United States v. Jason Cox , 665 F. App'x 457 ( 2016 )

NOT RECOMMENDED FOR PUBLICATION
File Name: 16a0670n.06
No. 15-4200
FILED
Dec 14, 2016
UNITED STATES COURT OF APPEALS DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA, )
)
Plaintiff-Appellee, )
) ON APPEAL FROM THE
v. ) UNITED STATES DISTRICT
) COURT FOR THE SOUTHERN
JASON COX, ) DISTRICT OF OHIO
)
Defendant-Appellant. ) OPINION
)
)
BEFORE: BATCHELDER, STRANCH, and DONALD, Circuit Judges.
JANE B. STRANCH, Circuit Judge. Jason Cox pled guilty to several counts of mail
fraud, wire fraud, and money laundering and was sentenced to sixty months’ imprisonment and
ordered to pay restitution. In this appeal, Cox challenges the length of his sentence and the
restitution amount. For the following reasons, we AFFIRM Cox’s sentence.
I. BACKGROUND
Jason Cox worked as an investment advisor with Edward Jones at the time of his
fraudulent activities. Around that time, he also developed a gambling addiction and began
gambling heavily, and he fraudulently acquired funds from three of his clients to pay the debts he
incurred. In his position as an investment advisor, Cox was “subject to little oversight with
respect to the handling of his clients’ financial accounts.” Cox repaid the principal plus the
promised interest to two of his clients before his arrest.
No. 15-4200, United States v. Cox
The third client that Cox defrauded, Jodene Beavers, was a developmentally disabled
woman in her fifties. Cox became the advisor for Beavers’s father, and was introduced to her as
“the person she could trust to manage her money after [her father] was no longer able to do so.”
Before Beavers’s father’s death, he paid her bills, paid the mortgage on her condo in Upper
Arlington, Ohio, and provided her with financial assistance, as she was rarely employed. He also
established a joint account that could have provided enough money to support her for most, if not
all, of her life. Upon her father’s death, Beavers inherited all of his assets. As Beavers relied
heavily on her father and had difficulty understanding the responsibilities of managing an estate,
her estate’s executor spoke with Cox several times about the importance of ensuring that her
funds last as long as possible.
Over the next two years Cox took nearly all of Beavers’s money. Cox sold the holdings
in the IRA account opened by Beavers’s father that was worth $164,000; as Beavers received
checks, Cox convinced her to write checks to him in amounts equal to or slightly lesser that the
amounts she received. He told her that he was “investing the money in mutual funds for her”
and that they were in a “joint business venture.” He caused Beavers to sell her condo, contacted
the real estate agent, and was present throughout the process. He convinced her to move into an
apartment in Whitehall, Ohio where he prepaid the rent, and “she was forced to leave a couch
and small refrigerator in her home which she really wanted to keep.” In her new apartment,
Beavers heard gunshots that caused her to have panic attacks, insomnia, and fear of walking
outside in the area. She also contracted scabies and was told there were bedbugs in her building.
Cox was charged with multiple counts of mail fraud, wire fraud, and money laundering.
He pled guilty to two counts of mail fraud, one count of wire fraud, and two counts of money
laundering, and agreed to pay restitution to Beavers. The Pre-Sentence Report (PSR)
No. 15-4200, United States v. Cox
recommended a total offense level of twenty-two, based on a loss range between $400,000 to
$1,000,000. The PSR calculated the base offense level at seven, increased by fourteen levels for
the loss amount, two levels for Beavers’s vulnerability, and two levels for abuse of trust. The
level was decreased to twenty-two for acceptance of responsibility.
In the plea agreement, however, both Cox and the Government argued in favor of
applying a lower loss range of $200,000 to $400,000, which would lead to a total offense level of
twenty. The probation officer, as well as the parties and the court, based this lower range in part
on new Guidelines that would be in effect soon, increasing the loss range for a twelve point
enhancement to $250,000 to $550,000. In light of this, both parties and the district court agreed
to a loss range of $200,000 to $400,000. And all agreed that a twelve level increase, instead of a
fourteen level increase, was appropriate.
The restitution amount indicated in the PSR was $432,539, but before sentencing the
Government submitted an addendum that adjusted that number due to a calculation error; the
updated restitution figure was $412,252.85, consisting of $360,150 in cash and checks provided
by Beavers, early distribution tax penalties of $22,244, wire transfer fees of $935, real estate fees
of $5,688.65, and ATM withdrawals and debit card purchases of $23,235.20.
At sentencing, the court applied a criminal history category of II and an offense level of
twenty for a Guidelines range of 37-46 months, and overruled Cox’s objection regarding the
abuse of trust enhancement. The court varied upward from the suggested range, imposed a
sentence of sixty months, and granted restitution in the amount of $412,252.85.
Cox appeals various elements of his sentence. He argues that the district court erred in
applying the abuse of trust enhancement, in accepting the government’s restitution amount, and
that his above-Guidelines sentence is both procedurally and substantively unreasonable.
No. 15-4200, United States v. Cox
II. ANALYSIS
A. The abuse of trust enhancement
A district court's determination that a defendant occupied a position of trust for the
purposes of the Sentencing Guidelines is reviewed de novo. United States v. Gilliam, 315 F.3d
614, 617 (6th Cir. 2003) (citing United States v. Tribble, 206 F.3d 634, 635 (6th Cir. 2000)).
The Guidelines authorize enhancement of an offense level in certain situations. “If the
defendant abused a position of public or private trust, or used a special skill, in a manner that
significantly facilitated the commission or concealment of the offense, increase by 2 levels.”
USSG § 3B1.3. The Guidelines define “a position of public or private trust” as “characterized by
professional or managerial discretion (i.e., substantial discretionary judgment that is ordinarily
given considerable deference). Persons holding such positions ordinarily are subject to
significantly less supervision than employees whose responsibilities are primarily non-
discretionary in nature.” Id. at cmt. n.1.
In determining whether or not the abuse of trust enhancement is appropriate, Sixth Circuit
precedent directs courts to look at “the level of discretion accorded an employee” as “the
decisive factor in determining whether his position was one that can be characterized as a trust
position.” United States v. Brogan, 238 F.3d 780, 783 (6th Cir. 2001) (citing Tribble, 206 F.3d
at 637). The specific job must be “characterized by substantial discretionary judgment that is
ordinarily given considerable deference.” Id. (quoting United States v. Ragland, 72 F.3d 500,
503 (6th Cir. 1996)).
Cox argues that his position was not a position of trust and that the deceit that occurred
was due to Beavers’s credulity. Further, he distinguishes his position because he “solicited
additional funds from his clients to invest in ‘off the books’ investments and continued even after
No. 15-4200, United States v. Cox
he was terminated from Edward Jones.” The Government responds that in controlling
investments and concealing the nature of his schemes, Cox had total authority to invest his
victim’s money. The Government also notes that Cox defrauded three non-disabled victims in
addition to Beavers.
Cox had significant discretion to use his clients’ money as he wished in his position as an
Investment Advisor for Edward Jones. The PSR explained that Cox had very little oversight,
and that lack of oversight permitted him to commit fraud relatively undetected by his employer.
In light of this record, the district court’s application of the two level abuse of trust enhancement
was appropriate.
Cox also argues that it was double-counting for him to receive both the abuse of trust and
the vulnerable victim enhancements. “Double counting ‘occurs when identical conduct is
described in two different ways so that two different adjustments apply.’” United States v.
Dobish, 102 F.3d 760, 762 (6th Cir. 1996) (citing United States v. Haines, 32 F.3d 290, 293 (7th
Cir. 1994)). In Dobish, we noted that double counting does not necessarily result when both the
abuse of trust and vulnerable victim enhancements are applied. 102 F.3d at 762. “The
enhancement for vulnerable victims focuses on the choice of victims” while the abuse of trust
enhancement, “in contrast, focuses on the offender’s post-selection conduct.” Id. (finding that
the defendant had both selected victims for their susceptibility and abused his position as an
investment manager). Here too, Cox’s seeming intentional selection of Beavers was in addition
to, and distinct from, his abuse of his position of trust as an investment advisor. Thus, the district
court did not err in applying both of these enhancements.
No. 15-4200, United States v. Cox
B. Calculation of restitution amount
Cox argues that his restitution amount is too high because it was based on a loss amount
that incorrectly included early distribution tax penalties, wire transfer fees, and real estate fees.
1. Standard of review
As an initial matter, the parties dispute the appropriate standard of review for resolving
this claim, and whether the claim was forfeited. The district court's loss calculation is reviewed
for clear error. United States v. Younes, 194 F. App'x 302, 315 (6th Cir. 2006) (citing United
States v. Orlando, 363 F.3d 596, 600–01 (6th Cir. 2004)). We review forfeited arguments for
plain error. United States v. Nazzal, 644 F. App'x 655, 658 (6th Cir. 2016) (quoting United
States v. Evers, 669 F.3d 645, 654 (6th Cir. 2012); United States v. Coppenger, 775 F.3d 799,
803 (6th Cir. 2015)). “Whereas forfeiture is the failure to make the timely assertion of a right,
waiver is the ‘intentional relinquishment or abandonment of a known right.’” Nazzal, 644 F.
App'x at 658 (quoting United States v. Olano, 507 U.S. 725, 733 (1993)). For there to be plain
error, Cox must show “(1) error (2) that ‘was obvious or clear,’ (3) that ‘affected defendant's
substantial rights’ and (4) that ‘affected the fairness, integrity, or public reputation of the judicial
proceedings.’” United States v. Vonner, 516 F.3d 382, 386 (6th Cir. 2008) (en banc) (citation
omitted).
2. Loss amount and restitution
Cox was ordered to pay restitution to Beavers pursuant to the Mandatory Victims
Restitution Act (MVRA), 18 U.S.C. § 3663A and USSG § 5E1.1. The Guidelines provision that
is used to calculate loss for the purpose of determining the offense level is USSG § 2B1.1.
A comment to that section excludes from loss “interest of any kind, finance charges, late fees,
No. 15-4200, United States v. Cox
penalties, amounts based on an agreed-upon return or rate of return, or other similar costs.”
USSG § 2B1.1 cmt. n.3(D)(i).
The original PSR recommended a total offense level of twenty-two, based on the loss
amount of $432,539 (this number was lowered in a subsequent addendum) and the loss range of
$400,000 to $1,000,000. Cox’s counsel objected to the inclusion of fees and penalties in the loss
amount in his Objections to the PSR.1 If the fees and penalties had been removed, the loss would
have been under $400,000; however, the parties reached an agreement to apply the lower loss
range of $200,000 to $400,000 regardless. They did not appear to resolve whether or not fees
and penalties should be included in the loss amount calculation. They simply agreed to the lower
loss range, at least in part to take into account new Guidelines that would go into effect soon.
At sentencing, the parties and the court agreed to the lower loss range. Cox mentioned
the issue of fees at sentencing in the context of describing, in part, how the parties reached the
agreement regarding the lower loss range: “in negotiating the plea agreement, we looked to the
amount of finance charges, late fees, other similar types of costs that the Guidelines specifically
exempt from addition to computing what the loss is. So that’s how we arrived at that figure
between $200,000 and $400,000.” (R. 63, PAGEID# 265). The Government said that it did not
agree that fees are not part of the loss, noting that, in agreeing to the lowered range, it was
recognizing that the Guidelines were changing soon. Finally, in regard to the amount of
restitution, Cox stated at sentencing, “I don’t disagree the $412,000 is the correct restitution
figure. . . . That’s a correct restitution figure.” Id.
Cox now clarifies that he is not appealing the loss as it relates to the offense level.
Rather, he is appealing the dollar amount of the loss that he alleges improperly included fees,
1
The figures he objected to including were the early distribution tax penalties of $22,244, wire
transfer fees of $935, and real estate fees of $5,688.65.
No. 15-4200, United States v. Cox
which was then used as the restitution amount. He acknowledges that restitution does not always
need to equal loss, but argues that it should in this case. Cox further clarifies that the district
court should have at least explained the restitution amount instead adopting it without discussion.
It is true that the loss amount should not include penalties or fees, and that the
$412,252.85 amount does include them. The range actually adopted by the court ($200,000 to
$400,000), however, reflected a number that did not include those penalties or fees and thus the
loss amount, used as intended to calculate the sentencing level, did not in function include
penalties or fees.
Restitution does not need to equal the loss amount. The parties pointed to few cases in
this circuit, but United States v. Rutley, 482 F. App'x 175, 178–79 (7th Cir. 2012) is helpful.
There, the defendant argued that interest must be excluded from his restitution amount because
interest was not allowed to be included in the loss amount for sentencing purposes. The court
stated:
[N]o case law and nothing in the Mandatory Victim Restitution Act or the
sentencing guidelines support [the defendant’s] argument. Application Note
3(D)(i) to § 2B1.1 applies to the loss amount only. Restitution is calculated under
18 U.S.C. § 3663A and U.S.S.G. § 5E1.1, and those provisions do not exclude
bargained-for interest (or finance charges) from a restitution award. See United
States v. Jimenez, 513 F.3d 62, 87 (3d Cir.2008); United States v. Morgan,
376 F.3d 1002, 1014 (9th Cir.2004).
Rutley, 482 F. App’x at 179. Even if there were fees and penalties in the restitution amount,
therefore, it does not mean that the restitution amount is erroneous.
The district court could have clarified these issues at the hearing, Cox argues, by
explaining: (1) whether the court accepted the argument that loss should include fees and
penalties and that restitution should equal loss, or (2) whether the court accepted Cox’s argument
that loss should not include fees but decided that restitution should reflect those charges. With
the parties in apparent agreement about both the sentencing range and the restitution amount,
No. 15-4200, United States v. Cox
however, it may have been difficult for the court to know that it needed to explain this particular
issue. The inclusion of fees in the restitution amount, or the court’s failure to expound upon this
issue at sentencing, does not rise to the level of plain error.
C. Reasonableness of Cox’s sentence
Because Cox did not object to the selected Guidelines range independently, or in
response to the Bostic question, the parties agree that this claim is unpreserved. We review
unpreserved claims of procedural (or substantive) reasonableness for plain error. United States
v. Bostic, 371 F.3d 865, 872–73 (6th Cir. 2004); see United States v. Penson, 526 F.3d 331, 337
(6th Cir. 2008). “Sentences must be both procedurally and substantively reasonable.” United
States v. Walters, 775 F.3d 778, 781 (6th Cir. 2015) (citing Gall v. United States, 552 U.S. 38, 51
(2007)). Cox argues that his sentence is both procedurally and substantively unreasonable.
1. Procedural reasonableness
A sentence is procedurally unreasonable if the district court commits a 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.” Gall, 552 U.S. at 51.
Cox first argues that the district court, in varying upward to a sentence of 60 months,
actually (or accidentally) assessed the variance from a previously rejected sentencing range of
46-57 months. The agreed upon sentencing range was 37-46 months, and during the hearing, the
court stated numerous times that it was using that range. As Cox notes, the court did state once
that it was going to “vary under 3553(a) to an amount just slightly above what [the probation
officer] had originally computed as the sentencing guideline range.” (R. 63, PageID# 297).
No. 15-4200, United States v. Cox
But the district court made its decision clear in repeatedly referencing the chosen range, then
expressly noting how it reached the sixty month figure.
Cox also argues that the court failed to explain the upward variance and notes that though
the court stated the loss did not capture the essence of the offense, Cox did receive a two level
enhancement for targeting a vulnerable victim. The Government responds that the district court
adequately explained its decision to impose an above-Guidelines sentence, in that it considered
Cox’s childhood, employment history, and addiction, as well as the severity of the crime and
other factors.
Cox points to United States v. Blackie, 548 F.3d 395 (6th Cir. 2008), as a similar case
where the district court was “ambiguous about the exact nature of the new offense level and the
Guidelines range at sentencing.” However, in Blackie, the court never stated the applicable
range at all, nor explained how it reached its sentence. 548 F.3d at 401. Here, however, the
court stated the range and also considered Cox’s “very, very troubling” conduct, the fact that
Beavers is left with “essentially no assets,” and the conclusion that this was “about as most
serious a financial offense as one can imagine.” The court discussed Cox’s minimal criminal
history, addiction, his years of gainful employment, and that the “physical abuse” he suffered as
a child at the hands of his step-father was “not something that should be ignored in a court of
justice.” The district court sufficiently explained its reasons for varying upward in determining
Cox’s sentence. There is no plain error in the sentence.
2. Substantive reasonableness
“The essence of a substantive-reasonableness claim is whether the length of the sentence
is ‘greater than necessary’ to achieve the sentencing goals set forth in 18 U.S.C. § 3553(a).”
United States v. Tristan–Madrigal, 601 F.3d 629, 632–33 (6th Cir. 2010). Courts must “take
No. 15-4200, United States v. Cox
into account the totality of the circumstances, including the extent of any variance from the
Guidelines range.” Gall, 552 U.S. at 51. A sentence may be substantively unreasonable if the
district court “fail[s] to consider pertinent § 3553(a) factors, or giv[es] an unreasonable amount
of weight to any pertinent factor.” United States v. Griffin, 530 F.3d 433, 439–40 (6th Cir. 2008)
(alterations in original) (citation omitted). The fact that we “might reasonably have concluded
that a different sentence was appropriate is insufficient to justify reversal of the district court.”
Gall, 552 U.S. at 51.
Cox argues that the court placed too much weight on one 18 U.S.C. § 3553(a) factor, the
seriousness of the crime, and failed to consider other relevant factors, such as his history,
cooperation with the prosecution, and willingness to repay Beavers.
At the sentencing hearing, the court discussed the nature of the offense and Cox’s “very,
very troubling” conduct, as well as his criminal history, noting that he tended towards the low
end of criminal history and that his two DUIs may show an addiction issue. § 3553(a)(1). The
court also noted the physical abuse that Cox suffered as a child, the importance of protecting the
public from further crimes, and of providing deterrence both to Cox and to society. § 3553(a)(2).
The court described the kinds of sentences available and the sentencing range, and indicated that
Cox should be considered as a candidate for the Residential Drug Abuse Program because of
“substantial untreated addiction.” § 3553(a)(3) and (4). And finally, the court discussed the
need for restitution. § 3553(a)(7). The court might have addressed more specifically the
Guideline policy statements and the need to avoid unwarranted sentencing disparities.
§ 3553(a)(5) & (6). However, because courts do not require a “ritualistic incantation of the
§ 3553(a) factors,” the sentence was reasonable. United States v. Chandler, 419 F.3d 484, 487
(6th Cir. 2005) (quoting United States v. Washington, 147 F.3d 490, 491 (6th Cir. 1998)).
No. 15-4200, United States v. Cox
III. CONCLUSION
For the foregoing reasons, we AFFIRM Cox’s sentence.