United States v. Bullard

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

No. 93-1017

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

JERRY CARL BULLARD,

Defendant-Appellant.

Appeal from the United States District Court
for the Northern District of Texas

( January 25, 1994 )

Before JONES and DeMOSS, Circuit Judges, and SCHWARTZ*, District
Judge.

PER CURIAM:

Jerry Carl Bullard appeals his sentence following his plea of

guilty and conviction for knowing and willful misapplication of

bank funds, in violation of Title 18, U.S.C. § 656.1 Bullard

*
District Judge of the Eastern District of Louisiana,
sitting by designation.
1
Bullard's sentencing hearing was originally set for October
20th, 1992, but was reset several times thereafter. On at least
one occasion the sentencing hearing was continued on defense
counsel's motion, for the express purpose of allowing defense
counsel additional time to obtain all necessary information
required to object to the monetary loss calculations set forth in
the Presentence Investigation Report (PSI). Yet, up to and
including the time of the sentencing hearing on December 1, 1992,
no written objections to the PSI were submitted by or on behalf of

1
contends that the district court erred in calculating the amount of

the loss caused by his offense conduct2 and by applying the

November 1, 1989 version of U.S.S.G. § 3E1.1 which afforded the

opportunity for only a two-level downward adjustment of the

sentencing guidelines for acceptance of responsibility. We have

jurisdiction under 28 U.S.C. §1291. Bullard failed to raise the

objections urged on appeal at the sentencing hearing. Because we

find no plain error, we affirm.

I.

At sentencing, the only controverted issue in the Presentence

Investigation Report (PSI) raised by defense counsel was the

probation officer's conclusion that Bullard's offense conduct

caused the victim bank First National Bank of Rowlett (FNB) to

become insolvent. The district court clearly indicated at the

outset that such statement would not be taken into consideration in

imposing sentence.

At the sentencing hearing, the district court adopted the

factual statements contained in the PSI, the sentencing

calculations recommended by the probation department, and

Bullard.

2
The guidelines applicable to theft, embezzlement and other
forms of theft, U.S.S.G. § 2B1.1, enhance the base level on a
graduated scale according to the amount of the victim's loss.
Bullard argues on appeal that the adjustment of his guidelines
pursuant § 2B1.1(b)(1)(N) for losses greater than $800,000.00 does
not reflect with any with economic reality the loss or risk of loss
to the victim bank, and therefore, contends the sentencing court's
reliance upon the total loss amount contained in the PSI (i.e.,
$846,058.88) was clearly erroneous.

2
determined the applicable guidelines were as follows: Total Offense

Level of 19; Criminal History Category of I; Imprisonment Range of

30 to 37 months; Supervised Release Range of 2 to 3 years; a Fine

Range of $6,000 to $60,000; and Restitution Amount of $35,113.50.

The PSI applied the rubric for calculation of loss

attributable to the defendant's conduct found in U.S.S.G. § 2B1.1,3

and calculated the "loss" to FNB at $846,058.88. This loss amount

warranted a thirteen-point enhancement of Bullard's base offense

level. Although no objections were raised with respect to the loss

amount, defense counsel did argue at the sentencing hearing that

Bullard should receive some credit for certain offsets reported by

the bank. Such offsets consisted of interest earned by the bank on

some of the fraudulent loans made by the defendant, the seizure of

cars by the government which had been purchased by the appellant

with fraudulent loan proceeds, and funds supposedly received by the

Government from Bullard's in-laws in settlement on the government's

attempted forfeiture of a "lake house" in which the appellant had

invested fraudulent loan proceeds.

Bullard argues on appeal that because he "objected" at the

3
The applicable guideline for the defendant's knowing and
willful misapplication of bank funds offense is section 2B1.1(a),
which provides a for a base level of four (4). Thirteen (13)
levels were added to the defendant's base offense level because his
offense involved a "loss" greater than $800,000.00. U.S.S.G.
§2B1.1(b)(1)(N). Additionally, his offense level was further
enhanced two levels for "more than minimal planning" as provided in
section 2B1.1(b)(4). The two level enhancement for abuse of a his
position of trust as provided in section 3B1.3 was canceled out by
a two level reduction for defendant's acceptance of responsibility
for his crime provided in section 3E1.1. Bullard's adjusted
offense level was thus, nineteen (19).

3
sentencing hearing based upon the method of calculation of the loss

he has preserved the issue for appeal. The government contends

that Bullard's failure to suggest an alternative loss calculation

scheme at sentencing constitutes waiver. We believe that on this

record, Bullard's failure to specify an alternative basis for

calculating the loss or an alternative "loss" calculation supported

by reliable evidence at the time of the sentencing hearing

constitutes waiver.

We will allow sentences to be attacked on grounds raised for

the first time on appeal in only the most exceptional cases.4 A

party must raise a claim of error with the district court in such

a manner so that the district court may correct itself and thus,

obviate the need for our review. This court will not reverse a

district court on an issue raised for the first time on appeal

unless a gross miscarriage of justice would otherwise result.5

The presentence report calculated the loss pursuant to

4
As we observed in United States v. Garcia-Pillado, 898 F.2d
36, 40 (5th Cir. 1990), "the proper administration of justice,
particularly our severely strained criminal justice system, will be
unduly hampered by any rule or practice which allows sentences to
be attacked on grounds raised for the first time on appeal in any
but the most exceptional cases." Id.
5
As we have previously noted, no contemporaneous objection was
made to the introduction of the PSI in the district court or to its
adequacy as proof of the "loss" to FNB for purposes of enhancement
as provided in § 2B1.1(b)(1)(N). Therefore, we are severely
limited in our review of that issue by the "plain error" standard.
An exception to the general rule of non-reviewability may be made
when an issue raised for the first time on appeal concerns a pure
question of law and refusal to consider it would result in a
miscarriage of justice. See United States v. Lopez, 923 F.2d 47,
50 (5th Cir.), cert. denied, U.S. , 111 S.Ct. 2032, 114
L.Ed.2d 117 (1991). The instant issue raised for the first time on
appeal warrants imposition of the rule and not the exception.

4
U.S.S.G. § 2B1.1, the guideline section listed as applicable to

Bullard's conduct. Under the loss calculation provided in that

guideline, whether the defendant intended to or in fact paid back

the loss is wholly irrelevant. Application Note 2 of U.S.S.G. §

2B1.1 provides guidance on how to determine the loss6 and states in

pertinent part: "'Loss' means the value of property taken" and

further provides as an example that "[i]n the case of a check or

money order, the loss is the loss that would have occurred if the

check or money order had been cashed." Application Note 3 of §

2B1.1 further provides that the sentencing court need not determine

loss precisely, as long as the estimate is reasonable, and such

loss "may be inferred from any reasonably reliable information

available, including the scope of the operation." (emphasis added).

The PSI prepared on September 16, 1992, which was adopted by the

district court without objection, describes with particularity the

extended scope of Bullard's operation, as follows:

On November 27, 1990, during a special examination
of the First National Bank of Rowlett (FNB) by the
Office of the Comptroller of the Currency (OCC),
several transactions involving Bullard were
discovered which appeared to be fraudulent.
Investigators from the Federal Deposit Insurance
Corporation (FDIC) were notified who in turn
notified the Federal Bureau of Investigation (FBI).
The investigation revealed that during the period
of June 1, 1987 through December 7, 1990, Bullard

6
"Commentary in the Guidelines Manual that interprets or
explains a guideline is authoritative, unless it violates the
Constitution or a federal statute, or is inconsistent with, or a
plainly erroneous reading of that guideline." Stinson v. United
States, U.S. , 113 S.Ct. 1913, 1915, 123 L.Ed.2d 598 (1993).
Failure to follow such commentary could constitute an incorrect
application to the guidelines, subjecting the sentence to possible
reversal on appeal. U.S.S.G. § 1B1.7.

5
 was involved in the theft, embezzlement, and
misapplication of FNB funds totalling
$846,058.88....

A substantial portion of the losses attributed to
the defendant involved transactions between Bullard
and William B. Walker, a friend and business
associate. These illegal transactions were carried
out in a variety of ways. Bullard prepared and
forged loan documents in the names of bank
customers without their knowledge. He used
financial information previously submitted by these
customers in order to document loan files, thus
deceiving other FNB officers, directors, and
federal bank examiners.

Bullard and Walker opened accounts at FNB in the
names of individuals without their knowledge and
used these accounts to deposit misapplied funds.
Bullard made unauthorized withdrawals from customer
accounts and later covered up these thefts with
proceeds of other fraudulent transactions. Bullard
and Walker prepared loan documents listing non-
existent collateral. Bullard issued unauthorized
letters of credit for a bank customer who was
already over-extended and delinquent on loans at
FNB. Bullard was responsible for managing FNB loan
participation with other financial institutions.
On several occasions, Bullard forged checks
received in payment from these institutions and
diverted the proceeds to accounts at FNB which he
controlled....

As long as a factual finding is plausible in light of the

record as a whole, it is not clearly erroneous.7 Considering the

record in this case as a whole, and particularly the undisputed

facts regarding the extended scope of Bullard's operation, we

believe that it is clearly plausible that the loss to FNB exceeded

$800,000.00.

Bullard contends that his "objections" concerning amounts paid

back to the FNB, offsets for interest earned on fraudulent loans,

7
United States v. Wimbish, 980 F.2d 312, 313 (5th Cir. 1992).

6
letters of credit which were never funded, inter alia, in effect

alerted the district court to the argument he now raises on appeal

(i.e., generally, the loss figure contained in the PSI was not

supported by accurate and reasonably reliable information). We

disagree.

Bullard never gave the district court a basis at the

sentencing hearing to believe that his "objections" were either

factually or legally relevant. Defense counsel did not even

characterize his colloquy as "objections" to any facet of the PSI.

His address, rather, was phrased initially as a plea for leniency

and evolved into an oral motion for downward departure from the

guidelines. For example, defense counsel stated:

There was one issue and one thing that I did
want to present to the Court along that
line.... I was attempting to find out how much
the interest income was.... So basically, I
think my contention would have been.... I was
trying to get an exact dollar amount to see if
it made a difference in the guideline
calculation.... But other than that, we have
reviewed the Pre-Sentence Report on several
occasions and talked about it and -- other
than what was already mentioned about the
reason for the bank's insolvency, we have no
objections.
* * *
I think the Court -- I'm going to ask the
Court to depart downward from the guidelines
based on the fact that there are circumstances
that are just not adequately considered by the
guidelines. And I think in this case the
matter of recovery, at least a part of the
loss. It would seem to me that a loss, which
is at least partially recovered, should not be
as serious as a loss, none of which is
recovered. They're all bad and I'm not trying
to minimize the Defendant's actions here. I'm
just asking the Court to take that into

7
 consideration....8

The foregoing remarks of defense counsel are most aptly

characterized as a plea of mitigation or for leniency. No

evidence, whatsoever, was presented at the time of the sentencing

hearing to support counsel's instantaneous, "on the spot" appraisal

of the "loss" to FNB being an amount lower than that set forth in

the PSI. No alternative calculation was presented at the time of

the sentencing hearing supporting defense counsel's speculation

relative to the "loss" amount. We refuse to overturn the district

court's sentence based upon speculation. More to the point,

Bullard's "objections" were, in reality, a motion for downward

departure. Distilled to its essence, Bullard would have us review

the district court's failure to depart downward from the

guidelines. When the district court has imposed a sentence within

the guidelines, appellate review is limited to determining whether

the guidelines were correctly applied. United States v. Soliman,

954 F.2d 1012 (5th Cir. 1992).9

Thus, in summary, the PSI, utilizing reliable information,

applied what on its face is the correct guideline. Bullard's

"objections," using the term objections loosely, were irrelevant

8
Transcript of Sentencing, pp. 3-5, 11 (emphasis added). ROA,
Vol. 2.
9
Generally, a claim that district court refused to depart from
the guidelines provides no grounds for relief. United States v.
Keller, 947 F.2d 739, 741 (5th Cir. 1991). Without hesitation we
observe no abuse of discretion by the district court, whatsoever,
in refusing to sustain Bullard's oral motion for downward departure
cum "objection."

8
under that guideline, and Bullard suggested no alternative

framework under which his objections could be perceived as

relevant. Considering the gravamen of Bullard's "objections," the

district court had no basis to determine that either another method

of calculating the "loss" or that different "loss" calculation was

more appropriate.

We are convinced that the district court's decision to accept

the loss calculation set forth in the presentence report neither

amounted to "plain error" nor to a "gross miscarriage of justice."

Accommodating defense counsel's plea for leniency, the sentencing

court selected the lowest sentence under the applicable guidelines,

thirty (30) months, which term of imprisonment fell both within the

guideline range provided by Section 2B1.1(b)(1)(N)(loss to the

victim in excess of $800,000) and the guideline range provided by

Section 2B1.1(b)(1)(M)(loss to the victim in excess of $500,000).

Bullard's fine was waived considering the amount of restitution

owed (i.e., $35,113.50).

In refusing to overturn the district court's sentence, we note

that defense counsel had a number of months at his disposal between

the time of Bullard's conviction and his sentencing date, and ample

time within which to submit his own calculation of the "loss"

amount, along with any justification therefor. Despite having been

given the ample opportunity to do so, Bullard did not object to the

loss determination contained within the PSI and, as previously

mentioned, has therefore waived any objection to such findings.

Moreover, we cannot refrain from observing that the undisputed

9
evidence established that Bullard's extended operation placed the

FNB at enormous risk, and it was later declared insolvent.10

Accordingly and for all of the above and foregoing reasons, we

find no reversible error and hold that the district court properly

adjusted Bullard's offense level upwards thirteen-levels as

provided in U.S.S.G. § 2B1.1(b)(1)(N).

II.

Bullard was sentenced on December 1, 1992, only one-month

after the effective date of amended U.S.S.G. § 3E1.1 entitled

"Acceptance of Responsibility." The PSI adopted by the district

court applied the 1989 version of that guideline, and pursuant

thereto recommended a two-level decrease in Bullard's offense level

for acceptance of responsibility.11 Bullard contends that the

10
Although we observe that the PSI did note that Bullard's
offense conduct caused the victim bank to become insolvent, the PSI
did not suggest enhancement pursuant to § 2B1.1(7)(A), which
provides: "If the offense -- (A) substantially jeopardizes the
safety and soundness of a financial institution . . . increase by
4 levels. If the resulting offense level is less than level 24,
increase to level 24." Application note 10 of the Commentary to §
2B1.1(7)(A) does not limit the meaning of the terms "substantially
jeopardized the safety and soundness of a financial institution" to
the situation where the institution becomes insolvent as a
consequence of the defendant's conduct. Rather, the aforesaid term
is defined quite broadly to include the following situations: as
a consequence of the offense the institution "substantially reduced
benefits to pensioners and insureds; was unable on demand to fully
refund any deposit, payment, or investment; . . . or was placed in
substantial jeopardy of any of the above." Id.
11
The Sentencing Commission's amendment to § 3E1.1, effective
November 1, 1992, added a new subsection (b), which provides in
pertinent part that: "if the defendant qualifies for a [two-level]
decrease under subsection (a)" and "the offense level determined
prior to the operation of subsection (a) is level 16 or greater,
and the defendant has assisted authorities in the investigation or
prosecution of his own misconduct by taking one or more of the

10
district court erred in failing to apply the version of guideline

§ 3E1.1 in effect at the time of his sentencing, despite the

absence of any objection. Bullard argues that he was entitled to a

three-level reduction for acceptance of responsibility pursuant to

U.S.S.G. §3E1.1(b)(1) and (2).

The government contends that even if the district court erred

in applying an outdated version of the guidelines, Bullard failed

to object to the PSI and thus, his sentence should only be reversed

upon a finding of plain error. There being no "plain error" under

the facts of this case, the government urges us to affirm the

district court.

To constitute plain error, the error must have
been so fundamental as to have resulted in a
miscarriage of justice.12

Given the limited scope of our review and having considered

the entire record on appeal,13 we uphold the sentence, since the

record as a whole demonstrates a two level, as opposed to a three-

level, downward adjustment for acceptance of responsibility did not

result in a miscarriage of justice. We find such for the reason

that, even assuming a three-level downward revision was warranted

following steps: (1) timely providing complete information to the
government concerning his own involvement in the offense or (2)
timely notifying authorities of his intention to enter a plea of
guilty . . ., decrease the offense level by 1 additional level."
12
United States v. Ebertowski, 896 F.2d 906, 907 (5th Cir.
1990).
13
United States v. Guerrero, 5 F.3d 868, 870 (5th Cir.
1993)(citing United States v. Pattan, 931 F.2d 1035, 1043 (5th Cir.
1991), cert. denied, U.S. , 112 S.Ct. 2308, 119 L.Ed.2d 229
(1992)).

11
under the particular facts and circumstances of this case,

Bullard's offense total offense level would have resulted in a

total offense level of eighteen (18), and a consequent sentencing

range of 27 to 33 months. Bullard was, in fact, sentenced to

thirty (30) months, which is well-within that lower guideline

range. A possible reduction in sentence of an additional three (3)

months simply does not rise to the level of "a miscarriage of

justice."14

Along these lines, we further disagree with Bullard's

suggestion that he is automatically and unqualifiedly entitled to

an additional one-level reduction for acceptance of responsibility

under the current version of the guidelines upon demonstrating that

(1) he has an offense level of 16 or greater prior to any

adjustment for acceptance of responsibility and (2) that he either

has provided timely information to the government or provided

timely notification of his intention to plead guilty. Application

Notes 3 and 5 to § 3E1.1 clearly do not support such a reading.

Application Note 3 provides that "a defendant who enters a guilty

plea is not entitled to an adjustment under this section as a

matter of right." Moreover, Application Note 5 provides that the

determination of the sentencing judge regarding his evaluation of

14
The instant case is readily distinguishable from our decision
in United States v. Gross, 979 F.2d 1048 (5th Cir.1992). In Gross,
our conclusion that manifest injustice resulted from the district
court's application of an outdated version of the guidelines and
imposition of consecutive sentences was firmly rooted in our
finding that the district court's error "resulted in Gross
receiving a substantially longer sentence than he would have if the
USDC had used the version of the guidelines then applicable." Id.
at 1052.

12
a defendant's acceptance of responsibility is entitled to great

deference.

As we do not find either plain error or manifest injustice in

the circumstances of this case, the sentence imposed is AFFIRMED.

13