USA. v. Lomow

• Decision Date: 17 September 2001
• Docket Number: DEFENDANT-APPELLANT,No. 00-10120,PLAINTIFF-APPELLEE,00-10120
• Parties: (9th Cir. 2001) UNITED STATES OF AMERICA,, v. WILLIAM DOUGLAS LOMOW,
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1013

266 F.3d 1013 (9th Cir. 2001)

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE, v. WILLIAM DOUGLAS LOMOW, DEFENDANT-APPELLANT.

No. 00-10120

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted May 14, 2001

Filed September 17, 2001

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Jonathon D. Soglin, First District Appellate Project, San Francisco, California, for the appellant.

Martha Boersch, Assistant United States Attorney, San Francisco, California, for the appellee.

Appeal from the United States District Court for the Northern District of California Claudia Wilken, District Judge, Presiding. D.C. No. CR-98-40009-CW

Before: Diarmuid F. O'Scannlain, A. Wallace Tashima and Sidney R. Thomas, Circuit Judges.

Thomas, Circuit Judge

William Lomow pled guilty to one count of money laundering, 18 U.S.C. §§ 1956(a)(1)(A)(i) and (B)(i), and one count of conspiracy, 18 U.S.C. §§ 371, in relation to a scheme to defraud. He appeals the legality of his plea entry and various aspects of the sentence imposed on him. We affirm in part and reverse in part.

I.

Central Contra Costa Sanitary District ("the District") had the exclusive authority to award sanitation contracts within its region. Lomow was the president and a fifty percent shareholder of Orinda-Moraga Disposal Service ("OMDS"). In 1986, the District entered a contract with OMDS to provide sanitation services for ten years. In 1990, the District entered a franchise agreement with Lomow.

According to the franchise agreement, OMDS would collect the garbage at rates set by the District. The District calculated the rates by determining OMDS's operation costs, chiefly by examining OMDS's financial records and rate applications, and then allowing a profit of between five and eleven percent.

Lomow and Robert Sliepka¹ devised a scheme to defraud the District. First, Lomow created eleven sham companies. Lomow falsely claimed that these companies provided services to OMDS when in fact they did not. OMDS paid these companies by check for their supposed services; however, Lomow had control of the associated bank accounts and used the money for personal purposes. The false claims had the effect of artificially increasing OMDS's operating costs, thereby also allowing increased rates.

Second, Lomow artificially lowered OMDS's revenues by failing to report fees from three major OMDS customers. Lomow created two unreported OMDS bank accounts into which he deposited the fees from these three customers. He then used the money for personal purposes. By lowering reported revenues, Lomow also allowed OMDS to request higher rates.

Finally, every year, between 1991 and 1995, OMDS, through Lomow, filed rate increase applications with supporting documents that did not include the diverted funds and that did include false expenses. The fraudulent applications allowed OMDS to charge higher rates than were otherwise warranted.

The government indicted Lomow on fifty-two counts, and Lomow pled guilty to two. The district court sentenced Lomow to seventy-two months concurrently on both counts and ordered that he make restitution to the District.

Prior to the plea, the District sued Lomow, OMDS, and Sliepka in state court for the losses caused by the scheme to defraud. Lomow did not appear, and the court awarded the District a judgment of over nine million dollars against Lomow and OMDS. Sliepka settled with the District for $850,000. As part of this civil suit, the state court ordered a receiver, Stephen Anderson, for OMDS and authorized the receiver to incur certain expenses during the wind-up of OMDS.

II.

The district court did not err in conducting the plea colloquy, and therefore, we affirm the district court with respect to these claims.

A.

The district court did not violate Federal Rule of Criminal Procedure 11 during the plea colloquy by not specifically identifying the elements of mail fraud, 18 U.S.C.§§ 1341, along with the elements of money laundering, 18 U.S.C. §§ 1956(a)(1)(A)(i) and (B)(i). Lomow argues that the elements of money laundering necessarily include the elements of the "specified unlawful activity." Therefore, Lomow reasons, the court was obligated under Fed. R. Crim. P. 11 to inform him also of the elements of the referenced criminal activity, in this case mail fraud.

We have previously rejected this argument in the context of instructing the jury on the elements of money laundering. United States v. Golb, 69 F.3d 1417, 1429 (9th Cir. 1995). Golb's reasoning applies here. Because the elements of money laundering do not include the elements of the"specified unlawful activity," the district court did not violate Rule 11 by not informing Lomow of the elements of mail fraud.

B.

The plea colloquy also established a sufficient factual basis that the proceeds in question resulted from mail fraud. "Rule 11(f) requires the district court to satisfy itself that there is a factual basis for all elements of the offense charged before accepting a guilty plea." United States v. Alber, 56 F.3d 1106, 1110 (9th Cir. 1995). "[T]he court may consider all of the evidence before it at the time of judgment." Id." `The court need not be convinced beyond a reasonable doubt that an accused is guilty. It need only be convinced that there is sufficient evidence to justify the reaching of such a conclusion.' " Id. (quoting United States v. Neel, 547 F.2d 95, 96 (9th Cir. 1976) (per curiam)).

In this case, the circumstantial evidence supports the district court's finding of a factual basis for Lomow's plea. For example, Lomow established post office boxes for his sham companies. For years during the fraud, he also provided invoices to the three companies that he kept off OMDS's books and received checks from those companies in response. He also filed rate applications and repeatedly corresponded with the District about rate increases. The evidence was sufficient to support acceptance of Lomow's plea.

Lomow also contends that the colloquy was insufficient to establish a factual basis for the separate transaction requirement. "Section [ ] 1956 requires that the government additionally prove that the defendant knowingly used the proceeds of unlawful activity in a separate financial transaction." United States v. Estacio, 64 F.3d 477, 480 (9th Cir. 1995). On the facts of this case, depositing the check from Sierra Diesel constituted a separate transaction from the fraud that generated the funds. United States v. Montoya, 945 F.2d 1068, 1076 (9th Cir. 1991) (holding that depositing a check, so that the defendant could make use of the funds, qualified as money laundering), abrogation on other grounds recognized by United States v. Carpenter, 961 F.2d 824 (9th Cir. 1992).

C.

Lomow argues that he did not knowingly and intelligently waive his right to a jury trial on the calculation of the amount of loss used in sentencing. However, a careful examination of the colloquy establishes that his waiver was knowing and intelligent. To the extent that he contends that his plea was involuntary because it violated Apprendi v. New Jersey, 530 U.S. 466 (2000), his claim fails. Lomow concedes that the calculation of the loss did not expose him "to a greater punishment than that authorized by the jury's guilty verdict." Id. at 494. Therefore, Lomow did not have the right to have a jury calculate the loss. United States v. Hernandez-Guardado, 228 F.3d 1017, 1027 (9th Cir. 2000) (quoting Apprendi, 530 U.S. at 494). Given this, the district court certainly did not err in not informing him of a non-existent right to a jury determination.

III.

The district court did not err in applying the money-laundering guideline, U.S.S.G. §§ 2S1.1, rather than the fraud guideline, U.S.S.G. §§ 2F1.1, to calculate Lomow's sentence. In arguing that his case was outside the heartland of money-laundering cases, Lomow relies on United States v. Smith, 186 F.3d 290 (3d Cir. 1999), superseded by rule as stated in United States v. Diaz, 245 F.3d 294 (3d Cir. 2001). We review a district court's application of the guidelines de novo. United States v. Cambra, 933 F.2d 752, 754 (9th Cir. 1991).

Pursuant to Appendix A of the guidelines, U.S.S.G.§§ 2S1.1 is the appropriate guideline for a conviction for a violation of 18 U.S.C. §§ 1956. Using §§ 2S1.1, the district court sentenced Lomow to seventy-two months for his money-laundering conviction. See U.S.S.G. §§§§ 1B1.1, 1B1.2; U.S.S.G. App. A.

Based on language in the guidelines, the Third Circuit developed a two-step analytical structure for determining the appropriate guideline in money-laundering cases, a reaction in part to the severe sentences imposed under the money-laundering guidelines to deter laundering connected with drug trafficking and serious crime. Smith, 186 F.3d at 298-99. However, our Circuit has not adopted the Third Circuit's construction of the guidelines.² Since Lomow's sentencing, the guidelines were amended to clarify that application of §§ 2S1.1 was appropriate in this context, repudiating the Third Circuit's interpretation in Smith. See U.S.S.G. Supp. to App. C at 29-32 (Amendment 591).³ In light of the clear intent of Amendment 591, we decline to adopt the Smith analysis now. The district court correctly sentenced Lomow under§§ 2S1.1.

IV.

The district court erred in conditioning Lomow's supervised release upon his repayment of the cost of his court-appointed counsel. A court may order a discretionary condition of supervised release only if the condition meets all of the following three criteria: the condition

(1) is reasonably related to the factors set forth in section 3553(a)(1), (a)(2)(B), (a)(2)(C), and (a)(2)(D);

(2) involves no greater deprivation of liberty than is reasonably necessary for the purposes set forth in section 3553(a)(2)(B), (a)(2)(C), and (a)(2)(D); and

(3) is consistent with any pertinent policy statements issued by the Sentencing Commission pursuant to 28 U.S.C. 994(a).

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