United States v. Nicholas Gossi ( 2010 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA,  No. 09-30202
Plaintiff-Appellee,
v.  D.C. No.
1:08-CR-104-S-EJL
NICHOLAS R. GOSSI,
OPINION
Defendant-Appellant.

Appeal from the United States District Court
for the District of Idaho
William F. Downes, District Judge, Presiding
Argued and Submitted
February 5, 2010—Seattle, Washington
Filed June 15, 2010
Before: Arthur L. Alarcón, William A. Fletcher, and
Johnnie B. Rawlinson, Circuit Judges.
Opinion by Judge Alarcón
8779
UNITED STATES v. GOSSI 8781
COUNSEL
Robert A. Wallace, Boise, Idaho, for the defendant-appellant.
8782 UNITED STATES v. GOSSI
George W. Breitsameter , Assistant United States Attorney,
Office of the United States Attorney, Boise, Idaho, for the
plaintiff-appellee.
OPINION
ALARCÓN, Circuit Judge:
Nicholas R. Gossi appeals from a restitution order imposed
pursuant to the Mandatory Victims Restitution Act
(“MVRA”), 18 U.S.C. § 3663A, following his guilty plea to
Mail Fraud in violation of 18 U.S.C. § 1341. Gossi contends
the district court failed “to use the true return date in offset-
ting the value of [the] returned property.” He also maintains
that the district court erred in “treat[ing] [him] more harshly
than all other codefendants” and in ordering him to pay resti-
tution more than “[o]nly [i]ntended, [f]oreseeable and
[c]ulpable [l]osses.” We affirm because we conclude that the
district court’s valuation of the property was within the dis-
cretion afforded district courts. We also hold that the district
court correctly ordered Gossi to pay restitution based on
losses proximately resulting from his criminal conduct.
I
On May 14, 2008, a federal grand jury returned a thirty-two
count indictment charging Gossi and his four co-defendants
with bank fraud. In addition, Gossi was charged with mail
fraud and making a false statement of material fact to the
Department of Housing and Urban Development (“HUD”).
On September 22, 2008, Gossi pled guilty to the count that
charged him with mail fraud in violation of 18 U.S.C. § 1341.11
In return for Gossi’s guilty plea, the government dismissed all remain-
ing counts on the indictment against Gossi.
UNITED STATES v. GOSSI 8783
On March 13, 2009, Gossi was sentenced to imprisonment
for six months followed by a period of six months home
detention. In addition, Gossi was ordered to be placed on
supervised release for a period of five years.
The district court entered a restitution order directing Gossi
to pay National City Mortgage Company (“NCMC”) the
amount of $288,087.12. In reaching this amount, the district
court explained:
The “Actual Unpaid Principal Balance of the Mort-
gage Loan,” according to [NCMC’s] own balance
sheet, was actually $704,087.12 at the time it took
possession of the property. The Total Realized Loss
includes $156,174.71 in fees and expenses accrued
after the property was returned. The Court thus finds
that $704,087.12 accurately reflects the value of the
property taken on the date of loss pursuant to 18
U.S.C. § 3663A(b)(1)(B)(i)(I). The current asking
price for the Dublin Drive property does not reflect
the value of the property returned, on the date it was
returned. The first appraisal apparent to the Court
was provided to [NCMC] on November 22, 2008; it
placed the value of the property at $416,000 “as is.”
The Court accordingly imposes upon . . . Gossi a res-
titution obligation in the amount of $288,087.12
($704,087.12 - $416,000.00) pursuant to 18 U.S.C.
§ 3663A(b)(1)(B).
Gossi has timely appealed from the district court’s order.
We have jurisdiction pursuant to 28 U.S.C. § 1291.
II
Gossi contends that the district court erred in determining
the return date of the property for purposes of assessing the
value of the property. He asserts that the district court should
have assigned value “when the bank could and should have
8784 UNITED STATES v. GOSSI
initiated foreclosure” rather than when it actually foreclosed.
(Appellant’s Br. 10.) According to Gossi, this is when the
property should have been considered to be returned, i.e.,
“when the bank knew the loan was in trouble and had the
legal right to initiate [foreclosure] proceedings.” (Id. at 11.)
Gossi also contends that the district court refused to set an
earlier return date because “the restitution calculation of the
court was driven, in part, by considerations of fault rather than
evidence of property value . . . .” (Id.)
“A restitution order is reviewed for an abuse of discretion,
provided that it is within the bounds of the statutory frame-
work. Factual findings supporting an order of restitution are
reviewed for clear error. The legality of an order of restitution
is reviewed de novo.” United States v. Gordon, 393 F.3d
1044, 1051 (9th Cir. 2004) (quoting United States v. Stod-
dard, 150 F.3d 1140, 1147 (9th Cir. 1998)).
[1] “Federal courts have no inherent power to award resti-
tution, but may do so only pursuant to statutory authority.”
United States v. Follet, 269 F.3d 996, 998 (9th Cir. 2001) (cit-
ing United States v. Hicks, 997 F.2d 594, 600 (9th Cir. 1993)).
“The courts have such authority under the Victim and Witness
Protection Act of 1982 (“VWPA”), providing for discretion-
ary awards of restitution after conviction for certain crimes,
18 U.S.C. § 3663, and under the Mandatory Victims Restitu-
tion Act of 1996 (“MVRA”), providing for mandatory restitu-
tion for crimes of violence and property offenses, 18 U.S.C.
§ 3663A.”2 Id.
“[T]he starting point for interpreting a statute is the lan-
guage of the statute itself.” United States v. Hackett, 311 F.3d
989, 991 (9th Cir. 2002) (quoting Consumer Prod. Safety
2
18 U.S.C. § 3663(b)(2), or the VWPA, and 18 U.S.C. § 3663A(b)(2),
or the MVRA, are nearly identical and “courts interpreting the MVRA
may look to and rely on cases interpreting the VWPA as precedent.”
Gordon, 393 F.3d at 1048.
UNITED STATES v. GOSSI 8785
Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980)).
“Absent congressional direction to the contrary, words in stat-
utes are to be construed according to ‘their ordinary, contem-
porary, common meaning[s].’ ” Id. (citing Pioneer Inv. Servs.
Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 388
(1993)).
[2] In United States v. Davoudi, 172 F.3d 1130 (9th Cir.
1999), we stated that, pursuant to the restitution statute,
[t]he district court is authorized by 18 U.S.C.
§ 3663(b)(1)(B)(ii) to order restitution in the amount
of the victim’s loss “less the value (as of the date the
property is returned) of any part of the property that
is returned.” This court has held that this plain lan-
guage requires property to be valued as of the date
the victim took control of the property. See [United
States v. Smith, 944 F.2d 618, 624-625 (9th Cir.
1991)]. “As of that date, the [secured lender] had the
power to dispose of the property and receive com-
pensation.” Id. at 625. Accord United States v. Cath-
erine, 55 F.3d 1462, 1465 (9th Cir. 1995); United
States v. Hutchison, 22 F.3d 846, 856 (9th Cir. 1993)
(“In Smith, . . . [w]e rejected the district court’s valu-
ation of the property as of the date on which it was
sold.”). Under Smith and its progeny the district
court should have based the restitution to HSA on
the fair market value of the Bel Air property at the
time HSA “had the power to dispose of the proper-
ty” as it wished.
Id. at 1134-35 (emphasis added).
[3] Under this Court’s precedent, the district court reason-
ably found that NCMC had the power to dispose of the prop-
erty at the time it took control of the property at foreclosure.
“Value should therefore be measured by what the financial
institution would have received in a sale as of that date.”
8786 UNITED STATES v. GOSSI
Smith, 944 F.2d at 625. Contrary to Gossi’s contention, the
district court could not have set the value of the property
based on appraisals prior to foreclosure simply because
NCMC did not have “the power to dispose of the property and
receive compensation” before foreclosure. Id. Whether the
district court also considered Gossi’s fault in imposing restitu-
tion is of no moment to the district court’s finding because the
district court reasonably valued the property in accordance
with this Court’s precedent. Nothing in the record indicates
that NCMC “had the power to dispose of the property as it
wished” prior to foreclosure. Davoudi, 172 F.3d at 1135(internal quotation marks omitted).
The district court did not abuse its discretion in determining
the amount of restitution.
III
[4] Gossi next argues that the district court also erred
because the restitution obligations imposed on his co-
defendants, who pled guilty to a different fraud scheme,
required them to pay lesser amounts. However, as the govern-
ment points out, the restitution obligations of co-defendants
are irrelevant to Gossi’s restitution obligation. Gossi was the
only defendant to enter a guilty plea to defraud NCMC. The
other co-defendants pled guilty to offenses involving a sepa-
rate entity, Zions Bank. The district court reasonably set resti-
tution in favor of NCMC pursuant to § 3664(f)(1)(A), which
states:
In each order of restitution, the court shall order res-
titution to each victim in the full amount of each vic-
tim’s losses as determined by the court and without
consideration of the economic circumstances of the
defendant.
18 U.S.C. § 3664(f)(1)(A) (emphasis added). Accordingly, the
UNITED STATES v. GOSSI 8787
district court did not abuse its discretion in ordering Gossi to
pay restitution to NCMC for the full amount of its losses.3
IV
Gossi also argues that the district court committed error
because he only should be responsible to pay restitution for
the reasonably foreseeable harm as opposed to the direct and
proximate harm that resulted from his mail fraud offense.
Gossi asserts that “[o]nly [i]ntended, [f]oreseeable and
[c]ulpable [l]osses should [c]ount.” (Appellant’s Br. 14.)
[5] “[R]estitution can only include losses directly resulting
from a defendant’s offense.” Stoddard, 150 F.3d at 1147(quoting United States v. Sablan, 92 F.3d 865, 870 (9th Cir.
1996)). “For that reason, ‘a restitution order must be based on
losses directly resulting from the defendant’s criminal con-
duct.’ ” Id. (quoting Sablan, 92 F.3d at 870).
“A victim for restitution purposes is a person who has suf-
fered a ‘loss caused by the specific conduct that is the basis
of the offense of conviction.’ ” United States v. Gamma Tech
Indus., Inc., 265 F.3d 917, 927 (9th Cir. 2001) (quoting
Hughey v. United States, 495 U.S. 411, 413 (1990)). In
Gamma Tech, this Court stated:
3
Initially, Gossi also argued that, in its restitution order, the district
court “failed to analyze his ‘ability to pay’ and did not order a payment
plan.” (Appellant’s Br. 7.) However, in his reply brief, Gossi indicated that
he was “withdraw[ing] the argument that his payment plan was improper.”
(Appellant’s Reply Br. 1.) In doing so, Gossi stated:
For purposes of payment plans, Appellant acknowledges that
more detailed financial information would have allowed the court
to fashion a better-tailored repayment plan. With guidance
afforded by the government’s brief, Appellant is expected [to]
endeavor to comply with the conditions of his sentence in han-
dling these issues with his probation officer.
(Id. at 1-2.)
8788 UNITED STATES v. GOSSI
It is clear from our cases that the phrase “directly
resulting” means that the conduct underlying the
offense of conviction must have caused a loss for
which a court may order restitution, but the loss can-
not be too far removed from that conduct. . . . Defen-
dant’s conduct need not be the sole cause of the loss,
but any subsequent action that contributes to the
loss, such as an intervening cause, must be directly
related to the defendant’s conduct. The causal chain
may not extend so far, in terms of the facts or the
time span, as to become unreasonable.
Gamma Tech, 265 F.3d at 928 (citations omitted).
“Under 18 U.S.C. § 3664 (‘§ 3664’), a dispute as to the
proper amount of restitution must be resolved by the district
court by a preponderance of the evidence.” United States v.
Waknine, 543 F.3d 546, 556 (9th Cir. 2008) (citing 18 U.S.C.
§ 3664(e); United States v. Clayton, 108 F.3d 1114, 1118 (9th
Cir. 1997)). “The government bears the burden of proving
that a person or entity is a victim for purposes of restitution,
[United States v. ]Baker, 25 F.3d [1452,] 1455 [(9th Cir.
1994), rev’d on other grounds, United States v. Lawrence,
189 F.3d 838, 846 (9th Cir. 1999)], and of proving the amount
of the loss, 18 U.S.C. § 3664(e).” Id.It is undisputed that Gossi was the only defendant that pled
guilty to defrauding NCMC. In determining NCMC’s loss, the
district court valued NCMC’s returned property as of the date
NCMC took control of such property (at the time of foreclo-
sure when NCMC had the power to dispose of the property
as it wished). Based on these factors, the district court ordered
Gossi to pay restitution.
Gossi relies on United States v. Zolp, 479 F.3d 715 (9th
Cir. 2007), to support his contention that he should be liable
only for any intended or foreseeable harm. However, as the
UNITED STATES v. GOSSI 8789
government notes, Zolp dealt with sentencing, not restitution.
In Catherine, 55 F.3d at 1464-65, we explained:
The fact that the designation of offense level 13 is
dependent upon an enhancement for the loss to the
victim does not mean that this loss determination is
to be utilized for purposes of determining the amount
of restitution to be paid. Although . . . the guidelines,
under which the defendant agreed to be sentenced,
and 18 U.S.C. § 3663, governing restitution, both
involve a calculation of loss to the victim, the
method of calculating loss is different in each. . . .
The different method of calculating loss in each case
is due to the different purposes behind the two stat-
utes. A defendant’s culpability will not always equal
the victim’s injury.
This distinction was highlighted in our recent opin-
ion in United States v. Hutchison, 22 F.3d 846, 854-
56 (9th Cir. 1993) [abrogated on other grounds,
United States v. Wells, 519 U.S. 482 (1997)], another
false loan application case. In Hutchison, we reached
different results in calculating loss for purposes of
confinement and loss for purposes of victim restitu-
tion. Relying on the intended loss, which in that case
was greater than the actual loss, we calculated the
loss for custodial sentencing under [U.S.S.G.] sec-
tion 2F1.1 as the gross loan amount, with no offset
for actual payments made on the loan or the value of
the forfeited collateral. In contrast, we held the
amount of restitution to be paid under 18 U.S.C.
§ 3663 was the actual loss, which we held must be
calculated as the unpaid balance on the loan, minus
the value of the collateral at the date the victim bank
gained control of the collateral, plus the bank’s
expenses prior to the same date.
Id. (emphasis added).
8790 UNITED STATES v. GOSSI
[6] Sentencing, unlike restitution, focuses on the criminal
defendant. 18 U.S.C. § 3553, which lists the factors to be con-
sidered when sentencing a defendant under the advisory Sen-
tencing Guidelines, explains the purposes of sentencing.
Section 3553(a) states:
(a) Factors to be considered in imposing a sentence.
— The court shall impose a sentence sufficient, but
not greater than necessary, to comply with the pur-
poses set forth in paragraph (2) of this subsection.
The court, in determining the particular sentence to
be imposed, shall consider—
....
(2) the need for the sentence imposed—
(A) to reflect the seriousness of the offense, to pro-
mote respect for the law, and to provide just punish-
ment for the offense;
(B) to afford adequate deterrence to criminal con-
duct;
(C) to protect the public from further crimes of the
defendant; and
(D) to provide the defendant with needed educa-
tional or vocational training, medical care, or other
correctional treatment in the most effective man-
ner[.]
18 U.S.C. § 3553(a)(2)(A)-(D) (emphasis added). Clearly,
§ 3553 focuses on the individual criminal defendant. In sen-
tencing a defendant, the advisory Sentencing Guidelines
require only that the greater of the actual or intended loss be
applied in computing the offense level when sentencing the
defendant. See U.S.S.G. § 2B1.1. Under the Guidelines,
UNITED STATES v. GOSSI 8791
“ ‘[a]ctual loss’ means [only] the reasonably foreseeable
pecuniary harm that resulted from the offense.” Id. at applica-
tion n.3(A)(i) (emphasis added).
Restitution, on the other hand, focuses on the victim and
the harm proximately caused by the defendant’s conduct. In
Gordon, we explained that
The primary and overarching goal of the MVRA is
to make victims of crime whole. In achieving this
objective, Congress intended district courts to
engage in an expedient and reasonable restitution
process, with uncertainties resolved with a view
toward achieving fairness to the victim. . . .
The MVRA makes restitution mandatory for particu-
lar crimes, including those offenses which involve
fraud or deceit. See 18 U.S.C. § 3663A(c)(1)(A)(ii).
Under the MVRA, a court must order restitution to
each victim of an offense, and the court cannot con-
sider the defendant’s economic circumstances. See
18 U.S.C. § 3664(f)(1)(A). The prior restitution
statue, the Victim and Witness Protection Act
(“VWPA”), required courts to consider the economic
circumstances of the defendant prior to ordering res-
titution, and the grating of restitution was discretion-
ary, not mandatory. See 18 U.S.C. § 3663. . . .
[W]e are presented with a statute[,] the primary and
overarching goal of which is to make victims of
crime whole, to fully compensate these victims for
their losses and to restore these victims to their origi-
nal state of well-being . . . .
Gordon, 393 F.3d at 1048, 1053 (quotation marks omitted).
Rejecting the argument that the Guidelines should be used in
calculating a loss for restitution purposes, in Gordon, we
observed:
8792 UNITED STATES v. GOSSI
Gordon argues that we should also look to the Sen-
tencing Guidelines for the measure of loss. In sen-
tencing a defendant for fraud the district court must
make a “reasonable estimate” of the victim’s “loss.”
U.S.S.G. § 2B1.1 app. n. 3(C). The general rule in a
case involving property obtained by fraud is that the
measure of loss is “[t]he fair market value of the
property unlawfully taken.” Id. app. n. 3(C)(i). As
noted above, the MVRA’s purpose is to make the
victims whole; conversely, the Sentencing Guide-
lines serve a punitive purpose, necessitating a differ-
ent loss calculation scheme than the MVRA.
Compare United States v. Bae, 250 F.3d 774, 777
(D.C. Cir. 2001) (noting that under the Sentencing
Guidelines “[l]ost profit is an undesirable measure of
loss” because it “would penalize frauds differently
depending upon whether the victim is a consumer or
producer”) (emphasis added) with United States v.
Rice, 38 F.3d 1536, 1544 (9th Cir. 1994) (holding
under the VWPA that lost profits are permissible
and determinable on the date of the taking for resti-
tution purposes because the property had a “book
price which includes a profit markup”). While there
is little logic in increasing or decreasing a defen-
dant’s sentence as a result of unpredictable fluctuat-
ing values for misappropriated items in the punitive
context, accounting for such fluctuations is neces-
sary in making victims whole in the restitutionary
context.
Id. at 1052 n.6.
Restitution clearly focuses on the victim, not the individual
defendant. Restitution seeks to compensate the victim for all
the direct and proximate losses resulting from the defendant’s
conduct, not only for the reasonable foreseeable losses. The
purpose of restitution is to put the victim back in the position
UNITED STATES v. GOSSI 8793
he or she would have been but for the defendant’s criminal
conduct. We previously explained:
[t]he purpose of restitution is twofold: (1) to restore
the defrauded party to the position he would have
had absent the fraud, Restatement of Restitution [§]
1, Comments a, b, c, and d (1937); (2) and to deny
the fraudulent party any benefits, whether or not
foreseeable, which derive from his wrongful act. Id.
[§] 1 Comment e, [§] 151 Comment c; Janigan [v.
Taylor, 344 F.2d 781, 786 (1st Cir. 1965)]. Thus,
where a person with knowledge of the facts wrong-
fully disposes of or acquires property of another and
makes a profit thereby he is accountable for those
profits. Id. [§] 1 Comment e, [§] 151 Comment f.
When the property is of fluctuating value, such as
stock, the injured party may be awarded an amount
equal to the highest value reached by the stock
within a reasonable time after the tortious act. Id. [§]
151 Comment c; Myzel v. Fields, 386 F.2d 718, 744
n.23, 745 (8th Cir. 1967).
Nelson v. Serwold, 687 F.2d 278, 281 (9th Cir. 1982) (empha-
sis added).
[7] Because the advisory Sentencing Guidelines and resti-
tution to victims under the MVRA clearly focus on different
aspects of the offense and serve different purposes, we reject
Gossi’s argument that we should look to the advisory Sen-
tencing Guidelines for calculating the victim’s losses.
AFFIRMED.