United States v. Sexton

• Decision Date: 05 July 2018
• Docket Number: No. 17-5743,17-5743
• Citation: 894 F.3d 787
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Daniel SEXTON, Defendant–Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

894 F.3d 787

UNITED STATES of America, Plaintiff–Appellee,

v.Daniel SEXTON, Defendant–Appellant.

No. 17-5743

United States Court of Appeals, Sixth Circuit.

Argued: May 1, 2018

Decided and Filed: July 5, 2018

Rehearing Denied July 16, 2018^*

ARGUED: Michael M. Losavio, Louisville, Kentucky, for Appellant. Dmitriy Slavin, UNITED STATES ATTORNEY’S OFFICE, Lexington, Kentucky, for Appellee. ON BRIEF: Michael M. Losavio, Louisville, Kentucky, for Appellant. Dmitriy Slavin, Charles P. Wisdom Jr., UNITED STATES ATTORNEY’S OFFICE, Lexington, Kentucky, for Appellee.

Before: MOORE, CLAY, and KETHLEDGE, Circuit Judges.

CLAY, J., delivered the opinion of the court in which KETHLEDGE, J., joined, and MOORE, J., joined in part. MOORE, J. (pg. 17), delivered a separate opinion concurring in part and dissenting in part.

CLAY, Circuit Judge.

Defendant Daniel Sexton ("Sexton") appeals from the judgment entered by the district court sentencing him to 109 months’ imprisonment, and ordering him to pay $2,637,058.32 in restitution and to forfeit property to the government, including a money judgment of $2,534,912. For the reasons set forth below, we AFFIRM the decision of the district court.

BACKGROUND

I. Factual History

Sexton operated a number of businesses in Kentucky. Jonathan Williams ("Williams") was a certified public accountant ("CPA") who acted as manager or co-owner of Sexton’s companies. Sheila Flynn ("Flynn") was the office manager. Between May 2006 and September 2010, Sexton and his co-conspirators secured loans for the businesses from banks by making misrepresentations about the businesses’ assets and the identity of the true borrowers. For example, Sexton owned three mobile home parks, and Sexton and Williams submitted financial records to banks and other lenders valuing the parks significantly higher than their actual value. Sexton and Williams also submitted to banks financial records falsely valuing a jet, and false and unfiled tax returns containing inflated adjusted gross income amounts. In addition, they arranged for straw purchases of condominiums that Sexton owned that were in foreclosure proceedings.

The banks who issued the loans included PBI Bank, Community Trust Bank, Farmers National Bank, Forcht Bank, and Central Bank. The total amount of funds disbursed from these banks was $8,160,400. Sexton and Williams also submitted applications for higher loan amounts ($13,600,000 and $13,800,000) toward the end of the time period involved, but those loan funds were never disbursed.

II. Procedural History

On May 5, 2016, Sexton, along with Williams, Flynn, and Joseph Tobin ("Tobin"), a bank loan officer at PBI Bank, was charged in a twenty-four count indictment. Count 1 alleged conspiracy to commit bank fraud in violation of 18 U.S.C. § 1349 and 18 U.S.C. § 1344(1), and Counts 2–24 alleged bank fraud in violation of 18 U.S.C. § 1344(1) and 18 U.S.C. § 2. The indictment also alleged forfeiture to the U.S. of certain property pursuant to 18 U.S.C. §§ 981(a)(1)(C), 982(a)(2)(A), and 28 U.S.C. § 2461(c).

On February 3, 2017, Sexton pleaded guilty to Count 1 pursuant to a plea agreement. At sentencing, the government moved to dismiss Counts 2–24. On March 28, 2017, a Presentence Investigation Report ("PSR") was prepared for Sexton. Relevant to this appeal, the PSR gave Sexton a four-level increase for being an organizer or leader under USSG § 3B1.1(a). The PSR also gave Sexton one criminal history point pursuant to USSG §§ 4A1.1(c), 4A1.2(m), and 4A1.2(f) for a 2005 California sentence for willful infliction of corporal injury to which Sexton pleaded nolo contendere. Finally, the PSR gave Sexton another two criminal history points pursuant to USSG § 4A1.1(d) for committing the instant offense while on probation for the California sentence. Sexton’s guideline imprisonment range was 97–121 months. Sexton objected to both the organizer/leader adjustment and his criminal history calculation.

Sexton was sentenced on June 19, 2017. At sentencing, the district court overruled Sexton’s objections to the organizer/leader enhancement and to the criminal history score. The district court applied the leader enhancement, finding that there were more than five participants, that Sexton exercised responsibility, leadership, or organizational responsibility over Flynn, that the conspiracy was otherwise extensive, and that Sexton was entitled to a large share of the fruits of the crime. The court also assessed three criminal-history points finding that the California case represented a prior sentence and that Sexton committed the instant offense while still serving that sentence. The court sentenced Sexton to 109 months in prison.

On June 27, 2017, Sexton timely filed his notice of appeal. He argues on appeal that the district court incorrectly increased his criminal history score three points based on the California sentence, that the district court incorrectly applied the organizer/leader enhancement, that Sexton’s sentence was substantively and procedurally unreasonable, and that both the forfeiture order and restitution judgment were erroneous.

DISCUSSION

I. Criminal History Score

Standard of Review

"In reviewing a district court’s application of the Sentencing Guidelines, this Court will ‘accept the findings of fact of the district court unless they are clearly erroneous and [will] give due deference to the district court’s application of the Guidelines to the facts.’ " United States v. Moon , 513 F.3d 527, 539–40 (6th Cir. 2008) (quoting United States v. Williams , 355 F.3d 893, 897–98 (6th Cir. 2003) ). "We review a district court’s legal conclusions regarding the Sentencing Guidelines de novo ." Id. at 540 (citing United States v. Latouf , 132 F.3d 320, 331 (6th Cir. 1997) ). "We review de novo a district court’s criminal history calculation." United States v. Paseur , 148 F. App’x 404, 408 (6th Cir. 2005) (citing United States v. Wheeler , 330 F.3d 407, 411 (6th Cir. 2003) ).

Analysis

A defendant’s criminal history category is determined by looking at USSG §§ 4A1.1 and 4A1.2. A district court assigns zero to three criminal history points for each of a defendant’s prior sentences. USSG § 4A1.1. A prior sentence is "any sentence previously imposed upon adjudication of guilt, whether by guilty plea, trial, or plea of nolo contendere, for conduct not part of the instant offense." USSG § 4A1.2(a)(1). If the prior sentence was not a "sentence of imprisonment," the district court adds one point. USSG § 4A1.1(c). After assigning points for each of the prior sentences, the district court must determine whether the present offense was committed "while under any criminal justice sentence, including probation, parole, supervised release, imprisonment, work release, or escape status." USSG § 4A1.1(d). If so, the court must add two points. Id.

On September 19, 2005, Sexton pleaded nolo contendere to willful infliction of corporal injury in the Los Angeles Superior Court of California. The court found Defendant guilty. The court did not sentence Sexton to prison, but placed Sexton on 24 months of summary probation with several conditions. The court provided that if Sexton successfully completed summary probation, he would be permitted to withdraw his plea and the case would be dismissed. On December 23, 2008, Sexton was permitted to withdraw his plea, and the case was dismissed.

The district correctly assessed one criminal history point for this prior California sentence under USSG § 4A1.1(c). Though Sexton was not sentenced to prison, he was placed on probation by the California court, which is treated as a sentence under § 4A1.1(c). USSG § 4A1.2 cmt. n.2. That Sexton was eventually permitted to withdraw his plea makes no difference. A "diversionary disposition resulting from a finding or admission of guilt, or a plea of nolo contendere, in a judicial proceeding is counted as a sentence under § 4A1.1(c) even if a conviction is not formally entered." USSG § 4A1.2(f). This rule "reflects a policy that defendants who receive the benefit of a rehabilitative sentence and continue to commit crimes should not be treated with further leniency." USSG § 4A1.2 cmt. n.9. The arrangement provided by the California court fits within the definition of a diversionary disposition under § 4A1.2(f). Sexton’s sentence was not otherwise reversed, vacated, invalidated, or expunged. See id. § 4A1.2 cmt. n.6, 10.

The district also correctly assessed two criminal history points under USSG § 4A1.1(d). Sexton became involved in the instant conspiracy beginning in 2006, which was while he was still on probation for this prior California sentence.

Because the district court did not err in its criminal history analysis, we affirm the district court’s criminal history calculation.

II. Leadership Adjustment

Standard of Review

"We review the district court’s ‘legal conclusion that a person is an organizer or leader under [§] 3B1.1’ deferentially, and its factual findings for clear error." United States v. House , 872 F.3d 748, 751 (6th Cir. 2017) (quoting United States v. Olive , 804 F.3d 747, 759 (6th Cir. 2015) ). "Under the clear-error standard, we abide by the court’s findings of fact unless the record leaves us with the definite and firm conviction that a mistake has been committed." Id. (quoting United States v. Yancy , 725 F.3d 596, 598 (6th Cir. 2013) ).

Analysis

Section 3B1.1(a) of the Sentencing Guidelines mandates a four-point offense-level increase "[i]f the defendant was an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive." To decide whether a defendant was an "organizer or leader," the Guidelines direct courts to consider a number of factors, including "the exercise of decision making authority, the nature of participation in the commission of the offense, the recruitment of accomplices, the claimed right to a larger share of the fruits of the crime, the degree of participation in planning or organizing the offense, the...