F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
OCT 5 2000
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
vs. No. 99-6335
ANTHONY A. NICHOLS,
Defendant - Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
(D.C. No. 99-CR-34)
Submitted on the briefs: *
Vicki Zemp Behenna, Esq., Assistant United States Attorney and Daniel G.
Webber, Jr., Esq., United States Attorney, Oklahoma City, Oklahoma, for Plaintiff
- Appellee.
Rand C. Eddy, Esq., Eddy & Jones, P.C., Oklahoma City, Oklahoma, for
Defendant - Appellant.
Before SEYMOUR, Chief Judge, KELLY, and HENRY, Circuit Judges.
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1 (G). The cause therefore
is ordered submitted without oral argument.
KELLY, Circuit Judge.
Petitioner-Appellant Anthony Allan Nichols pled guilty to using a false
social security number with the intent to deceive for the purpose of obtaining
checking accounts at two Oklahoma banks in violation of 42 U.S.C. §
408(a)(7)(B). He was sentenced to twenty-one months imprisonment, three years
supervised release, and ordered to pay restitution of $2,530.89. Mr. Nichols
appeals the sentence imposed, alleging that the trial court erred in overstating the
loss that Mr. Nichols intended to impose and that it erred in denying Mr. Nichols
a two-level reduction for acceptance of responsibility. We affirm in part, reverse
in part, and remand to the trial court for resentencing.
Background
Early in 1997, Mr. Nichols found himself with a poor credit history, due, in
part, to the failure of a business venture he had started. He responded to a
newspaper advertisement offering a manual which gave instructions on how to
obtain a second social security number. Following the manual’s instructions, Mr.
Nichols applied for an Employer Identification Number (EIN) with the Internal
Revenue Service. Mr. Nichols was assigned the EIN of XX-XXXXXXX, and began
representing this as his social security number. In what he claims was an effort
to reestablish a good credit history, Mr. Nichols began using this number in
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applications for loans and credit cards. Using this and other false social security
numbers, Mr. Nichols obtained a mortgage and bought a house, attempted to
purchase a car on credit, opened credit card accounts and various bank accounts,
and secured a home-repair loan through a financing corporation. In calculating
his offense level under the Guidelines, the trial court determined that the specific
offense characteristics warranted a six-level addition pursuant to USSG
§2F1.1(b)(1)(G), because Mr. Nichols intended to cause loss in excess of $70,000
but less than $120,000. The district court rejected Mr. Nichols’ contention that
he did not intend to cause any losses, finding that his actions belied such intent
and rejecting his testimony as incredible. Specifically, the court relied upon the
following facts: (1) Mr. Nichols used four different social security numbers,
including his daughter’s social security number on one occasion, (2) on over half
the credit applications, he used some variation of his true name (Anthony Allan
Nichols), i.e., Allen A. Nichols, or Allan A. Nichols, (3) he defaulted on several
of the loans, and the presence of collateral does not negate his intent, and (4) but
for the false social security numbers, the loans would not have been made.
Mr. Nichols objected to the trial court’s calculation, and appeals on this
basis. We consider various challenged components of the calculation
individually. We then address Mr. Nichols’ contention that the trial court erred
in denying him a reduction of his offense level for acceptance of responsibility.
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Discussion
We review the trial court’s application of the Sentencing Guidelines de
novo, but review its underlying findings of fact for clear error. See United States
v. Burridge, 191 F.3d 1297, 1301 (10th Cir. 1999). The trial court’s factual
findings will be accepted unless the record does not support them or unless,
“‘after reviewing all the evidence, we are left with the definite and firm
conviction that a mistake has been made.’” United States v. McAlpine, 32 F.3d
484, 488 (10th Cir. 1994) (citation omitted). We review the denial of a reduction
for acceptance of responsibility for clear error. See id. at 489.
Sentencing Guideline § 2F1.1 governs crimes involving fraud and deceit,
including violations of 42 U.S.C. § 408(a)(7)(B). Under this guideline, the
offense level is calculated based in part on the dollar value of the loss involved in
the criminal conduct. See USSG § 2F1.1(b)(1). If an intended loss can be
determined and it exceeds the actual loss, the court should use the intended loss to
calculate the defendant’s offense level. See id., comment. (n.8); United States v.
Smith; 951 F.2d 1164, 1166 (10th Cir. 1991). The reason the intended loss figure
is used, even if it is significantly greater than actual loss, is to measure the
magnitude of the crime at the time it was committed. See United States v.
Janusz, 135 F.3d 1319, 1324 (10th Cir. 1998). The fact that a victim has
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recovered part of its loss after discovery of a fraud does not diminish a
defendant’s culpability for purposes of sentencing. See id. (citing United States
v. Johnson, 941 F.2d 1102, 1114 (10th Cir. 1991); United States v. Westmoreland,
911 F.2d 398, 399 (10th Cir. 1990)). It is not error for a district court to count
the full amount taken through fraud as an intended loss, where the victim recovers
the loss through a civil suit, as opposed to through any voluntary action on the
part of the defendant. See Burridge, 191 F.3d at 1301; United States v. Pappert,
112 F.3d 1073, 1079 (10th Cir. 1997). Similarly, the mere presence of collateral
securing an item that was fraudulently obtained does not automatically reduce the
loss calculation under § 2F1.1 where it can be shown that the defendant intended
to permanently deprive the creditor of the collateral through concealment. See
United States v. Banta, 127 F.3d 982, 984 (10th Cir. 1997). At the same time, our
cases have insisted that calculations under § 2F1.1 accord with “economic
reality,” particularly considering the value of security given when the loan was
made. See United States v. Moore, 55 F.3d 1500, 1502 (10th Cir. 1995); Smith,
951 F.2d at 1167-69.
Mr. Nichols contends that the district court erred in finding that he intended
to inflict the various losses attributed to him. Although we defer to the district
court’s factual findings, see United States v. Ensminger, 174 F.3d 1143, 1145
(10th Cir. 1999), the government bears the burden of proving the amount of loss.
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See McAlpine, 32 F.3d at 487. “To meet the requirements of the Guideline, . . .
the record must support by a preponderance of the evidence the conclusion that
[the defendant] realistically intended a [particular] loss, or that a loss in that
amount was probable.” Smith, 951 F.2d at 1168 (emphasis added). We agree
with Mr. Nichols that the record does not support such a finding in several of the
instances in which the trial court found he intended to cause a loss, rendering the
trial court’s findings in those instances clearly erroneous.
A. Note Secured by Home Mortgage
In September 1997, Mr. Nichols purchased a home in Oklahoma City. He
executed an FHA mortgage securing the loan amount of $87,515. In his
application, Mr. Nichols represented his social security number to be 571-05-
8546, which was different from his employer identification number, XX-XXXXXXX,
the next to last two digits being transposed. He also identified himself as Allan
A. Nichols, rather than Anthony A. Nichols. The rest of the information Mr.
Nichols put on his application, such as his address and telephone number, was
valid. Several months after purchasing the home, Mr. Nichols fell behind on his
mortgage payments. He was unable to make payments for approximately one
year, during which time he filed for Chapter 13 bankruptcy for the purpose of
paying the arrearage and resuming monthly payments, so that he could keep his
residence.
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The trial court found that Mr. Nichols intended to deprive the lender of the
full amount of the loan, $87,515. This finding is simply not supported by the
record. The government failed to prove by a preponderance of the evidence that
Mr. Nichols either realistically intended such a loss, or that a loss in that amount
was probable. The home loan was fully secured by the mortgage, and in 1997, the
home had been appraised at $95,000. Although the district court determined that
the availability of collateral does not reduce the loss calculation, we feel it is
error to ignore the contemporaneous exchange of security for the note in
considering the economic reality of the transaction and any intended loss in
excess of the actual loss. The security of the loan is a valid consideration in
evaluating a defendant’s realistic intent and the probability of inflicting the loss.
See Pappert, 112 F.3d at 1078; Smith, 951 F.2d at 1169.
In Banta, the defendant purchased two vehicles worth almost $50,000 by
submitting fraudulent loan applications. The trial court found an intent to defraud
for the full $50,000 amount, despite the fact that the loans were secured by the
vehicles. See id., 127 F.3d at 983. But several factors distinguish Banta from
this case. The first is the mobility of vehicles as opposed to a residence. In
Banta, if defendant had desired, he could have permanently deprived the bank of
the collateral by concealing the vehicles, something that could not be done with a
house. Even considering the mobility of vehicles, we do not presume intent to
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cause a total loss. See Moore, 55 F.3d at 1503. Second, there was evidence in
Banta that the defendant likely intended such concealment. Not only did he
provide a false social security number on the loan application, he also used an
incorrect address, telephone number, and place of employment, making locating
the vehicles quite difficult. During the time he possessed the vehicles, he never
made a single legitimate payment on the loan. The defendant made only one
payment with a worthless check. See Banta, 127 F.3d at 984.
In this case, it is uncontroverted that an incorrect social security number
was used and we must accept the district court’s findings that Mr. Nichols’
transposition of his first and middle names is indicative of an intent to deceive,
and that the loan would not have been made but for the false information. The
fact that the loan was made under these circumstances, however, does not mean
that Mr. Nichols intended to deprive the lender of the full amount of the loan.
Were that the case, every false loan application would result in an intended loss in
the full amount of the loan. That surely is not the case under the Guideline and
our cases.
Mr. Nichols provided mostly correct information on his loan application,
and he made a number of payments on the house. While it is true that he did not
make payments on the house for one year pending Chapter 13 bankruptcy, he
continued making payments even after learning that he was going to be
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prosecuted for using a false social security number. The house was, and
continues to be, the sole residence for Mr. Nichols and his family. Nowhere did
the government demonstrate that Mr. Nichols intended to deprive the lender of the
full value of its loan, or that such a deprivation was probable. The government
theorized in its brief that Mr. Nichols’ use of a false social security number and
the transposed name made it “very possible that Nichols could obtain the full
proceeds of any sale of the mortgaged property to a third party and at the same
time put the collateral beyond the reach of the lender.” Aplee. Br. at 13. This is
sheer speculation, not supported by any facts in the record, and certainly not
enough to convince us that a loss in the amount of $87,515 was “probable.”
Smith, 951 F.2d at 1168. Accordingly, we remand to the trial court with
instructions to recalculate Mr. Nichols’ offense level without including the
mortgage amount as an intended loss.
B. Vehicle Loan
The trial court also found that Mr. Nichols intended to cause a loss in the
amount of $10,209 in connection with his purchase of a vehicle in April 1998.
The trial court found that Mr. Nichols intended to deprive the lender of the full
value of the vehicle. As with the house, this finding is not supported by the
record.
In March 1998, Mr. Nichols applied for a vehicle loan. In the application,
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he used a false social security number and his middle name rather than his first
name. All other information was correct, such as his address, place of
employment, and home and business telephone numbers. He also made a $1,000
down payment. After taking possession of the vehicle and driving it for three
weeks, Mr. Nichols was notified by the dealer that the lender would not accept the
contract. He promptly and voluntarily returned the vehicle undamaged. No actual
or intended loss for this transaction occurred.
In April 1998, Mr. Nichols signed a contract with another lender, made an
additional down payment of $792, and chose another vehicle. After
approximately three weeks, the lender discovered the false social security number
and repossessed the vehicle. The government failed to demonstrate any intent on
the part of Mr. Nichols to deprive the lender of the value of the vehicle. No
evidence was presented showing that Mr. Nichols failed to make payments on the
loans or damaged the vehicles or did any act consistent with concealment. In fact,
the accurate information Mr. Nichols provided on his loan application allowed the
lender to easily repossess the second vehicle. This case is plainly distinguishable
from Banta for the reasons discussed in the previous section. The government did
not show, by a preponderance of the evidence, that Mr. Nichols realistically
intended to deprive the lender of the full value of the vehicle, nor was it shown
that such a loss was probable. As such, the trial court’s finding was clearly
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erroneous and we remand with the instructions to recalculate Mr. Nichol’s offense
level without including the value of the vehicle as an intended loss.
C. Empire Funding Corp. Loan
In October of 1997, Mr. Nichols applied for a $4,200 loan with Empire
Funding Corp. to pay for the repair of a sewer line in his new home. In the
application, Mr. Nichols used a false social security number and an alternate
spelling of his middle name rather than his first name. All other information was
correct. He was granted the loan, and had the repairs made. Mr. Nichols made
monthly payments on the loan for almost two years, and was current on paying
back the loan at the time of sentencing. The government presented no evidence to
dispute the fact that Mr. Nichols made every loan payment. The trial court made
no specific findings concerning this loan, but determined that Mr. Nichols
intended to inflict a loss in the full amount of $4,200. This finding is likewise
clearly erroneous, and we remand with the instructions to recalculate Mr. Nichols’
offense level without including the value of this $4,200 loan as an intended loss.
D. MasterCard
In February 1997, Mr. Nichols obtained a MasterCard under the name
“Allen A. Nichols,” using the employer identification number previously
obtained. He put up a security deposit of $1,000 to obtain the card. The district
court included the high balance on the card, $2,002, as the intended loss, which
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was greater than the actual loss at the time the account was closed of $1,441.50.
Mr. Nichols claims that, at the time of sentencing, he had been making payments
on the card for over two years. The government claims that its evidence shows
that he stopped making payments almost two years prior to sentencing, and the
lender was required “to resort to self-help recoupment” to repay a portion of the
debt. Aplee. Br. at 30. For reasons discussed previously, the district court’s
failure to consider the $1,000 security deposit given prior to issuance of the card
is error; it appears that this is a secured credit card, and that should be considered
on remand in determining the loss.
E. Bank of Oklahoma
In November of 1997, Mr. Nichols opened a checking account with Bank of
Oklahoma, using a false social security number. He wrote a number of bad
payroll checks, causing the bank to lose $2,438.70. Mr. Nichols made full
restitution to the bank by March 1998, before he became aware of any criminal
charges. The trial court determined that Mr. Nichols intended a loss in the full
amount of $2,438.70. Mr. Nichols contends that the trial court erred in making
this finding, because he had already made full restitution before even being aware
of potential charges. We cannot say that such a finding by the trial court was
clearly erroneous. The purpose of the intended loss rules is to measure the
magnitude of the crime at the time it was committed. See Janusz, 135 F.3d at
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1324. The fact that Mr. Nichols later made restitution, even before learning of
criminal charges, does not absolve him. His citations to Janusz and United States
v. Gennuso, 967 F.2d 1460, 1462 (10th Cir. 1992) for the proposition that a court
must deduct from the loss calculation any value the defendant gave the victim at
the time of the fraud is unavailing, because the restitution was made after the
fraud, not in connection with it.
F. NationsBank
The trial court found Mr. Nichols responsible for a $4,420.85 loss from bad
checks cashed or deposited at NationsBank. Mr. Nichols admits writing bad
checks in the amount of $2,530.89, but claims the additional amount should not
be attributed to him, because the evidence did not show that he intended the
additional loss. We cannot say that the trial court’s findings attributing the full
amount to Mr. Nichols were clearly erroneous. The record indicates that Mr.
Nichols cashed or deposited $4,420.85 in bad checks in an account that he had
opened using a false social security number. The reason that the bank only had an
actual loss of $2,530.89 is that is was able to recover the difference by removing
it from Mr. Nichols’ account. Just as Mr. Nichols’ voluntary restitution discussed
in the previous section did not prevent the court from finding an intended loss in
the full amount of the bad checks, the fact that the bank was able to recover some
of its loss on the bad checks through a setoff does not render the trial court’s
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findings clearly erroneous.
G. Acceptance of Responsibility
The trial court denied Mr. Nichols an adjustment for acceptance of
responsibility, finding that his testimony was not credible. We review a trial
court’s refusal to grant an adjustment for acceptance of responsibility for clear
error. See United States v. Cruz Camacho, 137 F.3d 1220, 1226 (10th Cir. 1998)
(noting that the trial court has “broad discretion” to determine whether to give a
reduction under USSG § 3E1.1). We cannot say that the trial court’s judgment on
this issue was clearly erroneous.
Conclusion
For the foregoing reasons, we REVERSE with respect to the trial court’s
findings of intended loss concerning the loan amount secured by the home
mortgage, the vehicle loan, the Empire Funding loan and the MasterCard high
balance. We AFFIRM in all other respects. We REMAND with instructions to
recalculate the amount of intended loss in accordance with this opinion.
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