United States v. Robert Stochel , 901 F.3d 883 ( 2018 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 17-3576
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
ROBERT E. STOCHEL,
Defendant-Appellant.
____________________
Appeal from the United States District Court for
the Northern District of Indiana, Hammond Division.
No. 2:16CR30-001 — James T. Moody, Judge.
____________________
ARGUED APRIL 20, 2018 — DECIDED AUGUST 27, 2018
____________________
SYKES and BARRETT, Circuit Judges, and DURKIN, District
Judge. ∗
SYKES, Circuit Judge. An Indiana judge appointed Robert
Stochel as receiver for Tip Top Supermarkets, Inc., while its
proprietors were embroiled in protracted litigation. Over
several years Stochel stole more than $330,000 from the
∗ Of the Northern District of Illinois, sitting by designation.
2 No. 17-3576
receivership. After draining its coffers, Stochel evaded
detection by diverting funds from other sources to pay the
receivership’s bills. But the scheme was unsustainable. As
the litigation and receivership were winding down, the
principals suspected that something was amiss and asked
the state court to appoint an independent auditor. The judge
granted the request and ordered Stochel to turn over the
receivership’s files. To delay the day of reckoning, Stochel
filed a motion to vacate the order, falsely stating that the
receivership had sufficient funds to pay the auditor and
claiming that he needed more time to assemble the records.
This brought a brief reprieve, but the judge soon realized it
was a con and removed Stochel as receiver. Not long after,
the auditor uncovered the fraud.
A federal grand jury indicted Stochel for mail fraud. See
18 U.S.C. § 1341. The factual basis for the charge was
Stochel’s motion, which he had mailed to the court; the
indictment alleged that the motion perpetuated the fraudu-
lent scheme by delaying the detection of Stochel’s embez-
zlement. A jury found him guilty, and the district judge
imposed a sentence of 24 months in prison.
Stochel challenges the sufficiency of the evidence to sup-
port his conviction. He also contests three of the judge’s
sentencing determinations: (1) the denial of credit for ac-
ceptance of responsibility, see U.S.S.G. § 3E1.1(a); (2) the loss-
amount calculation, see id. § 2B1.1(b)(1)(G); and (3) the
application of a two-level enhancement for violating a
judicial order, see id. § 2B1.1(b)(9)(C). We affirm across the
board. There was plenty of evidence to convict Stochel of
mail fraud, and the judge’s sentencing rulings were sound.
No. 17-3576 3
I. Background
The Schwartz family established the Tip Top Supermar-
ket in Gary, Indiana, in the 1950s. Years later brothers Alan
and Maurice Schwartz came to own the grocery store
through a corporation called Tip Top Supermarkets, Inc.
Eventually the siblings had a falling-out and the collabora-
tion turned sour. In 1987 Maurice sued Alan in Indiana state
court alleging various financial improprieties, and Alan
responded with similar accusations. The court appointed a
receiver to oversee the corporation while the litigation was
under way.
Tip Top’s first receiver died in early 1999, and the judge
appointed Stochel to replace him. Under the appointment
order, Stochel had authority to “assemble and marshal” Tip
Top’s assets and was required to “report his actions to the
[c]ourt” and “remain subject to the further order and direc-
tions of the [c]ourt.” Stochel admits that the appointment
order required him to report the receivership’s expenses and
to secure the court’s approval before withdrawing corporate
funds.
Stochel flagrantly disregarded these instructions and in-
stead raided the receivership. By March 2004 he had zeroed
out its bank account, stealing $331,840 for his personal use.
He then went to extraordinary lengths to cover up the
embezzlement. Whenever the Schwartz brothers requested a
disbursement from the receivership, Stochel transferred
money from elsewhere to hide the shortfall. Alan and
Maurice were none the wiser. These call-and-response
transactions continued through November 2006, totaling
approximately $216,000 in payments of genuine receivership
4 No. 17-3576
expenses. Stochel made no further disbursements thereafter,
and he closed the receivership account in March 2010.
Stochel also made numerous fraudulent representations
to the state court to conceal his theft. In 2008 the court issued
a notice that the Tip Top litigation was concluding and the
case would be dismissed. Stochel objected and promised “to
file a lengthy update and report regarding all pending
matters and … assets within the next 30 days.” That dead-
line came and went with no report. The court repeatedly
ordered Stochel to provide an accounting over the next two
years, but he obstructed at every turn. Finally, Stochel
submitted his report in September 2010. It was riddled with
lies. Stochel claimed that the receivership had almost
$230,000 in assets, and he requested $93,000 in compensation
for his services. Unaware of the fraud, the court authorized
the payment in March 2011.
Soon thereafter the scheme began to unravel. The parties
balked at Stochel’s accounting and asked the judge to ap-
point an independent auditor to review the receivership’s
finances. The judge did so in November 2011 over Stochel’s
vigorous and protracted objection. Stochel delayed several
months longer by refusing to execute the auditor’s engage-
ment letter, but eventually the judge had had enough. On
March 7, 2012, the judge instructed the clerk of court to hire
the auditor and ordered Stochel to immediately turn over all
receivership files. The day of reckoning was nigh.
Stochel made a last stand nonetheless. On March 12,
2012, he moved for “[r]elief from judgment or order” under
Rule 60(B) of the Indiana Rules of Trial Procedure. Stochel
served the motion on the parties and delivered it to the court
by mail. The motion asked the court to vacate the March 7
No. 17-3576 5
order, falsely represented that the receivership had $8,000 to
pay an auditor, requested more time to assemble the receiv-
ership’s files, and asked the court to set a new auditing
schedule. The judge granted the motion in part and ordered
Stochel to deliver the receivership’s records by April 23.
Unsurprisingly, Stochel did not comply. Finally, on June 19
the judge vacated the award of receiver fees, removed
Stochel as receiver, and appointed the auditor to take his
place. The disarray in Stochel’s records prevented a com-
plete audit, but the auditor reported that the receivership
account had been empty and closed for years.
On March 16, 2016, a grand jury indicted Stochel on one
count of mail fraud. See 18 U.S.C. § 1341. The indictment
alleged that Stochel mailed the Rule 60(B) motion “for the
purpose of executing” the fraudulent scheme to steal the
receivership’s funds. More specifically, the indictment
charged that Stochel intended to “prevent[] the parties and
counsel … from learning of his scheme by lulling them into a
false sense of security.” Stochel moved to dismiss the in-
dictment as untimely. The judge denied the motion, and a
jury found Stochel guilty after a three-day trial. 1
The probation office prepared a presentence report, pro-
posing an offense level of 23 under the Sentencing Guide-
lines. Three elements of this calculation are relevant here.
First, the offense level included a twelve-level enhancement
for an intended loss greater than $250,000. U.S.S.G.
§ 2B1.1(b)(1)(G). The probation office concluded that Stochel
intended a loss of $331,840, representing the full amount he
1 The case was tried twice. The first trial ended in a mistrial when the
jury could not reach a verdict.
6 No. 17-3576
drained from the receivership. Second, the PSR applied a
two-level enhancement for violating a “prior, specific judi-
cial or administrative order,” id. § 2B1.1(b)(9)(C), because
Stochel had defied the state court’s order to “report his
actions” and “remain subject to the further order and direc-
tions of the [c]ourt.” Third, the PSR recommended against a
two-point reduction for acceptance of responsibility because
Stochel contested his guilt at trial. Id. § 3E1.1(a).
Stochel objected to all three sentencing recommenda-
tions. He claimed he should get credit for accepting respon-
sibility because he never denied stealing from the
receivership but only challenged the timeliness of the
charge. He also maintained that the intended loss amount
was less than $250,000 because he was entitled to offsets for
the receivership expenses he paid with diverted funds and
for the value of the services he provided. Finally, Stochel
argued that the two-level enhancement for violating a
judicial order was improper because the state-court order
did not qualify as a “specific” order under the Guidelines.
The judge overruled Stochel’s objections, adopted the
PSR’s recommendations, and calculated an advisory sen-
tencing range of 37 to 46 months in prison. The judge then
opted for a below-Guidelines sentence of 24 months based
on certain mitigating factors. This appeal followed.
II. Discussion
Stochel raises two sets of claims on appeal. He first ar-
gues that the evidence presented at trial was insufficient to
convict him of mail fraud. Our review of that claim is ex-
ceedingly limited. “A challenge to the sufficiency of the
evidence can be successful only when, after viewing the
No. 17-3576 7
evidence in the light most favorable to the prosecution, we
nevertheless are convinced that no rational jury could have
found the defendant guilty beyond a reasonable doubt.”
United States v. Caguana, 884 F.3d 681, 687 (7th Cir. 2018).
Stochel also renews his challenges to the three sentencing
rulings described above. On these issues we review the
judge’s factual findings for clear error and his legal conclu-
sions de novo. See United States v. DeLeon, 603 F.3d 397, 406
(7th Cir. 2010) (acceptance-of-responsibility enhancement);
United States v. Moose, 893 F.3d 951, 954 (7th Cir. 2018) (loss
calculation); United States v. Parolin, 239 F.3d 922, 928 (7th
Cir. 2001) (judicial-order enhancement).
A. Sufficiency of the Evidence
Stochel’s challenge to the sufficiency of the evidence is
confusingly mixed with an argument about the indictment’s
timeliness. He argues that his March 12, 2012 Rule 60(B)
motion was not mailed in furtherance of the fraudulent
scheme, which (he says) ended years earlier—either in
March 2004 when he last withdrew receivership funds for
his personal use or at the latest in November 2006, the last
time he deposited money to cover up the fraud. Either way,
he insists, the indictment came long after the statute of
limitations expired.
That’s incorrect. For mail fraud “the five-year statute of
limitations begins to run from the date of mailing of the
fraudulent information.” United States v. Tadros, 310 F.3d 999,
1006 (7th Cir. 2002). Stochel mailed the Rule 60(B) motion on
March 12, 2012, and he was indicted on March 16, 2016, so
clearly there’s no statute-of-limitations problem. Indeed,
Stochel’s argument about untimeliness tacitly admits as
8 No. 17-3576
much. He views the Rule 60(B) motion as irrelevant to the
scheme.
That’s really an attack on the sufficiency of the evidence.
To convict a defendant of mail fraud, the government must
prove: “(1) a scheme to defraud; (2) an intent to defraud; and
(3) use of the mails … in furtherance of the scheme.” United
States v. Leahy, 464 F.3d 773, 786 (7th Cir. 2006). Stochel
concedes the first two elements; his untimeliness argument
is in effect a challenge to the third element. He starts the
clock in 2006 (or even earlier, in 2004) instead of 2012 be-
cause he denies that the Rule 60(B) motion had anything to
do with his scheme. In other words, Stochel claims he was
not timely indicted for mail fraud because the government
never proved that he sent a fraudulent mailing within the
relevant timeframe. That’s a textbook challenge to the suffi-
ciency of the evidence.
And the challenge falls flat. The Supreme Court has held:
Mailings occurring after receipt of the goods
obtained by fraud are within the statute if they
were designed to lull the victims into a false
sense of security, postpone their ultimate com-
plaint to the authorities, and therefore make
the apprehension of the defendants less likely
than if no mailings had taken place.
United States v. Lane, 474 U.S. 438, 451–52 (1986) (internal
quotation marks omitted). So a mailing sent “long after the
scheme” concludes still furthers the fraud if it was intended
to “preserve[] the appearance of propriety” and keep “eve-
rything copacetic.” United States v. Mankarious, 151 F.3d 694,
705 (7th Cir. 1998). Put another way, a mailing furthers a
No. 17-3576 9
fraudulent scheme if it was designed to “facilitate conceal-
ment or postpone investigation of the scheme.” United States
v. O'Connor, 874 F.2d 483, 486 (7th Cir. 1989) (quotation
marks omitted).
That describes Stochel’s Rule 60(B) motion to a T. A jury
could reasonably find that Stochel filed the motion to delay
the investigation and discovery of the fraud. It’s also reason-
able to conclude that Stochel was trying to convey the
impression that all was well by falsely representing that the
receivership had sufficient funds to pay an auditor and that
he simply needed more time to assemble the receivership’s
records. See Mankarious, 151 F.3d at 705. Finally, the motion
could be seen as part of Stochel’s ongoing effort to facilitate
concealment of the scheme. See O’Connor, 874 F.2d at 486.
There’s good reason to think that he asked for more time and
a heads up on the auditing schedule because he wanted to
know how long he had to plot his next move. The jury was
entitled to make any and all of these inferences. The evi-
dence was easily sufficient to convict Stochel of mail fraud.
B. Acceptance of Responsibility
A defendant qualifies for a two-point reduction in his of-
fense level under the Guidelines if he “clearly demonstrates
acceptance of responsibility for his offense.” U.S.S.G.
§ 3E1.1(a). Proceeding to trial is not automatically disqualify-
ing, but a defendant cannot contest “an essential factual
element of guilt” and expect to get acceptance-of-
responsibility credit. United States v. Hendricks, 319 F.3d 993,
1009 (7th Cir. 2003); see also U.S.S.G. § 3E1.1 cmt. n.2 (ex-
plaining that a defendant can go “to trial to assert and
preserve issues that do not relate to factual guilt”). Stochel
insists that he’s entitled to credit for accepting responsibility
10 No. 17-3576
because he did not deny that he swindled the receivership
and engaged in a scheme to cover it up, but instead contest-
ed only whether the Rule 60(B) motion was in furtherance of
the scheme.
That argument fails for reasons we’ve already discussed.
Whether the use of the mails was “in furtherance of the
scheme” is the third element of the crime. Leahy, 464 F.3d at
786. Stochel’s decision to pick that fight is fatal to his claim
for acceptance-of-responsibility credit; defendants don’t get
credit for two-thirds of a contrite heart. See, e.g., United States
v. Williams, 202 F.3d 959, 963 (7th Cir. 2000).
C. Loss Amount
The base offense level for fraud offenses depends in part
on the loss amount, see U.S.S.G. § 2B1.1, and that, in turn,
depends on the monetary loss the defendant either intended
or actually caused, whichever is greater, see United States v.
Williams, 892 F.3d 242, 250 (7th Cir. 2018). In the context of
mail fraud, the lodestar of intended loss is “the amount
placed at risk by the scheme.” United States v. Durham,
766 F.3d 672, 687 (7th Cir. 2014). The analysis starts there
“because the purpose of fraud statutes … is to punish the
scheme, not simply the unlawful taking of money or proper-
ty.” United States v. Mei, 315 F.3d 788, 792 (7th Cir. 2003).
The parties agree that Stochel drained $331,840 from the
receivership, zeroing out its bank account and thus neces-
sarily putting that amount at risk. The central question is
how to account for the $216,000 in receivership expenses he
paid with funds he deposited to cover up his embezzlement.
We have held that “[l]oss cannot include the value of ser-
vices a defendant legitimately performed for the victims of
No. 17-3576 11
his fraud.” United States v. Swanson, 483 F.3d 509, 513 (7th
Cir. 2007) (emphasis added). Stochel admits that his later
deposits to cover disbursements were meant to conceal his
fraud, but he claims they count as “legitimate” payments
nonetheless.
This argument centers on the government’s concession
that the $216,000 in cover-up funds went toward genuine
receivership expenses. To Stochel’s mind that makes the
payments per se legitimate, entitling him to an offset. This
reasoning misses a key element in the analysis. Nominally
legitimate payments are not offset against intended loss
when they are “intertwined with and an ingredient of [an]
overall fraudulent scheme.” United States v. Marvin, 28 F.3d
663, 665 (7th Cir. 1994). The reason why is easy to grasp:
“[T]he fraudster’s costs shouldn’t be deducted any more
than the costs of a burglar’s tool should be deducted in
determining the loss suffered by the victim of the burglary.”
United States v. Spano, 421 F.3d 599, 607 (7th Cir. 2005) (cita-
tion omitted). On this understanding, Stochel’s payments to
cover his tracks were essentially the cost of perpetuating the
scheme. He admits that they were designed to lull his vic-
tims so that he could avoid detection.
Stochel responds that he was nevertheless entitled to an
offset because the victims received a substantial financial
benefit from the payments. Our cases support the judge’s
decision to reject this argument. In United States v. Lane,
323 F.3d 568, 585 n.4 (7th Cir. 2003), we refused to credit
“gains made by successful investors in a fraudulent invest-
ing scheme, as those gains are only intended to lure and
defraud other investors.” Stochel’s payments served a
similar purpose. Like a Ponzi schemer, he stole receivership
12 No. 17-3576
funds and covered his tracks with money from other sources
for the purpose of throwing the Schwartz brothers off his
scent and keeping the scam alive. We have affirmed the
denial of an offset in similar cases. See, e.g., United States v.
Peugh, 675 F.3d 736, 742 (7th Cir. 2012), rev'd on other grounds,
569 U.S. 530 (2013), opinion reinstated in part, 527 F. App’x 554
(7th Cir. 2013); United States v. Powell, 576 F.3d 482, 497 (7th
Cir. 2009).
Stochel’s second claim doesn’t fare any better. He insists
that he’s entitled to credit for the value of the services he
provided for the receivership. This argument is facially
implausible. The state judge concluded that Stochel was not
entitled to any payment for his services, and the district
judge reasonably relied on that decision. Moreover, even if
we considered the claim anew, Stochel has nothing to back it
up. He does little more than proclaim an entitlement to an
offset of more than $127,000 for his services as receiver.
Nowhere does he explain what services he provided and
how much they were worth. The judge was right to deny
this offset.
D. Judicial Order
The Guidelines call for a two-level increase in the offense
level “[i]f the offense involved … a violation of any prior,
specific judicial or administrative order.” U.S.S.G.
§ 2B1.1(b)(9)(C). The order in question must instruct the
defendant “to take or not to take a specified action.” Id.
§ 2B1.1(b)(9) cmt. n.8(C); see also United States v. Pentrack,
428 F.3d 986, 990 (10th Cir. 2005) (holding that a judicial
order must “provide the defendant with adequate notice of
the prohibited conduct”). Here, the state court ordered
Stochel to “report his actions to the [c]ourt” and “remain
No. 17-3576 13
subject to the further order and directions of the [c]ourt.”
Stochel nonetheless raided the receivership and engaged in
an elaborate scheme to cover up the embezzlement, ignoring
several court directives along the way. For this conduct the
judge added two points to the offense level.
Stochel argues that the enhancement was improperly ap-
plied because the state-court order was not specific
enough—that is, it did not describe the “specified action” he
was supposed to either undertake or forgo. That’s doubly
incorrect. The order instructed Stochel to “marshal” Tip
Top’s assets and then “report his actions to the [c]ourt.” If
nothing else, that required Stochel to notify the court when
he withdrew funds from the receivership; he obviously did
not comply. Stochel admits as much, and that concession
would resolve any ambiguity even if we were inclined to
find it. See United States v. Gist, 79 F.3d 52, 54 (7th Cir. 1996)
(holding that a judicial order was sufficiently specific when
the defendant “admitted the breadth of the injunction”).
The instruction to “remain subject to the further order
and directions of the [c]ourt” is similarly clear. Stochel
repeatedly violated specific directions from the court as the
scheme was unraveling. He blew through court-imposed
deadlines, thwarted the court’s efforts to appoint an auditor,
and stymied the court’s efforts to obtain the receivership’s
files. The enhancement was properly applied.
AFFIRMED.