United States v. Richard Brown , 732 F.3d 781 ( 2013 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 12-3313
UNITED STATES OF AMERICA ,
Plaintiff-Appellee,
v.
RICHARD E. BROWN ,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of Indiana, Evansville Division.
No. 3:11CR00011-001 — Richard L. Young, Chief Judge.
ARGUED FEBRUARY 25, 2013 — DECIDED OCTOBER 11, 2013
Before BAUER, POSNER, and SYKES, Circuit Judges.
SYKES, Circuit Judge. For 20 years Richard Brown was the
office manager and accountant for a cluster of small businesses
in southern Indiana owned by the Walker family. In 2009 the
family patriarch discovered that Brown was embezzling
money by using company credit cards and writing company
2 No. 12-3313
checks to pay for personal items and expenses. An audit
revealed that during the course of at least a decade, Brown had
stolen hundreds of thousands of dollars, gradually putting the
businesses in financial straits and destroying their credit.
A federal grand jury indicted Brown on more than
150 counts of wire fraud, mail fraud, and tax fraud. Brown
pleaded guilty to a single count of each of these crimes. The
advisory guidelines sentencing range was 21 to 27 months’
imprisonment, but the district judge thought that was far too
low. The judge settled on a sentence of 60 months, a significant
variance from the top of the range. Judgment was entered and
Brown appealed.
Weeks later, without warning, the judge filed an amended
judgment and attached a written “statement of reasons” to
“supplement” the reasons he had given in open court for the
sentence. Apparently applying “departure” analysis, the judge
recalculated the guidelines range, adding upward adjustments
based on the amount Brown embezzled, the duration of the
scheme, and the vulnerability of one of the victims. On this
revised calculation, the guidelines range was 41 to 51 months.
Compared to this range, the 60-month sentence seemed like a
less significant variance from the guidelines.
On appeal Brown argues that the district judge violated
Rule 32(h) of the Federal Rules of Criminal Procedure by
failing to give notice of his intent to apply upward “depar-
tures.” He also argues that his 60-month sentence is substan-
tively unreasonable.
We affirm. The judge’s belated effort to adjust the guide-
lines range introduced complications but did not violate
No. 12-3313 3
Rule 32(h). That rule requires “reasonable notice” when the
district court is “contemplating” a departure from the sentenc-
ing guidelines. FED . R. CRIM . P. 32(h). But “[t]he old regime of
‘departures’ is defunct,” United States v. Barlett, 567 F.3d 901,
909 (7th Cir. 2009), and Rule 32(h) does not apply to an upward
variance from the advisory guidelines range, see Irizarry v.
United States, 553 U.S. 708, 714 (2008). Because departures are
obsolete, Rule 32(h) no longer has any work to do.
Moreover, because the judge’s written statement of reasons
was filed after Brown appealed, the court lacked the power to
substantively alter the sentence because jurisdiction had shifted
to this court. Brown’s sentence did not change, though the
rationale for it certainly did. To the extent that the judge’s
recalculation of the guidelines range amounts to a substantive
change, it is a nullity because the court lacked jurisdiction to
make the change. If the recalculation simply introduced an
inconsistency between the written statement and the oral
pronouncement of the sentence, the oral pronouncement
controls. Either way, we disregard the written statement of
reasons. Considered in light of the court’s oral pronouncement
of sentence, the 60-month sentence is reasonable.
I. Background
From 1989 until 2009, Brown worked as the office manager,
bookkeeper, and accountant for a group of small businesses in
Evansville, Indiana, owned by the Walker family. In that
capacity he was authorized to write company checks and use
company credit cards for business purposes. Unbeknownst to
the Walkers, for many years Brown abused the trust they
4 No. 12-3313
placed in him by paying himself unauthorized bonuses. He
also repeatedly wrote company checks and used company
credit cards for personal expenses like gas, household items,
and home repairs. In addition to making these personal
purchases, Brown also used company funds to pay the credi-
tors of his church, the Oak Hill Christian Center, where he
served as the bookkeeper.
Not surprisingly, Brown failed to report any of this extra
income on his federal tax returns. He also failed to report
money he earned doing work for the church. Instead, he had
his compensation made payable to the Oak Hill Christian
Center and placed in tithing envelopes to conceal the income,
and then claimed charitable deductions for the amounts.
Brown’s crimes came to light in October 2009 while he was
on vacation. Lowell Walker, the family patriarch and the
primary owner of the Walker enterprises, intercepted an
invoice detailing the use of company checks to pay for ex-
penses relating to Brown’s rental properties. This precipitated
an internal audit, which revealed the extent of Brown’s misuse
of company funds. When Brown returned from vacation, the
Walkers confronted and fired him. Brown claimed that he was
simply reimbursing himself for promised pay raises that he
never received.
A federal grand jury indicted Brown for embezzlement
dating from 2004 to October 2009, when he was fired. He was
charged in a superseding indictment with 135 counts of wire
fraud, 15 counts of mail fraud, and 5 counts of tax fraud. He
agreed to plead guilty to one count each of wire and mail fraud
and one count of tax fraud. The plea agreement called for
No. 12-3313 5
restitution to the Walker family in the amount of $151,233 and
$38,675 to the Internal Revenue Service for tax losses. The
district court accepted the guilty pleas.
Based on the contents of the plea agreement and the
presentence report, Brown’s offense level under the sentencing
guidelines was 16, which when combined with a criminal
history category I yielded an advisory guidelines range of 21
to 27 months’ imprisonment. At the sentencing hearing, the
court accepted this guidelines calculation and then heard
testimony from three witnesses who spoke on Brown’s behalf.
All three were friends from the Oak Hill Christian Center; one
was the pastor of the church. They extolled Brown’s extensive
service to the church and said they believed him to be an
honest, loyal man.
The court also heard from two members of the Walker
family: Barbara Wilson, the co-owner who conducted the
internal audit; and Lowell Walker, the head of the family.
Wilson testified about Brown’s elaborate method of concealing
his embezzlement and how his deceit placed the family
businesses in a precarious financial situation and destroyed
their credit. Wilson, an experienced auditor with a master’s
degree in business administration, also testified that according
to her audit, Brown embezzled company funds on many
hundreds of occasions totaling approximately $667,000. That
total may understate the loss; Wilson explained that because of
missing records, her audit went back only as far as 1996.
When it was his turn to address the court, Brown mostly
described what he’d been up to since being fired by the
Walkers: He’d taught at a technical college, provided services
6 No. 12-3313
to the church, obtained a master’s degree and minister’s
license, and served as the legal guardian for a 70-year-old
cousin who was mentally handicapped.
Before imposing sentence the district court thoroughly
examined the sentencing factors listed in 18 U.S.C. § 3553(a),
placing special emphasis on the sophisticated nature of
Brown’s embezzlement scheme, its long duration, and the deep
breach of trust that his conduct entailed. The judge accepted
the results of the Walker family’s internal audit and explained
that the loss—more than $600,000—was significant for a small
business. On the other side of the ledger, the judge recognized
that Brown had no criminal history and had a great deal of
support from members of his church community, including
“somewhere between 40 and 50“ people who wrote letters to
the court on his behalf. These letters, the court said, stressed
Brown’s “high moral character, … his fairness, his devotion to
his church, his community, [all] the charitable things that he
was involved with.”
In the end, however, the judge contrasted the altruistic
picture painted by Brown’s supporters with the admitted facts
of the case. “It’s almost like you have two personalities,” the
judge said. “One is with your church,” and the other is “a
greedy individual who just wants to enrich himself at the
expense of others.” After touching on the remaining § 3553(a)
factors, the judge imposed a sentence of 60 months concurrent
on each count of wire and mail fraud and a concurrent
36 months on the tax-fraud count. The judge explained that
this variance from the guidelines range was based on “the
No. 12-3313 7
[§] 3553(a) factors and the extensive nature and duration of the
defendant’s criminal activity.”
The court entered judgment on October 1, 2012. Brown filed
a notice of appeal four days later. On October 24, 2012, the
district court issued an amended judgment and attached a
written statement of reasons explaining the sentence. The
purpose of the amendment was to correct a clerical mistake,
but the only difference between the original and amended
judgments was that the latter waived interest on the restitution
award. In the attached statement of reasons, however, the
judge sought to supplement his reasons for the sentence
announced in open court. In an apparent effort to apply
departure analysis, the judge recalculated Brown’s guidelines
range.
It’s not entirely clear what the judge was trying to accom-
plish. He began by noting that the original guidelines range
was 21 to 27 months and then stated as follows: “After giving
respectful consideration to the Sentencing Guidelines, the
Court believes the guidelines do not adequately reflect the
seriousness and entirety of the defendant’s conduct.” The
judge went on to find that Brown’s offense conduct warranted
the following upward adjustments to his offense level: a two-
level increase for the amount of the loss (more than $600,000);
a two-level increase for the extended duration of the scheme;
and a two-level increase for “a vulnerable victim” (referring to
Lowell Walker’s lack of computer skills). These upward
adjustments boosted Brown’s offense level from 16 to 22. The
judge concluded that “an offense level of 22 provides a
sentencing range of 41 to 51 months and more adequately
8 No. 12-3313
reflects the defendant’s criminal conduct in this matter.” The
judge then re-reviewed the § 3553(a) factors and reiterated that
60 months in prison was an appropriate sentence under all of
the circumstances.
II. Discussion
Brown challenges the district court’s sentencing procedure
and the substantive reasonableness of the sentence. We review
the procedural challenge de novo. United States v. Annoreno,
713 F.3d 352, 356 (7th Cir. 2013). Our review of the substantive
reasonableness of the sentence is more deferential; we look
only for an abuse of discretion. See United States v. Conaway,
713 F.3d 897, 901 (7th Cir. 2013); Annoreno, 713 F.3d at 355–56.
Brown’s principal argument is that the district court
violated Rule 32(h) by failing to give notice before applying
“departures” to recalculate his guidelines range in the post-
judgment statement of reasons. Rule 32(h) provides that
“[b]efore the court may depart from the applicable sentencing
range on a ground not identified for departure either in the
presentence report or in a party’s prehearing submission, the
court must give the parties reasonable notice that it is contem-
plating such a departure.” FED . R. CRIM . P. 32(h).
By its terms Rule 32(h) applies only to departures from an
otherwise applicable guidelines range. See id.; see also Irizarry,
553 U.S. at 714. “ ‘Departure’ is a term of art under the Guide-
lines and refers only to non-Guidelines sentences imposed
under the framework set out in the Guidelines.” Irizarry,
No. 12-3313 9
553 U.S. at 714. Since Booker1 we have repeatedly emphasized
that formal departure analysis is obsolete. See, e.g., United States
v. Lucas, 670 F.3d 784, 791 (7th Cir. 2012); United States v. Spano,
476 F.3d 476, 480 (7th Cir. 2007); United States v. Walker,
447 F.3d 999, 1006 (7th Cir. 2006); United States v. Blue, 453 F.3d
948, 952 (7th Cir. 2006). We reiterate the point here.
When the guidelines were mandatory, departure analysis
was the only way a district court could impose a sentence
outside the otherwise applicable guidelines ranges. Irizarry,
553 U.S. at 714; Spano, 476 F.3d at 480; United States v. Castro-
Juarez, 425 F.3d 430, 434–35 (7th Cir. 2005). By making the
guidelines advisory, Booker removed those constraints. Now
the district court’s obligation is simply to calculate the guide-
lines range correctly and arrive at a reasonable sentence after
weighing the sentencing factors in § 3553(a), varying upward
or downward from the guidelines range in its discretion.
United States v. Munoz, 610 F.3d 989, 994 (7th Cir. 2010) (citing
Gall v. United States, 552 U.S. 38, 51 (2007)); Spano, 476 F.3d at
480.
That isn’t to say that departures are completely useless;
“district courts can still take guidance from the departure
provisions in the guidelines and apply them by way of analogy
when assessing the § 3553(a) factors.” Lucas, 670 F.3d at 791.
But the only boundaries on the court’s Booker discretion are the
more capacious § 3553(a) factors. So analogizing to departures
is just one way for the district court to explain a sentence; it has
no legal force or effect.
1
United States v. Booker, 543 U.S. 220 (2005).
10 No. 12-3313
With the demise of departures as a constraint on the district
court’s sentencing discretion, Rule 32(h) has lost all utility. See
Walker, 447 F.3d at 1006–07. The rule does not apply to vari-
ances from the guidelines range. See Irizarry, 553 U.S. at 714–16;
United States v. Gooden, 564 F.3d 887, 891 (7th Cir. 2009) (per
curiam); Walker, 447 F.3d at 1006–07. Likewise, when a judge
chooses to use departure analysis “by way of analogy” to help
explain a sentence that varies from the guidelines, Lucas,
670 F.3d at 791, the rule does not apply.
Accordingly, if there was error below, it was not the district
court’s failure to give notice under Rule 32(h), it was the court’s
effort to recalculate Brown’s guidelines range after the notice
of appeal was filed.2 At the sentencing hearing, the district
court correctly calculated the guidelines range and then varied
upwardly based on the § 3553(a) factors, explaining why the
sentence was appropriate. The court’s post-appeal statement of
reasons needlessly introduced complication.
2
The government maintains that the district court did not recalculate the
guidelines range. That position is hard to reconcile with the record;
although as we’ve said, it’s not entirely clear what the judge was trying to
do in his written statement of reasons. At the sentencing hearing, the judge
accepted the original guidelines range of 21 to 27 months based on an
offense level of 16. In the statement of reasons attached to the amended
judgment, the court for the first time imposed three two-level increases to
reach an offense level of 22, which raised the guidelines range to 41 to
51 months. The judge either recalculated the guidelines range or was using
departure analysis to more fully explain his decision to impose an above-
guidelines sentence. We can’t tell which. Either way, for the reasons
explained in the text, we disregard the post-judgment written statement of
reasons.
No. 12-3313 11
Though neither Brown nor the government has recognized
it, the real problem with the court’s recalculation of the
guidelines range is that the judge lacked the power to amend
his decision once the case was in this court. “The filing of a
notice of appeal is an event of jurisdictional significance—it
confers jurisdiction on the court of appeals and divests the
district court of its control over those aspects of the case
involved in the appeal.” Griggs v. Provident Consumer Disc. Co.,
459 U.S. 56, 58 (1982) (per curiam); see also United States v.
Burton, 543 F.3d 950, 952 (7th Cir. 2008); United States v.
McHugh, 528 F.3d 538, 540 (7th Cir. 2008). “Only one court at
a time has jurisdiction over a subject.” McHugh, 528 F.3d at 540.
The point of the rule is to “avoid the confusion of placing the
same matter before two courts at the same time and to pre-
serve the integrity of the appeal process.” In re Teknek, LLC,
563 F.3d 639, 650 (7th Cir. 2009).
There are a few exceptions. “Ancillary issues, such as
attorney’s fees, may still be dealt with by the district court even
after an appeal has been lodged[, and] [t]he district court may
also issue orders ‘in aid of the appeal, to correct clerical
mistakes under [FED . R. CRIM . P. 36], or in aid of execution of a
judgment that has not been stayed or superseded.’ ” Burton,
543 F.3d at 952 (quoting Henry v. Farmer City State Bank,
808 F.2d 1228, 1240 (7th Cir. 1986)). Also, we held in Burton that
the district court may file a written sentencing memorandum
more fully explaining the sentence “up to the time when the
judgment is entered on its docket, and even thereafter, if a
proper post-judgment motion has been filed.” Id. at 953. But a
later-filed sentencing memorandum “cannot effect a substan-
tive change from the [sentence] announced at the hearing.” Id.
12 No. 12-3313
Thus, a written sentencing statement filed after the sentencing
is permissible if it simply “replicates” or “expands on the
judge’s reasoning without changing the ultimate judgment.”
Id. But the district court is “without authority to make any
substantive change in the sentence after the appeal [i]s lodged
in this court.”3 Id.
Here, the judge filed the written statement of reasons sua
sponte, after the notice of appeal was filed, as an attachment to
an amended judgment correcting a clerical error. The written
statement purported to recalculate the guidelines range and
thus differed in substance from the judge’s oral explanation of
the sentence. Because jurisdiction had shifted to this court, the
judge lacked authority to make this substantive change, so we
will disregard it. See Kusay v. United States, 62 F.3d 192, 194 (7th
Cir. 1995) (an action taken by the district court without
jurisdiction is a “nullity”).
Even if we construed the recalculated range as a
nonsubstantive change in the rationale for the sentence—after
all, the 60-month sentence was unaffected—the judge’s written
explanation is plainly at odds with his oral statement from the
bench. In cases of conflict between the written and oral
pronouncement of sentence, the oral pronouncement controls.
See United States v. Cephus, 684 F.3d 703, 709 (7th Cir. 2012)
(“What the judge says in sentencing a defendant takes prece-
3
In Burton we alluded to the difficulty of classifying a later-filed written
statement of reasons as a substantive change or merely a nonsubstantive
elaboration of the reasons for the sentence. United States v. Burton, 543 F.3d
950, 953 (7th Cir. 2008). Because of this difficulty, we discourage the use of
these statements after the notice of appeal has been filed.
No. 12-3313 13
dence over the written judgment” when the two conflict.);
United States v. Alburay, 415 F.3d 782, 788 (7th Cir. 2008) (“If an
inconsistency exists between an oral and the later written
sentence, the sentence pronounced from the bench controls.“
(internal quotation marks omitted)).
So we evaluate the reasonableness of the 60-month sentence
by reference to the court’s oral statement alone, without regard
to the later-filed written statement of reasons. Our review is
deferential. Brown’s main attack on the sentence is that it
varies too greatly from the original guidelines range. This
misunderstands the scope of the district court’s discretion.
“The judge’s task is to choose a reasonable sentence.” Bartlett,
567 F.3d at 909. A sentence is reasonable “if the district court
‘gives meaningful consideration to the factors enumerated
in … § 3553(a), including the advisory sentencing guidelines,
and arrives at a sentence that is objectively reasonable in light
of the statutory factors and the individual circumstances of the
case.’ ” United States v. Boroczk, 705 F.3d 616, 623 (7th Cir. 2013)
(quoting United States v. Shannon, 518 F.3d 494, 496 (7th Cir.
2008)). Judges “need not—indeed must not—begin with a
presumption in favor of a Guideline sentence.” Bartlett,
567 F.3d at 909. So just as “there is no need to start from the
perspective that an in-range sentence usually is best, there is
also no need to explain why some different sentence is better.”
Id. In other words, “a sentence cannot be called ‘unreasonable’
just because the judge explains why he chose that sentence,
rather than explaining his decision from the Guidelines’
perspective.” Id.14 No. 12-3313
The district court gave meaningful consideration to the
advisory guidelines range and each of the § 3553(a) factors,
giving special weight to the aggravated nature and circum-
stances of the offense. The court was well within its discretion
to emphasize these factors. The three counts of conviction
hardly captured the scope and duration of the scheme. Brown
stole from his employer for many years causing significant
losses. Over time he dealt a serious financial blow to these
small family businesses and damaged their credit. Brown
quibbles that the court gave insufficient weight to his church
work and service to others. But the court meaningfully
considered Brown’s service to his church and his support from
the church’s members and simply discounted these fac-
tors—not an unreasonable approach based on the double life
that Brown had led. Moreover, the court distinguished Brown
from other defendants who may turn to embezzlement in
response to catastrophic family events or desperate personal
circumstances; the court concluded that Brown’s motive was
pure greed.
Finally, Brown argues that the district court failed to
account for “the need to avoid unwarranted sentence dispari-
ties among defendants with similar records who have been
found guilty of similar conduct.” 18 U.S.C. § 3553(a)(6). As the
qualifier “unwarranted” reflects, this provision leaves plenty
of room for differences in sentences when warranted under the
circumstances. See United States v. Boscarino, 437 F.3d 634, 638
(7th Cir. 2006) (“After all, § 3553(a)(6) disallows ‘unwarranted
sentence disparities’ (emphasis added), not all sentence
differences.”). And of course sentencing disparities become a
point of concern only when the sentences being compared
No. 12-3313 15
involve similar conduct and defendants with similar records.
Brown compares his above-guidelines sentence to other cases
involving within-guidelines sentences for wire- and mail-fraud
convictions. But he does not explain how the cases involve
conduct similar to his conduct here; a different sentence for the
same charge does not alone raise any concern about unwar-
ranted disparities under § 3553(a)(6). Brown’s above-guidelines
sentence was reasonable.
AFFIRMED .