NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 14a0569n.06
No. 13-4149
FILED
Jul 28, 2014
UNITED STATES COURT OF APPEALS DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR THE
EILEEN FERN FOLLIET,
NORTHERN DISTRICT OF OHIO
Defendant-Appellant.
BEFORE: CLAY and STRANCH, Circuit Judges; and BLACK, District Judge.
CLAY, Circuit Judge. Defendant Eileen Fern Folliet challenges the district court’s
imposition of a 36-month sentence after Defendant pleaded guilty to four counts of mail fraud in
violation of 18 U.S.C § 1342. Defendant argues that she was not provided sufficient notice
under Fed. R. Crim. P. 32(h) of the district court’s intention to depart from the guidelines, and
contends that her sentence was procedurally and substantively unreasonable. For the reasons set
forth below, we AFFIRM.
BACKGROUND
Between December 2005 and January 2011, while working as an investment adviser for
Doris E. Lackman, a nonagenarian widow, Defendant misappropriated funds from Lackman’s
personal account as well as the Elwin and Doris Lackman Foundation, a charitable trust for
No. 13-4149
which Defendant served as co-trustee. Defendant pleaded guilty to four counts of mail fraud
pursuant to a written plea agreement.
The plea agreement did not contain any promises about the sentencing range to be used
or sentence to be imposed,1 but the parties stipulated to the computation of the advisory
sentencing guidelines offense level. The parties agreed that under U.S.S.G. § 2B1.1, which
applies to embezzlement and other forms of theft, the base offense level for Defendant’s crime is
seven. § 2B1.1(a)(1). The parties also agreed that an enhancement under § 2B1.1(b)(1) would
be appropriate. Section 2B1.1(b)(1) prescribes graduated sentencing enhancements, which apply
where the loss exceeds $5,000. Where the net loss is more than $70,000, but less than $120,000,
the offense level is increased by eight. § 2B1.1(b)(1)(E). Where the loss is more than $120,000,
but less than $200,000, the offense level is increased by ten. § 2B1.1(b)(1)(F). The government
calculated the net loss amount as $117,063.05. They arrived at this number by subtracting the
amount to which Defendant supposedly would have been entitled as compensation for her
services as trustee––$35,000––from the amount that Defendant had unlawfully taken from the
victim’s personal bank account ($111,013.05) and from the charitable trust ($41,050).
Defendant disputed the government’s calculations, and argued that the loss amount should in fact
be lower than $117,000. (13-1, PSR, at 18.) Although the government and Defendant could not
agree on the precise amount of loss, each calculated the net loss as somewhere between $70,000
and $120,000, and so they stipulated that an eight-level enhancement pursuant to
§ 2B1.1(b)(1)(E) would be appropriate.
1
To the contrary, the plea agreement provided: “Defendant understands that the [sentencing]
recommendations of the parties will not be binding upon the Court, that the Court alone will decide the advisory
guideline range under the sentencing guidelines, whether there is any basis to depart from that range or impose a
sentence outside the advisory guideline range, and what sentence to impose.” (R. 26, at 61.)
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The parties also agreed that a two-level increase pursuant to § 3B1.3 was appropriate,
since Defendant abused her position of trust. For purposes of the plea agreement, the
government agreed to recommend a three-level reduction for acceptance of responsibility,
resulting in an offense level of 14, and a guideline range of 15–21 months. This calculation was
reflected in the Presentence Report (“PSR”), which was prepared by an officer from the U.S.
Pretrial Services and Probation Department. Defendant filed three objections to the PSR, two of
which disputed the amount of loss. Defendant also disagreed with the government on the
appropriate amount of restitution.
A sentencing hearing was held on September 18, 2013. In addition to Defendant and
Defendant’s counsel, three other parties participated in the hearing: counsel for the government,
the representative for the estate,2 and counsel for the estate. Prior to the sentencing hearing, at
the district court’s request, the estate provided documentation, such as cancelled checks and deed
records, to support its calculations of the amounts of loss and restitution.
At the sentencing hearing, the district judge questioned each of the interested parties in
order to resolve the “dispute . . . regarding the amount of restitution” and amount of loss. (R. 26,
Sentencing Transcript, at 2, Page ID 129.) The district judge first questioned the government
attorney on the stipulated loss calculation. The judge expressed skepticism about the $35,000
offset for Defendant’s “services rendered” as trustee in light of the fact that Defendant had been
stealing from the trust:
The Court: Let me ask a question here, and you can advise me perhaps or
point me to some authority or some law, or some other basis.
Under what theory may a trustee steal from the trust and/or the
beneficiaries of that trust, and still be entitled to fees for serving as
a trustee? Under what theory do you arrive at that type of
2
After the victim, Doris Lackman, passed away, her estate became the victim in the criminal case against
Defendant. The executor of the estate––Doris Lackman’s cousin, James Spuhler––represented the estate’s interests.
The estate was also represented by counsel, Attorney Higgins.
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negotiation in your conclusion? Because quite frankly, that strikes
me as just beyond the pale that an individual could act as the
trustee, steal from the trust, and then come back and say, oh, by the
way, I'm entitled to fees for services rendered. Can you enlighten
me in some fashion?
Government: It’s hard to, Your Honor, to be honest. . . .
The Court: So we're going to pay her for fees as a trustee during this same
period of time when she’s stealing from the trust and stealing from
the beneficiaries? She’s entitled to be paid?
Government: I don’t disagree with you.
The Court: Well, you negotiated the plea agreement. You’re the one who gave
her the benefit.
Government: To be frank, Your Honor, we came into a situation where two
months into our investigation our victim passed away. Based upon
that, did I want to do that? No. But at some point, looking at
whether or not I could fully prosecute the case, and making that
determination based upon the fact that now my victim who would
say I didn't give her consent is gone, I felt at that particular time,
based upon the government's position, that – that’s why I did the
plea this way, Your Honor.
The Court: I don't mean to be harsh with you, but again, Mr. Higgins [counsel
for the victim’s representative] back here, who we will hear from
in a moment, who did, quite frankly, an extraordinary job in
piecing together and reconstructing all that happened here, and we
have not only this theft for many years, but we also have what I
would characterize as perhaps some other relevant conduct here by
this defendant, i.e., such things as her son showing up as the
beneficiary on this annuity, and some other things that occurred
here that would make one believe this is, again, this is a far, far
more serious type case than someone – I’ve seen many cases
where trustees, trustees and/or executors, or others, tipped into the
till, so to speak, but this is, quite frankly, an extraordinary course
of conduct that gives me pause . . . .
(Id. at 10.) The district court then heard from the estate, which argued that the loss calculation
and restitution amount in the PSR were too low and did not accurately reflect the total amount of
loss. The estate cited Ohio Revised Code § 5810.01 in support of the argument that the $35,000
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offset was inappropriate under the circumstances of this case. That statute provides: “To remedy
a breach of trust that has occurred . . . the court may . . . [r]educe or deny compensation to the
trustee.” Ohio Rev. Code § 5810.01(B)(8). The court recognized that this statute was “not
certainly controlling,” but explained that it was “certainly instructive.” (R. 26, at 56.)
The estate then alerted the court as to a mistake in the government’s loss calculations.
The estate provided documentation and accounting to support its assertion that $33,302.11 that
the investigating officers originally believed was already accounted for was actually omitted
from the loss calculation. When asked to respond to the estate’s statement regarding the
$33,302.11, the government replied: “We made a mistake. Those should be included. I just
talked to the agent. . . . [T]hose should have been counted[.]” (R. 26, at 24.)
Finally, the court heard from Defendant’s counsel, who focused her argument primarily
on the appropriate restitution calculation. As to the issue of loss amount, Defendant’s counsel
stated only:
[W]e stipulated to the loss amount in the plea agreement. And although
[Defendant] instructed me to object to the very thorough PS[R] prepared by the
government, she understands that there’s some ambiguity there about how much
money was in the account and what her fees were entitled to, and some offsets.
Perhaps the Court doesn’t believe there is any appropriate offset.
(R. 26, at 27.)
After hearing from each of the parties, the court recounted the issues and made
determinations about which figures to include in the restitution and loss amounts. Regarding the
offset, the court explained, “clearly a trustee who steals from the beneficiaries should not be
entitled to any fees whatsoever, at least in my view, under these set of facts.” (R. 26, at 56.) The
court found that the $33,302.11 that the government mistakenly omitted from its calculation
should also be included.
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Having resolved the issues surrounding amount of loss and restitution, the Court
proceeded to calculate the applicable advisory guideline range, explaining that it was “the court’s
duty . . . to properly calculate the advisory guidelines.” (R. 26, at 56.) The district judge
explained:
The PS[R] recommends a loss amount that was more than $70,000 but less than
$120,000. . . .
[T]he parties have previously calculated the loss amount at $117,063.05.
That loss amount, however, incorporated two things. It . . . contemplated . . . a
$35,000 compensation to the defendant for managing the trust from 2006 to 2010,
and I have obviously concluded that that will not be a credit against the amount of
loss. Additionally, there is a $33,000 sum of money that the government candidly
acknowledges was mistakenly omitted from the amount of loss. So the net of
117,000 would be increased by a total sum of $68,000, and according to my quick
math, therefore the amount of loss would be 185,000, approximately $185,000.
And under the loss table it would calculate more than $120,000 would be the
amount of loss, and the increase in the offense level would be 10, not the 8 that is
contemplated in the plea agreement.
And that is how -- if either side wishes to be heard regarding that
calculation you may, but I will apply a 10-level specific offense characteristic.
Again, so it is clear for the record, I have denied the defendant any benefit of the
$35,000 compensation as trustee fees for reasons I've already stated. And
additionally, as the government has noted and the victim has testified, or the
victim has presented, there clearly is an additional $33,000 amount of loss
through the Alianz account, as it's called, that would also increase the amount of
loss.
Either of those amounts would obviously increase the amount of loss
above the “more than 70,000” to “more than 120,000,” and . . . does not take us to
“more than 200,000” by my calculation. So therefore . . . an offense level 10 will
be. . . the specific offense characteristic.
(R. 26, at 57–59.)
As contemplated by the parties, the court applied a two-level increase for abuse of a
position of trust under § 3B1.3, and granted a three-level reduction for acceptance of
responsibility. With a base offense level of seven, an enhancement of ten, an enhancement of
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No. 13-4149
two, and a reduction of three, the resulting offense level was 16, and the corresponding advisory
guideline range was 21 to 27 months.
After praising the district court’s analysis, the government nevertheless filed an objection
“for the record” out of respect to the parties’ plea agreement. (R. 26, at 60.) Defendant also
objected, imploring the court to respect the plea agreement, for which the parties “negotiated
hard and long.” (Id.)
After the district court reaffirmed its calculation of 21 to 27 months, Defendant’s counsel
requested a downward departure. Defendant made a statement, apologizing for her “mistakes,”
and explaining that she is an honest person who did dishonest things. Defendant’s statement
ultimately proved unpersuasive and counterproductive. The district judge found Defendant’s
statement to be unapologetic and offensive to the extent that it minimized Defendant’s conduct––
–which the judge described as “absolutely reprehensible.” (R. 26, at 80–81.)
The district judge then went through Defendant’s history and characteristics, and well as
the nature of the crime. He recited the § 3553(a) factors (several times, in fact), and went
through each factor at length. Citing specific language from her statement to the court as
examples of Defendant’s “complete lack of understanding” of the wrongfulness of her conduct,
the judge found that Defendant was “not willing to accept the wrongfulness . . . or fully
acknowledge the criminal nature” of her conduct. (R. 26, at 78.)
The district judge recounted the details of several specific fraudulent transactions to
highlight the reprehensible “nature of [Defendant’s] conduct,” and to give Defendant and “a
reviewing court an understanding of why it is that . . . a lengthy term of incarceration is
appropriate.” (Id.) The judge found it problematic that the thefts occurred––and escalated––
over the course of six or more years, and that Defendant exploited the trust of a woman who
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“certainly, certainly relied” upon her. (Id. at 81.) The judge also considered the fact that
Defendant apparently made no effort to come up with money to pay restitution. (Id. at 70.)
After a lengthy discussion of the factors, the court explained:
21 to 27 months is inadequate, in my view, to reflect the serious nature of this
conduct and this criminal pattern over many, many years, and I will again vary
above the guideline range for the reasons I’ve just stated.
(R. 26, at 81.) The district court ultimately imposed an above-guidelines sentence of 36 months
of imprisonment on each count, to be served concurrently. In a written statement of reasons, the
district judge indicated that the reasons for imposing a sentence outside the advisory guideline
system were: “the nature and circumstances of the offense and the history and the characteristics
of the defendant”; “to reflect the seriousness of the offense, to promote respect for the law, and
to provide just punishment for the offense”; “to afford adequate deterrence to criminal conduct”;
and “to protect the public from further crimes of the defendant.” The district judge wrote: “The
guideline range is inadequate to reflect the seriousness of the defendant’s behavior. The upward
variance is based on the fact that the defendant has not accepted full responsibility for her
wrongdoings and also will send a message to the public that this type of crime will not be
tolerated.” (R. 13-2, PSR, at 29.)
Defendant timely appealed, challenging the procedural and substantive reasonableness of
the sentence imposed by the district court, as well as the lack of notice regarding the court’s
intention to apply the ten-level enhancement under § 2B1.1(b)(1)(F) instead of the eight-point
enhancement under § 2B1.1(b)(1)(E).
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No. 13-4149
DISCUSSION
I.
Defendant first argues that she was entitled to notice, pursuant to Federal Rule of
Criminal Procedure 32(h), of the district court’s intention to apply a ten-point enhancement
under § 2B1.1(b)(1) instead of an eight-point enhancement as the parties had recommended.
Rule 32(h) provides that a court must provide notice of intent to “depart from the applicable
sentencing range[.]” Fed. R. Crim. P. 32(h). This argument lacks merit because the parties’
recommended guidelines calculation is not the “applicable sentencing range,” and the district
court’s rejection of the parties’ recommended guidelines calculation is not a “departure” for
purposes of Rule 32(h).
Rule 32(h) applies only to “departure[s].” Irizarry v. United States, 553 U.S. 708, 714
(2008). “’Departure’ is a term of art under the Guidelines and refers only to non-Guidelines
sentences imposed under the framework set out in the Guidelines.” Id.; see also United States v.
Grams, 566 F.3d 683, 686 (6th Cir. 2009) (“Importantly, a departure results from the district
court’s application of a particular Guidelines provision, such as § 4A1.3 or § 5, Part K.”).
Neither the district court’s rejection of the parties’ recommended guidelines nor the district
court’s variance under 18 U.S.C. § 3553 is a “departure” for purposes of Rule 32(h). Irizarry,
553 U.S. at 714. In fact, the district court did not “depart from the applicable sentencing range”
at all in this case. To the contrary, the district court carefully calculated the applicable guidelines
range on the record, and based Defendant’s sentence on that advisory range. Accordingly,
Defendant was not due any notice under Rule 32(h).
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II.
We next review Defendant’s sentence for procedural and substantive reasonableness,
applying the deferential abuse-of-discretion standard. United States v. Seymour, 739 F.3d 923,
929 (6th Cir. 2014).
1. Procedural Reasonableness
Procedural reasonableness requires that the district court “properly calculate the
guidelines range, treat the guidelines as advisory, consider the § 3553(a) factors and adequately
explain the chosen sentence–––including an explanation for any variance from the guidelines
range.” United States v. Grossman, 513 F.3d 592, 595 (6th Cir. 2008) (citing Gall, 522 U.S. 38,
50 (2007)). Defendant argues broadly that the district court failed to consider Defendant’s
arguments for a lower sentence. She challenges the district court’s “utilization of a higher
guideline range as the starting point,” as well as its “inadequate” consideration of the § 3553(a)
factors.
To the extent that Defendant argues that the district court committed procedural error by
rejecting the parties’ recommended guidelines calculation, this argument must fail. First, it is not
procedurally unreasonable per se for a court to reject the parties’ stipulated advisory guidelines
calculation–––especially where that calculation is inaccurate. Second, the district court clearly
and specifically rejected the parties’ reasoning behind the “stipulated” amount of loss. It not
only disagreed with the government’s concession to provide an offset for services rendered, but
also disagreed with the parties’ mathematical calculations. The court found that the “Narrative
of events surrounding Doris E. Lackman,” which was submitted by the estate, provided clear
support for including $33,302.11 that had previously been omitted––apparently inadvertently.
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No. 13-4149
Likewise, we reject Defendant’s argument that the court improperly calculated the
applicable guidelines range by applying a ten-point enhancement under § 2B1.1(b)(1)(F). When
reviewing a district court’s application of § 2B1.1(b)(1), we review the district court’s factual
finding as to amount of loss for clear error. United States v. Jones, 641 F.3d 706, 712 (6th Cir.
2011). The district court “need only make a reasonable estimate” of the amount of loss for
purposes of § 2B1.1(b)(1). U.S.S.G. § 2B1.1 cmt. n. 3(C). In this case, the district court’s
finding that the amount of loss exceeded $120,000 was not clearly erroneous. Therefore, the
district court’s application of a ten-point enhancement under § 2B1.1(b)(1)(F) was not
unreasonable.
Finally, Defendant argues that her sentence is procedurally unreasonable because the
district court “failed to acknowledge” the factors militating in favor of a downward departure––
specifically, that Defendant is a first-time criminal offender with serious medical problems, that
Defendant is the sole caretaker for her elderly parents, and that both parties agreed that a 15–21
month sentencing range was appropriate. Quite the contrary, the district court specifically
mentioned each of these facts as he went through Defendant’s history and characteristics to
determine the appropriate individualized sentence. These factors had little mitigating effect,
however, in light of Defendant’s conduct and subsequent behavior. Though Defendant might
have been a “first time criminal” in the sense that she had no prior convictions, the district court
mentioned several times that “this was not a one-time thing”–––Defendant stole countless times
from the victim and various charities over the course of seven years.
In this case, the district court properly calculated the applicable guidelines range,
considered each of the § 3553 factors at length, and offered a comprehensive, careful, and
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No. 13-4149
persuasive explanation for the sentence, including the upward variance. Accordingly,
Defendant’s sentence is procedurally reasonable.
2. Substantive Reasonableness
Having found that the district court’s sentencing decision is procedurally sound, we now
consider the substantive reasonableness of the sentence. “A sentence may be considered
substantively unreasonable when the district court selects a sentence arbitrarily, bases the
sentence on impermissible factors, fails to consider relevant sentencing factors, or gives an
unreasonable amount of weight to any pertinent factor.” United States v. Conatser, 514 F.3d 508,
520 (6th Cir. 2008). Defendant argues that her sentence is substantively unreasonable because it
is arbitrary and greater than necessary. She also asserts that there is no sufficiently compelling
justification to support the 9-month variance. We disagree.
The district court’s task is to “impose a sentence sufficient, but not greater than
necessary, to comply with the purposes” of the statutory sentencing scheme. 18 U.S.C.
§ 3553(a). “Because the sentencing judge is in a superior position to find facts and judge their
import under § 3553(a), this Court applies a great deal of deference to a district court’s
determination that a particular sentence is appropriate.” United States v. Mayberry, 540 F.3d
506, 519 (6th Cir. 2008) (quotation marks and citation omitted).
In this case, the district judge offered an extensive explanation for why he felt the upward
variance was necessary. The court engaged in an extended analysis of the § 3553(a) factors,
explaining that Defendant’s conduct was particularly reprehensible because she stole from a
vulnerable elderly woman who considered the Defendant to be a close friend and trusted her
completed. The district court contrasted Defendant’s conduct with one-time fraudulent
transactions of financial necessity or poor judgment, and specifically admonished Defendant’s
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No. 13-4149
pattern of self-serving, fraudulent behavior. The district court unquestionably provided a
sufficiently compelling justification to support the 9-month variance.
Moreover, the court’s upward variance is not, as Defendant suggests, irreconcilable with
the court’s three-level reduction for acceptance of responsibility. By pleading guilty to the
charged offenses and admitting to wrongdoing, Defendant fulfilled the minimum requirements
for the acceptance of responsibility reduction under the guidelines. This is sufficient to justify
the court’s grant of the recommended three-level reduction.
Although Defendant’s guilty plea and shallow apology may be enough for her to qualify
for the unopposed reduction under § 3E1.1(a), it does not shield her from an upward variance
based in part on her apparent failure to understand “the full extent of wrongfulness” of her
conduct. The district court acknowledged that Defendant apologized and took criminal
responsibility for the charged offenses, but was troubled by Defendant’s repeated
characterization of the calculated, intentional, persistent conduct as a “mistake” and mere lapse
in judgment. Combined with Defendant’s failure to take remedial action, the court found
Defendant’s lack of overt remorse particularly upsetting given the selfish nature of Defendant’s
crime. A court can find that a defendant accepted responsibility––for example, by entering a
guilty plea––such that a § 3E1.1(a) reduction is appropriate, while still considering the
shortcomings of Defendant’s apology in applying an upward variance. In this case, the upward
variance and offense level reduction are reconcilable.
Finally, we reject Defendant’s argument that the upward variance is impermissibly based
on the duration of the criminal conduct. The court mentioned the “ongoing” and “escalating”
nature of Defendant’s conduct to highlight the ridiculousness of Defendant’s argument that her
behavior was a “mistake.” (R. 26, at 78.) The district court did not impose a variance based on
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the sheer duration of the crime, but rather on the fact that Defendant continued to characterize it
as a mere “mistake” despite the fact that Defendant’s conduct was escalating over the course of
many years.
CONCLUSION
For the reasons set forth herein, we AFFIRM the sentence imposed by the district court.
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