United States v. Zander ( 2018 )

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT July 11, 2018
_________________________________
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v. No. 17-4156
(D.C. No. 2:10-CR-01088-DN-1)
JEFFREY CHARLES ZANDER, (D. Utah)
Defendant - Appellant.
_________________________________
ORDER AND JUDGMENT *
_________________________________
Before BRISCOE, HOLMES, and PHILLIPS, Circuit Judges.
_________________________________
Jeffrey Charles Zander, appearing pro se, appeals from the district court’s
second amended judgment resentencing him after a second remand. Exercising
jurisdiction under 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a), we affirm.
BACKGROUND
A federal jury convicted Mr. Zander of all counts in the Superseding
Indictment, which included two counts each of mail and wire fraud, one count of
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
money laundering, and three counts of willful failure to file federal tax returns.
Mr. Zander’s fraud and money laundering convictions resulted from his fraudulent
diversion of funds from the Paiute Indian Tribe of Utah (Tribe) to his personal use.
The district court sentenced Mr. Zander to 68 months in prison and ordered
him to pay $202,543.92 in restitution to the Tribe. We affirmed Mr. Zander’s
convictions on appeal, but concluded there were errors in the loss calculation under
the sentencing guidelines and the amount of restitution ordered that required a
remand to the district court for resentencing. See United States v. Zander,
794 F.3d 1220 (10th Cir. 2015) (“Zander I”).
On remand, the district court resentenced Mr. Zander to the same term of
imprisonment, but decreased the amount of restitution to $176,698. It subsequently
reduced Mr. Zander’s term of imprisonment to 63 months on the government’s
motion to correct an error in the sentence.
On Mr. Zander’s appeal from his revised sentence and restitution amount, we
affirmed the district court’s refusal to consider sentencing guideline arguments newly
raised by Mr. Zander because they were beyond the scope of our prior mandate.
United States v. Zander, 705 F. App’x 707, 710 (10th Cir. 2017) (“Zander II”). But
we concluded it was unclear whether the district court had resolved two of
Mr. Zander’s arguments challenging the revised restitution order, and held the district
court had erred in not addressing these arguments to the extent it believed it was
precluded from doing so by our prior mandate. Id. at 710-11. As a result, we
reversed and remanded Mr. Zander’s sentence again, directing the district court to
2
exercise its discretion and determine whether to consider these restitution arguments.
See id. at 711.
On remand, the district court requested briefing on the issues we had
identified, received additional objections from Mr. Zander regarding his sentence,
and held two sentencing hearings, including one in which the government presented
evidence in support of its restitution request. Based on the evidence and arguments
presented, the district court again sentenced Mr. Zander to 63 months in prison and
ordered restitution in the amount of $176,698. This appeal followed.
DISCUSSION
Mr. Zander challenges various aspects of the district court’s restitution order
and again disputes a sentencing enhancement applied in his original sentencing. We
address these and other issues raised by Mr. Zander in turn.
A. The Tribe as a “victim” under the MVRA
“A district court may order criminal restitution only as authorized by federal
statute.” United States v. Ferdman, 779 F.3d 1129, 1131 (10th Cir. 2015). The
restitution order in this case was made pursuant to the Mandatory Victims Restitution
Act (MVRA), 18 U.S.C. § 3663A, which requires district courts to order that
restitution be paid to the “victim” of certain offenses, including “an offense against
property . . . committed by fraud or deceit,” id. § 3663A(a)(1), (c)(1)(A)(ii). The
MVRA defines a “victim” for this purpose as “a person directly and proximately
harmed as a result of the commission of an offense for which restitution may be
ordered.” § 3663A(a)(2). Mr. Zander argues the district court lacked authority to
3
order him to pay restitution to the Tribe because the Tribe is not a “person” and
therefore cannot be a victim under the MVRA. We review this issue of law de novo.
See United States v. Wells, 873 F.3d 1241, 1265 (10th Cir. 2017).
We and our sister circuits have consistently held that governmental entities,
such as the Tribe, can be “victims” for purposes of restitution under the MVRA. See,
e.g., United States v. Butler, 694 F.3d 1177, 1184 (10th Cir. 2012) (holding state can
be a victim under the MVRA); United States v. Quarrell, 310 F.3d 664, 677
(10th Cir. 2002) (holding federal government can be a victim under the statute);
United States v. Newell, 658 F.3d 1, 30 (1st Cir. 2011) (stating governmental entities
can be victims under the MVRA). The same is true under the MVRA’s predecessor
and companion statute, the Victim and Witness Protection Act (VWPA), 18 U.S.C.
§ 3663, which also defines a “victim” for purposes of restitution as a “person,”
§ 3663(a)(2). 1 See, e.g., United States v. Burger, 964 F.2d 1065, 1071 (10th Cir.
1992) (holding “governmental agencies . . . qualify as victims under the VWPA”);
United States v. Martin, 128 F.3d 1188, 1191 (7th Cir. 1997) (collecting cases
demonstrating “an unwavering line of [circuit court] precedent” holding that federal,
state, county, and city governments may be “victims” under the VWPA). Every
1
The VWPA authorizes but does not require federal courts to order a
defendant to make restitution to the “victim” of various offenses. 18 U.S.C.
§ 3663(a)(1)(A). It has defined a “victim” as a “person” since 1990. See United
States v. Lincoln, 277 F.3d 1112, 1113 (9th Cir. 2002). Congress amended the
VWPA’s definition of “victim” in 1996 when it adopted the MVRA and made the
definition of “victim” in both statutes identical. See id.; see also 18 U.S.C.
§ 3663(a)(2) (VWPA); id. § 3663A(a)(2) (MVRA).
4
circuit court to have considered the issue has also rejected Mr. Zander’s implicit
contention that the term “person” in the MVRA’s definition of “victim” limits
victims to natural persons. See, e.g., United States v. Benedict, 855 F.3d 880, 886-87
(8th Cir.), cert. denied, 138 S. Ct. 348 (2017); United States v. Ekanem, 383 F.3d 40,
42-44 (2d Cir. 2004); United States v. Lincoln, 277 F.3d 1112, 1113 (9th Cir. 2002).
Mr. Zander argues his narrow construction of the term “victim” in the MVRA
is supported by the rule of lenity, which “instructs courts to interpret ambiguous
punitive statutes in favor of the accused,” United States v. Serawop¸ 505 F.3d 1112, 1121
(10th Cir. 2007). But this “rule only applies if there is a grievous ambiguity or
uncertainty in the statute.” Id. at 1122 (internal quotation marks omitted). As the
discussion above demonstrates, neither we nor other circuit courts have detected any
ambiguity in the MVRA’s definition of “victim” with respect to governmental entities.
Mr. Zander’s contention that the district court lacked authority to order restitution to
the Tribe is meritless.
B. Restitution Order
Mr. Zander also challenges the restitution he was ordered to pay to the Tribe. We
review the legality of a restitution order de novo, the factual findings underlying the order
for clear error, and the amount of restitution imposed for abuse of discretion. Wells,
873 F.3d at 1265. The district court’s factual findings are clearly erroneous only “if
[they] lack[] evidentiary support or if a review of the evidence leaves us with the definite
and firm conviction that a mistake has been made.” United States v. Sanchez-Urias,
887 F.3d 1069, 1071 (10th Cir. 2018) (internal quotation marks omitted).
5
1. Direct causation
As a general rule, restitution can only be ordered under the MVRA “for losses
caused by the offense of conviction.” Zander I, 794 F.3d at 1233 (internal quotation
marks omitted). But when the offense of conviction includes a fraudulent scheme as an
element, the MVRA provides an alternative method for assessing restitution, directing
that it be paid to any victim “directly harmed by the defendant’s criminal conduct in the
course of the scheme.” 18 U.S.C. § 3663A(a)(2); see Wells, 873 F.3d at 1266. To prove
direct causation under this method, the government must show that the victim’s loss
would not have occurred but for the defendant’s conduct in the course of the scheme. See
Wells, 873 F.3d at 1266-67.
Mr. Zander was convicted of mail and wire fraud, both of which include “a
scheme or artifice to defraud” as an element. Zander I, 794 F.3d at 1226, 1230 (internal
quotation marks omitted). As described in more detail in Zander I, the scheme
underlying these convictions was Mr. Zander’s use of his position as the Tribe’s resource
and economic development director to appropriate checks intended to pay for consultant
services in preparing Integrated Resource Management Plans (IRMPs) for each of the
Tribe’s five bands. 2 Mr. Zander set his scheme in motion by suggesting that the Tribe
apply to the Bureau of Indian Affairs (BIA) for grant funds to prepare each IRMP. The
Tribe agreed, and Mr. Zander prepared five grant proposals between 2005 and 2007,
2
An IRMP is a comprehensive, long-term plan for the use, development, and
management of Tribal resources and assets. Zander I, 794 F.3d at 1223. The Tribe’s
main asset is the reservation lands held in trust by each of its bands. Id.
6
representing in each that most of the grant proceeds would be used to hire and pay
outside consultants and facilitators to assist the Tribe in preparing the IRMPs. The BIA
approved the grant proposals, and ultimately provided a total of $165,000 in grant funds
for the IRMP projects.
Pursuant to his scheme, Mr. Zander created false purchase orders, progress
reports, and invoices for four fictitious companies and represented to the Tribe that these
companies had performed work on the IRMPs. Based on these false representations, the
Tribe issued checks to these nonexistent companies. Mr. Zander then deposited these
checks into his personal bank account for his personal use.
It is undisputed that between 2005 and March 2008 Mr. Zander fraudulently
obtained $176,698 as a result of Tribal payments to these nonexistent companies.
Because the BIA grants were reimbursement grants, the Tribe made these payments out
of Tribal funds, and then obtained reimbursement from the BIA. The Tribe paid $11,698,
the difference between the $165,000 in BIA grant monies it received and what it paid to
Mr. Zander’s fictitious companies, out of Tribal funds. Zander I, 794 F.3d at 1223-25 &
n.1.
Mr. Zander contends restitution cannot be ordered for any part of the $176,698 he
fraudulently obtained because the Superseding Indictment defines the scheme underlying
his conviction as securing approval of the BIA grants to develop the IRMP plans and then
diverting the proceeds of these grants for his personal benefit. From this premise he
argues that none of the payments he appropriated were directly caused by the scheme
encompassed in his convictions because they “were made as directed by Tribal
7
Resolutions prior to and independent of any approval by the BIA of federal grant
money.” Aplt. Opening Br. at 27.
We disagree that this fact, even if true, precludes the restitution ordered by the
district court. As described in the Superseding Indictment and Zander I, the purpose
of Mr. Zander’s scheme was to fraudulently obtain money from the Tribe and the
BIA. With respect to direct causation, there is more than sufficient evidence
demonstrating that the Tribe would not have suffered the harm, the loss of $176,698
in consultant payments Mr. Zander fraudulently diverted to his own use, but for
Mr. Zander’s criminal conduct in falsely representing in the course of his scheme that
fictitious companies had performed work on the IRMP projects for which the BIA
had provided funding. The particulars of how and when the Tribe approved moving
forward with IRMP work relative to the BIA’s approval of the reimbursement grants,
or whether or when the Tribe ultimately paid for all of this work out of grant
proceeds, is immaterial to this determination. 3
3
Mr. Zander in fact acknowledged in Zander I that the charged scheme was
broader than what he now asserts, describing it as billing the Tribe for work he was
not authorized to perform and then pocketing the payments the Tribe made based on
his fraudulent representations. 794 F.3d at 1228. He further asserted then that the
BIA grant approvals were not an essential part of his scheme, because the Tribe was
able to pay for some of the IRMP-related work from other funds before it received
the grant awards. See id. at 1228 n.3. We rejected this argument, concluding the
Tribe’s application for and receipt of BIA grant funds was an essential part of
Mr. Zander’s scheme because it provided the Tribe with a “pool of funds [he] could
fraudulently take.” Id. We nonetheless do not agree with Mr. Zander’s current
contention that the charged scheme is defined solely by reference to the grant awards,
as his scheme was more than simply the diversion of the grant funds. We implicitly
recognized as much in Zander I by noting evidence “arguably suggest[ing] the
(continued)
8
Mr. Zander also argues that some of the payments included in the restitution
order were not part of the scheme underlying in his convictions because they were for
road and right-of-way inventories he contends were not part of the IRMP projects
referenced in the Superseding Indictment. But it is undisputed that these inventories
were undertaken in the same time period as the IRMP projects and that the purchase
orders and/or invoices for some of them reference the IRMP for which they were
purportedly prepared. Mr. Zander also employed precisely the same method of false
purchase orders, reports, and invoices to prompt the Tribe to pay his fictitious
companies—and hence him—for this nonexistent consultant work as he did for the
other payments in his fraudulent scheme. The district court’s finding that these
payments were part of the fraudulent scheme underlying his fraud convictions was
not, therefore, clearly erroneous.
2. Actual loss
“[A] district court may not order restitution in an amount that exceeds the actual
loss caused by the defendant’s conduct,” and it is the government’s burden to prove the
amount of this loss. Ferdman, 779 F.3d at 1132. Mr. Zander admits the government
carried this burden with respect to $107,000 of the restitution amount, which corresponds
to the payments the Tribe made for four of the five IRMPs it thought Mr. Zander was
overseeing, because these four IRMPs were never prepared. But he asserts there is no
scheme could have succeeded without the BIA’s grant approval,” id., and that
Mr. Zander’s “fraud caused” the loss of the additional, non-grant funds the Tribe had
contributed to the IRMP projects, see id. at 1225 n.1.
9
evidence supporting the district court’s finding that the Tribe sustained an actual loss
from his appropriation of the remaining $69,698, which the Tribe paid for nonexistent
consultant work on the Koosharem Band’s IRMP and on the road and right-of-way
inventories.
With respect to the Koosharem IRMP, Mr. Zander argues the Tribe received value
for its payments because he authored a four-page IRMP for the Koosharem Band’s
resources. But there is ample evidence in the record supporting the district court’s
finding that this product was worthless to the Tribe because it was deficient as an IRMP 4
and because it did not reflect the input of the qualified consultants Mr. Zander was
supposed to have retained to advise him and the Tribe on the issues it addressed. 5 That
the Tribe approved his summary IRMP for the Koosharem Band and the BIA accepted it,
both without knowing it was Mr. Zander’s fraudulent work product, also does not
persuade us that the district court was clearly erroneous in finding the Tribe obtained no
value from the Koosharem IRMP document Mr. Zander fraudulently authored. There is
4
A prosecution witness testified at trial that other IRMPs she had seen were a
minimum of 50 pages in length and that some were over 100 pages long. Zander I,
794 F.3d at 1224.
5
In fact, Mr. Zander represented in the BIA grant proposals that the grant funds
were necessary to hire and pay outside consultants and facilitators because “there is no
resident community expertise in natural resources management, strategic planning, or
economics.” Zander I, 794 F.3d at 1223 (brackets and internal quotation marks omitted).
And even if Mr. Zander had been qualified in these fields, a Tribal official testified at
Mr. Zander’s trial that the Tribe expected him to add value to the process by overseeing
and reviewing the consultants’ work, not by performing the work himself. She also
testified that he was barred by his employment contract and the Tribe’s ethics policies
from hiring and paying himself for work intended for outside consultants.
10
also evidence in the record supporting the district court’s finding that the road and right-
of-way inventories for which the Tribe paid were never prepared and that even if
Mr. Zander had prepared them, they would have been worthless to the Tribe because they
too were supposed to be the product of qualified consultants.
Mr. Zander also argues that the district court erred in these findings because it
relied in part on hearsay statements by three current or former Tribal officials presented
at the sentencing hearing through testimony by FBI Agent Klienlein. But hearsay
statements may be received and considered by a court in sentencing “if they bear some
minimal indicia of reliability.” United States v. Ruby, 706 F.3d 1221, 1229 (10th Cir.
2013) (internal quotation marks omitted). This is a “low hurdle,” United States v. Cook,
550 F.3d 1292, 1296 (10th Cir. 2008), that can be surmounted by, among other things,
some measure of evidence corroborating the out-of-court statements, see Ruby, 706 F.3d
at 1229. And there is more than sufficient evidence in the record corroborating the
hearsay statements on which the district court relied.
For example, Agent Klienlein testified at the sentencing hearing that he personally
did not see the road or right-of-way inventories in the Tribe’s IRMP files or on
Mr. Zander’s thumb drive when he reviewed them in the course of his investigation. This
testimony corroborates the Tribal officials’ hearsay statements that they never saw these
inventories and were not able to locate them in the Tribe’s files. The three officials’
separate statements that the Tribe received no value from any IRMPs or inventories
Mr. Zander may have prepared, because he was not authorized to prepare them and they
did not reflect information and analysis by qualified consultants as required, also are
11
indicia of reliability because they corroborate each other. See Cook, 550 F.3d at 1297
(affirming district court’s reliance on hearsay statements at sentencing in part because the
statements, made by different declarants, corroborated each other). In addition, the
hearsay statements Agent Klienlein reported by one of the former Tribal officials, Gayle
Rollo, are consistent with the direct testimony she gave at Mr. Zander’s 2013 trial. For
all of these reasons, we hold the district court did not err in relying on the hearsay
statements to which Agent Klienlein testified. 6
C. Sentencing Enhancement
Mr. Zander also argues the district court erred in refusing to resentence him
without the two-level enhancement for sophisticated means that was part of the
sentencing guidelines calculation the district court used in his first sentencing proceeding.
Mr. Zander did not challenge the sophisticated-means enhancement then or in his first
appeal, but attempted to challenge it after remand during his second sentencing. The
district court ruled then that this objection went beyond the scope of its mandate on
remand.
We affirmed this decision in Zander II, holding the district court had properly
applied the mandate rule. See 705 F. App’x at 710. Absent exceptional circumstances,
6
Mr. Zander also claims that he should have received advance notice that the
government would be presenting hearsay evidence and that he was denied an
opportunity to explain or rebut this evidence. But Mr. Zander did not object to the
alleged lack of notice at the sentencing hearing, and does not argue plain error now,
so we will not consider this objection on appeal. See Ave. Capital Mgmt. II, L.P. v.
Schaden, 843 F.3d 876, 886 (10th Cir. 2016). The record also shows that Mr. Zander
had ample opportunity to address the government’s hearsay evidence at the
sentencing hearing and took full advantage of this opportunity.
12
this rule limits the district court’s discretion on resentencing when the appellate court
has specifically limited the scope of the remand. See United States v. West,
646 F.3d 745, 748-49 (10th Cir. 2011); see also United States v. Webb, 98 F.3d 585,
587 (10th Cir. 1996) (“Although resentencing on remand is typically de novo, this
does not hold true where an appellate court has specifically limited a district court’s
discretion.”). We held in Zander II that our prior remand had limited the scope of the
remand in a manner that prohibited the district court from considering Mr. Zander’s
new objections to the enhancement for sophisticated means and other sentencing
guideline calculations. 705 F. App’x at 710. We also rejected Mr. Zander’s
argument that exceptional circumstances warranted a departure from the mandate rule
because serious injustice would result if these alleged errors were not corrected. Id.We did not broaden the mandate in our second remand; if anything, we narrowed
it to just the two unresolved issues relating to the restitution order. See id. at 710-11.
Our ruling in Zander II that Mr. Zander’s objections to the sophisticated-means
sentencing enhancement were beyond the limited scope of the district court’s mandate
therefore established the law of the case on this issue, which “ordinarily will be followed
by both the trial court on remand and the appellate court in any subsequent appeal,” West,
646 F.3d at 747-48.
Although the law of the case doctrine may be excused in some circumstances,
Mr. Zander does not argue such circumstances exist here. Instead, he asserts that neither
the mandate rule nor the law of the case doctrine applies because the district court made
statements in the third sentencing proceeding suggesting it considered and rejected
13
Mr. Zander’s objection to the sophisticated-means enhancement on the merits. But the
district court also expressly agreed with the government that this issue had previously
been addressed by this court and could not be readdressed at the sentencing hearing on
remand. This was the proper ruling, and it forecloses Mr. Zander’s attempt to resurrect
this issue.
D. Other Issues
“Before imposing sentence, the court must . . . address the defendant personally in
order to permit the defendant to speak or present any information to mitigate the
sentence[.]” Fed. R. Crim. P. 32(i)(4)(A)(ii). Mr. Zander contends the district court
failed to comply with these requirements because it did not personally address him and
offer him an opportunity to allocute. He also acknowledges that he failed to preserve this
objection for appeal, but argues he is nonetheless entitled to relief because the district
court committed plain error as described in United States v. Bustamante-Conchas,
850 F.3d 1130, 1137 (10th Cir. 2017). 7
We disagree. The record shows the district court personally engaged Mr. Zander,
who was appearing pro se, throughout the two sentencing hearings following our second
remand. It also shows the district court offered Mr. Zander several open-ended
opportunities to speak or present information before imposing sentence and that
Mr. Zander did so. As a result, there was no error.
7
To demonstrate plain error, Mr. Zander must show: “(1) error, (2) that is plain,
which (3) affects substantial rights, and which (4) seriously affects the fairness, integrity,
or public reputation of judicial proceedings.” Bustamante-Conchas, 850 F.3d at 1137
(internal quotation marks omitted).
14
Mr. Zander also requests that we reassign this case to a new judge on remand on
grounds of personal bias. But Mr. Zander fails to show personal bias, and his request is
moot in any event because he fails to demonstrate that remand is required.
CONCLUSION
For the reasons stated above, we affirm Mr. Zander’s sentence. We also grant
the government’s unopposed motion to take judicial notice of the brief Mr. Zander
filed on June 16, 2014 in appeal No. 13-4174.
Entered for the Court
Jerome A. Holmes
Circuit Judge
15