NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued August 7, 2012
Decided April 29, 2013
Before
RICHARD A. POSNER, Circuit Judge
JOHN DANIEL TINDER, Circuit Judge
DAVID F. HAMILTON, Circuit Judge
No. 11‐3035
Appeal from the United States District
UNITED STATES OF AMERICA, Court for the Northern District of Illinois,
Plaintiff‐Appellee, Eastern Division.
v. No. 10 CR 601‐1
KENNETH STEWARD, George W. Lindberg,
Defendant‐Appellant. Judge.
O R D E R
From 2004 until 2008, Kenneth Steward participated in a scheme that induced lenders to
issue millions of dollars in mortgage loans based on fraudulent loan applications. He was
charged with a total of 16 counts of mail, wire, and bank fraud, and pleaded guilty to each. The
district judge imposed 16 concurrent 210‐month sentences. Steward challenges two aspects of
his sentence on appeal: He first argues that the district court erred in enhancing his offense level
for obstructing justice after concluding that he committed perjury, U.S.S.G. § 3C1.1, because the
court did not find that the three elements of perjury were present. Second, he contends that the
court did not sentence him based on the factors in
18 U.S.C. § 3553(a) and that it inappropriately
relied on his past arrests. Because the record reflects that any error by the district court in
Appeal No. 11‐3035 Page 2
enhancing Steward’s sentence for obstructing justice was harmless, and the court properly
considered the factors under § 3553(a), we affirm.
According to evidence that the government compiled, Steward ran several real estate
development and construction companies, including Jireh Development Corporation, Jireh
Construction, and Jireh Real Estate Development. After finding people who wanted to purchase
property (or recruiting them to pose as buyers), he then used these companies to produce
documents that falsely qualified the buyers as purchasers; for instance, the paperwork falsely
stated that the buyers worked for the companies and included falsified W‐2 and earnings
statements. Steward also purchased counterfeit forms on their behalf, including false pay stubs
and bank statements. After compiling these fake documents, he submitted the finished loan
applications to loan officers who also participated in the fraud. After the unsuspecting banks
issued the mortgages, Steward and others received kickbacks.
Two years before sentencing, Steward appeared before a grand jury investigating the
fraud. He denied significant involvement with the Jireh companies, including ever holding a
position as an officer or director. Instead, he testified that he “was an independent contractor at
one time.” When the prosecutor asked him to further explain, he said: “[L]ike any water service,
salting service, things like that, anything I had to do for the corporation, then I would be – I
would be the independent contractor. Basically, I was never an employee or an officer of the
corporation.”
Steward entered a guilty plea in June 2011 without any deal with the government, and
he admitted how he used the Jireh companies to carry out his scheme. Before sentencing, the
probation office calculated a total offense level that incorporated a 2‐level enhancement for
obstruction of justice based on the probation officer’s conclusion that, in light of the evidence,
Steward committed perjury before the grand jury. To arrive at this obstruction enhancement,
the probation officer wrote (and the district court would later adopt by reference) that Steward
committed perjury by falsely testifying that he was only an “independent contractor” for the
Jireh companies:
Pursuant to Application Note 4(B), an example of conduct that qualifies as
obstruction is committing perjury. The defendant testified, before a grand jury,
he was never an employee or officer of Jireh. The evidence supports that the
defendant owned and operated Jireh for the purpose of the offense. Therefore,
the two‐level enhancement is applicable.
Attached to the PSR were written statements from co‐defendants explaining that Steward
owned and operated Jireh Development. The PSR also included a number of other attachments,
including Bank of America debit‐card applications and checking‐account statements for
accounts held by Jireh Development Corporation. Two of these applications bore Steward’s
Appeal No. 11‐3035 Page 3
signature and listed his title as “president.” One of the checking‐account statements expressly
lists the name of the account as “Jireh Development Corporation DBA Kenneth J Steward.”
With the obstruction enhancement, Steward’s total offense level was calculated at 37 and his
criminal history category at I, yielding a recommended guidelines range of 210 to 262 months.
In his sentencing memorandum and at his sentencing hearing, Steward challenged the
PSR’s recommended obstruction enhancement. He primarily contended that his statements
before the grand jury were the result of confusion or mistake. He also challenged the
importance of the debit‐card applications included with the PSR, arguing that the government
had not proven that he signed or submitted the documents. To refute that he was president of
the Jireh companies, he argued that records from the Illinois Secretary of State’s website listed
other people, and not Steward, as the president or agent of Jireh Development Corporation,
Jireh Construction, Inc., Jireh Construction, LLC, and Jireh Redevelopment Company.
In response to Steward’s renewed objection at the sentencing hearing, the government
proffered a “HUD‐1 settlement statement for a property sold by Jireh Development.” It
explained that Steward signed the document as the “President and Secretary/Treasurer” of Jireh
Development. The government also explained that one of the persons listed as the president of
Jireh Development Corporation on the Secretary of State’s website—a man named Kenneth
Washington—had pleaded guilty to participating in a different mortgage‐fraud scheme and
was incarcerated during a portion of the time that Steward used Jireh Development to carry out
his crime.
The district court agreed with the PSR’s recommended enhancement for obstruction of
justice, and after also adopting the remainder of the PSR, sentenced Steward to 210 months’
imprisonment, the bottom of his guidelines range. To justify the obstruction enhancement, the
court adopted the probation officer’s rationale, stating: “[A]s described in Lines 318 and 324 [of
the PSR], which the Court accepts, you have obstructed justice by, as counsel just mentioned,
committing perjury before the grand jury, for an enhancement of two levels.” Sent. Tr. 20.
Government counsel had just asserted that “it is ridiculous for this defendant to argue that he
did not lie to the grand jury. Based on the grand jury exhibits, [he] has represented all over the
place that he was the President and owner of Jireh Development.” Id. at 16. Counsel added that
Steward “owned and operated Jireh Development and, then, lied about that to the grand jury.
There was no confusion. It was simply a lie.” Id. at 17‐18. Then, while denying a reduction for
acceptance of responsibility, the district judge repeated that Steward “obstructed justice by
committing perjury in testimony before the grand jury – which the Court just found.” Id. at 20.
The court then proceeded to consider the sentencing factors provided at
18 U.S.C. § 3553(a),
focusing in particular on the financial scope of Steward’s offense and on his minimal criminal
record.
On appeal Steward first argues that the district court erred by applying a 2‐level
enhancement for obstructing justice without making explicit findings of the three elements of
Appeal No. 11‐3035 Page 4
perjury. Because he objected to the sentencing enhancement on the grounds that he did not
commit perjury, he contends that the district court needed to make independent findings that
covered each element of that crime: falsity, willfulness, and materiality. Steward contends that
the district court made no such findings. Steward also maintains that he innocently
misunderstood the significance of his statement before the grand jury. The government
counters that the PSR recited sufficient facts to encompass a finding of perjury, and that
regardless, any error was harmless.
Under § 3C1.1 of the Sentencing Guidelines, a court may enhance a defendant’s offense
level if he “willfully obstructed or impeded, or attempted to obstruct or impede” the
investigation into his offense. A finding that the defendant committed perjury supports this
enhancement. United States v. Dunnigan,
507 U.S. 87, 94 (1993); United States v. Johnson,
612 F.3d
889, 893 (7th Cir. 2010); United States v. Seward,
272 F.3d 831, 838 (7th Cir. 2001); U.S.S.G. § 3C1.1,
cmt. n.4(B). And perjury is defined as “false testimony concerning a material matter with the
willful intent to provide false testimony, rather than as a result of confusion, mistake, or faulty
memory.” Dunnigan,
507 U.S. at 94. If the defendant objects, however, the Supreme Court
instructed in Dunnigan that the sentencing court must “review the evidence and make
independent findings necessary to establish a willful impediment to or obstruction of justice . . .
under the perjury definition.”
Id. at 95. But separate findings of the individual elements of
perjury, though preferable, are unnecessary if the court makes a finding that “encompasses all
of the factual predicates for a finding of perjury.” Id.; Johnson,
612 F.3d at 893; Seward,
272 F.3d
at 838. Thus, it is sufficient if the court determines “‘that the defendant lied to the [court]’ about
material matters.” United States v. Grigsby,
692 F.3d 778, 786 (7th Cir. 2012) (quoting United States
v. White,
240 F.3d 656, 662 (7th Cir. 2001)). This court reviews de novo the adequacy of the
district court’s obstruction of justice findings and any underlying factual findings for clear error.
See United States v. Sheikh,
367 F.3d 683, 686 (7th Cir. 2004); United States v. Carrera,
259 F.3d 818,
831 (7th Cir. 2001).
Here, the district court did not make separate findings of each element of perjury, but
the omission does not invalidate the sentence. First, we can tell which statement the district
court found to be false: It adopted the findings in the PSR, with specific reference to line
numbers, which identify as false Steward’s testimony that he was never an employee or officer
of Jireh Development. Second, although the PSR does not expressly state that this false
statement was material or willful, the district court concluded that Steward “obstructed justice
by . . . committing perjury before the grand jury.” In the context of this case, that conclusion
suffices to encompass a finding of willfulness and materiality; “perjury,” after all, is a term of
art, well‐known to district court judges, that refers to all three elements of that crime. The
court’s conclusion that Steward committed perjury before the grand jury encompasses a finding
that he lied to them about a material matter.
Appeal No. 11‐3035 Page 5
Furthermore, the district court knew from the record that Steward’s lie was necessarily
material because Jireh was at the center of the fraud; thus his lie to the grand jury that he was
merely an independent contractor for Jireh, if believed, made his guilt less likely. And the
falsehood had to be willful because Steward knew of his true relationship to the company, as
reflected in his plea colloquy and in the many documents that he signed. See, e.g., United States
v. Taylor,
637 F.3d 812, 817–18 (7th Cir. 2011); United States v. Nurek,
578 F.3d 618, 623–24 (7th
Cir. 2009). As well, we have suggested that a finding that the defendant “‘obstructed or
attempted to obstruct justice in this case’ encompasses the willful element.” United States v.
Savage,
505 F.3d 754, 764 (7th Cir. 2007).Thus, error, if any, in failing to announce more explicit
findings is harmless, see, e.g.,
id. (holding district court’s finding that defendant “obstructed or
attempted to obstruct justice” was “regrettably slim” but constituted harmless error in light of
the clear record that defendant willfully lied about material matters contradicted by
government witnesses and defendant’s own expert), and on this record a remand for the court
to make those findings explicit would be a needless exercise.
The district court’s specific finding that Steward falsely denied that he was an employee
or officer of Jireh distinguishes this case from other similar cases in which we remanded for
further findings. In United States v. Seward, for instance, the district court enhanced the
defendant’s sentence under § 3C1.1 after reasoning only that his testimony at trial was
“untruthful.”
272 F.3d 831, 838 (7th Cir. 2001). We found this insufficient to justify an
obstruction enhancement for perjury, as it did not identify which statements at trial the court
found false, and thus it was “nearly impossible for us to assess whether the district court’s
errors were harmless in the end, because we cannot assess the materiality of any of the lies the
court found Seward was telling.”
Id. at 838–39. Similarly, in United States v. Johnson, we
remanded for resentencing after emphasizing that the district court failed to identify which of
the defendant’s statements it found to be false, and thus once again we were left unable to
assess materiality.
612 F.3d 889, 894–95 (7th Cir. 2010); see also United States v. McGiffen,
267 F.3d
581, 591–92 (7th Cir. 2001). Accordingly, although we urge district courts to make explicit
findings of the elements of perjury before enhancing a sentence under § 3C1.1, on this record we
need not remand for resentencing. See Savage,
505 F.3d at 764; United States v. Saunders,
359 F.3d
874, 879 (7th Cir. 2004) (holding district court’s lack of explicit findings required to justify an
enhancement under § 3C1.1 based on perjury was harmless where the record was clear that the
defendant, who was being sentenced for being a felon in possession of a firearm, “took the
stand in his defense and lied when he denied possessing a gun”).
In Steward’s second challenge to his sentence, he argues that the district court
committed procedural error by merely listing the factors provided at
18 U.S.C. § 3553(a), and by
improperly sentencing him within his guidelines range “based completely” on past arrests that
never resulted in convictions. Steward’s arguments are contradicted by the district court’s
statements during the sentencing hearing. After properly calculating Steward’s guidelines
range, the court proceeded to consider the factors set forth under § 3553(a), focusing
Appeal No. 11‐3035 Page 6
particularly on the millions of dollars paid and lost by lenders as a result of Steward’s
fraudulent conduct. This discussion demonstrates that the court meaningfully considered the
statutory factors, which is all it needed to do. See United States v. Martinez,
520 F.3d 749, 753 (7th
Cir. 2008); United States v. Tahzib,
513 F.3d 692, 695 (7th Cir. 2008). And although the court
mentioned Steward’s arrest history and inquired about the status of two pending state‐court
cases, the record shows that the court did not choose to sentence him within his guidelines
range based solely on either consideration. Instead, the court stated that it considered Steward’s
guidelines range to be appropriate based on the “nature of [his] offense” and the large loss to
lenders. Moreover, the court determined that a sentence at the bottom of that range was
appropriate because of his “limited” criminal history and his timely plea of guilty. Thus,
contrary to Steward’s assertions, the district court concluded that his prior arrests weighed in
favor of a lower sentence—indeed the lowest recommended sentence within his guidelines
range. See United States v. Lopez‐Hernandez,
687 F.3d 900, 903 (7th Cir. 2012).
AFFIRMED.
