18 U.S.C. § 371 (2001), to commit mail fraud, 18 U.S.C. § 1341 (2001). Following the preparation of presentence investigation reports ("PSR"), the district court judge sentenced the defendants on September 4, 2002. The base level for the offense was six, U.S.S.G. §§ 2B1.1(a), 2X1.1 (2001). Eight levels were added under U.S.S.G. § 2B1.1(b)(1)(E) because the intended loss was between $70,000 and $120,000. Kevin was given an additional four-level enhancement under U.S.S.G. § 3B1.1 for his role as an organizer or leader in the conspiracy. Kevin and Neil were both granted a two-level downward adjustment for acceptance of responsibility under U.S.S.G. § 3E1.1(a). And Kevin was given an additional one-level downward adjustment also for acceptance of responsibility under U.S.S.G. § 3E1.1.(b). No other adjustments were made, and the judge noted that neither defendant had any other criminal history.
The total offense level for Kevin was fifteen, with a corresponding U.S.S.G. suggested range of incarceration between eighteen and twenty-four months. The total offense level for Neil was twelve, with a U.S.S.G. range between ten and sixteen months. And for both defendants the statutory maximum period of imprisonment was five years with a U.S.S.G. range for supervised release of two-to-three years. Restitution was required under U.S.S.G. § 5E1.1. The district court judge sentenced Kevin to twenty-three months' imprisonment; sentenced Neil to six months' imprisonment (four months less than the lowest end of recommended U.S.S.G. suggested range), followed by six months' home detention; and ordered restitution in the amount of $84,696.74, owed by the defendants jointly and severally.
The Sensmeiers now challenge the district court's offense-level calculation and the restitution ordered under 18 U.S.C. § 3663A. For the reasons set forth below, we affirm the Sensmeiers' sentences and restitution orders.
The defendants' basic argument is that the district court failed to offset the amount of loss to Jasper by the value the defendants claim the victim gained through the resale of defective parts which the defendants allegedly sent to Jasper to facilitate their fraud. They assert that had the court offset the amount of Jasper's loss by its alleged "gain," then the eight-level enhancement under U.S.S.G. § 2B1.1 would have been inappropriate and the amount of restitution ordered would have been less. Neil also objects to the joint and several nature of the restitution order and correspondingly, to the district court's failure to apportion the restitution order to more closely comport with Neil's perception of his own culpability. We find these arguments unpersuasive.
Defendants challenge the district court's determination of the amount of...
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