In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 17‐2062
UNITED STATES OF AMERICA,
Plaintiff‐Appellee,
v.
JULIUS PETERSON, also known as
Eugene Peterson,
Defendant‐Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:15‐cr‐00386‐1 — Charles R. Norgle, Judge.
____________________
ARGUED JANUARY 19, 2018 — DECIDED MAY 29, 2018
____________________
Before BAUER, MANION, and ROVNER, Circuit Judges.
ROVNER, Circuit Judge. On June 24, 2015, a grand jury
indicted Julius Peterson on two counts of financial institu‐
tion fraud, one count of making a false statement to a finan‐
cial institution, and one count of bankruptcy fraud. Specifi‐
cally, Counts One and Two alleged a violation of 18 U.S.C.
§ 1344 by submitting false documents in relation to his sale
of 7931 S. Union Avenue and 6821 S. Dante Avenue in Chi‐
2 No. 17‐2062
cago, Illinois, Count Three alleged a violation of 18 U.S.C.
§ 1014 by making a false statement to a financial institution
that influenced a mortgage loan for one of those properties,
and Count Four alleged that he violated 18 U.S.C. § 152(3) by
making false statements in his bankruptcy petition.
Peterson pled guilty to one count of financial institution
fraud and one count of bankruptcy fraud. The district court
sentenced him to 24 months’ imprisonment, as well as five
years of supervised release, and ordered him to pay restitu‐
tion in the amount of $166,936. On appeal, Peterson raises
two challenges to that sentence. First, he asserts that the dis‐
trict court erred in imposing a two‐level enhancement under
U.S.S.G. § 2B1.1(b)(10)(C) because Peterson used “sophisti‐
cated means.” Second, he argues that the district court erred
in failing to provide reasons for the imposition of the terms
of supervised release. We consider these issues in turn.
The sophisticated means enhancement was imposed by
the district court based on the nature of the offense. The facts
underlying the offense were set forth in the PSR and were
not objected to by Peterson. The conduct at issue in this case
concerned a scheme to defraud financial institutions by false
representations surrounding the sale of property. The sale of
the property at 7931 S. Union Avenue is illustrative. Peterson
sold property to the buyer, Victoria Nyarko, who obtained
an FHA‐insured loan for the property from a financial insti‐
tution. In obtaining the loan, Nyarko submitted paperwork
indicating that the downpayment was a gift from her aunt,
Felicia Thomas, and included a “gift letter” in the applica‐
tion that had a signature purportedly of Thomas. Thomas,
however, was not Nyarko’s aunt, but instead was a friend of
Peterson, and the signature was not hers. Peterson provided
No. 17‐2062 3
money to Thomas, and Thomas then provided a cashier’s
check to Nyarko with Thomas as the remitter. That money
was deposited in Nyarko’s account, and Nyarko then pro‐
vided the downpayment with a cashier’s check drawn on
her account with her name as remitter. In that way, a finan‐
cial institution examining the origin of the money for the
downpayment would trace it as originating with Thomas,
who was identified as the one gifting the downpayment. Pe‐
terson attended the closing and signed documents indicating
that he had not paid or reimbursed Nyarko for any part of
the cash downpayment and that Nyarko was providing
those funds herself. Following the sale, Peterson deposited
the approximately $169,433 proceeds of the sale in a bank
account in the name of Niya’s Trucking and Transporting, a
company controlled by Peterson. He then paid Thomas with
a portion of the proceeds, and used $30,000 of those funds to
purchase a cashier’s check payable to a company controlled
by Nyarko, Victory Development Group. The account for
that entity had only $100 in it prior to that $30,000 deposit.
When Nyarko defaulted on that FHA‐insured loan, the De‐
partment of Housing and Urban Development paid out ap‐
proximately $214,075.
Peterson argues that the district court erred in imposing a
two‐level enhancement for the use of sophisticated means,
because the facts demonstrated only a garden‐variety mort‐
gage fraud scheme. He points to the language of the en‐
hancement and the Application Note to that provision.
Guideline §2B1.1(b)(10)(C) provides for a two‐level en‐
hancement “[i]f the offense otherwise involved sophisticated
means,” and Application Note 9(B) states that sophisticated
means includes
4 No. 17‐2062
especially complex or especially intricate of‐
fense conduct pertaining to the execution or
concealment of an offense. For example, in a
telemarketing scheme, locating the main office
of the scheme in one jurisdiction but locating
soliciting operations in another jurisdiction or‐
dinarily indicates sophisticated means. Con‐
duct such as hiding assets or transactions, or
both, through the use of fictitious entities, cor‐
porate shells, or offshore financial accounts al‐
so ordinarily indicates sophisticated means.
Peterson contends that the conduct in this case does not
fall within that definition. He argues that a “genuine U.S.
corporate account” was used to undertake the relevant
transactions, and therefore this case is not equivalent to the
illustrative items such as fictitious entities, corporate shells,
or offshore accounts. According to Peterson, the district
court erred in crediting the government’s argument that the
conduct involved hidden transactions. Peterson contends
that the district court was required to make findings that es‐
tablished that his offense conduct involved something akin
to the use of fictitious entities, corporate shells, or other off‐
shore accounts.
That argument fails to appreciate that sophisticated
means can vary based on the nature of the offense. It will not
always involve means as elaborate as offshore accounts or
corporate shells. The examples in the Application Note are
merely illustrative of the type of conduct that could demon‐
strate sophisticated means. We have consistently recognized
that “[a]pplication of the enhancement is proper ‘when the
conduct shows a greater level of planning or concealment
No. 17‐2062 5
than the typical fraud of its kind.’” United States v. DeMarco,
784 F.3d 388, 397 (7th Cir. 2015), quoting United States v.
Knox, 624 F.3d 865, 871 (7th Cir. 2010); United States v. Shene‐
man, 682 F.3d 623, 631–32 (7th Cir. 2012).
For instance, in Sheneman, the defendant argued that the
sophisticated means enhancement should not apply because
the offense was a garden variety home flipping scam. Id. at
632. We upheld the district court’s imposition of the en‐
hancement, holding that the offense conduct went beyond a
simple scam and included the utilization of powers of attor‐
ney to conceal the activity, misrepresentations to buyers, fal‐
sification of loan documents, concealment of the source of
down payments and closing costs, and artificial inflation of
buyers’ bank accounts. Id. We noted that we had upheld the
enhancement in similar mortgage fraud schemes such as in
Knox, 624 F.3d at 871–72 and United States v. Green, 648 F.3d
569, 576–77 (7th Cir. 2011). In Knox, we affirmed the en‐
hancement where the defendant used fraudulent appraisals
and false promises to buyers, and falsified loan applications
to convince mortgage lenders to finance. The enhancement
was also deemed applicable in Green where the defendants
purchased seventy properties using fraudulent loan applica‐
tions and fabricated documents to obtain the mortgages.
Similarly, in United States v. Anobah, 734 F.3d 733, 739 (7th
Cir. 2013), we rejected the defendant’s argument that the of‐
fense did not involve a greater level of planning or conceal‐
ment than a typical fraud of its kind. The district court found
that the scheme involved property in two states, the use of
straw buyers, false loan applications and other supporting
documents, and the use of multiple people to aid in the
scheme. Id. We held that the court did not clearly err in de‐
6 No. 17‐2062
termining that the sophisticated means enhancement was
applicable on those facts. Id.
The present case involves similar allegations of planning
and concealment, exceeding that of the “garden variety”
mortgage fraud scheme. The conduct in this case went be‐
yond that of a simple mortgage fraud case in which the de‐
fendant might provide funds to the buyer for the downpay‐
ment and forward a kickback to the buyer after the sale. In
this case, the defendant engaged in significant efforts to con‐
ceal the source of the downpayment and the kickbacks paid.
The downpayment was made through a friend of the de‐
fendant, Thomas, who was falsely identified as the aunt of
the buyer, Nyarko. Money was not transferred directly from
the defendant to Nyarko, but instead was deposited in
Thomas’ account, and Thomas then provided a cashier’s
check to Nyarko from her account, thus concealing the
source of the funds. In furtherance of those efforts, a fraudu‐
lent document was provided identifying Thomas as Nyar‐
ko’s aunt and the source of the downpayment funds. Efforts
were also made to conceal the kickback paid to Nyarko. The
proceeds of the sale were deposited in a bank account in the
name of Niya’s Trucking & Transporting, and a portion of
those proceeds was paid to Nyarko by a cashier’s check pay‐
able to Victory Development Group. As the district court
pointed out, that company, Victory Development Group,
had no interest or activity with respect to the real estate
transaction for which the payment was made. The only rea‐
son for the payment to that business instead of directly to
Nyarko was for concealment of the criminal activity. This
case therefore involves significant actions to conceal the trail
of money and to obscure the identity of the provider and re‐
cipient of funds, thus distinguishing it from the typical
No. 17‐2062 7
mortgage fraud and supporting the imposition of the sophis‐
ticated means enhancement. The district court did not err in
applying the enhancement in this case.
Peterson’s remaining claim is that the district court erred
in failing to provide any justification for the eleven discre‐
tionary supervised release conditions relating them to the
applicable § 3553(a) factors in the sentencing hearing. He al‐
leges that the court merely read the discretionary conditions
into the record, and the failure to link the conditions as a
whole to the § 3553(a) factors and provide findings was a
procedural error necessitating resentencing. See United States
v. Aslan, 644 F.3d 526, 531 (7th Cir. 2011)(“[p]rocedural er‐
rors include, among other things, failing to calculate or in‐
correctly calculating the guidelines range, treating the guide‐
lines as mandatory, failing to consider the § 3553(a) factors,
or failing to explain adequately the chosen sentence, includ‐
ing an explanation for any deviation from the guidelines
range”) citing Gall v. United States, 552 U.S. 38 (2007).
Following the acceptance of Peterson’s guilty plea, the
Presentence Investigation Report (”PSR”) was prepared and
distributed to the parties. Defense counsel filed two docu‐
ments in response to the PSR, Defendant Peterson’s Objections
to the Government’s Version of the Offense and the PSR challeng‐
ing certain portions of the PSR, and Defendant Peterson’s Sen‐
tencing Recommendation arguing for a sentence of only one
day time served and probation with home confinement, and
addressing the appropriate application of the § 3553(a) fac‐
tors. Peterson did not challenge the proposed supervised re‐
lease conditions in either document, nor did he argue that
the conditions were without justification. In the district
court, once again no objection to the supervised release con‐
8 No. 17‐2062
ditions was raised. The district court judge read each discre‐
tionary condition into the record, reading directly from the
PSR and even citing the pages as he went. The judge did not
discuss the § 3553(a) factors at that time, but in the sentenc‐
ing hearing he explicitly adopted the PSR and its findings.
The PSR recommended the conditions which the district
court imposed, and included a statement of reasons identify‐
ing the § 3553(a) factors which supported imposition of the
conditions. The PSR explained that the conditions were rec‐
ommended to comport with § 3553(a) concerns of affording
adequate deterrence, protecting the public from further
crimes, and providing the defendant with needed educa‐
tional or vocational training, medical care, or other correc‐
tional treatment in the most effective manner. It additionally
declared that the conditions were necessary to keep the pro‐
bation officer informed of Peterson’s conduct, condition and
compliance, to target interventions to, and factors that are
proven to, reduce the risk of re‐offending. Finally, the PSR
declared that the conditions would assist the defendant to
engage in responsible fiscal behavior while complying with
the need to repay victims. The connection between those
reasons and the conditions is obvious for many of the condi‐
tions, and the defendant acknowledges that most supervised
release conditions can be justified. Whether one could argue
that the reasons are inadequate to justify a particular discre‐
tionary condition is not before us, because as will be seen
Peterson’s challenge is broader than that.
Immediately after identifying the supervised release
conditions, the district court sequentially asked the proba‐
tion officer, each of Peterson’s attorneys, and the prosecutor
the following question: “from your standpoint, have I
missed anything?” Sent. Tr. Doc. 63 at 38–39. When individ‐
No. 17‐2062 9
ually queried, each one responded no. Nevertheless, Peter‐
son now argues that the court in fact missed something – an
articulation of its application of the § 3553(a) factors in im‐
posing the supervised release conditions. In general, when a
defendant fails to raise an objection at trial despite being
provided the opportunity to do so, we review the claim only
for plain error. Under that standard, the defendant must
demonstrate an error that is clear or obvious, which affected
the defendant’s substantial rights, and which seriously im‐
pugns the fairness, integrity or public reputation of the judi‐
cial proceeding. United States v. Bickart, 825 F.3d 832, 837 (7th
Cir. 2016). A defendant has the burden to show that the
standard is met, see United States v. Vonn, 535 U.S. 55, 62–63
(2002) and Peterson did not argue injury at all in his opening
brief. See United States v. Lewis, 823 F.3d 1075, 1083–84 (7th
Cir. 2016) (noting that even if the responses to the court’s in‐
quiries were not enough to demonstrate waiver, the failure
to object in response to an invitation would amount to forfei‐
ture and “[w]here the issue is the sufficiency of an explana‐
tion or findings, a meager explanation of an otherwise per‐
missible decision does not call into question the fairness, in‐
tegrity, or public reputation of the proceedings.”)1
Regardless of whether we apply the plain error standard
based on the failure to object below, or even the harmless
1 The government initially argued for the application of the plain er‐
ror standard, and stated in its brief to this court that it did not believe
that the response at the close of sentencing as to whether the court
missed anything was sufficient to constitute waiver. It has since asserted
that a recent opinion in this circuit, United States v. Gumila, 879 F.3d 831,
837–38 (7th Cir. 2018), supports a conclusion that Peterson waived the
claim entirely. As Peterson’s claim fails in any event, we decline to con‐
sider that argument.
10 No. 17‐2062
error standard advocated by Peterson in reliance on United
States v. Poulin, 809 F.3d 924, 930 (7th Cir. 2016), the claim
must fail. The only claim here is the narrow one of whether
the district court committed a procedural error in failing to
provide its reasons under § 3553(a) for imposing the discre‐
tionary conditions. This argument is premised on the court’s
failure to state its reasons at the sentencing hearing. Peterson
is correct that the district court did not state its reasons for
the conditions in its colloquy at sentencing in which it set
forth those conditions. The better practice would have been
to do so. But the district court incorporated the discretionary
conditions directly from the PSR, explicitly adopting the PSR
and its reasoning at that sentencing hearing, and the PSR
identified the § 3553(a) factors upon which the determina‐
tion was made. That is sufficient to overcome the claim of
procedural error in this case. The procedural requirement
that the court consider the § 3553(a) factors in imposing the
discretionary conditions, and communicate that determina‐
tion, is met in the adoption of the PSR which supplies that
reasoning. See United States v. Salem, 597 F.3d 877, 886–87
(7th Cir. 2010); United States v. Burke, 148 F.3d 832, 835 (7th
Cir. 1998) (“[t]o adopt the PSR is to make factual findings.”).
Although we would urge the probation office and the dis‐
trict court to strive for more detailed and less rote findings
and explanation of its reasoning as to the § 3553(a) factors,
we have recognized the need to consider the context and
practical realities of sentencing hearings in determining
whether the procedural requirements are met. United States
v. Reed, 859 F.3d 468, 472 (7th Cir. 2017). Where the parties
present no objection after being provided an opportunity,
we have determined that the procedural requirement can be
satisfied with a more general and less detailed explanation
No. 17‐2062 11
of reasoning. See Bickart, 825 F.3d at 839 (sufficient where the
district court tied the conditions to the § 3553(a) factors and
engaged in a more detailed exposition as to the two condi‐
tions to which the defendant objected); United States v.
Pietkiewicz, 712 F.3d 1057, 1061 (7th Cir. 2013) (“[t]he amount
of explanation required from the district court varies with
the circumstances.”); United States v Starko, 735 F.3d 989, 992
(7th Cir. 2013) (“[c]ourts do not have to engage in a dis‐
course of every single § 3553(a) factor; however, it is also the
case that a rote statement that the judge considered all rele‐
vant factors will not always suffice”) (internal quotations
omitted).
Therefore, Peterson cannot demonstrate that the district
court committed a procedural error in failing to identify the
reasons and apply the § 3553(a) factors. The required proce‐
dures were met by adopting the reasons in the PSR. Whether
the reasons in the PSR were sufficiently specific to justify
any particular discretionary condition is not before us. This
case does not involve any substantive challenge. In his open‐
ing brief, Peterson never claimed that the reasons provided
in the PSR and adopted by the district court were insuffi‐
cient to support a particular discretionary condition. In fact,
his opening brief in this case does not even list the discre‐
tionary conditions imposed by the court at all, let alone ar‐
gue as to the inapplicability of the § 3553(a) factors to any
particular discretionary condition. We hold only that here,
where the defendant had knowledge of the conditions and
the reasons in the PSR prior to sentence, and an opportunity
to object to those conditions before and at sentencing but
raises no claims related to any specific supervised release
condition, the court’s adoption of those unchallenged condi‐
12 No. 17‐2062
tions as well as the reasons in the PSR were sufficient to sat‐
isfy the procedural requirements.
The judgment and sentence are AFFIRMED.