United States v. Ferdman

• Decision Date: 13 February 2015
• Docket Number: No. 13–2196.,13–2196.
• Citation: 779 F.3d 1129
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Joshua FERDMAN, Defendant–Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

779 F.3d 1129

UNITED STATES of America, Plaintiff–Appellee

v.Joshua FERDMAN, Defendant–Appellant.

No. 13–2196.

United States Court of Appeals, Tenth Circuit.

Feb. 13, 2015.

Laura Fashing, Assistant United States Attorney (Damon P. Martinez, Acting United States Attorney, with her on the brief), Albuquerque, NM, for Plaintiff–Appellee.

John V. Butcher, Assistant Federal Public Defender, Albuquerque, NM, for Defendant–Appellant.

Before LUCERO, BALDOCK, and HOLMES, Circuit Judges.

Opinion

BALDOCK, Circuit Judge.

Defendant Joshua Ferdman and three co-conspirators concocted a scheme to fraudulently obtain cellular phones from Sprint stores in Arizona, California, and New Mexico, and resell them. To make a long story short, Defendant illicitly obtained the account information of numerous Sprint corporate customers. With this information in tow, Defendant went to various Sprint stores and purchased phones by impersonating the corporate account representatives. Defendant charged the price of the phones to the corporate accounts, and then sold at least some of the phones to one of his co-conspirators for online resale.

In one particular instance, on May 25, 2011, Defendant entered a Sprint store in Albuquerque, New Mexico, and held himself out as an authorized representative of Double Vision Glass and Mirror. Defendant charged thirteen smartphones to Double Vision's corporate account and left the store with the phones. Shortly thereafter, Defendant phoned the same Sprint store and ordered seven additional phones, once again charging them to Double Vision's account. A suspicious Sprint employee contacted Double Vision to confirm the order. After learning Defendant was an imposter, the employee lured him back to the store by sending him a text message advising him that his phones were ready for pickup. Albuquerque police officers arrested Defendant when he returned to the store.

Defendant subsequently pled guilty to a two-count indictment. The first count charged Defendant and his three co-conspirators with (a) conspiracy to transport in interstate commerce fraudulently obtained goods valued at $5,000 or more, and (b) conspiracy to use unauthorized access devices to obtain goods valued at $1,000 or more, both in violation of 18 U.S.C. § 371. The second count charged the four with the substantive crime of using unauthorized access devices to obtain goods valued at $1,000 or more, in violation of 18 U.S.C. § 1029(a)(2). The district court sentenced Defendant to fifteen months in prison.

As part of his sentence, the court ordered Defendant to pay Sprint $48,715.59 in restitution pursuant to the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. § 3663A. The court calculated this amount based on what Sprint referred to as the “retail unsubsidized price” of 86 cell phones Defendant fraudulently procured between May 15 and May 25, 2011, plus Sprint's shipping and investigative costs. Defendant now appeals the district court's restitution order, arguing the Government's proof of loss was insufficient to support the award.

Our jurisdiction arises under 18 U.S.C. § 3742(a). We review the district court's application of the MVRA de novo and its factual findings for clear error, while ultimately assessing the amount of the restitution award under an abuse of discretion standard. United States v. Shengyang Zhou, 717 F.3d 1139, 1152 (10th Cir.2013). Applying the appropriate standards, we vacate the order of restitution for lack of an adequate evidentiary basis, and remand.

I.

To better understand the particulars of this case, let us first consider the law generally applicable to the district court's order of restitution. A district court may order criminal restitution only as authorized by federal statute. Id. at 1154. As relevant here, the MVRA “shall apply in all sentencing proceedings” following a conviction for “any offense committed by fraud or deceit.” 18 U.S.C. § 3663A(c)(1)(A)(ii). Just last term in Paroline v. United States, ––– U.S. ––––, 134 S.Ct. 1710, 1726, 188 L.Ed.2d 714 (2014), the Supreme Court explained that while criminal restitution “serves punitive purposes” by implicating the Government's prosecutorial powers, its “primary goal” is “remedial or compensatory.”¹ Thus, the principal aim of such restitution is to ensure that crime victims, to the extent possible, are made whole for their losses. United States v. James, 564 F.3d 1237, 1246 (10th Cir.2009). This means restoring victims to the position they occupied before the crime. See Hughey v. United States, 495 U.S. 411, 416, 110 S.Ct. 1979, 109 L.Ed.2d 408 (1990). Restitution must not unjustly enrich crime victims or provide them a windfall. James, 564 F.3d at 1246. To these ends, an order of restitution imposed pursuant to the MVRA must be based on “the full amount of each victim's losses as determined by the court and without consideration of the economic circumstances of the defendant.” 18 U.S.C. § 3664(f)(1)(A). “We have held a district court may not order restitution in an amount that exceeds the actual loss caused by the defendant's conduct, which would amount to an illegal sentence constituting plain error.” James, 564 F.3d at 1243; see also United States v. Serawop, 505 F.3d 1112, 1124 (10th Cir.2007).

Where return of the stolen property is not feasible, the defendant must pay “the value of the property” to the victim of the offense, plus, in any event, “expenses incurred during participation in the investigation or prosecution of the offense.” 18 U.S.C. § 3663A(b)(1), (b)(4). Although the MVRA does not define “value,” and does not expressly authorize restitution for lost sales or profits, we have recognized that § 3663A “appears to contemplate the exercise of discretion by sentencing courts in determining the measure of value appropriate to restitution calculation in a given case.” James, 564 F.3d at 1245 (internal quotations omitted). “[T]his approach allows the district court to determine in each circumstance the best measure of value for the purpose of calculating the [victim's] actual loss....” Id. at 1246.

A district court shall issue and enforce an order of restitution under the MVRA in accordance with 18 U.S.C. § 3664. Id. § 3663A(d). “Any dispute as to the proper amount ... of restitution shall be resolved by the court by a preponderance of the evidence. The burden of demonstrating the amount of loss sustained by the victim as a result of the offense shall be on ... the Government.” Id. § 3664(e). Prior to sentencing, the probation office must “obtain and include in its presentence report ... information sufficient for the court to exercise its discretion in fashioning a restitution order. The report shall include, to the extent practicable, a complete accounting of the losses to each victim....” Id. § 3664(a). The probation office must also provide the victim an opportunity to file “a separate affidavit relating to the amount of the victim's losses subject to restitution.” Id. § 3664(d)(2)(A)(vi).

Concurrent with the passage of the MVRA in 1996, Congress amended § 3664to include subsections (d)(4) and (d)(6), which permit the district court to require proof of loss beyond that contained in the presentence report (PSR) and to refer the matter for hearing and proposed resolution. Pub.L. No. 104–132, § 206(a), 110 Stat. 1214, 1233 (1996). After reviewing the PSR and any objections thereto, the district court “may require additional documentation or testimony” before awarding restitution. Id. § 3664(d)(4). For the protection of the victim, “[t]he privacy of any records filed, or testimony heard” pursuant to subsection (d)(4) “shall be maintained to the greatest extent possible, and such records may be filed or testimony heard in camera.” Id. The court also “may refer any issue arising in connection with a proposed order of restitution to a magistrate judge or special master for proposed findings of fact and recommendations as to disposition,” subject to de novo review. Id. § 3664(d)(6). Finally, the MVRA provides that a district court may decline to award restitution where “complex issues of fact related to the ... amount of the victim's losses would complicate or prolong the sentencing process to a degree that the need to provide restitution to any victim is outweighed by the burden on the sentencing process.” Id. § 3663(c)(3)(B).

All this is not to say that the restitution phase of criminal sentencings should become a substitute for civil trials. For instance, although the MVRA allows recovery of losses “actually caused by the defendant's offense,” it does not allow recovery of consequential or incidental damages. Shengyang Zhou, 717 F.3d at 1154 (internal quotations omitted). According to the MVRA's legislative history: “It is the committee's intent that courts order full restitution to all identifiable victims of covered offenses, while guaranteeing that the sentencing phase of criminal trials do not become fora for the determination of facts and issues better suited to civil proceedings.” S.Rep. No. 104–179, at 189 (1996), reprinted in 1996 U.S.C.C.A.N. 924, 931.

But this does not mean a district court may dispense with the necessity of proof as mandated by the MVRA and simply “rubber stamp” a victim's claim of loss based upon a measure of value unsupported by the evidence. A district court “may resolve restitution uncertainties with a view towards achieving fairness to the victim so long as it still makes a reasonable determination of appropriate restitution rooted in a calculation of actual loss. ” United States v. Gallant, 537 F.3d 1202, 1252 (10th Cir.2008) (emphasis added). True, the MVRA does not require a court to calculate a victim's actual loss with “exact” precision. United States v. Parker, 553 F.3d 1309, 1323 (10th Cir.2009). Considered in its entirety, however, the MVRA undoubtedly “require[s] some precision when calculating restitution. Speculation and rough justice are not permitted.” United States v. Anderson, 741 F.3d 938, 954 (9th Cir.2...