United States v. McKinney
| Decision Date | 09 December 2022 |
| Docket Number | 22-cr-20249 |
| Parties | United States of America, Plaintiff, v. Thomas Lee McKinney, Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
Jonathan J.C. Grey Mag. Judge
Defendant Thomas Lee McKinney filed four objections to the Presentence Investigation Report (PSR). This opinion and order addresses Defendant's second objection. On October 31, 2022, the Court held an in-person hearing on the objection and heard oral argument. For the reasons set forth below Defendant's second objection is GRANTED.
On May 10, 2022, an information charged Defendant with two counts: “Bank Fraud; Aiding and Abetting,” in violation of 18 U.S.C. § 1334 (Count 1); and felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1) (Count 2). (ECF No. 15.) On June 23, 2022, Defendant pled guilty to Counts 1 and 2 of the information pursuant to a Rule 11 plea agreement. (ECF No. 26.)
In the plea agreement, the factual basis for Count 1 states:
From on or about January 4, 2019 to or [sic] about January 10, 2019, defendant and others executed a scheme to defraud JP Morgan Chase Bank (JPMC), a financial institution insured by the Federal Deposit Insurance Corporation. The scheme involved stealing a check payable by United Parcel Service and depositing it into a bank account, and thereafter making withdrawals therefrom, under false pretenses. As part of the scheme, a check for $ 608,100 payable by UPS to Bluestem Brands Inc., a company in the state of Minnesota, was diverted from a UPS facility in the state of Georgia, and sent instead to the state of Michigan. Shortly after the check was diverted from Georgia, one or more participants in the scheme created a false company in the state of Michigan called Bluestem Brands Inc., and opened an account for the false Bluestem Brands company at a JPMC branch office in Huntington Woods, Michigan on or about January 4, 2019. On or about January 7, 2019, defendant and another participant in the scheme deposited the stolen UPS check into the account under the materially false pretense, and with the intent to deceive the bank, that they were authorized to do so on behalf of the real Bluestem Brands company for which the check was intended. Thereafter, defendant made a series of withdrawals from the JPMC account on January 9 and 10, 2019, totaling over $ 173,310.
(Id. at PageID.149-150.)
For Count 1's offense level calculation, the PSR recommends a fourteen-level increase under U.S.S.G. § 2B1.1(b)(1)(H) based on an “intended loss” amount of $608,100.[1] The word “loss” is not defined in § 2B1.1. See U.S. Sent'g Guidelines Manual § 2B1.1(b)(1) (U.S. Sent'g Comm'n 2018) [hereinafter U.S.S.G. § 2B1.1(b)(1)]. But § 2B1.1's commentary contains a “General Rule” that “loss is the greater of actual loss or intended loss,” and it defines the terms “actual loss” and “intended loss.” Id. § 2B1.1 cmt. n.3(A)(i)-(ii). The PSR applies the commentary's general rule and its definition of “intended loss” in recommending a fourteen-level increase under § 2B1.1(b)(1)(H).
Defendant's second objection concerns this fourteen-level increase. Defendant argues that the “proper consideration” for the offense level computation for Count 1 “is actual loss ($173,000),[2] which would result in an increase of 10 levels, § 2B1.1(b)(1)(F), and not 14 [levels].” (ECF No. 32, PageID.317.) The government argues that the Court should consider the “intended loss” amount of $608,100 and apply § 2B1.1(b)(1)(H)'s fourteen-level increase. (ECF No. 33, PageID.344.) The government indicates that “[t]here is no dispute that $608,100 represents th[e] ‘intended loss,' whereas the amount that [Defendant] withdrew from the bank, $173,310, represents the ‘actual loss.'” (Id. at PageID.339.)
The PSR's “Sentencing Guideline recommendations are not binding on the Court.” United States v. Earnest, 588 F.Supp.3d 800, 803 (S.D. Ohio 2022). “Within 14 days after receiving the presentence report, the parties must state in writing any objections, including objections to material information, sentencing guideline ranges, and policy statements contained in or omitted from the report.” Fed. R. Crim. P. 32(f)(1). Federal Rule of Criminal Procedure 32(i)(3) provides in relevant part that
[a]t sentencing, the court:
Fed. R. Crim. P. 32(i)(3)(A)-(B).
The Sixth Circuit instructs that “the district court must affirmatively rule on a controverted matter where it could potentially impact the defendant's sentence.” United States v. White, 492 F.3d 380, 415 (6th Cir. 2007); see also United States v. Darwich, 337 F.3d 645, 667 (6th Cir. 2003) (). “[A] Rule 32(i)(3) ruling . . . requires more than blind reliance on the PSR”; “the PSR cannot be substituted for a ruling on a disputed matter.” Darwich, 337 F.3d at 667. The Sixth Circuit's “cases require literal compliance with Rule 32 and mandate that sentencing courts explain their calculation methods, . . . ensuring that defendants are sentenced on the basis of accurate information and provid[ing] a clear record for appellate courts.” United States v. Roberts, 919 F.3d 980, 988 (6th Cir. 2019) () (internal quotation marks and citations omitted).
Section 2B1.1(b)(1) assigns an increase in offense level between zero and thirty based on the dollar amount of the “loss.” U.S.S.G. § 2B1.1(b)(1). The guideline states in relevant part:
In addition, the relevant portion of Application Note 3(A) from § 2B1.1's commentary provides:
3. Loss Under Subsection (b)(1).--This application note applies to the determination of loss under subsection (b)(1).
Id. § 2B1.1 cmt. n.3(A)(i)-(ii).
Courts have distinguished the guidelines from the commentary based on them having different procedural requirements. See United States v. Havis, 927 F.3d 382, 385-86 (6th Cir. 2019) (en banc) (per curiam). Under the Sentencing Reform Act of 1984, the U.S. Sentencing Commission is tasked with creating the guidelines, and Congress reviews the guidelines and any amendments. See United States v. Riccardi, 989 F.3d 476, 483-84 (6th Cir. 2021) (). Moreover, amendments to the guidelines must “go through notice-and-comment rulemaking.” Id. at 484. But because the Sentencing Reform Act and its amendments do not mention the commentary, “[t]o amend the commentary, . . . the Commission need not follow the same procedures that govern changes to the substantive rules in the guidelines themselves (congressional review and notice-and-comment rulemaking).” Id. (citing Havis, 927 F.3d at 386). According to the Sixth Circuit, “[t]hat fact led some circuit courts to hold originally that they were not bound by the commentary's interpretation of the guidelines.” Id. (citing Stinson v. United States, 508 U.S. 36, 39-40, 40 n.2 (1993)).
In Stinson v. United States, the Supreme Court “rejected this view” and “held that the commentary's interpretation of a guideline ‘must be given []controlling weight unless it is plainly erroneous or inconsistent with the' guideline.” Id. (quoting Stinson, 508 U.S. at 38). The Court “viewed the guidelines as the ‘equivalent of legislative rules adopted by federal agencies,'” and “it viewed the commentary as ‘akin to an agency's interpretation of its own legislative rules.'” Id. (quoting Stinson, 508 U.S. at 45). The Court therefore concluded that “the commentary deserved the deference given to an agency's interpretation of its regulations-what was then known as Seminole Rock deference but now goes by Auer deference.” Id. (citing Stinson, 508 U.S. at 45; Auer v. Robbins, 519 U.S 452, 461 (1997); Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945)). The Sixth Circuit notes that “Stinson added that the Commission could effectively amend a guideline by amending the commentary so long as ‘the guideline which the commentary interprets will bear the [amended] construction.'” Id. (alteration in original) (quoti...
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