United States Court of Appeals,
Eleventh Circuit.
No. 93-9404.
UNITED STATES of America, Plaintiff-Appellee,
v.
Glenda NORRIS, Defendant-Appellant.
April 25, 1995.
Appeal from the United States District Court for the Middle
District of Georgia. (No. 3:92-00006-CR-ATH(DF), Duross
Fitzpatrick, Chief Judge.
Before EDMONDSON and CARNES, Circuit Judges, and HAND*, Senior
District Judge.
HAND, Senior District Judge:
Defendant-appellant Glenda Norris, president, co-owner, and
director of the now defunct1 Athens School of Cosmetology of
Athens, Georgia, and other defendants were indicted on December 21,
1992, in the United States District Court for the Middle District
of Georgia under 18 U.S.C. § 371 for conspiring to defraud the
United States through student-grant and -loan programs from July
1988 through June 1990. The indictment alleged, inter alia, that
Mrs. Norris's mother, son-in-law, and three children, including
Keith Norris, all of whom were also defendants below, received
student grants from the federal government and student loans
guaranteed by the federal government to attend the Athens School of
Cosmetology. Instead of enrolling, they performed personal
services and errands, including baby sitting, house cleaning, and
*
Honorable W.B. Hand, Senior United States District Judge
for the Southern District of Alabama, sitting by designation.
1
R-113-7.
construction work, for the co-owners of the school. There were
$6,290 in grants and $35,550 in loans for a total of $41,840.2
The government began investigating in April 1989 and
recommenced its investigation on February 7, 1990.3 Mrs. Norris's
son, Keith Norris, repaid $6,625 in loans from March 16, 1990, to
September 30, 1993.4
Mrs. Norris entered a guilty plea. At sentencing, on November
8, 1993, the district court agreed with the presentence
investigation report and found that the "loss" to the government
was $41,840. 5 The base offense level under the United States
Sentencing Guidelines was offense level 6. See U.S.S.G. §
2F1.1(a). The district court then made five adjustments to the
offense level, including a five-level increase because the loss was
greater than $40,000. See id. § 2F1.1(b)(1)(F). After the five
adjustments, Mrs. Norris was at offense level 14, which had a
sentencing range of 15 to 21 months with her criminal-history
category. See id. § 5A (sentencing table). The district court
sentenced Mrs. Norris to 18 months' imprisonment followed by three
years' supervised release, and ordered her and the other co-owner
of the school to pay restitution of $35,215. That amount was the
difference between $41,840 (the total of the grants and loans) and
$6,625 (the amount her son had repaid).6
2
R-1.
3
Presentence Investigation Report, ¶ 5.
4
Id. at ¶ 12.
5
R-113-8.
6
R-107; R-113-11.
In calculating the loss to the government, the district court
(1) counted both grants and loans and (2) did not subtract what her
son had repaid. Mrs. Norris appeals on both points. She contends
the district court should have counted only the grants. In the
alternative, she contends the district court should have included
both grants and loans but excluded the loans which her son had
repaid. Had the district court counted only the grants, or had it
counted both the grants and the loans but excluded those amounts
which her son had repaid, the amount of the loss would have been
under $40,000. Instead of a five-level increase under U.S.S.G. §
2F1.1(b)(1)(F), she would have received less of an increase for the
amount of the loss. See id. § 2F1.1(b)(1). Her total offense
level would have been lower.
The calculation of the amount of a loss under the sentencing
guidelines is reviewed for clear error, while an interpretation of
the guidelines is reviewed de novo. United States v. Menichino,
989 F.2d 438, 440 (11th Cir.1993) (citing United States v. Odedina,
980 F.2d 705, 707 (11th Cir.1993); United States v. Shriver, 967
F.2d 572, 574 (11th Cir.1992); United States v. Smith, 951 F.2d
1164, 1166 (10th Cir.1991)); see also United States v. Cannon, 41
F.3d 1462, 1466 (11th Cir.1995) (the court of appeals reviews
findings of facts for clear error and reviews the sentencing
court's application of the sentencing guidelines to the facts de
novo (citing United States v. Davis, 902 F.2d 860, 861 (11th
Cir.1990); United States v. Rodriguez, 959 F.2d 193 (11th
Cir.1992))).
I
The United States Sentencing Guidelines define the "loss" in
cases involving fraud or deceit.
[T]he loss is the value of the money, property, or services
unlawfully taken[. I]f an intended loss that the defendant
was attempting to inflict can be determined, this figure will
be used if it is greater than the actual loss....
There are, however, instances where additional factors are to
be considered in determining the loss or intended loss: ...
(b) Fraudulent Loan Application and Contract Procurement Cases
In fraudulent loan application cases and contract procurement
cases, the loss is the actual loss to the victim (or if the
loss has not yet come about, the expected loss). For example,
if a defendant fraudulently obtains a loan by misrepresenting
the value of his assets, the loss is the amount of the loan
not repaid at the time the offense is discovered, reduced by
the amount the lending institution has recovered (or can
expect to recover) from any assets pledged to secure the loan.
However, where the intended loss is greater than the actual
loss, the intended loss is to be used....
U.S.S.G. § 2F1.1, comment. (n. 7) (emphasis added); see also
Menichino, 989 F.2d at 441 (citing U.S.S.G. § 2F1.1, comment. (n.
7(b)); United States v. Baum, 974 F.2d 496, 499 (4th Cir.1992);
United States v. Kopp, 951 F.2d 521, 534 (3d Cir.1991); Smith, 951
F.2d at 1167-68)); Kopp, 951 F.2d at 536 (citing U.S.S.G. §
2F1.1).
II
We first consider the propriety of including both grants and
loans in the loss, instead of only the grants. Section 2F1.1
clearly permits including the loans in the loss. See U.S.S.G. §
2F1.1, comment. (n. 7(b)).
III
We next consider the propriety of including in the loss the
amounts which the appellant's son had repaid.
Mrs. Norris pointed out at oral argument that an example in
application note 7(b) is a loan involving collateral and one whose
repayment is not necessarily deferred. See U.S.S.G. § 2F1.1,
comment. (n. 7(b)). By contrast, student loans usually require no
collateral and allow repayment after the academic year for which
they are made. Therefore, she would have us hold that her son's
repaid loans should not be included in the calculation. We
disagree. The example in application note 7(b) is an illustration,
not a restriction. The facts of this case may not resemble the
facts of the example, but that does not mean that the application
note, or the principle which the example illustrates, does not
apply.
The Fourth Circuit has held that "the potential consequences
of default, rather than the amount of the loan, best measure the
"loss' to which [the defendant] exposed the lender.... Payments
made by [the defendant] should also be considered." Baum, 974 F.2d
at 499 (quoting United States v. Rothberg, 954 F.2d 217, 219 (4th
Cir.1992)). We agree with Baum in that a district court which uses
application note 7(b) should consider repayments; however, Baum
does not state, and we decline to hold, that repayments can never
be included in the loss. See U.S.S.G. § 2F1.1, comment. (n. 7(b)).
The record in this case does not warrant our finding of fault
with the court's conclusion. The trial court took note of the fact
of repayment by the son in determining the amount of restitution
due. The court reduced the restitution by the amounts repaid but
found that such repayment came "way too late" to reduce the loss.7
In so concluding, the court complied with the requirement of
7
R-113-8, 9.
application note 7(b) to consider the amount of the loss when the
"offense" was "discovered."
The presentence investigation report states that "no payments
were made toward the loans until after the offense had been
discovered by the authorities."8 Although some other parts of this
report were objected to and discussed at sentencing, this crucial
point was not. Without objection and in the absence of manifest
injustice, this conclusion becomes binding. See United States v.
Brokemond, 959 F.2d 206, 210 (11th Cir.1992) ("Appellant did not
file an objection to the sentencing report and did not object at
sentencing when no downward departure was granted. ...
Consequently, he is precluded from raising the issue for the first
time on appeal." (citing United States v. Asseff, 917 F.2d 502,
506 N. 4 (11th Cir.1990); United States v. Pritchett, 898 F.2d
130, 131 (11th Cir.1990))); United States v. Jones, 899 F.2d 1097,
1103 (11th Cir.) ("Where the district court has offered the
opportunity to object and a party is silent or fails to state the
grounds for objection, objections to the sentence will be waived
for purposes of appeal, and this court will not entertain an appeal
based upon such objections unless refusal to do so would result in
manifest injustice."), cert. denied, 498 U.S. 906, 111 S.Ct. 275,
112 L.Ed.2d 230 (1990), overruled on other grounds, United States
v. Morrill, 984 F.2d 1136, 1137 (11th Cir.1993) (en banc). This
result is further supported by the fact that defense counsel was
given at least two additional opportunities to object to the
8
Addendum to Presentence Investigation Report, 2.
findings of the presentence investigation report. 9 There were no
objections, so under our holdings any such objections now come too
late.
AFFIRMED.
9
R-113-9, 12.