United States v. Howard Shmuckler

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 12-4518

UNITED STATES OF AMERICA,

Plaintiff – Appellee,

HOWARD R. SHMUCKLER,

Defendant - Appellant.

No. 13-4003

UNITED STATES OF AMERICA,

Plaintiff – Appellee,

HOWARD R. SHMUCKLER,

Defendant - Appellant.

Appeals from the United States District Court for the Eastern
District of Virginia, at Alexandria. Leonie M. Brinkema,
District Judge. (1:11-cr-00344-LMB-1)

Submitted: June 12, 2013 Decided: July 18, 2013

Before SHEDD, DAVIS, and FLOYD, Circuit Judges.
Affirmed by unpublished per curiam opinion.

Michael S. Nachmanoff, Federal Public Defender, Rachel S.
Martin, Assistant Federal Public Defender, Caroline S. Platt,
Appellate Attorney, OFFICE OF THE FEDERAL PUBLIC DEFENDER,
Alexandria, Virginia, for Appellant. Neil H. MacBride, United
States Attorney, Timothy D. Belevetz, Assistant United States
Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Alexandria,
Virginia, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:

From June 2008 to September 2009, Appellant Howard

Shmuckler owned and operated a business called The Shmuckler

Group, LLC (TSG). Clients paid TSG substantial fees for home

loan-related services such as forestalling foreclosures,

modifying mortgages, and extending payment terms. Shmuckler and

his employees led prospective clients to believe that he was an

attorney licensed in Virginia and that his business had a 97%

success rate. In reality, Shmuckler had never been a member of

the Virginia bar, and TSG’s actual success rate was

approximately 4.5%. TSG’s employees instructed clients to cease

making their mortgage payments and stop communicating with their

lenders. During the course of its operation, TSG took in

approximately $2.8 million from 865 clients.

A grand jury returned an indictment charging Shmuckler with

seven counts of wire fraud. After the district court dismissed

Count Three, Shmuckler pleaded guilty to the remaining six

counts. Next, a probation officer prepared a presentence

investigation report (PSR), which calculated Shmuckler’s offense

level as 35 and criminal history category as III, leading to a

recommended sentence of 210 to 262 months. The probation

officer based this determination in part on an eighteen-level

increase for a loss of more than $2.5 million but no more than

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$7 million and a two-level increase for an offense that involved

sophisticated means.

At the sentencing hearing, Shmuckler objected to the

proposed two-level increase for sophisticated means. The

parties also disagreed regarding the loss amount. The district

court agreed with the government and imposed a two-level

enhancement for sophisticated means, explaining, “This was not a

simple fraud scheme. It was complex. It involved among other

things document manipulation.” However, the district court

decided to assume for the sake of argument that Shmuckler’s loss

calculation was correct, leading it to impose a fourteen-level

enhancement for the amount of loss rather than the PSR’s

proposed eighteen-level enhancement. The court applied the

other enhancements that the PSR recommended, leading to a

recommended sentencing range of 135 to 168 months under the

Sentencing Guidelines. The court ultimately imposed a sentence

of ninety months to run consecutively with Shmuckler’s

undischarged term of imprisonment.

On August 16, 2012, the district court held a hearing

regarding restitution. The government submitted a list

reflecting all of the TSG clients whose mortgages TSG had failed

to modify and the amounts they paid TSG, which it developed by

interviewing TSG clients and bank representatives. This list

suggested a restitution amount of $1,848,279. Shmuckler

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contended that the restitution amount could not exceed the

amount of loss the district court used for sentencing purposes,

meaning the restitution amount could not exceed $1 million. The

district court found the government’s argument more persuasive

and ordered restitution in the amount of $1,848,279 on December

17, 2012.

II.

First, Shmuckler argues that the district court erred in

applying a two-level enhancement under U.S.S.G.

§ 2B1.1(b)(10)(C) because Shmuckler’s fraud did not utilize

“sophisticated means.” In evaluating the district court’s

application of sentencing enhancements, “this Court review[s]

the district court’s legal conclusions de novo and its factual

findings for clear error.” United States v. Horton, 693 F.3d

463, 474 (4th Cir. 2012) (alteration in original) (quoting

United States v. Layton, 564 F.3d 330, 334 (4th Cir. 2009))

(internal quotation marks omitted). We therefore review the

district court’s finding regarding sophisticated means for clear

error, see United States v. Noel, 502 Fed. App’x 284, 290 (4th

Cir. 2012), and will reverse the district court’s finding only

if “left with the definite and firm conviction that a mistake

has been committed,” United States v. Harvey, 532 F.3d 326, 337

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(4th Cir. 2008) (quoting In re Mosko, 515 F.3d 319, 324 (4th

Cir. 2008)) (internal quotation marks omitted).

TSG’s behavior resembles the scheme at play in United

States v. Noel, and we find that case persuasive. In Noel, this

Court determined that the district court did not err in imposing

a sophisticated means enhancement when the defendant attracted

clients by telling them that he would safely invest their money

but then used the funds to start his own business. 502 Fed.

App’x at 290. The Court emphasized the defendant’s lies to

financial institutions and explained that his “three-year period

of extensive, intentional concealment is the kind of scheme

anticipated by the” sophisticated means enhancement. Id.; see

also United States v. Kontny, 238 F.3d 815, 820 (7th Cir. 2001)

(“The more sophisticated the efforts that an offender employs to

conceal his offense, the less likely he is to be detected, and

so he should be given a heavier sentence to maintain the same

expected punishment, and hence the same deterrence, that

confronts the average offender.”). Shmuckler similarly

attracted clients with lies, including falsehoods regarding the

success rate of his business, his status as an attorney, and the

extent of TSG’s operations. He also took significant steps to

conceal his fraud by telling clients not to communicate with

their lenders. In light of these aspects of Shmuckler’s scheme,

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the district court did not clearly err in finding that he

utilized sophisticated means.

Second, Shmuckler alleges that his sentence is procedurally

unreasonable because the district court did not sufficiently

explain its decision to run Shmuckler’s sentence consecutively

to his undischarged term of imprisonment. “A district court’s

decision to impose a sentence that runs concurrently with,

partially concurrently with, or consecutively to a prior

undischarged term of imprisonment is constrained only by its

consideration of the factors mentioned in the commentary to

[U.S.S.G.] § 5G1.3(c).” United States v. Mosley, 200 F.3d 218,

223 (4th Cir. 1999) (per curiam). These factors include the

following:

(i) The factors set forth in 18 U.S.C. [§] 3584
(referencing 18 U.S.C. [§] 3553(a));

(ii) The type (e.g., determinate,
indeterminate/parolable) and length of the prior
undischarged sentence;

(iii) The time served on the undischarged sentence and
the time likely to be served before release;

(iv) The fact that the prior undischarged sentence may
have been imposed in state court rather than federal
court, or at a different time before the same or
different federal court; and

(v) Any other circumstance relevant to the
determination of an appropriate sentence for the
instant offense.

U.S.S.G. § 5G1.3 cmt. n.3(A).

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The record in this case demonstrates that the district

court considered the factors that the commentary to U.S.S.G.

§ 5G1.3(c) identifies. First, the court considered the

§ 3553(a) factors. Specifically, the court considered

Shmuckler’s “age, [his] definitely well-documented health

situation, and the fact that [he had] received a significant

sentence from the District of Columbia.” The court also

explained, “I want to make sure that this sentence reflects the

seriousness of this conduct and the need, as I said, to send the

word out to other people in the financial and real estate

industry that you can’t prey on those [vulnerable] communities

within our area and take advantage of them.” The court also

evaluated “the kinds of sentence and the sentencing range.” 18

U.S.C. § 3553(a)(4). The court’s comments further indicate that

it considered the length of Shmuckler’s undischarged term of

imprisonment as required by the commentary to U.S.S.G. § 5G1.3.

For these reasons, the district court did not abuse its

discretion by imposing a consecutive sentence in this case.

Third, Shmuckler argues that the district court erred in

ordering restitution in an amount greater than the amount of

actual loss it used for sentencing purposes. In support of this

argument, Shmuckler compares the restitution requirements of the

Mandatory Victims Restitution Act (MVRA)—which requires district

courts to order restitution in wire fraud cases, 18 U.S.C.

8
§ 3663A(c)(1)(A)(ii)—with the restitution calculation parameters

set forth in U.S.S.G. § 2B1.1. The MVRA “implicitly requires

that the restitution award be based on the amount of loss

actually caused by the defendant’s offense.” United States v.

Dokich, 614 F.3d 314, 319 (7th Cir. 2010) (quoting United States

v. Rhodes, 330 F.3d 949, 953 (7th Cir. 2003)) (internal

quotation marks omitted). By contrast, the Guidelines direct

sentencing courts to determine the amount of loss by looking to

the “greater of actual loss or intended loss.” U.S.S.G. § 2B1.1

cmt. n.3(A). Shmuckler contends that, in light of these rules,

“it is legally and logically ‘impossible’ for restitution to

exceed the loss found for purposes of the sentencing guidelines”

as the restitution amount did in this case. This Court reviews

restitution orders for abuse of discretion. See Harvey, 532

F.3d at 339.

Each party contends that the Seventh Circuit’s decision in

United States v. Dokich supports its position, and we find the

case instructive. In Dokich, the district court had used a

lower figure for sentencing purposes than it ordered in

restitution, causing the circuit court to speculate that

“[p]erhaps the district court, by deliberately basing its

guidelines calculation on a lower amount of loss, intended in

this way to give [the defendant] a break.” 614 F.3d at 320.

The court held that the district court did not abuse its

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discretion because it had made a specific finding of actual loss

for restitution purposes. Id. In the case at hand, the

district court explicitly stated that it was “giv[ing] the

defendant the benefit of the doubt” by using the lower loss

amount for sentencing purposes. However, during the hearing

regarding restitution, the court made a more accurate finding of

actual loss. The district court therefore did not abuse its

discretion in using a greater loss amount for restitution than

it did for sentencing purposes. *

III.

For the foregoing reasons, we affirm the decision of the

district court.

AFFIRMED

*
Shmuckler further contends that the restitution order
violates the Sixth Amendment because the judge, not the jury,
found the facts supporting its entry. However, he acknowledges
that this Court rejected the same theory in United States v.
Day, 700 F.3d 713, 732 (4th Cir. 2012), and we agree that the
argument therefore lacks merit.