United States v. Garcia, CR 10–1727 JB.

• Decision Date: 22 March 2013
• Docket Number: No. CR 10–1727 JB.,CR 10–1727 JB.
• Citation: 939 F.Supp.2d 1155
• Parties: UNITED STATES of America, Plaintiff. v. Vincent J. GARCIA, Defendant.
• Court: U.S. District Court — District of New Mexico

939 F.Supp.2d 1155

UNITED STATES of America, Plaintiff.

v.Vincent J. GARCIA, Defendant.

No. CR 10–1727 JB.

United States District Court,

D. New Mexico.

March 22, 2013.

B.J. Crow, Crow Law Firm, Jason Bowles, Bowles Law Firm, Albuquerque, NM, for Defendant.

Kenneth J. Gonzales, United States Attorney, Jonathan M. Gerson, Assistant United States Attorney, United States Attorney's Office, Albuquerque, NM, for Plaintiff.

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, District Judge.

THIS MATTER comes before the Court on: (i) the United States' Objections to Presentence Report, filed May 4, 2012 (Doc. 89) (“U.S. Objections”); and (ii) the Defendant Vincent Garcia's Formal Objections to the Presentence Report, filed August 6, 2012 (Doc. 101) (“V. Garcia Objections”). The Court held an evidentiary hearing on August 15, 2012. The primary issues are: (i) whether the Court should accept that the parties' stipulation that the gross loss Defendant Vincent Garcia's offense of bank fraud caused is $842,237.44; (ii) how any credits that V. Garcia has should be applied against the gross loss that his offense caused; (iii) whether V. Garcia should receive an enhancement pursuant to U.S.S.G. § 2B1.1(b)(10)(C) for the use of “sophisticated means” in the commission of bank fraud; and (iv) whether V. Garcia should receive an enhancement pursuant to U.S.S.G. § 2B1.1(b)(2) based upon the number of victims of his offense. The Court will adopt the parties' proposed method for calculating the gross loss, but the Court will not adopt the parties' stipulated gross loss amount, because the evidence before the Court does not support their figure. The Court will apply V. Garcia's credits to offset the gross loss amount on a victim by victim basis. V. Garcia's credits are the collateral he pledged to obtain loans with financial institutions that are victims in this case, and the Plaintiff United States of America has made no allegation that those loans were fraudulently obtained. Because V. Garcia's offense of bank fraud arises from the fraudulent draw downs he submitted on otherwise legitimate loans, and the sum of those fraudulent draw downs is the gross loss amount his offense incurred, the Court will not apply the total value of V. Garcia's credits—which were pledged for legitimate loans—to offset the gross loss amount incurred in fraudulent draw downs. Rather, the Court finds that a reasonable estimate of the net loss V. Garcia's bank fraud caused may be ascertained by reducing V. Garcia's credits by the ratio of his fraudulent draw downs to the outstanding balance on his loans, and then applying that reduced credit amount to offset V. Garcia's gross loss amount. The Court determines that V. Garcia did not use sophisticated means to commit bank fraud, and sustains V. Garcia's objection to a 2–level increase to his offense level pursuant to U.S.S.G § 2B1.1(b)(10)(C). Lastly, the Court determines that the total number of victims in this case is less than ten, and will accordingly not enhance V. Garcia's offense level pursuant to U.S.S.G. § 2B1.1(b)(2). The Court thus sustains the United States and V. Garcia's objections in part and overrules them in part.

FACTUAL BACKGROUND

This case involves V. Garcia's, David Garcia's, and Derek Barnhill's misappropriation of loan funds to pay for personal living expenses, personal property, and the purchase of a casino in the state of Washington. See Presentence Investigation Report¶ 13, at 4, disclosed Feb. 3, 2012. The parties dispute the gross loss amount that V. Garcia's offense caused. Rule 32(i)(3)(B) requires that a district court at sentencing “must—for any disputed portion of the presentence report or other controverted matter—rule on the dispute or determine that a ruling is unnecessary....” Fed.R.Crim.P. 32(i)(3)(B). See United States v. Orr, 567 F.3d 610, 614 (10th Cir.2009) (same). This Memorandum Opinion and Order's findings of fact shall serve as the Court's essential findings for rule 32(i)(3)(B) purposes.

When the parties dispute the gross loss amount that a defendant's offense caused, for the purposes of sentencing the defendant under U.S.S.G. § 2B1.1, the government bears the burden of proving its estimation of gross loss by a preponderance of the evidence. See United States v. Kieffer, 681 F.3d 1143, 1168 (10th Cir.2012) (“[T]he Government met its initial burden of proving relevant conduct, it then had to prove the amount of loss (or reasonable estimate thereof)). The Court has made a “reasonable estimate” of the value of disputed assets and collateral, based upon the information available to the Court. SeeU.S.S.G. § 2B1.1, cmt. n.3(C) (“The court need only make reasonable estimate of the loss.”).

1. In 2005, V. Garcia and D. Garcia, V. Garcia's son, created Blue Dot Corporation, “a land development company in Albuquerque, New Mexico.” PSR ¶ 13, at 14; id. ¶ 24, at 9.

2. Blue Dot was the general contractor for the development of the properties known as the Downtown Anasazi, LLC and Copper Square, LLC located in Albuquerque, and Lockhaven Estates, LLC located in Clovis, New Mexico. See PSR ¶ 13, at 4; V. Garcia Objections at 11.¹

3. D. Garcia was Blue Dot's vice president and employed as its General Contractor. See Plea Agreement ¶ 8(g), at 5, filed August 19, 2011 (Doc. 76); PSR ¶ 15, at 5; id. ¶ 24, at 9.

4. In exchange for his services as the general contractor, D. Garcia received from Blue Dot a salary and construction work on his personal residence. See PSR ¶ 24, at 9; id. ¶ 26, at 9.

5. Around 2005, V. Garcia took an ownership share in Lockhaven Estates. See PSR ¶ 31, at 13.

6. V. Garcia took ownership of Lockhaven Estates with Derek Barnhill, an associate who had done construction management and real estate development with V. Garcia in the past. See PSR ¶ 31, at 13.

7. V. Garcia took out a loan for $1,800,000.00 from Columbian Bank & Trust (“Columbian Bank”) in 2006 to fund the development of Lockhaven Estates (the “Lockhaven Estates loan”). See Transcript of Hearing (taken Aug. 25, 2012) at 61:3–9 (Meacham) (“The Columbian, ... created a million eight credit in 2006 and secured by lock[ ]haven”) (“Tr.”); ²id. at 76:19 (Meacham) (“The loan was a million eight.”).³

8. The Lockhaven Estates loan's terms provided that V. Garcia and Barnhill could access the funds by submitting draw-down ⁴ requests to Columbian Bank. See PSR ¶ 31, at 13.

9. In 2006, V. Garcia and D. Garcia obtained an $11,000,000.00 construction loan from Columbian Bank to finance the Downtown Anasazi project (the “Downtown Anasazi loan”), a “condominium development in downtown Albuquerque.” PSR ¶ 13, at 4.

10. The Downtown Anasazi is a “development project,” a property that is bought by an investor to be developed so as to generate income. Tr. at 90:18–92:16 (Bowles, Ilfeld).

11. V. Garcia guaranteed his loans with Columbian Bank with his personal property and assets. See PSR ¶ 60, at 23 (“According to the ‘Unconditional Guaranty’ between ... Columbian ... and Vincent Garcia dated Aug. 4, 2006, ... Garcia pledged a lien upon and a right of setoff against all monies, securities, and other property of Guarantor or hereafter in the possession of or on deposit with the Lender ....”); see Tr. at 108:22–109:11 (Bowles, Garcia) (Q: “[D]id you pledge collateral as against the loan [ ] on the Anasazi project?” A: “I did .... that says that the [guarantor] specifically [ ]grants[ ] a security....” Q: “[W]ho was the person receiving this guarantee?” A: “The security interest in the guarantee was received by the lender Columbian bank and trust.”).

12. Over the years of 2006 and 2007, V. Garcia directed Barnhill to submit draw-down requests on the loans with Columbian Bank, and he knew that at least some of the funds obtained “would not be utilized directly in the construction” of the project on behalf of which the draw down was submitted. Plea Agreement ¶ 8(b), at 4; PSR ¶¶ 32–36, at 13–15 (explaining that, according to Barnhill, V. Garcia expressed that in 2006 he was in need of money to proceed with the Downtown Anasazi LLC, and directed Barnhill to submit draw-down requests on behalf of Lockhaven Estates for funds that would be used for the Downtown Anasazi and Blue Dot's expenses); V. Garcia Objections at 20 (“Mr. Garcia never instructed Mr. Barnhill to make fake invoices, but rather to get draws on the loan.”).

13. V. Garcia suggested to Barnhill, “in substance,” that Barnhill “should generate some false invoices for work on Lockhaven for submission to Columbian Bank and Trust, and that [V. Garcia] would use the proceeds for Blue Dot salaries and for expenses incurred on the Anasazi project.” Government Exhibit 4 at 5.⁵See PSR ¶¶ 31–32, at 13 ⁶ (stating that V. Garcia “suggested Barnhill should generate some false invoices for work on Lockhaven to be submitted to Columbian ..., and he would use the proceeds for Blue Dot Corporation salaries and for expense incurred on the Anasazi Project,” and that “no Lockhaven money went out of the office without Vincent Garcia's knowledge”).

14. Barnhill submitted a series of draw downs to Columbian Bank on behalf of Lockhaven Estates, the Downtown Anasazi, and Copper Square, which fraudulent invoices supported. See PSR ¶¶ 33–36, at 13–15; U.S. Objections at 3.

15. Barnhill created invoices using the names of businesses with whom V. Garcia and Barnhill had previously worked and by copying company logos from internet websites, which he placed on the invoices. See PSR ¶ 33, at 13–14.

16. V. Garcia intended to payback the funds that Barnhill obtained through the draw downs that did not go to the construction projects after the Downtown Anasazi became profitable. See Government Exhibit 4, at 5; PSR ¶ 32, at 13.

17. In 2007, V. Garcia increased his loan with Columbian Bank from $11,000,000.00 to $16,000,000.00. See PSR ¶¶ 19–21, at 7; Plea Agreement ¶ 8(b), at 4.⁷ 18. V. Garcia's increased loan with Columbian Bank allowed the Downtown Anasazi and Copper Square...