United States v. Stergios

United States Court of Appeals
For the First Circuit

No. 10-2293

UNITED STATES OF AMERICA,

Appellee,

v.

CHARLES D. STERGIOS,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. George Z. Singal, U.S. District Judge]

Before

Lynch, Chief Judge,
Boudin and Stahl, Circuit Judges.

Raymond J. Rigat, by Appointment of the Court, for appellant.
Margaret D. McGaughey, Appellate Chief, with whom Thomas E.
Delahanty, II, United States Attorney, was on brief for appellee.

October 18, 2011
 STAHL, Circuit Judge. In July 2010, a jury convicted

Defendant-Appellant Charles D. Stergios of two counts of bank fraud

and one count of mail fraud. Stergios appeals the jury's findings

that the banks he defrauded were FDIC insured (an element of bank

fraud) and that he used the United States mails to perpetrate his

frauds (an element of mail fraud). He also appeals restrictions on

his internet usage that the district court imposed as part of his

supervised release, as well as the district court's inclusion of a

counterfeit $1.4 million check in its calculation of loss

supporting Stergios's 80-month sentence. We affirm.

I. Facts & Background

The 2010 convictions for bank and mail fraud that

Stergios challenges here were not his first. In April 2005, after

pleading guilty before Judge Singal to charges of wire, mail, and

bank fraud, Stergios was sentenced to 75 months of incarceration,

followed by five years of supervised release. On June 24, 2009, to

complete his prison sentence, Stergios was transferred to Pharos

House, a residential reentry center in Portland, Maine. About a

month later, he was given permission to move to his mother and

stepfather's home in Brunswick, Maine, through Pharos House's home

confinement program. As a condition of his supervision, he was not

allowed to possess a computer or access the internet.

Nevertheless, between July 2, 2009 and August 24, 2009,

while living at Pharos House and at his parents' house on home

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confinement, Stergios used the internet and other means to attempt

to obtain money by false pretenses from Maine Bank & Trust (MB&T)1

and USAA Bank (USAA). His was a variation on the classic check

kiting scheme. He opened several bank accounts in person and

online, apparently only two of which were opened with legitimate,

but small, deposits. Thereafter, he inflated the value of those

accounts by depositing checks drawn from closed accounts and

accounts with insufficient funds, making fraudulent wire transfers,

and depositing empty envelopes purporting to contain cash.

Stergios then extracted money from the accounts by transferring

funds between them, withdrawing money from tellers and ATMs,

writing checks drawn from the accounts, and making purchases online

and in person using debit cards issued for the accounts.

On January 20, 2010, Stergios was charged in a four-count

superseding indictment. Count 1 charged bank fraud against MB&T,

in violation of 18 U.S.C. § 1344. Count 2 charged bank fraud

against USAA. Count 3 charged mail fraud involving USAA, in

violation of 18 U.S.C. § 1341. Count 4, which alleged escape from

custody, was severed from the other charges. Stergios thus found

himself once again before Judge Singal on July 19, 2010, for a jury

trial on Counts 1, 2, and 3.

1
Due to a merger effective January 1, 2009, MB&T is now known
as Peoples United Bank.

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 At the outset of trial, Stergios argued that, in the

absence of a certificate from the Federal Deposit Insurance

Corporation (FDIC), the testimony of an MB&T representative was

insufficient to prove that MB&T was FDIC insured at the time of

Stergios's crimes, as required by 18 U.S.C. § 1344. The government

presented two forms of evidence with respect to each bank's

FDIC-insured status. First, a bank representative testified that

the bank was FDIC insured.2 Stergios objected to some of this

testimony but not specifically to the bank representatives'

qualifications to provide the testimony. Second, the government

offered official copies of the banks' FDIC insurance certificates.

Each certificate was accompanied by an affidavit from Valerie J.

Best, Assistant Executive Secretary of the FDIC and custodian of

FDIC records, authenticating the certificate and stating that the

FDIC had no record of either bank's coverage having been terminated

since the date on the certificate.3 Stergios did not object to

these certificates or the accompanying affidavits.

Stergios also argued at the outset of trial that there

was no evidence that he had caused any specific item to be mailed,

2
Two MB&T representatives further testified that the bank
displays generic certificates of FDIC insurance in its branch
lobbies. The USAA representative testified that the bank displays
documentation of its FDIC insurance in its lobby, includes notice
of the insurance on its statements, and that she had seen USAA
listed as a federally-insured bank on the FDIC's website.
3
The government provided a similar certificate and affidavit
for Peoples United Bank, given the 2009 merger.

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as required by 18 U.S.C. § 1341, and thus that Count 3, accusing

him of mail fraud, should be dismissed. The government presented

evidence that Stergios had opened four accounts with USAA between

July 26, 2009 and August 3, 2009, while he was living in Maine.

Upon opening those accounts, Stergios had requested debit or ATM

cards for all four of the accounts, and USAA had mailed those cards

to him.

Gwendolyn Westrup, a fraud investigator for USAA,

testified that USAA has no branch offices and does business

exclusively by mail, over the telephone, and online. She further

testified that the bank's practice is to send all debit and ATM

cards by mail. The government also presented evidence that

Stergios used the debit and ATM cards to perpetrate his frauds, by

checking his account balances, making charges, and withdrawing

funds. Stergios made all of the charges in places other than

Indiana (the location from which USAA mailed the cards) and Texas

(where the bank is based), which the government argued was evidence

that USAA must have mailed the cards to Stergios.

After deliberating for two hours, the jury found Stergios

guilty as charged on Counts 1, 2, and 3. The following day,

Stergios pled guilty to Count 4.

At sentencing, over Stergios's objection, Judge Singal

included as relevant conduct an additional fraud detailed in

Stergios's report of presentence investigation (PSI). According to

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the PSI, on August 18, 2009, an applicant giving the name Thomas

Brooks opened a USAA checking account over the phone. Thomas

Brooks was the name Stergios had used when committing his 2005

offenses. The applicant also provided an email address that

Stergios had used in opening one of the USAA accounts included in

the 2009 indictment. On August 20, 2009, a $1.4 million check

originating from a TD Bank account in the name of GoldmanSager was

mailed to Thomas Brooks's USAA account. The same day, USAA

received a $1.2 million check made payable to Stergios from the

Brooks account.4 Though the $1.4 million check did not result in

any actual loss, Judge Singal included it as intended loss in his

offense calculation.

Judge Singal therefore found that Stergios's base offense

level under the Sentencing Guidelines was 7, and that the loss

amount of $1,488,233.93 raised the offense level to 23. Given that

Stergios had a Criminal History Category of IV, that resulted in a

Guideline range of 70 to 87 months. Having considered the

Guidelines, Judge Singal gave them no controlling weight and

sentenced Stergios to three concurrent terms of 80 months on Counts

1 through 3, to be served concurrently with a 60-month sentence on

Count 4. In addition, Judge Singal imposed concurrent terms of

4
As the government explained in its sentencing memorandum, it
had not included the $1.4 million check in the indictment because
none of the relevant events occurred in Maine. (Stergios had
improperly relocated to New York by this point.)

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five years of supervised release for Counts 1 and 2, to be served

concurrently with three years of supervision on Counts 3 and 4.

Judge Singal also imposed two special conditions of

supervised release to which Stergios objected. Special Condition

7 limited Stergios's use of computers and access to the internet.5

Special Condition 8 required Stergios to participate in a computer

and internet monitoring program, which included periodic

unannounced inspections of his computer, storage media, and other

electronic or internet-capable devices by his probation officer,

based upon a reasonable suspicion of contraband evidence or

violation of supervision.6 As the text of Special Condition 8 made

clear, the program could result in partial or full restriction of

Stergios's internet usage.

5
Special Condition 7 read as follows: "Subject always to
review by the sentencing judge upon request by either the defendant
or the government, the Defendant shall not possess or use a
computer to access an online 'computer service' at any location,
including his employment, without the supervising officer's prior
approval. This includes any Internet service provider, bulletin
board system or any other public or private computer network."
6
Special Condition 8 read as follows: "Defendant shall
participate and comply with the requirements of the Computer and
Internet Monitoring Program (which may include partial or full
restriction of computer(s), internet/intranet, and/or internet
capable devices), and shall pay for services, directly to the
monitoring company. The defendant shall submit to periodic
unannounced examinations of his/her computer(s), storage media,
and/or other electronic or internet capable device(s) performed by
the probation officer based on reasonable suspicion of contraband
evidence or a violation of supervision. This may include the
retrieval and copying of any prohibited data and/or the removal of
such system(s) for the purpose of conducting a more thorough
inspection."

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 II. Discussion

Stergios raises four issues on appeal. First, he argues

that there was insufficient evidence for the jury to find that the

banks he defrauded, MB&T and USAA, were FDIC insured. Second, he

argues that there was insufficient evidence for the jury to find

that he caused the United States mails to be used in furtherance of

his scheme to defraud. Third, he argues that the district court

abused its discretion by imposing special conditions of release

restricting his use of the internet. Fourth, he argues that the

district court erred by including the counterfeit $1.4 million

check in its calculation of Stergios's intended loss amount.

1. FDIC Insurance

Stergios first argues that the government failed to prove

beyond a reasonable doubt that MB&T and USAA were FDIC insured, "a

jurisdictional prerequisite as well as a substantive element" of

bank fraud under 18 U.S.C. § 1344. United States v. Ayewoh, 627

F.3d 914, 917 (1st Cir. 2010). We review the preserved portion of

Stergios's challenge to the sufficiency of the evidence de novo but

consider that evidence in the light most favorable to the

prosecution. Id.

Stergios contends that the bank representatives'

testimony, the FDIC insurance certificates, and the accompanying

affidavits from the FDIC records custodian were inadequate to

demonstrate FDIC insurance at the time of his crimes in 2009.

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Previously, we have upheld against a sufficiency-of-the-evidence

challenge the testimony of a bank official, standing alone. See

United States v. Vachon, 869 F.2d 653, 657 (1st Cir. 1989). We

have also upheld evidence of an FDIC certificate, authenticated by

testimony from the bank's records custodian. See Ayewoh, 627 F.3d

at 919-20. As a general matter, we have found that "with evidence

of FDIC insurance both at a time predating the offense and at the

time of trial, a reasonable jury could infer that, absent evidence

to the contrary, the bank was insured on the date of the crime."

Id. at 920. Here, for each bank, the government presented: (1) the

testimony of a bank official confirming that the bank was federally

insured at the time of trial;7 and (2) an FDIC certificate

predating the offense, accompanied by an affidavit certifying that

the FDIC had no record of termination of the bank's insurance.8

That was ample evidence for the jury to conclude that MB&T and USAA

were FDIC insured. See id.

Stergios also raises two specific challenges to the

evidence, neither of which was properly preserved at trial. We

7
Joan Voyer, a customer service representative for MB&T, also
testified that MB&T was insured at the time of Stergios's crimes in
2009. Gwendolyn Westrup, the USAA fraud investigator, testified
that USAA has "always" been insured by the FDIC. Stergios objected
when the government asked Ms. Westrup whether USAA was insured
during the summer of 2009, and the court sustained the objection on
the grounds that Ms. Westrup had already testified that the bank
had always been federally insured.
8
Termination of FDIC insurance is of course "an exceedingly
rare event in the banking industry." Ayewoh, 627 F.3d at 918.

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need not, however, analyze whether Stergios has demonstrated plain

error, see United States v. Olano, 507 U.S. 725, 732 (1993),

because we find no merit to these challenges under any standard of

review. First, Stergios argues that, because she was not a bank

manager, MB&T customer service representative Joan Voyer did not

have adequate personal knowledge of MB&T's FDIC insurance.9 But to

establish FDIC insurance, "courts have tended to accept any bank

employee's testimony as sufficient, regardless of whether that

employee was in a managerial position." Ayewoh, 627 F.3d at 919.

Second, Stergios contends that the certificates and affidavits were

insufficient to establish FDIC insurance at the time of his

offenses, because those documents merely certified that the banks

had been insured prior to 2009 and that there was no evidence of

termination of insurance. Putting aside Stergios's failure to

object to the certificates and affidavits at trial, we find that a

reasonable jury could have inferred, from the certificates and

affidavits alone or in combination with the bank representatives'

testimony, that the banks were FDIC insured at the time of

Stergios's crimes. See id. at 917-20.10

9
At trial, Stergios objected to the foundation for Ms.
Voyer's testimony that MB&T was FDIC insured in 2009, but he did
not object to her qualification to provide that testimony.
10
In Ayewoh, the government presented two forms of evidence
of FDIC insurance: (1) an FDIC certificate issued to the bank in
1999; and (2) testimony by the bank's records custodian that the
certificate was "the [FDIC] certificate issued to [the bank] on
January 1999." 627 F.3d at 917. Viewing the testimony in the

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2. Use of the Mails

Next, Stergios argues that the government failed to prove

beyond a reasonable doubt that he caused the United States mails to

be used in furtherance of his scheme to defraud, as required by

18 U.S.C. § 1341. Again, we review this challenge de novo but

consider the evidence and reasonable inferences in the light most

favorable to the prosecution. Ayewoh, 627 F.3d at 917.

The elements of mail fraud are: (1) devising or

attempting to devise a scheme or artifice to defraud; (2) knowing

and willful participation in the scheme with the specific intent to

defraud; and (3) the use of the United States mails in furtherance

of that scheme. United States v. Montminy, 936 F.2d 626, 627 (1st

Cir. 1991). The defendant "need not personally mail anything so

long as it is reasonably foreseeable that the mails will be used in

the ordinary course of business to further the scheme." United

States v. Cacho-Bonilla, 404 F.3d 84, 90 (1st Cir. 2005). Only the

third element -- the "in furtherance" requirement -- is at issue

here. Stergios argues that the mailing of USAA's debit and ATM

cards was not an act in furtherance of his scheme to defraud USAA.

"The courts have generously construed the 'furtherance'

requirement" of the mail fraud statute. Id. at 91. For that

light most favorable to the government, we found that a reasonable
jury could have interpreted the testimony as a statement that the
certificate indicated the bank's presently-insured status as of the
date of trial, and we found the evidence sufficient. Id. at 920.

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requirement to be met, the use of the mails need not be an

essential element of the scheme but need only be "incident to an

essential part of the scheme" or "a step in the plot." Schmuck v.

United States, 489 U.S. 705, 710-11 (1989) (internal quotation

marks omitted).

A reasonable jury could have found that standard easily

satisfied here. The government presented evidence that Stergios

caused the mails to be used at least four times, when he requested

and was mailed debit and ATM cards from USAA. The USAA fraud

investigator testified that USAA did business exclusively by mail

and that the bank's practice was to send ATM and debit cards by

mail. The government also presented evidence that Stergios used

the cards in furtherance of his scheme and made charges in places

other than Indiana (the location from which USAA mailed the cards)

and Texas (where the bank is based). Assessing that evidence, the

jury could reasonably have concluded that USAA sent the cards to

Stergios by mail and that the cards were "incident to an essential

part" of Stergios's scheme. Id. at 711. Without the ATM and debit

cards, Stergios could not have made certain fraudulent charges or

withdrawn funds that did not belong to him.

3. The Special Conditions

Stergios also questions the legality of two special

conditions of release that the district court imposed at

sentencing. We review a preserved challenge to a condition of

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release for abuse of discretion. United States v. Perazza-Mercado,

553 F.3d 65, 69 (1st Cir. 2009) (citing United States v. York, 357

F.3d 14, 19 (1st Cir. 2004)).

The statute that governs supervised release terms,

18 U.S.C. § 3583, provides discretion for sentencing courts to

impose certain special conditions of release. In this case, the

district court imposed two special conditions to which Stergios

objects. Special Condition 7 limits Stergios's use of computers

and access to the internet. Special Condition 8 requires Stergios

to participate in a computer and internet monitoring program, which

includes periodic unannounced inspections of his computer, storage

media, and other electronic or internet-capable devices by his

probation officer based upon a reasonable suspicion of contraband

evidence or violation of supervision.

To assess the validity of a condition of supervised

release, we apply 18 U.S.C. § 3583(d) and U.S.S.G. § 5D1.3(b),

"which require that special conditions cause no greater deprivation

of liberty than is reasonably necessary to achieve the goals of

supervised release, and that the conditions be reasonably related

both to these goals and to the nature and circumstances of the

offense and the history and characteristics of the defendant."

Perazza-Mercado, 553 F.3d at 69 (internal citations and quotation

-13-
marks omitted).11 Stergios argues that the district court imposed

what amounts to a total ban on his internet usage both at home and

at work, which is a greater deprivation than is necessary to

achieve the goals of supervised release. Stergios has, however,

mischaracterized the special conditions.

Special Condition 7 allows Stergios to use a computer and

access the internet, as long as he obtains his supervising

officer's approval. The condition is "[s]ubject always to review

by the sentencing judge upon request by either the defendant or the

Government." Stergios argues that Special Condition 7 might

prevent him from using a telephone upon his release, because he

believes telephones will all be connected to an internet service

provider at that point. We choose not to speculate as to how

technologies will develop in the years to come, nor are we

convinced that Stergios's use of a telephone would fall within

Special Condition 7's prohibition on "possess[ing] or us[ing] a

computer to access an online 'computer service.'" Should Stergios

find Special Condition 7 unduly restrictive upon his release, he

need only speak with his supervising officer and, if that does not

succeed, raise the issue with the district court.

11
The goals of supervised release are substantially the same
as the goals of sentencing: (a) to deter criminal conduct; (b) to
protect the public from further crimes by the defendant; and (c) to
provide the defendant with training, medical care, or correctional
treatment as effectively as possible. See 18 U.S.C. § 3583(c),
(d)(1).

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 Nor is Special Condition 8 unduly restrictive, as defense

counsel conceded at oral argument. That condition requires

Stergios to participate in the Computer and Internet Monitoring

Program, as part of which he must submit to unannounced

examinations of his computer and other electronic or internet-

capable devices when his probation officer has a reasonable

suspicion of contraband evidence or that Stergios has violated a

condition of supervision. As we noted in United States v.

Sebastian, 612 F.3d 47, 52 (1st Cir. 2010), "[i]f the district

court could not mandate compliance with the rules of the treatment

program, the required participation would be ineffectual."

Both special conditions are reasonably related to the

goals of supervised release, to the nature and circumstances of the

offense, and to the history and characteristics of the defendant.

Perazza-Mercado, 553 F.3d at 69. Stergios relied heavily on the

internet to perpetrate his frauds, including opening two checking

accounts online through USAA, opening another using an email

address, and conducting a number of electronic money transfers.

Moreover, Stergios had a history of using the internet to commit

crimes. Stergios's 2005 conviction involved hundreds of fraudulent

internet transactions on eBay, totaling over $421,000.00. It was

therefore reasonable for the district court to find, the second

time around, that restrictions on Stergios's internet usage were

necessary to deter him from committing further crimes.

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 This case is distinguishable from Perazza-Mercado, in

which the sentencing court imposed a total ban on the defendant's

residential internet usage though the defendant had no particular

history of using the internet to commit crimes. 553 F.3d at 70.

We found that restriction "inconsistent with the vocational and

educational goals of supervised release," id. at 72, but remanded

for the district court to devise a more limited internet

restriction, id. at 74. We emphasized the lack of nexus between

the defendant's crimes and the internet:

[O]ur sister circuits have upheld broad
restrictions on internet access as a condition
of supervised release where (1) the defendant
used the internet in the underlying offense;
(2) the defendant had a history of improperly
using the internet to engage in illegal
conduct; or (3) particular and identifiable
characteristics of the defendant suggested
that such a restriction was warranted.

Id. at 70. Here, Stergios used the internet as part of the

underlying offense, had a history of improperly using the internet

to engage in fraud, and his status as a repeat offender suggested

that an internet restriction was warranted. There was no abuse of

discretion.

4. The $1.4 Million Check

Finally, Stergios claims that the district court should

not have included the fraudulent $1.4 million check described in

his PSI when calculating the loss amount, because that check did

not result in actual loss and his mental state was such that he did

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not intend for any loss to occur.12 We review the district court's

interpretation and application of the Sentencing Guidelines de

novo, but we review for clear error the factual findings upon which

the district court based its loss determination. United States v.

Innarelli, 524 F.3d 286, 290 (1st Cir. 2008).

Sentencing Guideline Section 2B1.1 governs offenses

involving fraud or deceit and allows for a 16-level increase above

base offense level 7 when the loss occasioned by an offense is

greater than $1 million. See U.S.S.G. § 2B1.1(b)(1)(I). The

commentary to the Guidelines instructs a sentencing court to

consider "the greater of actual loss or intended loss" when

computing loss amounts. Id. § 2B1.1, cmt. n.3(A). Intended loss

"is a term of art meaning the loss the defendant reasonably

expected to occur at the time he perpetrated the fraud."

Innarelli, 524 F.3d at 290. "[W]e focus our loss inquiry for

purposes of determining a defendant's offense level on the

objectively reasonable expectation of a person in his position at

12
Importantly, Stergios does not contend that he did not write
the $1.4 million check, nor does he question the district court's
interpretation of the Sentencing Guidelines or the district court's
factual finding that the $1.4 million check qualified as relevant
conduct. Uncharged conduct is relevant to the offense of
conviction "if the government proves by a preponderance of the
evidence that such uncharged conduct is part of the same course of
conduct or common scheme or plan as the charged conduct." United
States v. Eisom, 585 F.3d 552, 557 (1st Cir. 2009). Stergios does
not allege that the government failed to meet that burden.

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the time he perpetrated the fraud, not on his subjective intentions

or hopes." Id. at 291.

Stergios argued at sentencing that the $1.4 million check

was a "fantasy manic extreme" brought about by his untreated

bipolar disorder and that he did not intend for any loss to occur

as a result of the check. However, the district court found that

the check was "a genuine result of Mr. Stergios believing that he

had gotten away with things thus far and was ready for greater

things." The court did not believe Stergios had been motivated by

his bipolar disorder:

[M]y view is that the conduct with regard to
the last check here wasn't a result of his
lack of medication, wasn't a result of his
grandiosity that the prior checks -- prior
activities were working for the most part.

In my view, his conduct in paragraph 19 was
part of a spree and ongoing series of
offenses, one with a similar purpose and
similar modus operandi. I think there is a
degree of similarity. I think the methodology
involved, the close time interval, that makes
it relevant conduct.

What the court found particularly "troubling" was "what to do with

Mr. Stergios given his past history and the prior offenses." As

the PSI detailed, Stergios had a relatively extensive criminal

history, including the 2005 conviction. The court emphasized that

Stergios had not even finished his sentence for the 2005 conviction

when he began engaging in the 2009 crimes, which indicated "a

genuine feeling that the laws of society don't apply to you. That

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you know better than other people and you're going to do whatever

you want to do." Given Stergios's prior misconduct, the court

noted that it could sentence Stergios above the guideline range,

with or without the $1.4 million check factored in.

We recognize that the district court's inclusion of the

$1.4 million check in its loss calculation may have resulted in a

higher sentence for Stergios than he would otherwise have

received,13 but "a party dissatisfied with the sentencing court's

quantification of the amount of loss in a particular case must go

a long way to demonstrate that the finding is clearly erroneous."

United States v. Rostoff, 53 F.3d 398, 407 (1st Cir. 1995).

Sentencing judges must receive "wide berth" in determining what

information is sufficiently reliable to be used at sentencing. Id.

Stergios has given us no reason to question the district court's

conclusion here. Furthermore, Stergios's subjective state of mind

at the time of his offenses is not what governs. Rather, we must

ask whether an objectively reasonable person would have intended

for the $1.4 million check to cause loss. Innarelli, 524 F.3d at

291. Under either analysis, we find that the district court did

not commit clear error.

III. Conclusion

For the foregoing reasons, we AFFIRM.

13
Absent the check, Stergios's Sentencing Guideline range was
27 to 46 months; with the check, it was 70 to 87 months.

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