United States v. Joshua Eaden ( 2022 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 20‐2763
UNITED STATES OF AMERICA
Plaintiff‐Appellee,
v.
JOSHUA W. EADEN
Defendant‐Appellant.
____________________
Appeal from the United States District Court for the
Southern District of Indiana, Evansville Division.
No. 3:17‐cr‐00025 — Richard L. Young, Judge.
____________________
ARGUED SEPTEMBER 27, 2021 — DECIDED JUNE 23, 2022
____________________
Before ROVNER, HAMILTON, and KIRSCH, Circuit Judges.
KIRSCH, Circuit Judge. Over a three‐year period, Joshua
Eaden defrauded his employer and its business partners of
more than $200,000. Eaden’s crimes eventually caught up
with him, and a jury convicted him of seventeen counts of
mail and wire fraud. On top of 46 months’ imprisonment, the
district court ordered Eaden to pay restitution to his victims
and to forfeit his ill‐gotten gains.
2 No. 20‐2763
Eaden argues on appeal that he is entitled to a new trial
for two reasons. First, he contends that the district court de‐
prived him of a fair trial by making prejudicial comments to
prospective jurors during voir dire. Second, he argues that the
district court wrongly admitted a lay witness’s opinion testi‐
mony regarding a subset of his fraud charges. And if not
granted a new trial, Eaden seeks at least the reduction of his
forfeiture and restitution obligations, which he contends were
miscalculated. Yet Eaden failed to raise these objections with
the district court, meaning we review only for plain error. The
government concedes (and we agree) that two of Eaden’s res‐
titution and forfeiture arguments merit relief, so we reduce
Eaden’s financial obligations accordingly. But when it comes
to Eaden’s remaining claims, we see either no error or nonob‐
vious error; we affirm as to those.
I
From 2002 to 2016, Joshua Eaden worked for Best One
Tire, a tire store owned by Southern Indiana Tire, Incorpo‐
rated (SIT). He eventually became Best One’s manager, but
from 2014 to 2016 he abused that position by defrauding SIT
and its business partners of more than $200,000. This fraud
took two forms. First, Eaden falsely inflated the profits at his
store (to obtain unearned performance‐based bonuses) by
billing SIT’s largest customer—Gibson County Coal—for
products it did not purchase. Second, Eaden submitted false
claims to a rewards program sponsored by tire manufacturer
Bridgestone Firestone, through which Best One’s employees
could claim gift cards and other prizes for selling Bridgestone
tires.
In early 2016, a community member’s tip alerted SIT’s
CEO to Eaden’s misdeeds. Police and internal investigations
No. 20‐2763 3
soon followed. On the internal side, SIT hired forensic ac‐
counting firm BKD to assess the scope of Eaden’s overbilling
scheme. To that end, BKD produced a report concluding that
Eaden had billed Gibson County Coal for more than $180,000
in never‐received products, netting Eaden more than $47,000
in unearned bonuses. Additionally, SIT forwarded Eaden’s
Bridgestone rewards program records to Bridgestone repre‐
sentative Don Anderson, who upon review found that more
than 75 percent of Eaden’s submitted claims contained false
information.
With his fraud now uncovered, Eaden faced a 23‐count in‐
dictment alleging multiple fraudulent schemes, including
those just described. Although he was eventually acquitted on
six counts, the jury convicted him of the remaining seven‐
teen. At sentencing, the district court imposed 46 months’ im‐
prisonment, three years of supervised release, and ordered
restitution of $244,673.00, as well as the forfeiture of all
Eaden’s bonuses from 2014 to 2016, which totaled $88,106.78.
Eaden now appeals, contending that he is entitled to a new
trial or, failing that, at least to reduced forfeiture and restitu‐
tion obligations.
II
We note from the outset that Eaden has (at a minimum)
forfeited his claims by failing to raise them with the district
court. But we needn’t decide whether he has crossed the line
into waiver; the government concedes that two of Eaden’s ar‐
guments merit relief, and the standard of review makes no
difference for the others. We therefore assess Eaden’s claims
for plain error, meaning he can obtain relief only by demon‐
strating: (1) an error (under whatever standard of review
would apply had the issue been preserved); (2) that is plain;
4 No. 20‐2763
(3) that affected his substantial rights; and (4) that, if not cor‐
rected, would impugn the fairness, integrity, or public repu‐
tation of judicial proceedings. United States v. Butler, 777 F.3d
382, 388 (7th Cir. 2015). We begin with Eaden’s arguments for
a new trial and then move to his restitution and forfeiture
challenges.
A
Eaden contends that the district court deprived him of a
fair trial in violation of the Fifth Amendment by informing
prospective jurors during voir dire that a grand jury had is‐
sued Eaden’s indictment based on probable cause, which the
district court defined as meaning “it’s probably true that
[Eaden] had some connection with criminal activity[.]” In
Eaden’s view, this definition predisposed the petit jury to find
him guilty and carried the government halfway to the goal
line in proving his guilt beyond a reasonable doubt. And so,
he insists, retrial is necessary.
Yet this argument misses the mark. For starters, Eaden ig‐
nores the broader context of the district court’s comments.
Although the district court undeniably invoked the “probably
true” language that Eaden challenges on appeal, it immedi‐
ately dispelled any notion that the grand jury’s finding had
some bearing on Eaden’s guilt or innocence. Just moments af‐
ter that unfortunate utterance, the district court inquired of a
potential juror: “the fact that Mr. Eaden has been indicted …
does that mean he’s guilty?” When another potential juror re‐
plied that it did not, the district court confirmed—“[t]hat’s ex‐
actly right. … he’s just exercising his rights to a trial by
jury.” In an exchange with another venire member, the dis‐
trict court highlighted that “probably” wouldn’t suffice for
the petit jury’s guilt‐or‐innocence determination:
No. 20‐2763 5
COURT: I mentioned the word “probable
cause.” That’s a burden of proof as well, all
right. The defendant probably had some con‐
nection to criminal activity. … [I]f you come
back, after listening to all the evidence in this
case, and you think: Well I think the defendant
probably committed this crime, is that enough
to convict?
PROSPECTIVE JUROR: I would say no.
COURT: Right. Probably tells you what? What’s
the word “probably” tell you?
PROSPECTIVE JUROR: That there might be
doubt that he didn’t do it.
COURT: Could be, could not be, right? Do we
convict people and take away their liberty based
on could be, could not be?
PROSPECTIVE JUROR: I would hope not.
COURT: Right. Exactly. We don’t do that … .
Moreover, the district court took great pains to impress
upon the jurors—both prospective and actual—that the gov‐
ernment bears the full burden of proof at trial, notwithstand‐
ing the issuance of an indictment. It stated during voir dire,
for instance, that “the fact that someone’s been charged with
a crime … [is] not evidence of their guilt,” and admonished
the venire that Eaden maintained a “cloak of innocence” de‐
spite his indictment. An exchange with one prospective juror
is illustrative:
6 No. 20‐2763
COURT: [W]hat does [Eaden] have to do in this
case to prove to you that he is innocent of these
charges?
PROSPECTIVE JUROR: He really doesn’t have
to prove his innocence. …
COURT: You mean that [Eaden] can sit here
throughout the entire trial, not say one thing,
not present any evidence, not do one darn
thing … ?
PROSPECTIVE JUROR: Yes.
COURT: You’re exactly right.
Finally, the district court’s end‐of‐trial instructions were
unimpeachable. They reminded the jury that an indictment is
not evidence, that it “does not even raise a suspicion of guilt,”
and that Eaden was presumed innocent until proven guilty.
Trial judges have substantial discretion in conducting voir
dire, and we interfere only where there has been “a clear
abuse of that discretion[.]” United States v. Betts‐Gaston, 860
F.3d 525, 530–31 (7th Cir. 2017). One of our prior decisions il‐
lustrates that the district court did not abuse its discretion in
this case. In United States v. Garcia, the defendant challenged
the district court’s jury instructions, which described the
grand jury as the “first screening process” in the criminal jus‐
tice system. 562 F.2d 411, 417 (7th Cir. 1977). Yet we required
only that the instructions, “taken as a whole, fairly and ade‐
quately stated the law pertinent to the case.” Id. at 416. Be‐
cause the instructions, viewed holistically, “ma[d]e manifest
the jury’s duty to decide the case on the basis of the evidence
presented at trial,” we held in Garcia that the district court had
not erred. Id. at 417.
No. 20‐2763 7
Despite the somewhat different context (voir dire versus
jury instructions), the same conclusion is appropriate here.
The district court carefully cabined its discussion of the grand
jury’s function, emphasizing repeatedly that Eaden’s indict‐
ment—even if it meant he “probably” had some connection
with criminal activity—was not evidence of guilt, that the
government bore the full burden of proving him guilty be‐
yond a reasonable doubt at trial, and that Eaden himself bore
no burden at all. Considering these extensive efforts, we can‐
not see how the jury could misunderstand the government’s
burden of proof, regardless of the district court’s “probably
true” utterance during voir dire.
Although we are confident the jury understood its duty in
this case, we nonetheless take this opportunity to remind dis‐
trict courts that comments about the grand jury are usually
unnecessary and should be avoided. “[T]he fact of the indict‐
ment has some emphasis” in virtually any criminal case, id.,but that fact warrants no comment in the ordinary case be‐
yond the typical admonition that the indictment is not evi‐
dence of guilt or of anything else, as the district judge rightly
stated. The grand jury’s finding of probable cause and deci‐
sion to return an indictment is meaningless at trial and need
not be mentioned by the court. In fact, the safer course is to
redact any reference to the grand jury’s role, as is commonly
done. But that the district court did not take that course in this
case is not a basis for a new trial.
B
If denied retrial for all counts, Eaden seeks a redo at least
as to counts 17–23 (those related to the Bridgestone rewards
program) because he believes that the district court erred by
admitting unhelpful witness testimony from Bridgestone
8 No. 20‐2763
representative Don Anderson in violation of the Federal Rules
of Evidence. The parties agree that Anderson testified as a lay
(rather than expert) witness, meaning that the admissibility of
his testimony was governed by Federal Rule of Evidence 701,
which requires that a lay witness’s opinion testimony be: (a)
rationally based on the witness’s perception; (b) helpful to
clearly understanding the witness’s testimony or determining
a fact in issue; and (c) not based on scientific, technical, or
other specialized knowledge.
Anderson’s testimony focused on Eaden’s submissions to
the Bridgestone rewards program’s online claims system.
This system enabled salespersons like Eaden to obtain points
redeemable for gift cards and other rewards by inputting cer‐
tain required information, such as the quantity and type of
tire sold, the purchaser’s identity, the date of sale, and the rel‐
evant invoice number. At trial, Anderson testified that, in re‐
viewing over 200 such submissions from Eaden, he discov‐
ered factual inaccuracies in more than 75 percent. Along the
way, Anderson described these inaccuracies as “fraudulent,”
meaning (in his view) that they could not have resulted from
“simple clerical errors.” Eaden homes in on the term “fraud‐
ulent,” contending that Anderson’s testimony provided only
the bare legal conclusion of “fraud” without being helpful as
Rule 701 requires.
Our precedents have repeatedly upheld a witness’s use of
the term “fraudulent” when testifying in fraud cases. In
United States v. Locke, for instance, we upheld lay witness tes‐
timony that the defendant’s submissions to a loan provider
(the witness’s employer) had been “fraudulent,” in the sense
that they would have been denied had they been accurate. 643
F.3d 235, 237–38 (7th Cir. 2011). We viewed such testimony as
No. 20‐2763 9
helpful under Rule 701 because it helped establish a key ele‐
ment—materiality—of the fraud charges pressed by the gov‐
ernment. Id. at 241. In the same vein, in a real estate fraud case
we upheld a witness’s use of the term “fraudulent” to de‐
scribe home appraisal reports submitted by the defend‐
ant. United States v. Owens, 301 F.3d 521, 527 (7th Cir. 2002).
The Owens defendant insisted that this amounted to state‐of‐
mind testimony regarding his intent, which is disallowed by
Rule 704(b). Id. Yet we disagreed, concluding that “fraudu‐
lent” as used in context applied only to the reports them‐
selves, rather than to the ultimate issue of the defendant’s in‐
tent. Id. No one disputed that the testimony was helpful: it
went directly to materiality.
Locke and Owens show why Anderson’s testimony was
properly admitted. In describing Eaden’s submissions as
fraudulent, Anderson was not addressing Eaden’s mental
state or the ultimate question of fraud. Instead, he was ex‐
pressing with a layperson’s vernacular that those submissions
were false, with the further indication that, in his view, that
falsity could not have resulted from mere negligence. This tes‐
timony was helpful under Rule 701. To prove Eaden’s fraud
charges, the government needed to show that his submissions
were both intentional and false. Anderson’s testimony
touched on both considerations. In addition, Anderson’s tes‐
timony was rationally based on his own perceptions from re‐
viewing Eaden’s Bridgestone claim submissions, and Eaden
does not contend that Anderson’s testimony was based on
specialized knowledge. It therefore satisfied Rule 701’s three
requirements and was properly admitted.
10 No. 20‐2763
C
Eaden’s final arguments all pertain to the restitution and
forfeiture amounts assessed by the district court. The govern‐
ment concedes that two of these arguments are meritorious,
and we reduce Eaden’s financial obligations accordingly. But
for the remainder we find that any error is not plain and there‐
fore affirm. We consider each argument in turn.
1
Eaden asserts that the district court erred in ordering him
to pay $189,709 in restitution to SIT—the same amount that
SIT repaid to Gibson County Coal to remedy Eaden’s over‐
billing. In fraud cases like Eaden’s, restitution is required by
the Mandatory Victim Restitution Act for any victim “directly
harmed by the defendant’s criminal conduct.” 18 U.S.C.
§§ 3663A(a)(1)–(2), (c). But (as Eaden correctly notes) restitu‐
tion is limited solely to “actual losses caused by the specific
conduct underlying the offense.” United States v. Meza, 983
F.3d 908, 918 (7th Cir. 2020).
Eaden argues—and the government concedes—that the
$189,709 was not a loss to SIT. Instead, SIT merely repaid un‐
earned funds that it had obtained from Gibson County Coal
solely by reason of Eaden’s fraud. The government has never
argued, either at trial or on appeal, that this amount was a loss
to SIT, and so it appears that the district court had no basis for
ordering this amount as restitution. Consequently, we accept
the government’s concession on this issue and modify the res‐
titution order to reduce Eaden’s financial obligations by
$189,709. See, e.g., United States v. Oliver, 873 F.3d 601, 609 (7th
Cir. 2017) (directly modifying district court’s restitution or‐
der).
No. 20‐2763 11
2
Eaden also contends that the district court erred in order‐
ing him to forfeit all the performance‐based bonuses he was
awarded from 2014 to 2016, which totaled $88,106.78. Civil
forfeiture, like restitution, is authorized by statute and is lim‐
ited to “the gross receipts obtained [by mail or wire
fraud].” 18 U.S.C. § 981(a)(1)(D). BKD’s forensic accounting
report attributed $47,288.97 in bonuses to Eaden’s overbilling
scheme yet said nothing about the remaining $40,817.81. Be‐
cause none of the evidence presented at trial or sentencing at‐
tacked the validity of Eaden’s bonuses beyond the $47,288.97
indicated in BKD’s report, the government concedes that
Eaden’s forfeiture obligation should be reduced by
$40,817.81. As with Eaden’s restitution arguments, we accept
the government’s concession on this point and reduce
Eaden’s forfeiture order by $40,817.81. See Oliver, 873 F.3d at
609.
3
Eaden asks us to further reduce his forfeiture and restitu‐
tion amounts as they relate to his bonus payments, which in
his view BKD attributed excessively to fraud. The size of
Eaden’s bonuses depended, in part, on his store’s net profits;
BKD determined that, because of Eaden’s fraud, those profits
had been inflated by $332,803.68, netting Eaden $47,288.97 in
unearned bonuses. But Eaden contends that this calculation is
an overestimate because it takes into account profits that, alt‐
hough deemed fraudulent by BKD, were not attributable to
the overbilling scheme for which he was convicted, instead
being associated with other schemes for which he was either
acquitted or never charged. In support, Eaden points to other
portions of BKD’s forensic accounting report, which
12 No. 20‐2763
designate $168,572.47 as the overstated net profits attributable
to the specific conduct for which Eaden was convicted. In es‐
sence, Eaden argues that the district court and government
erred in relying on BKD’s topline fraud calculation with re‐
spect to Eaden’s bonuses—$47,288.97—without drawing se‐
lectively from BKD’s report to exclude the underlying profits
attributable to never‐proven fraudulent schemes. But while
Eaden might be correct, the plain error standard permits relief
only where the error is plain, and any error here is not.
We’ve said that an error is plain where it is “clear” or “ob‐
vious.” United States v. Burns, 843 F.3d 679, 687 (7th Cir. 2016).
Yet this definition leaves unanswered a key question: Plain to
whom? The answer, although not always explicit in our prec‐
edents, is that the error must be plain to us on appeal, rather
than to those involved in the trial process. See id. (“We have
never required … that the error be obvious to the district
court[.]”) This answer has important implications in this case.
As an appellate court, legal errors are in our wheelhouse, and
so we’ve reversed where an error was “obvious under the
law” although not obvious below. Id.; see also United States v.
Jenkins, 772 F.3d 1092, 1098 (7th Cir. 2014) (plain error where
district court, relying on PSR, calculated Guidelines sentenc‐
ing range by factoring in prior conviction under statute that
had been deemed unconstitutional). Factual errors, by con‐
trast, tend to be more obscure on appeal. See, e.g., Gall v.
United States, 552 U.S. 38, 51–52 (2007) (noting that the district
judge “is in a superior position to find facts and judge their
import [for sentencing purposes]”, and that district courts
“have an institutional advantage over appellate courts in
making these sorts of determinations”). For that reason, we’ve
held that an error is not plain where it is “subtle, arcane, de‐
batable, or factually complicated.” United States v. Pierson, 925
No. 20‐2763 13
F.3d 913, 922 (7th Cir. 2019), cert. granted, judgment vacated
on other grounds, 140 S. Ct. 1291 (2020)
The error Eaden asserts is of the latter sort. He argues that
BKD’s overpaid‐bonus calculation overestimates his restitu‐
tion and forfeiture obligations because it takes into account
profits derived from never‐proven schemes. Yet he cannot tell
us the precise figure by which his restitution and forfeiture
orders should be reduced (setting aside, of course, the gov‐
ernment’s concession regarding part of his bonus payments).
Nor does Eaden dispute that the district court relied in part
on a topline number explicitly provided by BKD’s forensic ac‐
counting report—$47,288.97—in calculating these obliga‐
tions. This is, as our cases say, a “subtle … [and] factually
complicated” issue, id., based on intricate accounting calcula‐
tions, and therefore any error is not plain under our prece‐
dents.
4
Last, Eaden argues that the district court erred in ordering
him to repay the entire $7,676 he obtained from the Bridge‐
stone rewards program. In making this argument, Eaden once
again attacks the testimony of Don Anderson, who indicated
that he reviewed more than 200 of Eaden’s submissions to the
Bridgestone rewards program and found that, of those, more
than 75 percent contained inaccuracies. Eaden faults this tes‐
timony in two respects: first because Anderson testified that
“more than” 75 percent of the entries contained inaccuracies,
rather than 100 percent, and second because Anderson re‐
viewed only roughly half of Eaden’s submissions to the re‐
wards program. As Eaden sees it, this evidence is too thin to
deem all of his rewards restitution‐worthy.
14 No. 20‐2763
Yet as with Eaden’s preceding bonus arguments, any error
here is not plain. The district judge had evidence before him
that more than 75 percent of the Bridgestone submissions re‐
viewed by Anderson contained false information of a non‐
trivial nature. For all we know, “more than” 75 percent—
which indicates that at least 75 percent were false—could have
been 100 percent; Anderson’s testimony never ruled out that
possibility. Beyond that, the district judge could have also in‐
ferred that Bridgestone would have denied all rewards to
Eaden, even for legitimate claims, had it known of his fraud.
This is enough to place any error here in the camp of subtle
and factually complicated, short of what the plain error stand‐
ard requires.
* * *
We accept the government’s concessions on Eaden’s resti‐
tution and civil forfeiture arguments, and so modify the dis‐
trict court’s judgment, reducing those obligations by $189,709
and $40,817.81, respectively. The judgment is otherwise AF‐
FIRMED as modified.