United States v. Maurice William Campbell, Jr. , 765 F.3d 1291 ( 2014 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 12-11952
________________________
D.C. Docket No. 2:10-cr-00186-AKK-JEO-1
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
MAURICE WILLIAM CAMPBELL, JR.,
a.k.a. Bill Campbell,
a.k.a. Sir William,
Defendant - Appellant.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
________________________
(September 3, 2014)
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Before ED CARNES, Chief Judge, TJOFLAT, Circuit Judge, and MARRA, ∗
District Judge.
TJOFLAT, Circuit Judge:
In this case, Maurice William Campbell, Jr., and several co-conspirators,
created, and successfully executed, a scheme to defraud the State of Alabama to
the tune of several million dollars. The scheme was ultimately uncovered, and the
co-conspirators were separately indicted by a Northern District of Alabama grand
jury. Campbell was charged with wire fraud, mail fraud, money laundering,
engaging in monetary transactions in criminally derived property, and conspiring
to commit those offenses.
Campbell pled not guilty and stood trial. Several of his co-conspirators,
having pled guilty, testified for the prosecution. The jury believed what they had
to say and found Campbell guilty as charged. At sentencing, the District Court
departed downward from the sentence range the Sentencing Guidelines prescribed,
262 to 327 months’ confinement, and imposed prison sentences totaling 188
months. The court also ordered him to pay $5.9 million to the State of Alabama in
the form of restitution. 1
∗
Honorable Kenneth A. Marra, United States District Judge for the Southern District of
Florida, sitting by designation.
1
The court also ordered that Campbell forfeit to the United States $7.9 million.
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Campbell appeals his convictions and sentences. He appeals his convictions
on the ground that the Government failed to prove his guilt beyond a reasonable
doubt.2 He appeals his sentences on the ground that they are procedurally and
substantively unreasonable. See Gall v. United States, 552 U.S. 38, 51, 128 S. Ct.
586, 597, 169 L. Ed. 2d 445 (2007). We find no merit in Campbell’s challenges to
his convictions, and therefore affirm them, because the evidence of guilt, which we
set out in considerable detail infra, was overwhelming. We also affirm his
sentences, finding no procedural or substantive error.
I.
Campbell’s convictions arose from his conduct as the State Director of the
Alabama Small Business Development Consortium (the “ASBDC”). The ASBDC
was an affiliation of small business development centers housed within Alabama
public universities. These development centers provided workforce training,
business education, and other assistance to Alabama businesses. The ASBDC’s
central office obtained funding from various sources and distributed that money to
the member development centers. The central office also put on educational
2
Campbell therefore asks that we instruct the District Court, on remand, to enter an
order of acquittal on all counts of the indictment. Alternatively, he seeks a new trial on the
grounds that his attorney’s performance was constitutionally ineffective under the Sixth
Amendment because his attorney labored under a conflict of interest. We do not consider this
argument. This court will not “consider claims of ineffective assistance of counsel raised on
direct appeal where the district court did not entertain the claim nor develop a factual record.”
United States v. Bender, 290 F.3d 1279, 1284 (11th Cir. 2002).
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seminars, published educational material, and generally promoted the work being
done by its members.
Campbell was hired as the State Director of the ASBDC in 2003. At the
time, the ASBDC had been zeroed out of the state budget, and so Campbell set to
lobbying members of the Alabama Legislature and the Governor’s Office on the
ASBDC’s behalf. His efforts proved fruitful; over the course of his tenure,
Campbell secured approximately $7.3 million from the State. But, thanks to
Campbell’s efforts, the ASBDC did not receive that money directly; instead, state
funds were routed through a private nonprofit corporation, the Alabama Small
Business Institute of Commerce (the “Institute”).
Campbell incorporated the Institute in February 2005—after he secured the
promise of state funding for the ASBDC—as a 501(c)(3) corporation with the
stated purpose of “enhanc[ing] economic development, increas[ing] employment
and reduc[ing] business failure in Alabama through business education and
workforce training.” Campbell then asked Alabama officials that the Institute be
designated to receive the state money on the ASBDC’s behalf. He told the
Governor’s Office that the Institute was just a conduit for the ASBDC and that
channeling the funds through the Institute would make it easier to obtain matching
federal money and would allow him to keep the ASBDC’s various funding sources
separate. He did not explain the requested change to the Legislature; the then-
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Chairman of the House Education Appropriations Committee testified at
Campbell’s trial that he assumed the Institute and the ASBDC were the same thing.
Trusting Campbell, the Alabama officials agreed to designate the Institute as the
entity that would receive state funds on behalf of the ASBDC.
The Institute leased separate office space from the ASBDC’s central office,
was located in a different city, hired its own employees, and held its own accounts.
Most importantly, because the Institute was a private nonprofit rather than a state
entity, its accounts were not subject to audit by the Alabama Department of
Examiners of Public Accounts. Between 2005 and 2010, Campbell and several co-
conspirators took advantage of this fact.
From the beginning, Campbell treated the Institute’s money as his own. He
used the money to pay for, among other things, meals, clothing, cars, and
vacations. He hired two employees for the Institute, gave them Institute debit
cards, and told them that they could spend the money however they wanted. And
he gave debit cards to the ASBDC’s director of public relations and an Institute
board member with similar instructions. Campbell’s co-conspirators—who pled
guilty to various offenses committed during the execution of the scheme and
testified against him at trial—confirmed that, with Campbell’s permission, they all
used Institute funds to pay for vacations, shopping trips, jewelry, meals, groceries,
gas, and other personal expenses. Perhaps the most salacious example of the self-
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indulgence is the money Campbell spent entertaining a group of young women he
called the “Little Sisters.” The Little Sisters were a group of college-age girls with
whom Campbell liked to spend time. He ostensibly hired the girls to work various
events hosted by the ASBDC, sometimes paying them up to $100 for an hour of
passing out pamphlets or a few minutes spent setting up a display board. He also
paid the girls to attend meals and non-ASBDC events with him, bought their meals
and drinks, took them on shopping trips and beach vacations, and gave them gifts,
including bracelets engraved with “Lil Sis” and “Sir William” (his nickname)—all
paid for with Institute funds.
In 2008 Campbell started funneling money from the Institute’s accounts into
outside accounts controlled by him or his co-conspirators. The vehicle for these
transfers was a lease for “office space” in a retirement home. Campbell was the
executive director of the retirement home, and at his direction the Institute paid
$5,000 and then $6,000 per month for a bedroom in a residential apartment. The
Institute’s rent checks were deposited in an account in the retirement facility’s
name, which was controlled by Campbell. From there the “rent” money went to
other accounts controlled by either Campbell or his co-conspirators. Some of this
money was eventually “paid” back to Campbell as part of his compensation as
director of the retirement facility.
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Despite all this graft, some Institute money made its way into the hands of
the ASBDC-member development centers. Of the $7.3 million received by the
Institute, approximately $1.4 million was distributed to the development centers—
around 20 percent. The Government did not present the District Court with an
exact accounting of how all of the remaining $5.9 million was spent, and that
failure lies at the heart of this appeal.
II.
The Institute’s loose spending was eventually detected, and after a federal
investigation, a grand jury for the Northern District of Alabama returned a one-
count indictment in May 2010, charging Campbell with aiding and abetting mail
fraud, in violation of 18 U.S.C. § 1341 and 18 U.S.C. § 2. In March 2011, the
grand jury returned a ninety-six count superseding indictment, which charged
Campbell with three counts of aiding and abetting mail fraud, in violation of 18
U.S.C. § 1341 and 18 U.S.C. § 2 (Counts 1, 59, and 60); one count of conspiracy to
commit mail fraud, wire fraud, money laundering, and engaging in monetary
transactions in criminally derived property, in violation of 18 U.S.C. § 371 (Count
2); fifty-six counts of aiding and abetting wire fraud, in violation of 18 U.S.C.
§ 1343 and 18 U.S.C. § 2 (Counts 3–58); thirty-one counts of aiding and abetting
money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i) and 18 U.S.C. § 2
(Counts 61–91); and five counts of aiding and abetting engaging in monetary
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transactions in criminally derived property, in violation of 18 U.S.C. § 1957 and 18
U.S.C. § 2 (Counts 92–96).
During an eight-day trial, the Government presented testimony by Alabama
officials, Campbell’s co-conspirators, some of the Little Sisters, and an IRS agent
who examined the Institute’s accounts. The Government also submitted into
evidence receipts from purchases made with Institute funds, bank records for each
of the Institute’s accounts, and some of the Institute’s business records. Campbell
did not call any defense witnesses after the Government rested its case in chief.
On November 17, 2011, the jury returned a guilty verdict on all ninety-six counts.
The presentence investigation report (“PSI”) calculated Campbell’s sentence
range as follows: The base offense level for Campbell’s crimes was 7. See
U.S.S.G. §§ 2S1.1(a)(1); 2B1.1(a)(1) (2011). 3 This base level was increased by 32
based on the following special offense characteristics: a 20-level increase because
the loss amount was more than $7 million but less than $20 million, id.
§ 2B1.1(b)(1)(K); a 2-level increase because Campbell was acting on behalf of a
charitable organization, id. § 2B1.1(b)(9)(A); a 2-level increase because Campbell
3
The PSI grouped all counts together and applied the sentencing guideline for the count
that would result in the highest sentencing level. See U.S.S.G. §§ 3D1.2, 3D1.3. In Campbell’s
case, the money laundering charges under 18 U.S.C. §§ 1956 and 1957, which corresponded to
sentencing guideline § 2S1.1, resulted in the highest sentencing level. Section 2S1.1(a)(1)
provides that the base offense level for money laundering is the offense level of the underlying
offense that produced the laundered money. Here, the underlying offense is the wire fraud and
mail fraud charges, in violation of 18 U.S.C. §§ 1341 at 1343. The guideline section associated
with those charges is § 2B1.1. Section 2B1.1(a)(1) provided Campbell’s base offense level of 7.
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was convicted of money laundering under 18 U.S.C. § 1956, id. § 2S1.1(b)(2)(B);
a 2-level increase because the offense involved sophisticated money laundering, id.
§ 2S1.1(b)(3); a 2-level increase because Campbell abused a position of public or
private trust in a manner that significantly facilitated the commission or
concealment of the offense, id. § 3B1.3; and a 4-level increase because Campbell
was an organizer or leader of a criminal activity that involved five or more
participants or was otherwise extensive, id. § 3B1.1(a). This total offense level of
39, when combined with Campbell’s criminal history category of I, yielded a
Guidelines range of 262 to 327 months. Id. ch. 5, pt. A (sentencing table).
In his appeal, Campbell challenges the amount of loss calculation under
§ 2B1.1(b)(1), and so we focus our attention principally on the arguments
presented to the District Court with respect to the application of this section of the
Guidelines.4 Section 2B1.1(b)(1) provides a series of increasing offense level
enhancements based on the amount of loss attributable to a defendant’s fraud:
Loss (Apply the Greatest) Increase in Level
(A) $5,000 or less no increase
(B) More than $5,000 add 2
(C) More than $10,000 add 4
(D) More than $30,000 add 6
(E) More than $70,000 add 8
4
Campbell also argues that the District Court’s application of U.S.S.G. § 3B1.1(a)
(enhancement for being an organizer or leader of a criminal activity) was erroneous. That
argument is baseless.
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(F) More than $120,000 add 10
(G) More than $200,000 add 12
(H) More than $400,000 add 14
(I) More than $1,000,000 add 16
(J) More than $2,500,000 add 18
(K) More than $7,000,000 add 20
(L) More than $20,000,000 add 22
(M) More than $50,000,000 add 24
(N) More than $100,000,000 add 26
(O) More than $200,000,000 add 28
(P) More than $400,000,000 add 30.
U.S.S.G. § 2B1.1(b)(1). As is evident from its application of § 2B1.1(b)(1), the
PSI used the total amount of state money received by the Institute—$7.3 million—
as the loss caused by Campbell’s scheme. Accordingly, the PSI added 20 levels to
Campbell’s offense level, corresponding to a loss greater than $7 million but less
than $20 million.
The Government agreed with the premise underlying the $7.3 million
starting point—that all money received by the Institute was a loss to the State of
Alabama. See Gov’t Sent. Mem., Doc. 101, at 23 (“[T]he Institute was a useless
private ‘middleman’ for fulfilling the mission of the [ASBDC]. In truth and fact,
the Institute was formed to make State money, ‘my money’—to quote the
Defendant.”). However, the Government submitted that Campbell should receive a
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credit for the $1.4 million that was distributed to ASBDC members, 5 leaving a
total loss of $5.9 million, which corresponds to an 18-level increase under §
2B1.1(b)(1) (for a loss between $2.5 and $7 million). 6
Campbell objected to the PSI’s and the Government’s loss calculations,
claiming that he should have only received a 12-level increase under
§ 2B1.1(b)(1), which corresponds to a loss amount between $200,000 and
$400,000. Campbell reached this range by calculating the amount he gained from
the fraud rather than the amount the State of Alabama lost. The commentary to
§ 2B1.1 provides that, when the court cannot accurately estimate the victim’s loss,
it can instead use the defendant’s gain for purposes of calculating the § 2B1.1(b)(1)
offense level increase. U.S.S.G. § 2B1.1 cmt. n.3(B). Campbell contended that
the Institute was a legitimate nonprofit that was actively engaged in promoting
Alabama small businesses, and while some of the funds were admittedly misspent,
that should not convert 100 percent of the Institute’s funding into a “loss” to the
State of Alabama. In other words, the fraud, in Campbell’s view, was a matter of
degree—a bit too much spent on meals and liquor here, a few improper travel and
5
Application note 3(E)(i) to § 2B1.1 provides that the loss amount should be credited to
account for the value of any money returned or services rendered to the victim.
6
The Government still calculated Campbell’s total offense level at 39 because it sought a
two-level enhancement for “sophisticated means” used to perpetrate fraud, see U.S.S.G.
§ 2B1.1(b)(10)(C)—an enhancement that was not provided for in the original PSI. The parties
agree that an addendum to the original PSI incorporated, over the defendant’s objection, the
Government’s two changes—still reaching an offense level of 39 and a Guidelines range of 262
to 327 months.
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entertainment expenses there. As such, Campbell submitted that it would be
practically impossible to tease out what portion of the Institute’s spending was
illegitimate. And so Campbell proposed that the court use his gain instead—a
number he calculated at approximately $300,000, which included the Institute’s
“rent” payments ($237,000), improper expenditures listed in the superseding
indictment ($26,000), and checks written to the “Little Sisters” ($35,000). As
noted, a $300,000 loss corresponds to a 12-level increase under § 2B1.1(b)(1).
In the alternative, if the court accepted the Government’s premise that all
state money received by the Institute was a loss to the State, Campbell asked for
additional credit against that loss (beyond the $1.4 million distributed to ASBDC
members) for “undisputedly legitimate” expenses such as “lobbying fees and
expenses, attorney’s fees, fundraising expenses, legitimate travel expenses,
program expenditures, training expenses, salaries and associated taxes, vehicle
business related use, [and] appropriate and proper entertainment expenses.”
Campbell Sent. Mem., Doc. 100, at 9.
As the Supreme Court has explained, “a district court should begin all
sentencing proceedings by correctly calculating the applicable Guidelines range.”
Gall, 552 U.S. at 49, 128 S. Ct. at 596. “When a defendant challenges one of the
factual bases of his sentence . . . the Government has the burden of establishing the
disputed fact by a preponderance of the evidence.” United States v. Rodriguez,
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732 F.3d 1299, 1305 (11th Cir. 2013) (alteration in original) (quotation marks
omitted). Once the Guidelines range is fixed the sentencing court then “giv[es]
both parties an opportunity to argue for whatever sentence [whether inside or
outside the Guidelines range] they deem appropriate.” Gall, 552 U.S. at 49, 128 S.
Ct. at 596. Using the Guidelines range as the benchmark, the court then weighs
“all of the [18 U.S.C.] § 3553(a) factors to determine whether they support the
sentence requested by a party.” 7 Id. at 49–50, 128 S. Ct. at 596. “If [it] decides
that an outside-Guidelines sentence is warranted, [it] must consider the extent of
the deviation and ensure that the justification is sufficiently compelling to support
the degree of the variance.” Id. at 50, 128 S. Ct. at 597.
We begin with the District Court’s application of the Guidelines—in
particular, § 2B1.1(b)(1). During the sentencing hearing, the Government set to
proving that the State suffered at least a $2.5 million loss by arguing that the
Institute “was a private nonprofit middleman and was an utterly unnecessary
conduit of state funding”—“the real purpose of the Institute . . . was to make the
7
Section 3553 directs a court to impose a sentence “sufficient, but not greater than
necessary” to achieve the following sentencing objectives:
(A) to reflect the seriousness of the offense, to promote respect for the law, and to
provide just punishment for the offense;
(B) to afford adequate deterrence to criminal conduct;
(C) to protect the public from further crimes of the defendant; and
(D) to provide the defendant with needed educational or vocational training,
medical care, or other correctional treatment in the most effective manner.
18 U.S.C. § 3553(a)(2).
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state’s money Sir William’s money.” Sent. Tr., Doc. 123, at 27, 28–29. To wit,
the Institute distributed only 20 percent of the state funds to ASBDC members,
“[t]he Institute did not raise funds from other sources or obtain matching federal
funds as promised,” “[t]he Institute did not sponsor its own programming or offer
services,” and, apart from the 20 percent, there was “no other evidence in the
record that actual expenditures were made on behalf of member institutions or to
the benefit of the State of Alabama or the stated mission of the [ASBDC].” Id. at
26, 16. In short, the Government’s theory was that the Institute did not provide
any useful services to the State of Alabama. Its sole purpose was to “enable[] a
bunch of private individuals to take state money and make personal profit from it.
And that’s why the entirety counts as a loss to the State of Alabama.” Id. at 29.
In response to Campbell’s request that the loss amount be credited for the
Institute’s “legitimate” operating expenses, the Government pointed out that many
of these expenses were part and parcel of Campbell’s scheme to defraud the State
of money. For example, the Institute’s accountants reviewed fraudulent records
(and Campbell fired an accountant who began asking too many questions), the
Institute’s attorney prepared the Institute’s articles of incorporation and drafted the
fraudulent lease with the retirement home, and the Institute’s lobbyists helped
secure more money for Campbell and his co-conspirators to spend. As the
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Government put it, those expenses were “simply part of creating the cover for the
defendant’s conduct.” Id. at 36.
As to Campbell’s claim that he should be credited for the portion of his
travel, entertainment, salary, vehicle costs, etc., that was “appropriate and proper,”
the Government contended that, while it had not included every illegitimate
expenditure in the indictment (if it had, it would have included thousands of
counts), all of the expenditures made by Campbell and his co-conspirators “were
part of the larger scheme and artifice to defraud.” Sent. Tr., Doc. 123, at 37. The
Government gave a few examples of expenses that were not charged in the
indictment: $700-a-night hotel rooms at the Ritz Carlton, a $2,500 charge to ship
Campbell’s luggage, costs associated with a luxury SUV for Campbell, a personal
driver and a limousine when he traveled, and beach vacations for the Institute’s
employees—but the Government did not set to proving the illegitimacy of each
and every transaction made with Institute money. The Government’s bottom line
was that “the State of Alabama did not reap a dime of benefit from [any of the
Institute’s] expenditures. And the victim here, the State of Alabama, has to reap a
benefit for a credit to be given.” Id. at 35–36.
With the benefit of the parties’ arguments during the sentencing hearing and
the evidence and testimony submitted during trial, the District Court concluded
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that the Government had satisfied its burden of showing a loss in excess of $2.5
million. It announced its decision as follows:
[T]he court does not believe it needs to get to the gain analysis.
That’s according to the application notes, in particular, 3(B) of section
2B1.1 of the sentencing guidelines: “The court shall use the gain that
resulted from the offense as an alternative measure of loss only if
there is a loss but it reasonably cannot be determined.”
In this case, the court believes that the loss can reasonably be
determined and in fact has been done in this case based on both the
trial evidence and the arguments that have been presented here today.
The court believes that the government has met its burden of
establishing a loss of at least $2.5 million in this case.
Therefore, the court agrees . . . that the appropriate increase is 18 and
not . . . the level 12 that the defendant is asking for based on [his]
numbers of $200,000 to $400,000.
Id. at 65. The court also denied Campbell’s request for credits against the
calculated loss:
Based on the trial evidence, it’s clear that there is at least sufficient
evidence in the record for the government to meet . . . its burden of
proof in this case to establish that a lot of these professional entities
that were being used [(i.e., the accountants, lawyer, and lobbyists)]
played some role in perpetuating the scheme and the crime against the
state.
Id. at 66. The court went on to reject all of Campbell’s other objections to the
PSI’s Guidelines sentence range and, thus, concluded that Campbell’s total offense
level was 39 and the Guidelines range was 262 to 327 months.8
8
As explained in note 6, supra, an addendum to the PSI adopted the Government’s 18-
level increase for the loss amount and the two-level increase for “sophisticated means,” resulting
in a total offense level of 39 and the same recommended sentence range as in the original PSI.
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Campbell requested a departure pursuant to note 19 of the § 2B1.1
comments, which explains that “[t]here may be cases in which the offense level
determined under this guideline substantially overstates the seriousness of the
offense. In such cases, a downward departure may be warranted.” U.S.S.G.
§ 2B1.1 cmt. n.19(C). In support of such a downward departure, Campbell
claimed that the amount of loss was not an appropriate proxy for his culpability,
that an inside-Guidelines sentence for him would be disproportionate to similar
white-collar crimes, and that part of the loss was caused by expenditures made by
the Institute employees, not him.
Campbell also asked that the District Court sentence him to a below-
Guidelines sentence, based on the 18 U.S.C. § 3553(a) sentencing factors, to a
sentence between 48 to 60 months. To support this variance, Campbell asked the
court to consider, among other factors, his age (he was 60 years old at the time of
sentencing) and his history of community service (which was well attested to in
letters submitted to the court and testimony during the sentencing hearing).
The court declined to grant a departure under the Guidelines but did grant a
variance pursuant to the § 3553(a) sentencing factors. The court imposed a total
term of imprisonment of 188 months, relying on, among other things, Campbell’s
“life of service and his compassion for his family but, more importantly for the
court, for his fellow man as well.” Sent. Tr., Doc. 123, at 135. The court also
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ordered that Campbell pay $5.9 million in restitution to the State of Alabama.
After announcing Campbell’s sentence, the court explained that “the sentence
would have been the same regardless of how the guidelines issues that we dealt
with earlier had been resolved in this case.” 9 Id. at 136.
III.
The Supreme Court has provided the following framework for our review of
a district court’s sentence:
[The court of appeals] must first ensure that the district court
committed no significant procedural error, such as failing to calculate
(or improperly calculating) the Guidelines range, treating the
Guidelines as mandatory, failing to consider the § 3553(a) factors,
selecting a sentence based on clearly erroneous facts, or failing to
adequately explain the chosen sentence—including an explanation for
any deviation from the Guidelines range.
Assuming that the district court's sentencing decision is procedurally
sound, the appellate court should then consider the substantive
reasonableness of the sentence imposed under an abuse-of-discretion
standard. When conducting this review, the court will, of course, take
into account the totality of the circumstances, including the extent of
any variance from the Guidelines range.
Gall, 552 U.S. at 51, 128 S. Ct. at 597. In carrying out this task, we review a
district court’s interpretation and application of the Sentencing Guidelines de novo,
9
Given this statement, the Government asserts that even if the District Court erred in its
application of the Guidelines, any error was harmless. See United States v. Tampas, 493 F.3d
1291, 1305 (11th Cir. 2007) (“[W]here the district court would have imposed the same sentence
regardless of the Guidelines’ recommendations on the amount of loss, any error in its loss
calculation is harmless.”). Because we conclude that the District Court correctly applied
§ 2B1.1(b)(1), we need not address this argument.
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and we review its findings of fact for clear error. United States v. Maxwell, 579
F.3d 1282, 1305 (11th Cir. 2009).
Only one of Campbell’s challenges to his sentences merits further
discussion: his argument that the District Court erred in calculating the amount of
loss caused by his scheme under § 2B1.1(b)(1) of the United States Sentencing
Guidelines. Campbell argues that the District Court erred in finding that the
amount of loss caused by his fraud exceeded $2.5 million. For reasons explained
below, we reject his argument and affirm Campbell’s sentences. 10
A.
Under the Sentencing Guidelines’ approach to economic crime, the amount
of financial loss attributable to a defendant’s crime serves as a proxy for “the
seriousness of the offense and the defendant’s relative culpability.” U.S.S.G.
§ 2B1.1 cmt. background. Given the nature of such crimes, the financial damage
done may often be difficult to calculate with precision; accordingly, the Sentencing
10
Campbell also filed a motion to stay the appeal and to remand the case to the District
Court for a jury determination on the applicability of several sentencing enhancements in light of
the Supreme Court’s decision in Alleyne v. United States, 570 U.S. ___, 113 S. Ct. 2151, 186
L. Ed. 2d 314 (2013). We ordered that motion be carried with the case. Alleyne held that any fact
that increases a mandatory minimum sentence is an element of the crime that must be submitted
to a jury and found beyond a reasonable doubt. Id. at 2163. Campbell argues from this holding
that all sentencing enhancements are elements of the crime that a jury must decide. We have
already had occasion to address this issue: after Alleyne, “a district court may continue to make
guidelines calculations based upon judicial fact findings and may enhance a sentence—so long
as its findings do not increase the statutory maximum or minimum authorized by facts
determined in a guilty plea or jury verdict.” United States v. Charles, ___ F.3d ___, 2014 WL
3031267, at *3 (11th Cir. 2014). The motion is denied.
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Guidelines only require district courts to make “a reasonable estimate of the loss.”
U.S.S.G. § 2B1.1 cmt. n.3(C). If, in the sentencing court’s assessment, that
calculation under- or overestimates the seriousness of the offense (e.g., in cases
where the crime caused substantial nonmonetary harm or created the risk of much
greater financial losses), then the court may grant an upward or downward
departure as needed. See id. cmt. n.19.
The Guidelines provide some general principles to guide the calculation of
the loss amount, which we lay out below, but the appropriate method for
estimating loss in any given case is highly fact-dependent, and accordingly, district
judges are entitled to considerable leeway in choosing how to go about this task.
As this court has explained before, “[f]raud is conjured in numerous variations and
that should be considered when choosing a calculation methodology for the harm
intended or caused.” United States v. Gupta, 463 F.3d 1182, 1199 (11th Cir.
2006). “The sentencing judge is in a unique position to assess the evidence and
estimate the loss based upon that evidence. For this reason, the court’s loss
determination is entitled to appropriate deference.” U.S.S.G. § 2B1.1 cmt. n.3(C).
The district court is not altogether unfettered in calculating the loss amount,
though—whatever methodology it chooses, the court must “support its loss
calculation with reliable and specific evidence.” United States v. Munoz, 430 F.3d
1357, 1370 (11th Cir. 2005). We will overturn a court’s loss calculation under the
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clear-error standard where “we are left with a definite and firm conviction that a
mistake has been committed.” See United States v. Crawford, 407 F.3d 1174,
1177 (11th Cir. 2005) (quotation marks omitted).
The Guidelines define “loss” as “the greater of actual or intended loss.”
U.S.S.G. § 2B1.1 cmt. n.3(A). Actual loss is the relevant measure in this case and
is defined as the “reasonably foreseeable pecuniary harm that resulted from the
offense.” Id. cmt. n.3(A)(i). Reasonably foreseeable pecuniary harm can include
losses caused by co-conspirators, United States v. Hunter, 323 F.3d 1314, 1319
(11th Cir. 2003), 11 and is not limited to the harm caused by the conduct charged in
the indictment, United States v. Rodriguez, 751 F.3d 1244, 1256 (11th Cir. 2014).
If the defendant returned any money to the victim or rendered any legitimate
services to the victim before the fraud was detected, the loss amount must be
reduced by the fair market value of the returned money or the services rendered.
U.S.S.G. § 2B1.1 cmt. n.3(E)(i). This “credit” accounts for the fact that “value
may be rendered even amid fraudulent conduct.” United States v. Sayakhom, 186
F.3d 928, 946 (9th Cir. 1999) (quotation marks omitted). As the Sentencing
Commission explained when it adopted this “net loss” approach, “the offender who
11
Hunter dealt with loss calculations under § 2F1.1 of the 1998 Sentencing Guidelines.
Section 2F1.1 was consolidated with § 2B1.1 in 2001; this consolidation did not materially
change the amount-of-loss rules, and courts have continued to apply the case law developed
under § 2F1.1 in applying § 2B1.1. See United States v. Maxwell, 579 F.3d 1282, 1305 n.8
(11th Cir. 2009).
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transfers something of value to the victim(s) generally is committing a less serious
offense than an offender who does not.” U.S. Sentencing Guidelines Manual, app.
C, vol. II, amend. 617, at 183 (2003). In line with this purpose, courts have held
that a fraudster may not receive credit for value that is provided to his victims for
the sole purpose of enabling him to conceal or perpetuate his scheme, see United
States v. Orton, 73 F.3d 331, 334 (11th Cir. 1996); United States v. Blitz, 151 F.3d
1002, 1012 (9th Cir. 1998), nor may he deduct the costs he incurred in running a
fraudulent scheme, see United States v. Craiglow, 432 F.3d 816, 820 (8th Cir.
2005); United States v. Marvin, 28 F.3d 663, 665 (7th Cir. 1994).
B.
In Campbell’s case, the $5.5 million gap between the parties’ loss numbers
is attributable to a factual dispute over the legitimacy of the Institute and a legal
dispute over what the Government is required to prove in order to establish a loss
amount under § 2B1.1(b)(1).
We begin with the factual disagreement. Most of Campbell’s arguments
attacking the Government’s and District Court’s loss number rest on a narrative
that has been thoroughly debunked by the evidence presented at trial. Campbell
asserts on appeal that he “borrowed” all of the state money with every intention of
using it “for lawful and honorable purposes”; he simply “made some questionable
decisions in regard to how he spent a small fraction of the sums.” Appellant Br., at
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14. Building on that premise, Campbell avows that “there were intended benefits
to state agencies and others through workforce development, and that many
agencies and others did in fact gain from Mr. Campbell’s fundraising efforts and
subsequent development work. The extent to which those goals were achieved is
the only dispute.” Id. at 31.
In effect, Campbell seeks to analogize his conduct to billing fraud—i.e.,
where a defendant provides legitimate services to the victim but then fraudulently
charges the victim more than those services were worth.12 In such cases, the
pecuniary harm suffered by the victim is the difference between the amount billed
and the value of the legitimate services rendered. See, e.g., United States v. Klein,
543 F.3d 206, 213–14 (5th Cir. 2008). Campbell, in effect, suggests that each
transaction made with Institute money should be treated as a separate “billing”
because the State received a little bit of benefit from all his dinners, “entertainment
expenses,” travel costs, and “contract labor” expenditures (i.e., the Little Sisters)—
since they were all ultimately intended to benefit the ASBDC. He concedes that he
might have “overbilled” in some instances, but nevertheless asserts that he
provided a benefit that must be accounted for. Campbell takes this argument one
step further, though. Because of the incremental nature and lengthy duration of his
“overbilling,” it would be impossible now to go back and unravel every transaction
12
Campbell never articulates his argument in this manner, but we find the analogy useful
in describing the gist of how he thinks the District Court should have treated his case.
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made with Institute money to disentangle the legitimate conduct from the
fraudulent.
The District Court rejected this approach and so do we. First, the record
does not support Campbell’s “pure heart, empty mind” narrative. In finding
Campbell guilty of the first mail fraud count, which stemmed from the Institute’s
receipt of the first $1.2 million in state funds, the jury necessarily concluded that
Campbell intended to defraud the State of Alabama from the outset. See United
States v. Bradley, 644 F.3d 1213, 1238 (11th Cir. 2011) (explaining that, to prove
mail fraud or wire fraud, the Government must prove that the defendant
“intentionally participate[d] in a scheme or artifice to defraud another of money or
property” (quoting United States v. Ward, 486 F.3d 1212, 1222 (11th Cir. 2007))).
Likewise, in returning a guilty verdict of 36 counts of money laundering under 18
U.S.C. §§ 1956 and 1957, the jury concluded that the Institute’s money was “dirty
money” (in this case, because it was fraudulently procured) before Campbell
started smuggling it out of the Institute accounts. See United States v. Christo, 129
F.3d 578, 579–08 (11th Cir. 1997) (explaining that money laundering requires the
laundered funds to already be the product of a completed crime).
In finding Campbell guilty of 56 counts of wire fraud for purchases made
with Institute debit cards, the jury rejected Campbell’s theory that he was just a
little negligent in the amounts he spent on otherwise beneficial activities. See
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Bradley, supra. And in adjudging Campbell guilty of conspiracy under 18 U.S.C.
§ 371, the jury rejected Campbell’s supposition that Campbell merely “okayed a
few questionable purchases” made by the Institute and ASDBC employees,
Appellant Br. at 14, instead finding that Campbell and his associates were engaged
in an fraudulent enterprise to convert Alabama’s money to their own personal use.
These findings were amply supported by evidence submitted at trial, including
testimony that Campbell referred to the Institute funds as “Sir William’s play
money” and his “savings account,” that he channeled money into various accounts
“so that prying eyes can’t look at it,” that he recruited his co-conspirators by
promising that the Institute would allow everyone “to make more money,” and that
he grew angry when anyone questioned his use of the Institute’s money.
The Government’s position—that the Institute was a sham organization
which served no legitimate purpose—finds ample support in the record. Even if
we accept arguendo that the Institute occasionally used some of the state money to
perform functions that had previously been performed by the ASBDC state office
(e.g., to promote ASBDC members’ work, host seminars, or publish educational
material), there was no valid reason for incorporating the Institute as a separate
nonprofit entity and then funneling the state funds through it. When he was
lobbying state officials for money, Campbell told them that using the Institute as a
receiving entity for the ASBDC would allow him to more easily obtain matching
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funds and keep the ASBDC’s various funding sources separate. And yet, the
Institute never obtained any matching federal funds; the only other funding it
received, apart from the $7.3 million from the State, was $75,000 in private
donations made by FedEx and Intuit (making up approximately one percent of the
Institute’s total funding); and only 20 percent of the state funding ever made its
way into the hands of ASBDC members.
The reality is that Campbell created the Institute and inserted it into the
ASBDC’s funding stream for the sole purpose of allowing him to conceal state
funds from state accountants and thus enable him and his co-conspirators to use the
money as they saw fit. Accordingly, to say that the loss suffered by the State was
only incremental—that Campbell’s fraud only nibbled at the edges of an otherwise
wholesome undertaking—is flatly contradicted by the record. Accordingly, we
reject Campbell’s assertion that any fraud he committed was merely a matter of
degree. Because that assertion was a necessary element of his argument that the
amount of loss would be impossible to accurately estimate, we reject Campbell’s
argument that the District Court erred by not using the amount he gained (instead
of the amount Alabama lost) to figure the level enhancement under § 2B1.1(b)(1).
That brings us to the legal question. As an alternative to his argument that
the State’s losses are impossible to calculate under the “billing fraud” method,
Campbell suggests that the Government bore the burden of proving the
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illegitimacy of each of the Institute’s expenditures, item by item. In other words,
Campbell argues that the District Court should have begun its loss calculation at
zero and worked its way up as the Government proved that various activities
undertaken by the Institute were not valuable to the State.
As already noted, the government must prove the facts underlying a
proposed sentence by a preponderance of the evidence, Rodriguez, 732 F.3d at
1305, and the district court must hold it to that burden and must “support its loss
calculation with reliable and specific evidence,” Munoz, 430 F.3d at 1370. In
cases like Campbell’s, that requirement does not demand that the Government and
the court sift through years of bank records and receipts to ascertain itemized proof
of every single transaction that should be chalked up as a loss to the victim. See
Orton, 73 F.3d at 334–35 (explaining that “an exhaustive inquiry is not required in
every case” involving a complicated fraudulent scheme in which the victims’ loss
is difficult to calculate). 13 Nor does it require the district court to use some other
13
Orton involved a Ponzi scheme, but its basic point holds true for all types of fraud. As
we explained,
a sentencing court is not generally required to make detailed findings of
individualized losses to each victim in every case. There are cases where it would
be unduly cumbersome, potentially requiring large expenditures of time and
resources to determine large amounts of detailed information. Such a rigid rule is
not required by the Guidelines. All that is required is that the court “make a
reasonable estimate of the loss, given the available information.” U.S.S.G.
§ 2F1.1, comment. (n.8) (emphasis added). Where detailed information is not
available, a detailed estimate is not required.
Orton, 73 F.3d at 335 (the language quoted from U.S.S.G. § 2F1.1 cmt. n.8 now appears, slightly
altered, in § 2B1.1 cmt. n.C).
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variation of Campbell’s “bottom-up” approach to calculating loss. Where, as here,
a defendant’s conduct was permeated with fraud, a district court does not err by
treating the amount that was transferred from the victim to the fraudulent
enterprise as the starting point for calculating the victim’s pecuniary harm. See
United States v. Washington, 715 F.3d 975, 985 (6th Cir. 2013) (“[The district
court] would have been justified in finding the amount of loss to be the entire
$3.32 million [paid to the defendants] because it found that the entire [] program
was a sham.”).
That is not to say that the total amount of state funding received by the
Institute should have been the final number used to fix Campbell’s § 2B1.1(b)(1)
level increase. As we already observed, “value may be rendered even amid
fraudulent conduct,” Sayakhom, 186 F.3d at 946, and the Guidelines commentary
required the court to grant a credit for any “money returned” or “the fair market
value of . . . services rendered” to the State, U.S.S.G. § 2B1.1 cmt. n.3(E)(i). The
District Court granted such a credit for the $1.4 million that the Institute
transferred to ASBDC members.
Campbell’s final argument on appeal is that the District Court should have
also granted a credit for the costs associated with running the Institute. Before the
District Court, Campbell sought a credit for lobbying expenses, legal fees,
accounting fees, taxes, bills, employee salaries, insurance, vehicle leases, and other
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various expenses that were “legitimate expenses for a nonprofit to incur.”
Campbell Sent. Mem., Doc. 100, at 16 & n.4. He has now submitted to this court a
list of business expenses totaling nearly $2.7 million that, he claims, should
credited against the already-reduced $5.9 million loss amount. See Reply Br.,
App. II. As an initial matter, even if the District Court had granted a credit for all
$2.7 million, the total loss amount would still remain above $2.5 million—the
lower bound of the 18-level enhancement Campbell received. 14 See U.S.S.G.
§ 2B1.1(b)(1)(J).
But Campbell’s argument suffers from more than a mathematical flaw; he
presupposes that he is entitled to deduct the Institute’s operating expenses because
they are appropriate expenses incurred in operating a nonprofit. That is not enough
to entitle Campbell to a credit. As the Seventh Circuit has explained in the face of
a similar argument, “[t]he monies . . . spent as part of [a] fraudulent scheme do not
become ‘legitimate business expenses’ simply because other legitimate businesses
also incur these expenses.” Marvin, 28 F.3d at 665. The relevant inquiry is
whether any legitimate value was rendered to the State of Alabama. See U.S.S.G.
§ 2B1.1 cmt. n.3(C). The District Court concluded that many of the expenses cited
14
Campbell tries to get below this $2.5 million threshold by including in his list of
proposed credits the $1.5 million balance of a certificate of deposit that the Government seized.
Though he never says so directly, we presume that he believes this amount should be credited as
“money returned” to the victim. See U.S.S.G. § 2B1.1 cmt. n.3(E)(i). But the Guidelines
commentary is clear that the a credit is only available for money returned or services rendered
“before the offense was detected.” Id.
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by Campbell—rather than benefiting the State—“played some role in perpetuating
the scheme and the crime against the state.” Sent. Tr., Doc. 123, at 66. Such
expenses are obviously not creditable against Campbell’s loss. See Orton, 73 F.3d
at 334; Blitz, 151 F.3d at 1012.
Therefore, we find the District Court’s method for estimating Campbell’s
loss to have been appropriate under the circumstances, and the ultimate “answer”
the District Court reached to have been a reasonable estimate of the pecuniary
harm Campbell’s scheme inflicted on the State of Alabama.
IV.
For the foregoing reasons, Campbell’s convictions and sentences are
AFFIRMED.
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