U.S. v. Sykes

• Decision Date: 04 February 2004
• Docket Number: No. 03-1406.,03-1406.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Joseph V. SYKES, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

357 F.3d 672

UNITED STATES of America, Plaintiff-Appellee, v. Joseph V. SYKES, Defendant-Appellant.

No. 03-1406.

United States Court of Appeals, Seventh Circuit.

Argued October 1, 2003.

Decided February 4, 2004.

Brian Hayes (argued), Chicago, IL, Plaintiff-Appellee.

Terence F. MacCarthy, John F. Murphy (argued), Chicago, IL, for Defendant-Appellant.

Before KANNE, ROVNER, and EVANS, Circuit Judges.

KANNE, Circuit Judge.

Between November 1998 and December 2001, Joseph Sykes manufactured counterfeit checks on his home computer and used them to defraud approximately 20 different banks and investment companies. Before being caught he caused over $1 million of actual loss to his victims. In August 2002 Sykes pleaded guilty to one count of bank fraud, 18 U.S.C. § 1344. The court sentenced him to 100 months' imprisonment and 5 years' supervised release and ordered him to pay over $1 million in restitution. He argues that the court erred in setting his offense level and calculating his criminal history points. We affirm.

I. History

Before this case, 32-year-old Sykes had already accumulated at least nine state convictions involving bad checks and one federal conviction for bank fraud. Sykes's current bank fraud scheme was quite straightforward. First, he made counterfeit checks on his home computer, replicating real checks but substituting fictitious account numbers. Then he deposited some of these checks along with real ones written against closed or overdrawn accounts into new accounts that he opened in his own name or one of his seven aliases. Sykes usually used each new account just long enough to deposit a few checks over the course of several days and then withdraw what he could before the bank discovered the fraud. Sykes also generated other counterfeit checks with real account numbers and used them to initiate fraudulent wire transfers. He would tender a counterfeit check at a bank where he already had an existing account, but instead of making a deposit, he would use it as "proof" of an account at the drawee bank and initiate a wire transfer out of that account and into one of his own accounts. Again he was able to withdraw some funds before the banks detected the fraud and reversed the wire transfers.

Sykes pleaded guilty to one count of bank fraud and proceeded to sentencing. He made several objections to the probation officer's and government's sentencing recommendation, including one to his offense level and one to his criminal history category. His offense level was set at 24, including 15 points for intending to cause more than $10 million in loss. See U.S.S.G. § 2F1.1 (1998) (now incorporated into U.S.S.G. § 2B1.1). He was assessed 16 criminal history points, which placed him in criminal history category VI. See U.S.S.G. Ch. 5, Pt. A, Sentencing Table. The court gave him the minimum term of imprisonment possible for his offense level and criminal history category, 100 months.

II. Analysis

Sykes argues first that the district court failed to explain its conclusion that he intended to inflict over $10 million of loss. He says that the district court should have explained why it was accepting the government's calculation of intended loss instead of the figures he proposed. He contends that the district court's explanation for its conclusion is so deficient that he "cannot challenge, and this court cannot evaluate, the district court's conclusion until the district court has completed its job." Sykes's argument is very narrowly focused on the district court's reasoning and not on its ultimate calculation of loss, though Sykes says that he "believes that if the district court is forced to articulate its rationale, it will come to a different conclusion."

Sykes's argument is without merit. Federal Rule of Criminal Procedure 32(i)(3) requires a district court to rule on all controverted matters that will affect sentencing. See Fed.R.Crim.P. 32(i)(3) (formerly Rule 32(b)(6)(d)); see United States v. Burke, 148 F.3d 832, 835 (7th Cir.1998). This requirement ensures that the court addresses all of the defendant's objections and provides a record of how the objections were resolved for later reference. United States v. Cureton, 89 F.3d 469, 473 (7th Cir.1996). But Rule 32 does not impose an onerous burden. The district court can often satisfy the rule by adopting the proposed findings in the presentence report (PSR), even as to contested facts, Burke, 148 F.3d at 836, so long as the PSR articulates a sufficiently clear basis for the sentence, see United States v. Schaefer, 291 F.3d 932, 938-39 (7th Cir. 2002), and the reviewing court can be sure that "the district court made a decision of design rather than of convenience," Burke, 148 F.3d at 836. The district court did not set Sykes's sentence simply by adopting the PSR, but these cases demonstrate the court's minimal burden.

In this case the controverted matter was the amount of loss, and the court clearly resolved the controversy and then provided a basis for its ruling. Sykes's attorney argued that his client intended to steal only as much as necessary to satisfy his personal and business debts. The government countered that Sykes intended to steal the total amount of the fraudulent deposits and wire transfers. As evidence of its calculation, the government offered a detailed list of all the fraudulent deposits and wire transfers totaling approximately $13 million. The government also described a conversation between Sykes and an investigator from Merrill Lynch during which Sykes explained that there was a window of opportunity for him to steal fraudulently transferred funds before the fraud was detected (suggesting that Sykes could have stolen all of the money in that window of opportunity). When the district court settled on the government's theory, the court cited the relevant case law, explained that it agreed with the government's analysis of the facts (which tracked the analysis articulated in the PSR) and then explained that it was rejecting Sykes's calculations because it believed that Sykes intended to steal the total amount of money he deposited into the accounts. The court was especially persuaded by Sykes's statement to the Merrill Lynch investigator. The district court's explanation is sufficient to serve the purposes of Rule 32. And Sykes's contention that the district court's analysis is too inadequate to facilitate his appeal is disingenuous; just as he understood the PSR analysis well enough to urge its rejection in a 22-page memorandum to the district court, he could also understand equally well the district court's loss calculation, which matched the total offered by the government and the probation officer.

Perhaps the reason Sykes attacks only the court's reasoning and then professes his inability to attack the ultimate loss calculation is that the law would be against him if he were to attack to the loss calculation directly. We would review the court's factual conclusion about Sykes's intended loss only for clear error. United States v. Kipta, 212 F.3d 1049, 1051 (7th Cir.2000). There is ample case law that in a bank fraud case the total amount of fraudulent deposits is an acceptable calculation of intended loss. Id. at 1052 (affirming district court's conclusion that defendant intended to defraud bank out of total amount of checks drawn on account with insufficient-funds); United States v. Yusufu, 63 F.3d 505, 513-14 (7th Cir.1995) (affirming district court's calculation of intended loss as inflated face amount of money orders and checks that defendant had altered before depositing them); United States v. Strozier,...