United States v. Bazemore

• Decision Date: 05 October 2016
• Docket Number: No. 15-10805,15-10805
• Citation: 839 F.3d 379
• Parties: United States of America, Plaintiff - Appellee v. Vincent Bazemore, Defendant - Appellant
• Court: U.S. Court of Appeals — Fifth Circuit

839 F.3d 379

United States of America, Plaintiff - Appellee

v.Vincent Bazemore, Defendant - Appellant

No. 15-10805

United States Court of Appeals, Fifth Circuit.

FILED October 5, 2016

Emily Baker Falconer, Assistant U.S. Attorney, James Wesley Hendrix, Assistant U.S. Attorney, U.S. Attorney's Office, Dallas, TX, for Plaintiff—Appellee.

Kevin Joel Page, Federal Public Defender's Office, Dallas, TX, for Defendant—Appellant.

Before KING, SMITH, and COSTA, Circuit Judges.

PER CURIAM:

Defendant–Appellant Vincent Bazemore was convicted of mail fraud for his part in a scheme to procure life insurance policies by misrepresenting the applicants' net worths and their intention to transfer the policies to a third party. This court previously affirmed Bazemore's conviction but vacated his sentence and the restitution order. On remand for resentencing, the district court applied an 18–level enhancement to Bazemore's base offense level due to the actual loss caused by Bazemore's scheme to insurers and a lender. Bazemore again appeals his sentence, raising several challenges to the district court's application and calculation of the actual loss enhancement. For the following reasons, we AFFIRM the district court's sentence in full.

I. FACTUAL AND PROCEDURAL BACKGROUND

This appeal arises out of an insurance fraud scheme perpetrated by Defendant–Appellant Vincent Bazemore. In resolving Bazemore's original appeal, we described the scheme and procedural history in detail, United States v. Bazemore (Bazemore I) , 608 Fed.Appx. 207, 209 (5th Cir. 2015), and we now recount the scheme and procedural history as relevant to the sentencing question before us today. “Bazemore's scheme involved tricking insurance companies into issuing stranger-owned (or originated) life insurance (“STOLI”) policies to unqualified applicants.”¹ Id. Bazemore first convinced senior citizens of relatively modest means to apply for multi-million dollar life insurance policies intended for high net-worth individuals. Id . Bazemore secured the policies by grossly inflating the applicants' net worths on the policy applications and falsely claiming that the applicants did not intend to transfer the policy to a third party² and that the premiums would not be financed by a third party. Id . However Bazemore did not misrepresent the applicants' age or health status on any application. Id. Bazemore paid the first two years of the policy premiums using loan proceeds from a lender, Portigon AG,³ at which point he planned to sell the policy to a third party investor, use the proceeds to repay the loan, and share the remainder with the applicant. Id. After each policy issued, Bazemore, in his role as an insurance agent, received a commission roughly equivalent to the cost of the first year's premium. Id.

As a result of this scheme, “Bazemore was charged and convicted of four counts of mail fraud, each relating to a STOLI policy for which he received a commission payment.” Id. at 209–10. At Bazemore's first sentencing, “[t]he district court calculated a [G]uidelines range of 292 to 365 months' imprisonment based on an offense level of 39 and criminal history category of II.” Id. at 210. “The offense level was largely the product of a 24–point enhancement for the scheme's intended loss to the insurers, which the district calculated to be $81 million, the sum of the death benefits for all of the policies issued to Bazemore's applicants.” Id. The district court also calculated that Bazemore owed restitution of $4,014,627.13. Id . That figure was the sum of two distinct amounts: (1) an actual loss of $2,266,665.13 suffered by insurers who paid commissions to Bazemore, and (2) an actual loss of $1,747,962 suffered by Portigon. Id . Based on these findings, the district court sentenced Bazemore to 292 months' imprisonment and ordered restitution of $4,104,627.13. Id .

Bazemore appealed his conviction, sentence, and restitution order. Id . The court affirmed Bazemore's conviction but vacated his sentence and the restitution order. Id. at 217. As to his sentence, the court found that the district court erred in using the sum face value of the insurance policies—$81 million—to calculate the intended loss from Bazemore's scheme. Id. at 213–14. The court noted that Bazemore made no misrepresentation as to the applicants' age or health status and this mitigated some of the potential harm from the fraud. Id. at 214–16. Accordingly, it concluded that the district court could not apply an intended loss enhancement based on the $81 million sum face value unless the Government proved by a preponderance of the evidence that the fraudulent policies posed a risk of financial loss to the insurers that the same policies issued to qualified insureds did not. Id. at 216. As to the restitution order, the court found that the district court incorrectly calculated the actual loss amounts suffered by the insurers. Id. at 217. The court instructed that the formula to use for actual loss on a rescinded STOLI policy (in the restitution context) on remand was “the commission the insurer paid to Bazemore less any premium payments that it retained.” Id.

On remand, the probation officer issued an addendum to the presentence report (“PSR”), concluding that actual loss, rather than intended loss, should be used to calculate the loss enhancement at resentencing. For purposes of the loss enhancement, the PSR calculated a total actual loss of $1,282,636 to the insurers targeted by Bazemore, using the formula described by the court in Bazemore I (commissions paid by the insurers less any premium payments they retained). Id. at 216–17. The PSR also calculated an actual loss of $1,747,962 to the lender, i.e., the same loss calculated by the district court for Portigon at Bazemore's first sentencing. But the PSR noted that Portigon transferred its loan and securities portfolio to EAA PF LLP in January 2015, so EAA replaced Portigon as the victim of Bazemore's scheme.⁴

On August 17, 2015, the district court held Bazemore's resentencing hearing. The district court adopted the PSR's calculation of actual loss to the insurers, finding they suffered a total actual loss of $937,612.⁵ The district court then calculated the actual loss to Bazemore's lender. Looking to Fifth Circuit caselaw, the court found that actual loss should be calculated “at the time of the original sentencing,” thereby ignoring Portigon's transfer of the loans (and its related security interest in the insurance policies) to EAA because the transfer occurred after the first sentencing. The district court included only the nine loans that had been rescinded, settled, or lapsed in calculating the lender's total actual loss of $1,747,962. The district court did not include any actual loss for the four loans related to active policies, noting that the Government stated that any loss for those loans was “speculative.”

Because the loss to the insurers and the lender combined for a total actual loss of $2,685,574, the district court applied an 18–level enhancement. See U.S. Sentencing Guidelines Manual § 2B1.1(b) (U.S. Sentencing Comm'n 2012) (providing for an 18-level enhancement for offense causing losses between $2.5 and 7 million). The district court calculated a Guidelines range of 151 to 188 months' imprisonment based on a total offense level of 33 and a criminal history category of II. Similar to the first sentence, Bazemore's offense level was largely the product of the loss enhancement. The court sentenced Bazemore to 188 months' imprisonment, ordered restitution in the amount of $2,685,574, and further explained that it would have imposed the same sentence even if it had not overruled Bazemore's objections. Bazemore timely appeals the actual loss enhancement to his base offense level.

II. THE ACTUAL LOSS CALCULATION

A. The law of the case doctrine and the mandate rule

On appeal, Bazemore argues, as he did before the district court, that the district court erred in applying a loss enhancement based on a finding of actual loss because both the law of the case doctrine and the mandate rule compelled a finding of zero actual loss. Under the law of the case doctrine, “an issue of fact or law decided on appeal may not be reexamined either by the district court on remand or by the appellate court on a subsequent appeal.” United States v. Matthews , 312 F.3d 652, 657 (5th Cir. 2002) (quoting Tollett v. City of Kemah , 285 F.3d 357, 363 (5th Cir. 2002) ). “[A] corollary or specific application of the law of the case doctrine” is the mandate rule. United States v. Pineiro , 470 F.3d 200, 205 (5th Cir. 2006) (per curiam). That rule “prohibits a district court on remand from reexamining an issue of law or fact previously decided on appeal and not resubmitted to the trial court on remand.” Id. “Moreover, the [mandate] rule bars litigation of issues decided by the district court but foregone on appeal or otherwise waived, for example because they were not raised in the district court.” United States v. Lee , 358 F.3d 315, 321 (5th Cir. 2004). Accordingly, a district court cannot “reconsider its own rulings made before appeal and not raised on appeal.” 18B Charles Alan Wright et al., Federal Practice and Procedure § 4478.3 (2d ed. 2016). Both the law of the case doctrine and the mandate rule apply to issues decided expressly or implicitly. See Pineiro , 470 F.3d at 205 ; Lee , 358 F.3d at 320. “We review de novo a district court's application of the remand order, including whether the law-of-the-case doctrine or mandate rule forecloses the district court's actions on remand.” United States v. Carales–Villalta , 617 F.3d 342, 344 (5th Cir. 2010) ; accord Pineiro , 470 F.3d at 204.

Bazemore's argument rests on two objections that he made at his first sentencing. In these objections Bazemore argued that (1) actual loss to the insurers for the commissions they paid Bazemore should be calculated based on losses to the insurers rather than gains to Bazemore because gains...