U.S. v. Szarwark

• Citation: 168 F.3d 993
• Decision Date: 18 February 1999
• Docket Number: Nos. 98-1968,98-2189,s. 98-1968
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Ernest J. SZARWARK, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 993

168 F.3d 993

UNITED STATES of America, Plaintiff-Appellee, v. Ernest J. SZARWARK, Defendant-Appellant.

Nos. 98-1968, 98-2189.

United States Court of Appeals Seventh Circuit.

Argued Nov. 4, 1998.

Decided Feb. 18, 1999.

Donald J. Schmid (argued), Office of the United States Attorney, South Bend, IN, for Plaintiff-Appellee in No. 98-1968.

Andrew B. Baker, Jr., Office of the United States Attorney, Dyer, IN, for Plaintiff-Appellant in No. 98-2189.

C. Kenneth Wilber (argued), Berger, James, Gammage & Wilber, South Bend, IN, for Defendant-Appellant.

Before POSNER, Chief Judge, and BAUER and EVANS, Circuit Judges.

BAUER, Circuit Judge.

After being convicted of mail fraud, in violation of 18 U.S.C. § 1341, Ernest Szarwark ("Szarwark") was sentenced to twenty-four months in prison, and ordered to pay $87,346.29 in restitution. Szarwark appeals, challenging the sufficiency of the government's evidence that the mailings were in furtherance of his scheme to defraud, as well as its evidence that the mailings actually occurred. The government cross-appeals, arguing that it was clear error for the district judge to grant Szarwark a two level reduction for acceptance of responsibility, and that the judge erred in holding that retroactive application of the Mandatory Victim Restitution Act violates the Ex Post Facto Clause. We affirm in part and reverse in part.

I. BACKGROUND

Ernest Szarwark stole money from the law firm Barnes & Thornburg, where he was a partner. He accomplished this crime by sending legitimate bills to clients but depositing their checks into the firm's trust account rather than its general account. Szarwark then used trust account checks to pay personal debts while representing that he was On July 10, 1997, a federal grand jury sitting in the Northern District of Indiana charged Szarwark with four counts of mail fraud under 18 U.S.C. § 1341. Szarwark pled not guilty. After a three-day trial, which began on January 6, 1998, a jury convicted him on all four counts. Szarwark made motions for a judgment of acquittal both after the government rested its case and after the jury returned its verdict. His motions were denied. After receiving a two level reduction for acceptance of responsibility under the Sentencing Guidelines, Szarwark was sentenced to twenty-four months in prison. He was also ordered to pay $87,346.29 in restitution. Both Szarwark and the government appeal.

making payments on behalf of clients. Finally, Szarwark covered up his activities by writing off the original bills as uncollectible.

II. DISCUSSION

A. Sufficiency of the Evidence

Szarwark's appeal challenges the denials of his motion for a judgment of acquittal. Such motions may be granted only "if the evidence is insufficient to sustain a conviction." Fed.R.Crim.P. 29(a). As we have often explained, when we review for sufficiency of evidence, the appellant "faces a nearly insurmountable hurdle ... [in that] we consider the evidence in the light most favorable to the Government, defer to the credibility determination of the jury, and overturn a verdict only when the record contains no evidence, regardless of how it is weighed, from which the jury could find guilt beyond a reasonable doubt." United States v. Moore, 115 F.3d 1348, 1363 (7th Cir.1997) (internal quotation marks and citations omitted).

In order to prove that Szarwark violated the mail fraud statute, 18 U.S.C. § 1341, the government was required to show that he used the mails in furtherance of his scheme to defraud. United States v. Lack, 129 F.3d 403, 406 (7th Cir.1997). However, "the use of the mails need not be an essential element of the scheme." Schmuck v. United States, 489 U.S. 705, 710, 109 S.Ct. 1443, 1448, 103 L.Ed.2d 734 (1989). Rather, "[i]t is sufficient for the mailing to be incident to an essential part of the scheme." Id. at 710-11, 109 S.Ct. at 1448 (internal quotation marks and citations omitted). Finally, "courts must consider the full scope of the scheme when determining the sufficiency of the mailing element." United States v. Ashman, 979 F.2d 469, 482 (7th Cir.1992). See also Schmuck, 489 U.S. at 715, 109 S.Ct. at 1450 ("The relevant question at all times is whether the mailing is part of the execution of the scheme as conceived by the perpetrator at the time."). Thus, we read the "in furtherance" requirement broadly. United States v. Laurenzana, 113 F.3d 689, 694 (7th Cir.1997).

Szarwark argues that his fraud reached fruition when he deposited his clients' checks into the firm's trust account, bringing the money within his control. He contends that the mailing of the checks constituted mere investment of the proceeds of the scheme and, therefore, was neither an essential part of the scheme nor incident to an essential part of the scheme. Under this theory, Szarwark would have us treat his case as if he had deposited his clients' checks into his own bank account. However, unlike someone who has successfully deposited fraudulently obtained checks into his own bank account, Szarwark could not have benefitted from his scheme without forwarding the checks (which he chose to do by mail) to his creditors. There was no other way for him to get the money out of Barnes & Thornburg's trust account. Obviously, he could not have made the checks out to himself. Thus, there was ample evidence from which the jury could conclude beyond a reasonable doubt that Szarwark's mailing of the checks was an essential element of his fraudulent scheme.

Szarwark also argues that the government failed to present sufficient proof that he actually mailed the trust account checks to the IRS, as charged in Counts I and II of the indictment. However, the government presented evidence that the checks were received by the IRS Service Center in Cincinnati, Ohio, that the Service Center receives checks from taxpayers at a post office box, and that the Service Center is a secure facility that does not receive hand deliveries

from taxpayers. Furthermore, the defense stipulated that only mailed items are delivered to post office boxes. Viewed in the light most favorable to the government, it is clear that the jury was presented with sufficient evidence to find beyond a reasonable doubt that the mailings did in fact occur. See United States v. Mankarious, 151 F.3d 694, 702-3 (1998) (finding sufficient evidence that a series of fraudulent invoices were mailed when an employee testified that she routinely mailed invoices, and that she specifically remembered mailing one of the invoices; and the government presented evidence that the recipient of the invoices regularly date-stamped incoming mail, many of the invoices were date stamped, and the timing of the date stamps showed that the invoices were received several days after the invoice date).

B. Acceptance of Responsibility

Before we discuss the government's cross-appeal, we feel compelled to advise that "defendants, who benefit from favorable calls under the federal sentencing guidelines, should think more than twice about appealing their cases when their appeals have little likelihood of success ... because a defendant's appeal may draw a guidelines cross-appeal when the government would [probably] not ... appeal on its own in the first instance." United States v. Bradley, 165 F.3d 594, 595 (7th Cir.1999). See also United States v. Martinson, 37 F.3d 353 (7th Cir.1994) (affirming conviction but finding clear error in reduction of offense level for acceptance of responsibility). While we find no merit in Szarwark's appeal, we agree with the government's contention on cross-appeal that Szarwark was not entitled to any sentence reduction for acceptance of responsibility.

We review a district court's determination of acceptance of responsibility for clear error, bearing in mind the Guidelines' directive that "[t]he sentencing judge is in a unique position to evaluate a defendant's acceptance of responsibility," and that, consequently, "the determination of the sentencing judge is entitled to great deference on review." U.S.S.G. § 3E1.1, Application Note 5. Even under this deferential standard, however, Szarwark's sentence reduction cannot stand.

The Sentencing Guidelines provide that a defendant who "clearly demonstrates acceptance of responsibility for his offense," is entitled to a two level reduction. U.S.S.G. § 3E1.1(a). In order to receive this reduction, it is normally necessary, (although not sufficient) for the defendant to plead guilty. United States v. Cunningham, 103 F.3d 596, 598 (7th Cir.1996); United States v. Beserra, 967 F.2d 254, 255 (7th Cir.1992). See also U.S.S.G. § 3E1.1, Application Note 3. This bias in favor of guilty pleas arises from the Guidelines' admonition that an acceptance of responsibility reduction "is not intended to apply to a defendant who puts the government to its burden of proof at trial by denying the essential factual elements of guilt." Id., Application Note 2. See also Cunningham, 103 F.3d at 598 ("[T]he [acceptance of responsibility] provision is designed in part to help the government and the judiciary avoid the time and expense of trial."); Beserra, 967 F.2d at 256 ("The framers of the sentencing guidelines ... wanted to encourage the guilty to plead guilty in order to save the government and the judiciary the costs of trial."). Consistent with this policy, however, a defendant may, in "rare situations," clearly demonstrate acceptance of responsibility even after going to trial if the defendant does so only to "assert and preserve issues that do not relate to factual guilt." U.S.S.G. § 3E1.1, Application Note 2. Unfortunately for Szarwark, this is not one of those "rare situations." Although Szarwark admitted that he embezzled money from his law firm, he put the government to its burden of proof (at a three day trial involving live testimony) by denying that the mailings were in furtherance of his scheme to defraud and by challenging the government's evidence that the...