United States v. Leonard R. Fazio ( 2007 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 06-3028
___________
United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the Southern
* District of Iowa.
Leonard R. Fazio, *
*
Appellant. *
___________
Submitted: January 10, 2007
Filed: May 29, 2007
___________
Before WOLLMAN, BEAM, and MELLOY, Circuit Judges.
___________
BEAM, Circuit Judge.
Leonard Fazio appeals his conviction and sentence for one count of mail fraud
and two counts of wire fraud. 18 U.S.C. §§ 1341, 1343. We affirm in part, reverse
in part, and remand for further proceedings.
I. BACKGROUND
Fazio is a licensed real estate broker with his own RE/MAX franchise in Des
Moines, Iowa. In this capacity, Fazio also attended to third-party properties for out-
of-state mortgage companies, concerning himself with foreclosures, relocations and
repossessions. The mortgage companies directed him to check on property
occupancy, to get possession of properties with "cash-for-keys" deals, and to provide
the selling mortgage company an opinion on the estimated value of a particular
property. Homecomings Financial was one of the companies that hired Fazio to
perform such third-party work. Homecomings would either enlist Fazio to sell the
third-party property "as is," or would direct Fazio to rehabilitate the property by hiring
a contractor to do painting and repairs. If rehabilitation was necessary, Fazio would
hire and pay the contractors, and submit reimbursement requests to Homecomings.
Fazio submitted several such requests for reimbursement to Homecomings,
which requests provide the basis for the mail fraud charges. According to Fazio's
employees (who were government witnesses), Fazio directed them to fabricate or
inflate bills for reimbursement. Allison Bice, Fazio's office manager from 2001
through 2004, testified that Fazio directed her to inflate bills, and to "get as much
money out of Homecomings as . . . possibl[e]." Bice testified that Fazio felt the third-
party property business was not terribly profitable, and this was a way to recoup
losses. Heather Dyar, who worked as a bookkeeper in the office, testified that when
she noticed that Bice's invoices were inflated, she expressed concern to Fazio that a
crime was being committed. Fazio brushed her off. He told her that no one could tell
him what to charge for his services, and that this was not an uncommon practice in the
third-party property market. Diana Pastor, one of Fazio's real estate agents, testified
that Fazio had told Bice to bill Homecomings the "maximum" amount–meaning the
highest amount that Homecomings would pay for a particular service, based on a list
supplied to the local agents. Fazio does not contest that Homecomings was billed
excess amounts, and in some cases for work not performed by contractors. However,
Fazio contends that he did not know that Bice was submitting inflated bills and that
he did not direct her to do so.
The wire fraud charges stem from Fazio's handling of the listing for a
Homecomings' acreage in New Virginia, Iowa. Homecomings retained Fazio to do
a broker price opinion on the property, and he opined that the property was worth
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$40,000 "as is" or $80,000 if rehabilitated. Homecomings opted to sell it without
rehabilitation, and directed Fazio to list it for $59,900. Fazio attempted several times
to buy it for himself, but each offer was summarily rejected by Homecomings. Fazio
directed Dyar, who was assisting him with the electronic offer submissions, to call
Homecomings and ask why the offers were being rejected. A Homecomings
representative told Dyar that it was company policy not to sell to listing agents. Dyar
testified that upon hearing this news, Fazio directed her to submit offers to
Homecomings in Candy Olson's name. Olson was Fazio's girlfriend at the time.
Homecomings accepted "Olson's" offer to buy the property for $48,000. Shortly after
Homecomings accepted this offer, but before closing, Fazio marketed the property and
secured an offer from John Jordan to buy the property for $110,000. The sale required
some repair work to be performed, including trash removal, roof repairs, new
carpeting, painting and drywall work.
Olson testified that she did not know that Fazio had submitted an offer in her
name. She testified that he told her that she signed papers with regard to the offer
when she was in the hospital recovering from brain surgery, but she did not remember
doing so. Other witnesses testified that Olson knew all along that Fazio was buying
the property in her name, and that she hoped to profit from it. And in fact, she did
profit. Fazio secured a loan through his realty company's line of credit for
approximately $45,000 for Olson's November purchase of the New Virginia real
estate. Fazio intended to pay off the loan and realize a substantial profit from the
Jordan transaction. Olson testified that he offered to pay her $2,000 for letting him
use her as a conduit.
Unfortunately for Fazio, his relationship with Olson soured in the midst of these
various transactions. Olson attended the closing on the New Virginia property alone
and has never turned over the proceeds of the transaction to Fazio. Her personal
attorney testified that she kept $31,000 of the proceeds for herself and gave him the
remainder to keep in his trust account. The attorney testified that he made a few
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disbursements from the account for bills which needed to be paid (including Olson's
tax obligations as a result of the transaction, and $2,000 in reimbursements to Jordan
for deficiencies in the property). The attorney testified that he wrote a check to the
United States Marshal's office for the remaining balance in the account.
A jury convicted Fazio of two counts of wire fraud in connection with the sale
of the New Virginia land, and one count of mail fraud for an inflated reimbursement
request. Specifically, the jury found that Fazio submitted by mail a fraudulent request
for reimbursement for $1,650 for work done by a contractor to remove trash from a
property in Des Moines. The two counts of wire fraud related to the offer Fazio faxed,
purportedly on Olson's behalf, and the money wired to Homecomings at closing, also
allegedly on Olson's behalf.
After disposal of post-trial motions, including a motion for new trial, the district
court sentenced Fazio to twenty-four months' imprisonment, imposed a $40,000 fine,
and ordered $58,1501 in restitution to Homecomings. Fazio appealed. Shortly
thereafter, Fazio's counsel discovered that the trial judge's wife was the first cousin of
Olson's buyer Jordan, who had also been a government trial witness. Counsel also
discovered that the trial judge had commented to Jordan, after trial but prior to
sentencing, that Fazio would likely receive jail time for breaking the law.
Using this "newly discovered evidence," Fazio asked the district court, a second
time, for a new trial. The trial judge immediately recused himself and the matter was
referred to this court.2
1
The district court credited Fazio for the amount that Olson's attorney paid to
the United States Marshal's office, $45,035, and ordered Fazio to pay the balance,
$13,115. The government indicated at sentencing that the $45,035 would be remitted
to Homecomings.
2
Fazio requested that this court remand for a hearing on the recusal issue in the
district court, which request we denied.
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On appeal, Fazio contends that he is entitled to a new trial because of the trial
court-witness relationship or, at least, because the trial judge should have recused
himself prior to pronouncing the sentence. Fazio additionally argues that the district
court should have ordered a pre-trial evidentiary hearing on his assertion that a
conflict of interest existed because his initially retained attorney was married to an
assistant United States Attorney (AUSA). With regard to the trial, Fazio argues there
was insufficient evidence to support the guilty verdicts, that there were evidentiary
errors at trial, and that there were several errors with regard to his sentence.
II. DISCUSSION
A. Recusal
Fazio argues that the trial judge's failure to inform the parties that his wife's first
cousin was a government witness seriously affected the fairness and integrity of his
trial. He also asserts that at a minimum, the trial judge should have recused himself
prior to sentencing because of the comment he made that Fazio would receive jail time
for breaking the law.
It is unclear what our standard of review should be for this issue, which has two
separate components: (1) the district court's implicit decision during trial not to
disclose his relationship to Jordan or recuse, and (2) the district court's failure to
recuse for the sentencing proceeding after making the "jail" comments to Jordan.
Fazio seems to admit that we review the second component for plain error. We hold,
however, that the first component–the district court's implicit decision not to disclose
and recuse–should be reviewed for an abuse of discretion, which would be our
standard had this decision been made on the record. See Moran v. Clarke, 296 F.3d
638, 648 (8th Cir. 2002) (en banc) (abuse of discretion standard for district court's
decision not to recuse).
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We find that the district court did not abuse its discretion in failing to recuse
during Fazio's trial. Fazio concedes that the trial judge was not required by 28 U.S.C.
§ 455(b) to disclose that his wife was a cousin to one of the witnesses. Section 455
requires a judge to recuse himself when a material witness is related within the third
degree to the judge or his spouse. Id. § 455(b)(5). A first cousin is considered the
fourth degree of relationship. However, Fazio argues that section 455(a) does require
recusal in these circumstances. Section 455(a) provides that any judge "shall
disqualify himself in any proceeding in which his impartiality might reasonably be
questioned." Id. § 455(a). Fazio cites our decision in Moran in support of his
arguments.
In Moran, one of the defendants admitted at her deposition that she and the
district court judge knew each other socially for over twenty-one years, and during
those years they had visited one another's homes on various occasions. Upon learning
of this relationship, the plaintiff asked the district court to recuse, which request the
district court denied without comment. On appeal, we noted that section 455(a) does
not require scienter, or an actual bias, but instead it contains a purely objective
standard. Moran, 296 F.3d at 648. We reiterated that the key ingredient in a section
455(a) recusal case is avoidance of the appearance of impropriety, as judged by
whether the average person on the street might question the judge's impartiality. Id.
In light of the longtime and relatively close social relationship between a party to the
proceeding and the trial judge, we remanded to the district court for a more thorough
(than an order without comment) consideration of the recusal issue. Id. at 649.
Moran is not dispositive for a number of distinguishing reasons. First and
foremost, the questioned relationship was between the trial judge and a party, not
simply a witness. And despite Fazio's attempts to paint Jordan as a material witness
for the government, an examination of the record belies this assertion. Jordan's
testimony was actually more favorable to Fazio than the government. He testified that
he bought the New Virginia property for its listed price of $110,000, that he was quite
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happy with the property, and that it was his understanding that the property was an
investment for both Olson and Fazio. The key issue in the fraud counts relating to the
New Virginia property was whether Olson was a willing participant in the transaction.
Jordan's testimony helped Fazio in that regard. Jordan also testified that he was a
longtime friend of Fazio's. His testimony, including cross-examination and redirect
examination consisted of twenty-six pages within a voluminous transcript. Jordan's
relationship to the Fazio trial is much less significant than the Moran party was to that
proceeding.
Moran is also distinguishable because the record suggested a "fractious
relationship between the district court and Moran's attorneys." Id. at 649. A careful
review of the record suggests no such conflict in Fazio's trial proceedings. We admit
that the trial court's handling of this matter was wanting. Ideally, once the trial judge
realized that one of the witnesses was his wife's cousin, he should have disclosed the
possible conflict to the parties. See id. ("We find particularly worrisome the district
court's failure to disclose this conflict himself, as permitted by section 455(e)."). In
the district court's defense, it is quite possible that he was unaware of the issue until
after trial started. Nonetheless, disclosure would have been preferable, regardless of
whether doing so during trial would have been cumbersome. However, we cannot say
that the trial judge's failure to do so was an abuse of discretion.
Fazio also complains that the pre-sentence comments the trial judge made to
Jordan require that he be disqualified from the sentencing of Fazio. As noted above,
we review this issue for plain error. Before an appellate court can correct an error not
raised at trial, it must find that there was plain error that affected substantial rights.
Even then, an appellate court may exercise its discretion to notice the error only if the
error seriously affected the fairness, integrity, or public reputation of the judicial
proceedings. United States v. Pirani, 406 F.3d 543, 550 (8th Cir.), cert. denied, 126
S. Ct. 266 (2005). The judge, in response to Jordan's inquiry, told Jordan that Fazio
would get jail time because he broke the law. We find no error in the district court's
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failure to recuse for sentencing. Instead, we find that this comment, from an
experienced federal trial judge, merely reflected the reality of the situation in light of
the federal Sentencing Guidelines. See, e.g., United States v. Ture, 450 F.3d 352, 357
(8th Cir. 2006) (reversing district court's decision to give only probation when the
Guidelines called for at least twelve months of incarceration); United States v. Givens,
443 F.3d 642, 645-46 (8th Cir. 2006) (rejecting the district court's sentence of "time
served" when defendant had served no time and a Guidelines range of twenty-four to
thirty months applied).
In addition to the two-part recusal issue, there is one more matter we must
consider before moving on to Fazio's remaining arguments. The recusal issue was
first raised in Fazio's second motion for new trial, based on newly discovered
evidence, filed with the district court after the notice of appeal had been filed. Of
course, once the notice of appeal was filed, the district court was without jurisdiction
to take any further action in the case. As a result, the motion for new trial is still
pending. In light of our decision that the district court did not err by not recusing
during trial or at sentencing, we find that the motion for new trial should be denied.3
In view of the fact that we are also remanding to the district court for reasons
discussed infra, we direct the district court to deny the still-pending motion for new
trial.
B. Conflict of Interest
A few months after Fazio was indicted, he raised an allegation regarding a
potential conflict of interest through a motion to dismiss. Fazio argued his Sixth
Amendment right to effective assistance of counsel was adversely implicated because
3
We also doubt that the current offering is really "newly discovered evidence."
We question whether the relationship was not something that could have been
discovered prior to trial, especially considering Jordan's friendly relationship with
Fazio.
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his initially retained defense counsel was married to an AUSA who was allegedly
involved in the early investigation of the criminal charges against him. The district
court held a hearing on the motion to dismiss and denied it without an evidentiary
hearing, finding that the allegations of conflict of interest were too speculative and
that Fazio could point to nothing in the record indicating that Fazio's case was
adversely affected by the relationship. The court also found that no substantive
information about the case was exchanged by the AUSA and her husband defense
attorney.
We review the district court's refusal to hold an evidentiary hearing on a
potential conflict of interest for an abuse of discretion, Covey v. United States, 377
F.3d 903, 909 (8th Cir. 2004), and find none. We agree with both the government and
the district court that the conflict claims were too speculative to warrant an evidentiary
hearing. Fazio's current counsel was retained within weeks after his indictment. And
though the AUSA in question was the attorney who took the initial call indicating that
a local real estate agent might be engaged in unlawful practices, the AUSA instructed
the caller to contact the FBI. When the matter was referred from the FBI back to the
United States Attorney's office, the AUSA immediately recused herself from the
matter. There was no evidence that any substantive information about the case passed
between Fazio's initial defense counsel and his AUSA spouse. Accordingly, we find
no abuse of discretion and reject Fazio's arguments on this point.
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C. Trial Errors
Fazio argues that there was insufficient evidence to support the verdict and that
the verdict was contrary to the weight of the evidence. For a sufficiency challenge,
we view the evidence, and all of its inferences, in the light most favorable to the
verdict. United States v. Lee, 451 F.3d 914, 916 (8th Cir. 2006). We reverse only if
no reasonable jury could find Fazio guilty of the charges. United States v. Walker,
393 F.3d 842, 846 (8th Cir.), cert. denied, 126 S. Ct. 463 (2005). While Federal Rule
of Criminal Procedure 33(a) authorizes a district court to "vacate any judgment and
grant a new trial if the interest of justice so requires," a motion for new trial based on
the weight of the evidence is generally disfavored, and the district court's authority to
grant a new trial should be exercised sparingly and with caution. United States v.
Johnson, 474 F.3d 1044, 1050-51 (8th Cir. 2007).
Viewing the evidence in the light most favorable to the guilty verdict, we find
that a reasonable jury could have convicted Fazio of the charged offenses. With
regard to the mail fraud,4 Bice testified that Fazio directed her to inflate billings. Dyar
testified that she questioned Fazio about the problem, but that he brushed her off by
essentially saying that everybody does it. Pastor also testified that Fazio had directed
Bice to get the most money out of Homecomings as possible. Fazio's counsel attacked
Bice's credibility during the defense case, but the jury obviously believed Bice, at least
in part. It was entitled to do so, and was certainly not unreasonable in doing so.
Similarly, with regard to the wire fraud and the New Virginia property, Candy
Olson testified that she did not know that Fazio was buying the property in her name,
that she did not sign the faxed offer, and that she did not understand what was going
4
We have also considered, and reject, Fazio's assertion that there was no
evidence that the mail was used to transmit the documents at issue in Count 2. We
agree with the government that there was sufficient evidence of use of the mail.
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on with this property until she closed on the property. Pastor testified that she thought
the property was worth much more than Fazio's submitted price opinion, and that
Fazio told her he was going to price the property low and "steal" it from
Homecomings. In his defense, Fazio assiduously presented evidence that impugned
Olson's and Pastor's credibility and contradicted their assertions. We concede that
there were numerous inconsistencies between Olson's testimony and other evidence
in the case. However, to convict Fazio of these charges, the jury had to find that
Olson was an unwilling participant in the transaction. The jury was entitled to believe
the testimony of Olson in this regard, and it apparently did so. We cannot say that this
was unreasonable.
For mostly the same reasons, we do not fault the district court for refusing to
exercise its limited discretion to grant Rule 33 relief. There was evidence to support
the verdict. It may or may not have been the same verdict we would have rendered
had we sat on the jury. However, what the district court, or appellate court, thinks of
a defendant's guilt or innocence is of little import if there is sufficient evidence to
support the jury's guilty verdict. The jury watched and heard each witness testify,
viewed the documentary evidence, and came to a conclusion about who and what to
believe. Fazio contends that because the jury acquitted him on some of the counts, it
must have had reasonable doubt on the remaining counts. We disagree, and believe
instead that the jury carefully performed its duty by not simply rendering a blanket
verdict on all counts. We, too, have carefully examined the record and find no error
that should have been rectified by the operation of Rule 33.
We next turn to Fazio's allegations of error with regard to various evidentiary
rulings. We review the trial court's evidentiary rulings for an abuse of discretion.
United States v. Edelmann, 458 F.3d 791, 809 (8th Cir. 2006) (bad act evidence);
United States v. Chauncey, 420 F.3d 864, 875 (8th Cir. 2005) (defendant's proffered
relevant evidence), cert. denied, 126 S. Ct. 1480 (2006). Fazio argues that there was
prejudicial error when the jury heard evidence of other bad acts, specifically, that he
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had submitted inflated claims for repayment outside of the times alleged in the
indictment and that he committed an ethical violation. Prior to trial, the district court
sustained Fazio's counsel's motion in limine to exclude other "bad act" evidence.
However, on direct examination, Bice testified about occasions wherein Fazio had
directed her to submit inflated bills, and some of those instances were outside of the
charged time frame. The district court gave a cautionary instruction immediately after
Bice was finished testifying. The second incident occurred during Pastor's testimony,
wherein she testified that she thought it was an ethical violation for Fazio to advertise
the New Virginia property as his own listing before Olson had closed on the purchase
of the property. Following an objection and discussion outside of the jury's presence,
the district court instructed the jury to disregard Pastor's answer regarding the ethical
violation.
The government argues that it did not purposefully elicit testimony in violation
of the motion in limine, that the evidence was relevant to give the jury a full picture
of the criminal conduct, and that any error was adequately cured by the district court's
prompt instructions. We agree with the government's characterization of this evidence
and find that the district court's remedy cured any possible prejudice. Bice testified
that she worked for Fazio from February 2001 through March 2004, and that during
that time period, she routinely submitted inflated bills to Homecomings. Pastor
volunteered extra information when asked about whether she ran an ad for the New
Virginia property. The district court took prompt remedial action with regard to both
comments, and further gave the jury an "other bad acts" instruction in the final jury
instructions. No abuse of discretion occurred with regard to this evidence.
Fazio's final argument with regard to trial error is that he was denied his Sixth
Amendment right to testify and present a defense when the district court precluded
him from testifying about the sexual orientation of a previous witness, who was also
one of his former employees. Fazio testified on direct examination about how he
came to hire this agent:
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And without sounding too egotistical, she was a terrible Realtor at Iowa
Realty. A lot of it was her lifestyle. A lot of it she just didn't come
across good to people. She's very smart, very educated, and the most she
ever made in real estate was $16,000, and I just knew she had more
potential than that.
On cross-examination, the government followed up, asking Fazio if this agent
was unsuccessful before coming to work for him, and Fazio reiterated that she "wasn't
doing very well" at her former job, but that she has become a productive agent with
his training. On redirect, Fazio's counsel again began questioning him about this
agent's "lifestyle issues." At this point the government objected, and after some
colloquy with the trial judge, the court excluded it as irrelevant. Counsel for Fazio
argued that the government opened the door to this line of reasoning, and that Fazio
was trying to enhance his own credibility by pointing out that he hired her in spite of
her problems.
Subject to reasonable restrictions, the Sixth Amendment does grant the accused
the right to present relevant evidence in his favor. Chauncey, 420 F.3d at 875. The
district court found, however, that the proffered evidence was not relevant. We agree.
We also find that Fazio did manage to testify that the agent had "lifestyle" issues, a
common euphemism for referring to someone with a homosexual orientation. And,
Fazio's stated reason for wanting to introduce the evidence–to bolster his own
credibility by showing the jury that he hired the agent because he thought she had
good sales potential despite her previous low sales performance–was satisfied by his
other testimony. Fazio clearly testified that the agent had been a low performer at
Iowa Realty when he hired her. We, like the district court, fail to see the relevance of
Fazio's opinion that the reason she had not previously been a successful agent was
somehow related to her sexual orientation. This contention is without merit.
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D. Sentencing
Fazio makes several arguments relating to his sentence. He first contends that
the district court wrongly found facts to support the amount of loss and the abuse of
trust enhancement in violation of the Sixth Amendment, the Due Process Clause, and
United States v. Booker, 543 U.S. 220 (2005). We have repeatedly rejected similar
arguments since the Supreme Court decided Booker, and will do so in this instance
as well. E.g., United States v. Hines, 472 F.3d 1038, 1040 (8th Cir. 2007) (per
curiam) (noting that under Booker and this court's post-Booker precedent judicial fact-
finding is permissible at sentencing so long as the district court understands that the
Sentencing Guidelines are advisory). Because the district court treated the Guidelines
as advisory, Fazio's argument fails.
Fazio next alleges that the district court's determination of total loss in the case,
which impacted his Guidelines range, was incorrect. We review the district court's
interpretation of loss as used in the Guidelines de novo, and its calculation of loss for
clear error. United States v. Craiglow, 432 F.3d 816, 820 (8th Cir. 2005). Under the
clearly erroneous standard, we will affirm the trial court's decision unless it is not
supported by substantial evidence, was based on an erroneous view of the law, or we
are left with a firm conviction that a mistake has been made after reviewing the entire
record. United States v. Wallraff, 705 F.2d 980, 987 (8th Cir. 1983).
The district court calculated the amount of loss as follows: Fazio/Olson
purchased the New Virginia property for $48,000, and then prior to closing on this
sale with Homecomings, obtained a subsequent offer to purchase for $110,000–a
difference of $62,000. The court deducted a total of $3,500 for roofing repairs and
the new carpet installed at the New Virginia property. The court further deducted
$2,000 for a payment made to Jordan for additional repairs after he bought the
property. Accordingly, the loss calculation for the wire fraud was set at $56,500. The
district court then added in $1,650 for the mail fraud reimbursement count. The final
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loss to Homecomings was calculated at $58,150. Because the loss was between
$30,000 and $70,000, Fazio's offense level was increased by six levels. United States
Sentencing Guidelines Manual § 2B1.1(b).
Fazio argues that he spent close to $25,000 on improvements that should be
deducted from the loss calculation. The district court rejected Fazio's assertion that
he spent this much on repairs to the property, finding that the only repairs to the
property supported by the record were for roof repair and new carpeting, which he
calculated to be $3,500.
We agree with Fazio that the record supports more than $3,500 in repairs. The
roof repairer testified at trial that he billed Fazio approximately $4,600 and was paid
this amount. Olson testified that trash removal, painting, and drywall work were
performed on the property before it was sold to Jordan. Jordan also indicated that
when he first looked at the property, there was much trash (old cars and appliances)
that needed to be removed. So, it seems clear that the district court's credit to Fazio
of $3,500 is not supported by substantial evidence in the record. The roof repair alone
was more than that, and it is undisputed that this amount was paid by Fazio. However,
assuming arguendo that all of Fazio's assertions about the cost of repairs to the New
Virginia house are true–$25,000 as advocated in his brief–this does not change the
Guidelines calculation of between $30,000-$70,000 in loss. Subtracting $25,000 from
$58,150 still leaves a loss calculation of $33,150.
Thus, in order for us to reverse on this issue, we must agree with Fazio's other
arguments about the district court's loss calculation. In this regard, Fazio argues that
he personally received no benefit from the New Virginia sale. We agree that the
record is clear that Fazio in no way profited from the New Virginia transaction. He
is still paying on the original $45,000 note from Polk County Bank. But that does not
mean Homecomings did not suffer a loss. Generally, loss under the Guidelines is the
greater of actual or intended loss, and the court need only make a reasonable
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estimation. United States v. Scott, 448 F.3d 1040, 1044 (8th Cir. 2006). Fazio was
convicted by the jury for misrepresenting to Homecomings that Olson bought the
property, when it was actually him, and for failing to disclose that he had another offer
for substantially more money before the Homecomings-Olson transaction closed. If
relations between Olson and Fazio had not soured, he very likely would have made
a significant profit on the transaction. The fact that due to his personal circumstances
he did not profit from the transaction does not preclude Homecomings from suffering
either an actual or intended loss.
Fazio also argues that the loss calculation fails to take into account the amount
of money that the quick sale to Olson saved Homecomings, if for example, it had been
required to market the property for an extended period of time. Fazio's arguments fail
because we cannot fault the district court for failing to speculate about the amount of
money that Homecomings may have saved because of the quick sale to Olson.
We grant particular deference to the district court's loss calculations because of
its "unique ability to assess the evidence and estimate the loss." Id.; U.S.S.G. § 2B1.1,
cmt. n. 3(C). We find that the district court has made a reasonable estimation of loss
in this case, despite our conclusion that Fazio should have been credited with more
that $3,500 in repairs to the property. All of the district court's remaining conclusions
are supported by substantial evidence in the record, and the resulting estimation of
loss between $30,000 and $70,000 is reasonable. Accordingly, we deny Fazio's
arguments on this point.
Fazio next challenges the district court's application of a sentencing
enhancement for an abuse of a position of trust. We review the district court's
conclusion that Fazio occupied a position of trust for clear error. United States v.
Erhart, 415 F.3d 965, 972 (8th Cir. 2005), cert. denied, 126 S. Ct. 1181 (2006). A
position of public or private trust is characterized by professional or managerial
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discretion, and the abuse of trust enhancement applies where the offender has abused
discretionary authority entrusted to the defendant by the victim. Id.The district court applied the enhancement because of Fazio's position as a real
estate agent retained by Homecomings, an out-of-state company relying on him to be
honest and forthright with them. In Erhart, we affirmed the application of an
enhancement as applied to a chiropractor who submitted inflated claims to insurance
companies. Id. at 972. We rejected the Erhart defendant's argument that the insurance
companies permitted him little professional discretion because they closely scrutinized
his billings, noting that the fraud "continued as it did precisely because the insurance
companies trusted Erhart and the accuracy of the claims that he supplied them." Id.Similarly, Fazio argues that Homecomings set many of the parameters of their
business relationship, and that he therefore did not occupy a position of trust. We
disagree and find that the district court did not clearly err in applying the abuse-of-
trust enhancement. Like the chiropractor in Erhart, Fazio was responsible for
representing past events truthfully to a remote reimbursing company. And, with
regard to the New Virginia property, Homecomings clearly indicated that it would not
sell to its listing agents. Fazio easily sidestepped that requirement by filling in another
person's name on the offer, when he was obviously the person buying the New
Virginia property. Accordingly, we agree with the district court that Fazio occupied
and abused a position of trust.
Fazio next argues that his sentence was unreasonable. A sentencing court acts
unreasonably if it fails to consider a matter of relative importance, gives undue weight
to an improper or irrelevant matter, or arrives at a sentence outside of the range
justified by the facts of the case. United States v. Medearis, 451 F.3d 918, 920 (8th
Cir. 2006). Fazio argues that the district court gave significant weight to the following
improper or irrelevant factors: acquitted conduct, his failure to admit wrongdoing, and
submitting inconsistent financial statements to the probation office.
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We note that the district court followed the sentencing procedure set forth in United
States v. Haack, 403 F.3d 997, 1002-03 (8th Cir.), cert. denied, 126 S. Ct. 276 (2005),
in fashioning Fazio's sentence. Based on many factors, including the loss calculation
and the abuse-of-trust enhancement, the district court determined that the Guidelines
range was eighteen to twenty-four months. The district court considered the factors
set forth in 18 U.S.C. § 3553(a), and sentenced Fazio to twenty-four months–the high
end of the Guidelines range.
Our reasonableness review is akin to the abuse of discretion standard.
Medearis, 451 F.3d at 920. The sentencing transcript reflects that the district court did
consider all of the things that Fazio complains about. However, it was within its
discretion to do so. Accordingly, we find that the court did not act unreasonably in
refusing to sentence Fazio below the Guidelines range. We find no abuse of discretion
in the district court's ultimate sentence of twenty-four months' imprisonment.
Finally, Fazio contends that the district court erred in ordering him to pay
$13,115 in restitution to Homecomings. In determining whether to order restitution,
the district court shall consider the amount of loss sustained by the victim, the
financial resources and earning ability of the defendant, and any other factors deemed
appropriate by the district court. United States v. Berndt, 86 F.3d 803, 808-09 (8th
Cir. 1996).
The district court set the restitution amount the same as the loss
amount–$58,150, but reduced that award by the amount that Olson's attorney paid to
the United States Marshal's office, $45,035, and ordered Fazio to pay the balance,
$13,115. We have previously found that in setting the loss amount at $58,150, the
district court erred in not giving Fazio appropriate credit for repairs made to the New
Virginia property. Although denial of credit was not enough to make a difference for
purposes of the loss calculation under U.S.S.G. § 2B1.1, it does make a difference in
the restitution. While the record is not entirely clear as to the amount Fazio should
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be credited for repairs, it is clearly more than the $3,500 applied by the district court.
The amount may not equal exactly $13,115, but our review of the record indicates that
Homecomings will be adequately made whole when the government remits to it the
$45,035 held by the Marshal's office. Accordingly, we vacate the district court's
award of restitution.
III. CONCLUSION
We affirm Fazio's conviction and sentence, and remand to the district court to
deny the motion for new trial and vacate the award of restitution.
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