United States v. Lewis , 104 F.3d 690 ( 1997 )

REVISED
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
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Nos. 96-30641
96-30699
96-30700
Summary Calendar
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UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
CONNIE S. LEWIS, PATSY E. LEWIS, and
MARION FRANCIS RICHEY,
Defendants-Appellants.
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Appeals from the United States District Court for the
Western District of Louisiana
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December 11, 1996
Before GARWOOD, JOLLY, and DENNIS, Circuit Judges.
PER CURIAM:
Appellants Connie S. Lewis, Patsy E. Lewis, and Marion Francis
Richey pled guilty to charges arising from a long-standing food
stamp fraud scheme. The Lewises’ two sons, Jason and Carson, also
pled guilty; they do not appeal. Following a sentencing hearing,
the district court sentenced the five defendants to make
restitution to the Department of Agriculture, among other
penalties. Connie Lewis and his wife, Patsy Lewis, were each
required to make restitution in the amount of $4,005,399, jointly
and severally liable with the other co-defendants. Richey was
ordered to make restitution in the amount of $414,947, jointly and
severally liable with the other co-defendants. Connie Lewis, Patsy
Lewis and Richey appeal the district court’s determination of the
amount of restitution, alleging various errors. Having reviewed
the briefs and the record, we conclude that the district court did
not err, and we therefore affirm.
I
The Lewis family conducted its illegal operations at two
family-run meat markets, Lewis Meat Market in Alexandria,
Louisiana, and Lewis Meat and Slaughter in Pollock, Louisiana. The
Alexandria store began accepting food stamps in 1988; the Pollock
store accepted stamps beginning in 1992. In the spring of 1995,
Richey, Connie Lewis’ cousin, became involved with the Alexandria
store with the intent of taking over the business when Lewis
“retired.” In June 1995, Richey applied for authorization to
accept food stamps in the name of CENLA Meats. The application was
denied, but Richey continued to work at the Alexandria store and to
participate in the food stamp fraud conspiracy.
The scheme was simple. Rather than supplying food to food
stamp recipients, the Lewises would illegally purchase food stamp
coupons in exchange for cash at a substantial discount to the face
value of the coupons. The defendants would then redeem the coupons
for their full face value, falsely certifying that they properly
accepted the coupons in exchange for equivalent amounts of eligible
food items.
2
During the relevant period, the two stores redeemed a total of
$4,216,209 in food stamp coupons. Of this total, $436,786 was
redeemed between June 1995 and October 1995, the period during
which Richey was an active participant in the conspiracy. The
coupons redeemed during this period were redeemed by the Pollock
store, because the Alexandria store was no longer authorized to
accept food stamps. The evidence indicated that the defendants had
purchased many of these coupons in Alexandria, and then illegally
transferred them to the Pollock store.
In order to calculate the amount of restitution required by
the Victim and Witness Protection Act (the “VWPA”), 18 U.S.C. §§
3663 and 3664, the district court deducted five percent from the
full face value of coupons redeemed during the period over which
each defendant participated in the conspiracy. The five percent
represented the most generous estimate suggested of the portion of
redemptions that represented legitimate exchanges for food.
II
The Lewises argue that the district court should have
calculated the required restitution from the face value less the
amount they actually paid in cash to food stamp recipients. The
Lewises insist that the VWPA “requires that [they] be given credit
for the value of the part of the property that was returned to the
owner at the time of the illegal transaction.” Connie S. Lewis Br.
at 9-10. The Lewises cite various cases in which defendants’
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restitution was reduced by the amount of property or value that was
returned to the victim of the crime.
The Lewises paid approximately 78% of the coupons’ face value
in cash to food stamp recipients. On this basis, they argue that
more than $3 million was “returned.” The Lewises cite 18 U.S.C.
§ 3663(b)(1), arguing that this limits the amount of restitution
the court may permissibly order to approximately $800,000.
Under 18 U.S.C. § 3663(b)(1)(A), the court may order the
defendant to “return the property to the owner or someone
designated by the owner.” If the property cannot feasibly be
returned, the defendant shall make restitution in an amount
equivalent to the value of the property, “less the value (as of the
date the property is returned) of any part of the property that is
returned.” 18 U.S.C. § 3663(b)(1)(B)(ii).
This provision does not help the Lewises, because they mistake
the nature of the “property” at issue. The VWPA permits the court
to order a defendant to make restitution to “any victim.” The
Lewises illegally obtained “property” in two steps of their
criminal scheme: they illegally obtained food stamps coupons from
indigent individuals, and they illegally obtained cash redemptions
from the United States Department of Agriculture. Whether
criminally complicit food stamp recipients could be considered
“victim owners” for restitution under the VWPA is unclear, but they
are not the victim to whom the district court ordered restitution.
The victim here is the Department of Agriculture, and the illegal
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cash payments that the Lewises made to food stamp recipients does
not constitute a “return” of the cash redemption they fraudulently
obtained from the Department.
The amount of “profit” the Lewises made from their illegal
scheme is irrelevant to the amount of restitution that is owed.
The Lewises illegally obtained in excess of $4 million from the
Department of Agriculture, and the Department has suffered a real
loss in that amount. The purpose of the food stamp program is to
provide nutritional food, not cash, to needy families. The
defendants have thwarted that purpose. While the defendants’
expenses in conducting their illegal operation undoubtedly reduced
the profit they gained, those expenses did not alleviate the loss
to the Department of Agriculture. The Lewises’ argument is without
merit, and we conclude that the district court properly ordered
restitution in the full face amount of the coupons illegally
redeemed.
III
Marion Richey argues that the district court improperly
“extrapolated” information for the Alexandria store between 1988
and August 1993 to determine the amount illegally redeemed during
the months in 1995 when he was a member of the conspiracy. Richey
further argues that the 5% credit for legitimate sales was too
small because the evidence “would indicate that more than five
percent of the food stamp transactions would be for legitimate
sales of meat.” Richey Br. at 7-8.
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Under 18 U.S.C. § 3664(d), the government bears the burden of
proving the amount of restitution owed by a preponderance of the
evidence, and the district court is to resolve disputes as to the
proper amount of restitution. Without deciding that such an
“extrapolation” would be improper in the absence of more definite
evidence, we observe that Richey mistakes the method of calculation
employed by the district court.
At the sentencing hearing, Special Agent Gerald Burkhalter
testified concerning the facts revealed by the Department of
Agriculture’s investigation of the illegal scheme. Burkhalter
testified to the dollar amount of food stamp coupons that the Lewis
family redeemed in each month of the conspiracy. Burkhalter stated
that between June 1995 and October 1995 the Lewis operation,
through the Pollock store,1 redeemed a total of $436,786. Rec. 4,
24-25. No extrapolation of data from earlier periods was
performed. As an active and knowing member of the conspiracy,
Richey is responsible for this entire amount, without regard to
whether the stamps in question were illegally purchased at the
Pollock store or at the Alexandria store where he worked.
Richey’s second challenge to the $415,947 restitution award is
an assertion that the government failed to prove that only five
1
At this point in the conspiracy, the Alexandria store was no
longer authorized to accept food stamps. Despite this, Richey and
others continued to purchase food stamps coupons in Alexandria.
The defendants would then illegally transfer the coupons to the
Pollock store to be redeemed.
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percent of the sales were legitimate. This argument is without
merit. The government’s financial analysis indicated that between
two and three percent of food stamp coupon redemptions represented
legitimate sales. Jason Lewis agreed that this figure was correct
to the best of his knowledge. Carson Lewis testified that he
believed the figure was three to four percent. Rec. 4, 32. The
presentence report accepted a figure of 2.5 percent, and then
generously doubled it to five percent to account for possible
error. The district court adopted this figure.
The court was required to resolve the factual dispute by a
preponderance of the evidence. The defendants presented no
evidence that a figure higher than five percent was appropriate.
When asked whether two to five percent would be a “fair accounting”
Richey himself did not deny that it was, but simply suggested that
they were trying to “build up” the meat business with more sales.
Rec. 4, 44. Neither Richey nor any other defendant offered
evidence that more than five percent of the food stamp redemptions
represented legitimate sales. The district court did not clearly
err in determining that the government had shown by a preponderance
of the evidence that five percent was the appropriate figure.
Richey’s final argument is that the district court abused its
discretion in ordering restitution in an amount he is unable to
pay. We find this argument unpersuasive. In determining an amount
of restitution to be paid, the district court considers not only a
defendant’s present financial resources, but also his future
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ability to pay. United States v. Schinnell, 80 F.3d 1064, 1072
(5th Cir. 1996). The defendant bears the burden of persuading as
to any mitigating financial factors under § 3664(a). United States
v. Matovsky, 935 F.3d 719, 722 (5th Cir. 1991). Richey has been
regularly employed over most of his life, and presented no evidence
that he will be unable to pay the restitution imposed over time.
We find that the district court did not abuse its discretion in
declining to depart downward from the restitution recommended in
the presentence report.
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IV
We conclude that the district court properly determined the
amount of restitution to be made by the defendants to the victim of
their crime, the United States Department of Agriculture. The
sentences imposed by the district court upon Connie S. Lewis,
Patsy E. Lewis, and Marion Francis Richey are therefore
A F F I R M E D.
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