U.S. v. Sharma

• Citation: 190 F.3d 220
• Decision Date: 30 August 1999
• Docket Number: Nos. 98-7408,98-7409,98-7410,s. 98-7408
• Parties: (3rd Cir. 1999) UNITED STATES OF AMERICA, v. CHANDRA D. SHARMA, Appellant UNITED STATES OF AMERICA, v. SUBODH C. SHARMA, Appellant UNITED STATES OF AMERICA, v. SUSHIL C. SHARMA, Appellant UNITED STATES OF AMERICA, v. VINOD C. VASISTH, Appellant , and 98-7454
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 220

190 F.3d 220 (3rd Cir. 1999)

UNITED STATES OF AMERICA, v. CHANDRA D. SHARMA, Appellant UNITED STATES OF AMERICA, v. SUBODH C. SHARMA, Appellant UNITED STATES OF AMERICA, v. SUSHIL C. SHARMA, Appellant UNITED STATES OF AMERICA, v. VINOD C. VASISTH, Appellant

Nos. 98-7408, 98-7409, 98-7410, and 98-7454

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued July 12, 1999

Decided August 30, 1999

Appeal from the United States District Court For the Middle District of Pennsylvania D.C. Nos.: 1:CR-96-321-001, 1:CR-96-321-002, 1:CR-96-321-003 & 1:CR-96-321-004 District Judge: Honorable Sylvia H. Rambo (D.C. Criminal Nos. 96-cr-00321-1, 96-cr-00321-2, 96-cr-00321-3, 96-cr-00321-4 ) [Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Theodore B. Smith, III (Argued) Sally A. Lied Office of United States Attorney Federal Building P.O. Box 11754 228 Walnut Street Harrisburg, PA 17108 Counsel for Appellee

Jerry A. Philpott 227 High Street P.O. Box 116 Duncannon, PA 17020 Counsel for Appellant Chandra D. Sharma

Michael M. Mustokoff (Argued) Teresa N. Cavenagh Duane, Morris & Heckscher 4200 One Liberty Place Philadelphia, PA 19103-7396 Counsel for Appellant Subodh C. Sharma

Daniel I. Siegel (Argued) Thomas A. Thornton Office of Federal Public Defender 100 Chestnut Street, Suite 306 Harrisburg, PA 17101 Counsel for Appellant Sushil C. Sharma

Michael M. Mustokoff (Argued) Teresa N. Cavenagh Duane, Morris & Heckscher 4200 One Liberty Place Philadelphia, PA 19103-7396 Counsel for Appellant Vinod C. Vasisth

Before: GREENBERG, ALITO, and ROSENN, Circuit Judges.

OPINION OF THE COURT

ROSENN, Circuit Judge.

In this appeal from a criminal conviction of, inter alia, conspiracy and bank fraud, the major issue is whether under the Sentencing Guidelines interest owed on a defaulted loan obtained by fraud may be included by the court in calculating the amount of the victim's loss. A jury found that the defendants, a father and his three adult sons, had given material and false statements that misrepresented their financial resources to two banks in order to obtain loans and lines of credit. They defaulted on loans from the State Bank of India ("SBI") valued at $1,890,702.74, of which $670,718.85 was principal and $1,219,983.89 was interest. The district court included both the principal and the interest in its calculation of the amount of SBI's loss, an integral figure in the determination of the defendants' sentences. Raising an issue of first impression in this circuit, the defendants contend that under the interest amendment in 1992 to the Sentencing Guidelines Application Notes, interest on the defaulted loan should not have been included in calculating the victim's loss. The district court disagreed and also rejected the defendants' other claims. We affirm.

I.

To obtain loans and lines of credit, defendant Chandra D. Sharma ("Chandra") and his sons, defendants Subodh C. Sharma ("Subodh"), Sushil C. Sharma ("Sushil"), and Vinod C. Vasisth ("Vinod"), made false representations to Commerce Bank in Harrisburg, Pennsylvania and SBI in New York City. They grossly misrepresented the value and profitability of their assets through the submission of false financial statements. They gave the banks a false picture of their ability to contribute a substantial sum of their own money to finance the projects for which they sought loans, and of the profitability of their businesses, which could purportedly and adequately collateralize the loans.

In 1985, the defendants began planning to build a sixty- bed nursing home in the Harrisburg area to be known as the Victory Garden Nursing Home ("Victory Garden"). Subodh signed a Certificate of Need application prepared by an accountant. After two conferences with the Health Resources Planning and Development, Inc., both of which were attended by Sushil and Subodh, and the latter by Chandra, the Pennsylvania Department of Health granted the Certificate of Need.

In December 1985, Subodh, Sushil, and Vinod met with the architect, Kamal Chaudhury. As a result of that meeting, Subodh and Chaudhury negotiated two contracts. In the first contract, Victory Garden promised to pay Building Technologies, Chaudhury's firm, $5,500 for preliminary work and $56,000 for architecture and construction. At Subodh's insistence, Chaudhury signed a side agreement in which Building Technologies agreed to have Eaglemark, the defendants' company, provide on-site construction managers for a fee of $19,500. When applying for a construction loan with SBI, the defendants submitted the primary contract but omitted the Eaglemark side agreement from the supporting documentation to the bank.

In December 1985, Subodh signed an agreement to purchase fifty acres of land in Duncannon, Pennsylvania for $75,000. The land was to be used as the nursing home site. In July 1986, Commerce Bank loaned the defendants $60,000 for the purchase of the land. Chandra took title to the land solely in his name, but the mortgage on the property was in Subodh and Vinod's name.

In June 1986, Chandra, Subodh, and Vinod agreed to purchase the Sloan Manufacturing and Engineering Company ("Sloan" or "Sloan Manufacturing") for $189,766. Vinod and Subodh signed a promissory note for the purchase price. The principals of Sloan agreed to accept the promissory note for the purchase on the basis of the obligor's financial statement. However, it contained a forged signature of Sushil's accountants. Subodh and Vinod collateralized the note with Eaglemark's assets and guaranty; they subsequently defaulted on their note.

Several months later, the four defendants agreed to purchase D.B. Industries ("Industries") from Dojcin Bulatovic for $175,000. The defendants paid $7,500 down and agreed to pay the remaining $167,500 over fifteen years with interest at ten percent, evidenced by a promissory note confessing judgment and signed by Subodh. Seeking a commercial loan for Industries, Subodh approached Commerce Bank and submitted a falsified sales agreement between Industries and Eaglemark. Most significantly, the falsified agreement stated that the purchase price was $264,000, rather than $175,000. In addition, the agreement stated that the defendants had, with the exception of a $50,000 promissory note given to Bulatovic, purchased Industries with cash. Commerce Bank made the $100,000 loan on the conditions that Industries pay off the purported $50,000 promissory note to Bulatovic, Subodh pay off a second loan on his residence, and Subodh's residence be used as collateral. After Industries defaulted on the loan in July 1991, Sushil, seeking to modify the loan agreement, presented a statement reporting his personal net worth at $1,677,089 and a purported copy of his 1990 tax return that overstated his adjusted gross income.

In January 1987, Subodh, on behalf of all the defendants, sought a $15,000 line of credit from Commerce Bank for Perfect Care, another business owned by the defendants. In connection with the credit application, each of the defendants submitted false personal financial statements that failed to list recently-incurred liabilities. In addition, the defendants inflated the profitability and assets of their companies, V-Care and Perfect Care. In April 1987, Commerce Bank extended the $15,000 line of credit for Perfect Care to use as short-term working capital. However, the defendants used the money for other purposes.

In June 1987, the defendants obtained a loan from SBI for sixty-five percent of the construction costs with a maximum of $1,200,000 to finance the building of Victory Garden. When applying for the loan, the defendants submitted several false documents. Sushil submitted two financial statements for V-Care that were signed but not prepared by a certified public accountant. These statements magnified the company's financial assets. Personal financial statements submitted by each defendant failed to list recently-incurred liabilities. The construction agreement between Victory Garden and G.B. Construction was "doctored" to reflect a contract price of $1,600,000, rather than the agreed-to $1,200,000. A letter from Sushil provided a false explanation for a $2,000 discrepancy between the original sales price and the sales price recited in the deed submitted to the bank for the land on which the defendants planned to build and mortgage the nursing home.

Sushil furnished a summary of project costs that overstated by at least $340,000 the amount of money the defendants had expended on the construction. The summary falsely represented that a New York certified public accountant had traced disbursements of $589,299 to original construction records exclusive of owners' salaries and administrative expenses. Based on the summary, SBI loaned the defendants $383,044 (65% of $589,299), which they transferred to their individual accounts on the day following their execution of the construction loan agreement with SBI. The defendants then drew checks against their respective bank accounts to create the illusion that they were personally contributing 35% to the project as required by their agreement with the bank. Sushil also submitted to the bank a letter from Chaudhury that overstated the progress with the construction of the nursing home.

As collateral, the defendants gave SBI a deed for fifteen acres of the fifty-acre tract on which the nursing home was to be built. The defendants represented that this land was worth $75,000, the purchase price of the entire fifty-acre tract. The remaining thirty-five acres were transferred to Chandra, who conveyed the property to his wife Heena Sharma. Upon discovering these facts, the bank sued in a state court, which found the conveyance fraudulent, and voided it. SBI ultimately obtained the title to thirty-five-acre parcel.

During the construction of Victory Garden, the defendants sought additional money from SBI. Again, they overstated the extent of their investment in the...