UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 07-4112
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
BARBARA BLAND,
Defendant - Appellant.
Appeal from the United States District Court for the Northern
District of West Virginia, at Clarksburg. Irene M. Keeley, Chief
District Judge. (1:06-cr-00064-IMK)
Argued: January 29, 2008 Decided: March 7, 2008
Before MOTZ, TRAXLER, and DUNCAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Charles T. Berry, BOWLES, RICE, MCDAVID, GRAFF & LOVE,
P.L.L.C., Morgantown, West Virginia, for Appellant. David Earl
Godwin, Assistant United States Attorney, OFFICE OF THE UNITED
STATES ATTORNEY, Clarksburg, West Virginia, for Appellee. ON
BRIEF: Sharon L. Potter, United States Attorney, Wheeling, West
Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Barbara Bland (“Bland”) pleaded guilty to one count of
attempted federal financial aid fraud in violation of 20 U.S.C.
§ 1097(a). She was subsequently convicted and sentenced to two
years’ probation, with the first six months to be served in home
detention. On appeal, Bland contends that the district court erred
by sentencing her as a felon, rather than as a misdemeanant.
Because we find that Bland pleaded guilty to a felony offense under
§ 1097(a) and that her guilty plea is supported by a sufficient
factual basis, we find no error and affirm.
I.
In 2001, Bland opened the Art and Science Institute of
Cosmetology and Massage Therapy (“ASIC”) in Fairmont, West
Virginia. In September 2004, she applied to the United States
Department of Education (“DOE”) for ASIC to become certified to
participate in the federal financial aid programs under Title IV of
the Higher Education Act of 1965 (“Title IV”). Pub. L. No. 89-329,
79 Stat. 1219 (codified as amended at 20 U.S.C. §§ 1070 et. seq.).
As a Title IV eligible institution, qualified ASIC students would
have been allowed to seek federal financial aid to help fund their
tuition. See 20 U.S.C. § 1070. Bland commenced the certification
process by submitting an “Initial Application for Approval to be
Designated as an Eligible Institution and to Participate in the
Federal Financial Assistance Programs” pursuant to the Title IV
2
regulations. See 34 C.F.R. § 600.20(a). Next, Bland was required
to obtain and submit an audited financial statement for ASIC for
fiscal year 2003, prepared in accordance with “Government Auditing
Standards.” See id. § 668.23. She hired Michael Henderson, CPA
(“Henderson”) of the accounting firm Oliver & Henderson, who
prepared a compilation report1 of ASIC’s financial standing, rather
than a more costly audited financial statement. Bland subsequently
used the information entered in the compilation report to create a
false audited financial statement, forged Henderson’s signature,
and submitted the statement to the DOE on a fabricated Oliver &
Henderson letterhead. The fraudulent submissions were detected by
the DOE. During the course of the ensuing DOE investigation, a DOE
employee contacted Bland and informed her that ASIC’s Title IV
application would not be considered for approval until Bland
submitted an additional audited financial statement for fiscal year
2004. Bland never submitted the statement and the application was
never approved. As a result, neither ASIC nor any of its students
received funds from the DOE.
Bland was later indicted in the United States District Court
for the Northern District of West Virginia on five counts stemming
from her submission of the fraudulent application. Bland entered
1
A compilation report is a collection of financial statements
created solely from the representations of management, with no
audit or independent review of the reported figures. A compilation
report does not conform to Government Auditing Standards.
3
into a plea agreement in which she agreed to plead guilty to one
count of federal financial aid fraud, in violation of 20 U.S.C.
§ 1097(a), in exchange for the dismissal of the other four counts.
The agreement indicated that the maximum statutory penalties to
which Bland would be exposed were: “(1) imprisonment for a period
of not more than 5 years;” “(2) a fine of up to $250,000;” “(3) up
to three (3) years of supervised release;” and, “(4) a special
assessment of $100.00.” J.A. 11-12. The government agreed to
recommend as “lenient a sentence as an application of the advisory
sentencing guidelines will allow.” J.A. 13. Bland, in turn,
waived “any right she may have [had] for a jury determination of
any and all facts relevant to sentencing,” and consented to the
determination of such facts by the sentencing court. Id.
At Bland’s plea hearing, the district court first sought to
determine whether Bland was aware of the contents of the plea
agreement and the ramifications of a guilty plea. As part of this
determination, the court asked Bland if she understood that the
statutory “maximum period of imprisonment” for the crime to which
she was pleading guilty was “five years.” Plea Hr’g Tr. at 19.
Bland responded, “Yes ma’am.” Id. Bland responded in the same
manner when asked whether she understood that “there[] [was] a one
hundred dollar mandatory special assessment that has to be paid for
the felony conviction on or before the date of your sentencing.”
Id. at 20.
4
The court next sought to determine whether there existed a
sufficient factual basis to support Bland’s guilty plea. To so
establish, the government called as a witness George Blissman
(“Blissman”), a Special Agent employed with the DOE Office of
Inspector General. Blissman testified that after interviewing
Bland’s accountant, Henderson, he discovered that the 2003
financial statements submitted by Bland “weren’t prepared by the
CPA who was represented as preparing them. . . . They were not
signed by him and the letterhead used on the reports were not ones
that he would use.” Id. at 31. Blissman further testified that
Bland admitted to him that she had prepared the financial
statements with the assistance of a member of her staff, and that
they had forged Henderson’s signature. Following Blissman’s
testimony, Bland entered her plea of guilty, at which time the
following dialogue took place.
THE COURT: Did you in fact do what Mr. Blissman
testified regarding the preparation of the application
for financial aid and the further preparation of the
financial statements that were questioned later by the
Department of Education?
THE DEFENDANT: Yes ma’am.
. . . .
THE COURT: Okay. You took information that Mr.
Henderson had done as a compilation, which is a term of
art under accounting, and then you managed to put it into
a format that was required by the Department of Education
and then signed his name to it, correct?
THE DEFENDANT: Yes.
5
THE COURT: All right. So in point of fact then,
you took someone else’s compilation of financial
information, put it in a different format and represented
that it had been done by Mr. Henderson on behalf of you
and your school, correct?
THE DEFENDANT: Yes.
Id. at 35-37. The court then made the following findings in regard
to Bland:
I find that you are aware of the consequences of the plea
and that there is a factual basis for the tendered plea
and that’s based both on the testimony of Mr. Blissman
and your allocution to the . . . elements of the offense.
I find that . . . because there is a factual basis for
the plea and that you knew what you were doing here, that
your plea of guilty to Count One should be accepted and
I, therefore, accept your plea of guilty to Count One.
Id. at 38.
Immediately following the acceptance of Bland’s plea, the
court asked the government if Bland would “have any licensure
issues [with respect to the operation of ASIC] now that she’s
tendered a plea of guilty to a felony.” Id. at 39. The government
responded, “I don’t really know what effect--I’m not aware of
anything.” Id. at 40. The court then addressed the question to
Bland’s attorney who answered, “Well, certainly there could be some
fallout from a guilty plea” but it is “not automatic.” Id. There
was no further discussion on the issue and the hearing concluded.
The Presentence Investigation Report (“PSR”) was prepared on
November 9, 2006. It listed Bland’s offense as a “Class D Felony”
with a corresponding penalty of “5 years/$250,000.” J.A. 117. The
PSR indicated that under the United States Sentencing Guidelines
6
(the “Guidelines”), the base offense level for a violation of
§ 1097(a) was 6. The PSR suggested that the offense level be
increased by 6 levels in this case based upon the estimated $48,710
to $69,520 intended loss range of Bland’s fraud.2 The PSR also
recommended that Bland be given a 2-level reduction pursuant to
U.S.S.G. section 3E1.1(a) for Acceptance of Responsibility. Though
Bland filed four written objections to the PSR, she made no
objection to the PSR’s classification of the offense as a Class D
Felony, the listed maximum statutory penalties, or the estimated
intended loss range.
In her sentencing memorandum filed December 1, 2006, Bland
asserted for the first time that because her attempted fraud was
unsuccessful and procured no funds, she should be sentenced under
the “misdemeanor exception” of § 1097(a). As will be discussed
more fully below, the “misdemeanor exception” limits the punishment
for certain violations of § 1097(a) to a fine of no more than $5000
and a term of imprisonment not to exceed one year. At the
sentencing hearing on January 3, 2007, the district court rejected
Bland’s argument, finding that the government’s contention that
2
The Guidelines require calculation of the loss at issue in
each specific case, which is the greater of the intended loss and
the actual loss. U.S.S.G. § 2B1.1. Cmt. n. 3(A). Section
2B1.1(b)(1) sets out the offense-level increases corresponding to
various ranges of loss amounts. The estimated intended loss
figures in this case were predicated upon Title IV eligibility
percentages and grant and loan amounts from similar institutions in
the state of West Virginia and schools with similar student
populations in the Fairmont area.
7
unsuccessful attempts at procuring funds illegally are not covered
by the exception “ma[de] the most sense.” J.A. 79. The court
further found that “under 20 U.S.C. Section 1097(a), this is not a
misdemeanor offense. This is a felony offense. Moreover, I find
as a fact that that is exactly what Ms. Bland knew when she pled
guilty to the offense back in September of 2006.” J.A. 79-80.
Therefore the court concluded that it “w[ould] not sentence her as
a misdemeanant,” but “w[ould] sentence her pursuant to the felony
provisions of the statute.” J.A. 80. Then, based on the intended
loss range in the PSR, Bland was sentenced, as a felon, to two
years’ probation with the first six months in home detention--the
bottom of the Guideline range. Bland filed a timely notice of
appeal.
II.
On appeal, Bland challenges neither her conviction under
§ 1097(a), nor the factual basis supporting the conviction, nor
“the actual term of her sentence.” Appellant’s Br. at 7. Instead,
she assigns error solely to the district court’s decision to
sentence her as a felon rather than as a misdemeanant.
Section 1097(a) provides:
Any person who knowingly and willfully embezzles,
misapplies, steals, obtains by fraud, false statement, or
forgery, or fails to refund any funds, assets, or
property provided or insured under this subchapter and
part C of subchapter I of chapter 34 of Title 42 or
attempts to so embezzle, misapply, steal, obtain by
8
fraud, false statement or forgery, or fail to refund any
funds, assets, or property, shall be fined not more than
$20,000 or imprisoned for not more than 5 years, or both,
except if the amount so embezzled, misapplied, stolen,
obtained by fraud, false statement, or forgery, or failed
to be refunded does not exceed $200, then the fine shall
not be more than $5,000 and imprisonment shall not exceed
one year, or both.
20 U.S.C. § 1097(a) (emphasis added). Because the final clause of
§ 1097, emphasized above, limits the imprisonment term to one year
for any crime falling within its parameters, it has been
characterized as the “misdemeanor exception.” See 18 U.S.C.
§ 3559(a) (classifying any crime for which the maximum term of
imprisonment exceeds one year as a felony, and any crime for which
the maximum term authorized is limited to one year or less as a
misdemeanor.).
Bland argues that the plain language of the statute requires
that she be sentenced under this exception “because [her]
unperfected fraud procured zero dollars.” Appellant’s Br. at 8.
That is, because “the amount” she “obtained by fraud . . . d[id]
not exceed $200,” she was guilty only of a misdemeanor violation of
§ 1097(a). The government, however, contends that the same
language unambiguously renders the misdemeanor exception
inapplicable to Bland’s attempted crime, because “[b]y its terms,
it only applies when a person, who actually receives funds,
receives less than $200.” Appellee’s Br. at 8. Both Bland and the
government’s “plain language” interpretations lead to somewhat
9
anomalous results. Under Bland’s theory, every attempted fraud, no
matter the intended loss amount, could only be punished as a
misdemeanor. Conversely, under the government’s interpretation,
every unsuccessful attempt would be considered a felony and could
be punished with a maximum five-year prison term, even when a
successful attempt involving the same or lesser amount of money, so
long as less than $200, would be considered a misdemeanor with a
maximum sentence of one year imprisonment.
Although the applicability of the misdemeanor exception to an
attempted crime under § 1097(a) appears to be an issue of first
impression for this court, as well as for the other circuit courts
of appeal, we need not resolve the issue here, because we find,
consonant with the district court, that Bland pleaded guilty to a
felony and that there exists a sufficient factual basis to support
her plea. Notwithstanding Bland’s post hoc contention that she
“did not specifically agree to a felony plea,” Appellant’s Br. at
2, the record plainly indicates that she did in fact plead guilty
to a felony and was aware of such both when she signed the plea
agreement and when she entered her plea in the district court.
As the district court pointed out during Bland’s sentencing
hearing, “[i]t’s very clear from the provisions of the plea
agreement” that the parties contemplated a felony plea. J.A. 74.
First, the plea agreement provides that “[t]he maximum statutory
penalties to which Ms. Bland will be exposed by virtue of her plea
10
of guilty” are five-years’ imprisonment; “a fine of up to
$250,000”; “up to three (3) years of supervised release”; and “a
special assessment of $100.00.” J.A. 11-12. Bland acknowledges,
as she must, that these are the maximum penalties for a felony
charge under § 1097(a). If Bland were agreeing to plead guilty to
a misdemeanor, “the maximum statutory penalties to which [she]
w[ould] [have] be[en] exposed,” J.A. 11, were one year in prison
and a fine of up to five thousand dollars. See § 1097(a).
Further, if Bland had been pleading to a misdemeanor, she would
have only owed, and presumably only paid, a maximum special
assessment fee of twenty-five dollars. Id. Instead, she was
assessed, and paid on the date of her sentencing hearing, a fee of
one hundred dollars, which is charged only to individuals convicted
of a felony offense. See 18 U.S.C. § 3013(a) (providing that any
individual convicted of an offense against the United States be
charged an amount from “$5 to $25” “in the case of an infraction or
a misdemeanor” and “$100 in the case of a felony”).
The PSR also alerted Bland to the fact that she had pleaded
guilty to a felony by, again, listing the felony penalties as those
to which she would be subject, and by describing Bland’s offense as
a “Class D Felony.” J.A. 117. Notably, although Bland made four
objections to the PSR, she did not dispute the statutory maximums
or the classification of her offense as a felony. See J.A. 142-46.
11
The plea colloquy further demonstrates that Bland intended to
and understood that she was pleading guilty to a felony offense.
In fact, when this issue was raised at Bland’s sentencing hearing,
the court stated to Bland’s counsel, “I will be candid with you .
. . I was quite surprised to see that, particularly since I handled
the plea hearing[,] that you and Ms. Bland thought she was pleading
to a misdemeanor.” J.A. 68. The court’s bewilderment is
understandable. At the plea hearing, after having the government
summarize the terms of the plea agreement, including those
discussed above that plainly indicate that the parties negotiated
a felony plea, the court explained in detail each maximum penalty
for a felony violation of § 1097(a) and asked Bland whether she
understood that she would be exposed to such penalties. At no time
during this extended colloquy did Bland’s counsel interject or
object; nor did Bland express any consternation or confusion.
Rather, she simply indicated her understanding, responding, “Yes,
ma’am.” Plea Hr’g Tr. 19-20. Significantly, during this
conversation the court specifically mentioned the word “felony,”
asking Bland whether she understood that there was “a one hundred
dollar mandatory special assessment that has to be paid for the
felony conviction.” Id. at 20 (emphasis added). Again, Bland
responded, “Yes ma’am.” Id. The classification of Bland’s offense
was also a key part of a later exchange between the court and
Bland’s counsel, when, after accepting Bland’s plea, the court
12
asked whether Bland would “have any licensure issues now that she’s
tendered a plea of guilty to a felony.” Id. at 39 (emphasis
added). Again, there was no expression of shock, hesitation, or
mention of a misdemeanor charge. Instead, Bland’s counsel simply
answered the question and the hearing concluded without further
discussion.
These exchanges, combined with the contents of the plea
agreement, led the district court to find that Bland had pleaded
guilty to a felony offense and to further “find as a fact” that she
knew “exactly” that at the time she entered the plea. We find no
error in these findings.3
III.
Having determined that Bland pleaded guilty to a felony charge
under § 1097(a), the only remaining issue is whether her plea was
supported by a sufficient factual basis.4 Under Rule 11(b)(3),
“[b]efore entering judgment on a guilty plea, the court must
determine that there is a factual basis for the plea.” Fed. R.
3
Because we conclude that Bland pleaded guilty to a felony and
therefore need not reach the statutory interpretation issue, we
likewise have no need to resolve her subsidiary arguments regarding
the proper calculation of the intended loss of her unperfected
fraud and the application of the rule of lenity.
4
Although Bland does not explicitly challenge the district
court’s finding of a sufficient factual basis for the plea, we
proceed prudentially and construe her argument as including such a
challenge.
13
Crim. P. 11(b)(3). The district court in this case made such a
finding, which we review for abuse of discretion. United States v.
Martinez, 277 F.3d 517, 531 (4th Cir. 2002). We cannot find error
“so long as the district court could reasonably have determined
that there was a sufficient factual basis based on the record
before it.” United States v. Mastrapa, 509 F.3d 652, 660 (4th Cir.
2007).
Bland was charged with, and pleaded guilty to, knowingly and
willfully attempting to obtain federal funds by fraud, false
statement, and forgery. J.A. 6; see § 1097(a). Blissman, the DOE
investigator, testified that through examination of the fraudulent
documents, Bland’s own admission, and talking with Bland’s
accountant, he learned that Bland created a fraudulent audited
financial statement, copied it on a fabricated letterhead, forged
the accountant’s signature, and submitted the statement to the DOE
in an attempt to procure Title IV funds for her institution and its
students. Bland fully corroborated this testimony. If successful,
the district court found, Bland’s fraud and forgery would have
swindled the government out of approximately $50,000. With this
record before it, the district court did not abuse its discretion
in finding a sufficient factual basis for Bland’s guilty plea.
14
IV.
Because Bland pleaded guilty to a felony offense under 20
U.S.C. § 1097(a), and there existed a sufficient factual basis to
support that plea, the judgment of the district court is
AFFIRMED.
15