[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT
U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
October 5, 2005
No. 04-12485 THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 03-00056-CR-4-RH-WCS
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
KATHY MILLS LEE,
Defendant-Appellant.
________________________
No. 04-13673
________________________
D. C. Docket No. 03-00056-CR-RH-WCS
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
versus
JOSEPH MICHAEL WYMAN,
Defendant-Appellant.
________________________
Appeals from the United States District Court
for the Northern District of Florida
_________________________
(October 5, 2005)
Before CARNES and PRYOR, Circuit Judges, and FORRESTER*, District Judge.
FORRESTER, District Judge:
Joseph Michael Wyman and Kathy Mills Lee challenge the judgments and
sentences imposed for committing three counts of mail fraud in violation of 18
U.S.C. §§ 1341 and 1342. The grand jury returned a true bill against Wyman and
Lee on February 24, 2004, and a joint trial commenced on March 1, 2004. The
jury returned a general verdict of guilty on all three counts of the indictment on
March 4, 2004.
Wyman and Lee contend the evidence was insufficient to convict them of
mail fraud and contend that the district court improperly admitted hearsay and
opinion testimony during trial. Wyman and Lee also raise sentencing objections,
contending that they were sentenced in violation of United States v. Booker, 125
*
Honorable J. Owen Forrester, United States District Judge for the Northern District of
Georgia, sitting by designation.
2
S. Ct. 738 (2005),1 and that their sentences were based upon unreliable evidence
and factors not proven by a preponderance of the evidence. The appellants also
object to the district court’s admission of alleged opinion and hearsay evidence.
Lee raises an individual objection to the district court’s denial of her motion to
continue sentencing until such time as she could be sentenced with Wyman.
I. Background
A. The Financial Scheme
Appellants’ convictions arise out of their attempts to use a nonexistent
banking channel not only to obtain goods without payment but also to retain use of
those goods as long as possible. Between 2000 and 2002, Appellant Wyman
attended several seminars and conferences instructing attendees in “alternative”
banking channels. Through these seminars, Wyman was taught about implausible
theories of private offset exchanges, a commercially unrecognized system rooted
in the notion that the United States Treasury amasses moneys rightfully belonging
to individuals. Private offset exchanges were claimed mechanisms for individuals
to access this Treasury-held money. Using closed checking accounts, an
individual would write a check to obtain a good or service. As these checks were
1
Appellants raised this issue as a claim under Blakely v. Washington, 542 U.S. 296
(2004). Subsequent to briefing, the United States Supreme Court issued its opinion in Booker,
which addressed the implications of Blakely to the United States Sentencing Guidelines.
Accordingly, Appellant’s Blakely challenge will be treated under Booker.
3
written on closed accounts, the account on which the check was drawn could not
provide the funds to pay for the goods. Instead, these offset checks were
theoretically to be presented to the Treasury by the drawee bank or payee for
reimbursement with the stockpiled funds.
Between the summers of 2002 and 2003, Kathy Mills Lee and Joseph
Michael Wyman uttered more than one million dollars’ worth of personal checks
drawn upon closed bank accounts. Lee wrote checks drawn upon her account at
Citizens Financial Services in Indiana. On August 29, 2002, Lee wrote to Citizens
to close her account for ongoing transactions but informed Citizens that she
intended her account to remain open for adjustments and setoffs. After the letter
was sent, Lee wrote sixteen checks totaling $192,982.10 on the closed Citizens
account. Included among these checks were a $121,914.09 check to pay off her
mortgage, a check to pay off a $12,000 home equity line of credit, and $5,769 in
checks written to Wyman. Wyman deposited these checks into his account at the
South Trust Bank in Tallahassee, Florida, on occasion utilizing a split deposit to
walk away with cash.
Wyman also did his share of check-writing, utilizing former checking
accounts in Georgia and California to write more than $800,000 in offset checks
on closed accounts. Among Wyman’s many checks were two drafted for $110,000
4
and $449,000 to purchase an option on a Destin beachfront property. Further,
Wyman passed a $79,077.40 check for a BMW and wrote another two
checks for two Acuras in the amounts of $33,972.61 and $45,325.21. Lee was
also the beneficiary of Wyman’s check-writing, receiving more than $8,500 in
checks written on closed accounts. Lee and Wyman also attempted to pay off the
mortgage on Lee’s sister’s home with an offset check for $9,676.59.
When the payees of these offset checks complained that the checks were
being dishonored, Wyman and Lee employed a range of responses to the
complaints. The first response to merchant complaints was typically to ignore the
situation. In some cases this strategy proved effective, as several merchants and
banks simply wrote off their losses. For example, ABC Liquors eventually wrote
off Lee’s $1,154.70 purchase as a bad debt after several phone calls and an
attempt to negotiate the check as an offset check failed. Similarly, Sam’s Club
gave up on collecting payment for $584.77 in merchandise purchased by Lee with
an offset check, and Bank of America and Capital City Bank wrote off the
negative balances in Wyman’s and Lee’s accounts as losses. To more persistent
payees, Wyman and Lee would send paperwork which they claimed would
facilitate redemption of these offset checks. The papers informed merchants that
while the closed checking accounts were not open for public transactions, they
5
were open for private offset or exchange transactions. Wyman and Lee urged the
payees to negotiate these offset checks with banks or, alternatively, directly with
the Treasury. Unsurprisingly, the record does not reveal any successful
negotiations of these offset checks by merchants or banks.
While some of the check recipients and banks simply wrote off their debts,
other payees pursued legal action. Vanderbilt Mortgage, mortgage lender for
Lee’s sister’s home, threatened legal action to recover its losses after discovering
the offset check meant to pay off the loan balance was written on a closed account.
Although it served legal notice of the default on Lee’s sister, Vanderbilt eventually
charged off the unpaid balance as a loss. A BMW dealership, Quality Imports,
repossessed a vehicle it sold to Wyman after discovering the offset check used to
fund the purchase was a bad check. Fortunately, Quality Imports was able to
repossess the car a few days after the original sale. Community First, the lender
on a car owned by Wyman, also turned to repossession to recoup its losses.
Community First was less fortunate than Quality Imports, however, as the sale of
the repossessed car was insufficient by approximately $9,000 to cover the full
amount of the loan. Similarly, Ford Motor Credit obtained a civil judgment
against Lee for the debt remaining after Lee’s attempt to pay for her Explorer
failed. Lee had written checks to both Ford Motor Credit and then later to a local
6
dealership in an attempt to pay off and purchase her leased car, but these
transactions fell through once the offset checks were dishonored.
First South, Lee’s mortgage company, resorted to foreclosure after checks
written by Lee to pay off her mortgage and home equity loans were dishonored.
For approximately $1,000, Lee and Wyman purchased from Cindy Beers, an
exchange transaction proponent, a package of documents meant to discharge a
mortgage. (Wyman testified that he thought the package had worked in achieving
the write-off of Lee’s sister’s mortgage.) Following Beers’ mortgage-discharge
package, which involved ten to twelve different steps of paperwork, Wyman and
Lee first sent First South a request for payoff and then sent an offset check to
redeem the debt. The bank failed to verify whether the payoff check was valid,
and consequently First South erroneously sent a notice of satisfaction on both the
mortgage and line of credit, even sending a refund for overpayment on the line of
credit. Upon discovering its mistake, First South sent Lee notices of nonpayment.
Wyman and Lee ignored these notices, instead sending in more paperwork from
the Beers package. Eventually, First South filed a foreclosure motion. Wyman and
Lee responded to the lender and its counsel with still more documents from the
Beers package. Two of the documents in the indictment, a “Notice of
Acceptance” and a “motion to dismiss,” were part of this attempt to achieve
7
satisfaction of the mortgage and retention of the house. Due to these delaying
tactics, it took First South almost a year from receipt of the bad check to recoup its
losses.
Some recipients of offset checks, however, fared relatively better at the
hands of Wyman and Lee. Bert Moore, the attorney handling the Destin property
deal, as well as Affiliated Travel, a coin dealer, had refused to allow Wyman to
take receipt of any goods until his checks cleared and so did not sustain any losses.
Similarly, Proctor & Proctor, at which enterprise Wyman attempted to purchase
two Acuras, never sustained actual losses as Proctor’s bank refused to act as
fiduciary and process the offset check Wyman offered in payment. Wyman also
made good a $950.68 debt to Hair Options, a provider of hair replacement
services; after discovering the offset check had been dishonored, Hair Options’
threat to stop providing its services to Wyman mid-treatment proved effective.
South Trust Bank also found threats of legal action to be effective, as Wyman
reimbursed the negative balance in his account with that institution when the bank
threatened to call law enforcement.
B. Challenged Evidence at Trial
In detailing the operation of Wyman and Lee’s financial scheme, the trial
court admitted several pieces of evidence that are now one basis for these appeals.
8
First, the district court allowed the government to introduce into evidence a letter
written by Citizens’ counsel to Lee, in which Lee was informed by the bank that
she had to stop writing checks on a closed account. The letter told Lee that to
continue to do so would be check fraud. Second, the district court allowed the
government to introduce an e-mail written by a Capital City Bank employee
referring to Wyman as a con artist. The letter and e-mail writers never testified at
trial. The district court also allowed the attorney handling First South’s
foreclosure action to testify during his redirect examination by the government
that he believed Wyman and Lee had committed illegal acts.
Finally, the parties dispute the importance of testimony provided by Bert
Moore, the attorney handling the Destin property deal. Moore testified that he
only remembered receiving one offset check from Wyman as consideration for the
purchase of an option on the property. Moore further recalled that check as being
for $111,000. Wyman, however, provided testimony which indicated that he
wrote two checks on that property. Further, Wyman composed a letter to Capital
City Bank in which he urged that bank to honor two checks, for $111,000 and
$449,000, written to Bert Moore.
9
C. Sentencing
While Wyman and Lee were jointly tried, the appellants were sentenced at
different times. During the time scheduled for a joint sentencing hearing, the
district court granted a defense motion to continue Wyman’s sentencing to permit
a mental health examination. After ascertaining that the government and Lee’s
counsel were ready to proceed, Lee was sentenced on May 13, 2004. At her
sentencing hearing, Lee did not raise any kind of Blakely-style objection to extra-
verdict enhancements. Wyman was sentenced two months later, on July 13, 2004.
During Wyman’s sentencing hearing, conducted after the Supreme Court’s
opinion in Blakely v. Washington was handed down, Wyman raised a Blakely
objection to extra-verdict sentence enhancements. Wyman also was sentenced on
the basis of a reduced loss calculation, as the district court determined that two
checks, both counted as part of the scheme, were actually written to accomplish
the same purpose: to pay for Lee’s Ford Explorer. Lee did not receive the benefit
of this adjusted calculation of loss in her earlier sentencing hearing.
II. Discussion
A. Sufficiency of the Evidence
Wyman and Lee contend that the three mailings alleged in support of the
mail fraud charges are insufficient to form the basis of a mail fraud conviction.
10
We review challenges to the sufficiency of the evidence de novo. United States v.
Hooshmand, 931 F.2d 725, 733 (11th Cir. 1991). The evidence must be
considered in the light most favorable to the government, and all inferences and
credibility determinations must be drawn in favor of the jury’s verdict. United
States v. Cooper, 132 F.3d 1400, 1404 (11th Cir. 1998). If there is any reasonable
construction of the evidence that would allow the jury to find the defendant-
appellants guilty beyond a reasonable doubt, we must affirm the convictions. Id.
The mail fraud statute, 18 U.S.C. § 1341, prohibits the use of the mails in
furtherance of a scheme to defraud. United States v. Waymer, 55 F.3d 564, 568
(11th Cir. 1995). In order to prove a violation of § 1341, it is the government’s
burden to prove that the accused intentionally participated in a scheme to defraud
and used the United States mails to carry out that scheme. Id. While a mailing is a
required element of a § 1341 claim, the use of the mails need not be an essential
element of the scheme; for a mail fraud conviction, it is sufficient if the
government shows that the mailing was “incident to an essential part of the
scheme” or “a step in the plot.” Id. at 569 (internal citations omitted).
1. August 29, 2002 Letter
The first mail fraud count was based upon the August 29, 2002 letter sent by
Lee to Citizens Financial Services, her former bank. The evidence elicited at trial
11
showed that Lee called Citizens in August 2002 to close her account but was
informed that the checking account had already been closed for approximately one
year. Lee then sent the August 29, 2002 letter to Citizens again asking the bank to
close her account. The letter stated:
Notice to Settle and Close Accounts. . . . This letter of NOTICE TO
SETTLE and CLOSE ACCOUNTS is notice to you, in both your
private and official capacities, as CFS Bancorp, Inc., that the above
referenced account is Accepted for Value and Exempt from Levy.
This account is considered closed for any ongoing debit or credit
entries for the undersigned Principal in Fact.
This account will remain open for any adjustments or setoffs, through
the Principal in Fact’s exemption.
The phrase “Accepted for value, Certified and sworn on the Undersigned’s
unlimited commercial liability” was stamped across the documentation, and the
letter also referred to the Uniform Commercial Code § 3-419 and House Joint
Resolution 192 of June 5, 1933. H.R. J. Res. 192, 73rd Cong. (1933) (providing
for the suspension of the gold standard). Citizens’ representative testified at trial
that the letter caused her to seek advice from others within the bank and also
caused great confusion as to the appellants’ meaning and purpose in sending the
letter. Citizens’ counsel wrote to Lee, warning her that writing checks on closed
checking accounts could be considered check fraud. In response to that letter, Lee
informed Citizens that she intended to use the account for private asset exchanges,
12
not for public transactions. Further, the government elicited Wyman’s testimony
that the August 29 letter was sent to advance the offset financial scheme.
Given this evidence, we find that a reasonable jury could determine that the
August 29, 2002 letter was a mailing in furtherance of the scheme to defraud.
Wyman and Lee’s scheme was two pronged, first writing checks on closed
accounts to obtain goods and services without paying for them, and second
working to retain those goods as long as possible by convincing merchants and
banks that the offset checks were actually legitimate. Whether the appellants’
explanations of the offset scheme simply bought them time with the wrongly
obtained fruits of their scheme or convinced the banks and merchants to write off
the debt, either way, their scheme depended on attaching at least some semblance
of credibility to their scheme. The August 29, 2002 letter to Citizens could be
reasonably viewed as a method of causing that bank either to attempt to negotiate
the checks with the Treasury or, alternatively, to hesitate or delay before
dishonoring Lee’s checks to merchants. Thus, a reasonable jury could view the
letter to Citizens purporting to close the checking account for public purposes but
open it for private offsets a step in the plot incident to an essential element of the
scheme. Accordingly, we must find that there is sufficient evidence to support the
13
jury’s verdict as to the first count of the indictment relating to the August 29, 2002
letter.
2. Response to Foreclosure Complaint, Summary Judgment
Wyman and Lee also challenge their convictions on the two other counts of
the indictment, both of which are based upon mailings sent by the appellants to
opposing counsel in the foreclosure action on Lee’s home.2 After discovering that
Lee’s check purporting to pay off her mortgage was written on a closed account,
First South3 initiated foreclosure proceedings. Lee and Wyman responded to the
foreclosure motion with documents from the Beers package. Among the many
documents Lee and Wyman submitted were the final two mailings charged in the
indictment, an April 11, 2003 “Notice of Acceptance” and an April 22, 2003
motion to dismiss, both mailed to First South’s counsel.
In the Notice of Acceptance, Lee wrote:
I have exchanged my exemption (EIN # 260027391) for the discharge
of the charges. I hereby request an appearance bond at no cost to me
so I can enter a plea for the Defendant. I do not intend to dispute the
2
Appellants made a Rule 29 motion at the close of all the evidence which was denied by
the district court. Several theories were advanced as to why these two letters, mailed to First
South’s law firm, were essential to the scheme to defraud. The district court gave a general
charge to the jury on the mail fraud counts, and we now find that the evidence recited herein is
sufficient to support the jury’s verdict on those counts.
3
The entity formerly known as First South is now Branch Bank & Trust. As Wyman and
Lee dealt with the bank when it was known as First South, we will continue to refer to that entity
as First South throughout this opinion.
14
facts. Based upon the issuance of the appearance bond and the
absence of an assessment and findings of fact and conclusions of law,
I will plead guilty to the charges and exchange my exemption for full
settlement of the account.
Lee attached copies of the summons, lis pendens, and complaint to her
mailing and affixed the same “Accepted for assessed value & returned in exchange
for closure and settlement of this accounting” stamp across each document.
In the motion to dismiss, Lee submitted an affidavit in opposition to
foreclosure. Among her various testimonial statements, Lee affirmed: “I have not
seen nor been presented with any material fact which demonstrates that the
Creditor is in receipt of any document that verifies, under penalty of perjury, that
the Defendants owe [First South] any balance of any amount on any alleged debt,
and believe that none exists.” As part of the April 22, 2005 motion to dismiss, Lee
also submitted to First South’s counsel a Notice of Default and Entry for Notarial
Protest. This document asserted that First South was in default on its contract with
Lee and through this default had waived its rights. Wyman testified that the
purpose of all of these documents, part of the Beers package, was to cause the
lender to discharge the mortgage on Lee’s home.
A reasonable jury in possession of this evidence could find that the Notice
of Acceptance and motion to dismiss were mailed in furtherance of the scheme to
defraud. Wyman testified that the purpose of the entire Beers package of
15
documents was to get the mortgage discharged. These two mailings, part of that
larger stack of documents, further that purpose. The Notice of Acceptance
purports fully to settle the mortgage by exchanging Lee’s “exemption” for a
settlement of the debt. The motion to dismiss denies that any debt actually exists.
Moreover, the Notice of Default, sent with that motion to dismiss, attempts to
place First South in default to Lee and even informs that bank that it has somehow
waived its rights to collect under any original terms. These letters to First South’s
counsel, part of the larger Beers blizzard of documents, are all designed to
obfuscate Lee’s actual obligation on the mortgage loan. Drawing upon these facts,
a reasonable jury could view these letters, and the entire Beers package of
documents, as steps in the scheme to keep Lee’s home without payment. We must
therefore find that there is sufficient evidence in the record to support the jury’s
verdict on the second and third counts of the indictment.
Wyman and Lee, however, contend that as these two mailings were sent as
part of litigation, strong policy considerations prevent us from basing a mail fraud
conviction upon the foreclosure documents. In support of their argument, the
appellants cite United States v. Pendergraft, 297 F.3d 1198 (11th Cir. 2002), in
which we considered the legal sufficiency of a mail fraud indictment based upon
false affidavits attached to a motion for preliminary injunction. Defendants
16
Pendergraft and Spielvogel proposed to open an Ocala, Florida abortion clinic but
faced local opposition to their plans. Id. at 1200. After receiving a phone call
from Spielvogel seeking money in return for abandoning the clinic, the chairman
of the County Board of Commissioners, Cretul, contacted the Federal Bureau of
Investigation (“FBI”), which began taping conversations between Cretul and the
defendants. Id. at 1200-01. At some point after the FBI began its monitoring,
Spielvogel contacted the FBI and alleged that Cretul had threatened him. Id. at
1201. Due to its monitoring, however, the FBI knew this claim to be false. Id.
Subsequently, Pendergraft offered to abandon his clinic and stay away from the
city at a rate of $550,000 for three years, $750,000 for five years, or $1,000,000
for a permanent absence. Id. After Cretul declined the offer, the defendants
opened the clinic. Id. Pendergraft and the clinic then filed suit seeking injunctive
relief to obtain protection against protesters. Id. In support of their suit,
Spielvogel and Pendergraft submitted affidavits contending that Cretul threatened
them in violation of the Freedom of Access to Clinic Entrances Act, 18 U.S.C.
§ 248. Id. These affidavits were filed with the court and also served by mail upon
opposing counsel. Id. at 1208.
In considering the legal sufficiency of the mail fraud counts in the
indictment, we acknowledged that serving a motion by mail was a common
17
litigation practice, and that prosecuting litigation activities would tend to inhibit
policies promoting access to the courts. Id. We also recognized that the mail
fraud statute cannot encompass all criminal schemes, id. at 1209, and that a
malicious prosecution claim might be a more appropriate vehicle to deal with
mailings made in the course of litigation. Id. at 1208. These statements, however,
were simply dicta. In our analysis of the legal sufficiency of the claim, this court
focused on whether or not Spielvogel and Pendergraft had the necessary intent to
deceive. Id. at 1209. The Pendergraft defendants were aware that Cretul would
know there were never any threats, and so they could not have intended to deceive
Cretul with their false allegation. Id. Ultimately, it was due to the absence of an
intent to deceive, and not upon any policy concerns relating to using the mails in
connection with litigation, that we held that the mail fraud indictment failed to
charge an offense as a matter of law. Id.
Wyman and Lee’s attempt to draw parallels between the facts of this case
and Pendergraft are unpersuasive. Most important, the two mailings at issue were
not mailings to the court, but rather mailings to First South and its counsel.
Wyman and Lee did not instigate suit at all; indeed, considering that their
fraudulent scheme involved obtaining goods with offset checks and then holding
on to possession as long as possible, a foreclosure action would be a hindrance to
18
their plans. Wyman’s testimony indicates that the Beers package of documents
was intended to influence the lender and its counsel and not at all directed toward
influencing the courts. Although these documents eventually did make their way
into the foreclosure record and before the trial judge, First South’s attorney
testified that he filed those documents, not Wyman or Lee. We have discovered
no evidence that shows Wyman or Lee actively sought to involve the courts in the
foreclosure dispute;4 on the contrary, Wyman’s testimony indicates that use of the
Beers package of documents was designed to avoid foreclosure altogether.
Second, there was no intent to deceive in the Pendergraft legal mailings. Wyman
and Lee’s Notice of Acceptance and motion to dismiss, by contrast, were part of a
package of documents that was designed expressly to attempt to mislead the lender
so as to obtain the discharge of the debt and the release of the mortgage after the
bank discovered that the check was worthless. In one final point of distinction,
the Pendergraft defendants were charged for a fraud which directly involved
mailings to the court. Lee and Wyman were indicted and eventually convicted for
knowingly writing checks on closed accounts and then using the mails to confuse
and avoid their creditors. Given that Lee and Wyman’s mailings were not directed
4
To be sure, the defendants did appear at a hearing on the lenders motion for summary
judgement. At that time Wyman caused the court to deny the motion by producing the
documents erroneously sent by the bank stating that the indebtedness were satisfied after it
received the initial bad check.
19
by them toward the court, the fact that the appellants were indicted on the basis of
these mailings does not raise the same concerns of access and finality raised in the
Pendergraft opinion.
We recognize, of course, that there are real public policy concerns inherent
in allowing litigation materials to form the basis of a mail fraud claim, but those
policy concerns have never been thought to preclude perjury prosecutions. Even if
we read Pendergraft as appellants would like, we do not believe the mailings in
this case implicate those policy concerns for the reasons already discussed. While
we must be mindful of the concerns for placing obstacles in the path of full access
to our courts, we cannot countenance mailing false claims clothed in legalese to
lenders, with the intent of perpetrating or perpetuating a fraud, even where
litigation is ongoing. For all these reasons, we find there is sufficient evidence to
affirm the jury’s verdict on all three counts of the indictment.
B. Booker issue
Citing Blakely v. Washington, 542 U.S. 296 (2004), which we now interpret
as a claim under United States v. Booker, __ U.S. __, 125 S. Ct. 738 (2005), both
Wyman and Lee contend that their sentences were improperly based upon facts not
admitted nor found by jury verdict. The superseding indictment did not allege an
amount of loss nor number of victims, and the jury never made a finding as to loss,
20
number of victims, nor obstruction of justice. As Lee’s and Wyman’s sentences
were based in part on these factors, the appellants contend that their sentences
violate Booker.
There are two types of Booker error which a district court may commit in
sentencing: constitutional and statutory. A constitutional Booker error occurs
when extra-verdict enhancements are used to reach a result under the United States
Sentencing Guidelines (“the Guidelines”) that is binding on the sentencing judge.
United States v. Shelton, 400 F.3d 1325, 1331 (11th Cir. 2005). A statutory
Booker error, in contrast, consists in sentencing a defendant under the Guidelines
as if they were mandatory and not advisory, even in the absence of a Sixth
Amendment violation. Id. at 1330-31. As Wyman and Lee challenge the use of
extra-verdict facts in the construction of their sentences, they are alleging a
constitutional Booker error. Wyman raised a Blakely objection to the district
court, now construed as an objection under Booker, so we review for harmless
error. United States v. Davis, 407 F.3d 1269, 1270 (11th Cir. 2005). We
explained in United States v. Paz, 405 F.3d 946, 948-49 (11th Cir. 2005), that
Booker constitutional errors are harmless where the government can show beyond
21
reasonable doubt that the error did not contribute to the defendant’s ultimate
sentence.5
In Paz, the defendant pled guilty to violation of 18 U.S.C. § 1029(a)(1) for
using a skimming device to make counterfeit credit cards. Id. at 947. Paz’s
sentence was enhanced six levels based upon a judicial finding, not admitted to by
the defendant, that the amount of loss was between $30,000 and $70,000. Id. Paz
objected to the loss enhancement at the sentencing hearing, but the district court
overruled his objection in reliance on United States v. Reese, 382 F.3d 1308 (11th
Cir. 2004), vacated by __ U.S. __, 125 S. Ct. 1089 (2005), aff’d in part and
vacated and remanded in part, 397 F.3d 1337 (11th Cir. 2005). Id. at 948.
Building upon this enhancement for amount of loss, the district court sentenced
Paz to ten months’ imprisonment. Id. The district court judge stated, however,
that in the event that the Guidelines were held to be unconstitutional, in whole or
in part, he would have sentenced Paz to six months’ imprisonment. Id. Utilizing
harmless error review, this court determined that the government could not meet
its burden to show the constitutional error was harmless beyond a reasonable
5
Harmless error review of a Booker statutory error, by contrast, is subject to a less
demanding test: whether a court could determine that the error did not affect the sentence, or had
only a slight effect. See United States v. Robles, 408 F.3d 1324 (11th Cir.2005); United States v.
Hornaday, 392 F.3d 1306, 1315-16 (11th Cir. 2004). For this reason, if we interpret Wyman’s
Blakely objection as including a Booker statutory error claim, our holding that the constitutional
error is harmless would, a fortiori, dictate the same holding as to the statutory error.
22
doubt because of the district court’s statement that, if not bound by the Guidelines,
it would have imposed a shorter sentence. Id. at 948-49.
In marked contrast to Paz, the district court explicitly stated that it would
have given Wyman the same sentence whether the Guidelines were mandatory or
advisory. Moreover, the district court expressly considered the 18 U.S.C.
§ 3553(a) sentencing factors when composing its alternative, non-Guidelines
sentence. Accordingly, we find that the government has carried its burden of
showing that the Booker constitutional error was harmless beyond a reasonable
doubt, as it is clear that the extrajudicial enhancements did not contribute to
Wyman’s sentence.6 Cf. United States v. Robles, 408 F.3d 1324 (11th Cir. 2005)
(finding no Booker error where the sentencing judge stated that he would impose
the same sentence whether the Guidelines were mandatory or advisory).
6
While Lee did not make a Blakely/Booker objection to the district court, she now
attempts to adopt Wyman’s objection as her own. See infra, Section D. We need not consider
whether or not Lee’s attempt to co-opt Wyman’s properly-raised Booker objection may be given
effect, as the government and Lee have agreed that remand for resentencing is appropriate.
Accordingly, we find that any possible Booker objection Lee might raise to her sentence is moot.
23
C. Sentencing Factors
In addition to the Booker challenge, we are also confronted with a challenge
to the district court’s use of the Guidelines in calculating Wyman’s and Lee’s
sentences. In particular, the appellants object to the district court’s calculation of
loss. Additionally, the appellants also objected to the district court’s calculation of
the number of victims and its refusal to reduce sentence under the Guidelines for
attempt. This court reviews a district court’s factual findings for clear error and its
application of the Guidelines de novo. United States v. Auguste, 392 F.3d 1266,
1267 (11th Cir. 2004); see also United States v. Crawford, 407 F.3d 1174 (11th
Cir. 2005) (holding that the Booker decision did not change the standard of review
for application of the Guidelines).
1. Proof of Loss
An amount of loss determination is reviewed by this court for clear error.
United States v. Cabrera, 172 F.3d 1287, 1292 (11th Cir. 1999). A sentencing
court need only make a reasonable estimate of the loss, given the available
information. United States v. Wilson, 993 F.2d 214, 218 (11th Cir. 1993). A
sentencing judge, however, may not speculate about the existence of a fact that
would permit a more severe sentence. Id.
24
Defendants argue that there is insufficient proof of the $449,000 check
written by Wyman to Bert Moore in order to purchase an option on the Destin
property. In his testimony at trial, Moore testified that he first received a $111,000
check from Wyman and Moore during their face-to-face negotiations for the
property and discussed the difficulties he had when he attempted to present the
offset check to the bank for payment. When asked whether the $111,000 check
was the only check he received from the appellants, Moore responded that it was
the only one he recalled. Based upon Moore’s testimony, Wyman and Lee
contend there is insufficient evidence that the second check for the Destin
property, a check for $449,000, was ever part of the fraudulent scheme.
Moore’s testimony, however, was not the only evidence in the record
regarding the existence of the second option check. During his testimony, Wyman
stated that he gave Moore not only the $111,000 check, but also testified that there
was a second check he gave Moore. Moreover, a letter written by Wyman to
Capital City Bank referenced the $449,000 check. Wyman’s letter chastised the
bank for not processing previous offset checks and further stated, “Please notify
agents of your banking department that are processing these checks and instruct
25
them to process future checks, such as checks 1005 and 1006 to Bert Moore, for
exemption exchanges equal to $111,000 and $449,000 respectively.”7
Reviewing the evidence before the district court, we must conclude that the
court did not err when it included the $449,000 check in the loss calculation.
While there was no paper copy of the check produced, Wyman’s testimony
intimated that he actually gave two checks to Moore, thus contradicting Moore’s
testimony that he only recalled receiving one check. Moreover, Wyman wrote a
letter to Capital City Bank seeking to ensure that a $449,000 offset check to
Moore would be honored even though written on a closed account. Taking all of
this evidence together, there is more than speculation to tie a $449,000 check to
the appellants’ fraudulent scheme. Moreover, as the Guideline sentence
enhancement properly applied to these facts is for losses between $400,000 and
$1,000,000, there is no need to consider any other arguments raised by Wyman
and Lee as to the calculation of loss.8 United States Sentencing Commission,
Guidelines Manual, §2B1.1(b)(1)(H) (Nov. 2002).
7
During oral argument, we asked counsel about this second, $449,000 check and were
told that no extant copy of the check was ever found.
8
Wyman and Lee seek offsets to the calculation of loss for reclaimed goods or where a
security interest protected a victim from loss. The Guidelines will only offset loss for returned
goods if those goods are returned before the scheme is detected. USSG § 2B1.1, comment.
(n.2(E)(i)). Reduction of loss is contemplated for amounts recovered from collateral. Id. at
n.2(E)(ii). We need not decide this question, however, as the $449,000 check alone supports a
fourteen-level Guideline enhancement under USSG § 2B1.1(b)(1)(H).
26
2. Attempt
Wyman and Lee also contend that their sentences should have been reduced
under Guideline § 2X1.1(b)(1), which directs a sentencing court to apply a three-
level reduction to a sentence “unless the defendant completed all the acts the
defendant believed necessary for successful completion of the substantive
offense.” USSG § 2X1.1(b)(1). This three-level reduction may be declined,
however, if the factual circumstances show that the offense was about to be
complete but for an interruption beyond the defendant’s control. Id. The facts of
this case clearly demonstrate that Wyman and Lee completed all the acts necessary
to commit mail fraud. There is no dispute that they actually mailed the August 29,
2002 letter to Citizens, as well as the two letters from the Beers package to First
South’s counsel. Moreover, Wyman and Lee completed the acts underlying their
scheme to defraud – they wrote checks on closed accounts, provided misleading
information to banks and payees in an attempt to have the bad checks honored,
and thus were able to either keep outright or to retain for a lengthy period of time
their ill-gotten gains. The fact that their offset checks were not in fact honored
cannot be credited to Wyman and Lee but rather to the good sense of the banks
and merchants ensnared in this financial scheme. Accordingly, we affirm the
district court’s refusal to apply a reduction in sentence for attempt.
27
3. Number of Victims
The appellants also object to the district court’s calculation of the number of
victims. Wyman and Lee point out that in many cases their victims were able to
offset their losses through such means as collateral and repossession, and thus that
these secured individuals should not be considered victims. Guideline section
2B1.1(b)(2)(A)(i) provides that the basic offense level should be increased two
levels if the offense involved ten or more victims. The Guidelines Application
Notes define a victim as “any person who sustained any part of the actual loss
determined under subsection (b)(1).” USSG § 2B1.1, comment. (n.3(A)(ii)). The
Guidelines further define actual loss as reasonably foreseeable pecuniary harm
resulting from the offense. Id. at n.2(A)(i). Pecuniary harm is defined as
monetary or other harm that can be monetized but excludes emotional distress,
harm to reputation, or non-economic harms. Id. at n.2(A)(iii). For a pecuniary
harm to be reasonably foreseeable, the defendant must have known or, in the
circumstances, reasonably should have known that the harm was a potential result
of the offense. Id. at n.2(A)(iv).
None of the definitions provided by the Guidelines speak to the specific
challenge posed by Wyman and Lee: whether a victim who is reimbursed for his
loss qualifies as a victim for the purposes of § 2B1.1(b)(2)(A). We have only
28
discovered one other circuit opinion which discusses this issue, United States v.
Yagar, 404 F.3d 967 (6th Cir. 2005). In Yagar, the defendant pled guilty to theft
of stolen mail in violation of 18 U.S.C. § 1708. Id. at 968. Yagar used stolen
checks to make deposits in excess of $88,000 into the accounts of more than fifty
individuals and then withdrew portions of those deposited funds, ultimately
receiving $20,987.15 in cash. Id. Yagar’s sentence was enhanced two levels
under Guideline § 2B1.1(b)(2)(A) for a crime involving more than ten but less
than fifty victims. Id. On appeal, all parties conceded that five banks sustained
actual losses within the meaning of the Guidelines, but Yagar contended that the
further six victims, individual account holders, could not be counted for the
purposes of § 2B1.1(b)(2)(A) because they were reimbursed by their banks for
their loss: the cost of buying new checks for new checking accounts. Id. at 970.
The Yagar court concluded that the account holders were not victims because they
were fully reimbursed for their temporary loss. Id. at 971. Nevertheless, the Sixth
Circuit opinion acknowledged that there were circumstances where a reimbursed
individual could still be considered a victim but distinguished that eventuality
from the facts before them, in which the monetary loss was short-lived and
immediately covered by a third party. Id.
29
Yagar, of course, is not binding upon this court and only has effect upon us
to the extent of its persuasiveness. Our reading of Yagar indicates that the case
did not read the actual loss provisions together with the Application Notes
discussing credits against loss. § 2B1.1, comment. (n. 2(E)). See generally United
States v. Inclema, 363 F.3d 1177 (11th Cir. 2004) (directing courts to read the text
of the Guidelines and its accompanying commentary together). When considering
the impact of recovered collateral, or the return of money, property, or services, to
the victim, the Guidelines treat those so recovering as having suffered a loss but
then allow the defendant to take credit against the total loss for the value of the
recovered or returned loss. Id. Stated another way, inherent in the credit against
loss provision is an acknowledgment that there was in fact an initial loss, even
though it was subsequently remedied by recovery of collateral or return of goods.
A concrete example exposes the flaw in the appellants’ reasoning. The evidence
at trial showed that Community First, holder of a loan secured by Wyman’s car,
repossessed that car as collateral. Even after selling the collateral, however,
Community First was saddled with debt of approximately $9,000. Under the
appellants’ theory, however, Community First could not be considered a victim
because it had collateral, even though that collateral proved insufficient. This
does not comport with the Guidelines.
30
Even if we were to follow the reasoning of Yagar, moreover, the facts
before us are significantly different than those before our sister circuit. Wyman
and Lee contend that Ford Motor Credit, First South, Vanderbilt, Quality Imports,
and Community First are not victims because they recovered security to offset
their losses. Unlike the Yagar account holders, however, the monetary losses
suffered by these parties were neither short-lived nor immediately covered by third
parties. First South, for example, had to pursue foreclosure litigation for almost
one year before being able to reach its security interest in Lee’s home. Similarly,
Ford Motor Credit had to file suit and secure judgment in order to reclaim its
collateral, as Lee kept her car for approximately one year and only returned the
vehicle after her arrest. Community First, as the entity receiving the car payments
in the form of offset checks, also had to await judgment to reclaim its collateral.
Quality Imports, which sold Wyman the BMW, had to repossess its car in order to
recover its loss. Vanderbilt also had to wait an appreciable time and fruitlessly
resort to a legal remedy in an attempt to reclaim its collateral, Lee’s sister’s home.
In none of these cases was there a third party available to provide prompt
indemnification. Moreover, unlike the individual account holders in Yagar, our
victims suffered considerably more than a small out-of-pocket loss and were not
31
immediately reimbursed by any third party. For all these reasons, we affirm the
district court’s imposition of a two-level increase for number of victims.
D. Denial of Continuance
Lee has a contention of error, specific to her own case, regarding the denial
of her motion for a continuance of her sentencing hearing. Lee and Wyman were
tried jointly and originally scheduled to be sentenced jointly, but Wyman’s
sentencing was postponed to allow his psychiatric evaluation. In the interim
between Lee’s sentencing and Wyman’s sentencing, Blakely was decided.
Unaware of the sea change Blakely would bring, Lee did not object to the use of
judicial fact-finding in fashioning her sentence. In addition, Lee was sentenced on
the basis of losses totaling more than $1,000,000, which carries a sixteen-level
enhancement, while Wyman was later sentenced for the fourteen-level
enhancement for losses between $400,000 and $1,000,000. This discrepancy
stems from a calculation of loss that “double-counted” two checks intended to
create a single loss. Thus, Lee contends that the denial of a continuance of her
sentencing hearing to allow joint sentencing was error, depriving her of the benefit
of Blakely as well as by the change in the calculation of loss.
The denial of a motion to continue sentencing is reviewed for abuse of
discretion. See United States v. Costello, 760 F.2d 1123, 1126 (11th Cir. 1985)
32
(denying motion to continue trial). Lee’s counsel informed the district court that
her client was prepared to go forward on the appointed sentencing date.
Accordingly, we cannot see how the district court abused its discretion in taking
counsel at her word and sentencing Lee. Cf. United States v. Verderame, 51 F.3d
249 (11th Cir. 1995) (finding prejudice where denial of continuance prohibited
defendant from preparing a defense). Moreover, whatever prejudice Lee suffered
has been mooted, as the government does not challenge Lee’s contention
regarding the double-counting of loss. As Lee’s case must be remanded to the
district court for resentencing, her Blakely claim regarding a first appeal is also
irrelevant. Accordingly, we find the district court did not abuse its discretion in
denying Lee’s motion to continue her sentencing to a date on which Wyman could
be jointly sentenced.
E. Admission of Hearsay and Opinion Evidence
The appellants’ fifth and final contention of error on appeal regards the
district court’s admission of three pieces of evidence: an e-mail describing
Wyman as a con man, a letter advising Lee that her actions constituted check
fraud, and testimony describing Wyman’s and Lee’s actions as clearly illegal. A
district court’s admission of evidence is examined for abuse of discretion. United
States v. De La Mata, 266 F.3d 1275, 1300 (11th Cir. 2001); see generally United
33
States v. Frazier, 387 F.3d 1244 (11th Cir. 2004) (finding that evidentiary rulings
are reviewed deferentially for abuse of discretion). Lee and Wyman first object to
a letter written by a Citizens employee to Lee stating, “Please be advised that
issuing apparently negotiable instruments drawn against a bank account that you
know may well be closed is check fraud.” The second hearsay objection relates to
an e-mail composed by a Capital City Bank employee stating, “Wyman is a con
artist.” The appellants contend that these are out-of-court statements that invaded
the province of the jury on a pivotal issue and tainted the jury.
Our examination of the transcript, however, reveals that the district court
judge admitted these statements not for their truth, but for the non-hearsay purpose
of showing notice that the financial transactions were not recognized and were
unlawful. In their opening statements, appellants’ counsel suggested that the
various banks involved in this case either did not believe these checks were illegal
or did not clearly inform Wyman or Lee that their check-writing scheme was
wrongful. Instead, defense counsel suggested that the problem was simply that
these banks were too small and unsophisticated to negotiate offset checks. We do
not believe it was an abuse of discretion to admit these statements for the non-
hearsay purpose of showing the banks were aware that these transactions were
wrongful and actually informed the appellants of this fact.
34
Wyman and Lee also object to the district court allowing First South’s
counsel to testify that appellants’ actions in fighting the foreclosure suit were
illegal. Putting the challenged statement in context, Mr. Robbins, an attorney
handling the foreclosure action, was asked on direct examination to discuss the
content of Lee’s legal filings. On cross examination, Robbins was asked whether
Lee was entitled to fight against a lawsuit by filing the sort of documents at issue,
such as opposition to a motion to dismiss. Robbins conceded that there was
nothing inappropriate in making such a filing. Upon redirect examination, the
government then asked Robbins if it was appropriate to write a check on a closed
account to pay off a mortgage. Robbins then testified that Lee was not entitled
wrongly to state in a court filing that she had paid off the mortgage, nor was she
entitled to write bad checks. As the district court pointed out in overruling the
defense objections, the redirect questions as to the legality of Lee’s actions opened
the door to the government’s follow-up question to Robbins. We find that the
district court did not abuse its discretion in allowing this testimony to go before
the jury. On this basis, we affirm the admission of evidence.
35
III. Conclusion
We find there was sufficient evidence to sustain the convictions and also
find that the district court did not err in its admission of evidence, in denying a
sentencing continuance, or in calculating Wyman’s sentence. In these respects,
therefore, we AFFIRM the district court. As the parties are agreed that Lee’s
sentence was erroneously calculated, we REMAND the case to the district court
for resentencing consistent with this opinion.
36
United States v. Kathy Mills Lee
Court: Court of Appeals for the Eleventh Circuit
Date filed: 2005-10-05
Citations: 427 F.3d 881
Copy Citations