United States v. Gadson ( 2023 )

United States Court of Appeals
For the First Circuit
Nos. 22-1444, 22-1449
UNITED STATES,
Appellee,
v.
BERNARD GADSON,
Defendant, Appellant.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Jon D. Levy, U.S. District Judge]
Before
Kayatta, Selya, and Howard,
Circuit Judges.
Chauncey B. Wood, with whom Danya F. Fullerton and Wood &
Nathanson, LLP were on brief, for appellant.
Benjamin M. Block, Assistant United States Attorney, with
whom Darcie N. McElwee, United States Attorney, was on brief, for
appellee.
August 9, 2023
KAYATTA, Circuit Judge. Bernard Gadson was sentenced to
110 months' imprisonment after pleading guilty to crimes arising
from his role in a bank fraud scheme. On appeal, he challenges
the procedural reasonableness of his sentence, asserting that the
district court miscalculated the appropriate Guidelines sentencing
range. He also challenges the inclusion of certain amounts in the
court's restitution order. For the following reasons, we affirm
Gadson's prison sentence, and vacate in part the restitution order.
I.
We begin by summarizing the factual background and
procedural history that form the basis of Gadson's appeals.
"Because [Gadson pleaded] guilty, we draw the relevant facts from
the change-of-plea colloquy, the unchallenged portions of the
Presentence Investigation Report ('PSR'), and the sentencing
hearing transcript." United States v. González-Andino, 58 F.4th
563, 565 (1st Cir. 2023) (quoting United States v. Díaz-Rivera,
957 F.3d 20, 22 (1st Cir. 2020)).
On October 25, 2021, Gadson pleaded guilty to three
crimes stemming from his involvement in a bank fraud conspiracy:
(i) attempted bank fraud, in violation of 18 U.S.C. §§ 2, 1344(2);
(ii) aiding and abetting aggravated identity theft, in violation
of 18 U.S.C. §§ 2, 1028A(1); and (iii) criminal contempt,1 in
1 Gadson was initially arrested in August 2019 and
subsequently released on bond. The criminal contempt charge
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violation of 18 U.S.C. § 401(3). As relevant here, Gadson and his
coconspirators obtained the names and personal information
(including dates of birth and social security numbers) of real
individuals, and then used that information to apply for loans for
themselves in those persons' names, with no intention of repaying
the loans. To support the loan applications, Gadson and his
coconspirators also created and used fraudulent supporting
documents, such as counterfeit driver's licenses, pay stubs, and
lease agreements. The specific conduct that formed the basis for
the bank fraud and identity theft charges occurred in January 2019.
The district court sentenced Gadson to 110 months'
imprisonment. In determining the total offense level for bank
fraud and criminal contempt (which were grouped together under the
applicable United States Sentencing Guidelines), the court added
twelve levels under section 2B1.1 for the monetary losses
associated with Gadson's conduct, including losses stemming from
uncharged relevant conduct. See United States v. Flete-Garcia,
925 F.3d 17, 28 (1st Cir. 2019). Pursuant to the applicable
Guidelines commentary, the court looked to "intended loss" rather
than "actual loss" because the "intended loss" was the greater of
the two. U.S.S.G. § 2B1.1, cmt. n.3(A).
resulted from conduct that violated the terms of his pretrial
release.
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Additionally, the court denied Gadson's requested three-
level reduction for acceptance of responsibility under
section 3E1.1. The government had initially agreed in Gadson's
plea agreement to recommend that the district court apply the
reduction. And the PSR recommended that Gadson receive the
reduction (although it said it was a "close call"), noting the
parties' agreement. But the government had reserved the right to
change its view, and ultimately opposed the credit because Gadson,
according to the government, "falsely den[ied], and frivolously
contest[ed], relevant conduct" during the sentencing proceedings.
The district court sided with the government, resting
the denial on the fact that Gadson had not "truthfully admitted
the conduct that . . . comprise[d] the offense of conviction."
Although he had pleaded guilty, Gadson contested the government's
characterization of his role in the scheme. He disputed the
application of a three-level increase for his role as a "manager
or supervisor" of the scheme, as well as the inclusion of much of
the conduct taken into account for the purpose of determining loss
under section 2B1.1. The court rejected Gadson's contentions, and
asked "whether his challenging [of] the findings in the
[presentence] report associated with his role [was] frivolous and
so lacking in merit as to disqualify him from acceptance of
responsibility credit." The court then observed that Gadson had
incorrectly "disputed . . . his role in the conspiracy, shifting
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blame to his co-conspirators [and] characterizing himself as a
minor player relative to them." The court found "ample evidence
that he was the top person in this criminal activity," and
determined that Gadson "ha[d] not accepted that." "With that
background," the court could not "in good faith conclude that he
ha[d] sufficiently taken responsibility for his actions so as to
receive a reduction."
Ultimately, the court calculated a total offense level
of twenty-seven for bank fraud and criminal contempt, yielding a
Guidelines sentencing range of 100–125 months. The court then
imposed a downward-variant sentence of 80 months for those counts,
to run consecutively with the mandatory minimum sentence of
24 months for identity theft and a 6-month sentence pursuant to 18
U.S.C. § 3147 for committing a new offense while on pretrial
release.
The court also ordered restitution in the amount of
$256,537. Included in that calculation was an auto loan for
$107,437 issued by TD Bank to Gadson in October 2020. Gadson
obtained the loan in his own name but submitted fraudulent
documents regarding his income and employment when applying for
it. Gadson was current on all payments on the loan at the time of
sentencing, and the court applied a credit of $13,196 for the
amount already paid off.
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II.
Gadson argues that his prison sentence was procedurally
unreasonable based on two Guidelines calculation errors. First,
he challenges the district court's use of "intended loss" rather
than "actual loss" in determining his offense level for the bank
fraud and criminal contempt counts. Second, he asserts that the
court erred in denying the three-level reduction for acceptance of
responsibility. We address these arguments in turn.
A.
Gadson concedes that he did not raise his "actual loss"
argument to the district court, and thus we review it for plain
error. See United States v. Lewis, 963 F.3d 16, 25 (1st Cir.
2020). "In order to establish plain error, a defendant must show
that: '(1) there was error; (2) the error was plain; (3) the error
affected [his] substantial rights; and (4) the error adversely
impacted the fairness, integrity, or public reputation of judicial
proceedings.'" Id. (alteration in original) (quoting United
States v. Clemens, 738 F.3d 1, 10 (1st Cir. 2013)).
We begin our review with the relevant Guidelines text.
For certain theft crimes, including Gadson's, section 2B1.1
specifies a base offense level and then provides for offense-level
increases depending on the amount of the loss. U.S.S.G.
§ 2B1.1(a), (b)(1). If, for example, the loss is more than $6,500
and less than or equal to $15,000, two levels are added; if the
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loss is more than $15,000 and less than or equal to $40,000, four
levels are added, and so on. U.S.S.G. § 2B1.1(b)(1)(B), (C).
The Guidelines themselves do not define "loss," but the
Guidelines commentary to section 2B1.1 provides that "loss is the
greater of actual loss or intended loss." U.S.S.G. § 2B1.1,
cmt. n.3(A). The commentary then defines "actual loss" as "the
reasonably foreseeable pecuniary harm that resulted from the
offense," and defines "intended loss" as "the pecuniary harm that
the defendant purposely sought to inflict." U.S.S.G. § 2B1.1,
cmt. n.3(A)(i)–(ii).
As discussed above, the district court here determined
that intended loss was greater than actual loss, ultimately
resulting in a twelve-level increase in Gadson's total offense
level. Gadson asserts on appeal that the district court should
have used actual loss instead of intended loss, and that, had the
court done so, he would have received at most a ten-level increase
under section 2B1.1.
Gadson thus asks us to reject the commentary's
definition of "loss." In Stinson v. United States, 508 U.S. 36(1993), the Supreme Court held that the Guidelines commentary
should be "treated as an agency's interpretation of its own
legislative rule," and that, accordingly, the commentary "must be
given 'controlling weight unless it is plainly erroneous or
inconsistent with the regulation.'" Id. at 44–45 (quoting Bowles
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v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945)). Applying
Stinson, we have held that "disregarding commentary in favor of a
guideline or statute is permissible 'only when "following one will
result in violating the dictates of the other."'" United States
v. Duong, 665 F.3d 364, 368 (1st Cir. 2012) (quoting United States
v. Piper, 35 F.3d 611, 617 (1st Cir. 1994)).
Gadson makes no argument that he could prevail if Stinson
applied. Instead, he asserts that the Supreme Court's decision in
Kisor v. Wilkie, 139 S. Ct. 2400 (2019), changed the standard for
deferring to the commentary. Kisor clarified that courts should
not defer to an agency's interpretation of its own regulation
"unless the regulation is genuinely ambiguous." Id. at 2415; see
Lewis, 963 F.3d at 23–24 (noting that although Kisor rejected a
challenge to the Auer/Seminole Rock doctrine of agency deference,
"[i]t is nevertheless fair to say that Kisor sought to clarify the
nuances of judicial deference to agency interpretations of
regulations"). "And before concluding that a rule is genuinely
ambiguous, a court must exhaust all the 'traditional tools' of
construction." Kisor, 139 S. Ct. at 2415 (quoting Chevron,
U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 843
n.9 (1984)). "Then, '[i]f genuine ambiguity remains,' a court
must ensure that 'the agency's reading [is] "reasonable,"' meaning
that it 'must come within the zone of ambiguity the court has
identified after employing all its interpretive tools.'" Lewis,
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963 F.3d at 24 (alterations in original) (citation omitted)
(quoting Kisor, 139 S. Ct. at 2415–16).
Applying Kisor, Gadson argues that "loss" as used in
section 2B1.1 unambiguously means "actual loss." Gadson further
asserts that even if "loss" were ambiguous, defining that term to
include "intended loss" would not be reasonable.
Gadson must do more than simply prove that the Guidelines
mean what he says they mean. Rather, because we are reviewing
Gadson's claim for plain error, he must prove that the district
court's error "was plain -- which is to say, clear or obvious."
United States v. Romero, 906 F.3d 196, 209 (1st Cir. 2018). And
even assuming that Kisor abrogated Stinson, and further assuming
that the district court committed error by using intended loss,
any such error was not "clear or obvious."
Gadson concedes that his reading of section 2B1.1 does
not directly follow from First Circuit precedent. "With no binding
precedent on his side, [he] cannot succeed on plain-error review
unless he shows his [loss] theory is compelled by the guidelines'
language itself." Id. at 207. In making that argument, Gadson
cites heavily from United States v. Banks, 55 F.4th 246 (3d Cir.
2022), in which the Third Circuit reviewed de novo whether
section 2B1.1 encompasses intended loss. Id. at 255 n.29. That
court concluded that "in the context of a sentence enhancement for
basic economic offenses, the ordinary meaning of the word 'loss'
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is the loss the victim actually suffered." Id. at 258. The court,
applying Kisor, placed "no weight" on the commentary's definition
to the contrary. Id.
In reaching its conclusion, the Third Circuit explained,
"The Guideline does not mention 'actual' versus 'intended' loss;
that distinction appears only in the commentary. That absence
alone indicates that the Guideline does not include intended loss."
Id. at 257. The court also relied in part on dictionaries,
finding, "Our review of common dictionary definitions of 'loss'
point to an ordinary meaning of 'actual loss.' None of these
definitions suggest an ordinary understanding that 'loss' means
'intended loss.'" Id. at 258.
Because the Third Circuit was reviewing the question de
novo, it expressed no opinion as to whether its interpretation was
"clear or obvious." So even if we were to agree with that court's
ultimate conclusion that "loss" means actual loss, it would not
resolve the matter here. See Lewis, 963 F.3d at 27 (concluding,
with respect to a pure question of law, that "any error, if there
was one, could not have been 'clear or obvious' as required to
establish plain error"); Romero, 906 F.3d at 209 (same); United
States v. Caraballo-Rodriguez, 480 F.3d 62, 76 (1st Cir. 2007)
(same). The Third Circuit itself provided reason to believe that
its conclusion in Banks was not necessarily "obvious," noting that
in certain contexts "'loss' could mean pecuniary or non-pecuniary
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loss and could mean actual or intended loss." Banks, 55 F.4th at
258.
More importantly, our discussions of section 2B1.1 in
past opinions put paid to the claim that it is "obvious" that
"loss" does not encompass intended loss. Although we have never
squarely addressed a challenge to the commentary's use of intended
loss (either before or after Kisor), we have regularly -- both
before and after Kisor -- explained the concept in the context of
loss calculation challenges. See, e.g., United States v. Akoto,
61 F.4th 36, 45 (1st Cir. 2023) (quoting the commentary to explain
that loss for purposes of section 2B1.1 is "the greater of actual
loss or intended loss"); United States v. Carrasquillo-Vilches, 33
F.4th 36, 41–42 (1st Cir. 2022) (same); United States v. Rueda,
933 F.3d 6, 8 (1st Cir. 2019) (same); Flete-Garcia, 925 F.3d at
28 (same); United States v. Stokes, 829 F.3d 47, 54 (1st Cir. 2016)
(same). In none of these cases have we expressed any doubt
regarding the use of intended loss. To the contrary, we have
described such use approvingly, noting that "[i]n fraud cases,
amount of loss is meant to be a proxy for the harm (both actual
and intended) inflicted by the fraudster's nefarious activities,"
Flete-Garcia, 925 F.3d at 33 (emphasis added), and that "intended
loss is frequently a better measure of culpability than actual
loss," United States v. Appolon, 695 F.3d 44, 67 (1st Cir. 2012)
(emphasis added). These statements provide, at the very least,
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reasonable arguments as to why "loss" as used in section 2B1.1
does not unambiguously mean only actual loss, and why "intended
loss" falls within that term's "zone of ambiguity."2 See Kisor,
139 S. Ct. at 2415–16. Accordingly, using intended loss in this
case was not "clear or obvious" error.3
As discussed above, our conclusion is not in direct
tension with the Third Circuit's holding in Banks. Further, our
opinion is consistent with a more similar case from the Fourth
Circuit, United States v. Limbaugh, No. 21-4449, 2023 WL 1195772 The existence of reasonable arguments in support of these
positions does not necessarily mean that we would find such
positions correct if they were squarely presented on the merits.
We reiterate that, for purposes of this opinion, we have only
assumed (without deciding) that the district court committed
error. See Romero, 906 F.3d at 209 (concluding that an alleged
Guidelines interpretation error was not plain, without "tak[ing]
a definitive stand on" the meaning of the relevant Guidelines
section); Caraballo-Rodriguez, 480 F.3d at 70 (noting that the
court's conclusion that an alleged error of statutory
interpretation was not plain did not constitute a "ruling on the
merits" of the statute's meaning).
3 Gadson briefly mentions that the rule of lenity demands a
narrow interpretation of section 2B1.1. But it is hardly clear
how invoking lenity -- a rule reserved for circumstances in which
"substantial ambiguity as to the guideline's meaning persists even
after a court looks to its text, structure, context, and purposes,"
United States v. Pinkham, 896 F.3d 133, 138 (1st Cir. 2018)
(quoting United States v. Suárez-González, 760 F.3d 96, 101 (1st
Cir. 2014)) -- could make it "obvious" that section 2B1.1 compels
a particular reading of "loss." Gadson fails to bridge this gap.
Additionally, because we reject Gadson's intended loss
argument, we need not address his claim that the district court
erred in including the TD Bank auto loan in the loss calculation.
Gadson concedes that such error becomes material only if the
district court plainly erred in using intended loss.
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(4th Cir. Jan. 6, 2023). There, as here, the court reviewed for
plain error "whether the commentary defining 'loss' [to include
intended loss] . . . can be reconciled with the text of § 2B1.1's
'loss' provision." Id. at *4. The court observed that it had
never directly addressed the "loss" issue, but it "ha[d] routinely
deferred to and relied on those commentary definitions in reviewing
challenges to loss calculations." Id. "Under those
circumstances," the court (like this court today) could not "say
that the district court committed a 'clear' or 'obvious' error" by
using intended loss. Id.
B.
Gadson additionally argues that the district court erred
in denying the three-level reduction for acceptance of
responsibility. "We review 'a sentencing court's factbound
determination that a defendant has not accepted responsibility'
for clear error." United States v. D'Angelo, 802 F.3d 205, 209
(1st Cir. 2015) (quoting United States v. Jordan, 549 F.3d 57, 60
(1st Cir. 2008)); see United States v. Coleman, 884 F.3d 67, 73
(1st Cir. 2018).
Section 3E1.1(a) provides for a two-level decrease "[i]f
the defendant clearly demonstrates acceptance of responsibility
for his offense." U.S.S.G. § 3E1.1(a). If the defendant qualifies
for that two-level decrease, and the defendant's offense level
before that reduction was sixteen or more, then section 3E1.1(b)
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provides for an additional one-level decrease upon a motion by the
government "stating that the defendant has assisted authorities in
the investigation or prosecution of his own misconduct by timely
notifying authorities of his intention to enter a plea of guilty."
U.S.S.G. § 3E1.1(b).4
As relevant here, the commentary to section 3E1.1 lists
the following as "appropriate considerations" in "determining
whether a defendant qualifies under subsection (a)": "truthfully
admitting the conduct comprising the offense(s) of conviction, and
truthfully admitting or not falsely denying any additional
relevant conduct for which the defendant is accountable under
§ 1B1.3 (Relevant Conduct)"; "post-offense rehabilitative
efforts"; and "the timeliness of the defendant's conduct in
manifesting the acceptance of responsibility." U.S.S.G. § 3E1.1,
cmt. n.1. The commentary also adds that "[a] defendant who falsely
denies, or frivolously contests, relevant conduct that the court
determines to be true has acted in a manner inconsistent with
4 As noted above, the government opposed any reduction for
acceptance of responsibility, and thus made no motion for the
additional one-level decrease. "But in practice, a district court
retains some ability to grant the [additional] reduction even if
the government" makes no motion under section 3E1.1(b). United
States v. Rivera-Morales, 961 F.3d 1, 16 (1st Cir. 2020). "This
ability is narrowly circumscribed: a sentencing court may exercise
it only 'when the government's withholding of the predicate motion
"was based on an unconstitutional motive" or "was not rationally
related to any legitimate government end."'" Id. (quoting United
States v. Meléndez-Rivera, 782 F.3d 26, 30 (1st Cir. 2015)).
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acceptance of responsibility, but the fact that a defendant's
challenge is unsuccessful does not necessarily establish that it
was either a false denial or frivolous." Id.On appeal, Gadson asserts that he is entitled to the
reduction based upon his guilty plea "well in advance of trial,"
the district court's recognition of his post-offense
rehabilitative efforts, and the probation officer's support for
the reduction. But he does not contest the district court's
factual findings that Gadson had, without merit, "disputed . . .
his role in the conspiracy" and "ha[d] not accepted" "that he was
the top person in this criminal activity" -- the findings that
formed the basis for the district court's decision to deny the
reduction.
Gadson fails to explain why, based on the Guidelines
commentary or anything else, his guilty plea and rehabilitative
efforts should outweigh his false denial of his role in the scheme.
"A defendant who pleads guilty is not entitled to a downward
adjustment for acceptance of responsibility as a matter of right."
United States v. Muriel, 111 F.3d 975, 982 (1st Cir. 1997).
Further, "[i]t is within the discretion of the district court to
deny a reduction on the basis of its determination that a defendant
has resorted to half-truths or evasions from the truth in an effort
to minimize his or her culpability." Id. at 982–83. Accordingly,
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we cannot conclude that the district court clearly erred in
determining that Gadson had not accepted responsibility.
III.
Finally, Gadson asserts that the district court should
not have included the TD Bank auto loan in the restitution order.
Because the government agrees with Gadson, we vacate the
restitution order to that extent and remand this matter to the
district court without addressing it on the merits. See United
States v. Foley, 783 F.3d 7, 27–28 (1st Cir. 2015).
IV.
For the foregoing reasons, we affirm Gadson's prison
sentence. We vacate in part (as to the TD Bank loan), and
otherwise affirm the district court's restitution order, and
remand for further proceedings consistent with this opinion.
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