United States v. Hayes

              IN THE UNITED STATES COURT OF APPEALS

                      FOR THE FIFTH CIRCUIT

                      _____________________

                           No. 93-2472
                      _____________________


     UNITED STATES OF AMERICA,
                                               Plaintiff-Appellee,

                              versus

     PATRICK CARL HAYES,
                                              Defendant-Appellant.


_________________________________________________________________

      Appeal from the United States District Court for the
                    Southern District of Texas
_________________________________________________________________
                         (August 31, 1994)


Before REYNALDO G. GARZA, DeMOSS and PARKER1, Circuit Judges.

ROBERT M. PARKER, Circuit Judge:

   Appellant Patrick Carl Hayes ("Hayes") appeals that portion of

his sentence requiring him to pay restitution.    Having concluded

that the district court erred in ordering restitution in this case,

we will vacate the order of restitution, and remand the case to the

District Court for resentencing.

                                 FACTS

    Hayes was charged in a three count indictment with possession

of stolen mail; specifically, possession of three credit cards

     1
       Judge Parker participated by designation in the oral
argument of this case as a United States District Judge for the
Eastern District of Texas. Since that time he has been appointed
as a Fifth Circuit Judge.

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which had been stolen from the United States mail in violation of

18 U.S.C. § 1708.       Hayes pleaded guilty to all three counts, was

sentenced to six months imprisonment and was ordered to make

$3,255.01   in    restitution    to   the    credit    card   companies.       The

restitution represents the amounts that were charged to the credit

cards between January and March of 1989.              Hayes was charged with

and convicted of possession of the cards "on or about" March 31,

1989, the date that Hayes was arrested with the cards in his

possession.       The   cards   had   been    mailed     by   the   credit    card

companies, but were never received by the credit card customers.

Hayes claimed that he had purchased the cards from an acquaintance

and had not yet used them, although he admitted that he intended to

use them in the future.         There was evidence that several of the

charges had been made at the service station where Hayes worked.

                                 DISCUSSION

     Restitution is a criminal penalty and a component of the

defendant's      sentence.      Consequently,     this    Court     reviews   the

restitution order de novo.        United States v. Chaney, 964 F.2d 437,

451 (5th Cir. 1992).

     Hayes' restitution was ordered pursuant to the Victim and

Witness Protection Act, 18 U.S.C. § 3663, (VWPA) which provides in

pertinent part:

     The court, when sentencing a defendant convicted of an
     offense under this title...may order, in addition to
     or...in lieu of any other penalty authorized by law, that
     the defendant make restitution to any victim of such
     offense.

18 U.S.C. § 3663(a)(1)(1988) (the version in effect at the time of


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Hayes' sentencing).     An order of restitution must be based on the

conduct for which the defendant was convicted, because the Supreme

Court held in Hughey v. United States, 495 U.S. 411, 110 S.Ct. 1979

(1990) that "Congress intended restitution to be tied to the loss

caused by the offense of conviction." Id. at 1981.                 See also,

United   States   v.   Chaney,   964   F.2d   437,   451   (5th   Cir.   1992)

("Restitution under the Victim and Witness Protection Act (VWPA) is

limited to losses caused by the specific conduct that is the basis

of the offense of conviction.")

    Hayes pleaded guilty to an indictment charging him with mere

possession on one day, not with conduct or a scheme that resulted

in losses to any victims.        The indictment did not charge him with

being in possession of the cards during the three month period when

the charges were made, and none of the charges occurred on the day

named in his indictment.

     The Government concedes that restitution under the VWPA is

limited to losses caused by the specific conduct that is the basis

of the offense of conviction.       They then attempt to argue that the

credit card companies' losses stem from Hayes' actions.            The theft

of the cards prevented the credit card companies from recovering

the charged amounts from the customers they were issued to, and the

Government contends that Hayes' purchase of the stolen cards

prevented the credit card companies from identifying and collecting

the amounts due from the person who stole the cards.

   This position seems similar to the argument that the Government

made successfully in United States v. Rollins, 93-1444 (5th Cir.


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January 3, 1994).        In that case, this Court, in an unpublished

opinion, declined to disturb a district court's restitution order

where the defendant was convicted of violating 18 U.S.C. § 2321 by

buying and receiving with intent to sell or otherwise dispose of a

vehicle, knowing that the vehicle identification number had been

altered.     The defendant argued that any loss incurred was caused

solely by the initial theft of the vehicle, an offense for which

the defendant was not charged or convicted.           This Court, however,

held that the district court was entitled to conclude that Rollins'

actions constituted a continuation of the scheme to steal the

vehicle,   because the specific conduct upon which the offense was

based was his buying a van with knowledge that it had been stolen,

altering its VIN, and selling it to an innocent purchaser.               The

case before us is distinguishable from Rollins, in that Rollins'

victim's loss resulted directly from the conduct for which he was

convicted.    Hayes was convicted only of possession of stolen mail,

which offense does not include any element of use or attempted use

of the credit cards.      The credit card companies suffered loss not

from Hayes' possession of the cards, but from the unauthorized

charges made to the cards, which Hayes was not charged with and not

convicted of.

    While the Fifth Circuit has not had a previous occasion to

decide this issue, the Eleventh Circuit, when confronted with a

similar question, held that a conviction for possession of 89

unauthorized access devices could not support a restitution award

because "there     was   no   loss   caused   by   [the   defendant's]   mere


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possession of the access devices.    It was only [the defendant's]

use of the devices that resulted in loss to the victims."   United

States v. Cobbs, 967 F.2d 1555, 1559 (11th Cir. 1992).

    We are persuaded that the Eleventh Circuit is correct.     The

credit card companies' losses were not caused by the conduct for

which Hayes was convicted.   Therefore, the restitution imposed by

the district court is not authorized under VWPA.

                             CONCLUSION

    Since the order for restitution represents only one component

of the sentencing court's balance of sanctions, the entire sentence

is VACATED and the case is REMANDED for resentencing.




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