United States v. Aaron Hymas , 780 F.3d 1285 ( 2015 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 13-30239
Plaintiff-Appellee,
D.C. No.
v. 1:12-cr-00045-
EJL-1
AARON MICHAEL HYMAS,
Defendant-Appellant.
UNITED STATES OF AMERICA, No. 13-30240
Plaintiff-Appellee,
D.C. No.
v. 1:12-cr-00045-
EJL-2
TIFFANY KIM HYMAS,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the District of Idaho
Edward J. Lodge, District Judge, Presiding
Argued and Submitted
November 19, 2014—Portland, Oregon
Filed March 25, 2015
Before: Richard R. Clifton, Milan D. Smith, Jr.,
and Andrew D. Hurwitz, Circuit Judges.
Opinion by Judge Clifton
2 UNITED STATES V. HYMAS
SUMMARY*
Criminal Law
The panel vacated Aaron Hymas’s sentence, and affirmed
the district court’s restitution order as to Aaron and Tiffany
Hymas, in a case in which Aaron and Tiffany each pled guilty
to one count of wire fraud in connection with making false
statements in a mortgage loan application.
The panel held that there were no serious due process
concerns that required application of a clear and convincing
evidence standard, rather than a preponderance of the
evidence standard, to determine the extent of loss attributable
to the loan that was the subject of Aaron’s conviction, where
Aaron admitted the facts of the fraud that caused the loan to
be made and knew the size of the loan, which defined the
potential extent of the loss.
The panel held that before applying an 8-level increase
that more than doubled the Sentencing Guidelines range of
imprisonment, the district court should have applied the clear
and convincing standard to determine the amount of the
losses from loans that were not the subject of Aaron’s
conviction, where Aaron was not charged with a conspiracy,
pled guilty only to one count of fraud regarding a specific
loan transaction, and had neither need nor opportunity to
contest the alleged conspiracy. The panel could not say that
the error was harmless.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
UNITED STATES V. HYMAS 3
The panel rejected Aaron’s arguments regarding
calculation of losses from the loans. The panel held that the
district court correctly calculated the losses by taking the
principal amount of the loan and subtracting any credits from
the subsequent sale of the property, and did not err by
considering the losses submitted by successor lenders who
had purchased the loans.
The panel held that the district court did not err in
calculating Aaron’s and Tiffany’s respective restitution
amounts. The panel held that the record supports (1) holding
Aaron responsible for losses resulting from loan applications
submitted under the names of Tiffany and his brother-in-law
in addition to the loans in his name, and (2) determinations
that the lenders listed in the presentence report suffered losses
that were directly and proximately caused by the Hymases’
conduct. The panel rejected as foreclosed by Robers v.
United States, 134 S. Ct. 1854 (2014), the Hymases’
argument that the amount of restitution is too high because
the drop in the market, not the fraud on the loan applications,
was responsible for the lenders’ losses.
The panel remanded for further proceedings.
COUNSEL
Marcus R. Mumford (argued), Mumford PC, Salt Lake City,
Utah , for Defendants-Appellants.
Syrena C. Hargrove (argued) and Wendy J. Olson, Assistant
United States Attorneys, Boise, Idaho, for Plaintiff-Appellee.
4 UNITED STATES V. HYMAS
OPINION
CLIFTON, Circuit Judge:
Aaron and Tiffany Hymas were each convicted, pursuant
to plea agreements, of one count of wire fraud under
18 U.S.C. § 1343. Aaron1 appeals his sentence of 24 months’
imprisonment, contending that facts found by the district
court in sentencing should have been subject to the clear and
convincing standard of proof rather than the preponderance
of the evidence standard that the district court applied,
because of the disproportionate impact of those facts on the
sentence that was imposed. We agree, in part, vacate that
sentence, and remand to the district court for further
proceedings. Both defendants also appeal the district court’s
orders requiring restitution. We affirm those orders.
I. Background
Aaron and Tiffany Hymas are a married couple. They
partially owned and ran two businesses in the housing
industry, Crestwood Construction and OPM Enterprises. In
order to acquire financing, the Hymases and their business
partner developed a plan to borrow money to construct
houses, sell them, and use the proceeds to pay off the loans,
ideally leaving a profit.
It was alleged, however, that many of the mortgage loan
applications submitted by the defendants from 2005 to 2007
were fraudulent. Indictments alleged that the Hymases made
false statements related to their employment, employment
1
To avoid confusion we refer to the defendants individually by their first
names.
UNITED STATES V. HYMAS 5
income, and rental income in the applications for twenty
loans. Five of the loan applications listed Aaron as the
borrower, thirteen listed Tiffany, and two listed Allen
Bollschweiler, the husband of Aaron’s sister.
Both defendants pled guilty to one count of wire fraud
pursuant to plea agreements that provided that the other
counts would be dismissed. Specifically, each defendant pled
guilty to a charge of wire fraud regarding a March 28, 2007
loan to Tiffany in the amount of $295,600, identified as
Count Four in both indictments. In the plea agreements, the
defendants admitted that identified statements “were false and
material to the loan application, and that [he or she] knew that
they were false at the time [he or she] made them or caused
them to be made.” Each plea agreement specified certain
statements that were made in the loan application though
known to be false. Aaron’s agreement, for instance, specified
the following misrepresentations:
1) Tiffany Hymas was employed by OPM
Enterprises with 2.6 years on the job.
2) Tiffany Hymas had base employment
income of $42,500/month, plus commissions
of $30,000/month for a total of
$72,500/month.
3) Tiffany Hymas had gross rental income, as
follows: $4,350/month on 6097 Moose Creek,
Meridian, Idaho; $4,100/month on 5035 N.
Spangle in Meridian, Idaho; $2,150/month on
7243 E. Hampshire Lane, in Nampa, Idaho;
$4,000/month on 11 632 W. Hollandale in
Boise, Idaho.
6 UNITED STATES V. HYMAS
It was further agreed that the loan was funded based on the
above misrepresentations.
A presentence report (“PSR”) was prepared for each
defendant. For Aaron, the PSR calculated the total loss as
$3,689,953.73. The loss attributed to the Count Four loan was
$162,758.79. The rest represented losses allegedly suffered
by lenders on other loans, including loans that were the
subject of counts that were dismissed. Losses from these
loans were included because other “relevant conduct,”
separate from the specific activity that is the subject of the
criminal conviction, may be considered in imposing a
sentence. See U.S.S.G. § 1B1.3.
Adding the losses from other loans substantially increased
the proposed Guidelines sentencing range calculated in the
PSR. The base offense level for Aaron’s conviction under the
Sentencing Guidelines was 7, but the loss amount as
determined in the PSR increased that level by 18, to a total of
25. Following a reduction of 3 levels for acceptance of
responsibility, the PSR determined that Aaron’s total offense
level was 22. With a criminal history category of I, Aaron’s
Guidelines imprisonment range was 41 to 51 months.
Aaron filed objections to the PSR loss calculation. He
contested the relevant conduct, the proper burden of proof,
the number and identification of victims, and the loss amount
for sentencing. He also contested the loss amount and the
proper victims for restitution. The district court held a three-
day evidentiary hearing to resolve the factual issues.
Following the hearing, the district court issued a written
order. Although Aaron argued that the clear and convincing
evidence standard applied, the court explicitly held that the
UNITED STATES V. HYMAS 7
burden of proof that applied was preponderance of the
evidence. The court applied that standard to determine the
total loss amount for the purpose of calculating Aaron’s
sentence, including losses from other loans as relevant
conduct. The court found that Aaron Hymas had committed
fraud in the nineteen other loan applications and that the total
loss amount was $3,416,337.97, slightly less than the amount
calculated in the PSR. The district court agreed with the
PSR’s calculation of the Guidelines imprisonment range as 41
to 51 months. The district court subsequently sentenced
Aaron to 24 months in prison.
The amount of restitution proposed by the PSRs for each
defendant was $2,891,866.34. Aaron’s attorney specifically
objected to that calculation, but Tiffany’s did not. The
district court ultimately ordered restitution in the amounts of
$1,520,296.77 for Aaron and $667,505.42 for Tiffany.
II. Aaron’s Sentence
As described above, the district court applied the
preponderance of the evidence standard to calculate the total
loss amount resulting from Aaron’s relevant conduct. Aaron
contests the district court’s use of that standard, arguing that
the clear and convincing standard should have been applied
because the loss enhancements had a disproportionate impact
on the length of his sentence.
District courts generally use the “preponderance of the
evidence standard of proof when finding facts at sentencing,
such as the amount of loss caused by a fraud.” United States
v. Treadwell, 593 F.3d 990, 1000 (9th Cir. 2010). The higher
clear and convincing standard may apply, however, “when a
sentencing factor has an extremely disproportionate effect on
8 UNITED STATES V. HYMAS
the sentence relative to the offense of conviction.” United
States v. Mezas de Jesus, 217 F.3d 638, 642 (9th Cir. 2000)
(citing United States v. Restrepo, 946 F.2d 654, 659 (9th Cir.
1991) (en banc)); see also Treadwell, 593 F.3d at 1000.
Particularly “where a severe sentencing enhancement is
imposed on the basis of uncharged or acquitted conduct, due
process may require clear and convincing evidence of that
conduct.” Treadwell, 593 F.3d at 1000.
Our precedents “have not been a model of clarity in
deciding what analytical framework to employ when
determining whether a disproportionate effect on sentencing
may require the application of a heightened standard of
proof.” United States v. Berger, 587 F.3d 1038, 1048 (9th Cir.
2009). We have indicated that, “where the sentencing
enhancements are based on . . . the offense of conviction,” the
preponderance of the evidence standard is sufficient. Id.(citing United States v. Harrison-Philpot, 978 F.2d 1520,
1524 (9th Cir. 1992)) (internal quotation marks omitted). We
have also held that “there is no bright-line rule for the
disproportionate impact test;” instead, the court examines the
“totality of the circumstances” using six factors first
articulated in United States v. Valensia, 222 F.3d 1173 (9th
Cir. 2000) (“Valensia factors”).2 Berger, 587 F.3d at 1048
(citing United States v. Jordan, 256 F.3d 922, 928 (9th Cir.
2001)) (internal quotation marks omitted).
Under the Valensia totality of the circumstances test, six
factors, none of which is dispositive, guide the determination
2
Our opinion in Valensia was vacated and remanded by the Supreme
Court, see United States v. Valensia, 532 U.S. 901 (2001), but we have
continued to use the factors articulated in the decision.
UNITED STATES V. HYMAS 9
of whether a sentencing factor has a disproportionate impact
on the sentence:
(1) whether the enhanced sentence falls within
the maximum sentence for the crime alleged
in the indictment; (2) whether the enhanced
sentence negates the presumption of
innocence or the prosecution's burden of proof
for the crime alleged in the indictment;
(3) whether the facts offered in support of the
enhancement create new offenses requiring
separate punishment; (4) whether the increase
in sentence is based on the extent of a
conspiracy; (5) whether an increase in the
number of offense levels is less than or equal
to four; and (6) whether the length of the
enhanced sentence more than doubles the
length of the sentence authorized by the initial
sentencing guideline range in a case where the
defendant would otherwise have received a
relatively short sentence.
Treadwell, 593 F.3d at 1000.
We separate our consideration of the loss enhancement
here into two parts: (1) losses attributed to the loan that was
the subject of Count Four of the indictment, to which Aaron
pled guilty, and (2) losses attributed to the other loans.
1. Count Four Losses
Aaron pled guilty to Count Four of the indictment, which
involved a loan in the amount of $295,600. Applying the
preponderance of the evidence standard, the district court
10 UNITED STATES V. HYMAS
determined the loss to the lender on that loan to be
$162,758.79. That loss, by itself, enhanced Aaron’s total
offense calculation under the Sentencing Guidelines by 10
levels. See U.S.S.G. § 2B1.1 (providing for a 10-level
increase for losses over $120,000 but no more than
$200,000).
Notwithstanding the increase in the sentence, the loss
from Count Four stemmed from conduct for which Aaron
was convicted, alleviating the due process concerns discussed
above. The preponderance of the evidence standard was
sufficient for determining the actual extent of that loss. See
Harrison-Philpot, 978 F.2d at 1524.
We would reach the same conclusion applying the
Valensia factors. The maximum sentence authorized for wire
fraud was 20 years, and the sentence imposed was well below
that. The loss enhancement did not negate the presumption
of innocence or alter the burden of proof for wire fraud. See
Treadwell, 593 F.3d at 1001. The facts offered in support of
the loss enhancement did not create a new offense that would
require separate punishment. See id. The fourth factor did
not apply because Aaron was not convicted for conspiracy.
The fifth and sixth factors arguably favor use of the clear
and convincing standard. The number of offense levels added
under U.S.S.G. § 2B1.1 for a loss of more than $120,000 but
not more than $200,000 was 10. In pleading guilty, Aaron
did not acknowledge any particular loss amount, and that loss
enhancement was over 4 levels. Similarly, the length of the
Guidelines sentencing range based on that loss amount more
than doubled the length of sentence authorized by the initial
Guidelines range if no loss had been attributed to the
UNITED STATES V. HYMAS 11
transaction. Aaron argues that these two factors alone were
sufficient to require the use of the heightened standard.
But the size of a loss enhancement, standing alone, does
not compel the use of the clear and convincing standard.
Treadwell, 593 F.3d at 1001–02. In this instance, we
conclude that there were no serious due process concerns that
required application of a heightened standard, even
considering the Valensia factors, to the extent that the
sentence was based on the loan that was the subject of the
conviction. Aaron admitted the facts of the fraud that caused
the loan to be made. He also knew the size of the loan, and
that defined the potential extent of the loss. In that situation
it was not necessary to apply a heightened standard to protect
against a violation of due process.
2. Losses from Other Loans
The sentence imposed by the district court was not
entirely based on the loan that was the subject of the
conviction, however. The district court also used losses from
other loans to calculate Aaron’s total offense level, increasing
the total offense figure by an additional 8 levels. Based on
the principles articulated above, the clear and convincing
standard of proof should have been applied to determine the
amount of the losses from the other loans.
Aaron did not plead guilty to fraud for the other loans.
He was not charged with a conspiracy, nor did he admit in his
plea agreement that he had participated in a scheme to
defraud involving multiple transactions. Losses from these
loans were based on conduct for which he was not convicted.
Aaron did not have a guilt-phase trial where the government
12 UNITED STATES V. HYMAS
was required to prove beyond a reasonable doubt that he
committed fraud on the other loan applications.
Similar to the analysis of Count Four, the fifth and sixth
Valensia factors support the use of the heightened standard
for the other loans, even though the first four factors may not
require that result. Inclusion of the losses from the other
loans ultimately resulted in an increase of 8 offense levels,
from 10 (based on the loss from the Count Four loan by itself)
to 18. This additional 8-level increase more than doubled the
Guidelines imprisonment range. Under our precedents, we
conclude that the district court should have employed a
heightened clear and convincing standard of proof with
regard to the losses from those other loans.
In United States v. Munoz, for example, we held that the
district court was required to use the clear and convincing
evidence standard when calculating losses from uncharged
conduct. 233 F.3d 1117, 1127 (9th Cir. 2000), superseded on
other grounds by statute as stated in United States v. Van
Alstyne, 584 F.3d 803, 817–18 (9th Cir. 2009). Two
defendants were indicted on ten counts but convicted of only
two counts of fraud in connection with specific sales of bus
shelters as part of a Ponzi scheme. Id. at 1123. The district
court, applying a preponderance of evidence standard,
included within the loss calculation the losses from hundreds
of sales made to other investors not included in the two
counts of conviction. Id. at 1124. We vacated the sentence
and remanded for resentencing, holding that, while the sales
to the other investors were relevant conduct, the heightened
standard of proof should have been used because the
enhancement had a “disproportionate effect on the sentence.”
Id. at 1127. The same is true here.
UNITED STATES V. HYMAS 13
The district court in this case concluded that the
appropriate standard of proof was preponderance of evidence
based upon a line of cases that applied that lower standard
when determining the extent of losses from a conspiracy.
The decisions cited by the district court – Treadwell, 593 F.3d
at 1001; Berger, 587 F.3d at 1048–49; and United States v.
Armstead, 552 F.3d 769, 777 (9th Cir. 2008) – hold that
where losses are based on the extent of a criminal conspiracy,
those losses need not be proven by clear and convincing
evidence because the defendants had the opportunity at trial
to challenge evidence of the extent of the fraud conspiracy.
In this case, however, the government did not charge
Aaron with a conspiracy to defraud that included the other
acts of fraud alleged in the indictment. He only pled guilty to
one count of fraud regarding a specific loan transaction. He
had neither need nor opportunity to contest the alleged
conspiracy, and he cannot be sentenced using the lower
standard as if he had challenged a conspiracy charge.
To be sure, the allegations against the Hymases bore
similarities to a conspiracy, and the multiple counts
resembled each other by alleging similar misrepresentations
in similar loan applications. But the representations were not
identical in all applications. Most of the losses included in
the district court’s calculation were based on loans that did
not contain the specific false representations in Count Four
acknowledged in the Plea Agreement. Even as to the loan
applications that included the same statements, Aaron argues
with justification that his admission that the statements were
false in 2007 did not mean he admitted that those same
statements were false in earlier years, before the family’s
financial circumstances deteriorated.
14 UNITED STATES V. HYMAS
The government argues that, even if the district court
applied the wrong standard, its decision to impose a 24-month
sentence was harmless beyond a reasonable doubt because the
sentence varied significantly below the guidelines range. We
decline to engage in such guesswork. It is true that the
district court might have made the same loss calculation
applying the clear and convincing standard, but it might not
have, either. The court made a point of stating that it was
applying the preponderance standard, and the court’s
emphasis on the standard could imply that a higher standard
would have resulted in a different loss calculation.
Sometimes a district court says in finding a loss amount that
it would reach the same result under either standard, but the
court in this instance did not.
Similarly, the district court might have imposed the same
sentence even if it had calculated a lower loss figure under
the clear and convincing standard and, as a result, a lower
sentencing Guidelines range, but that possible outcome is too
uncertain for us to rely upon it. It is also inconsistent with
our normal approach to sentencing. “[T]he district court must
correctly calculate the recommended Guidelines sentence and
use that recommendation as the ‘starting point and initial
benchmark.’” United States v. Munoz-Camarena, 631 F.3d
1028, 1030 (9th Cir. 2011) (per curiam) (quoting Kimbrough
v. United States, 552 U.S. 85, 108 (2007)) (internal quotation
marks omitted). We cannot say on this record that the failure
to calculate the correct recommended Guidelines sentence
was harmless error because the district court’s analysis for the
extent of the variance was not based on the correct range. Id.at 1030–31. Accordingly, we vacate Aaron Hymas’s
sentence and remand the matter to the district court. On
remand, the court should apply the clear and convincing
standard in calculating losses attributable to the other loans.
UNITED STATES V. HYMAS 15
3. Calculation of Losses from Loans
Aaron also argues that the district court erred by using the
amount realized from deficiency sales to calculate the losses
from the loans. We conclude that the district court correctly
calculated the losses by taking the principal amount of the
loan and subtracting any credits from the subsequent sale of
the property. See United States v. Morris, 744 F.3d 1373 (9th
Cir. 2014). Similarly, the district court did not err by
considering the losses submitted by successor lenders who
had purchased the loans. The losses to those lenders are
considered reasonably foreseeable pecuniary harm because
the lenders purchased the loans “without an awareness of
[their] true value due to . . . fraud.” United States v. Yeung,
672 F.3d 594, 603 (9th Cir. 2012), overruled on other
grounds by Robers v. United States, 572 U.S. –, 134 S. Ct.
1854 (2014)). Although Yeung examined proximate cause in
the context of the Mandatory Victims Restitution Act,
18 U.S.C. § 3663A, we see no reason why its reasoning
would not apply to determine losses in the sentencing context.
III. Restitution Order
The court reviews de novo the legality of a restitution
order, including the district court’s valuation method. Yeung,
672 F.3d at 600. Factual findings supporting an order of
restitution are reviewed for clear error. United States v. Chao
Fan Xu, 706 F.3d 965, 993 (9th Cir. 2013).3
3
Tiffany did not file objections to the PSR. The failure to object might
otherwise call for review under the “plain error” standard. We need not
consider that possibility, however, because we conclude that the district
court did not err at all. For a similar reason, we reject Tiffany’s argument
alleging ineffective assistance of counsel, discussed below at 17–18.
16 UNITED STATES V. HYMAS
The Mandatory Victims Restitution Act requires that
defendants be ordered to pay restitution to any victim
“directly and proximately harmed as a result of the
commission of an offense.” 18 U.S.C. § 3663A(a)(2).4 The
district court properly determined that Aaron owed
$1,520,296.77 and Tiffany owed $667,505.42 in restitution.
While the district court limited the restitution Tiffany
owed to the amount in the loan applications submitted in her
name, the court held Aaron responsible for losses resulting
from loan applications submitted under the names of Tiffany
and his brother-in-law in addition to the loans in his name
because he orchestrated all the loans. The testimony in the
record supports the district court’s findings that Aaron was
responsible for making the fraudulent statements on the loan
applications even if he himself did not sign them.
Additionally, Aaron’s guilty plea conviction concerned a loan
in Tiffany’s name.
The record also supports the district court’s
determinations that the lenders listed in the PSR suffered
losses that were directly and proximately caused by the
Hymases’ conduct. The Hymases argue that successor
lenders were not victims entitled to restitution. This court has
already considered and rejected the argument that the sale of
loans to successive lenders breaks the chain of causation
between fraud on a loan application and the resulting loss.
The Hymases’ fraud on the original loan application
proximately harmed each successor lender because that
4
The standard of proof for restitution proceedings is preponderance of
the evidence, as opposed to the standard of clear and convincing evidence
required for a sentencing enhancement with a disproportionate impact.
18 U.S.C. § 3664(e).
UNITED STATES V. HYMAS 17
lender purchased the loan “without an awareness of its true
value due to [the] fraud.” See Yeung, 672 F.3d at 603.
The Hymases also argue that the loan servicers listed in
the PSR did not themselves suffer losses. This argument was
not presented to the trial court, and it cannot be raised for the
first time on appeal. See United States v. Napier, 463 F.3d
1040, 1045–46 (9th Cir. 2006). Although we may consider
newly-raised issues that are “purely legal,” this argument is
not purely legal because it requires fact-finding as to the
terms between the servicing entities and the successor holders
of the loan.5
The Hymases further argue that the amount of restitution
is too high because the drop in the market, not the fraud on
the loan applications, was responsible for the lenders’ losses.
The Supreme Court has squarely rejected this argument,
concluding that fluctuations in property values are “common”
and “foreseeable,” and that a drop in the market does not
sever the link between the fraud and the lenders’ losses.
Robers, 134 S. Ct. at 1859.
In connection with her challenge to the restitution order,
Tiffany argues that her appointed counsel in the proceedings
below was ineffective by failing to object to the loss and
restitution amount presented in the PSR. Although it seems
doubtful that trial counsel’s performance could have been
deficient because the district court substantially decreased her
5
The servicing entities, even if they do not own the loan outright, may
be considered to be the entity “designated by the owner” to receive the
restitution. 18 U.S.C. § 3663(b)(1)(A) (The court may order a defendant
to “return the property to the owner of the property or someone designated
by the owner.”)
18 UNITED STATES V. HYMAS
restitution amount from the figure proposed in the PSR, we
need not address that question because we have already
concluded that the district court did not err with respect to
calculating Tiffany’s restitution amount. Trial counsel’s
objection would not have produced a different result. See
Walker v. Martel, 709 F.3d 925, 942 (9th Cir. 2013).
IV. Conclusion
We vacate Aaron Hymas’s sentence and remand to the
district court for further proceedings. We affirm the district
court’s restitution order as to both defendants.
AFFIRMED IN PART, VACATED AND
REMANDED IN PART.