United States v. Sharp

FILED
United States Court of Appeals
Tenth Circuit

April 28, 2014
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,
v. No. 13-1114
CHARLES HOMER “CHIP” SHARP,

Defendant-Appellant.
______________________________
UNITED STATES OF AMERICA,

Plaintiff-Appellee,
v. No. 13-1117
MICHAEL ARTHUR GRIGGS,

Defendant-Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. No. 1:08-CR-00365-MSK)

Robert T. Fishman, Of Counsel, Ridley, McGreevy & Winocur, PC, Denver,
Colorado, for Defendant-Appellant, Charles Sharp.

Norman R. Mueller, (Rachel A. Bellis, with him on the briefs), of Haddon,
Morgan and Foreman, P.C., Denver, Colorado, for Defendant-Appellant, Michael
Griggs.

Pegeen D. Rhyne, Assistant United States Attorney, (John F. Walsh, United States
Attorney, with her on the consolidated brief), Denver, Colorado, for Plaintiff-
Appellee.
Before BRISCOE, Chief Judge, HOLLOWAY* and PHILLIPS, Circuit Judges.

BRISCOE, Chief Judge.

Codefendants Michael Griggs and Charles Sharp appeal from their

convictions for mail fraud and conspiracy to commit mail fraud. Griggs also

challenges a $500,000 fine that was imposed by the district court as part of his

sentence. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we affirm.

______________________

*The late Honorable William J. Holloway, Jr., United States Senior Circuit
Judge, fully participated in these appeals and drafted the combined concurrence
and dissent included with this decision. The decision was circulated to the full
court prior to his death. Judge Holloway passed away, however, before the
opinion and his separate writing could be filed and published. “The practice of
this Court permits the remaining two panel judges if in agreement to act as a
quorum in resolving the appeal.” United States v. Wiles, 106 F.3d 1516, 1516 n.*
(10th Cir.1997); see also 28 U.S.C. § 46(d) (noting circuit court may adopt
procedures permitting disposition of an appeal where remaining quorum of panel
agrees on the disposition). The remaining panel members have acted as a quorum
with respect to this opinion and no judge of this Court has objected to publication.

2
 I

A. Factual background

1. The defendants and their operation of DRI

In 1986, defendant Griggs formed Disaster Restoration, Inc. (DRI), a

Denver, Colorado-based corporation, and subsequently served as its owner and

chief executive officer. DRI repaired and restored commercial and residential

properties throughout Colorado that were damaged by fire, flood, or other

disasters. DRI had four divisions, each of which engaged in a separate part of the

restoration process: (1) the emergency services division, which responded

immediately to disasters; (2) the contents division, which both moved and

restored personal property; (3) the structural repair division, which performed

needed structural repairs on the damaged commercial and residential buildings;

and (4) the environmental division, which addressed environmental concerns

arising out of a disaster. Approximately 85% of DRI’s restoration work was

performed by its own employees; the remaining 15% was performed by

subcontractors hired by DRI.

In carrying out its business, DRI contracted directly with the owner

of the damaged property. DRI would often, in turn, work directly with and be

paid by the property owner’s insurance company. In doing so, DRI would submit

to the insurance company an estimate outlining the scope and proposed cost of the

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repair and restoration work that was to be performed. In preparing these

estimates, DRI used Xactimate, a software program commonly utilized by

insurance adjusters to calculate repair and construction costs. DRI’s estimates

also sometimes included manually-input line items relating to work to be

performed by its subcontractors. Those line items referenced the name of the

subcontractor and typically included the words “per invoice” or “per proposal.”

In 2003, Griggs hired defendant Sharp to work as the chief executive

officer and operating manager of DRI. Both Griggs and Sharp established

company policies, and also trained and supervised DRI project managers and

estimators.

Beginning in approximately 2004, Griggs and Sharp began

instructing DRI employees who prepared DRI’s estimates to add 20-30% to the

price that DRI’s subcontractors were charging DRI. As a result, the estimate sent

by DRI to an insurance company would, in the case of a line item relating to

subcontractor work, list an amount 20-30% higher than the subcontractor’s bid for

the work (and that DRI knew it would be paying the subcontractor for its work).

Griggs and Sharp also instructed DRI employees to require DRI’s subcontractors

to provide DRI with two invoices: one that listed the actual amount the

subcontractor would charge and receive from DRI, and a second invoice that

listed a total amount 20-30% higher than the first invoice. The invoices reflecting

the actual charges to DRI went to DRI’s accounts payable department for payment

4
and were not shared with the insurance companies. The inflated invoices were

kept in DRI’s job files to be provided to insurance adjusters upon request. Thus,

the sole purpose for the inflated invoice was to provide DRI with a document that

would support the amount listed on the subcontractor line item of DRI’s estimate.

On most DRI estimates, DRI employees also added 10% for overhead

and 10% for profit, a total of 20% markup that was known and generally agreed to

by insurers and was standard in the industry.

2. The individual jobs at issue

The counts of conviction at issue in these appeals stem from the

following restoration jobs performed by DRI between 2005 and 2006.

a. The Belterra job (basis for Count 4)

In 2005, DRI performed restoration work on a property in Longmont,

Colorado, owned by Belterra Inc. and insured by Travelers Insurance (Travelers).

DRI employee Mark Troudt provided Travelers with a revised estimate that

included two subcontractor line items: one in the amount of $62,430.01 for

“ELECTRICAL” and another in the amount of $1,976.10 for “PLUMBING.”

Supp. ROA at 32. The line item for the electrical work stated “[t]he line item

above represents the electrical repairs per detailed invoices from Master

Electrician (A/C Electric).” Id. The line item for the plumbing work stated that

the amount listed was “per the detailed break down [sic] from D&H Plumbing and

Heating.” Id. In fact, however, DRI paid only $45,486.96 to its subcontractor for

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the electrical work and $1,580.88 to its subcontractor for the plumbing work.

b. The Benaglio job (basis for Counts 7 and 8)

In 2005, DRI performed restoration work on a property in

Broomfield, Colorado, owned by John Benaglio and insured by The Hartford

Insurance Company (The Hartford). Troudt sent The Hartford a DRI estimate that

included seven line items for vinyl windows that included the following language:

“The line item above represents the actual cost of the window for installation and

material per the invoice from Professional Window Service.” Id. at 79, 83, 88,

91, 93, 94, 96. These seven line items in DRI’s estimate totaled $4,084.72. But

DRI paid its subcontractor, Professional Window Service, only $3,568.44 for the

work.

On this same DRI estimate, Troudt also listed three subcontractor

line items for “ELECTRICAL” work. Id. at 108-09. Each of these line items

stated that the amounts were “[p]er invoice from Ruby Electric.” Id. However,

DRI actually paid Ruby Electric 20% less for each line item than was listed on its

estimate to The Hartford.

c. The Cahall job (basis for Count 15)

In 2005, DRI performed restoration work on a property in

Broomfield, Colorado, owned by Rosemary Cahall and insured by the Kemper

Insurance Company (Kemper). DRI employee Justin Blackburn submitted to

Kemper a DRI estimate that included two subcontractor line items, one in the

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amount of $8,009 and the other in the amount of $5,550, for work performed by

subcontractor D&H. Id. at 184-85. Each of these line items included the wording

“per estimate from D&H Heating and Air.” Id. DRI, however, paid D&H only

$6,407 for this work.

On the same DRI estimate, Blackburn also listed a subcontractor line

item for “Electrical repairs - per estimate from H&H Electrical” in the amount of

$4,180. Id. at 184. The actual work, however, was performed by Ruby Electric

and DRI paid Ruby Electric only $2,686.40 for the work.

d. The Clear Creek job (basis for Counts 16 and 17)

In 2005, DRI performed restoration work on a property in Empire,

Colorado, owned by Clear Creek Investments and insured by State Farm

Insurance Company (State Farm). Troudt sent State Farm a DRI estimate that

listed a single subcontractor line item in the amount of $6,231.90 for “HEAT,

VENT & PLUMBING” work performed by D&H. Id. at 226. Written below the

line item was the phrase “per the the [sic] invoice and breakdown from D&H

Heating in the amount of 5193.25 x contractor overhead and profit of 20% = the

cost of $6231.90.” Id. Troudt also sent a cover letter that stated, in pertinent

part, “The break down [sic] is per invoice received from D&H Heating for labor

and material completed to date.” Id. at 225. In fact, however, D&H had agreed

to perform the work for $3,879.60 and invoiced DRI for that amount.

e. The Evans job (basis for Counts 22 and 23)

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 In 2005, DRI performed restoration work on a property in Boulder,

Colorado, owned by Kent and Marilyn Evans and insured by State Farm. DRI

employee Jason Cain sent State Farm a DRI estimate that included a

subcontractor line item in the amount of $267.52 for “Electronics Cleaning per

RescueTech.” Id. at 336. Included with the line item was the following

statement: “Electronics cleaning includes 20% O&P.” Id. Rescue Tech provided

DRI with an estimate in the amount of $223.03, but ultimately agreed to accept

$178.42 from DRI for the work.

Cain also sent State Farm a DRI supplemental estimate that included

subcontractor line items in the amount of $3,550 for “PAINTING . . . Per

CertaPro Painting,” id. at 347, and in the amount of $5,899.85 for “CONCRETE -

garage slab,” id. at 348. Along with the supplemental estimate, Cain sent State

Farm the false proposals from these subcontractors that matched the dollar figures

listed on the supplemental estimate. In fact, however, CertaPro charged DRI

$1,760, and TBD (the subcontractor that performed the concrete work) charged

DRI $4,719.88. 1

1
Cain’s supplemental estimate also included a subcontractor line item for
“Electrical Rewire - per proposal from Ruby Electric” in the amount of $1,678.63.
Supp. ROA at 348. According to the government, Ruby Electric actually charged
DRI less than this amount. Unfortunately, however, the exhibits included in the
record on appeal do not fully substantiate the government’s assertion on this
point, and thus we do not rely on it for purposes of our analysis.
Relatedly, we note that the exhibits included in the record suggest, but do
(continued...)

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 f. The Jones job (basis for Count 30)

In 2006, DRI performed restoration work on a property in Boulder,

Colorado, owned by David Jones and insured by American Family Insurance

(American Family). Blackburn sent American Family a DRI estimate that

contained two subcontractor line items: one in the amount of $4,995.98 for

“Plumbing repairs - per invoice from Broomhall Brothers Plumbing,” and another

in the amount of $4,456 for “Electrical repairs - per invoice from Ruby

Electrical.” Id. at 710. In fact, however, DRI paid both of these subcontractors

20% less than the amounts listed on DRI’s estimate.

g. The Justen job (basis for Count 31)

In 2005, DRI performed restoration work on a property in Lakewood,

Colorado, owned by Kathleen Justen and insured by Amica Insurance (Amica).

Blackburn sent Amica a DRI estimate with a subcontractor line item in the

amount of $5,700 for “Asbestos abatement - per estimate from Rocky Mountain

Abatement.” Id. at 739. Together with the DRI estimate, Blackburn sent Amica a

proposal from Rocky Mountain that listed a contract price of $5,750. However,

DRI actually paid Rocky Mountain $4,025 for the work.

h. The List job (basis for Count 36)

1
(...continued)
not fully establish, that DRI’s estimate and supplemental estimate included a total
of $3,375 in subcontractor line items from Ruby Electric, and that DRI actually
paid Ruby Electric a total of $2,700 for its work. Id. at 354, 356.

9
 In 2005, DRI performed restoration work on a property in Niwot,

Colorado, owned by Don List and insured by Allstate Insurance Company

(Allstate). Blackburn sent Allstate a DRI estimate that included a subcontractor

line item in the amount of $8,551.22 for “Electronics cleaning - per invoice from

ICC Technical Loss Consultants of $7,126.02 plus ten and ten.” Id. at 779. ICC

provided DRI with an inflated invoice that matched the $7,126.02 figure. But

DRI actually paid ICC $5,700.60 for the work.

i. The Lusman job (basis for Count 37)

In 2006, DRI performed restoration work on a property in Morrison,

Colorado, owned by Charles Lusman and insured by Sentry Insurance (Sentry).

Blackburn sent to James Lynch, an independent adjuster who was working for

Sentry, a falsely inflated Rocky Mountain Abatement proposal for $4,038 plus a

$450 inspection fee. Id. at 803-05. Lynch relied on the false Rocky Mountain

Abatement proposal and incorporated it as a line item in the claim estimate that

he created for Sentry on the Lusman job. Unbeknownst to Lynch and Sentry,

Rocky Mountain Abatement had agreed to perform the work for $3,250 plus a

$450 inspection fee.

j. The Taddonio job (basis for Count 53)

In 2005, DRI performed restoration work on a property in Lakewood,

Colorado, owned by Louise Taddonio and insured by Ohio Casualty. Id. at 1047.

Blackburn sent Ohio Casualty a DRI estimate that included a subcontractor line

10
item in the amount of $4,293.44 for “Motorized shades - per proposal from

Ananda and Suns.” Id. at 1048. Ananda and Suns provided DRI with two

invoices: one in the amount of $4,293.44, and another in the amount of $3,484.32.

Id. at 1055-56. DRI provided Ohio Casualty with a copy of the higher invoice,

but actually paid Ananda and Suns the lower of these two amounts.

B. Procedural background

On September 8, 2008, a federal grand jury returned a sixty-count

indictment against Griggs, Sharp, and eight other DRI employees. Count 1

charged Griggs, Sharp, and the other defendants with conspiracy to commit mail

fraud, in violation of 18 U.S.C. § 371. Counts 2 through 57 charged Griggs,

Sharp and various other defendants with individual counts of mail fraud, in

violation of 18 U.S.C. §§ 1341 and 2. Counts 58 and 59 charged Sharp with

extortion, in violation of 18 U.S.C. § 1951. Count 60 was a forfeiture charge

against all of the defendants.

Four of the named defendants — Jason Cain, Brett Harding, Peter

Jennings and Garland Scott Risdon — pleaded guilty. The government dismissed

all charges against defendants Matthew Kaskel and Mark Troudt, as well as

certain of the charges against Griggs, Sharp (in particular the extortion counts)

and the remaining two defendants, Justin Blackburn and Daniel Travers.

The joint trial of Griggs, Sharp, Blackburn and Travers began in

early July 2012. Following approximately five weeks of evidence and

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approximately one week of deliberations, the jury returned a partial verdict,

convicting Sharp and Griggs of several counts. Specifically, the jury convicted

Sharp on Counts 1 (conspiracy), 4, 15, 22, 23, 30, 31, 36, 37, and 53, and

convicted Griggs on Counts 1, 4, 7, 8, 15, 16, 17, 22, 23, 30, 31, 36, 37, and 53.

As for Blackburn and Travers, the jury either acquitted them or was unable to

reach a verdict on certain of the counts. Consequently, neither Blackburn nor

Travers were found guilty on any count. Following the trial, the district court,

acting pursuant to the government’s motion, dismissed all of the counts on which

the jury was unable to reach verdicts.

The district court sentenced Griggs to a term of imprisonment of fifty

months, to be followed by a three-year-term of supervised release. The district

court also ordered Griggs to pay restitution in the amount of $477,643.49, plus a

fine of $500,000.

The district court sentenced Sharp to a term of imprisonment of

thirty-six months, to be followed by a three-year-term of supervised release. The

district court also ordered Sharp to pay restitution in the amount of $477,643.49.

II

A. Sharp’s Appeal

Sharp raises five issues in his appeal: two sufficiency-of-the-

evidence issues, two instruction-related issues, and, lastly, a challenge to his

convictions based upon this court’s decision in United States v. Cochran, 109

12
F.3d 660 (10th Cir. 1997). We conclude, for the reasons we shall discuss in

greater detail below, that all of these issues lack merit.

1. Was the evidence presented at trial sufficient to
establish that Sharp obtained money by false pretenses
or representations?

Sharp argues in his first issue on appeal that his convictions for mail

fraud and conspiracy to commit mail fraud must be reversed because the evidence

presented by the government at trial was insufficient to establish that he obtained

money by false pretenses or representations. “We review the sufficiency of

evidence de novo.” United States v. Serrato, 742 F.3d 461, 472 (10th Cir. 2014).

“The question for the court is ‘whether, after viewing the evidence in the light

most favorable to the prosecution, any rational trier of fact could have found the

essential elements of the crime beyond a reasonable doubt.” Id. (quoting Jackson

v. Virginia, 443 U.S. 307, 319 (1979)).

The district court in this case instructed the jury that to find the

defendants guilty of mail fraud, the government had to establish beyond a

reasonable doubt each of the following elements:

1. That the named defendant devised or participated
in a scheme to defraud or to obtain money or property
by means of false pretenses or representations as that
scheme is described in the Indictment.

2. That the named defendant acted with the specific
intent to defraud or to obtain money or property by false
pretenses or representations.

13
 3. That the scheme involved a person making false
pretenses or representations that were material, and

4. That the named defendant knew or could have
reasonably foreseen that a person would use the mails or
an interstate private or commercial carrier to transmit
documents relating to the scheme as set forth in the
Indictment.

ROA at 3064 (Instruction No. 25); see United States v. Schuler, 458 F.3d

1148, 1152 (10th Cir. 2006) (outlining essential elements of mail fraud claim

under 18 U.S.C. § 1341). The district court further instructed the jury as to the

meaning of a false pretense or representation:

A representation or pretense is false if it is known to
be untrue or it is made with reckless indifference to its
truth or falsity. A representation or pretense can also be
false if it is a half-truth or omits or conceals a material
fact if it is made with the intent to defraud.

ROA at 3066 (Instruction No. 28).

As Sharp notes, “[t]he most common type of statement relied upon

by the government was a subcontractor line item consisting of a dollar figure and

some additional statement like, ‘per estimate from . . .’ or ‘per invoice from . . .’

the subcontractor.” Sharp Br. at 14. Sharp argues that, “[a]s a matter of law,

none of these statements [we]re false.” Id. at 15. To begin with, he argues, “[a]

number standing alone cannot constitute a false statement: it makes no sense to

say that ‘$4,000’ is something that is ‘true’ or ‘false.’” Id. “Nor,” he argues,

“can any of these statements be considered false simply because the dollar amount

14
was accompanied by an explanation that the figure was ‘per invoice,’ ‘per

estimate,’ or some similar phrase.” Id. “[I]n order for the jury to have properly

concluded that a line item was false,” Sharp argues, “it was required to conclude

beyond a reasonable doubt that DRI represented that line item to be, not only the

price that DRI proposed to charge the insurance companies for the subcontractor’s

work, but also that the line item stated the amount of money that DRI was going

to pay its subcontractor to perform that work.” Id. But, he asserts, “[n]othing in

either the DRI estimate or the subcontractor’s underlying invoice stated or

implied that the price being charged by DRI was the same as the amount that DRI

would pay the subcontractor for its work.” Id. at 16. That is because, Sharp

argues, “the purpose of a DRI estimate was to define the scope of work to be

performed and to provide a basis for negotiating a fair and reasonable price for

that work, . . . not to disclose DRI’s arrangements with subcontractors, what it

pays laborers, or the costs of material that DRI uses.” Id.

Sharp argues that “[t]he same holds true with respect to the

statements at issue in Counts 22 and 36 (relating to the Evans and List jobs),

where DRI’s estimates included line item prices for subcontractor work

accompanied by statements that the number was ‘per invoice’ or ‘per estimate’

provided by the subcontractor and included ‘ten and ten’ or 20% O&P.’” Id.

(quoting Exhibits 336 and 779). “With respect to both of these Counts,” Sharp

asserts, “DRI provided the insurance companies with a proposed price for

15
subcontractor work without representing that that price was identical to what DRI

would in turn pay the subcontractor.” Id. More specifically, Sharp asserts that

“[t]he disclosure that the contractor’s price was increased by ‘10+10’ or by 20%

does not constitute a representation that the line item price itself includes no

markup, and that the only markup is the ‘10+10’ or 20% referenced in the

estimate.” Id. at 16-17.

The government argues in response that “[a] rational jury could . . .

have found that the subcontractor line items within the DRI estimates were

themselves affirmative false representations.” Gov’t Br. at 23. In support, the

government asserts that “[f]or each count of conviction, the relevant DRI estimate

had language in the subcontractor line items that, in addition to the context of the

estimate itself, caused the line item to be a false representation regarding what the

subcontractor was charging DRI.” Id. Specifically, “[l]ine items on each of these

DRI estimates included one of the following references to the subcontractor

documents: ‘per detailed breakdown,’ ‘per invoice,’ ‘actual cost . . . per invoice,’

‘per estimate,’ ‘per Rescue Tech Electronics,’ ‘per CertaPro Painting,’ and ‘per

proposal.’” Id. (quoting various trial exhibits). “Additionally,” the government

argues, “the insurance adjusters testified that they understood the listed prices on

the subcontractor line items to be what the subcontractors were charging DRI.”

Id. “The evidence,” the government asserts, “supports the inference that [Sharp

and Griggs] knew this and that this was precisely the reason they required DRI

16
employees to obtain the falsely inflated invoices/proposals from subcontractors.”

Id. “Unless [Sharp and Griggs] intended to deceive the insurance companies

regarding what the subcontractors were charging DRI, there would have been no

need to obtain the false subcontractor invoices/proposals.” Id. And, the

government asserts, “Sharp’s statement to DRI employees in 2005 that ‘if the

insurance companies found out what we’re doing, our life would end as we know

it’ is powerful evidence that [Sharp and Griggs intended to deceive the insurance

companies.” Id. at 23-24.

In any event, the government argues, it is clear that the false

subcontractor invoices/proposals requested by DRI employees at the direction of

Sharp and Griggs “were kept in DRI’s job files to be provided to insurance

adjustors [sic] ‘upon request.’” Id. at 21 (quoting ROA at 306, 2981-82, 3003-

04). “While these false subcontractor invoices/proposals were not always

provided to insurance companies,” the government argues, “DRI’s practice of

routinely obtaining them so they could be provided to the insurance companies

‘upon request’ pervades the entire fraudulent scheme and conspiracy.” Id. at 22.

Further, the government argues, “DRI sent those false documents to the insurance

companies in connection with the jobs at Belterra (Count 4), Clear Creek (Counts

16 & 17), Evans (Count 23), Justen (Count 31), Lusman (Count 37), and

Taddonio (Count 53).” Id. “A rational jury,” the government argues, “could have

found these false subcontractor invoices/proposals were sufficient to support its

17
verdicts in this case.” Id.

After carefully examining the record on appeal, we agree with the

government that there was sufficient evidence to support Sharp’s convictions on

Counts 4, 23, 31, 37 and 53. 2 As the government notes, those counts of

conviction related to projects in which DRI supplied the insurers at issue with

copies of the inflated subcontractor invoices/proposals it had requested from its

subcontractors. Quite clearly, those invoices were false because they did not

show the true amount that the subcontractors had bid for the work, had expected

to receive from DRI, had billed DRI, or were ultimately paid by DRI. In other

words, those invoices falsely suggested, in each instance, that DRI was being

charged a higher amount by the subcontractor than was actually the case. And

DRI’s purpose in providing the invoices/proposals to the insurers was to persuade

them to pay the inflated amounts so that DRI could reap a profit on the

subcontractor’s work.

We likewise conclude that the evidence presented at trial was

sufficient to support the remaining counts of conviction (Counts 7, 8, 15, 22, 30

and 36) relating to projects in which the insurers did not request DRI to provide

copies of the underlying subcontractor invoices/proposals. In each of those

circumstances, DRI provided the insurer with an estimate that included at least

2
The jury convicted Griggs on Counts 16 and 17, but was unable to reach a
verdict on those counts as to Sharp.

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one subcontractor line item listing a dollar amount accompanied by a phrase such

as “per estimate,” “per proposal,” “per invoice,” or something similarly worded.

These statements were true in the sense that the subcontractors at issue had, in

fact, provided DRI with proposals matching the dollar amounts listed on DRI’s

estimates. But the statements omitted or concealed a key material fact: that there

was another, lower-priced proposal from the subcontractor that listed the true

price that DRI would be paying the subcontractor for its work on the project.

Thus, the estimates submitted by DRI to the insurers omitted or concealed a

material fact.

Relatedly, the government presented evidence from which a jury

reasonably could have found that Sharp and the other defendants acted with the

intent to defraud the insurers. To begin with, the government’s evidence

established that Sharp and the other defendants knew that DRI would make no

profit on its subcontractors’ work unless it submitted to the insurers estimates that

contained inflated prices for the subcontractors’ work. The government’s

evidence further established that DRI’s employees, at the direction of Sharp and

Griggs, began requiring DRI’s subcontractors, as a condition of receiving future

work from DRI, to submit two invoices: one listing the actual price that DRI

would pay the subcontractor upon completion of the work, and a second listing an

inflated price — typically 20-30% higher than the actual price — that DRI would

19
provide to the insurer upon request. 3 The government’s evidence also established

that DRI, at the direction of Sharp and Griggs, concealed from insurers the

existence of the lower, actual-priced invoices. When this evidence of intent to

defraud is considered in connection with defendants’ concealment of the actual

subcontractor invoices and prices, the government’s evidence was clearly

sufficient to allow the jury to convict Sharp on these mail fraud counts. See

generally Schuler, 458 F.3d at 1152 (noting that intent to defraud may be inferred

from a variety of circumstantial evidence).

Sharp also makes two specific arguments regarding Counts 37 and

53. To begin with, Sharp notes that Count 37 “was based upon the fact that DRI

provided James Lynch — an independent adjuster for Sentry Insurance — with a

copy of a subcontractor proposal for abatement work prepared by Rocky

Mountain Abatement.” Sharp Br. at 17. Sharp asserts that “DRI made no

representations that the price to be charged Sentry was identical to what DRI

intended to pay for the abatement work.” Id. Rather, he asserts, “DRI simply

quoted a price (which Mr. Lynch determined was both fair and reasonable).” Id.

As the government notes, however, the subcontractor proposal that

DRI provided to Lynch was the higher of the two invoices DRI was provided by

3
As the government aptly notes, “[u]nless Appellants intended to deceive
the insurance companies regarding what the subcontractors were charging DRI,
there would have been no need to obtain the false subcontractor
invoices/proposals.” Gov’t Br. at 23.

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its subcontractor, Rocky Mountain Abatement, and this higher invoice failed to

reflect the actual cost that DRI would be paying Rocky Mountain Abatement for

its work. Further, Lynch testified at trial that he relied on the accuracy of the

Rocky Mountain invoice in determining how much DRI should be reimbursed by

Sentry. Tr. at 1635. Consequently, we conclude that this count is not materially

distinguishable from the other counts of conviction.

As for Count 53, which related to the Taddonio project, Sharp argues

that it “requires a somewhat different analysis.” Sharp Br. at 17. Sharp notes

that Count 53 “was based upon an estimate provided by DRI which included a

subcontractor line item together with the statement that ‘actual cost once incurred

will be billed.’” Id. (quoting Exhibit 1048). Sharp argues that, “[b]ecause this

statement constitutes a representation about something that is to occur in the

future, it cannot be ‘false’ as a matter of law.” Id.

The government argues in response that “there was ample evidence

for the jury to find that the statements in the DRI estimate for the Taddonio job

were false at the time they were made.” Gov’t Br. at 24. To begin with, the

government explains that “[t]he DRI estimate included a subcontractor line item

that stated, ‘Motorized shades - per proposal from Ananda and Suns’ for

$4,293.44,” and “[b]elow that line item, DRI Employee Justin Blackburn stated,

‘The above two line items are uncommon, and may not reflect the actual costs. If

this is the case, the actual costs once incur[r]ed will be billed.’” Id. (quoting Ex.

21
App. at 1048). “However,” the government notes, “per Mr. Blackburn’s

instructions, DRI employee Greg Rye had previously obtained from Ananda &

Suns . . . two invoices for this work,” one “reflect[ing] the $3,484.32 that Ananda

. . . intended to charge DRI, and one falsely inflated by 20% to $4,293.44.” Id. at

25. And, the government notes, “Blackburn provided the falsely inflated invoice

to the insurance company.” Id. “This evidence,” the government argues,

“supports the jury’s conclusion that the statements in this DRI estimate were

intentionally false at the time they were made because . . . Blackburn knew that

Ananda . . . had already agreed to charge DRI a lower price.” Id.

We agree with the government. At the time DRI submitted its

estimate to the insurance company, it knew that Ananda had bid the job for

$3,484.32, approximately $800 less than the amount listed on DRI’s estimate.

DRI, however, concealed this fact from the insurance company and, instead, listed

the higher of the two amounts on its own estimate and in turn provided the

insurance company with the invoice from Ananda that falsely suggested Ananda

was charging DRI $4,293.44 for its work.

2. Was the evidence presented at trial sufficient to
establish that the alleged omissions or misstatements
were “material”?

In his second issue on appeal, Sharp challenges his mail fraud

convictions on another ground, i.e., that the government’s evidence was

insufficient to allow the jury to find that any of the alleged omissions or

22
misstatements underlying those counts were “material.” Sharp Br. at 20. In

support, Sharp argues that “[n]o person of ordinary prudence, engaged in an

arm’s-length negotiation over the fair and reasonable cost of a restoration project,

would rely upon his adversary’s representations about the costs associated with

that project when those costs can be, and usually are, verified independently.” Id.

at 21.

“To determine whether a statement is material the appropriate test is

to examine whether it has a natural tendency to influence, or is capable of

influencing a decision or action by another.” 4 United States v. Lawrence, 405

F.3d 888, 901 (10th Cir. 2005). “The question of whether a statement is material

is a question of fact for the jury to decide.” Id.

We conclude, after viewing the evidence in the light most favorable

to the government, that a rational trier of fact could have found beyond a

reasonable doubt that the statements at issue in DRI’s estimates were material.

The phraseology that DRI chose to utilize in describing the subcontractor line

items in its own invoices clearly suggested that the dollar figures in those line

items were consistent with the amounts that DRI was paying its subcontractors.

And DRI perpetuated that false suggestion, when necessary, by providing copies

4
The district court instructed the jury, consistent with law of this circuit,
that “[a] false representation or pretense is material if it has a natural tendency to
influence or is capable of influencing the decision of a person or entity to whom
the representation or pretense is addressed.” ROA at 3066.

23
of the inflated subcontractor invoices to insurers upon request. In short, DRI’s

communications with the insurers suggested that DRI was simply charging the

insurers the actual amount that DRI would ultimately pay to its subcontractors.

Notably, the insurance adjusters who worked on the projects at issue testified that

they relied on the accuracy of this information provided to them by DRI. Thus,

DRI effectively lulled the insurance companies and their adjusters into believing

there was no need to investigate further the subcontractor line items, or to prepare

their own, independent estimates of the costs associated with the subcontractor

line items.

3. Did the district court err by refusing to instruct the
jury that Sharp could be convicted of mail fraud on the
basis of an omission only if he had a duty to disclose the
withheld fact?

In his third issue on appeal, Sharp argues that the district court erred

by refusing to instruct the jury that Sharp could be convicted of mail fraud on the

basis of an omission only if he had a duty to disclose the withheld fact. “We

review the district court’s decision to give a particular jury instruction for abuse

of discretion; however, we review the instructions as a whole de novo to

determine whether they accurately informed the jury of the governing law.”

United States v. Toledo, 739 F.3d 562, 567 (10th Cir. 2014).

Sharp is correct in noting “that ‘[w]hen an allegation of fraud is

based upon nondisclosure, there can be no fraud absent a duty to speak.’” United

24
States v. Cochran, 109 F.3d 660, 665 (10th Cir. 1997) (quoting Chiarella v.

United States, 445 U.S. 222, 235 (1980)). The question for us in this case is

whether Sharp was entitled to have the jury instructed on this legal principle.

And that, in turn, depends upon whether such an instruction was “supported by

competent evidence.” Pratt v. Petelin, 733 F.3d 1006, 1009 (10th Cir. 2013).

In order to resolve that question, we begin by reviewing the precise

arguments that were made by Sharp and his co-defendants prior to the district

court instructing the jury. As previously noted, the district court ultimately

instructed the jury, in Instruction No. 28, as to the meaning of a false pretense or

representation:

A representation or pretense is false if it is known to
be untrue or it is made with reckless indifference to its
truth or falsity. A representation or pretense can also be
false if it is a half-truth or omits or conceals a material
fact if it is made with the intent to defraud.

ROA at 3066 (Instruction No. 28). Prior to the district court doing so,

defendants objected to the last sentence of Instruction No. 28, in particular its

reference to “omit[ting] or conceal[ing] a material fact.” ROA at 3033-34.

Griggs’ counsel argued that it was his understanding “that omissions were coming

out of the case,” leaving at issue “some variety of affirmative misrepresentation.”

Id. at 3034. The district court responded, “Omissions are not out of the case.

They – omissions that fall within the mid-range of the spectrum that I identified

during the ruling [on defendants’ motion for judgment of acquittal] are part of the

25
case.” Id. Griggs’ counsel then stated, “I’ll just say that I think if omissions are

still in the case, then there should be some instruction about a duty to speak.” Id.

The district court stated:

Let me be clear here. I have gone over the counts, and I
had a judgment – actually dismissed Count 51, where
there was no duty to speak. What I have determined as a
matter of law is that a mail fraud claim can be premised
on a combination of an affirmative representation
coupled with knowledge and omission that renders that
representation ambiguous or misleading. Cochran
refers to deceitful concealment of material facts. And
that’s in conjunction with . . . a representation.

Id. at 3034-35. The district court continued:

Let me clarify. And to the extent I was not clear in
my ruling [on defendants’ motions for judgment of
acquittal], this will supplement that ruling.

The spectrum that I see is, on one hand, an
affirmative misrepresentation. At the other end of the
spectrum is a mere non-disclosure, where there is no
duty to disclose. That’s the Cochran situation. And
midway in between is an affirmative representation
which becomes ambiguous or misleading in the absence
of a disclosure of additional information. And that is
the deceitful concealment of material facts.

Id. at 3035-36. Ultimately, the district court held as follows:

I find that Instruction No. 28 is an accurate statement
of the law when read in conjunction with Instruction No.
25. Instruction No. 25 states the elements that must be
proven by the Government with regard to each of the
mail fraud claims. It repeatedly uses the phrase “false
pretenses or representations.” And Instruction No. 28
really defines what is false in that context and it –– read
literally, the sentence says, “a representation or a

26
 pretense can be false if it is a half-truth or it omits or
conceals a material fact.” That’s premised upon the fact
that there is a representation or a pretense. It is not
including a non-disclosure. And as read in that light, the
jury in applying this definition must find a
representation or pretense before determining whether it
is false. That being the case, I find no problem in the
instruction.

Id. at 3039.

We conclude, for two related reasons, that the district court’s

analysis was correct. First, as the district court noted, the jury could not have

found Sharp guilty based on a mere omission. Rather, Instruction Nos. 25 and 28

required the jury, in the course of considering each of the mail fraud counts, to

find the existence of a representation or pretense. Second, and contrary to

Sharp’s arguments below and now on appeal, none of the counts at issue were

based on pure “omissions.” 5 Rather, as we have explained, the counts at issue

were based on subcontractor line items in DRI’s estimates that listed the name of

the specific subcontractor and included a dollar amount combined with a phrase

such as “per detailed breakdown,” “per invoice,” “per estimate,” and “per

proposal.” That information, taken together, could reasonably have been

understood by the insurers as indicating that the dollar amounts listed by DRI

were identical to the amounts being charged DRI by the subcontractors. And,

5
Sharp argues in his opening brief that “[t]he trial court’s instructions
allowed the jury to convict [him] based upon a pure omission.” Sharp Br. at 25.
But Sharp points to no evidence to support this argument.

27
whenever an insurance adjuster asked to see a copy of the underlying

subcontractor invoice, DRI perpetuated the myth by providing the adjuster with a

copy of the inflated subcontractor invoice. 6 Consequently, the district court did

not abuse its discretion in refusing to instruct the jury that Sharp could be

convicted of mail fraud on the basis of an omission only if he had a duty to

disclose the withheld fact.

4. Did the district court err in giving the jury an Allen
instruction?

In his fourth issue on appeal, Sharp argues that the district court

erred by giving the jury an Allen instruction after it informed the district court

that it was unable reach a verdict.

a. Background

At approximately 1:26 p.m. on its fourth day of deliberations

(Thursday, August 9, 2012), the jury sent a note to the district court asking, in

effect, whether it was necessary for the defendants to have “know[n] about the

statute prohibiting mail fraud in order to be guilty of mail fraud.” ROA at 3244-

45. The district court responded to the jury as follows: “Please consider the

instructions as a whole. The definition of intent for conspiracy is found in

Instruction 21. The intent . . . required to commit mail fraud is set out in

6
This occurred in connection with Count 4 (the Belterra job), Counts 16
and 17 (the Clear Creek job), Count 23 (the Evans job), Count 31 (the Justen job),
Count 37 (the Lusman job), and Count 53 (the Taddonio job).

28
Instructions 25 and 27.” Id. at 3250.

Little more than an hour later, at 2:44 p.m., the jury sent a note to the

district court stating, “Under careful consideration in our deliberations, we, the

jury, are unable to return a verdict.” Id. at 3251. The note was signed by all

twelve jurors. Sharp’s counsel argued that the jury’s note was a definitive

statement that they were unable to reach a verdict, and that the district court

should, consequently, declare a mistrial and discharge the jury. Counsel for the

other defendants agreed. The district court, however, stated that it was “not

inclined to grant the motion for mistrial at this time” because “[t]he jurors have

not been instructed that they can reach a verdict on some but not all counts.” Id.

at 3252-53. In turn, the district court stated that it “intend[ed] to call the jurors

into the courtroom and to both reread the modified Allen instruction found at

Instruction No. 34 and advise them that, one they can continue and should

continue their deliberations as to all of the counts that are at issue, and,

secondarily, those counts that they can render a verdict on, they should proceed to

do so.” Id. at 3253. The government had no objection to this proposal, but

Sharp’s counsel objected, arguing that the district court’s proposed instruction

would act as “a signal of disapproval” to the jury. Id. at 3254. Griggs’ counsel

likewise objected. Id. at 3254-55.

The district court proceeded to bring the jury into the courtroom and

instruct them as follows:

29
 Ladies and gentlemen of the jury, I have received
your communication which we’ve numbered as
Communication No. 13, in which you have stated
“Under careful consideration in our deliberations, we,
the jury, are unable to return a verdict.”
It is not uncommon in the course of deliberations for
members of a jury to believe that they have reached an
impasse. Sometimes the mere passage of time, taking a
break, sometimes a fresh perspective, allows jurors to
reach past an impasse. I remind you that Instruction No.
34 tells you that it is your duty as jurors to consult with
one another and to deliberate with a view to reaching an
agreement if you can do so without violence to
individual judgment. You must each evaluate the
evidence for yourself, but only after impartially
considering it with your fellow jurors. In the course of
your deliberations, do not hesitate to reexamine your
own views and change your opinion if you are convinced
it is erroneous. However, do not surrender your honest
conviction as to the weight or effect of evidence solely
because of the opinion of your fellow jurors or for the
mere purpose of returning a verdict.
A verdict in this case is not necessarily a singular
verdict. You may render a verdict on any count upon
which you can agree. There may be some counts upon
which you cannot agree; and in that event, you may not
be able to render a verdict.
Your reference here to being able to return a verdict
suggests to me that you are thinking that you cannot
return a verdict because you cannot agree on all of the
counts. I urge you to go back and reconsider and see if
there are any of the counts that you can agree on. And if
there are counts that you can agree on, to render a
verdict on those counts.
Recognizing that you’ve been working very hard this
week, long hours, I think it will be helpful for you,
perhaps, to take a break for the rest of the day.

Id. at 3255-56. The jury proceeded, with the agreement of the district

court, to take a three-day break and reconvened on Monday, August 13, 2012. On

30
the afternoon of Wednesday, August 15, 2012, after approximately two-and-a-half

days of additional deliberation, the jury reached a partial verdict and was unable

to return a verdict on the remaining counts. 7 Id. at 3277-79, 3281-85.

b. Analysis

We review for abuse of discretion a district court’s decision to give

an Allen charge. See United States v. Cornelius, 696 F.3d 1307, 1321 (10th Cir.

2012); United States v. Ailsworth, 138 F.3d 843, 851 (10th Cir. 1998).

“A district court may issue an Allen instruction urging deadlocked

jurors to review and reconsider the evidence in the light of the views expressed by

other jurors so as to avoid a mistrial, provided that the instruction does not

impose such pressure on the jury such that the accuracy and integrity of the

verdict becomes uncertain.” Cornelius, 696 F.3d at 1321 (internal quotations,

7
As to the conspiracy charge, which was Count 1, the jury found Sharp
and Griggs guilty, but found Blackburn and Travers not guilty. As to the
individual mail fraud counts, the jury found as follows: Count 2 (Griggs, Sharp
and Travers all not guilty); Count 4 (Griggs and Sharp guilty); Counts 7-8 (Griggs
guilty; unable to reach a verdict as to Sharp); Count 14 (all defendants not guilty);
Count 15 (Griggs and Sharp guilty; Blackburn not guilty); Counts 16-17 (Griggs
guilty; unable to reach a verdict as to Sharp); Counts 18-19 (Griggs, Sharp and
Travers all not guilty); Count 22 (Griggs and Sharp guilty; Travers not guilty);
Count 23 (Griggs and Sharp guilty); Counts 24-25 and 27-28 (Griggs, Sharp and
Blackburn all not guilty); Counts 30-31 (Griggs and Sharp guilty; Blackburn not
guilty); Counts 32-35 (Griggs, Sharp and Blackburn all not guilty); Count 36
(Griggs and Sharp guilty; Blackburn not guilty); Count 37 (Griggs and Sharp
guilty; Blackburn not guilty); Counts 41-42, 47-48, 50, 52 (unable to reach a
verdict as to any defendant); Count 53 (Griggs and Sharp guilty; unable to reach a
verdict as to Blackburn); Counts 56-57 (unable to reach a verdict as to any
defendant).

31
alterations, and citations omitted). “In considering whether an Allen instruction

was improperly coercive, we consider (1) the language of the instruction, (2)

whether the instruction is presented with other instructions, (3) the timing of the

instruction, and (4) the length of the jury’s subsequent deliberations.” Id.

(internal quotation marks and citations omitted). “The ultimate question is

whether the instruction was impermissibly coercive in a way that undermined the

integrity of the deliberation process.” Id. (internal quotation marks, citation and

alteration omitted).

We conclude that the district court’s Allen instruction in this case

was not improperly coercive. To begin with, the district court’s statement, “do

not hesitate to reexamine your own views and change your opinion if you are

convinced it is erroneous,” ROA at 3255, effectively “urged all jurors, not just

those in favor of acquittal, to reconsider their views according to the proper

standard of the law,” Cornelius, 696 F.3d at 1322. The language of the

instruction also effectively encouraged, rather than “undermined,” the deliberative

process. Id. To be sure, the instruction was read alone by the district court after

the jury had deliberated for several days and then indicated that it was unable to

return a verdict. See United States v. LaVallee, 439 F.3d 670, 690 (10th Cir.

2006) (“[T]here is no per se rule against giving an Allen charge once the jury has

begun to deliberate.”). But in the present case, the instruction had been

previously read to the jury as part of the initial jury instructions, and the district

32
court reminded the jury of that fact. Following the district court’s reading of the

Allen instruction, the jury proceeded to deliberate for two-and-a-half more days.

Notably, the jury did not convict Sharp and Griggs on all of the counts at issue.

Indeed, the jury remained deadlocked with respect to several of the counts at

issue. And, with respect to defendants Blackburn and Travers, the jury either

acquitted them or was deadlocked. Thus, considering all of these factors together,

we are not persuaded that the district’s Allen instruction imposed such pressure

on the jury as to call into question the accuracy and integrity of its verdicts.

Sharp argues, however, that “[t]here are three problems with the

language of the court’s Allen instruction and its comments regarding a partial

verdict that rendered the instruction improperly coercive.” Sharp Br. at 29. To

begin with, Sharp argues, by telling the jury that “the mere passage of time [or]

taking a break . . . allows jurors to reach past an impasse,” and then excusing the

jury for a three-day break, the district court effectively “encouraged the jurors to

take a break with an eye towards any holdouts returning at [a] later time and

capitulating.” Id. at 30. As we have noted, however, the language of the district

court’s Allen instruction actually encouraged all of the jurors, and not just the

purported “holdouts,” to reconsider their views. Further, as the government

correctly notes, it was the jury that requested the three-day break; the district

court did not unilaterally impose that break on the jury. Thus, we reject Sharp’s

assertion regarding the “message” sent to the jury by the district court.

33
 Sharp next complains that the district court’s “instruction did not

reiterate the fact that the burden of proof was on the government, and that [he]

had no burden to prove anything.” Id. Sharp is correct on this point and “[i]t

would, of course, be more palatable if the jury [had been] reminded of the

presumption of innocence and burden of proof.” United States v. Winn, 411 F.2d

415, 417 (10th Cir. 1969). But, as the government notes, the absence of this

language is not per se prejudicial. And, importantly, the district court did

emphasize to the jurors that they should “not surrender [their] honest

conviction[s] as to the weight or effect of evidence solely because of the opinion

of . . . fellow jurors or for the mere purpose of returning a verdict.” ROA at

3256.

Third, Sharp argues that “the court’s instruction improperly

interfered with the structure and course of the jury’s deliberations by admonishing

the jury to return a partial verdict if at all possible.” Sharp Br. at 31. But a close

examination of the district court’s Allen instruction indicates that the district

court’s reference to the possibility of a partial verdict was clearly intended to

alleviate any concerns on the part of the jury “that [they could not] return a

verdict because [they could not] agree on all counts.” ROA at 3256. Moreover,

the district court did not suggest, as was the case in LaVallee, that the jury could

or should seal or return partial verdicts as they were reached or prior to the

conclusion of the deliberative process. Thus, Sharp’s argument in this regard

34
lacks merit.

Finally, Sharp complains about the timing of the Allen instruction,

noting that it “was given, not just after the jury had begun its deliberations, but

after it had been deliberating for four days, and after it advised the court . . . that

it was deadlocked.” Sharp Br. at 33. But we have previously upheld the giving

of an Allen instruction under nearly the same circumstances as occurred here, i.e.,

“after the jury deliberated for four days, returned a partial verdict, and announced

that it was deadlocked.” Ailsworth, 138 F.3d at 851-52. In concluding that “[t]he

timing of the Allen instruction[] . . . was not problematic,” we noted that “[t]he

court first gave an Allen instruction to the jury when it charged the jury before

deliberations began.” Id. at 851. Notably, the district court in this case did so as

well. In other words, the jury in this case was given the Allen instruction for the

first time prior to deliberations, and it was reread to them after four days of

deliberation. Consistent with Ailsworth, we conclude that this timing was not

“problematic.” Id.

5. Is Sharp entitled to have his convictions vacated
under the rule established in Cochran?

In his fifth and final issue on appeal, Sharp “incorporates by

reference the first argument advanced by . . . Griggs in his Opening Brief,” i.e.,

that his convictions must be vacated in light of this court’s decision in Cochran.

Sharp Br. at 34. As we shall discuss in greater detail below in the section

35
addressing Griggs’ appeal, this issue lacks merit.

B. Griggs’ Appeal

Griggs raises six issues in his appeal: a challenge to his convictions

based upon this court’s decision in Cochran, two sufficiency-of-the-evidence

issues (the same two issues raised by Sharp), two instruction-related issues (the

same two instruction-related issues as Sharp), and, finally, a challenge to the

$500,000 fine imposed by the district court at sentencing. As with Sharp’s

appeal, we conclude that all of the issues raised by Griggs lack merit.

1. Is Griggs entitled to have his convictions vacated on
the basis of this court’s decision in Cochran?

In his first issue on appeal, Griggs contends that the government’s

evidence was insufficient to support his convictions. As we have noted, “[w]e

review the sufficiency of evidence de novo.” Serrato, 742 F.3d at 472.

a. The Cochran decision

Griggs bases his sufficiency-of-evidence challenge on our decision in

Cochran. The defendant in that case, Robert Cochran, was the head of the

Oklahoma City Municipal Bond Underwriting Department of Stifel, Nicolaus &

Company (Stifel), a company that participated in underwriting municipal bond

issues. Stifel was a co-managing underwriter for almost $77 million in taxable

20-year revenue bonds issued by the Oklahoma City Airport Trust (OCAT).

Stifel also, in connection with the deal, brokered a collateralized guaranteed

36
investment contract between OCAT and the Postipankki Bank, a Finnish bank.

This contract allowed OCAT to invest the bond proceeds at a fixed rate until

needed and earn a return in excess of most short-term investments. Stifel located

Postipankki, the highest bidder in terms of the guaranteed interest rate offered,

with the help of Pacific Matrix Financial Corporation, a California money broker.

At the direction of Stifel, Postipankki reduced slightly the amount of the

guaranteed interest percentage it offered in its original bid (Postipankki would

have been the highest bidder even based on its net bid) to account for broker fees

charged by Stifel and Pacific Matrix. Those fees totaled $529,241.09, of which

Stifel received $489,241.09. OCAT was unaware of the fees or that Postipankki’s

original bid was for a slightly higher guaranteed rate of interest. The return from

the guaranteed investment contract earned OCAT more than $1.5 million, and the

net rates it earned were over twice what it was making on short-term Treasury

securities.

As a result of the OCAT transaction, Cochran was indicted on two

counts of wire fraud (specifically a telephone call directing the Postipankki bid

reduction and a fax transmission from Pacific Matrix to Oklahoma bond counsel

reflecting the reduced bid amount) and one count of money laundering. Cochran

was subsequently convicted by a jury of these counts and was sentenced to a term

of imprisonment and ordered to pay restitution in an amount equal to the broker

fee received in the OCAT transaction.

37
 On appeal, Cochran “argue[d] that he had no duty to disclose (to

OCAT) the Stifel commission on the guaranteed investment contract placed with

Postipankki bank.” 109 F.3d at 665. We agreed. In reaching this conclusion, we

noted “[t]he evidence in this case does not support [the existence of a fiduciary]

duty [between Stifel/Cochran and OCAT], nor does it support the government’s

alternate theory that Stifel’s affirmative misstatements of fact (the net bids)

induced false beliefs regarding the amount of the Postipankki bid to OCAT.” Id.

We emphasized that we “analyze[d] the government’s alternate theory virtually

the same way as its nondisclosure theory because the alternate theory presupposes

a duty to disclose with any statements unaccompanied by such disclosure deemed

fraudulent.” Id. “The record,” we noted, “ma[de] it clear that even among the

government’s industry witnesses no consensus existed concerning proper

reinvestment fee disclosure.” Id. at 666. Consequently, we held that “[t]he wire

fraud counts pertaining to the OCAT transaction must be reversed.” Id. at 667.

b. The district court’s rejection of Griggs’ Cochran-based challenge

Griggs, citing Cochran, moved for a judgment of acquittal on all

counts at the conclusion of the government’s case, at the conclusion of all the

evidence, and after the jury had returned its verdict. The district court dismissed

one of the mail fraud counts at issue (Count 51), 8 but rejected Griggs’ motions

8
In the project at issue in Count 51, the government’s evidence established
(continued...)

38
with respect to the remaining counts at issue.

c. Griggs’ challenge to the district court’s decision

Griggs argues that “[t]he district court’s attempt to distinguish this

case from Cochran fails.” Griggs Br. at 19. In support, Griggs asserts that “[i]n

Cochran, the broker [defendant] provided an affirmative representation

concerning the interest rate offered to OCAT.” Id. “The ‘quoted’ rate,” Griggs

asserts, “was less than the ‘original’ rate the bank was willing to pay,” and “[t]hat

‘original’ rate had been reduced to cover the broker fee to the defendant[].” Id. at

19-20. “In this case,” Griggs argues, “the quoted rate for the cost of the

subcontractors was higher than the amount actually paid to the subcontractor

because the quoted amount included profit and overhead for DRI.” Id. at 20. “In

other words,” he argues, “the ‘retail rate’ charged to the insurance company

included the ‘wholesale rate’ paid to the subcontractors plus a markup for profit

and overhead.” Id. He argues that “DRI’s estimates for the insurance companies

accurately represented what DRI was charging for the work of the subcontractors

but omitted disclosing the amount of the markup DRI was charging for that

work.” Id. “In Cochran,” he argues, “the quoted rate to OCAT was what the

bank was paying, but omitted disclosing that the bank had reduced the rate it was

8
(...continued)
that DRI dealt exclusively with the property owner, Steve Rosen, who was acting
as his own general contractor overseeing the repair of his property. In other
words, DRI did not make any representations to Rosen’s insurance company.

39
willing to pay in order to cover the cost of the broker fee.” Id.

Ultimately, Griggs argues that, “[s]ince it is not contested that DRI

had no duty to disclose to the insurance companies, this case is controlled by the

holding in Cochran.” Id. “Indeed,” Griggs argues, “the relationship between DRI

and the insurance companies was much more arms-length than that between the

broker and OCAT in Cochran.” Id. According to Griggs, “[u]nder these facts,

DRI charging the insurance companies a retail price for the work of

subcontractors without disclosing that the subcontractors were paid a wholesale

amount, when there was no duty of disclosure, cannot be deemed a nondisclosure

coupled with an affirmative misrepresentation which induced a false belief among

the insurers.” Id. at 21.

We reject Griggs’ arguments and conclude that the district court

correctly distinguished this case from Cochran. The basis for the fraud charges in

Cochran was the defendant’s nondisclosure of information to OCAT. Although

the defendant in Cochran truthfully informed OCAT of the guaranteed interest

rate it would receive from the bank, he failed to disclose to OCAT (a) the fact

that the bank had originally offered a slightly higher guaranteed interest rate, (b)

the fact that he and Stifel would be receiving a commission from the bank, and (c)

the fact that the bank effectively paid for the commission by lowering slightly the

amount of the guaranteed interest rate.

The case at issue involving DRI, in contrast, involves more than the

40
nondisclosure of information. In each of the counts at issue, DRI submitted to an

insurance company a written estimate that included one or more line items listing

work to be performed by a subcontractor, along with a dollar amount and a phrase

such as “per detailed breakdown,” “per invoice,” “actual cost . . . per invoice,”

“per estimate,” or “per proposal.” This information was truthful only in the sense

that the amount listed on the subcontractor line item matched one of the two

invoices submitted by the subcontractor to DRI. What DRI’s estimate failed to

inform the insurer, however, was that the matching invoice was generated by the

subcontractor only at DRI’s request and solely for the purpose of hiding the fact

that DRI was paying the subcontractor a lesser amount, and DRI was receiving

the difference. By structuring its estimates and supporting documentation in this

manner, DRI falsely suggested to the insurer that the amount listed on the

subcontractor line item was the precise amount that DRI would be paying the

subcontractor for its work. Thus, in sum, the case at hand did not involve a mere

nondisclosure, but rather involved an affirmative representation combined with a

related nondisclosure. Together, these affirmative acts coupled with material

omissions resulted in the deceitful concealment of material facts from the

insurers.

Griggs also argues that, “[b]ecause one cannot be guilty of

conspiring to do something that is not a crime, the failure of the government to

present sufficient evidence of mail fraud means there is insufficient evidence to

41
sustain [his] conspiracy conviction.” Griggs Br. at 21. This argument, however,

fails for the reasons outlined above, i.e., there was sufficient evidence to support

his convictions for mail fraud.

Finally, Griggs argues that criminalizing the conduct at issue in this

case violates due process. Id. at 22. This argument, like his other Cochran-based

argument, rests largely, if not exclusively, on the notion that the conduct at issue

involved the mere nondisclosure of information. In particular, Griggs argues that

criminalizing the conduct at issue in this case retroactively imposed a duty on him

and his codefendants, as private individuals, to disclose information in private

business transactions. Id. Griggs also argues that “typical commercial actors,

such as the defendants in this case, could not have contemplated or appreciated

the fine lines drawn by the district court.” Id. at 23. Consequently, he argues,

“constitutional notice of what constituted criminal conduct was not provided,”

and his convictions must therefore be reversed. Id.

“[D]ue process requires citizens be given fair notice of what conduct

is criminal.” United States v. Apollo Energies, Inc., 611 F.3d 679, 687 (10th Cir.

2010). “A criminal statute cannot be so vague that ‘ordinary people’ are

uncertain of its meaning.” Id. (quoting Kolender v. Lawson, 461 U.S. 352, 357

(1983)). “As generally stated, the void-for-vagueness doctrine requires that a

penal statute define the criminal offense with sufficient definiteness that ordinary

people can understand what conduct is prohibited and in a manner that does not

42
encourage arbitrary and discriminatory enforcement.” Kolender, 461 U.S. at 357.

The mail fraud statute Griggs was convicted of violating, 18 U.S.C. §

1341, makes it a crime to engage in a scheme or artifice to defraud or obtain

money or property “by means of false or fraudulent pretenses, representations, or

promises.” As the district court’s instructions in this case correctly informed the

jury, a representation is “false” if it is known to be untrue or is made with

reckless indifference as to its truth or falsity, and a representation is “false” when

it constitutes a half truth, or effectively omits or conceals a material fact,

provided it is made with intent to defraud. Tenth Circuit Pattern Jury

Instructions, Criminal, § 2.56 (2011).

Notably, Griggs does not appear to dispute that the mail fraud statute

adequately placed him on notice that it was illegal to engage in a scheme or

artifice to obtain money by means of false statements. Rather, his due process

arguments appear to be confined to the mere nondisclosure of information. As we

have explained, however, the government’s case against Griggs, Sharp and their

codefendants did not rest on the mere nondisclosure of information. Rather, the

government’s case focused on half-truths or representations that effectively

omitted or concealed material facts. Moreover, it is worth noting that the manner

in which Griggs and Sharp structured their system of subcontractor invoicing

(requiring subcontractors to submit two invoices), combined with the manner in

which DRI provided estimates to insurers (falsely implying that the amounts

43
listed for subcontractor work were the actual amounts to be paid by DRI to the

subcontractors), clearly suggested that Griggs and Sharp knew that insurers would

not, if they knew all of the facts, pay DRI the inflated subcontractor amounts

listed on its estimates. Indeed, the government’s evidence established that Sharp

told DRI employees during a meeting concerning this system of subcontractor

invoicing “that if the insurance companies found out what we were doing, our life

would end as we know it.” ROA at 130 (testimony of Greg Rye, former project

manager at DRI). Consequently, we conclude there is no merit to Griggs’ due

process arguments.

2-5. Incorporation of issues raised by Sharp

In his second, third, fourth, and fifth issues on appeal, Griggs

incorporates by reference four of the arguments asserted by Sharp: that the

evidence presented at trial was insufficient to establish that he obtained money by

false pretenses or representations; that the evidence presented at trial was

insufficient to establish that the alleged omissions or misstatements were

material; that the district court erred by refusing to instruct the jury that Griggs

could be convicted on the basis of a material omission only if he had a duty to

disclose the withheld fact; and that the district court erred by giving the jurors an

Allen instruction after they indicated that they could not reach a unanimous

verdict. Griggs Br. at 25-27. For the reasons we outlined in addressing Sharp’s

appeal, we conclude that these issues lack merit.

44
 6. Was the $500,000 fine imposed by the district court unreasonable?

In his sixth and final issue on appeal, Griggs challenges the

procedural and substantive reasonableness of the $500,000 fine that was imposed

by the district court as part of his sentence. In particular, Griggs argues that the

fine imposed in his case “is procedurally unreasonable because . . . the district

court (1) failed to calculate the Guideline range fine, (2) failed to explain why it

was necessary to deviate from the Guideline-range fine urged by the government

or reject the $15,000 fine recommended in the PSI to accomplish its sentencing

goal; [sic] (3) neither considered nor accounted for restitution of more than

$477,000 that . . . Griggs was ordered to pay; and (4) did not consider the burden

the fine placed on . . . Griggs’ wife and daughter who are dependent on him at a

time the court also was imposing a 50-month term of imprisonment.” Griggs Br.

at 32. Griggs also argues that the fine is substantively unreasonable for these

same reasons. Id. at 36 (“The failings that render this fine procedurally

unreasonable also make this fine substantively unreasonable and an abuse of

discretion.”).

a. Procedural background

The presentence investigation report (PSR) recommended that a fine

in the amount of $15,000 be imposed against Griggs. Griggs agreed with this

recommendation. The government, however, objected to this recommendation

and argued that a fine of $125,000, an amount at the top of the Guidelines range,

45
was warranted.

At Griggs’ sentencing hearing, the government argued that Griggs

had hidden assets during the course of the probation office’s presentence

investigation. In particular, the government argued that Griggs “actively misled”

the probation officer “about his current control and ownership of Restoration

Logics,” a company that had taken over DRI’s business, “through his ownership

and control of [a third entity called] JENMAR.” Griggs App. at 448.

The district court agreed with the government on this point. In the

course of pronouncing Griggs’ sentence, the district court found that the

presentence investigation “[wa]s sort of a cat and mouse game” in which “Griggs

did not come forward and disclose voluntarily all of his financial information.”

Id. at 467. In particular, the district court noted that Griggs failed to provide

information to the probation officer regarding a number of “assets and transfers

that [were] made during the course of this case.” Id. at 468. This included, the

district court noted, information regarding “the actual worth of Restoration

Logistics, which bought out DRI,” “whether this was an asset sale or a stock

sale,” “what purchase price was paid,” and how much Griggs received from the

sale of DRI. Id. at 467. The district court also “f[ound] some of the

representations that . . . Griggs made to the probation officer to be somewhat

insincere and incredible.” Id. at 469. Ultimately, the district court found that

there was an “attempt [by Griggs] to shelter assets from collection in anticipation

46
of imposition of a restitution amount and a forfeiture award and a fine.” Id. And

Griggs’ actions in that regard, the district court stated, factored into its sentencing

decisions. Id.

The district court adopted most of the information contained in the

PSR and found that Griggs’ “Total Offense Level [wa]s 27,” and his “Criminal

History Category [was] I,” resulting in a guideline sentencing range “of 70 to 87

months, 1 to 3 years of supervised release on each count, a fine of $12,500 to

$3,500,000, and a special assessment of $100 per count.” Id. at 463. The district

court then imposed a below-Guidelines term of imprisonment of fifty months,

“followed by 3 years of supervised release, a fine of $500,000, a restitution

obligation of [$]477,643.49, . . . and a special assessment of $1,400.” Id.

After imposing this sentence, the district court asked if “there [was]

any need for clarification, further explanation, objection, or request for

continuance?” Id. The prosecutor asked if the district court “could . . . make a

record as to why that particular $500,000 [fine] number was chosen” since it was

“above the guideline range.” Id. at 471. The district court responded: “The

guideline range is $12,500 to 3,500,000.” Id. The prosecutor then stated, “The

top end of that range that you cited is the statutory maximum allowed by the

counts of conviction,” but “the guideline range . . . for an offense category of 27

47
is $12,500 to $125,000.” 9 Id. The district court responded, “This is a variant

sentence.” Id. at 472. Pursuant to the prosecutor’s request, the district court then

specified its reasons for imposing a fine that varied from the Guidelines range:

I carefully studied the financial information that was
contained in the presentence report, that which was
supplied, including the income that was reported by Mr.
Griggs over years 2006 through 2011. 2006, it was
$696,000; 2007, $292,000; 2008, $385,000; 2009,
$174,000; 2010, $358,000; and 2011, $273,000. Given
that amount of income and the relatively small number
of assets that are reflected in the presentence report, I
believe both that Mr. Griggs has a capacity to earn
money, and I suspect that the disclosure of the assets
that were acquired during that time is not accurate or
complete.

Id.

Immediately following its explanation, the district court asked

Griggs’ counsel if he had any response. Id. at 473. Griggs’ counsel responded:

Of course, Your Honor, we continue and persist in
the position that the fine should be imposed within the
fine range, especially given that the counts were grouped
in this case. We understand the Court’s ruling. I think
our position is already made known and clear in the
record. But we think the fine at the level announced by
the Court is inappropriate and that the fine should be

9
A review of the record suggests that the district court’s misunderstanding
of the guideline fine range derived from the original and revised PSRs, both of
which stated erroneously that “[t]he fine range is from $12,500 to $3,500,000,
pursuant to §5E1.2(c)(3).” Dist. Ct. Docket Nos. 1530 and 1558 at ¶ 110.
Notably, neither Griggs nor the government objected to this portion of either PSR.
Thus, it was not until the time of sentencing that the prosecutor brought this error
to the district court’s attention.

48
 imposed within the guideline range.

Id. The district court then asked, “Even though this is a variant sentence?”

Id. Griggs’ counsel responded, “I understand that it’s a variant sentence, but it’s

not on the Government’s motion. And I think I’ve made my record.” Id.

b. Standard of review

Generally speaking, we review sentences, including fines, for

reasonableness under a deferential abuse-of-discretion standard. See United

States v. Vigil, 644 F.3d 1114, 1123 (10th Cir. 2011). “Reasonableness review is

a two-step process comprising a procedural and a substantive component.”

United States v. Friedman, 554 F.3d 1301, 1307 (10th Cir. 2009) (internal

quotation marks omitted). “Procedural reasonableness involves using the proper

method to calculate the [fine].” United States v. Conlan, 500 F.3d 1167, 1169

(10th Cir. 2007). Substantive reasonableness, in contrast, involves whether the

amount of the fine at issue is reasonable given all the circumstances of the case in

light of the statutory and Guidelines factors. See generally United States v.

Sayad, 589 F.3d 1110, 1116 (10th Cir. 2009).

The government argues, however, and we agree, that plain error

review applies to Griggs’ challenges to the procedural reasonableness of the fine

imposed by the district court. As outlined above, Griggs’ counsel argued only

that the fine was “inappropriate” and should fall “within the guideline range.”

App. at 473. Nothing about these general objections was sufficient to alert the

49
district court to the more-specific procedural objections that Griggs now asserts

on appeal. Accordingly, we conclude that Griggs’ objections to the procedural

reasonableness of his fine are unpreserved and thus subject to review only for

plain error. See United States v. Romero, 491 F.3d 1173, 1177-78 (10th Cir.

2007). “We find plain error only when there is (1) error, (2) that is plain, (3)

which affects substantial rights, and (4) which seriously affects the fairness,

integrity, or public reputation of judicial proceedings.” Id. at 1178.

c. Analysis

Griggs’ first two procedural challenges, i.e., that the district court

failed to calculate the Guidelines range for the fine and failed to explain its

reasons for deviating from the Guidelines range, are without merit. Although the

PSR misstated the upper end of the Guidelines fine range, neither party objected

to that error. Thus, it was not until the time of sentencing, when the district court

expressly adopted the Guidelines fine range stated in the PSR, that the prosecutor

realized the error and brought it to the attention of the district court. The district

court in turn recognized the error and thus effectively adopted the proper

Guidelines fine range as outlined by the prosecutor. The district court also, at the

urging of the prosecutor, explained its reasons for imposing a fine that varied

above the Guidelines range. Consequently, there was no procedural error in this

regard, and thus no plain error.

Griggs’ latter two procedural arguments also lack merit. To be sure,

50
the district court did not expressly discuss the interplay of the restitution and fine

that it imposed, nor did it discuss any potential burden the fine might place on

Griggs’ wife and daughter. But the district court did, in explaining its reasons for

imposing an above-Guidelines-range fine, find that Griggs had hidden assets from

the probation office, or at least effectively prevented the probation office from

discovering substantial assets. As a result of this conduct, the district court

clearly concluded that both restitution and a substantial fine were appropriate and

warranted. Notably, Griggs makes no effort to challenge the district court’s

finding on this point. Consequently, he has failed to establish that any error on

the part of the district court affected his substantial rights, or otherwise seriously

affected the fairness, integrity, or public reputation of the judicial proceedings.

Having concluded that the district court’s sentencing decision was

“procedurally sound” under the plain error standard of review, we are left to

“consider the substantive reasonableness of the [fine] imposed under an abuse-of-

discretion standard.” Gall v. United States, 552 U.S. 38, 51 (2007). In doing so,

we must “take into account the totality of the circumstances, including the extent

of any variance from the Guidelines range.” Id. Because the fine in this case “is

outside the Guidelines range,” we “must give due deference to the district court’s

decision that the § 3553(a) factors, on a whole, justify the extent of the variance.”

Id.

The extent of the variance of the fine imposed in this case was, to be

51
sure, substantial. Although the upper end of the Guidelines range fine was

$125,000, the district court concluded that a fine four times greater than the upper

end of the Guidelines range, i.e., $500,000, was warranted based upon its findings

that Griggs attempted to conceal assets from the probation office during its

presentence investigation. The question for us is whether, giving due deference

to the district court’s decision, the circumstances of this case, including Griggs’

conduct during the presentence investigation, justified the extent of the variance.

Two of the Application Notes to U.S.S.G. § 5E1.2 provide useful

guidance in making our determination. To begin with, Application Note 4

provides that a significant amount of loss may justify a fine that exceeds the

Guidelines range:

The [Sentencing] Commission envisions that for most
defendants, the maximum of the guideline fine range
from subsection (c) will be at least twice the amount of
gain or loss resulting from the offense. Where,
however, two times either the amount of gain to the
defendant or the amount of loss caused by the offense
exceeds the maximum of the fine guideline, an upward
departure from the fine guideline may be warranted.

Moreover, where a sentence within the applicable fine
guideline range would not be sufficient to ensure both
the disgorgement of any gain from the offense that
otherwise would not be disgorged (e.g., by restitution or
forfeiture) and an adequate punitive fine, an upward
departure from the fine guideline range may be
warranted.

U.S.S.G. § 5E1.2, cmt. n.4. In this case, it was undisputed that the amount

52
of loss caused by Griggs’ conduct was $477,643.49. Because “two times” this

amount of loss ($955,286.98) greatly “exceeds the maximum of the fine

guideline” ($125,000), this is, without question, a case where it was appropriate

for the district court to consider “an upward departure” or variance “from the fine

guideline range.” Id.

Application Note 6 also provides that “[t]he existence of income or

assets that the defendant failed to disclose may justify a larger fine than that

which otherwise would be warranted under this section.” U.S.S.G. § 5E1.2, cmt.

n.6. That certainly captures the situation before us. As we have noted, the

district court expressly found that Griggs concealed assets from the probation

office during the course of its presentence investigation. And Griggs, though now

challenging the amount of the fine imposed, makes no attempt to challenge the

district court’s findings regarding his concealment of assets.

We are persuaded from reviewing the transcript of the sentencing

hearing that the district court’s decision to impose a $500,000 fine on Griggs was

consistent with Application Notes 4 and 6. Not only was the district court well

aware of the amount of loss at issue, it expressly emphasized, and expressed

displeasure with, Griggs’ efforts to conceal assets during the presentence

investigation. And it was this latter factor that the district court mentioned when

asked by government counsel to explain its reasons for varying upward from the

Guidelines range.

53
 The only potentially unusual factor in this case, and the one that

appears to concern the dissent, was the district court’s decision, when informed

by the government that the upper end of the Guidelines range was $125,000 rather

than $3,500,000, to stick with the amount of the fine that it originally selected

and vary upwards from the Guidelines range. We are not persuaded, however,

that this circumstance renders the amount of the fine “arbitrary, capricious,

whimsical, or manifestly unreasonable.” United States v. Naramor, 726 F.3d

1160, 1171 (10th Cir. 2013) (internal quotation marks omitted). To the contrary,

we are convinced that the district court in this case carefully selected the amount

of the fine — approximately equal to the amount of the loss associated with

Griggs’ offense — both to ensure the disgorgement of any gain from the offense

and to ensure that Griggs was adequately punished for his offense and for his

concealment of assets during the presentence investigation.

Thus, in sum, we conclude that the amount of the fine imposed by the

district court was substantively reasonable.

III

Having rejected each of the claims for relief asserted by Sharp and

Griggs, we AFFIRM their convictions and sentences.

54
No. 13-1114, United States v. Sharp; No. 13-1117, United States v. Griggs

HOLLOWAY, Circuit Judge, concurring in part and dissenting in part.

I join the majority in affirming the convictions of both Charles Sharp and Michael

Griggs. Like the majority, I also believe that Mr. Griggs’s challenge to the procedural

reasonableness of his sentence must be reviewed for plain error only. But the majority

and I part company on the question of the substantive reasonableness of Mr. Griggs’s fine

itself. I am unable to assent to the majority’s conclusion that the district court’s

imposition of a $500,000 fine on Mr. Griggs was substantively reasonable “given all the

circumstances of the case in light of the factors set forth in § 3553(a).” United States v.

Sayad, 589 F.3d 1110, 1116 (10th Cir. 2009) (brackets and internal quotation marks

omitted). Accordingly, I would vacate the $500,000 fine imposed on Mr. Griggs and

remand to the district court for resentencing.

A “‘sentence’ is broadly defined to include not just terms of imprisonment, but

also . . . fines.” United States v. Perez–Jiminez, 654 F.3d 1136, 1146 (10th Cir. 2011);

see also 18 U.S.C. § 3551(b)(2) (“An individual found guilty of an offense shall be

sentenced . . . to . . . a fine . . . .”). When determining the amount of a fine, a district

court is bound to consider “the burden that the fine will impose upon . . . any person who

is financially dependent on the defendant.” 18 U.S.C. § 3572(a)(2). The district court

also must take into account “whether restitution is ordered or made and the amount of

such restitution.” Id. § 3572(a)(4). As to the latter point, “the court shall impose a fine or

other monetary penalty only to the extent that such fine or penalty will not impair the

ability of the defendant to make restitution.” Id. § 3572(b). These statutory requirements
are mirrored in the Guidelines themselves. See U.S.S.G. § 5E1.2(d)(3)-(4) (“In

determining the amount of the fine, the court shall consider . . . the burden that the fine

places on the defendant and his dependents relative to alternative punishments [and] any

restitution or reparation that the defendant has made or is obligated to make . . . .”). The

district court uttered not a word about the factors emphasized above.

We review a sentence for substantive reasonableness under an abuse-of-discretion

standard. See Sayad, 589 F.3d at 1116. A district court abuses its discretion when it

imposes a sentence that is “arbitrary, capricious, whimsical, or manifestly unreasonable.”

United States v. Muñoz–Nava, 524 F.3d 1137, 1146 (10th Cir. 2008) (quotation omitted).

Having considered the totality of the circumstances in this case, I am left with the firm

impression that the district court exceeded the bounds of reasonableness by imposing an

arbitrary fine on Mr. Griggs without fairly considering the fine’s consequences.

Despite having an obligation to do so, the district court did not consider the burden

that a heavy fine would place on Mr. Griggs’s wife and daughter. It likewise neglected to

take into account whether such a formidable fine would also impair Mr. Griggs’s ability

to make restitution, which had been ordered in the amount of $477,643.49. The

government admits the district court procedurally erred in both respects. See Appellee’s

Consolidated Answer Br. at 45-46. The district court also calculated Mr. Griggs’s fine

while working under the mistaken belief (courtesy, it appears, of an incorrect figure given

by the probation office in the presentence investigation report) that the high end of his

Guidelines fine range was $3,500,000, rather than $125,000. The much higher

-2-
$3,500,000 figure represents the statutory maximum fine for Mr. Griggs’s offense, not

the actual Guidelines fine relevant to his case.

It is evident that the district court was not advised until the very moment of

sentencing that the $500,000 fine varied significantly upward from the upper range of the

Guidelines. Yet, when presented with this information at Mr. Griggs’s sentencing

hearing, the district court still stubbornly adhered to the $500,000 amount, deciding on

the fly that Mr. Griggs’s fine would now be a variant one. This was done without

discussing the burden that the highly variant fine would put on Mr. Griggs’s family or

how that fine would affect his no-less-substantial responsibility to pay restitution. None

of this inspires confidence in the majority’s conclusion that the $500,000 fine was, on

balance, a reasonable one.

The district court’s significant procedural errors—admitted by the government—

cannot help but bleed into the question whether the fine, viewed in its totality, was

substantively reasonable. I believe the district court’s lack of awareness of the

Guidelines range (and lack of willingness to revisit its position once being made aware of

the correct Guidelines range at the sentencing hearing) made it inevitable that the amount

of the fine imposed would be colored by arbitrariness. And such arbitrariness is, by its

very nature, unreasonable.

When fashioning a sentence for someone judged guilty of a crime, a court must

consider how that sentence will “promote respect for the law, and . . . provide just

punishment for the offense.” 18 U.S.C. § 3553(a)(2)(A). An arbitrary sentence furthers

neither of these goals. In light of the district court’s initial miscalculation of the fine

-3-
under the Guidelines, its failure to revisit the amount of the fine after being informed of

the correct sentencing range, and the fact that it did not consider the assuredly significant

impact of a sizeable fine on Mr. Griggs’s wife and daughter or on his obligation to pay

restitution, I am convinced the $500,000 fine imposed on Mr. Griggs was manifestly

unreasonable due to its arbitrariness and thus should not be allowed to stand. Although I

am “well aware that the district court is in a ‘superior position to find facts and judge

their import under § 3553(a),’” United States v. Friedman, 554 F.3d 1301, 1310 (10th

Cir. 2009) (quoting Gall v. United States, 552 U.S. 38, 51 (2007)), I believe this is

precisely a case where highly pertinent facts were not found, much less carefully

weighed, by the district court, resulting in the imposition of an arbitrary, unreasonable,

and likely excessive fine.

True, the district court still might have come up with the $500,000 amount even if

it had been correctly advised of the Guidelines range in the first place, even if it had

considered the burden of the fine on Mr. Griggs’s wife and daughter, even if it had taken

into account the interplay of the fine with the restitution amount, and even if it had paused

for even a few minutes at Mr. Griggs’s sentencing hearing to process the fact that it had

just been informed it had calculated a fine using a Guidelines range that was wildly off-

base. And, to be sure, the district court’s finding that Mr. Griggs had concealed assets

must also be given its due weight. But with so much guesswork already required, I

decline to speculate about whether the district court, in effect, arrived at the right

destination with the wrong roadmap. I would avoid further conjecture and post hoc

rationalization by vacating Mr. Griggs’s fine and remanding the matter for a new

-4-
sentencing hearing—the only thing, at this point, that can provide the necessary assurance

that Mr. Griggs’s fine has not been arbitrarily imposed.

Although in all other respects fully concurring in today’s opinion, I respectfully

dissent from the majority’s affirmance of the $500,000 fine imposed on Mr. Griggs by

the district court.

-5-