United States v. Looney

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

No. 98-30622
_____________________

UNITED STATES OF AMERICA

Plaintiff-Appellee,

v.

TIMOTHY PATRICK LOONEY

Defendant-Appellant.

_________________________________________________________________

Appeal from the United States District Court
for the Western District of Louisiana
(1:97-CR-54-2-G-G)
_________________________________________________________________

April 7, 1999

Before KING, Chief Judge, and REYNALDO G. GARZA and JOLLY,
Circuit Judges.

PER CURIAM:*

Defendant-appellant Timothy Patrick Looney appeals his

sentence, challenging the district court’s decision to depart

upward from the sentencing guidelines to a term of sixty months

of imprisonment, the district court’s loss calculation, and the

district court’s failure to decrease his base offense level for

acceptance of responsibility. We affirm.

*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
 I. FACTUAL AND PROCEDURAL HISTORY

In November 1992, defendant-appellant Timothy Patrick Looney

formed a company called Paramount Financial Group. From 1993

until 1996, Looney, who represented himself as a financial

advisor, convinced clients to invest in nonexistent stocks and

bonds and then converted the money invested to his own use. His

scheme was to mail clients a letter entitled “Investment

Opportunity,” in which he advertised that, for less than face

value, he could purchase city municipal bonds that would mature

sooner than ordinary bonds. Once the nonexistent bonds

“matured,” Looney would normally pay a portion of the interest to

the client and then advise the client of the opportunity to

purchase other municipal bonds, effectively rolling over the

client’s perceived principal and interest into another

nonexistent bond. Looney would also mail false income tax

statements to his clients that listed their supposed interest

earnings. Fourteen victims of this scheme suffered losses

totaling $1,171,600.40. Many of the victims were long-time

friends or family members of Looney.

Looney surrendered voluntarily to the F.B.I. on September

23, 1996. On October 3, 1996, he was charged by bill of

information with one count of mail fraud in violation of 18

U.S.C. § 1341. On October 17, 1996, Looney pleaded guilty as

charged. The presentence report (PSR) calculated Looney’s

imprisonment range to be twenty-seven to thirty-three months

based on a total offense level of eighteen and a criminal history

2
category of I. On January 28, 1997, the district judge gave

notice that he was considering an upward departure from the

sentencing guidelines range.

At the sentencing hearing on January 30, 1997, the district

court sentenced Looney to the statutory maximum of sixty months

of imprisonment and three years of supervised release, and

ordered Looney to pay a total of $1,048,329.56 as restitution to

his victims and a $100 special assessment. The district court

stated the following reasons for upwardly departing from the

guidelines range: (1) that the offense caused reasonably

foreseeable physical or psychological harm or severe emotional

trauma; (2) that the offense involved the knowing endangerment of

the solvency of one or more victims; (3) that the defendant so

abused a position of trust as to warrant an upward departure

beyond that already afforded by United States Sentencing

Guideline (U.S.S.G.) § 3B1.3; and (4) that the repetitiveness,

intricacy, sophistication, and length of the defendant’s scheme

were substantially in excess of the ordinary mail fraud scheme,

and the level of malfeasance was not accounted for adequately by

the enhancement for “more than minimal planning” provided by

U.S.S.G. § 2F1.1(b)(2)(A).

On January 28, 1998, Looney filed a motion to vacate, set

aside, or correct his sentence under 28 U.S.C. § 2255, in which

he claimed that his attorney had rendered ineffective assistance

by failing to appeal his sentence. On April 15, 1998, the

district court granted Looney an out-of-time appeal. On June 9,

3
1998, the district court reinstated the judgment on the docket,

setting the time for filing a notice of appeal to run from that

date. Looney filed a notice of appeal on June 12, 1998.

II. DISCUSSION

On appeal, Looney challenges the district court’s decision

to depart upward from the applicable guidelines range, arguing

that the factors relied on by the district court do not justify

departure, and that, even if the district court relied on

acceptable factors, the upward departure is unreasonable. Looney

also challenges the district court’s calculation of the loss

attributable to his scheme and the district court’s failure to

decrease his base offense level by three for his acceptance of

responsibility. We examine each contention in turn.

A. Upward Departure

A district court has discretion to depart from the

guidelines if it finds that an aggravating circumstance exists

that was not adequately taken into consideration by the

Sentencing Commission. See 18 U.S.C. § 3553(b). A district

court’s decision to depart is reviewed for abuse of discretion.

See Koon v. United States, 116 S. Ct. 2035, 2036-48 (1996);

United States v. Nevels, 160 F.3d 226, 229 (5th Cir. 1998). So

long as the judge provides acceptable reasons for departure and

the degree of the departure is reasonable, the district court has

not abused its discretion. See Nevels, 160 F.3d at 229-30.

However, if the defendant fails to object to the upward

departure before the district court, we review the departure for

4
plain error. See United States v. Ravitch, 128 F.3d 865, 869

(5th Cir. 1997). Here, Looney did not object to the district

court’s upward departure, and thus plain error review applies.

Under Federal Rule of Criminal Procedure 52(b), this court may

correct forfeited errors only where the appellant demonstrates

(1) that there is an error, (2) that the error is plain, and (3)

that the error affects the appellant’s substantial rights. See

United States v. Olano, 507 U.S. 725, 732-35 (1993); Ravitch, 128

F.3d at 869. Even if these factors are met, this court will

correct a forfeited error only if the error “seriously affect[s]

the fairness, integrity or public reputation of judicial

proceedings.” Olano, 507 U.S. at 736 (internal quotation marks

omitted) (alteration in original); see Ravitch, 128 F.3d at 869.

Therefore, if the district court could reinstate the same

sentence if the case were remanded, we will uphold the

defendant’s sentence even though the district court’s stated

reasons for departure constitute a mistaken application of the

guidelines. See Ravitch, 128 F.3d at 869.

When considering whether to depart from the applicable

guidelines range, the Supreme Court has set forth the following

questions for sentencing courts to consider:

1) What features of this case, potentially, take it outside
the Guidelines’ “heartland” and make of it a special, or
unusual, case?

2) Has the Commission forbidden departures based on those
features?

3) If not, has the Commission encouraged departures based on
those features?

5
 4) If not, has the Commission discouraged departures based
on those features?

Koon, 116 S. Ct. at 2045 (internal quotation marks omitted).

The sentencing court may not use forbidden factors as a basis for

departure. See id. An encouraged factor may provide the basis

for departure if the applicable guideline does not already take

it into account. See id. Finally, “[i]f the . . . factor is a

discouraged factor, or an encouraged factor already taken into

account by the applicable Guideline, the court should depart only

if the factor is present to an exceptional degree or in some

other way makes the case different from the ordinary case where

the factor is present.” Id.

With these principles in mind, we now turn to the district

court’s stated reasons for departure: (1) that the offense

caused reasonably foreseeable physical or psychological harm, or

severe emotional trauma; (2) that the offense involved a knowing

endangerment of the solvency of one or more of the victims; (3)

that the defendant so abused a position of trust as to warrant an

upward departure beyond that already afforded by U.S.S.G.

§ 3B1.3; and (4) that the repetitiveness, intricacy,

sophistication, and length of the defendant’s scheme were

substantially in excess of the typical crime of mail fraud, and

the malfeasance was not accounted for by the enhancement for more

than minimal planning under U.S.S.G. § 2F1.1. The district court

found that the Sentencing Commission had neither forbidden nor

discouraged departure on the basis of any of the articulated

factors, and that the Sentencing Commission in fact encouraged

6
departure on the basis of the first two stated factors. See U.S.

SENTENCING GUIDELINES MANUAL § 2F1.1 application note 10 (1997). We

address each of the factors below.

(1) Upward Departure for Psychological Harm

Relying on United States v. Wells, 101 F.3d 370, 374 (5th

Cir. 1996), and United States v. Stouffer, 986 F.2d 916, 928 n.16

(5th Cir. 1983), the district court found that Looney’s conduct

resulted in “extreme personal victimization” and had a

“devastating impact” on his victims, many of whom were family

members and long-time friends and acquaintances.

Letters from the victims indicate that many victims

experienced outrage, anger, anxiety, grief, inability to sleep,

inability to concentrate, depression, repeated memories of the

crime, and shock that someone that they trusted and thought they

knew could betray them in such a manner. The victims included

Looney’s cousin, wife, long-time acquaintances and friends, and

several elderly victims. We cannot say that the district court’s

decision to depart upward on this basis constitutes plain error.

See Wells, 101 F.3d at 373-74 (finding upward departure not

erroneous under abuse of discretion review); United States v.

Anderson, 5 F.3d 795, 805 (5th Cir. 1993) (same); Stouffer, 986

F.2d at 927-28 (same); U.S. SENTENCING GUIDELINES MANUAL §§ 2F1.1

application note 10, 5K2.3. But cf. United States v. Pelkey, 29

F.3d 11, 15-16 (1st Cir. 1994) (concluding, under “deferential”

review, that departure for psychological injury was improper even

7
though defrauded victims included long-time friends,

acquaintances, and some elderly persons).1

(2) Upward Departure for Knowing Endangerment of Solvency

U.S.S.G. § 2F1.1(f) states that an upward departure may be

appropriate where “the offense involved the knowing endangerment

of the solvency of one or more victims.” The district court

found that at least one of Looney’s victims had been threatened

with insolvency. Clyde Brown, who was eighty-three years old,

invested “all [he and his wife] had saved in . . . thirty years

of marriage.” In his victim impact statement, he stated that his

only remaining sources of income were Social Security and

retirement benefits from his employer. His retirement benefits

expired in 1997. We conclude that the district court did not

plainly err in upwardly departing on this basis. Looney

undoubtedly knew that there was a substantial risk that his

victims would face insolvency when he accepted the life savings

of elderly victims like Clyde Brown who clearly would not be able

to work in the event that they lost their money. See United

States v. Ross, 77 F.3d 1525, 1551 (7th Cir. 1996) (finding

extreme risk of victim insolvency justified upward departure

where victims were students with loan debt). Thus, the district

court did not commit plain error in concluding that Looney’s

1
We distinguish United States v. Lara, 975 F.2d 1120,
1127-28 (5th Cir. 1992), on its facts. There we found that
conclusory assertions would not support an upward departure. See
id. at 1128. Here, the district court relied on more than mere
conclusory assertions.

8
offense involved the “knowing endangerment of the solvency” of at

least one victim.2

(3) Upward Departure for Abuse of Position of Trust

The guidelines already provide for sentencing enhancements

based on an abuse of a position of trust. See U.S. SENTENCING

GUIDELINES MANUAL § 3B1.3. The district court found, however, that

an upward departure was warranted beyond that provided for by

U.S.S.G. § 3B1.3. Departure on this basis is not specifically

discouraged or forbidden by the guidelines. Because the factor

is already taken into account by the guidelines, however, the

district court may depart only if the case is different than the

ordinary case where the factor is present. See Koon, 116 S. Ct.

at 2045.

Looney objected to the PSR’s inclusion of a two-level

increase for abuse of a position of trust pursuant to U.S.S.G.

§ 3B1.3. He did not, however, object to the district court’s use

of this factor as a basis for upward departure. We conclude

2
United States v. Pelkey, 29 F.3d 11, 15 (1st Cir. 1994),
relied upon by Looney in support of his position, is
distinguishable. There, the court decided that an unlisted
factor relied upon by the district court to justify an upward
departure--the victims’ “failure to have a secure financial
future”--did not rise to the level of seriousness of the other
factors actually listed in application note 10 of U.S.S.G. §
2F1.1. See id. The court therefore refused to affirm the
district court’s upward departure on that ground. See id. As
the Pelkey court noted, however, its decision was based on the
law as it existed prior to the addition of “the knowing
endangerment of the solvency of one or more victims” to the list
set forth in application note 10. See id. at 15 n.5. Therefore,
Pelkey affords no guidance in determining whether Looney’s
conduct constitutes the “knowing endangerment of the solvency of
one or more” of his victims.

9
that, whether the district court’s departure is reviewed under

abuse of discretion or plain error review, the result is the

same--the district court did not err.

The district court found that Looney occupied a position of

trust because he acted as an investment advisor/broker for his

victims. In concluding that upward departure was warranted

because Looney’s abuse of his position of trust was not

adequately accounted for by the enhancement provided for by

U.S.S.G. § 3B1.3, the court relied upon United States v. Kay, 83

F.3d 98 (5th Cir. 1996). There, we held that the district court

did not err in departing upward for the defendant’s abuse of a

position of trust where the defendant made fraudulent

representations in setting up a checking account, embezzled funds

(including some funds from the trusts of minor children) by

forging her mother’s signature, deposited the embezzled funds

into the checking account, and ultimately converted the proceeds

to her own personal account. See id. at 100, 102-03. In the

case at bar, Looney abused his position of trust as an investment

advisor/broker by convincing friends, relatives, and the elderly

to entrust their savings to him, whereupon he converted the

proceeds to his own use, all the while making it appear as though

he was engaged in a legitimate business by sending out false

interest statements and letters to convince his clients to roll

10
over their “profits” to new investments. We conclude that the

district court did not err by departing upward on this basis.3

(4) Upward Departure for Complexity of Scheme

Finally, the district court justified its upward departure

on the ground that the repetitiveness, intricacy, sophistication,

and duration of the scheme was in excess of what is involved in

the ordinary crime of mail fraud and is not adequately accounted

for by the enhancement for “more than minimal planning” contained

in U.S.S.G. § 2F1.1(b)(2)(A). In so doing, the district court

again relied on United States v. Kay.

Looney argues that the district court erred because his was

a “simple, uncomplicated scheme.” We disagree. To avoid

detection, Looney concocted sophisticated methods to make his

bond business appear legitimate, including sending false interest

statements to his victims to inform them, for tax purposes, of

the “interest” they had supposedly earned. Furthermore, in an

effort to keep the scheme rolling, he sent letters in which he

convinced his victims to roll over their principal and “interest”

toward the purchase of new bonds. As the district court saw it,

Nothing so intricate has been in this room in a long time,
where he would get money from one person and send out a

3
The district court also relied on United States v. Queen,
4 F.3d 925 (10th Cir. 1993). Looney correctly notes that Queen
is not entirely applicable because there the district court did
not depart upward for abuse of a position of trust beyond the
two-level enhancement already provided for by U.S.S.G. § 3B1.3.
However, it appears that the district court relied on this case
only for the proposition that an investment advisor/broker is a
position of trust. In any event, the district court also
correctly relied on United States v. Kay, and therefore its
upward departure is well-supported.

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 check presumably for interest earned on nonexistent bonds,
keep track of what date that letter went out, and then at
the next entry’s due date send another check for the
interest that had earned and offered to roll the matter over
to a new bond that he had found. It was a sophisticated
piece of business for which the guidelines don’t adequately
provide.

As the Supreme Court has noted, a district court’s understanding

of the ordinariness or unusualness of a particular case deserves

deference because district courts “have an institutional

advantage over appellate courts in making these sorts of

determinations, especially as they see so many more Guidelines

cases than appellate courts do.” Koon, 116 S. Ct. at 2047. We

conclude that the district court did not plainly err in adjusting

upward on this basis. See Kay, 83 F.3d at 101-02.

Looney next argues that even if the reasons given by the

sentencing court for upward departure are valid, the extent of

the departure was unreasonable. Looney contends that the extent

of the departure was unreasonable because he turned himself in

and took responsibility for his actions. These factors are

better addressed to whether the district court erred by failing

to decrease his base offense level for acceptance of

responsibility, an issue we address below. We conclude that the

district court’s decision to impose the statutory maximum

sentence was not unreasonable because the court’s expressed

reasons were valid and the sentence was not disproportionate to

Looney’s conduct. See Nevels, 160 F.3d at 229-30.

B. District Court’s Loss Calculation

12
 Looney next argues that the district court incorrectly

calculated the loss attributable to his scheme for purposes of

U.S.S.G. § 2F1.1(b)(1) by considering not only the amount of loss

owed in restitution, $1,048,329.56, but also the $1,190,404.00

which Looney took from other victims but later repaid. Looney

never objected in front of the district court on this basis, and

his arguments lack merit. The amount of loss for purposes of

U.S.S.G. § 2F1.1(b)(1) “is the dollar amount placed at risk by a

defendant’s fraudulent scheme or artifice.” United States v.

Oates, 122 F.3d 222, 225 (5th Cir. 1997); see United States v.

Brown, 7 F.3d 1155, 1159 (5th Cir. 1993) (“Where a defendant

attempts to pass altered or forged checks, the face value of the

checks reflects the intended loss, even if the money is recovered

or returned.”); United States v. Wimbish, 980 F.2d 312, 315-16

(5th Cir. 1992); cf. United States v. Cockerham, 919 F.2d 286,

289 (5th Cir. 1990) (concluding that, under U.S.S.G. § 2B1.1,

loss “includes the value of all property taken, even that

recovered or returned”). Thus, the district court did not err in

calculating the defendant’s base offense level to include a

twelve point increase pursuant to U.S.S.G. § 2F1.1(b)(1)(M).

C. Acceptance of Responsibility

Finally, Looney argues that the district court erred by

failing to decrease his base offense level three levels for

acceptance of responsibility pursuant to U.S.S.G. § 3E1.1. In

support of this contention, Looney argues that he voluntarily

turned himself in, cooperated with law enforcement, and pleaded

13
guilty as charged. He contends that the district court lacked

discretion to avoid reducing his sentence for acceptance of

responsibility. However, it is only once the sentencing court

concludes that the defendant did in fact accept responsibility

that the court must award the reduction. See United States v.

Tello, 9 F.3d 1119, 1124 (5th Cir. 1993); United States v.

Surasky, 976 F.2d 242, 248 n.7 (5th Cir. 1992).

By sentencing Looney to the statutory maximum, the district

court implicitly determined that Looney had not accepted

responsibility. This conclusion is reviewed “for clear error but

under a standard of review even more deferential than a pure

‘clearly erroneous’ standard.” United States v. Gonzales, 19

F.3d 982, 983 (5th Cir. 1994).

While there is some evidence that Looney accepted

responsibility by turning himself in and pleading guilty, the

victim impact statements reveal that the victims did not feel

that Looney manifested any remorse for his wrongdoing. Thus,

there was evidence from which the district court could have

determined that Looney had not accepted responsibility for his

wrongdoing. We cannot say that the district court clearly erred

by failing to decrease Looney’s base offense level for acceptance

of responsibility.

III. CONCLUSION

For the foregoing reasons, we AFFIRM the sentence imposed by

the district court.

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