United States v. Brisson, Michael J. ( 2006 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 05-1540
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
MICHAEL J. BRISSON,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Western Division.
No. 04 CR 50021—Philip G. Reinhard, Judge.
____________
ARGUED APRIL 4, 2006—DECIDED JUNE 2, 2006
____________
Before POSNER, WOOD, and EVANS, Circuit Judges.
EVANS, Circuit Judge. In late 2000, Michael Brisson
decided to buy a hotel in Bloomington, Illinois. When it
came time to make the down payment, Brisson didn’t have
the $100,000 that was due. So he embarked on a series of
check-kiting transactions, causing a loss to one of his banks
of $99,938.73.
But this was only the start of the brief but ambitious
foray into financial crime which Brisson has admitted. In
February 2001, he applied for a $3.5 million loan from
another institution, Busey Bank, to pay for and renovate
the hotel. Brisson misrepresented his assets, net worth, and
personal stake in the venture and provided mislead-
2 No. 05-1540
ing profit and loss statements from the hotel. Although
he had agreed to provide the bank with a security inter-
est in all the hotel’s room receipts, Brisson diverted more
than $500,000 of these monies to a different account and
used more than $380,000 to pay his personal expenses.
This, in turn, caused large shortages in the hotel’s operat-
ing revenue, which Brisson covered by retaining his employ-
ees’ federal income and FICA taxes—a total of
$239,472—rather than paying them over to the IRS. He also
submitted false construction loan draw requests to Busey
Bank’s escrow agent.
Brisson’s career as a hotelier came to an end in June
2002, when the bank figured out what was happening with
the hotel’s room receipts, foreclosed on its loan, and re-
moved Brisson from the executive offices. The bank’s loss
from Brisson’s fraud totaled at least $492,843.
But Brisson still was not done. Having lost his source
of income and by his own admission desperate for money,
he filed fraudulent tax returns for 2001 and 2002, claiming
total refunds of $163,686. The claims were based on taxes
withheld from Brisson’s hotel salary—taxes which Brisson
had, of course, never actually sent to the IRS.
Brisson ultimately pled guilty to one count each of bank
fraud, submitting a false claim for an income tax refund,
and failing to pay over employment taxes to the IRS. He
was sentenced to a term of 30 months. In this appeal, he
challenges the manner in which the district court (Hon.
Philip G. Reinhard) grouped the three counts to calculate
the offense level under the United States Sentencing
Guidelines. He also argues that his sentence was unreason-
able.
We deal first with the grouping issue, reviewing the
district court’s legal interpretation of the guidelines
de novo. United States v. Jackson, 410 F.3d 939, 941 (7th
Cir. 2005). In the plea agreement, Brisson and the govern-
ment proposed that counts 1 and 2 be grouped together,
No. 05-1540 3
since they both involved financial fraud. See U.S.S.G.
§ 2B1.1. Brisson also argued, over the government’s objec-
tion—and reiterates the argument on appeal—that count 3
should have been grouped with the first two, since all three
counts involved “economic offenses,” and all three arose
from “the same economic hardship which found its genesis
during Defendant’s running of the hotel . . . .”
The district court took a different approach. The govern-
ment had charged count 2 under 18 U.S.C. § 287, a general
statute covering fraudulent claims against the United
States. Judge Reinhard determined, however, that since the
conduct involved filing a false claim for a tax refund,
Brisson’s sentence should be governed by the tax guideline,
see U.S.S.G. § 2T1.1, and should be calculated using the tax
loss table provided by guideline § 2T4.1. Therefore, Judge
Reinhard grouped the count 2 tax fraud offense together
with the count 3 offense of failing to pay over employment
taxes to the IRS. He further determined that the two tax
offenses should not be grouped with count 1, since the count
1 conduct involved fraud loss to a separate party, namely
Busey Bank, and was covered by § 2B1.1. In the end, this
gave Brisson a 2-level grouping adjustment and a combined
offense level of 22.
The record reflects that Judge Reinhard devoted consider-
able thought and research to the grouping issue, and
we find his conclusions to be sound. While Appendix A of
the guidelines indicates that guideline § 2B1.1 applies to
violations of 18 U.S.C. § 287, a cross-reference instructs
that if the count of conviction establishes an offense
specifically covered by another guideline, that other
guideline should be applied. U.S.S.G. § 2B1.1(c)(3). Judge
Reinhard determined that Brisson’s attempt to claim tax
refunds to which he was not entitled caused a different type
of loss than the fraud against his bank. Two other circuits
have endorsed applying the tax guidelines rather than the
fraud guidelines to false claims for tax refunds, see United
4 No. 05-1540
States v. Barnes, 324 F.3d 135, 139-40 (3rd Cir. 2003);
United States v. Aragbaye, 234 F.3d 1101, 1105-06 (9th Cir.
2000), and we see no reason to disagree with them.
Brisson’s “offense conduct was at heart a scheme to file
fraudulent tax returns and thus could be considered on par
with tax fraud.” Aragbaye, 234 F.3d at 1105 (citation and
internal quotation marks omitted).
Furthermore, Judge Reinhard did not err in refusing
to group the two tax offenses together with the bank fraud
offense and thereby give Brisson a lower offense level.
Grouping is appropriate when different counts involve
substantially the same harm. U.S.S.G. § 3D1.2. Brisson
notes that subsection 3D1.2(d) allows for grouping of
offenses covered by guidelines §§ 2B1.1 and 2T1.1. We have
joined most other courts in holding, however, that “there is
no automatic grouping of counts [under subsection
3D1.2(d)] simply because those counts are on the ‘are to be
grouped’ list.” United States v. Chavin, 316 F.3d 666, 673
(7th Cir. 2002) (quoting United States v. Williams, 154 F.3d
655, 657 (6th Cir. 1998), cert. denied, 525 U.S. 1113 (1999)).
Rather, offenses may be grouped if they are “of the same
general type and otherwise meet the criteria for grouping
under [subsection d].” Id. at 675 (quoting U.S.S.G. § 3D1.2
cmt. n. 6).
That is not the case here. There was no necessary connec-
tion between Brisson’s fraud on his bank and his bilking of
the government. Brisson argues his three counts should go
together because they were all “economic offenses arising
out of the failed ownership of the hotel.” But that is both too
high a level of generality and a disingenuous spin on the
facts. Brisson’s false tax claims were filed after he lost the
hotel and was desperate for money. But his diversion of the
hotel’s room receipts in violation of his bank’s security
agreement helped bring about the failure of his ownership;
it did not “aris[e] out of” that failure. Moreover, Brisson’s
conduct involved different victims, see U.S.S.G. § 3D1.2(a)-
No. 05-1540 5
(b), and did not involve conduct that was treated as a
specific offense characteristic for the guidelines calculation
for another count, see U.S.S.G. § 3D1.2(c). In short, the
bank fraud and tax fraud did not represent “substantially
the same harm,” U.S.S.G. § 3D1.2, so Judge Reinhard did
not err in refusing to group them.
Finally, Brisson disputes the reasonableness of his 30-
month sentence, which checked in at the bottom of the
advisory guidelines range. (He suggests instead “a minimal
sentence in the county jail” or work-release coupled with
home monitoring.) Judge Reinhard wisely rejected that sort
of tap-on-the-wrist conclusion to this case.
A sentence that is properly calculated under the guide-
lines is entitled to a presumption of reasonableness which
may be rebutted by reference to the sentencing factors set
forth in 18 U.S.C. § 3553(a). United States v. Mykytiuk, 415
F.3d 606, 608 (7th Cir. 2005). Appellate review is, as we
have often noted, “deferential.” Id.In urging a light sentence, Brisson cites the “profound
negative impact on his family needs and obligations”; his
“conversion to Christianity” and the effect his sentence will
have on his ability to take up a “likely offer for a
$200,000.00 per year salary as a business consultant” at his
church. A princely sum, we assume that would promote his
ability to pay restitution. Lastly, in light of the § 3553(a)
factors bearing on deterrence and promoting respect for the
law, he makes the curious argument that prison sentences
for “economic offenses” such as his do not impede others
who are tempted to engage in similar deeds. We beg to
differ. Who knows how many more “economic offenses”
would be committed if the tempted knew that
the punishment, if caught, would be little more than
minimal? We reject the claim.
The record shows that Judge Reinhard carefully consid-
ered Brisson’s arguments and properly rejected them. And
6 No. 05-1540
of course Brisson is hardly the first defendant to claim a
religious conversion or to find that his punishment imposes
hardship on his family. As for his future as a business
consultant, we’re not sure what it is about his recent
achievements that would make someone want to pay him
$200,000 to impress his wisdom on others. Yet, if that is the
case, he can only hope that the opportunity will stay warm
while he’s on ice.
The sentence imposed by the district court is AFFIRMED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—6-2-06