United States v. Brown

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
AUG 4 1999
TENTH CIRCUIT
PATRICK FISHER
Clerk

UNITED STATES OF AMERICA,
Nos. 98-2169
Plaintiff - Appellee/ and 98-2205
Cross-Appellant,
v. (D. New Mexico)
MITCHELL BROWN, (D.C. No. CR-96-514-MV)

Defendant - Appellant/
Cross-Appellee.

ORDER AND JUDGMENT *

Before ANDERSON , TACHA , and BALDOCK , Circuit Judges.

Mitchell Brown was convicted by a jury on four counts: (1) concealing

assets from the bankruptcy court, in violation of 18 U.S.C. § 152 (Count IV); (2)

concealing assets from the FDIC, in violation of 18 U.S.C. § 1032 (Count I); (3)

inviting the FDIC to rely on his false statements, in violation of 18 U.S.C. § 1007

(Count II); and (4) conspiring to invite the FDIC to rely on his false statements, in

*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
violation of 18 U.S.C. § 371 (Count V). He challenges each of his convictions on

numerous grounds. He argues that Counts I, II, and V of the indictment were

defective. He also challenges the sufficiency of the evidence supporting his

convictions. Finally, he contends that the jury was improperly instructed as to all

four counts. On cross-appeal, the government contests the district court’s finding

at sentencing that no loss occurred. We reject each of these arguments for the

reasons below, and affirm Brown’s convictions and sentence.

I. BACKGROUND

Mitchell Brown (Brown) and his wife, Joyce Brown, were indicted

together, but Brown was tried separately. Brown’s convictions center around

three properties in which, according to the government’s case at trial, he retained

an interest which he concealed from the bankruptcy court and later the FDIC.

These properties are (1) Brown’s residence at 55 Ranch Road, Marin County,

California (the residence); (2) the Elan Fitness Center, located in San Anselmo,

California (the fitness center); and (3) the New Mexico Land Company (NMLC),

a New Mexico corporation. The jury returned special verdicts as to Counts I and

IV, determining that Brown concealed from both the FDIC and the bankruptcy

court an interest in each of the three properties. As to Counts II and V it rendered

general verdicts.

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 The parties presented extensive evidence at trial, only some of which is

detailed here. Many of the facts relevant to this appeal are uncontested. Mitchell

and Joyce Brown were married in 1980, following the execution of a valid

prenuptial agreement in which they agreed to hold all property as separate

property. Brown filed for bankruptcy on March 30, 1987. In 1990, the FDIC

obtained a judgment against Brown for approximately $2.4 million, based on an

October 1984 real estate transaction. The bankruptcy court held this debt was

nondischargeable.

Brown owned the Ranch Road residence as his separate property beginning

in March 1979, and the Browns have resided there continuously during their

marriage. In 1986, Citicorp, which held the mortgage on the residence,

foreclosed and obtained an eviction order. Brown asked Paul Kahn to purchase

the house from Citicorp. Brown arranged the financing and took care of all the

paperwork. Kahn signed the mortgage, and Joyce Brown paid $3000 per month to

Kahn for the Browns to stay in the house. These payments were designated rent,

but Kahn made no money from the arrangement because the monthly payments

were only enough to cover amounts due under the mortgage. In January 1988,

Kahn, who was going through a divorce, sold the house for $10 to the Anthony

Brown Trust (ABT), created in favor of the Browns’ minor son. Joyce Brown was

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the sole trustee of the trust. As part of the transaction, the trust assumed the

outstanding mortgage.

Elan Fitness Center, formerly known as Omni Fitness and Health, was

purchased in 1984 by Marin Financial Corporation, an entity owned by Brown.

On April 1, 1985, Brown transferred the fitness center to his wife, who since then

has managed the business. The parties disagree concerning the terms and the

ultimate efficacy of the transfer.

Brown Land Company (BLC), the predecessor corporation of NMLC, was

organized in 1979 by Brown. Originally, Brown, his mother, and his sister owned

BLC’s stock in equal thirds. In September 1985, Brown transferred his stock into

the Anthony Mitchell Brown Living Trust (AMBLT), with Joyce Brown as

trustee. In April 1987, Robert Janes, Brown’s attorney, organized the NMLC,

which took over the assets of the BLC. In 1989 and 1990, Joyce Brown, both

individually and as trustee for ABT, paid $45,000 to NMLC. During the same

period, NMLC paid for Brown’s attorney’s fees. Brown’s mother, paying for

repair work Brown did on her house, had checks for the work made out to NMLC.

The government contends that NMLC was Brown’s “piggy bank,” Appellee’s Br.

at 33; Brown insists that he was an employee of NMLC and that NMLC paid only

legitimate business expenses.

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 Following entry of judgment against Brown in 1990 in favor of the FDIC,

the FDIC attempted to identify assets that might satisfy the judgment. It deposed

Brown on July 19, 1991, for that purpose. Brown testified that a trust owned the

residence, that his wife owned the fitness center, and that he received only

expense reimbursements from NMLC (he testified that he was also entitled to

20% of profits but that there had been none). The FDIC also obtained Brown’s

bankruptcy filings in the course of its investigation. The FDIC subsequently

settled its $2.4 million judgment for $10,000.

II. DISCUSSION

A. Challenges to Indictment

Brown challenges his indictment on various grounds. First, he argues that

Counts I, II, and V of the indictment were insufficient. In general, an indictment

is constitutionally sufficient if it (1) alleges all the essential elements of the

offense, (2) provides the defendant notice of the charge against him, and (3) is

specific enough to provide double jeopardy protection. See United States v.

Dashney , 117 F.3d 1197, 1205 (10th Cir. 1997). Brown argues that the first two

of these requirements were not met as to Count I, because it did not specify which

assets he allegedly concealed from the FDIC. He also makes the same arguments

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as to Counts II and V, claiming that the government was required to specify in the

indictment which allegedly false statements he made to the FDIC.

“Defenses and objections based on defects in the indictment or information

(other than that it fails to show jurisdiction in the court or to charge an offense)”

must be raised by motion prior to trial. Fed. R. Crim. P. 12(b)(2), 12(f); see, e.g. ,

United States v. Freeman , 813 F.2d 303, 304 (10th Cir. 1987). Although Brown

did request additional details regarding Counts I and II by moving for a bill of

particulars prior to trial, he never challenged the legal sufficiency of these counts,

such as by a motion to dismiss. Therefore he has waived all challenges to the

sufficiency of these counts, save only the claim that they fail to charge an

offense. 1

Cognizant of this waiver rule, Brown attempts to cast his arguments in the

terms of the exception. At root, however, by arguing that the indictment should

have specified the false statements and assets at issue, Brown is not really

claiming that Counts I and II do not charge offenses, i.e., that some essential

elements of the crimes were not alleged as a matter of law. He is merely arguing

that those elements should have been alleged with more factual specificity. Such

claims cannot be raised for the first time at this late date. See United States v.

Brown , 164 F.3d 518, 521 & n.3 (10th Cir. 1998) (evaluating challenge to

1
We note that Brown’s appellate counsel did not represent him at trial.

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jurisdiction, but refusing to reach challenge to specificity of indictment not raised

at trial); Bennett v. United States , 252 F.2d 97, 98 (10th Cir. 1958) (applying

Rule 12(b)(2) to bar claim that indictment lacked sufficient detail); see also, e.g. ,

United States v. Freeman , 619 F.2d 1112, 1118 (5th Cir. 1980) (“Appellants'

contention that the indictment lacked the specificity required by the sixth

amendment was waived by their failure to object before trial.”) (citing United

States v. Varner , 437 F.2d 1195, 1197 (5th Cir. 1971)).

Brown also challenges Count V on duplicity grounds, arguing that the

district court erred in allowing the prosecution an election. Count V alleged a

conspiracy (a) to make false statements to the FDIC and (b) to conceal assets

from the FDIC. After a duplicity challenge by Brown prior to trial, the court

forced the prosecution to choose which conspiracy to present to the jury, and the

prosecution chose the false statements conspiracy. Such a forced election was

entirely proper, and sufficed to cure any duplicity. See United States v.

Trammell , 133 F.3d 1343, 1354-55 (10th Cir. 1998) (approving use of unanimity

instruction to cure duplicity); United States v. Henry , 504 F.2d 1335, 1338 (10th

Cir. 1974) (“The proper way to attack a duplicitous indictment is by a motion to

elect.”). We therefore reject Brown’s challenges to his indictment.

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B. Sufficiency of the Evidence

Brown appeals the denial of his motion for a judgment of acquittal on each

count of his indictment. Thus, he challenges the sufficiency of the evidence

supporting each of his convictions. See United States v. Willis , 102 F.3d 1078,

1083 (10th Cir. 1996). In reviewing these claims, we “look at all the evidence,

both direct and circumstantial, together with the reasonable inferences to be

drawn therefrom in a light most favorable to the government to determine whether

a reasonable jury could find the defendant guilty beyond a reasonable doubt.”

United States v. Levine , 970 F.2d 681, 684-85 (10th Cir. 1992).

First, as to Count IV, Brown claims the government did not show that the

assets Brown allegedly concealed were part of his bankruptcy estate. The statute,

18 U.S.C. § 152(1), prohibits “knowingly and fraudulently conceal[ing] . . . any

property belonging to the estate of a debtor” from the United States Trustee or

other bankruptcy court officers. Property of a debtor’s bankruptcy estate is

broadly defined in 11 U.S.C. § 541(a)(1) to include (with limited exceptions not

applicable here) “all legal or equitable interests of the debtor in property as of the

commencement of the case.” Therefore we are concerned with whether a rational

juror could have found beyond a reasonable doubt that on March 30, 1987, Brown

had a legal or equitable interest in any of the three properties at issue here.

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 Brown argues that he had no such interest in the properties as of March 30,

1987. He states that the fitness center belonged to his wife, that the residence

was in Kahn’s name, and that NMLC did not yet exist. However, that Brown may

not have held legal title to any of these assets on the date in question is not

determinative. “[E]quitable interests of the debtor,” “wherever located and by

whomever held,” must be disclosed. 11 U.S.C. § 541(a)(1); see, e.g. United

States v. Moynagh , 566 F.2d 799, 803 (1st Cir. 1977) (finding equitable interest

where debtor had, prior to filing, transferred boats to corporation owned by

debtor’s mother and son). “[T]he issue of just what interests are ‘equitable’

interests in property” is “a question of fact for the jury.” 1 Lawrence P. King,

Collier on Bankruptcy ¶ 7.02[1][a], 7-30 & n.42 (15th ed. rev. 1999) (citing cases

so holding).

There was sufficient evidence to support the conclusion that Brown held an

equitable interest in at least the residence, which is enough for us to uphold his

conviction on Count IV. A rational juror could reasonably infer from the

testimony of Paul Kahn that Kahn was acting only as nominee title holder, and

that both he and the Browns understood that the Browns were to retain de facto

ownership of the residence. Kahn “didn’t put up any dollars” for the purchase,

and “the entire mortgage” was financed by Brown’s contacts at Southern Bankers

Mortgage Corporation (because the house was worth much more than the

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$265,000 sale price). R. Vol. XIX at 879, 881. Kahn testified, “I felt that, you

know, that I’d like to help him as long as, you know, I didn’t lose any money in

the proposition. . . . [A]nd frankly, . . . I didn’t want to make any money on the

proposition. I wanted to help a friend who was in trouble . . . .” Id. at 883. He

told Brown “that I was willing to do this as long as I could do it and not be

financially harmed and that I did not want to make any money on it.” Id. The

lease terms between Joyce Brown and Kahn were crafted to accomplish this zero-

profit, zero-loss goal. There was evidence that at least some of the money paid to

Kahn for rent came from Brown (and not his wife), through companies Brown

controlled. See, e.g. , R. Vol. XXII at 1478 (indicating that Brown signed a check

on August 10, 1987, for $3,000, made out to Paul Kahn, with the memo “house

payment”). When Kahn went through a divorce in 1987, Kahn “asked Mitch

[Brown] to find some other way of dealing with the property, or find another

buyer or I would have to sell the property.” R. Vol. XIX at 914. So the Anthony

Brown Trust “was set up to purchase the 55 Ranch Road property from Paul

Kahn.” Appellant’s Br. at 7 n.2. Kahn testified, “again, under my premise, which

was I didn’t want to make any money and I didn’t want to get harmed, I sold it

back to them for—I sold it back to the trust for $10 subject to the liens, meaning

they had to assume the mortgage obligations and anything else on the property.”

R. Vol. XIX at 913. This sale was consummated only months after Brown

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declared bankruptcy. Kahn, who had spent time as a real estate developer,

believed at the time that the house was actually worth in excess of $400,000. Id.

at 915. When, after the sale, Kahn determined that he owed approximately $5000

in taxes on the sale, he asked the Browns to pay that amount, which they did. Id.

at 924-26.

This circumstantial evidence supports the inference that Brown retained an

interest which he was required to disclose to the bankruptcy court. Cf. United

States v. Edwards , 905 F. Supp. 45, 48-49 (D. Mass. 1995) (“The Government

was . . . entitled to . . . prove by circumstantial evidence that the conveyance was

a sham transaction, that Edwards retained an equitable interest in the

condominium, and that Edwards committed a crime by failing to disclose it in his

bankruptcy proceeding.”)

The possibility that Brown’s interest was worthless or exempt, and was

therefore of no value to creditors, is not crucial. “Debtors have an absolute duty

to report whatever interests they hold in property, even if they believe their assets

are worthless or are unavailable to the bankruptcy estate.” In re Yonikus , 974

F.2d 901, 904 (7th Cir. 1992). This is because “[a]llowing debtors the discretion

to not report exempt or worthless property usurps the role of the trustee, creditors,

and the court by denying them the opportunity to review the factual and legal

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basis of debtors’ claims.” Bensenville Community Ctr. Union v. Bailey (In re

Bailey ), 147 B.R. 157, 163 (Bankr. N.D. Ill. 1992).

Brown protests that his dealings with Kahn and the creation of the Anthony

Brown Trust were of themselves perfectly legal. That may or may not be, but it

does not absolve Brown of his duty to disclose the nature of these dealings to the

Bankruptcy Court.

Brown raises similar challenges to the evidence supporting Counts I, II, and

V. In essence, he argues that the government never showed that he had a legal

interest in the three properties, and that therefore he could not have (1) concealed,

(2) lied about, or (3) conspired to lie about such an interest. We reject these

arguments for similar reasons. It was sufficient for the government to show that

Brown concealed from the FDIC, lied to the FDIC about, and conspired to lie to

the FDIC about his equitable interest in the residence.

Finally, Brown argues that the factual allegations in Counts I, II, and V

were so vague as to “make[] it impossible to assess whether those facts have been

proven by sufficient evidence.” Appellant’s Br. at 38. This is essentially a

recasting of his challenge to the specificity of the indictment, which he has

waived.

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C. Jury Instructions

Brown raises several challenges to the jury instructions given by the district

court. As to Count V, Brown argues that the jury should have been required to

find that the false statements alleged were material. He contends that the court

erred when it instructed the jury that Brown’s bankruptcy declaration was material

as a matter of law. Brown did not raise this issue before the district court. We

agree with Brown that the court erred, on the authority of United States v.

Gaudin , 515 U.S. 506 (1995) (holding that materiality element of false statements

offense must be decided by jury). 2
However, even assuming that this error was

not harmless (which is by no means clear, see Neder v. United States , 119 S. Ct.

1827, 1999 WL 373186 (1999) (finding Gaudin error harmless)), we may correct

such an error not raised at trial only if “the forfeited error seriously affects the

fairness, integrity or public reputation of judicial proceedings.” Johnson v.

United States , 520 U.S. 461, 469 (1997) (internal quotes omitted); see also United

States v. Schleibaum , 130 F.3d 947, 949 (10th Cir. 1997) (en banc) (applying

Johnson ); United States v. Clifton , 127 F.3d 969, 971-72 (10th Cir. 1997) (same).

Not only does Brown not point to any particularized unfairness resulting from the

Gaudin error, but, more to the point, he does not argue on appeal that the

The government seeks to distinguish Gaudin because it involved a
2

substantive false statements offense, not a conspiracy charge. The government’s
unsupported arguments on this point are not persuasive.

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declaration in question was not material. See Johnson , 520 U.S. at 470

(“Materiality was essentially uncontroverted at trial and has remained so on

appeal.”); cf. Neder , 1999 WL 373186, at *11 (“Neder did not argue to the

jury—and does not argue here—that his false statements of income could be

found immaterial.”). Thus, he has not made an adequate claim for relief.

Brown also contends that the district court erred in not instructing the jury that it

was required to agree unanimously on each element of each charged offense.

Brown did not ask for such an instruction at trial, and he now claims the court’s

failure to give such an instruction sua sponte was plain error. The court did give

the following instruction: “To reach a verdict, whether it is guilty or not guilty,

all of you must agree. Your verdict must be unanimous on each count of the

indictment.” R. Vol. XXVII at 2285. Such general unanimity instructions are

presumptively sufficient in this circuit. See, e.g. , United States v. Linn , 31 F.3d

987, 991 (10th Cir. 1994). Brown has not shown that this case falls outside the

presumptive rule.

As to Counts II and V, Brown argues that the jury should have been

instructed that in order to convict, it had to agree unanimously on a particular

false statement. Brown did not request such an instruction at trial. Yet in each of

the appellate cases cited by Brown requiring such an instruction, the defendant

had first requested and been denied such an instruction by the trial court. See

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United States v. Holley , 942 F.2d 916, 922 (5th Cir. 1991); United States v.

Duncan , 850 F.2d 1104, 1105 (6th Cir. 1988); United States v. Ferris , 719 F.2d

1405, 1406 (9th Cir. 1983). We have held that a district court’s failure to give

such a factually specific unanimity instruction sua sponte is not plain error. See

United States v. Smith , 13 F.3d 1421, 1427 (10th Cir. 1994). We therefore reject

Brown’s arguments on this point.

Brown also argues that the jury was inadequately instructed on the legal

principles necessary to render fair verdicts in this case. Again, he acknowledges

not requesting at trial the instructions he now favors. We therefore review only

for plain error. See United States v. Duran , 133 F.3d 1324, 1330 (10th Cir.

1998). For Brown to prevail, he must show that the court gave obviously

erroneous instructions that, considered as a whole, misled the jury and affected

his substantial rights. See id.

Brown claims that the district court should have instructed the jury sua

sponte on various principles of California law, including the effect of prenuptial

agreements, the writing requirement of the Statute of Frauds, and the elements of

fraudulent transfers. He argues that if the jury had received such instructions, it

would have concluded that he had no interest in any of the assets at issue. We

think an instruction on the Statute of Frauds’ writing requirement was not

appropriate, much less required to be given sua sponte. The absence of a written

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agreement between Brown and Kahn did not preclude a finding of guilt, as we

have explained above regarding equitable interests. And although it appears that

instructions on fraudulent transfers and prenuptial agreements may have been

relevant and helpful in some degree, we do not think the lack of such instructions

misled the jury, viewing the instructions as a whole.

Brown argues that the district court’s definition of “estate of a debtor” was

confusing and prejudicial as to Count IV. He cites the court’s statement that a

bankruptcy estate “may also be used to mean property acquired after the

commencement of the proceeding,” R. Vol. XXVII at 2201, and argues that the

jury was never instructed that after-acquired property is included only if it is the

proceeds of estate property. As the government correctly notes, however, the

issue of after-acquired property was relevant to only one of the three properties

listed in Count IV (NMLC), and the jury rendered special verdicts on each of the

three properties. Thus, even assuming that the jury misunderstood or misapplied

the law regarding after-acquired properties, its error affected only one of three

independently sufficient grounds for a conviction on Count IV.

For these reasons, the district court committed no reversible error by not

giving jury instructions that Brown did not request at trial.

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D. Cross-Appeal: Loss Level at Sentencing

The government contests the district court’s determination that Brown’s

sentence should not be enhanced under USSG § 2F1.1, which increases a fraud

defendant’s offense level for offenses involving either an actual or intended loss

in excess of $2,000. See USSG § 2F1.1(b) & comment. (n.7). We review the

district court's legal interpretation of § 2F1.1 de novo, and review its findings of

fact on the issue of loss for clear error, giving due deference to its application of

the guidelines to the facts. See United States v. Janusz , 135 F.3d 1319, 1324

(10th Cir. 1998).

The government has the burden of proving loss by the preponderance of the

evidence. See United States v. Reddeck , 22 F.3d 1504, 1512 (10th Cir. 1994).

The district court determined that the government had not met its burden. The

government’s primary argument was that loss should be measured by the entire

amount of the judgment the FDIC settled ($2.4 million), which would result in a

12-point increase in offense level. The court disagreed and instead analyzed loss

in terms of the value of the three concealed assets, both at the time of Brown’s

bankruptcy filing and at the time of his settlement agreement with the FDIC. On

this analysis, it found that the government had failed to prove any loss because (a)

there was no showing that the Anthony Brown Trust was invalid, or that the

residence was transferred fraudulently, and in any event, at the time of the

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bankruptcy there was no equity in the residence; (b) Brown retained no ownership

interest in the fitness center; and (c) NMLC did not exist at the time the

bankruptcy was filed, and there was “a failure of proof in terms of the value of

New Mexico Land Company that can be attributed to Mr. Brown” at the time of

the settlement agreement. R. Vol. XIV at 147.

On appeal, the government again focuses almost its entire argument on the

claim that loss should be measured by the $2.4 million judgment, reasoning that

Brown intended such a loss by fraudulently inducing the FDIC to settle its

judgment. We note that the $2.4 million judgment against Brown apparently

resulted from conduct unrelated to the offense here (the government does not

argue otherwise). That is, although at some point Brown did something that

ended in his owing the FDIC $2.4 million, that is not this case. The question here

is what loss Brown intended to cause the FDIC by concealing and lying about

three specific assets that might satisfy the judgment to some extent.

We emphasize that the government does not argue that actual loss amounts

to $2.4 million; it bases its entire argument here on intended loss. Yet as a matter

of law in this circuit, intended loss “cannot exceed the loss a defendant in fact

could have occasioned if his or her fraud had been entirely successful.” United

States v. Santiago , 977 F.2d 517, 524 (10th Cir. 1992). Thus, “the fair market

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value of what a defendant has taken or attempted to take defines the upper limit

for loss valuation under Guidelines § 2F1.1.” Id. at 525.

The government essentially takes the position that the property “taken” by

Brown was the $2.4 million judgment, not just the properties he concealed. This

attempted distinction misses the point. In circumstances like these, a judgment’s

fair market value is bounded by the worth of the assets sought in satisfaction of

the judgment. The most the government can claim is that Brown intended to

prevent it from realizing the value of the concealed assets. Therefore the only

relevant measure of intended loss is the value of those assets.

The government argues alternatively that Brown gained $2.4 million by

inducing the FDIC to settle its judgment. First of all, for the reasons above, it

does not necessarily follow that Brown actually gained that amount. But more to

the point, a defendant’s gain may be used only as an “alternative estimate” of

actual or intended loss. USSG § 2F1.1 comment. (n.8). The issue posed by the

government’s arguments on the question of loss is not difficulty of measurement,

but what to measure. For the reasons above, we think the district court was

correct to look only at the value of the three assets concealed.

Having expended its energy arguing for a loss of $2.4 million, the

government makes little effort to argue for any other measure of loss. The

government’s only other argument on appeal is that the district court’s findings

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are clearly erroneous because they impermissibly conflict with the jury’s guilty

verdicts. This claim is made in the most summary fashion, with only a cursory

discussion of the alleged conflict, and without any citation to authority.

The government concedes that “loss is not a required element” of any of the

crimes for which Brown was convicted, Appellee’s Br. at 57, and therefore the

jury was never asked to determine the issue. For example, as to Count IV, the

government argued to the jury as follows:

[Brown] wanted to keep the house, an admirable goal, so long as it is
not done to conceal assets or to hide and to lie to the people to whom
you are required to tell the truth.

I might also point out at this point, because it is kind of an
issue, nobody knows today what would have happened if Mr. Brown
had put every single thing in that bankruptcy petition, if he had
written down, Paul Kahn is holding this house. . . .

It’s very possible that the bankruptcy court would have said,
well, you know, he’s got a family, he needs to stay in that house,
we’re not going to force a sale of that house. But that’s not the
point. The point is, Mr. Brown had an absolute obligation to tell the
bankruptcy court and let the bankruptcy court make that decision.

R. Vol. XXVII at 2229. In principle then, there is no inconsistency between the

jury’s verdicts and a finding of no loss; any inconsistency would have to be in the

specifics. The government thus argues that “it is difficult to see under the facts

of this case how there could be no loss to the FDIC.” Appellee’s Br. at 57

(emphasis added). The government does not tell us what these key facts are. It

states only that the court’s finding that “it was not persuaded that the transactions

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were fraudulent . . . encroached on the jury’s findings of fact.” Id. at 58. This is

a considerable oversimplification of the issue. For example, following the tenor

of the government’s closing argument above, the jury may well have thought that

the only crime Brown committed with relation to the house was not telling the

bankruptcy court about a perfectly legal transfer.

Some of the conflicts between the jury’s verdicts and the court’s sentencing

findings are obvious and troubling. The court appears to have found that Brown

in fact had no interest in the fitness center. See R. Vol. XIV at 145, 146. The

court also determined essentially that Brown had no interest in the residence at

the time of the FDIC settlement. See id. at 151. But it is easy to understand how

the court arrived at these conclusions given the dearth of proof offered by the

government at sentencing regarding precisely what property interests could be

attributed to Brown. Although the government provided evidence regarding the

total value of each of the assets, it never attempted to show what portion of that

value was properly attributable to Brown. This problem is most apparent with

regard to the fitness center. The court acknowledged that “the jury verdict does

stand for the proposition that there was a finding by the jury implicitly that the

defendant had some interest in the fitness center.” Id. at 145. Yet it had no way

to evaluate that interest, because despite strong evidence that Joyce Brown had at

least some property interest in the fitness center (it had increased in value in part

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due to her personal efforts), the government never attempted to provide even an

estimate of the portion of the property which could properly be attributed to

Brown himself. It likewise makes no such arguments on appeal, with regard to

this or either of the other assets. The government has set high hurdles for itself

with its “all-or-nothing” stance at sentencing and on appeal.

On the record before us, we conclude t he court’s findings do not

necessarily undermine the convictions. Its reasoning is repeatedly stated in terms

of a “failure of proof.” Given the narrow theories of liability argued at trial and

the complicated nature of the property interests involved, the government was not

entitled at sentencing merely to rest on the jury’s verdicts coupled with evidence

regarding overall asset values. The court was empowered and indeed required to

make its own findings on the facts relating to loss, and after a full hearing, it held

that the government had not met its burden. See Fed. R. Crim. P. 32(c)(1); United

States v. Garcia , 78 F.3d 1457, 1463 n.6 (10th Cir. 1996) (“The judge remains

ultimately responsible for determining the facts [at sentencing] . . . .”); cf. United

States v. Tavano , 12 F.3d 301 (1st Cir. 1993) (finding error in sentencing court’s

refusal to consider evidence favorable to defendant and inconsistent with

evidence presented at trial). Although we have misgivings about some aspects of

the district court’s findings, on this record, we have no basis for disturbing its

decision.

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AFFIRMED.

ENTERED FOR THE COURT

Stephen H. Anderson
Circuit Judge

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