![]()
United
States Court of Appeals,
Sixth
Circuit.
UNITED
STATES of America, Plaintiff-Appellee,
v.
Caroll
A. WATKINS, Defendant-Appellant.
No. 92-5830.
Argued
Dec. 11, 1992.
Decided
June 1, 1993.
Defendant was convicted in the United States
District Court for the Middle District of Tennessee, John T. Nixon, Chief
Judge, of check kiting, and she appealed.
The Court of Appeals, Engel, Senior Circuit Judge, held that: (1) vacation of sentence and remand were
necessary, where sentencing judge failed to make adequate findings to support
calculating offense level under intended loss rule on basis of total amount of
checks deposited rather than on amount of cash withdrawn against deposits, and
(2) sentencing court's finding that defendant had not accepted responsibility
for her conduct, and so was not entitled to reduction in offense level, was not
clearly erroneous.
Sentence vacated and cause remanded for
resentencing.
West
Headnotes
[1] Criminal Law
1139
[1] Criminal Law
1158(1)
Court of Appeals
reviews de novo sentencing court's interpretation of Sentencing Guidelines, but
must uphold sentencing court's factual findings unless they are clearly
erroneous. 18 U.S.C.A. § 3742; U.S.S.G. § 1B1.1 et seq., 18 U.S.C.A.App.
[2] Sentencing and Punishment
973
(Formerly 110k1313(1))
Factual findings
upon which court relies in imposing sentence under Sentencing Guidelines need
not be based upon proof beyond reasonable doubt, but need only be supported by
preponderance of evidence. U.S.S.G. § 1B1.1 et seq., 18 U.S.C.A.App.
[3] Sentencing and Punishment
736
(Formerly 184k69(1))
In order for loss
in amount greater than actual loss to be relevant as "intended loss" in calculating offense level for fraud
offense under Sentencing Guidelines, defendant must have intended loss, it must
have been possible for defendant to cause loss, and defendant must have
completed, or been about to complete but for interruption, all of acts
necessary to bring about loss. U.S.S.G. § § 2F1.1, 2F1.1, comment. (n.7), 18 U.S.C.A.App.
[4] Sentencing and Punishment
996
(Formerly 184k69(1))
Sentencing court
was required to support with specific findings its calculating offense level
under intended loss rule based on total amount of checks presented for payment
or deposit by defendant as part of check kiting schemes, rather than on amount
of cash withdrawn against worthless deposits, where defendant argued that she
never intended to withdraw as cash all of checks that she deposited, various
check kiting schemes were interrupted at various stages of completion, and
extent to which defendant was capable of causing intended loss was at
issue. U.S.S.G. § 2F1.1, 18 U.S.C.A.App.
[5] Criminal Law
1158(1)
Question of extent
to which defendant has accepted responsibility for criminal conduct so as to
warrant reduction in offense level under Sentencing Guidelines is question of
fact, and sentencing court's findings will not be overturned unless clearly
erroneous. U.S.S.G. § 3E1.1(a), 18 U.S.C.A.App.
[6] Sentencing and Punishment
963
(Formerly 110k1311)
Burden of
establishing that defendant has accepted responsibility for criminal conduct so
as to warrant reduction of offense level under Sentencing Guidelines remains at
all times on defendant, who must clearly demonstrate acceptance of
responsibility. U.S.S.G. § 3E1.1(a), 18 U.S.C.A.App.
[7] Sentencing and Punishment
981
(Formerly 110k1313(2))
Sentencing court's
finding that defendant, who was convicted of check kiting, was not entitled to
reduction in offense level for accepting responsibility for criminal conduct
was supported by evidence that while she was awaiting sentencing, defendant deposited
into new account two checks drawn on closed accounts and attempted to cash two
checks against funds purportedly contained in new account. U.S.S.G. § 3E1.1(a), 18 U.S.C.A.App.
*1193 William Cohen, Asst. U.S. Atty. (argued), Ernest W. Williams, U.S. Atty., Nancy Jones, Asst. U.S. Atty. (briefed), Nashville, TN, for
plaintiff-appellee.
C. Douglas Thoresen, Asst. Federal Public
Defender (argued and briefed), Nashville, TN, for defendant-appellant.
Before:
KENNEDY and BATCHELDER, Circuit Judges;
and ENGEL, Senior Circuit Judge.
ENGEL, Senior Circuit Judge.
Caroll Watkins appeals the sentence imposed
following her conviction for check kiting.
She argues that the sentencing court erred in calculating the amount of
loss by relying on the face value of the worthless *1194 checks that she
presented rather than on the amount of cash that she succeeded in withdrawing
against those checks. She also argues
that the court erred in denying her a two-point reduction for acceptance of
responsibility on the grounds that she had engaged in similar conduct after her
arraignment. Because of uncertainties in the record and the absence of adequate
findings by the sentencing judge, we are unable to complete our statutory duty
of review. We therefore vacate the sentence and remand.
I
From late March through mid-May of 1991,
Watkins engaged in check kiting schemes involving five separate banks in the
Nashville area. In each case, Watkins
deposited worthless checks into an account that she had just opened, often
under an alias. Watkins quickly proceeded
to make cash withdrawals against those funds before the bank could determine
that the deposited checks were not backed by sufficient funds. Her schemes were interrupted at each bank
in various stages of completion.
Watkins pleaded guilty to a one-count
information charging her with defrauding the Nashville Bank of Commerce in
violation of 18 U.S.C. § 1344. In accordance
with Rule 32(c) of the Federal Rules of
Criminal Procedure and
section 6A1.1 of the U.S. Sentencing Commission's Guidelines Manual
("U.S.S.G." or "guidelines"), the probation department
prepared a presentence report. That report set forth in great detail the
factual allegations supporting the recommended sentence. The report described the scheme that
resulted in the defrauding of the Nashville Bank of Commerce, as well as
similar schemes involving First Tennessee Bank, Sovran Bank, Metropolitan
Federal Savings & Loan, and First American National Bank.
Although the record is somewhat unclear, the
presentence report appears to describe approximately 22 separate transactions,
perhaps more. Based on this evidence,
the probation report concluded that Watkins had presented for payment or
deposit checks totalling $42,600, and that she had succeeded in obtaining cash
in the amount of $13,100.
[FN1] While there is some dispute as to the total
number of checks involved, Watkins concedes that the total face amount of those
checks exceeded $40,000, and that she succeeded in obtaining $13,100.
FN1.
According to the probation department's summary, Watkins obtained $4,100 from
Nashville Bank of Commerce, $6,500 from Sovran Bank and $2,500 from First
American National Bank.
While Watkins was awaiting sentencing, she
attempted to open an account at SouthTrust Bank ("STB") in the name
"Caroll Fisher." Her initial
deposit was a $50 check drawn on her ex-husband's account, which she executed
by signing her ex-husband's name. When
a bank official learned that Watkins's ex- husband's account had been closed,
the official refused to complete the opening of the account. [FN2] The next
day, Watkins attempted to deposit a $3,000 check, drawn on another closed
account, into the STB account. The
bank accepted this check for deposit because bank procedures did not provide
for the confirmation of the existence of accounts into which funds were
deposited. Later that day, Watkins attempted to pay for a purchase with a $50
check drawn on the STB account. The
merchant contacted the bank and was informed that the account was invalid. When he informed Watkins of this, she drove
to the bank and attempted to cash a $500 check drawn on the account. While the branch manager was attempting to
determine the status of the account, Watkins became agitated and abruptly left
the bank.
FN2.
The bank official left a message on Watkins's answering machine informing her
that the account would not be opened and requesting that she return the starter
checks she had been given. Watkins
evidently received this message, for she eventually returned the unused starter
checks.
Watkins was sentenced under U.S.S.G. § 2F1.1 and assigned a base offense level of 6. The sentencing court adopted the presentence
report's recommendation that, since the "intended" loss exceeded
$40,000, the offense level be increased by five points pursuant to section 2F1.1(b)(1)(F). [FN3] The court *1195
also adopted the recommendation that the offense level be augmented by two
points pursuant to section 2F1.1(b)(2) to reflect the existence of more than minimal
planning. Finally, the court adopted
the report's recommendation that, in light of Watkins's apparent inability to
refrain from engaging in similar conduct, she be denied a two-point reduction
for acceptance of responsibility.
FN3. Section 2F1.1(b)(1) of the Guidelines, covering offenses involving
fraud and deceit, provides that the base offense level of six is to be enhanced
as follows:
If the loss exceeded $2,000, increase the offense level as follows:
Loss (Apply the Greatest) Increase in
Level
* * *
(D) More than $10,000 add 3
(E) More than $20,000 add 4
(F) More than $40,000 add 5
* * *
Accordingly, the court assigned Watkins a
total offense level of 13. This
resulted, in combination with a criminal history category of II, in a
sentencing range of 15-21 months. The
court sentenced Watkins to 15 months' incarceration and three years' supervised
release, and directed restitution in the amount of $13,100.
II
[1][2] Appellate review of sentences imposed pursuant to
the guidelines is generally governed by 18 U.S.C. § 3742. See U.S. v. Morrison, 983 F.2d 730
(6th Cir.1993). Under section 3742, we review de novo a sentencing court's
interpretation of the guidelines, but we must uphold a sentencing court's
factual findings unless they are clearly erroneous. Id. Furthermore, those factual findings need not be based
upon proof beyond a reasonable doubt, but need only be supported by a
preponderance of the evidence. U.S. v. Carroll, 893 F.2d 1502,
1506 (6th Cir.1990). With these principles in mind, we turn to
the merits of Watkins's appeal.
A
Watkins argues first that the sentencing
court erred in calculating the amount of loss by relying on the total amount of
deposits rather than on the amount of cash withdrawn against them. In response, the government points to application
note 7 in the commentary to U.S.S.G. § 2F1.1, which deems relevant for sentencing purposes the
intended amount of loss. The
government argues that Watkins intended to withdraw cash representing the total
face value of all of the checks that she had deposited. That total, under this view, controls as
the relevant amount of loss for purposes of sentencing.
The government is correct that section 2F1.1 focuses upon the intended or attempted loss as
opposed to proved actual loss.
Application note 7 of the commentary to the U.S.S.G. § 2F1.1 provides that "if 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."
Although this language may appear somewhat broad, several principles
limit its reach. First, the
application note must be read in conjunction with section 2X1.1(b)(1), which
governs attempts. That section
provides that the offense level for an attempt is three levels lower than for
the completed offense.
[3] Section 2X1.1(b)(1) further provides that the
offense level need not be reduced if
the defendant completed all the acts the defendant believed necessary
for successful completion of the substantive offense or the circumstances
demonstrate that the defendant was about to complete all such acts but for
apprehension or interruption by some similar event beyond the defendant's
control.
Thus, for intended loss to be
deemed relevant under application note 7 to
section 2F1.1, the defendant's conduct must meet the
requirements of section 2X1.1(b)(1).
If the defendant's conduct does not meet those requirements, that
conduct qualifies only as an attempt, and section 2X1.1(b)(1) directs that the
offense level be reduced accordingly.
[FN4]
FN4.
Where the offense was partially completed, application note 4 to section 2X1.1
sets forth the proper procedure. The
commentary to that section provides:
In certain cases the participants may have completed (or have been
about to complete but for apprehension or interruption) all of the acts
necessary for the successful completion of part, but not all, of the intended
offense. In such cases, the offense
level for the count (or group of closely-related multiple counts) is whichever
of the following is greater: the offense level for the intended offense minus
three levels (under section 2X1.1(b)(1), (b)(2), or (b)(3)(A)), or the offense
level for the part of the offense for which the necessary acts were completed
(or about to be completed but for apprehension or interruption). For example, where the intended offense was
the theft of $800,000 but the participants completed (or were about to
complete) only the acts necessary to steal $30,000, the offense level is the
level for the theft of $800,000 minus three levels, or the offense level for
the theft of $30,000, whichever is greater.
*1196 A second limitation on the broad
reach of the "intended loss" rule is that the intended loss must have
been possible to be deemed relevant. U.S. v. Khan, 969 F.2d 218, 221
(6th Cir.1992) ("the
fraud loss must reflect 'economic reality.' ") (quoting U.S. v. Schneider, 930 F.2d 555,
559 (7th Cir.1991)). See also U.S. v. Santiago, 977 F.2d 517
(10th Cir.1992). Regardless
of the defendant's intent, the defendant may not be sentenced on the basis of
harm that he or she was incapable of inflicting. Id.
Thus three factors must be present for an
amount of loss to be relevant under section 2F1.1. First,
as application note 7 instructs, the defendant must have intended the
loss. Second, it must have been
possible for the defendant to cause the loss.
Third, the defendant must have completed or been about to complete but
for interruption, all of the acts necessary to bring about the loss.
[4] Although the record frustrates a more careful
analysis, it appears that all three of these limitations may be relevant
here. First, Watkins's intent is at
issue, because she argues she never intended to withdraw as cash all of the
checks that she deposited. Second, the
extent to which Watkins completed her schemes and the events that prevented her
from bringing her schemes to fruition, are also relevant since those schemes
were interrupted at various stages of completion. Finally, the extent to which Watkins was capable of causing the
full amount of the loss is also at issue, since realistically the record
suggests that Watkins could not have withdrawn the full amount of every check
that she deposited.
[FN5]
FN5.
Specifically, the record contains indications that the sentencing judge might
have counted some funds twice by adding together several transactions involving
the same amount of bogus funds. For
example, if Watkins deposited a worthless $1,000 check into bank A, wrote a
check against those funds for deposit into bank B, and then wrote a check for
$1,000 cash against the funds in bank B, the relevant figure for purposes of
sentencing is not $3,000, but $1,000.
The government presented no evidence
regarding these issues at the sentencing hearing. The sentencing court therefore had to rely exclusively on the
contents of the presentence report in making its findings regarding the
relevant amount of loss. We have that
report, and conclude that it does not provide a sufficient basis for the
sentencing court's findings. The
report contains very little if any evidence that Watkins intended to, or could
have, completely drained her accounts of the funds purportedly contained
therein. Indeed, the report fails to support the sentencing court's findings
concerning the total face amount of checks.
Accordingly, we vacate the sentence and remand to the district court
with instructions to make more specific findings in accordance with this opinion.
We recognize that our remand may have no
effect on Watkins's sentence. First,
the district court may, at resentencing, find that the relevant amount of loss
is greater than $40,000. Further, we
are aware that Watkins's sentence--fifteen months--falls within the range of
available sentences as long as the relevant amount of loss is deemed to be
anywhere from $10,000 to $70,000.
[FN6] Nonetheless, the sentencing court's original
sentence, at the bottom of the appropriate range, suggests that the court might
have been inclined to impose an even lower sentence, given the opportunity to
do so. [FN7] We *1197 do not suggest it
necessarily should have; that is the
province of the sentencing judge.
FN6.
If the amount of harm is deemed to be between $10,000 and $20,000, the
sentencing court may select from a range of ten to sixteen months. If the harm is between $20,000 and $40,000,
the court may select a sentence anywhere between 12 and 18 months. U.S.S.G. § § 2F1.1(b)(1)(D)-(G).
FN7.
We note also that, in light of Watkins's current release date-- October 8,
1993--and in light of the possibility that the district court might resentence
Watkins to a lesser term, the court may wish to consider entertaining a motion
for release pending resentencing pursuant to Rule 46(c) and 18 U.S.C. § 3143(a).
B
Watkins next contends that the sentencing
court should have granted her a two- point reduction to reflect her acceptance
of responsibility. In light of our
decision to remand this case for resentencing, we need not address this
issue. U.S. v. Gessa, 971 F.2d 1257, 1267
(6th Cir.1992) (en banc); U.S. v. Taylor, 933 F.2d 307, 313
(5th Cir.1991). Because this issue will no doubt arise at
resentencing, however, we provide the district court with instructions in the
interest of judicial economy. Taylor, 933 F.2d at 313; Ryder Truck Lines, Inc. v.
Teamsters Freight Local No. 480, 705 F.2d 851, 858 (6th Cir.1983).
[5][6][7] The question of the extent to which a defendant
has accepted responsibility for criminal conduct is generally deemed a question
of fact, and the sentencing court's findings in this regard will not be
overturned unless clearly erroneous.
Furthermore, the burden of establishing this mitigating factor remains
at all times on the defendant, who must "clearly demonstrate"
acceptance of responsibility. U.S.S.G. § 3E1.1(a). Here,
evidence established that Watkins deposited into a new account at SouthTrust
Bank a $50 check drawn on the closed account of her ex-husband and a $3,000
drawn on another closed account. The
record also reveals that Watkins attempted to cash not one but two checks
against the funds purportedly contained in the new account. Finally, there was evidence that Watkins
became agitated when the branch manager decided to look into the problem and
that she abruptly left the bank.
We find that this evidence shows clearly that
Watkins either cannot or will not stop engaging in the type of behavior that
resulted in the sentence from which she appeals. Accordingly, we cannot deem clearly erroneous the sentencing
court's finding that Watkins had not accepted responsibility for her conduct.
III
For the foregoing reasons, we VACATE the
sentence and REMAND the cause for resentencing consistent with this opinion.
END OF DOCUMENT
United
States Court of Appeals,
Sixth
Circuit.
UNITED
STATES of America, Plaintiff-Appellee,
v.
Caroll
A. WATKINS, Defendant-Appellant.
No. 92-5830.
Argued
Dec. 11, 1992.
Decided
June 1, 1993.
Defendant was convicted in the United States
District Court for the Middle District of Tennessee, John T. Nixon, Chief
Judge, of check kiting, and she appealed.
The Court of Appeals, Engel, Senior Circuit Judge, held that: (1) vacation of sentence and remand were
necessary, where sentencing judge failed to make adequate findings to support
calculating offense level under intended loss rule on basis of total amount of
checks deposited rather than on amount of cash withdrawn against deposits, and
(2) sentencing court's finding that defendant had not accepted responsibility
for her conduct, and so was not entitled to reduction in offense level, was not
clearly erroneous.
Sentence vacated and cause remanded for
resentencing.
[1] Criminal Law
1139
[1] Criminal Law
1158(1)
Court of Appeals
reviews de novo sentencing court's interpretation of Sentencing Guidelines, but
must uphold sentencing court's factual findings unless they are clearly
erroneous. 18 U.S.C.A. § 3742; U.S.S.G. § 1B1.1 et seq., 18 U.S.C.A.App.
[2] Sentencing and Punishment
973
(Formerly 110k1313(1))
Factual findings
upon which court relies in imposing sentence under Sentencing Guidelines need
not be based upon proof beyond reasonable doubt, but need only be supported by
preponderance of evidence. U.S.S.G. § 1B1.1 et seq., 18 U.S.C.A.App.
[3] Sentencing and Punishment
736
(Formerly 184k69(1))
In order for loss
in amount greater than actual loss to be relevant as "intended loss" in calculating offense level for fraud
offense under Sentencing Guidelines, defendant must have intended loss, it must
have been possible for defendant to cause loss, and defendant must have
completed, or been about to complete but for interruption, all of acts
necessary to bring about loss. U.S.S.G. § § 2F1.1, 2F1.1, comment. (n.7), 18 U.S.C.A.App.
[4] Sentencing and Punishment
996
(Formerly 184k69(1))
Sentencing court
was required to support with specific findings its calculating offense level
under intended loss rule based on total amount of checks presented for payment
or deposit by defendant as part of check kiting schemes, rather than on amount
of cash withdrawn against worthless deposits, where defendant argued that she
never intended to withdraw as cash all of checks that she
deposited, various check kiting schemes were interrupted at various stages of
completion, and extent to which defendant was capable of causing intended loss
was at issue. U.S.S.G. § 2F1.1, 18 U.S.C.A.App.
[5] Criminal Law
1158(1)
Question of extent
to which defendant has accepted responsibility for criminal conduct so as to
warrant reduction in offense level under Sentencing Guidelines is question of
fact, and sentencing court's findings will not be overturned unless clearly
erroneous. U.S.S.G. § 3E1.1(a), 18 U.S.C.A.App.
[6] Sentencing and Punishment
963
(Formerly 110k1311)
Burden of
establishing that defendant has accepted responsibility for criminal conduct so
as to warrant reduction of offense level under Sentencing Guidelines remains at
all times on defendant, who must clearly demonstrate acceptance of
responsibility. U.S.S.G. § 3E1.1(a), 18 U.S.C.A.App.
[7] Sentencing and Punishment
981
(Formerly 110k1313(2))
Sentencing court's
finding that defendant, who was convicted of check kiting, was not entitled to
reduction in offense level for accepting responsibility for criminal conduct
was supported by evidence that while she was awaiting sentencing, defendant
deposited into new account two checks drawn on closed accounts and attempted to
cash two checks against funds purportedly contained in new account. U.S.S.G. § 3E1.1(a), 18 U.S.C.A.App.
*1193 William Cohen, Asst. U.S. Atty. (argued), Ernest W. Williams, U.S. Atty., Nancy Jones, Asst. U.S. Atty. (briefed), Nashville, TN, for
plaintiff-appellee.
C. Douglas Thoresen, Asst. Federal Public
Defender (argued and briefed), Nashville, TN, for defendant-appellant.
Before:
KENNEDY and BATCHELDER, Circuit Judges;
and ENGEL, Senior Circuit Judge.
ENGEL, Senior Circuit Judge.
Caroll Watkins appeals the sentence imposed
following her conviction for check kiting.
She argues that the sentencing court erred in calculating the amount of
loss by relying on the face value of the worthless *1194 checks that she
presented rather than on the amount of cash that she succeeded in withdrawing
against those checks. She also argues
that the court erred in denying her a two-point reduction for acceptance of
responsibility on the grounds that she had engaged in similar conduct after her
arraignment. Because of uncertainties in the record and the absence of adequate
findings by the sentencing judge, we are unable to complete our statutory duty
of review. We therefore vacate the sentence and remand.
I
From late March through mid-May of 1991,
Watkins engaged in check kiting schemes involving five separate banks in the
Nashville area. In each case, Watkins
deposited worthless checks into an account that she had just opened, often
under an alias. Watkins quickly
proceeded to make cash withdrawals against those funds before the bank could
determine that the deposited checks were not backed by sufficient funds. Her schemes were interrupted at each bank
in various stages of completion.
Watkins pleaded guilty to a one-count
information charging her with defrauding the Nashville Bank of Commerce in
violation of 18 U.S.C. § 1344. In accordance with Rule 32(c) of the Federal Rules of
Criminal Procedure and
section 6A1.1 of the U.S. Sentencing Commission's Guidelines Manual
("U.S.S.G." or "guidelines"), the probation department
prepared a presentence report. That report set forth in great detail the
factual allegations supporting the recommended sentence. The report described the scheme that
resulted in the defrauding of the Nashville Bank of Commerce, as well as
similar schemes involving First Tennessee Bank, Sovran Bank, Metropolitan
Federal Savings & Loan, and First American National Bank.
Although the record is somewhat unclear, the
presentence report appears to describe approximately 22 separate transactions,
perhaps more. Based on this evidence,
the probation report concluded that Watkins had presented for payment or
deposit checks totalling $42,600, and that she had succeeded in obtaining cash
in the amount of $13,100. [FN1] While there is some dispute as to the total
number of checks involved, Watkins concedes that the total face amount of those
checks exceeded $40,000, and that she succeeded in obtaining $13,100.
FN1. According to the probation department's summary,
Watkins obtained $4,100 from Nashville Bank of Commerce, $6,500 from Sovran
Bank and $2,500 from First American National Bank.
While Watkins was awaiting sentencing, she
attempted to open an account at SouthTrust Bank
("STB") in the name "Caroll Fisher." Her initial deposit was a $50 check drawn
on her ex-husband's account, which she executed by signing her ex-husband's
name. When a bank official learned
that Watkins's ex- husband's account had been closed, the official refused to
complete the opening of the account. [FN2] The next
day, Watkins attempted to deposit a $3,000 check, drawn on another closed
account, into the STB account. The
bank accepted this check for deposit because bank procedures did not provide
for the confirmation of the existence of accounts into which funds were
deposited. Later that day, Watkins attempted to pay for a purchase with a $50
check drawn on the STB account. The
merchant contacted the bank and was informed that the account was invalid. When he informed Watkins of this, she drove
to the bank and attempted to cash a $500 check drawn on the account. While the branch manager was attempting to
determine the status of the account, Watkins became agitated and abruptly left
the bank.
FN2. The bank official left a message on Watkins's
answering machine informing her that the account would not be opened and
requesting that she return the starter checks she had been given. Watkins evidently received this message,
for she eventually returned the unused starter checks.
Watkins was sentenced under U.S.S.G. § 2F1.1 and assigned a base offense
level of 6. The sentencing court
adopted the presentence report's recommendation that, since the
"intended" loss exceeded $40,000, the offense level be increased by
five points pursuant to section 2F1.1(b)(1)(F). [FN3] The court *1195 also adopted the
recommendation that the offense level be augmented by two points pursuant to section 2F1.1(b)(2) to reflect the existence of more than minimal
planning. Finally, the court adopted
the report's recommendation that, in light of Watkins's apparent inability to
refrain from engaging in similar conduct, she be denied a two-point reduction
for acceptance of responsibility.
FN3. Section 2F1.1(b)(1) of the Guidelines, covering offenses involving
fraud and deceit, provides that the base offense level of six is to be enhanced
as follows:
If the loss exceeded $2,000, increase the offense level as follows:
Loss (Apply the Greatest) Increase in
Level
* * *
(D) More than $10,000 add 3
(E) More than $20,000 add 4
(F) More than $40,000 add 5
Accordingly, the court assigned Watkins a
total offense level of 13. This
resulted, in combination with a criminal history category of II, in a
sentencing range of 15-21 months. The
court sentenced Watkins to 15 months' incarceration and three years' supervised
release, and directed restitution in the amount of $13,100.
II
[1][2] Appellate review of sentences imposed pursuant to
the guidelines is generally governed by 18 U.S.C. § 3742. See U.S. v. Morrison, 983 F.2d 730
(6th Cir.1993). Under section 3742, we review de novo a sentencing court's
interpretation of the guidelines, but we must uphold a sentencing court's
factual findings unless they are clearly erroneous. Id. Furthermore, those factual findings need not be
based upon proof beyond a reasonable doubt, but need only be supported by a
preponderance of the evidence. U.S. v. Carroll, 893 F.2d 1502,
1506 (6th Cir.1990). With these principles in mind, we turn to
the merits of Watkins's appeal.
A
Watkins argues first that the sentencing
court erred in calculating the amount of loss by relying on the total amount of
deposits rather than on the amount of cash withdrawn against them. In response, the government points to application note 7 in the commentary to U.S.S.G. § 2F1.1, which deems relevant for sentencing purposes the
intended amount of loss. The
government argues that Watkins intended to withdraw cash representing the total
face value of all of the checks that she had deposited. That total, under this view, controls as
the relevant amount of loss for purposes of sentencing.
The government is correct that section 2F1.1 focuses upon the intended or attempted loss as
opposed to proved actual loss.
Application note 7 of the commentary to the U.S.S.G. § 2F1.1 provides that "if 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."
Although this language may appear somewhat broad, several principles
limit its reach. First, the
application note must be read in conjunction with section 2X1.1(b)(1), which
governs attempts. That section provides
that the offense level for an attempt is three levels lower than for the completed
offense.
[3]
Section 2X1.1(b)(1) further provides that the offense level need not be reduced
if
the defendant completed all the acts the defendant believed necessary
for successful completion of the substantive offense or the circumstances
demonstrate that the defendant was about to complete all such acts but for
apprehension or interruption by some similar event beyond the defendant's
control.
Thus, for
intended loss to be deemed relevant under application note 7 to section 2F1.1, the defendant's conduct must meet the requirements
of section 2X1.1(b)(1). If the
defendant's conduct does not meet those requirements, that conduct qualifies
only as an attempt, and section 2X1.1(b)(1) directs that the offense level be
reduced accordingly.
[FN4]
FN4. Where the offense was partially completed,
application note 4 to section 2X1.1 sets forth the proper procedure. The commentary to that section provides:
In certain cases the participants may have completed (or have been
about to complete but for apprehension or interruption) all of the acts
necessary for the successful completion of part, but not all, of the intended
offense. In such cases, the offense level
for the count (or group of closely-related multiple counts) is whichever of the
following is greater: the offense level for the intended offense minus three
levels (under section 2X1.1(b)(1), (b)(2), or (b)(3)(A)), or the offense level
for the part of the offense for which the necessary acts were completed (or
about to be completed but for apprehension or interruption). For example, where the intended offense was
the theft of $800,000 but the participants completed (or were about to
complete) only the acts necessary to steal $30,000, the offense level is the
level for the theft of $800,000 minus three levels, or
the offense level for the theft of $30,000, whichever is greater.
*1196 A second limitation on the broad
reach of the "intended loss" rule is that the intended loss must have
been possible to be deemed relevant. U.S. v. Khan, 969 F.2d 218, 221
(6th Cir.1992) ("the
fraud loss must reflect 'economic reality.' ") (quoting U.S. v. Schneider, 930 F.2d 555,
559 (7th Cir.1991)). See also U.S. v. Santiago, 977 F.2d 517
(10th Cir.1992). Regardless
of the defendant's intent, the defendant may not be sentenced on the basis of
harm that he or she was incapable of inflicting. Id.
Thus three factors must be present for an
amount of loss to be relevant under section 2F1.1. First,
as application note 7 instructs, the defendant must have intended the
loss. Second, it must have been
possible for the defendant to cause the loss.
Third, the defendant must have completed or been about to complete but
for interruption, all of the acts necessary to bring about the loss.
[4]
Although the record frustrates a more careful analysis, it appears that all
three of these limitations may be relevant here. First, Watkins's intent is at issue, because she argues she
never intended to withdraw as cash all of the checks that she deposited. Second, the extent to which Watkins
completed her schemes and the events that prevented her from bringing her
schemes to fruition, are also relevant since those
schemes were interrupted at various stages of completion. Finally, the extent to which Watkins was
capable of causing the full amount of the loss is also at issue, since
realistically the record suggests that Watkins could not have withdrawn the
full amount of every check that she deposited. [FN5]
FN5. Specifically, the record contains indications that
the sentencing judge might have counted some funds twice by adding together
several transactions involving the same amount of bogus funds. For example, if Watkins deposited a
worthless $1,000 check into bank A, wrote a check against those funds for
deposit into bank B, and then wrote a check for $1,000 cash against the funds
in bank B, the relevant figure for purposes of sentencing is not $3,000, but
$1,000.
The government presented no evidence
regarding these issues at the sentencing hearing. The sentencing court therefore had to rely exclusively on the
contents of the presentence report in making its findings regarding the
relevant amount of loss. We have that
report, and conclude that it does not provide a sufficient basis for the
sentencing court's findings. The
report contains very little if any evidence that Watkins intended to, or could
have, completely drained her accounts of the funds purportedly contained
therein. Indeed, the report fails to support the
sentencing court's findings concerning the total face amount of checks. Accordingly, we vacate the sentence and
remand to the district court with instructions to make more specific findings
in accordance with this opinion.
We recognize that our remand may have no
effect on Watkins's sentence. First,
the district court may, at resentencing, find that the relevant amount of loss
is greater than $40,000. Further, we
are aware that Watkins's sentence--fifteen months--falls within the range of
available sentences as long as the relevant amount of loss is deemed to be
anywhere from $10,000 to $70,000. [FN6]
Nonetheless, the sentencing court's original sentence, at the bottom of
the appropriate range, suggests that the court might have been inclined to
impose an even lower sentence, given the opportunity to do so. [FN7] We *1197
do not suggest it necessarily should have;
that is the province of the sentencing judge.
FN6. If the amount of harm is deemed to be between
$10,000 and $20,000, the sentencing court may select from a range of ten to
sixteen months. If the harm is between
$20,000 and $40,000, the court may select a sentence anywhere between 12 and 18
months. U.S.S.G. § § 2F1.1(b)(1)(D)-(G).
FN7. We note also that, in light of Watkins's current
release date-- October 8, 1993--and in light of the possibility that the
district court might resentence Watkins to a lesser term, the court may wish to
consider entertaining a motion for release pending resentencing pursuant to Rule
46(c) and 18 U.S.C. § 3143(a).
B
Watkins next contends that the sentencing
court should have granted her a two- point reduction to reflect her acceptance
of responsibility. In light of our
decision to remand this case for resentencing, we need not address this
issue. U.S. v. Gessa, 971 F.2d 1257, 1267
(6th Cir.1992) (en banc); U.S. v. Taylor, 933 F.2d 307, 313
(5th Cir.1991). Because this issue will no doubt arise at
resentencing, however, we provide the district court with instructions in the
interest of judicial economy. Taylor, 933 F.2d at 313; Ryder Truck Lines, Inc. v.
Teamsters Freight Local No. 480, 705 F.2d 851, 858 (6th Cir.1983).
[5][6][7]
The question of the extent to which a defendant has accepted responsibility for
criminal conduct is generally deemed a question of fact, and the sentencing court's
findings in this regard will not be overturned unless clearly erroneous. Furthermore, the burden of establishing
this mitigating factor remains at all times on the defendant, who must
"clearly demonstrate" acceptance of responsibility. U.S.S.G. § 3E1.1(a). Here,
evidence established that Watkins deposited into a new account at SouthTrust
Bank a $50 check drawn on the closed account of her ex-husband and a $3,000
drawn on another closed account. The
record also reveals that Watkins attempted to cash not one but two checks
against the funds purportedly contained in the new account. Finally, there was evidence that Watkins
became agitated when the branch manager decided to look into the problem and
that she abruptly left the bank.
We find that this evidence shows clearly that
Watkins either cannot or will not stop engaging in the type of behavior that
resulted in the sentence from which she appeals. Accordingly, we cannot deem clearly erroneous the sentencing
court's finding that Watkins had not accepted responsibility for her conduct.
III
For the foregoing reasons, we VACATE the
sentence and REMAND the cause for resentencing consistent with this opinion.
END OF DOCUMENT