U.S. v. Swanson

• Decision Date: 20 April 2007
• Docket Number: No. 05-4432.,05-4432.
• Citation: 483 F.3d 509
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. David H. SWANSON, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

483 F.3d 509

UNITED STATES of America, Plaintiff-Appellee, v. David H. SWANSON, Defendant-Appellant.

No. 05-4432.

United States Court of Appeals, Seventh Circuit.

Argued May 8, 2006.^*

Decided April 20, 2007.

Charles Goodloe, Jr. (argued), Office of the United States Attorney, Indianapolis, IN, for Plaintiff-Appellee.

William H. Theis (argued), Office of the Federal Defender Program, Chicago, IL, for Defendant-Appellant.

Before BAUER, RIPPLE, and ROVNER, Circuit Judges.

ILANA DIAMOND ROVNER, Circuit Judge.

For the second time David Swanson, who worked as an independent consultant and briefly as the chief executive officer of Countrymark Cooperative, Inc., appeals his prison sentence and the restitution and forfeiture orders entered on his convictions arising from a fraudulent scheme to siphon funds for his personal use from his consulting clients and Countrymark. We remanded previously, instructing the district court to reconsider the amounts it ordered as restitution and forfeiture, and for recalculation of the guidelines imprisonment range using the 1998 version of the guidelines, which the parties agreed should apply. We also recognized that aspects of Swanson's sentence under the guidelines might be affected by the then-forthcoming decision in United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005). Now in this second appeal, Swanson renews his disagreements with the district court's calculation of the fraud loss and the amount of restitution, and he also presses a new contention that in formulating his guidelines sentence the court erroneously applied an upward adjustment for his role as an organizer or leader of extensive criminal activity. We are not persuaded by these arguments—or by others that rest on views about Booker that we have rejected in other cases—and accordingly affirm the judgment of the district court.

I.

We presume familiarity with our prior opinion, United States v. Swanson, 394 F.3d 520 (7th Cir.2005) ("Swanson I"). Briefly, as an independent consultant and as the CEO of Countrymark, Swanson managed the acquisitions of related agricultural enterprises. He used his positions for personal gain, however, by obtaining "reimbursement" for phony expenses and by inflating the reported purchase price of one acquisition and keeping the extra money for himself. After a three-week trial, a jury found Swanson guilty of wire fraud, money laundering, interstate transportation of stolen funds, and income tax evasion. At the first sentencing, the district court found that Swanson's fraud led to $6.7 million in losses; that conclusion was based in part on what the court characterized as "the government's proof at trial that the jury accepted." The court also entered orders of restitution and forfeiture but failed to consider whether the restitution figure should have been offset by money repaid to the victim corporations and by the value, if any, they received from Swanson's work on the acquisitions. The court also neglected to ensure that the forfeiture figure encompassed only proceeds from Swanson's illegal activities.

Because of these errors, we remanded for resentencing. We noted that the jury returned general verdicts and thus did not make any findings relevant to the fraud loss; accordingly, we instructed the district court to revisit the loss determination and, if necessary depending on the outcome in Booker, other guidelines findings as well. See Swanson I, 394 F.3d at 526 n. 1. We also directed the district court to reconsider the amounts of restitution and forfeiture after making additional factual findings, and to recalculate the imprisonment range using the 1998 guidelines rather than the 2001 version that the court employed. Id. at 530.

At resentencing the parties and the district court all agreed that Swanson should be sentenced using the 1998 version of the guidelines. The government, however, argued that our remand in Swanson's first appeal did not require the district court to recalculate the fraud loss for purposes of the guidelines. In a memorandum supported by an extensive compilation of trial exhibits, the government offered revised calculations for the amounts of restitution and forfeiture. For his part, Swanson argued that our remand did require a recalculation of the fraud loss, and that the government failed to support its revised calculation with adequate evidence. He also objected that he had acted alone and thus a four-level upward adjustment under U.S.S.G. § 3B1.1 for organizing and leading the criminal activity should not be reimposed. This was not an argument he made at the first sentencing hearing or that he raised in his prior appeal. Swanson further objected to the government's proposed restitution figure. He argued that the requested amount still failed to account for the value that his work, even if fraudulent in part, may have conferred on the victims, but he refused to suggest an alternative figure for restitution or produce any evidence that part of what he did for his victims was legitimate.

The district court recalculated the fraud loss using the government's new itemization but still arrived at $6.7 million, just as before. The court used this figure in applying U.S.S.G. § 2F1.1, the applicable offense guideline from the 1998 version of the guidelines, and once again added four levels under § 3B1.1(a). The court then sentenced Swanson to 151 months of imprisonment, the high end of the resulting range of 121 to 151 months. In addition, with no proposed restitution figure from Swanson, the court adopted the government's calculations, which credited Swanson for repayments made to Countrymark, and ordered Swanson to pay $2.2 million in restitution.

II.

A. Fraud Loss Amount

Swanson first argues that the district court erred in calculating a $6.7 million fraud loss. The court's calculation subjected Swanson to a 14-level upward adjustment under the 1998 version of the guidelines. See U.S.S.G. § 2F1.1(b)(1)(O), (P) (1998) (increasing offense level by 14 if loss caused by fraud totals more than $5 million but less than $10 million). The two largest components of the loss stem from Swanson's conduct during Countrymark's acquisition of Malta Clayton, an agriculture feed company, and his role in promoting a start-up company called GreenHeat, LLC. He says the loss figure is overstated since it includes (1) amounts that even now he characterizes as "closing costs" for the Malta Clayton acquisition, (2) investments in GreenHeat that Swanson says were lost because the company failed and not because of his fraud, and (3) losses stemming from conduct not charged in his indictment.

As to the acquisition, Swanson told Countrymark's board of directors that acquiring Malta Clayton would cost $33 million. In fact, as Swanson knew, the actual cost was only $31 million, but he collected a total of $35 million for the deal from Countrymark and another investor. Swanson left the $4 million surplus in a bank account that he alone controlled, and from that account he diverted half to his personal use before he was discovered. At trial the chairman of Countrymark's board confirmed that Swanson misrepresented the acquisition cost to be $33 million. The government also introduced phony invoices that Swanson created to convince Countrymark that nearly all of the $2 million he used for personal expenses and funneled to his private accounts had gone to Vickers and Allen, Inc., a consulting firm, for "closing costs" associated with the acquisition. Swanson did not disclose to the board that he controlled this firm, and its two named principals testified that they were unaware of any work performed in connection with the Malta Clayton acquisition.

After Countrymark discovered it had been bilked and forced Swanson to resign, he began promoting a start-up company called GreenHeat, LLC, which purportedly was developing an environmentally friendly fuel derived from soybeans. Swanson amassed a sizable amount of capital for the venture, including a $1.13 million investment by Archer Daniels Midland Company ("ADM"). But instead of using this money to develop GreenHeat, Swanson used it to pay for personal expenditures and to make several installment payments to Country-mark under the terms of a settlement agreement the company reached with Swanson. Ultimately, ADM and the other investors lost all of the money they contributed to GreenHeat. At trial an ADM representative testified that he reviewed some of GreenHeat's financial information provided by Swanson shortly before writing off the investment and could detect no misstatements. But at Swanson's first sentencing hearing, an agent from the Internal Revenue Service ("IRS") testified that she had reviewed GreenHeat's bank and tax records and concluded that the start-up was never viable and that Swanson converted the company's funds to his personal use.

All of this was adequately established, and at resentencing the district court found that the "amount put at risk" by Swanson included the entire $4 million he diverted during the Malta Clayton acquisition. The court likewise included ADM's investment in GreenHeat. Although the GreenHeat swindle was not alleged in the indictment, the court noted that loss for guidelines purposes encompasses other acts that are part of a "common scheme or course of conduct." And, the court reasoned, Swanson's theft of ADM's $1.13 million investment in GreenHeat was just another step in his scheme of "obtaining funds through mergers, acquisitions and joint ventures."

Swanson first challenges the district court's loss finding because, he asserts, some of the extra $4 million he took for the Malta Clayton acquisition might really have been used for legitimate closing costs. To support this position, Swanson points to trial testimony by an Ernst & Young accountant (and government witness) who stated during cross-examination that the fees charged by Vickers and Allen for the Malta...