In the
United States Court of Appeals
For the Seventh Circuit
Nos. 09-2589 & 09-2593
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
C HRISTINE F AVARA and F RANK C USTABLE, JR.,
Defendants-Appellants.
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 1:05-cr-00340—Blanche M. Manning, Judge.
A RGUED F EBRUARY 23, 2010—D ECIDED A UGUST 11, 2010
Before B AUER, P OSNER and S YKES, Circuit Judges.
B AUER, Circuit Judge. Christine Favara and Frank
Custable were convicted of fraudulently acquiring and
selling corporate securities. The district court sentenced
Favara to 70 months in prison and Custable, the
organizer of the scheme, to 262 months in prison. They
appeal their sentences as unreasonable. For the reasons
stated below, we affirm.
2 Nos. 09-2589 & 09-2593
I. BACKGROUND
A. Frank Custable
In June 2008, Custable pleaded guilty to seven-
teen counts of wire and securities fraud for a scheme
in which he fraudulently obtained restricted shares of
stock in failing companies, concealed the transactions
from the SEC, and then disseminated false informa-
tion to create a market for the shares.
In addition to the fraud charges, Custable pleaded
guilty to obstruction of justice and contempt of court,
stemming from his conduct during the SEC’s investiga-
tion of the stock scheme and its ensuing civil suit
against him. One of the obstruction counts charged
Custable and his attorney, Frank Luce, with an attempt
to thwart the investigation by falsely telling the SEC that
Luce represented one of Custable’s former employees
and that the employee would not cooperate with the
agency’s investigation. The contempt count and the sec-
ond obstruction count reflected Custable’s transfer and
expenditure of assets that had been frozen during the
SEC civil suit, in contravention of a federal court order.
After he pleaded guilty, the court sentenced Custable
to 262 months in prison, within the recommended Guide-
line range. On appeal, Custable argues that the district
court miscalculated his offense level, enhanced his sen-
tence twice for his violation of the asset freeze order,
improperly used a later version of the Guidelines, and
imposed an unreasonably harsh sentence. Only the last
three arguments were made in the district court.
Nos. 09-2589 & 09-2593 3
B. Christine Favara
Favara was an executive who worked with Custable
to facilitate the stock transactions and falsify consulting
contracts and SEC registration documents. In 2008, she
pleaded guilty to a single count of securities fraud.
Before her guilty plea, and while free on bond in this
case, Favara posed as an investment advisor and stole
at least $155,000 in retirement funds from a client. She
was again indicted for fraud, this time in the Eastern
District of California, and her bond in this case was
revoked. When Favara agreed to plead guilty, the gov-
ernment dismissed the California indictment.
At sentencing, the court acknowledged Favara’s dif-
ficult childhood, her bipolar disorder and other argu-
ments for a lenient sentence. But it held that the serious-
ness of the offenses warranted a sentence within the
Guideline range and sentenced Favara to 70 months in
prison, at the low end of the recommended range.
Favara timely appealed. She argues that the judge
failed to adequately consider the advisory nature of the
Guidelines and her arguments for a lenient sentence.
II. DISCUSSION
In this appeal, the parties ask us to evaluate the
fairness of the district court’s sentencing procedures and
the overall reasonableness of their sentences. We review
the district court’s imposition of within-Guidelines sen-
tences for abuse of discretion. United States v. Poetz,
4 Nos. 09-2589 & 09-2593
582 F.3d 835, 837 (7th Cir. 2009). We review de novo
the procedures used during sentencing, including the
court’s consideration of the factors in 18 U.S.C. § 3553. Id.
A. Custable
Custable provides four reasons why his sentence is
unreasonable. First, he complains that the presentence
investigation report (“PSR”) overstated his offense level,
which should have been six, and not seven. And so he
asks us to remand so the district court can resentence
him under the new, lower offense level.
We typically review de novo the district court’s sen-
tencing procedures. United States v. Garrett, 528 F.3d
525, 527 (7th Cir. 2008). Custable never objected in the
district court to the base offense level, so we deem his
arguments forfeited and review for plain error. Id. See
also United States v. Jaimes-Jaimes, 406 F.3d 845, 848-49
(7th Cir. 2005). On plain error review, we first deter-
mine whether there was error, whether it was plain, and
whether it affected substantial rights. Garrett, 528 F.3d
at 527. If these criteria are met, we then have discretion
to grant relief if the error “seriously affected the
fairness, integrity, or public reputation of judicial pro-
ceedings.” United States v. Sawyer, 521 F.3d 792, 796 (7th
Cir. 2008) (quoting United States v. Olano, 507 U.S. 725,
736 (1993)). Even if we were to remand Custable’s case
with instructions to reduce his base offense level, there
is no reason to believe a correction would affect the
sentence, so any error is harmless. See Garrett, 528 F.3d
at 527.
Nos. 09-2589 & 09-2593 5
The PSR broke the counts against Custable into two
groups, one composed of the fraud and contempt counts
and the other containing the two obstruction counts.
When a defendant is sentenced for more than one group
of counts, the Guidelines prescribe the method whereby
a court determines the “combined offense level” for the
groups, with the goal of using the most serious offense
as the starting point and “provid[ing] incremental punish-
ment for significant additional criminal conduct.” U.S.
Sentencing Guidelines Manual ch. 3, pt. D, introductory
cmt. Under these rules, when two groups of counts are
both sufficiently serious such that the offense level for
one group is only “5 to 8 levels less serious” than that
of the most serious group, the defendant’s total offense
level is raised by one level. See id. § 3D1.4(b).
This is precisely the situation in Custable’s case. As
calculated by the PSR and adopted by the district court,
the offense level for the group of fraud and contempt
counts was forty-one, nine levels above that of the ob-
struction group, which was thirty-two. Reducing by
one the offense level for his fraud counts will sim-
ply trigger the above grouping rule and result in the
addition of a level to Custable’s combined offense
level, negating any reduction in the Guideline range.1
1
The PSR set the offense level for Custable’s second group of
counts, the obstruction group, at 32. Reducing by one the offense
level for the fraud/contempt group will result in an offense
level of 40. The offense level applicable to the obstruction
counts will thus be “8 levels less serious than the Group with
(continued...)
6 Nos. 09-2589 & 09-2593
See id. We have no reason to believe that an error that
did not affect the Guideline range affected the district
court’s sentencing decision as the district court stated
its intention to impose a sentence within the applicable
Guideline range. Any error is thus harmless.
We next turn to Custable’s second claim, that the
PSR impermissibly double-counted when it increased
his offense level for violating a judicial order, id.
§ 2B1.1(b)(8)(c), and for obstructing justice, id. § 3C1.1. The
rule against double-counting prevents a district court
from imposing “two or more upward adjustments
within the same Guideline range when both are premised
on the same conduct.” United States v. Blum, 534 F.3d 608,
612 (7th Cir. 2008) (citing United States v. Schmeilski, 408
F.3d 917, 919 (7th Cir. 2005)). Here, the district court’s
application of both enhancements was not double
counting because each was based on distinct conduct,
one for transferring frozen funds in violation of a
judicial order and the other for interfering with the
SEC’s investigation.
Third, Custable argues that the district court failed to
account for his cooperation with the government or
1
(...continued)
the highest offense level,” see U.S.S.G. § 3D1.4(b), and Custable’s
total offense level will be adjusted upward by one level.
Though the parties propose various ways to regroup the
counts, none of them eliminates the need for two groups, one
containing the fraud and another containing at least one
obstruction count. See id. § 3D1.2 cmt. n. 5.
Nos. 09-2589 & 09-2593 7
adequately consider the factors under 18 U.S.C. § 3553(a),
and that the court violated the Constitution’s prohibi-
tion against ex post facto laws by sentencing him under
a later, harsher version of the Guidelines than that in
effect at the time of the crimes. As a result, Custable says
his sentence is unreasonable. As discussed above, we
review the district court’s sentencing procedures, in-
cluding its consideration of the § 3553 factors de novo,
United States v. Corson, 579 F.3d 804, 813 (7th Cir. 2009),
and the substantive reasonableness of Custable’s sen-
tence for abuse of discretion. Poetz, 582 F.3d at 837.
In light of the Sentencing Guidelines’ advisory nature,
a district court must give meaningful consideration to
the § 3553 factors, as well as the Guidelines range, and
the sentence must be “objectively reasonable in light of
the statutory factors and the individual circumstances
of the case.” United States v. Shannon, 518 F.3d 494, 496
(7th Cir. 2008). Rather than address each factor, the
district court need only provide an adequate statement
of its reasons why the selected sentence is appropriate.
Id. (citing United States v. Harris, 490 F.3d 589, 597 (7th
Cir. 2007)).
Though it ultimately imposed a sentence within the
Guidelines range, the district court adequately con-
sidered the § 3553 factors and we do not find the sen-
tence unreasonable. In addition to discussing its reasons
at length during the sentencing hearing, the court
provided a detailed written statement with its sen-
tencing order. The court’s statements indicate its con-
sideration of Custable’s cooperation with the govern-
8 Nos. 09-2589 & 09-2593
ment, which it termed “substantial” and “extensive.” It
also considered Custable’s family circumstances and
acceptance of responsibility. The court’s reasoned con-
sideration of the § 3553 factors and the individual cir-
cumstances of Custable’s case comports with its discre-
tion to fashion a sentence “sufficient but not greater
than necessary” to satisfy the objectives of the Guide-
lines. 18 U.S.C. § 3553(a). The mere fact that the de-
fendant cooperated with the government did not bind
the court to impose a lenient sentence. The court
found significant Custable’s history of unlawful finan-
cial dealings, his role as “mastermind” of the scheme,
the level of planning required, and his failure to
repatriate from an off-shore bank account the proceeds
of his scheme. We do not find unreasonable its deter-
mination that these factors tipped the balance in favor
of a within-Guidelines sentence.
Finally, we dispose of Custable’s argument that
the court’s reliance on the 2008 version of the Guide-
lines violates the Constitutional prohibition against
ex post facto laws. Custable claims that the 2008 Guide-
lines impose a more serious offense level, and thus a
harsher sentence, than the Guidelines in effect in 2001
or 2002 when he committed the offenses. Section 2B1.1 of
the 2002 Guidelines calls for a base offense level of six, and
a four-point enhancement for the number of victims,
instead of the six-point increase Custable received under
the 2008 Guidelines. But this argument is foreclosed by
United States v. Demaree, 459 F.3d 791, 795 (7th Cir. 2006).
In Demaree, we held that, because the Guidelines are
Nos. 09-2589 & 09-2593 9
only advisory in nature, a court’s use of a later version
does not offend ex post facto. Id. We find no reason to
abandon that conclusion today. United States v. Nurek,
578 F.3d 618, 626 (7th Cir. 2009); see also United States
v. Panice, 598 F.3d 426, 435 (7th Cir. 2010).
B. Favara
Favara similarly challenges the reasonableness of her
sentence. She argues that the judge treated the Sen-
tencing Guidelines as mandatory and thus failed
to adequately consider her arguments for a below-Guide-
lines sentence, especially the role her now controlled
bipolar disorder played in her fraudulent conduct.
We presume the district court’s imposition of a within-
Guidelines sentence is reasonable and review it for
abuse of discretion. Poetz, 582 F.3d at 837. We review
de novo its procedures during sentencing, including
the court’s consideration of the § 3553 factors. Id.
Judge Manning, in correcting an error in the initial
Guideline calculation, stated that her “intent was to
impose the low end of the Guideline range.” Favara
says this statement is evidence that the judge presumed
the reasonableness of the Guidelines and did not ade-
quately consider arguments in favor of a below-Guidelines
sentence.
Though the district judge indicated her intent to set
Favara’s sentence at the low end of the range, when
viewed in context, the judge’s comment and the
10 Nos. 09-2589 & 09-2593
resulting sentence were based on her view that a within-
Guideline sentence was appropriate in Favara’s case. See
United States v. Diaz, 533 F.3d 574, 577 (7th Cir. 2008). The
judge recognized her discretion to impose a sentence
below the Guidelines, if warranted. At the second sen-
tencing hearing, the judge acknowledged her discretion
to depart from the Guidelines, saying, “I can impose
whatever sentence I deem appropriate under [§] 3553.”
That she also attached a thirteen-point explanation,
based on Favara’s unique circumstances, as to why a
within-Guidelines sentence was appropriate in this
case further indicates her recognition of the Guidelines’
advisory nature.
Judge Manning’s written statement that Favara’s
difficult past “favors leniency,” further shows that she
recognized her discretion, but thought leniency was not
appropriate. Further buttressing this view is the fact that
the judge imposed a bottom-of-the-Guidelines sentence
despite her recognition of several aggravating fac-
tors—including Favara’s theft of an elderly couple’s
retirement savings while on bond in the present case—that
warranted a “very tough sentence.” The judge clearly
recognized the advisory nature of the Guidelines and
appropriately based her sentence on the facts of
Favara’s case.
Favara next presents a series of arguments that the
judge gave inadequate consideration to her bipolar dis-
order, and that Favara committed the offense “while
suffering from a significantly reduced mental capacity.”
As we indicate above, the judge indeed considered
Nos. 09-2589 & 09-2593 11
Favara’s illness. She permitted a psychiatric evaluation
and delayed sentencing to allow Favara to present the
report. Both at the sentencing hearing and in her
written memorandum explaining the sentence, the
judge acknowledged that Favara’s bipolar disorder was
a factor contributing to the offenses and favored le-
niency. But she went on to state that the seriousness of
Favara’s conduct and her inability to remain compliant
with treatment despite a longstanding awareness of
the bipolar disorder favored a harsh sentence. The law
requires no more. The discretion to impose a below-
Guidelines sentence is in the judge’s hands. A sentencing
judge must indicate her consideration of arguments in
favor of mitigation under § 3553. But she is not required
to reduce the sentence anytime a defendant presents
evidence that mental illness was a factor. See United
States v. Campos, 541 F.3d 735, 750-51 (7th Cir. 2008) (de-
fendant must rebut presumption that within-Guidelines
sentence is reasonable).
Finally, Favara’s 70-month sentence was not unwar-
rantedly disparate from her co-defendants, several of
whom received probation. Section 3553 requires the
judge to consider, among other things, whether a par-
ticular sentence would create unwarranted disparities
with other defendants, but only among defendants with
“similar records who have been found guilty of similar
conduct.” 18 U.S.C. § 3553(a)(6) (emphasis added). Favara
omits the emphasized language from her brief, but that
makes it no less fatal to her argument. The judge
indicated in her written explanation that she con-
sidered the disparity, but found it warranted in light of
12 Nos. 09-2589 & 09-2593
the seriousness of the offenses, Favara’s history, and the
fact that she embezzled $150,000 while awaiting trial.
“Unlike the other co-defendants . . . Favara’s conduct
followed a long history of other fraudulent behavior.” The
judge thus adequately considered any disparity between
Favara’s sentence and those of her co-defendants and
in any event Favara’s conduct and record warranted
such a disparity.
III. CONCLUSION
The error in Frank Custable’s offense level calculation
was harmless. Neither his nor Christine Favara’s sen-
tences are unreasonable. We affirm.
8-11-10