United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS December 15, 2003
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
_____________________ Clerk
No. 03-30390
_____________________
United States of America,
Plaintiff - Appellee,
v.
Richard D. O’Neal,
Defendant - Appellant.
_________________________________________________________________
Appeal from the United States District Court
for the Western District of Louisiana, Alexandria
District Court No. 02-CR-10001-1
_________________________________________________________________
Before DEMOSS, DENNIS and PRADO, Circuit Judges.1
PER CURIAM.
Mr. O’Neal was indicted on nine counts resulting from his
conduct during bankruptcy proceedings. These counts charged him
with the transfer and concealment of property and assets during
bankruptcy (Counts 1, 2, 4, 6 and 8); money laundering (Counts 3
and 7); the making of false declarations, certifications, and
1
Pursuant to 5th Cir. R. 47.5, this Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5th Cir. R.
47.5.4.
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statements during bankruptcy (Count 5); and the making of false
statements during a court proceeding (Count 9).
Mr. O’Neal pleaded guilty to Counts 5 and 9 in exchange for
waiver of the remaining counts. The district court ordered Mr.
O’Neal to pay restitution of $163,460.00. On appeal, Mr. O’Neal
challenges the amount of restitution and the restitution payment
schedule ordered by the district court.
Factual Background
Mr. O’Neal and his ex-wife, Helen O’Neal2, worked in the
scrap business and operated as O’Neal Salvage. In November 1996,
the two filed a Chapter 13 bankruptcy petition in the Bankruptcy
Court for the Western District of Louisiana. That petition was
dismissed on January 22, 1997. On January 28, 1997, the couple
filed a voluntary bankruptcy petition under Chapter 11 in the
same court. During the bankruptcy proceedings the couple
established a debtor in possession (“DIP”) account at Evangeline
State Bank. In October 1997, Mr. O’Neal opened a separate
account with his nephew, Brian Corley, under the name “Black
River Trading Company” at the Catahoula-LaSalle Bank in
Jonesville, Louisiana (“Black River account”). Mr. O’Neal did
not inform the bankruptcy trustee or his creditors of the Black
River account.
2
The couple was married during the beginning of bankruptcy
proceedings but was divorced by 1999. Charges were also brought
against Helen O’Neal but were later dismissed.
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Before beginning bankruptcy proceedings, Mr. O’Neal owned a
Komatsu PC300 excavator valued at $140,000.00, and insured by
Travelers Insurance Company. The excavator secured a debt of
$191,000.00 that Mr. O’Neal owed to KDC Financial. When the
excavator was destroyed in a sink hole, Travelers Insurance
mistakenly reimbursed Mr. O’Neal $88,250.00 when it should have
paid the secured creditor, KDC Financial, directly. Mr. O’Neal
eventually paid $40,000.00 to KDC Financial, but he retained the
remaining insurance proceeds of $48,250.00. Mr. O’Neal later
sold the excavator for $42,460.00 plus $25,500.00 worth of other
equipment. The retained insurance proceeds and the earnings on
the scrap sale were not turned over to KDC Financial, or
disclosed to the bankruptcy trustee. In bankruptcy court
proceedings, Mr. O’Neal denied having received anything other
than two late-model trucks in exchange for the excavator.
Mr. O’Neal also failed to disclose that he had insured an
Al-Jon bailer that was owned by his son. When the bailer was
destroyed in a fire, Mr. O’Neal received $68,500.00 in insurance
proceeds. Mr. O’Neal retained $20,500.00 of those proceeds,
using the rest to pay off an outstanding loan on the bailer. Mr.
O’Neal then sold the bailer for $10,000.00. Mr. O’Neal did not
report the insurance proceeds or the scrap metal proceeds in his
bankruptcy report. After his conviction, but before sentencing,
Mr. O’Neal badly burned his hands while working on a vehicle.
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Sentencing
Mr. O’Neal pleaded guilty to Counts 5 and 9 of the
indictment against him. Count 5 alleged that Mr. O’Neal “did
knowingly and fraudulently make a false declaration,
certification, verification and false statement, made under
penalty of perjury,” and specified that he “did not note either
his ownership of a 1993 Ranger boat or his ownership of a 1996
Ford Mustang, all in violation of 18 U.S.C. § 152(3).” Count 9
alleged that, at a hearing on a Motion to Dismiss, Mr. O’Neal
“did knowingly and fraudulently make a false statement under
penalty of perjury,” and specified that he falsely stated “that
(1) he traded scrap collateral (Komatsu PC300 excavator) for two
trucks and (2) that he purchased two trucks, a 1982 Kenilworth
and a 1970 International F2000D, for the scrap of the PC 300, all
in violation of 18 U.S.C. § 153 (3).” In pleading guilty to
Counts 5 and 9, Mr. O’Neal’s signed an agreement that read: “in
addition to the penalties set forth in the preceding paragraphs,
the Court may order him to make restitution to the creditors who
were victims of the bankruptcy fraud alleged in the indictment
and that the amount of restitution and method of payment is in
the discretion of the Court.”
The district court ordered the Probation Office to conduct
a pre-sentence investigation report of Mr. O’Neal. The report
showed Mr. O’Neal had a net income of $40.00 per month. In
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addition, the Probation Office calculated that Mr. O’Neal’s
conduct had caused his creditors to lose $163,460.00. This sum
included proceeds Mr. O’Neal had earned from the sale of the 1993
Ranger boat and the 1966 Ford Mustang mentioned in Count 5. The
sum also included the insurance proceeds and salvage sale
earnings from the excavator and the bailer.
Mr. O’Neal was sentenced to 15 months incarceration and
ordered to immediately pay $200.00 to the Crime Victims Fund.
The district court also assessed a fine of $4,000.00 and
restitution of $163,460.00. The district court specified that
beginning within 30 days of his release Mr. O’Neal would be
required to pay $136.00 per month on the fine and $4,807.00 per
month on the restitution. Mr. O’Neal was given a supervised
release period of 36 months.3
Standard of Review
If a restitution order is permitted by law, the propriety of
the particular award is reviewed for abuse of discretion. United
States v. Reese, 998 F.2d 1275, 1280 (5th Cir. 1993). The
factual findings underlying the award are reviewed for clear
error. United States v. Cihak, 137 F.3d 252, 263 (5th Cir.
1998). If a defendant fails to timely object to a restitution
award at sentencing, the underlying factual findings are reviewed
3
If Mr. O’Neal begins these payments within 30 days of his
release, and pays the full amount each time, he will complete the
restitution payment in the 35th month of his supervised release.
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for plain error, rather than for clear error. United States v.
Olano, 507 U.S. 725, 732 (1993); and FED. R. CRIM. P. 52(b). Plain
error exists where there is error, the error is plain, and the
error affects substantial rights. Olano, 507 U.S. at 732. If
plain error is found, this Court has discretion to decide whether
to correct that error. United States v. Vital, 68 F.3d 114, 119
(5th Cir. 1995) (finding correction appropriate where a failure
to correct would seriously affect the “fairness, integrity, or
public reputation of judicial proceedings”).
This Court will only reverse a district court’s restitution
order if the appellant demonstrates that it “is probable that the
district court failed to consider one of the mandatory factors
and the failure to consider that factor influenced the court.”
United States v. Schinell, 80 F.3d 1064, 1070 (5th Cir. 1996).
Amount of Restitution
Mr. O’Neal does not object to the fact that restitution was
ordered. Instead, he contends that the amount of that
restitution violated the guidelines of the Victim and Witness
Protection Act, 18 U.S.C. §§ 3663-3664. (“VWPA”). He argues that
the insurance and sale proceeds from the bailer, and the salvage
proceeds from the excavator, should not have been included in his
restitution because they were not losses suffered by victims of
the crimes of which he was convicted. He contends that the total
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restitution should have been, at most, $59,210.00,4 which would
have qualified him for a lesser sentence under the Sentencing
Guidelines. Because Mr. O’Neal did not timely object to the
amount of his restitution order, this Court reviews the district
court’s factual findings underlying that award for plain error.
See Olano, 507 U.S. at 732.
Under the VWPA, courts may order convicted defendants to
compensate their victims for any losses that resulted from the
defendants’ crimes. A victim of a defendant’s crimes is defined
as “a person directly and proximately harmed as a result of the
commission of an offense . . .” 18 U.S.C. § 3663A(a)(2).
Creditors, trustees and investors are considered victims of
bankruptcy fraud for purposes of restitution. United States v.
Cluck, 143 F.3d 174, 180 (5th Cir. 1998); United States v.
Dahlstrom, 180 F.3d 677, 686 (5th Cir. 1999). Courts may also
order restitution in a criminal case “to the extent agreed to by
the parties in a plea agreement.” 18 U.S.C. § 3663(a)(3).
Additionally, the VWPA includes in the category of
compensable victims, anyone directly harmed by the defendant’s
criminal conduct in the course of a scheme, conspiracy, or
pattern, where the defendant’s offense involved as an element a
4
Mr. O’Neal calculated this figure by adding the $11,500.00
he earned from the sale of the Ranger boat, the $5,250.00 he
earned from the sale of the Ford Mustang; and the $42,460.00 he
retained from the insurance proceeds he received for the
excavator.
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scheme, conspiracy, or pattern of criminal activity. See id.
This Court has held that “where a fraudulent scheme is an element
of the conviction, the court may award restitution for ‘actions
pursuant to that scheme.’” United States v. Cothran, 302 F.3d
279, 289 (5th Cir. 2002) (quoting United States v. Stouffer, 986
F.2d 916, 928 (5th Cir. 1993)). In order to determine which of a
defendant’s actions are actions pursuant to a scheme of conduct,
courts must focus on the actions alleged in the indictment and
their temporal scope. Id.
Before even reaching the extent of any scheme by Mr. O’Neal,
this Court can dispose of Mr. O’Neal’s claim that the insurance
proceeds from the excavator should not have been included in his
restitution. Count 1 of the indictment against Mr. O’Neal
alleged that he knowingly and fraudulently transferred the
$48,250.00 in insurance proceeds from the excavator. In his plea
agreement, Mr. O’Neal agreed to pay restitution for all of the
offenses charged in the indictment, not merely those to which he
pleaded guilty. Mr. O’Neal’s creditors, who are represented by
the U.S. Bankruptcy Trustee, lost money because of Mr. O’Neal’s
fraudulent conduct, and were therefore direct and proximate
victims of his conduct. See Cluck, 143 F.3d at 180. The
$48,250.00 was properly included in Mr. O’Neal’s restitution
because it was a restitution payment to which he had agreed in
his plea agreement. See 18 U.S.C. § 3663(a)(3). This Court
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finds no error in the district court’s inclusion of that sum in
Mr. O’Neal’s restitution.
Mr. O’Neal’s earnings from the bailer, however, were not
mentioned in the indictment, and therefore require a different
analysis. Mr. O’Neal argues that he had no obligation to declare
proceeds from the bailer because he did not technically own it.
However, Mr. O’Neal gained income from his conduct regarding the
bailer. He was required by the bankruptcy court to disclose all
of his earnings and income, whether derived from property he
owned or not. The charges in the indictment against Mr. O’Neal,
taken together, describe a scheme of bankruptcy fraud between
November 12, 1997 and August 28, 1998. During this time, Mr.
O’Neal hid profits and insurance proceeds from the U.S.
Bankruptcy Trustee, and lied during bankruptcy proceedings about
having done so. Mr. O’Neal’s relevant conduct regarding the
bailer took place in November and December of 1997, well within
the time period of the other conduct alleged in the indictment.
Furthermore, Mr. O’Neal also fraudulently hid these resources
from the U.S. Bankruptcy Trustee. His failure to declare profits
from the bailer can easily be seen as an action pursuant to a
scheme of bankruptcy fraud. See Cothran, 302 F.3d at 289.
Therefore, the district court did not err by including those
proceeds in the restitution order. See id.
Restitution Payment Schedule
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Mr. O’Neal contends that the district court erred by not
considering his financial situation when it created his
restitution payment schedule. The following factors are to be
considered in determining a restitution payment schedule: 1) the
financial resources and other assets of the defendant, including
whether any of these assets are jointly controlled; 2) projected
earnings and other income of the defendant; and 3) any financial
obligations of the defendant, including obligations to
dependants. 18 U.S.C. § 3664(f)(2). A district court’s
restitution payment schedule will only be reversed if the
appellant demonstrates “that is probable that the district court
failed to consider one of the mandatory factors and the failure
to consider that factor influenced the court.” United States v.
Schinnell, 80 F.3d 1064, 1070 (5th Cir. 1996). In addition to
considering a defendant’s financial situation at the time of
sentencing, this Court has noted the importance of 18 U.S.C. §
3664(k), which allows a district court to adjust its payment
schedule if defendant’s earnings turn out be insufficient to meet
the payments. United States v. Caldwell, 302 F.3d 399, 420-421
(5th Cir. 2002).
In this case, the district court ordered a Pre-Sentence
Investigation into Mr. O’Neal’s financial situation. In light of
that report, the district court ordered that Mr. O’Neal would not
be required to pay interest on the restitution. This decision
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shows that the district court considered Mr. O’Neal’s financial
situation.
Mr. O’Neal asserts that the payment schedule will be
impossible for him to meet, especially considering the burn
injuries he sustained. However, he makes no showing that the
district court failed to consider one of the mandatory financial
factors in ordering the payment schedule. Although Mr. O’Neal’s
earnings were low at the time of sentencing and he had no assets,
he had supported himself in the past, and was without any debts
or dependents. This Court finds no error in the district court’s
payment schedule order. See Schinell, 80 F.3d at 1070.
If, upon Mr. O’Neal’s release, he is unable to meet the
payment schedule, the district court can alter that schedule
pursuant to 18 U.S.C. § 3664(k). See Caldwell, 302 F.2d at 420-
420.
This Court AFFIRMS the judgment of the district court.
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