United States v. Barnett , 828 F.3d 1189 ( 2016 )


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  •                                                                               FILED
    United States Court of Appeals
    PUBLISH                             Tenth Circuit
    UNITED STATES COURT OF APPEALS                      July 11, 2016
    Elisabeth A. Shumaker
    FOR THE TENTH CIRCUIT                        Clerk of Court
    _________________________________
    UNITED STATES OF AMERICA,
    Plaintiff - Appellee,
    v.                                                          No. 15-5055
    ROGER DANA BARNETT,
    Defendant - Appellant.
    _________________________________
    Appeal from the United States District Court
    for the Northern District of Oklahoma
    (D.C. No. 4:14-CR-00119-GKF-1)
    _________________________________
    Submitted on the briefs:*
    Julia L. O’Connell, Federal Public Defender, and Barry L. Derryberry, Research and
    Writing Specialist, Office of the Federal Public Defender, Northern District of
    Oklahoma, Tulsa, Oklahoma, for Defendant-Appellant.
    Danny C. Williams, Sr., United States Attorney, and Clemon D. Ashley, Assistant United
    States Attorney, Office of the United States Attorney, Northern District of
    Oklahoma, Tulsa, Oklahoma, for Plaintiff-Appellee.
    _________________________________
    Before KELLY, BRISCOE, and HARTZ, Circuit Judges.
    _________________________________
    HARTZ, Circuit Judge.
    *
    After examining the briefs and appellate record, this panel has determined unanimously
    that oral argument would not materially assist in the determination of this appeal. See
    Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted
    without oral argument.
    _________________________________
    Defendant Roger Dana Barnett served as Second Chief of the Muscogee (Creek) Nation
    in 2013 and 2014. One of his duties in that elected position was to make disbursements
    from the Tribe’s emergency-assistance fund to tribal members who met certain
    conditions. He could provide assistance with money from a petty cash fund or by using a
    tribal debit card to make point-of-sale purchases or to make withdrawals from ATM
    machines. He pleaded guilty in the United States District Court for the Northern District
    of Oklahoma to embezzling funds from the Tribe by appropriating to his own use money
    withdrawn from ATM machines. See 18 U.S.C. § 1163. The sole issue on this appeal is
    whether the district court properly determined the amount of money embezzled for
    purposes of calculating Defendant’s offense level and the amount he owes the Tribe in
    restitution. Based on evidence recited in the probation office’s presentence report (PSR)
    and an addendum to that report (the Addendum), the district court found that Defendant
    embezzled all, not just some, of the money that he withdrew from ATM machines.
    Defendant asserts that the court’s reliance on the PSR and the Addendum was improper
    because the government failed to present at sentencing any evidence of the amount of
    loss. We disagree. The court could properly rely on the PSR and Addendum because
    Defendant did not adequately challenge their recitations of the evidence concerning his
    defalcations. The only issue that he preserved for appeal was whether the recited
    evidence sufficed to support the court’s determination of the amount of loss, and we hold
    that the evidence was sufficient. We therefore affirm Defendant’s sentence. Our
    jurisdiction arises under 18 U.S.C. § 3742(a) and 28 U.S.C. § 1291.
    2
    After summarizing the description of Defendant’s conduct in the PSR and
    Addendum, we discuss the law governing objections to a PSR, set forth Defendant’s
    objections in the district court, hold that the objections to the factual recitations were
    inadequate, and conclude by holding that the unobjected-to factual recitations adequately
    supported the district court’s findings.
    I.   The PSR and Addendum
    When Defendant pleaded guilty, he admitted using his tribal debit card to make
    ATM withdrawals that he spent primarily on gambling. The PSR added further detail:
    Applicants could obtain financial assistance from the Second Chief only after completing
    a form that documented tribal membership, denial of assistance from other sources, and
    proof of income and need. Recipients were to provide receipts to document expenditures
    of emergency funds. To provide assistance, Defendant could use a tribal debit card
    issued to him for both point-of-sale transactions and ATM withdrawals. He also could
    use a petty-cash fund.
    From April 3, 2013, through April 29, 2014, Defendant embezzled money from
    the emergency fund, using it for such things as gambling, purchasing goods, and gifts to
    others. To obtain the money, he used the tribal debit card to make ATM withdrawals at
    various casinos and other businesses. He provided no receipts for the ATM withdrawals
    or documentation of their purposes despite multiple requests from the Tribe.
    When Defendant’s expenditures eventually exhausted the emergency fund, he
    requested additional money. The Tribe conducted an audit and notified the Federal
    Bureau of Investigation of the apparent embezzlement. The PSR calculated the total
    3
    amount of Defendant’s misappropriation from the Tribe as $211,880.76, which included
    all the ATM withdrawals.
    Later the probation office filed the Addendum to the PSR. It described
    Defendant’s duties before disbursing funds and the Tribe’s documentation requirements:
    Although defendant was not required to obtain signed receipts from
    those to whom he provided financial assistance, he was required to verify
    tribal membership, denial of assistance from other resources, and proof of
    income and need, as stated in the request form for emergency assistance
    held by his office, which was revised May 14, 2013, one month after the
    instant offense began. Persons receiving assistance were to provide
    receipts to the Second Chief’s Office following expenditure of any
    disbursements.
    R., Vol. III at 15. Nevertheless, said the PSR:
    Defendant did not follow this policy when accessing funds through ATM
    withdrawals. The evidence shows that between April 2013, and April
    2014, defendant made ATM withdrawals several times each week of
    various amounts, usually between $200 and $800, with the majority of the
    withdrawals coming from casino ATM machines. Defendant kept no
    receipts or documentation of the purpose for the withdrawals and admitted
    that he used much of the funds to gamble and provide to others to gamble.
    
    Id. According to
    the Addendum, this lack of documentation (despite repeated requests
    by the Tribe’s accountant) was contrary to Defendant’s practice when providing
    assistance using other methods of payment, and the use of the ATMs was also remarkable
    because petty cash often would have been available if cash assistance was needed:
    [T]here were legitimate purchases and expenditures made by defendant
    utilizing the debit card for point of sale purchases, for which defendant did
    fill out the required credit card form. In addition, most of the ATM
    withdrawals occurred during normal business hours when defendant had
    access to the petty cash fund established for use by his office, minimizing
    the need for use of the debit card to make ATM cash withdrawals.
    4
    Defendant did at times utilize the petty cash fund as authorized for
    legitimate disbursements and completed the required documentation. As to
    the ATM cash withdrawals; however, no documentation was ever
    completed by defendant nor was any receipt ever returned by a recipient,
    despite numerous emails to defendant’s office sent by [the] Muscogee
    Creek Nation Staff Accountant, requesting such receipts, to which
    defendant replied he would comply and never did.
    
    Id. The Addendum
    concluded that the loss equaled the total amount of ATM
    withdrawals, despite letters supporting Defendant from members of the Tribe, who did
    not provide sufficient detail to be helpful:
    The evidence suggests that defendant complied with tribal
    documentation policies for most expenditures other than ATM cash
    withdrawals. Defendant has provided no evidence to support his contention
    that the amount of loss calculated in the presentence report based upon the
    cash withdrawn from ATMs belonging to the Muscogee (Creek) Nation
    should not be included . . . . Although five tribal members have provided
    letters stating that they have received emergency assistance from defendant,
    no receipts, dates, or amounts have been given and no proof exists that the
    assistance given to those five parties has not already been omitted from the
    loss amount as part of the legitimate expenditures made by point of sale
    purchases or petty cash disbursements that were documented by defendant.
    
    Id. II. Necessity
    of Objections to the PSR
    Fed. R. Crim. P. 32(i)(3) governs the district court’s use of a PSR in establishing
    the facts relevant to sentencing. In pertinent part it states:
    At sentencing, the court:
    (A) may accept any undisputed portion of the presentence report as a
    finding of fact; [and]
    (B) must—for any disputed portion of the presentence report or
    other controverted matter—rule on the dispute or determine that a
    ruling is unnecessary either because the matter will not affect
    sentencing, or because the court will not consider the matter in
    sentencing . . . .
    5
    In light of this rule, we have said that “[a]t sentencing, the district court may rely on facts
    stated in the presentence report unless the defendant has objected to them. When a
    defendant objects to a fact in a presentence report, the government must prove that fact at
    a sentencing hearing by a preponderance of the evidence.” United States v. Harrison,
    
    743 F.3d 760
    , 763 (10th Cir. 2014) (internal quotation marks omitted).
    But what constitutes an adequate objection to a recitation in the PSR? A
    defendant must do more than simply state that he objects to the PSR’s bottom line. “[T]o
    invoke the district court’s Rule 32 fact-finding obligation, the defendant is required to
    make specific allegations of factual inaccuracy.” United States v. Chee, 
    514 F.3d 1106
    ,
    1115 (10th Cir. 2008) (emphasis added) (internal quotation marks omitted). “An
    objection to the ultimate conclusions in the presentence report does not necessarily imply
    that a ‘controverted matter’ exists.” 
    Id. Rather, the
    defendant has “an affirmative duty to
    make a showing that the information in the presentence report was unreliable and
    articulate the reasons why the facts contained therein were untrue or inaccurate.” 
    Id. (brackets and
    internal quotation marks omitted); see United States v. Rodriguez-Delma,
    
    456 F.3d 1246
    , 1253–54 (10th Cir. 2006) (district court’s fact-finding obligation was not
    triggered by a sentence-enhancement objection that did not contest the facts supporting
    the enhancement).
    III.   Insufficiency of Defendant’s Objections to the PSR and Addendum
    Defendant did not satisfy the above requirements. Our review of the record shows
    that he objected to the PSR’s conclusions but not the underlying facts.
    6
    Defendant responded to the initial PSR in three ways. First, he submitted an
    expert report prepared by former IRS agent Larry Cotton. It primarily relied on a civil
    tax case containing a short paragraph on constructive dividends—a case not relied on by
    Defendant on appeal. It also raised an issue about what documentation was required by
    the emergency-assistance program. But the district court then requested more
    information on the program’s requirements, and, as we shall see, Defendant never
    challenged what the probation office set forth in its Addendum.1
    Second, Defendant submitted letters from five tribal members who said that they
    received emergency assistance from him, although they did not provide receipts or
    otherwise describe when they received the assistance or how much they received.
    1
    We quote the summary of the report that appears in the Addendum to establish that the
    report did not raise any challenge to the evidence ultimately set forth in the PSR and
    Addendum (the expert report is not itself in the record):
    Cotton argues that defendant was not required to obtain a signed receipt
    from tribal members to whom he legitimately gave financial assistance.
    Therefore, he contends that the loss amount should be calculated similarly
    to an income tax examination of a “C” corporation where certain expenses
    paid and deducted by the corporation without a receipt are disallowed to the
    corporation but not considered a constructive dividend, or income, to the
    majority shareholder. Defendant cites Erickson v. Commissioner, 
    598 F.2d 525
    , 531 (9th Cir. 1979), in support of his argument. Thus, as the total loss
    amount calculated in the presentence report of $211,880.79, is mostly
    derived from numerous ATM withdrawals made by the defendant at casino
    and non-casino ATMs, Cotton opines that 20% of the total withdrawals
    made at the three non-casino ATMs ($81,702.60), should be deducted from
    the loss amount. A 20% reduction from $81,702.60 is $16,340.52.
    Therefore, when subtracted from the currently calculated loss amount of
    $211,880.79, the resulting loss amount would be $195,540.27.
    R., Vol. III at 14.
    7
    Third, Defendant submitted a sentencing memorandum in support of his objection
    to the loss calculation and an unrelated matter. His paragraph on the calculated loss
    stated:
    The Government now appears to be relying on [Defendant’s] failure
    to comply with tribal policy for his office to maintain its position regarding
    the loss amount. That [Defendant] failed to comply with this policy
    regarding emergency assistance by not submitting the required
    documentation, now translates into a factor in the loss equation. The
    Government asks this Court to assume that all ATM withdrawals were
    utilized for personal use. That he gambled at various casinos with tribal
    funds is not questioned; however, the Government cannot meet its burden
    to prove by a preponderance of the evidence, that the entire sum withdrawn
    from the ATMs’ was for [Defendant’s] personal use.
    R., Vol. I at 16. The memorandum did not dispute the accuracy of the evidence in the
    PSR and Addendum—the amount of money withdrawn and the absence of
    documentation—but only the inferences to be drawn from that evidence.
    After these submissions by Defendant, the probation office prepared the PSR
    addendum, which was dated eight days before the hearing at which he was sentenced.
    Counsel posed no new objections to its content. The following exchange occurred at the
    outset of the hearing:
    THE COURT: . . . [H]ave you had a full, fair, and complete opportunity to
    discuss the contents of that presentence investigation report with Mr.
    Brunton as your attorney?
    THE DEFENDANT: Yes, sir.
    THE COURT: . . . I know we do have one objection here to the sentencing
    guidelines in the presentence investigation report. Are there any others?
    MS. COZZONI [the prosecutor]: Not that I’m aware of, Your Honor.
    MR. BRUNTON [defense counsel]: No, sir.
    THE COURT: All right. And with regard to that objection, Mr. Brunton,
    anything other than what you’ve raised in the papers?
    MR. BRUNTON: No, sir.
    8
    R., Vol. II at 54–55. The court overruled Defendant’s objection. It said that
    disbursements made by point-of-sale transactions and petty-cash outlays were supported
    by the required documentation, but that none of the ATM withdrawals were. The court
    discounted the letters from tribal members describing emergency assistance from
    Defendant because the assistance given to them could have been part of the point-of-sale
    transactions or from the petty-cash fund. It also relied on Defendant’s admission to using
    the funds to gamble, make personal purchases, and give to others. And it noted that
    Defendant did not need to make ATM withdrawals during business hours, when he could
    access the petty-cash fund. It included as loss all ATM withdrawals. The following
    exchange with counsel then took place:
    THE COURT: Are there any objections to those findings?
    MS. COZZONI: No, Your Honor.
    THE COURT: Mr. Brunton?
    MR. BRUNTON: Other than what I’ve already previously filed, Judge.
    R., Vol. II at 63.
    Thus, Defendant did not “make specific allegations of factual inaccuracy” in the
    PSR or PSR addendum. 
    Chee, 514 F.3d at 1115
    . He did not dispute any of the facts
    underlying the total-loss finding, including the amounts withdrawn and the times of the
    withdrawals, his access to the petty-cash fund, the documentation required of both him
    and third parties (as set forth in the PSR Addendum), his compliance with these
    requirements when making other disbursements, and the failure of third parties to provide
    documentation of expenditures that he attributed to the ATM withdrawals. The
    sentencing court could therefore properly rely on those facts. The only objection that
    9
    Defendant adequately preserved was that the facts set forth in the PSR and PSR
    Addendum did not support the court’s conclusion regarding the amount of loss. We now
    turn to that objection.
    IV.    Sufficiency of the Evidence
    “The Government bears the burden of proving loss by a preponderance of the
    evidence.” United States v. Griffith, 
    584 F.3d 1004
    , 1011 (10th Cir. 2009). We review
    the district court’s findings for clear error. See United States v. Mullins, 
    613 F.3d 1273
    ,
    1292 (10th Cir. 2010). In overruling Defendant’s objection to the loss amount, the
    district court reasoned:
    Based upon the totality of the factors in this case, including the fact
    that the defendant properly documented expenditures in cases other than
    ATM cash withdrawals, that the defendant admitted he used the funds to
    gamble or make personal purchases or gave funds to others to gamble, the
    fact that no one person alleged by defendant to have received benefits from
    the ATM withdrawals has provided a receipt, and that defendant had access
    to petty cash in his office and did not need to make ATM withdrawals
    during business hours, the court includes all ATM cash withdrawals made
    by the defendant for which no documentation has been provided in the
    court’s determination of loss and finds . . . the inclusion of such
    withdrawals to be reasonable.
    R., Vol. II at 62. We think this view of the evidence was eminently reasonable. In an
    unpublished opinion in similar circumstances we upheld a sentencing determination. See
    United States v. Sankey, 430 F. App’x 669, 673–74 (10th Cir. 2011) (defendant handled
    tribal funds in a manner that made them untraceable—by cashing cashier’s checks
    payable to the tribe—and circumvented tribal policies meant to prevent
    misappropriation). The district court did not commit clear error.
    10
    Defendant raises an additional challenge to the restitution award. He contends that
    the government failed to comply with the statutory requirement that the probation office
    provide “to the extent practicable, a complete accounting of the losses to each victim.”
    18 U.S.C. § 3664(a) (1996); see United States v. Ferdman, 
    779 F.3d 1129
    , 1133 (10th
    Cir. 2015) (sentencing court cannot “dispense with the necessity of proof . . . and simply
    ‘rubber stamp’ a victim’s claim of loss based upon a measure of value unsupported by the
    evidence”). We reject the argument. The PSR provided adequate detail. There was no
    need for the usual accounting to apportion the loss among the victims, because there was
    only one victim here.
    V.    CONCLUSION
    We AFFIRM the district court’s sentence and judgment.
    11