Filed: Sep. 06, 2013
Latest Update: Feb. 12, 2020
Summary: Case: 11-15953 Date Filed: 09/06/2013 Page: 1 of 23 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ No. 11-15953 _ D.C. Docket No. 3:09-cr-00004-RLV-GGB-1 UNITED STATES OF AMERICA, Plaintiff-Appellee, versus JEFFREY WALLACE EDWARDS, a.k.a. J.W. Edwards, FRONTIER HOLDINGS, INC., Defendants-Appellants. _ Appeals from the United States District Court for the Northern District of Georgia _ (September 6, 2013) Before PRYOR and COX, Circuit Judges and WALTER, * District Judg
Summary: Case: 11-15953 Date Filed: 09/06/2013 Page: 1 of 23 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ No. 11-15953 _ D.C. Docket No. 3:09-cr-00004-RLV-GGB-1 UNITED STATES OF AMERICA, Plaintiff-Appellee, versus JEFFREY WALLACE EDWARDS, a.k.a. J.W. Edwards, FRONTIER HOLDINGS, INC., Defendants-Appellants. _ Appeals from the United States District Court for the Northern District of Georgia _ (September 6, 2013) Before PRYOR and COX, Circuit Judges and WALTER, * District Judge..
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Case: 11-15953 Date Filed: 09/06/2013 Page: 1 of 23
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
__________________________
No. 11-15953
__________________________
D.C. Docket No. 3:09-cr-00004-RLV-GGB-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
JEFFREY WALLACE EDWARDS,
a.k.a. J.W. Edwards,
FRONTIER HOLDINGS, INC.,
Defendants-Appellants.
__________________________
Appeals from the United States District Court
for the Northern District of Georgia
__________________________
(September 6, 2013)
Before PRYOR and COX, Circuit Judges and WALTER, * District Judge.
COX, Circuit Judge:
*
Honorable Donald E. Walter, United States District Judge for the Western District of
Louisiana, sitting by designation.
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Jeffrey W. Edwards and Frontier Holdings Inc. 1 (collectively “Defendants”)
were convicted of wire fraud, mail fraud, and money laundering, all offenses
arising out of a high yield investment scheme. In the scheme, Edwards solicited
funds from investors by promising astronomical returns and then used the funds for
extravagant personal expenditures. At sentencing, the district court ordered
Edwards to pay the victims over six million dollars in restitution pursuant to the
Mandatory Victims Restitution Act. 18 U.S.C. § 3663A. The Defendants appeal
and contend that the district court erred in the court’s restitution order by: 1) not
considering Edwards’s financial situation, 2) ordering restitution based on
dismissed counts, 3) ordering restitution for an unrelated real estate investment
scheme, and 4) ordering restitution without evidence showing Edwards injured the
alleged victims.
I. FACTS AND PROCEDURAL HISTORY
A. Defendants’ High Yield Investment Scheme
Edwards found potential victims through investment conferences or by
referrals from other victim-investors. Edwards utilized a variety of
misrepresentations to encourage potential victims to invest in his scheme. He
1
Frontier Holdings Inc. is a Georgia corporation. Edwards is the CEO of Frontier
Holdings and controls its decisions and operations. Edwards offered his high yield investment
scheme through Frontier Holdings and used several bank accounts belonging to Frontier
Holdings. While Frontier Holdings was not ordered to pay restitution, the defense makes no
differentiation between the two defendants and both defendants challenge on appeal all issues.
2
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promised victims that the high yield program produced returns ranging from 75%
to 800%. He also lied about his background. He told one victim that he owned
five banks. Another was told that he owned the First National Bank of Georgia.
A number of victims were told that he owned large tracts of land in Georgia and
handled millions of dollars in investment funds. At other times, Edwards told
victims that he was an agent of the Federal Reserve and a friend of then-Vice-
President Dick Cheney.
Edwards did not explain how the high yield investment program worked, but
told victims that this was a special investment opportunity reserved for high net
worth individuals. Despite these restrictions, Edwards assured victims that he
could allow multiple small investors to pool their money and access these
investments through his banking connections. At times, Edwards represented that
the investment worked by depositing money into special high interest Federal
Reserve accounts. At other times, Edwards asserted that the investment capitalized
on “fads” at the International Monetary Fund. Despite the high returns, Edwards
told victims that the high yield program was completely risk-free. According to
Edwards, the money was only pledged; so, the victims’ money would never leave
the bank he owned.
These misrepresentations enticed victims to send the Defendants money.
Victims were normally asked to wire money directly to the Defendants’ accounts.
3
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After receiving the victims’ money, Edwards did not invest it as promised. Rather,
he used the money for extravagant personal expenditures including houses, cars,
and cruises. Whenever victims attempted to withdraw money, Edwards assured
them that the investment was producing returns, but provided excuses for why the
money was not immediately available. Eventually, Edwards stopped
communicating with the victims.
The Defendants were indicted by a federal grand jury on six counts of mail
fraud (counts 1-6), twenty counts of wire fraud (counts 7-26), and eleven counts of
money laundering (counts 27-37). (Dkt. 127.) After the close of evidence at trial,
the district court granted the Government’s motion to dismiss counts 3, 4, and 5,
and the Defendants’ motion to dismiss counts 1, 12, 18, and 25. (Dkt. 239 at 1.)
The court denied the Defendants’ motion to dismiss counts 2, 6, 7-11, 14-17, 19,
21-24, and 26. The jury convicted the Defendants on two counts of mail fraud
(counts 2 and 6), seventeen counts of wire fraud (counts 7–11, 13–17, 19–24, and
26), and eleven counts of money laundering based on a high yield investment
scheme (counts 27–37). (Dkt. 242, 243.)
B. The Post-Trial Restitution Order
The probation officer filed a presentence report proposing Edwards pay
$6,820,620.05 in restitution to the Defendants’ victims. Edwards objected to the
presentence report and moved the court to bar consideration of all alleged victims
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who did not testify at trial. (Dkt. 266.) Particularly relevant to this appeal, the
report proposed $850,000 in restitution to the Heavenly Abundance Foundation
owned by Teana Reese [sic] and $1,635,000 in restitution to Camencita Jocson.
(PSI at ¶ 65.) The proposed restitution for Jocson consisted of $675,000 sent to
Edwards’s personal account for investment in the high yield program and $960,000
sent to an account belonging to Edwards’s company, Grandview LLC. Jocson was
persuaded to send $960,000 to the Grandview account because Edwards told her it
would be used to earn “rich rewards” through real estate investment. Edwards
opened the Grandview account on June 21, and Jocson wired the $960,000 five
days later. Over the next two and a half weeks, Edwards transferred the money
into his personal account. Edwards then spent the money on personal
expenditures, not investments.
At the sentencing hearing, Edwards objected to restitution for Jocson,
victims who did not testify, and victims whose related counts were dismissed at
trial. Edwards also asked the court to consider his dependents and financial
situation when calculating restitution. At the conclusion of sentencing, Edwards
was sentenced to 108 months, (Dkt. 271 at 2,) and Frontier Holdings was placed on
probation for one year. (Dkt. 272 at 2.) The district court said that a restitution
order would be entered later.
5
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Ninety-one days later, the district court ordered Edwards to pay
$6,820,620.05 in restitution to various victims. (Dkt. 311.) Frontier Holdings was
not required to pay restitution. (Dkt. 272 at 2.) Edwards moved to vacate the
restitution order on four grounds and requested a hearing. (Dkt. 315.) First,
Edwards argued the court improperly considered facts outside the record in
determining restitution. Second, he asserted the court should have considered his
finances in determining restitution. Third, Edwards argued that the court
wrongfully transferred the restitution proposed for Reece to the Caldwells,
Colovin, Freeman, Perry, and Wilson (who were allegedly Reece’s victims).
Fourth, Edwards argued the court wrongfully ordered restitution for the victims
whose related counts were dismissed at trial.
The court denied Edwards’s motion. (Dkt. 333.) The court held that it did
not need to consider Edwards’s finances to determine the amount of restitution
and properly ordered restitution for victims whose related counts were dismissed at
trial. The court also held that the transfer of the $850,000 in restitution from Reece
to the Caldwells, Colovin, Freeman, Perry, and Wilson was appropriate since
Edwards never objected to the proposed restitution to Reece in the presentence
report. No evidence in the record shows why the restitution was changed from
Reece to these individuals.
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According to the Government, shortly before sentencing the Government
learned that Reece was not a victim, but a co-conspirator in the fraud. (Red Br. at
55.) Allegedly, Reece solicited money from her victims and then transferred it to
the Defendants. Thus, on the eve of sentencing, the probation officer proposed that
the district court change the restitution order to prevent Reece from receiving an
unjust windfall. These events were never related to the Defendant. The
Government concedes that no evidence in the record supports this change in
restitution. (Red. Br. at 58.)
II. ISSUES PRESENTED
The Defendants present ten issues on appeal. After careful consideration of
the briefs, the record, and with the benefit of oral argument, we conclude that only
the four issues relating to restitution merit discussion. In addition to the four
issues, the Defendants contend that the district court erred by: denying a motion to
depose Dr. Moor; denying a motion to sever counts relating to Dr. Moor; and
denying a motion for a judgment of acquittal on counts 6, 7, 10, 11, 13, 17, 20, 21,
23, and 26. We conclude there is no merit in these contentions and do not address
them further in this opinion.
Of the restitution four issues, first, the Defendants contend that the district
court should have considered Edwards’s financial situation to determine the
amount of restitution. Second, the Defendants argue that the district court erred by
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granting restitution to victims when the counts related to their injuries were
dismissed at trial. Third, the Defendants assert that the district court erred by
ordering restitution to Jocson for losses caused by an unrelated real estate
investment scheme. Fourth, the Defendants contend that the district court lacked
sufficient evidence to order restitution for the Caldwells, Colovin, Freeman, Perry,
and Wilson.
III. STANDARDS OF REVIEW
This case implicates two standards of review. “This Court reviews de novo
the legality of a restitution order, but reviews for clear error the factual findings
underpinning a restitution order.” United States v. Brown, 665 F.3d 1239, 1252
(11th Cir. 2011).
IV. DISCUSSION
A district court has authority to order restitution only as authorized by
statute. The Mandatory Victim Restitution Act (“MVRA”) requires the district
court to grant restitution to all victims once a defendant is convicted of “any
offense… in which an identifiable victim or victims has suffered a… pecuniary
loss.” 18 U.S.C. § 3663A(c)(1)(B); see also United States v. Robertson, 493 F.3d
1322, 1329 (11th Cir. 2007) (“Under the Restitution Act, defendants convicted of
wire or mail fraud must make restitution to any ‘victim’ of their offenses.”). To
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order restitution under the MVRA, courts are required to follow the procedures in
18 U.S.C. § 3664. 18 U.S.C. § 3663A(d).
Both Edwards and Frontier Holdings appeal the restitution order. But, only
Edwards was ordered to pay restitution and Frontier Holdings makes no argument
about why it should be allowed to challenge the restitution order. Thus, we
conclude that Frontier Holdings does not have a sufficient injury for standing to
challenge the restitution order, and we only address Edwards’s arguments
challenging the restitution order. See United States v. Hays, 515 U.S. 737, 742
(1995) (“The federal courts are under an independent obligation to examine their
own jurisdiction, and standing is perhaps the most important of the jurisdictional
doctrines.”).
A. The district court correctly ignored Edwards’s finances when
determining the amount of restitution.
Edwards contends that the district court was required to consider Edwards’s
financial resources before determining the amount of restitution owed his victims.
The Government responds that the district court not only was not required to
consider Edwards’s financial resources, but was prohibited by the MVRA from
considering his financial resources. Because Edwards’s argument challenges the
legality of the restitution order, we review the district court’s procedures de novo.
Brown, 665 F.3d at 1252.
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The MVRA creates a two-step process for determining the amount and
schedule of restitution payments. First, a district court determines “the full amount
of each victim’s losses… without consideration of the economic circumstances of
the defendant.” 18 U.S.C. § 3663A(f)(1)(A). At this first stage, the district court
lacks “any discretion to contemplate the defendant’s financial situation.” United
States v. Jones, 289 F.3d 1260, 1265 (11th Cir. 2002).
Second, after the district court establishes the total amount of restitution
owed, the district court considers the defendant’s financial resources to create a
schedule for restitution payments. 18 U.S.C. § 3663A(f)(2). At this second stage,
the court should consider the defendant’s finances. However, even then, the
defendant bears the burden of demonstrating his financial condition, and the court
can rely on the probation report and need not make independent findings. See
Jones, 289 F.3d at 1266 (holding that a district court can rely on the probation
report and is not required to make independent findings regarding the defendant’s
financial resources).
In contrast to Edwards’s contention, the MVRA expressly prohibits
consideration of his financial resources when determining the amount of
restitution. Edwards’s reliance on our prior decisions in United States v.
Satterfield, 743 F.2d 827 (11th Cir. 1984), and United States v. Page,
69 F.3d 482,
493 (11th Cir. 1995), is misplaced. These cases interpret the Victim and Witness
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Protection Act of 1982 (“VWPA”) which, as we have previously explained, was
amended in 1996 by the MVRA. United States v. Thayer, 204 F.3d 1352, 1357
(11th Cir. 2000). While the VWPA gave the court discretion in determining how
much restitution to order, the MVRA requires a court to grant the “full amount of
restitution.”2 18 U.S.C. § 3664(f)(1)(A);
Thayer, 204 F.3d at 1357.
Accordingly, we hold that the district court did not err in determining the
full amount of restitution without considering Edwards’s financial resources.
B. The district court did not clearly err by ordering restitution to
Jocson for losses caused by a related scheme.
Edwards contends that he cannot be required to pay restitution to Jocson for
the money she transferred to Grandview LLC’s account (the “Grandview
Transaction”). According to Edwards, this was a separate real estate investment
transaction unrelated to the scheme charged in the indictment. The Government
responds that this issue has not been preserved for appeal and, even if preserved,
that the Grandview Transaction is related to the common scheme.
We conclude that this issue was properly preserved for appeal. 3 We must
determine whether the district court clearly erred by finding that the Grandview
2
To the extent they require a court to consider a defendant’s financial resources before
determining the amount of restitution, United States v. Scatterfield and United States v. Page
have been abrogated by statute.
3
Edwards preserved this argument for appeal by objecting during the sentencing hearing.
At the hearing, Edwards argued that “Ms. Jocson invested into a Grandview LLC, which was a
real estate development company. Has nothing to do with quote the high yield program that was
11
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Transaction was related to the offenses resulting in convictions. We review for
clear error a district court’s determination that a transaction was sufficiently related
to an offense resulting in convictions. See United States v. Valladares, 544 F.3d
1257, 1270 (11th Cir. 2008) (applying clear error review to the district court’s
determination that an injury was related).
As a threshold matter, Edwards incorrectly relies on the Supreme Court’s
decision in United States v. Hughey, 495 U.S. 411 (1990), for the proposition that
restitution may only be ordered for an offense resulting in conviction. As we have
previously explained, the enactment of “the MVRA all but eviscerated Hughey
with respect to crimes involving schemes.” United States v. Dickerson,
370 F.3d
1330, 1341 (11th Cir. 2004). In Dickerson, we observed that the definition of
“victim” used for the MVRA was expanded after the Hughey decision to include,
“in the case of an offense that involves as an element a scheme, conspiracy, or
pattern of criminal activity, any person directly harmed by the defendant's criminal
conduct in the course of the scheme, conspiracy, or pattern….” 18 U.S.C. §
3663A(a)(2). We joined our sister circuits in holding “that by defining ‘victim’
expansively in scheme-based crimes, Congress partially overrul[ed] Hughey's
the basis of the indictment… Nothing in the record there is any misrepresentation in connection
with the Grandview LLC. There is nothing in there that any losses were not just from the
economic downturn.”
12
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restrictive interpretation of the VWPA and expand[ed] district courts' authority to
grant restitution.” Dickerson, 370 F.3d at 1338 (citations omitted).
We have repeatedly “rejected attempts to narrow the scope of ‘victim’ under
the statute.” See Brown, 665 F.3d at 1253. We reject Edwards’s similar attempts
in this case. Thus, “when the crime of conviction includes a scheme, conspiracy,
or pattern of criminal activity as an element of the offense, the court may order
restitution for acts of related conduct for which the defendant was not convicted.”
Dickerson, 370 F.3d at 1339; see also
Brown, 665 F.3d at 1252 (“Courts have
agreed that, in light of the expanded statutory language, restitution orders for
conduct closely related to the offense of conviction are appropriate under either §
3663 or § 3663A(a)(2), in addition to the specific conduct for which the defendant
was convicted.”).
Turning to the district court’s decision, we consider whether the district
court clearly erred by finding that the Grandview Transaction was related to the
scheme that resulted in convictions. See Dickerson, 370 F.3d at 1339 (citing
United States v. Hensley,
91 F.3d 274, 277 (1st Cir. 1996), for the proposition that
“the outer limits of a VWPA § 3663(a)(2) restitution order encompass all direct
harm from the criminal conduct of the defendant which was within any scheme,
conspiracy, or pattern of activity that was an element of any offense of
conviction.”). Although the record is vague, the district court’s decision is not
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clearly erroneous. The record shows that Edwards enticed Jocson to transfer
money into the Grandview account by misrepresenting that he would use the
money for profitable real estate investments. Instead of using the money to invest
in real estate, Edwards transferred the money out of the Grandview account and
into his personal account to be used for personal expenditures.
Based on this evidence, the district court could find that the Grandview
Transaction was a related scheme. Like the offenses for which Edwards was
convicted, he presented a false investment opportunity to Jocson by
misrepresenting that the money would be invested. As in the scheme resulting in
convictions, Edwards enticed Jocson to invest by promising profitable returns.
Additionally, the course of misappropriation is nearly identical to the offenses
resulting in convictions. Edwards told Jocson to transfer the money into a bank
account belonging to a company he owned. He then transferred the money into his
personal account—the same account that held the proceeds of his other fraudulent
schemes.
The only significant difference between the transactions resulting in
convictions and the Grandview Transaction is that in one case Edwards falsely
promised to invest in various financial instruments and in the other he falsely
promised to invest in real estate. Edwards’s use of somewhat different lies to
accomplish both frauds does not show a separate, unrelated scheme or pattern of
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criminal activity. In fact, even among the offenses of conviction, Edwards
routinely used different representations to solicit victims.
Furthermore, our prior precedent considering whether a scheme was
sufficiently related for restitution suggests that the Grandview Transaction is
related. While we do not appear to have defined a test for relatedness, we have
considered whether the victim and purpose of each scheme were the same, whether
the schemes involved the same modus operandi, and whether the schemes involved
common participants. See Valladares, 544 F.3d at 1268. In Valladares, the
defendant was convicted of providing pharmacies with prescriptions that the
defendant obtained by bribing patients and doctors.
Id. at 1261. The pharmacies
would then submit fraudulent Medicare claims based on the prescriptions and pay
the defendant kickbacks. Although not charged in the indictment, the government
provided evidence that the defendant also operated a scheme of submitting
fraudulent Medicare claims for medical equipment through her company.
Id.
Even though the two schemes were different both in the type of claims submitted
for reimbursement and the means used, we held that the district court did not err in
determining they were related because the schemes involved the same victim,
purpose, modus operandi, and participants.
Id. at 1268.
The same considerations are relevant in this case. See
Brown, 665 F.3d at
1253 (using the victim and purpose factors from Vallardares to determine a
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scheme was related). Jocson was a victim both in the transactions resulting in
convictions and the Grandview Transaction. The purpose of both transactions was
to fraudulently obtain funds that Edwards could use for personal expenditures.
Edwards used the same modus operandi of fraudulently soliciting investments with
promises of profit, asking investors to transfer money to an account,
misappropriating the money to his personal account, and spending the money on
personal expenditures instead of investing it as promised. Finally, in both
transactions Edwards was a common participant.
Accordingly, we hold that the district court did not clearly err by finding the
Grandview Transaction related to the scheme.
C. The district court properly found that Edwards owed restitution to
victims whose related counts were dismissed at trial.
Edwards contends that the district court erred by ordering restitution to
victims when the counts related to their injuries were dismissed at trial. Edwards
seems to assert that since these counts were dismissed, the district court never
found that Edwards injured these victims. The Government responds that the
district court did make findings in the restitution order. Edwards fails to note
which recipients of restitution fall into this category, but does refer to dismissed
counts 1, 12, 18, and 25—which concern Mr. Hulis, Mr. and Mrs. Holyk, and Ms.
Lara. The court did not order Edwards to pay Hulis restitution; thus, we only
consider whether the district court made sufficient findings for the Holyks and
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Lara. Because this argument challenges the legality of the restitution order, and
not the factual basis underlying any finding of harm, we review de novo. 4
In ordering restitution, a district court must make specific findings that the
alleged victim was harmed by the defendant. United States v. Singletary, 649 F.3d
1212, 1222 (11th Cir. 2011). Contrary to Edwards’s contention, the district court
did find that the Holyks and Lara were harmed. In the restitution order, the court
found that both the Holyks and Lara were victims suffering damages of $75,000
and $106,000 respectively.
Furthermore, as already discussed, the lack of a conviction does not
automatically preclude the district court from finding an injury sufficient to order
restitution. While a conviction is required to trigger restitution under the MVRA,
once the defendant is convicted, a “court may order restitution for acts of related
conduct for which the defendant was not convicted.” Dickerson, 370 F.3d at 1339.
Thus, lack of a conviction does not automatically prevent the district court from
finding an injury sufficient for restitution so long as the injury is related to an
offense of which the defendant was convicted.
4
Because the defendant only challenges the existence of any findings, we do not address
the factual support for the district court’s findings. See Access Now, Inc. v. Southwest Airlines
Co., 385 F.3d 1324, 1330 (11th Cir. 2004) (“[T]he law is by now well settled in this Circuit that
a legal claim or argument that has not been briefed before the court is deemed abandoned and its
merits will not be addressed.”).
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Accordingly, we hold that the district court made sufficient findings to
support the order that the Holyks and Lara were victims entitled to restitution.
D. Insufficient evidence supports the restitution order to Reece’s
Alleged Victims.
Fourth, Edwards contends that the district court erred by ordering restitution
to the Caldwells, Colovin, Freeman, Perry, and Wilson (collectively “Reece’s
Alleged Victims”) because the Government failed to provide any evidence that
Edwards harmed these individuals. As previously mentioned, the probation officer
proposed a change in restitution from Reece to Reece’s Alleged Victims on the
night before sentencing after determining that Reece was a co-conspirator, not a
victim. The Government admits that it did not follow proper procedures to
substantiate restitution for these individuals, but argues the restitution order should
stand under a plain error standard of review because Edwards failed to preserve
this argument.
The Government contends that Edwards failed to preserve this issue for
appeal because he did not object to the presentence report’s $850,000
recommended restitution for Reece and did not object to the restitution for Reece’s
Alleged Victims until after the restitution order was issued. Edwards responds that
he objected as soon as they were aware of restitution to Reece’s Alleged Victims.
To preserve an argument for appeal, the argument must be raised at the trial
court if the party had an opportunity to do so. United States v. Obasohan, 73 F.3d
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309, 310 (11th Cir. 1996). In order to explain how Edwards properly preserved
this argument at the earliest opportunity, we first must recount how the procedure
in this case deviated from the procedures a court should follow under 18 U.S.C. §
3664. 5 See 18 U.S.C. § 3663A(d) (providing that an order for restitution should
follow the procedures in 18 U.S.C. § 3664).
Under 18 U.S.C. § 3664, the probation officer should provide the court with
information for a restitution order including “a complete accounting of the losses
of each victim.” 18 U.S.C. § 3664(a). The district court should then disclose
relevant portions of this material to both the defendant and the government. 18
U.S.C. § 3664(b). If needed, “the court may require additional documentation or
hear testimony.” 18 U.S.C. § 3664(d)(4). If a victim’s losses are still
unascertainable by ten days before sentencing, the government or the probation
officer should inform the court. 18 U.S.C. § 3664(d)(5). The court should then set
a date for final determination of the victim’s losses no later than 90 days after
sentencing.6 18 U.S.C. § 3664(d)(5). The government bears the burden of
demonstrating a victim’s loss by a preponderance of the evidence. 18 U.S.C. §
3664(e).
5
This description is provided only to give proper context for our analysis concerning
whether the issue was preserved. Edwards does not contend on appeal that the district court
erred by deviating from the procedures in 18 U.S.C. § 3664.
6
Although the statute says that the date for final determination is “not to exceed 90 days
after sentencing,” the Supreme Court has held that this requirement may be waived in certain
situations. See Dolan v. United States, 130 S. Ct. 2533, 2537 (2010).
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These procedures were not followed in this case as to Reece’s Alleged
Victims. These alleged victims were not mentioned in the presentence report. In
the presentence report, the full $850,000 was proposed as restitution to Reece
directly. Consequently, Edwards received no information about these victims with
the presentence report information pertaining to restitution. Furthermore, the
Government failed to inform the court of the unascertainable losses by ten days
before sentencing. Although no communication is in the record, the Government
asserts that the decision to transfer restitution from Reece to Reece’s Alleged
Victims was not communicated to the court until the day before sentencing and
was never communicated to Edwards. The Government also admits that it never
provided any evidence of Reece’s Alleged Victims’ losses at sentencing. Because
of these procedural mistakes, Edwards first learned of the order requiring
restitution to Reece’s Alleged Victims when the district court entered the order
ninety-one days after the sentencing hearing. Therefore, by objecting to the
restitution order, Edwards objected at the earliest possible opportunity.
We reject the Government’s argument that Edwards failed to preserve his
defense against the transfer of restitution to Reece’s Alleged Victims by not
objecting to the original proposed restitution to Reece. First, despite the alleged
connection between the recipients, this restitution is ordered to different
individuals. Second, the Government’s transfer theory fails because it begs the
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question by presupposing, without any evidence, that these individuals actually
were Reece’s victims. The Government essentially argues that by not objecting to
restitution to Reece, Edwards failed to preserve the opportunity to object to a new
restitution order to individuals who are not shown by the record to have any
connection with Edwards, Reece, or this case generally. Stated this way, the flaw
in the Government’s preservation argument is readily apparent.
Accordingly, we hold that Edwards preserved this argument for appeal by
objecting as soon as this restitution order was received.
Under 18 U.S.C. § 3664(e) the government must prove that an individual is
a victim entitled to restitution by a preponderance of the evidence. Because this
issue addresses the facts underlying a restitution order, we review the district
court’s decision for clear error. Brown, 665 F.3d at 1252. Since the Government
admits that the court had no evidence at the time it ordered restitution to
demonstrate that Reece’s Alleged Victims were entitled to restitution, we conclude
that the Government failed to meet its evidentiary burden and that the district court
clearly erred. 7
7
The Government argues that the court did have evidence that the Caldwells invested
with Reece because it mentioned the restitution award in a separate criminal action brought
against Reece. However, the court never states that it took judicial notice of that judgment or
that the judgment provides sufficient evidence to link Edwards to the Caldwells. Thus, this
finding is not explained “with sufficient clarity to enable this court to adequately perform its
function on appellate review.” United States v. Huff, 609 F.3d 1240, 1248 (11th Cir. 2010).
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Because we hold that the district court erred in ordering restitution to
Reece’s Alleged Victims, we must determine what remedy is appropriate. Under
28 U.S.C. § 2106, this court has broad discretion to grant relief “as may be just
under the circumstances.” See United States v. Matinez, 606 F.3d 1303, 1304
(11th Cir. 2010) (“28 U.S.C. § 2106 unambiguously grants the circuit courts broad
discretion to fashion an appropriate mandate… [i]ndeed, we cannot imagine how
the appellate court’s discretion could be framed more broadly.”). We often require
both the defendant and the government to present all evidence and objections at the
sentencing hearing. See United States v. Canty,
570 F.3d 1251, 1256-57 (11th Cir.
2009).
In light of third parties’ interests, however, the correct remedy here is to
vacate the order of restitution to Reece’s Alleged Victims and remand for a
hearing. In this case, we face a situation where not remanding may harm victims
who may not have been in court. If we do not remand, these individuals will be
denied the possibility of restitution through no fault of their own. Vacating
without remand would harm victims though they bear no responsibility for the
crime and are the parties the statute seeks to benefit.
Accordingly, we exercise our discretion to vacate the order of restitution to
Reece’s Alleged Victims and remand the case to the district court for a hearing on
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whether these individuals are entitled to restitution. 8 See generally 28 U.S.C. §
2106.
V. CONCLUSION
The convictions and sentences of the Defendants are AFFIRMED. We
AFFIRM the restitution order generally, but VACATE the restitution order in
respect to the Caldwells, Colovin, Freeman, Perry, and Wilson and REMAND for
a hearing to determine whether they are entitled to restitution.
CONVICTIONS AND SENTENCES AFFIRMED; RESTITUTION
ORDER AFFIRMED IN PART AND VACATED AND REMANDED IN PART.
8
In its brief, the Government notes that the restitution order contains an arithmetic error
that originated in the Government’s proposed order. (Red. Br. at 47-48.) On remand, the district
court should also revise the restitution order to reflect any clerical errors in the Government’s
arithmetic. See Fed. R. Crim. P. 36 (granting the court the ability to correct a clerical error at any
time.); United States v. Augustin, 661 F.3d 1105, 1110 n.1 (11th Cir. 2011) (“[W]e may sua
sponte raise the issue that there is a clerical error in the judgment and remand with instructions
that the error be corrected.”).
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