United States v. Mickey Johnson , 688 F.3d 444 ( 2012 )

United States Court of Appeals
For the Eighth Circuit
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No. 11-3841
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United States of America
lllllllllllllllllllll Plaintiff - Appellee
v.
Mickey Johnson
lllllllllllllllllllll Defendant - Appellant
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Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
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Submitted: June 15, 2012
Filed: August 17, 2012
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Before LOKEN, GRUENDER, and BENTON, Circuit Judges.
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GRUENDER, Circuit Judge.
Mickey Johnson pled guilty to two counts of wire fraud, in violation of 18
U.S.C. § 1343, in connection with a mortgage fraud scheme. At sentencing, the
district court1 calculated an advisory sentencing guidelines range of 33 to 41 months’
1
The Honorable Audrey G. Fleissig, United States District Judge for the
Eastern District of Missouri.
imprisonment based on a total offense level of 20 and a criminal history category of
I. The district court sentenced Johnson to a term of 33 months’ imprisonment, and
Johnson now appeals the sentence. We affirm.
In 2005, Mickey Johnson and Jeremy Beadle worked together at Premier
Mortgage Funding (“PMF”) in Lake Saint Louis, Missouri. That year, Johnson
approached Beadle and proposed that they purchase, renovate, and sell five properties
in the 3900 block of Labadie Avenue in Saint Louis, Missouri, because Johnson
believed the neighborhood was “coming back.” They agreed that Johnson would
oversee the renovations, Beadle would provide the financing, and they would each
have a fifty-percent share in the venture. Beadle subsequently served as the
purchaser-of-record for the properties and provided financing for the renovations,
which Johnson oversaw. After a series of thefts and incidents of vandalism, Johnson
and Beadle decided to sell the properties as quickly as possible to stop their
“hemorrhaging financial losses.”
Johnson recruited Robert Shaw, whom Johnson had met previously at a
seminar for real estate investors, to purchase two of the properties. Johnson served
as Shaw’s loan officer so that Shaw could obtain loans through PMF for both of the
properties. Although Johnson was fully aware of Shaw’s actual income and intent to
purchase the properties as investments, Johnson overstated Shaw’s income on the
loan applications and falsely indicated that Shaw would purchase each property as his
primary residence. When Shaw stated that he did not want to do anything illegal,
Johnson assured him that this was standard procedure in the mortgage business.
Johnson also arranged for Beadle to provide Shaw with funds for the down payments
for the properties and for renovations after purchase, but Johnson never mentioned
the renovation money on the loan applications and affirmatively indicated that Shaw
was providing the down payments. Johnson also inflated the sale price for the
properties so that some of the resulting inflated loan proceeds could be used to
reimburse Beadle for the down payment and renovation funds he had provided to
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Shaw. After Shaw approved the applications for submission despite the
misrepresentations, Johnson filed the applications. Johnson similarly submitted
fraudulent loan applications so that Beadle could sell two of the remaining three
properties to Rebecca Domecillo, another colleague at PMF, and Michael Skarl,
Domecillo’s son. Each of the four properties ended up in foreclosure. Beadle was
unable to sell the fifth property, and it also ended up in foreclosure. Shaw eventually
declared bankruptcy after he was unable to satisfy the deficiency judgments from the
foreclosures of his two Labadie Avenue properties.
A grand jury subsequently indicted Johnson on four counts of wire fraud, one
count for each of the loans for the four Labadie Avenue properties that were sold.
After Beadle and Domecillo pled guilty to fraud charges and after Shaw and Beadle
testified against Johnson at his trial, Johnson pled guilty to the two counts relating to
the loans to Shaw. At sentencing, Johnson objected to the probation office’s
conclusion in the Presentence Investigation Report that he qualified for a two-
offense-level aggravating role enhancement. See U.S.S.G. § 3B1.1(c) (providing for
a two-level offense level increase for “an organizer, leader, manager, or supervisor
in any criminal activity”). Johnson argued that Beadle was more culpable than he
because Beadle was his employer and provided the capital for the scheme. The
district court concluded that Johnson qualified for the two-level increase because he
recruited Shaw to purchase the properties, prepared and filed Shaw’s, Domecillo’s,
and Skarl’s loan applications despite knowing that they contained numerous
materially false representations, and assured Shaw that the paperwork was properly
completed despite the known misrepresentations. Johnson now appeals his sentence.
When reviewing a sentence, we first evaluate whether the district court
committed significant procedural error. Gall v. United States, 552 U.S. 38, 51 (2007).
Johnson now contends that the district court erroneously applied the aggravating role
enhancement under U.S.S.G. § 3B1.1(c) because Shaw—due to his reliance on
Johnson’s assertions that the misrepresentations were acceptable—was not a
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criminally responsible party, and therefore there was nobody for Johnson to “lead.”
See U.S.S.G. § 3B1.1 cmt. n.2 (“To qualify[,] . . . the defendant must have been the
organizer, leader, manager, or supervisor of one or more other participants.”); id. cmt.
n.1 (“A ‘participant’ is a person who is criminally responsible for the commission of
the offense, but need not have been convicted.”). We ordinarily review the district
court’s factual findings underlying the imposition of a sentencing enhancement for
clear error, United States v. McDonald, 521 F.3d 975, 978 (8th Cir. 2008), and its
application of the sentencing guidelines de novo, United States v. Richart, 662 F.3d
1037, 1045 (8th Cir. 2011) cert. denied, 566 U.S. ---, 132 S. Ct. 1942 (2012).
Although Johnson objected to the imposition of the aggravating role enhancement at
the time of sentencing, he did not raise the issue of whether Shaw qualified as a
“participant.” Thus, we review this issue only for plain error. See United States v.
Ali, 616 F.3d 745, 751-52 (8th Cir. 2010). For us to find plain error, Johnson would
have “to show that (1) there was an error that was not affirmatively waived, (2) the
error was ‘plain,’ meaning clear and obvious, (3) the error affects his substantial
rights, and (4) the error ‘seriously affects the fairness, integrity or public reputation
of judicial proceedings.’” Id. at 752 (quoting Puckett v. United States, 556 U.S. 129,
135 (2009)).
We reject Johnson’s argument that it was clear and obvious at the time of
sentencing that Shaw was not a “participant” within the meaning of U.S.S.G. § 3B1.1.
Shaw testified that—prompted by Johnson—he knowingly overstated his income on
the two loan applications, knowingly and falsely indicated that he would occupy each
purchased property as his primary residence, and knowingly under-reported the
sellers’ financial concessions in the sales. He also testified that he signed an
acknowledgment that the information in the applications was accurate and that he
understood that submitting false information violated the law. Shaw affirmed that,
although he had indicated to Johnson that he did not want to do anything illegal in the
loan applications, he nonetheless was responsible for the misrepresentations they
contained. Furthermore, at his sentencing hearing, Johnson himself declared that
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Shaw “is not a victim” in this case because he “knew fully well” what he was doing.
In the face of such evidence, Johnson has not met his burden of establishing that it
was clear and obvious that Shaw was not a participant within the meaning of U.S.S.G.
§ 3B1.1. Because Johnson’s acts of recruiting Shaw into the criminal enterprise and
directing him on how to obtain the fraudulent loans were sufficient to justify the
enhancement, see United States v. Umanzor, 617 F.3d 1053, 1060 (8th Cir. 2010)
(“[A] defendant may qualify for the enhancement [under U.S.S.G. § 3B1.1] if he
directs the actions of only one other participant.”), we reject Johnson’s procedural
challenge to his sentence.2
Johnson also contends that the sentence is substantively unreasonable because
Beadle received a sentence of probation and Domecillo only received an 18-month
sentence of imprisonment even though both Beadle and Domecillo were “more
culpable” and responsible for “far more extensive fraudulent transactions and losses”
than he was. Johnson maintains that although some of the “gross disparity” between
their sentences and his sentence can be explained by their substantial assistance to the
Government, this difference does not fully justify “the vast degree of disparity in their
respective sentences.” He argues that the remaining disparity rebuts the presumption
of reasonableness we apply to within-guidelines sentences. See United States v.
Lazenby, 439 F.3d 928, 933-34 (8th Cir. 2006).
We review the substantive reasonableness of a sentence under a deferential
abuse-of-discretion standard. United States v. Mees, 640 F.3d 849, 856 (8th Cir.
2011). An abuse of discretion occurs “where the sentencing court ‘fails to consider
2
Johnson also argues that, if Shaw was not a participant within the meaning of
U.S.S.G. § 3B1.1, the enhancement could not be justified by Johnson’s processing of
Domecillo’s and Skarl’s loan applications because there was no evidence that
Johnson “directed” either of those participants in how to obtain the loans. In light of
our conclusion that Johnson’s direction of Shaw was sufficient to justify the
enhancement, we do not reach this question.
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a relevant factor that should have received significant weight, gives significant weight
to an improper or irrelevant factor, or considers only the appropriate factors but
commits a clear error of judgment in weighing those factors.’” United States v.
Moore, 565 F.3d 435, 438 (8th Cir. 2009) (quoting United States v. Kowal, 527 F.3d
741, 749 (8th Cir. 2008)). “[I]t will be the unusual case when we reverse a district
court sentence—whether within, above, or below the applicable Guidelines range—as
substantively unreasonable.” United States v. Feemster, 572 F.3d 455, 464 (8th Cir.
2009) (en banc) (quoting United States v. Gardellini, 545 F.3d 1089, 1090 (D.C. Cir.
2008)).
“[I]t is not an abuse of discretion for a district court to impose a sentence that
results in a disparity between co-defendants when there are ‘legitimate distinctions’
between the co-defendants.” United States v. Davis-Bey, 605 F.3d 479, 483 (8th Cir.
2010) (quoting United States v. Watson, 480 F.3d 1175, 1178 (8th Cir. 2007)). In
addition to the distinction that Johnson, unlike Domecillo and Beadle, did not receive
a sentencing reduction for substantial assistance, see United States v. Gallegos, 480
F.3d 856, 859 (8th Cir. 2007) (per curiam), the district court also identified a
legitimate distinction when it noted that Johnson’s sentence was sufficient, but not
greater than necessary, to force Johnson to “come to terms with what [he] did here,
and come to terms with . . . the mere fact [that] what others may have encouraged or
permitted does not relieve [him] of [his] responsibility for [his] own actions.” The
district court already had considered and rejected Johnson’s argument that he was
minimally culpable. When Johnson claimed that he was “not a criminal” or a “felon”
and “followed every guideline of every lender,” the court responded:
[Y]ou seem to think that everybody is to blame here except you, and that
your only offense here was not reporting Mr. Beadle. . . . I don’t believe
the facts support that, and find that you were an active participant in this
fraud . . . and that you did so knowingly. And the fact that you continue
to disallow your role in these offenses further confirms my assessment
that a sentence in the Guideline range is appropriate in this matter.
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The district court properly considered Johnson’s “minimal remorse” in balancing the
18 U.S.C. § 3553(a) factors and crafting Johnson’s sentence. See United States v.
Wilder, 597 F.3d 936, 947 (8th Cir. 2010). Moreover, the district court specifically
considered Johnson’s role in the criminal enterprise and determined that a 33-month
sentence was appropriate to “achieve parity with the [sentences] of similarly situated
individuals, who have committed similarly situated offenses.” Finally, the district
court also was aware that, in addition to Johnson’s continued refusal to appreciate the
seriousness of his crimes, Johnson differed from Beadle and Domecillo in that he
waited until after his trial had convened to plead guilty. Because of these legitimate
distinctions, the district court did not abuse its discretion in sentencing Johnson to 33
months’ imprisonment.
For the foregoing reasons, the judgment of the district court is affirmed.
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