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Summary: Case: 19-12239 Date Filed: 07/20/2020 Page: 1 of 19 [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ Nos. 19-12239, 19-13636 Non-Argument Calendar _ D.C. Docket No. 5:17-cr-00026-MTT-2 UNITED STATES OF AMERICA, Plaintiff-Appellee, versus DAVE CARTY, Defendant-Appellant. _ Appeals from the United States District Court for the Middle District of Georgia _ (July 20, 2020) Before MARTIN, ROSENBAUM, and ANDERSON, Circuit Judges. PER CURIAM: Dave Carty was indicted on
Summary: Case: 19-12239 Date Filed: 07/20/2020 Page: 1 of 19 [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ Nos. 19-12239, 19-13636 Non-Argument Calendar _ D.C. Docket No. 5:17-cr-00026-MTT-2 UNITED STATES OF AMERICA, Plaintiff-Appellee, versus DAVE CARTY, Defendant-Appellant. _ Appeals from the United States District Court for the Middle District of Georgia _ (July 20, 2020) Before MARTIN, ROSENBAUM, and ANDERSON, Circuit Judges. PER CURIAM: Dave Carty was indicted on 1..
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Case: 19-12239 Date Filed: 07/20/2020 Page: 1 of 19
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
Nos. 19-12239, 19-13636
Non-Argument Calendar
________________________
D.C. Docket No. 5:17-cr-00026-MTT-2
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
DAVE CARTY,
Defendant-Appellant.
________________________
Appeals from the United States District Court
for the Middle District of Georgia
________________________
(July 20, 2020)
Before MARTIN, ROSENBAUM, and ANDERSON, Circuit Judges.
PER CURIAM:
Dave Carty was indicted on 13 counts of wire fraud, wire fraud conspiracy,
mail fraud, and money laundering conspiracy. He went to trial, where he was
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acquitted by a jury on all charges except one count of wire fraud. The district court
sentenced him to 50-months imprisonment. The court also ordered Carty to pay
$1.9 million in restitution to the Bibb County School District. On appeal, Carty
challenges his conviction, his term of imprisonment, and the order of restitution.
Following careful review, we affirm.
I.
A. FACTUAL BACKGROUND
In 2011, the Bibb County School District (the “School District”) in Macon,
Georgia, decided to overhaul and upgrade its classroom technology. An outside
auditor hired by the School District recommended that the district replace all
27,500 school computers, at an estimated cost of $52 million.
In June 2012, the School District solicited bids for a project manager to
oversee the necessary hardware and software upgrades. One of the three
companies that prequalified for the project was Progressive Consulting
Technologies, Inc. (“Progressive”), located in Macon. Carty served as
Progressive’s Vice-President and Chief Operating Officer, while codefendant Isaac
Culver served as the firm’s President and Chief Executive Officer. CompTech,
Inc., a federal contracting firm located in Dayton, Ohio, supported Progressive’s
bid for the technology upgrade by submitting a reference letter from Allen
Stephen, CompTech’s President and Chief Executive Officer. In August 2012,
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Progressive was awarded the position of project manager for the School District’s
technology upgrade. From September 2012 through June 2013, the School District
paid Progressive $953,360 for services that the firm performed as project manager.
Around this time, Progressive set up a demonstration at a Bibb County high
school to display a variety of technology options for the upgrade. One of the
devices was the NComputing L300 (“L300” or “NComputing device”). The L300
is what is known as a “thin client,” a device that connects multiple monitors to a
single personal computer (“PC”) acting as a server. With an L300 connected, one
PC can serve up to 30 or 40 different monitors. As of 2012, the L300 was
considered to be a good computing product for school districts. The School
District decided to organize its classroom software upgrade around the L300.
The School District wanted to purchase the equipment on a “GSA schedule,”
which allows companies to sell products to government entities at a previously
negotiated price. CompTech was listed on a GSA schedule, though it had never
before made a GSA sale.
In December 2012, Progressive negotiated with NComputing for the
purchase of 15,000 L300s. Progressive agreed to pay $159 per device for 11,000
L300s, and NComputing agreed to donate 4,000 additional devices to the School
District. The total cost for the 15,000 L300s, including a vSpace server and
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management center, was $1,749,000 ($116.60 per device). The sale was a direct
sale from the manufacturer, not a GSA sale.
On December 17, 2012, Carty sent an email to Allen Stephen at CompTech.
Even though CompTech had not been involved in the NComputing transaction,
Carty instructed Stephen to send the School District an invoice for the
NComputing devices and support on CompTech letterhead, using CompTech’s
GSA information. Originally, Carty sent Stephen a blank invoice with a total cost
of $3,607,500. The invoice charged the School District for all 15,000 devices, as
well as certain support and management services that NComputing had provided at
no cost. Later that day, Carty changed the total amount to $3,768,000. Either
Carty or Culver also requested the invoice number be changed from “GSA0001” to
“GSA0037,” so as not to look like this was CompTech’s first GSA sale. In the
end, the invoice (which we refer to as the “NComputing Invoice”) charged the
School District $2,235,000 for 15,000 L300s ($149 per device), as well as
$1,533,000 in management and installation fees. This amount was separate from
the management fees the School District paid to Progressive. The next day,
Stephen emailed the NComputing Invoice to the School District’s Information
Technology (“IT”) Director.
On December 21, the School District wired $3,768,000 to CompTech for the
sale. On Culver’s instructions, CompTech wired $2,151,750 to Progressive’s bank
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account. That same day, Progressive wired $1,749,000 to NComputing for the
previously negotiated devices and corresponding support services. A few days
later, Culver directed Stephen to send a check for $1,537,990 to Progressive, which
he did.
Initially, 300 of the NComputing devices were deployed and installed in
pilot projects at three Bibb County schools. In the spring of 2013, an attorney for
the School District asked Stephen for updates about installation and deployment of
the remaining devices. Although the NComputing Invoice—which was on
CompTech letterhead—provided for installation, it was Stephen’s understanding
that Progressive would do the installation. In April, Culver told Stephen to tell the
School District that CompTech would install the devices. He also instructed
Stephen to tell the School District that two “employees” named in the email would
do the installation. Stephen later testified that CompTech was not in charge of
installation and the two employees named in Culver’s email were not CompTech
employees.
In the fall of 2013, Michael Hall, the School District’s new IT Director, shut
down the technology upgrade project. Hall concluded that the cost of
implementation was too high, and that the NComputing devices were not the right
fit for the classrooms. Aside from the 300 devices used in the pilot project, the rest
of the order—totaling 14,700 NComputing devices—stayed in storage, where they
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remained through Carty’s trial. The School District later entered into negotiations
with a company called Firefly to sell 13,500 of the unused devices for $65 each,
but the plan fell through when NComputing refused to provide the necessary
licenses. At the time the negotiations with Firefly were ongoing, NComputing also
offered to buy the devices back at $40 per unit.
B. PROCEDURAL HISTORY
Carty, Culver, and Progressive were indicted by a federal grand jury in 2017.
The indictment charged each party with 13 counts of wire fraud, wire fraud
conspiracy, mail fraud, and money laundering conspiracy. Relevant to this appeal,
Count Two charged wire fraud based on Carty’s December 17, 2012 email to
Stephen, to which Carty attached a blank invoice (which became the NComputing
Invoice) and in which Carty requested that Stephen transcribe CompTech’s
letterhead onto the invoice. Carty pled not guilty to all charges.
1. Trial
Prior to trial, Carty moved in limine to exclude evidence of the $953,360 in
management fees the School District paid to Progressive. We refer to the invoices
and payments reflecting these management fees as the “Progressive Invoices.”
Carty maintained that the Progressive Invoices were not relevant to the charged
conduct, and that any relevance would be outweighed by the jury’s negative
inference “that [Progressive] was already earning a great deal of money from [the
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School District] through its project manager contract.” The government responded
that this evidence was relevant to distinguishing between how Progressive billed
when it was acting legitimately, and how it billed when it was trying to make the
NComputing Invoice look legitimate. The government submitted that exclusion
was not warranted because any negative inference the jury might draw would not
outweigh the probative value of the evidence. The government later added that the
evidence would show Progressive was already getting paid for the work it was
doing for the School District and it did not need to build payment into the cost of
the NComputing devices.
The district court preliminarily found that the government “made a sufficient
showing to preclude the granting” of Carty’s motion in limine. The government
then introduced the Progressive Invoices at trial through testimony but did not
publish the documents to the jury. Following the close of evidence on the second
day of trial, the court again ruled that the Progressive Invoices could come in as
evidence. The next day, one of the government’s witnesses discussed two of the
Progressive Invoices in detail. The fourth day of trial, another witness identified
the checks the School District paid to Progressive on the invoices. The checks
were summarized on a chart showing total payments to Progressive in the amount
of $953,360. Carty’s objection to the summary chart’s introduction was overruled
and the chart was admitted into evidence.
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During closing arguments on the last day of trial, counsel for the government
told the jury that Carty “turned the role of technical project manager for the Bibb
County School District into a cash windfall.” Carty objected to this statement; the
court again overruled the objection. The jury then returned a verdict of guilty on
Count Two and not guilty on all other counts.
2. Presentence Proceedings
Following Carty’s conviction, the Probation Office prepared a presentence
investigation report (“PSR”) for him. The PSR set Carty’s base offense level at 7.
Probation increased Carty’s offense level by 18 because the intended loss amount
of the offense was greater than $3,500,000 but less than $9,500,000. Probation
also increased Carty’s offense level by 2 because the offense involved
sophisticated means. With a total offense level of 27 and no criminal history,
Carty’s sentence range under the U.S. Sentencing Guidelines was 70–87 months.
The Probation Office also recommended restitution in the amount of $1,922,520.02
to the School District. This amount was calculated as follows:
$3,768,000.00 (the amount the School District paid pursuant to the NComputing
Invoice)
- $34,980.00 (300 installed NComputing devices multiplied by an actual cost of
$116.60)
- $955,500.00 (14,700 stored NComputing devices multiplied by $65, the price
Firefly offered for them)
- $854,999.98 (the amount the School District received in a civil settlement)
$1,922,520.02
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Carty objected to the PSR’s loss determination. He first argued that the
School District did not suffer pecuniary harm because the NComputing devices
were delivered in working order and thus “the only loss [the School District]
suffered was being deceived about the identity of the vendor.” Even if the “loss”
were any amount the School District paid in excess of the GSA schedule price—
which Carty, through his offense conduct, led the School District to believe it was
paying—Carty argued the pricing information in the record compels a finding of
no loss or a lower loss than that reflected in the PSR. The government agreed with
Carty that the draft PSR incorrectly calculated the loss amount but rejected the idea
that there was no loss. The government argued the loss amount should be set at
$3,393,000. This was the NComputing Invoice amount, less the amount
NComputing later offered the School District to buy back the devices ($25 per
device, so $375,000 total). In the alternative, the government argued Carty inflated
the price of the NComputing devices by $2,019,000. This was the amount in the
NComputing Invoice, less what Progressive actually paid for the devices. Either
way, the government noted, a 16-level increase for a loss amount falling between
$1,500,000 and $3,500,000 would be proper. The PSR was edited to include an
actual loss of $1,922,520.02 (the same as the preliminary restitution amount),
resulting in a 16-level increase.
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Carty objected, as well, to the imposition of restitution. He said the School
District was not a victim because it chose to keep the NComputing devices in
storage, rather than use or sell them. In the alternative, he argued that the evidence
at trial—rather than the price offered by Firefly or NComputing—should be the
basis for determining the value of the devices in the School District’s possession.
The Probation Office stood by its restitution recommendation from the original
PSR.
3. Sentencing
At the sentence hearing, Carty renewed his objection to the loss amount
determination. The court, after hearing from the government and discussing
various aspects of the loss calculation, overruled Carty’s objection. The court
stated it was “satisfied that the loss amount exceeds $1.5 million.” The court then
sentenced Carty to 50-months imprisonment, followed by 3 years of supervised
release. Carty timely appealed from his judgment of conviction.
At sentencing, the court told the parties it would address restitution and
forfeiture by separate order. After giving the parties a chance to submit
supplemental briefing, the court ordered Carty to pay $1,920,853.36 in restitution,
jointly and severally with his codefendants, to the School District. The court found
that restitution was mandatory because Carty caused the School District to suffer a
pecuniary loss. The court adopted the Probation Office’s restitution calculation,
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except that it offset the judgment by $856,666.64 to reflect the updated amount of
money the School District received pursuant to the civil settlement. The court also
ordered $148,000 in forfeiture, to which Carty did not object. The court entered an
amended judgment, from which Carty also appealed.
II.
Carty makes three arguments in his consolidated appeal. First, he argues his
conviction should be vacated based on the admission of the Progressive Invoices.
Second, he argues his sentence should be vacated because the district court failed
to make independent or specific findings regarding the loss amount. Finally, he
argues the district court considered the wrong factors when calculating the
restitution award.
We first conclude that the district court did not err in admitting the
Progressive Invoices into evidence. We then turn to the restitution calculation,
which Carty cannot show was done with clear error. Finally, any error in
calculating the loss amount for sentencing was harmless. As a result, we affirm.
A.
“Determinations of admissibility of evidence rest largely within the
discretion of the trial judge and will not be disturbed on appeal absent a clear
showing of an abuse of discretion.” United States v. Baptiste, 935 F.3d 1304, 1311
(11th Cir. 2019) (quotation marks omitted). Federal Rule of Evidence 403
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provides that relevant evidence may be excluded “if its probative value is
substantially outweighed by a danger” of unfair prejudice. Even where a party
shows the district court abused its discretion in determining the admissibility of
evidence, “nonconstitutional evidentiary errors are not grounds for reversal absent
a reasonable likelihood that the defendant’s substantial rights were affected.”
United States v. Gibson, 708 F.3d 1256, 1275 (11th Cir. 2013) (quotation marks
omitted). “In reviewing issues under Federal Rule of Evidence 403, we look at the
evidence in a light most favorable to its admission, maximizing its probative value
and minimizing its undue prejudicial impact.”
Id. (alteration adopted) (quotation
marks omitted).
The district court did not abuse its discretion when it permitted the
introduction of the Progressive Invoices. The district court properly found that
these invoices were relevant to explain Progressive’s role as project manager and
to prevent the jury from inferring that the upcharge in the NComputing Invoice
was necessary to compensate Progressive for other services rendered. The
Progressive Invoices were also relevant to show that Progressive normally charged
the School District for work only after it had been completed, whereas the
NComputing Invoice was submitted before the services were rendered. Because
the Progressive Invoices had a tendency to make Carty’s guilt on Count Two more
probable, they were relevant evidence. See Fed. R. Evid. 401. In addition, viewed
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in the light most favorable to admission, the Progressive Invoices did not unfairly
prejudice the jury. The trial record shows the invoices were used for the limited
purpose described above—not for inflaming the jury against Carty. Carty
challenges the government’s statement in closing that he “turned the role of
technical project manager for the Bibb County School District into a cash
windfall.” The context of this statement shows the government was referring to
the $2 million profit Progressive made by obscuring its role as vendor of the
NComputing devices, not the smaller, legitimate payments it received as the
project manager.
We have no trouble concluding that the probative value of the Progressive
Invoices was not “substantially outweighed” by any danger of prejudice. See Fed.
R. Evid. 403. As a result, this evidence was properly admitted by the district court.
B.
Under the Mandatory Victims Restitution Act (“MVRA”), a district court
must “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.’”
United States v. Goldman, 953 F.3d 1213, 1223 (11th Cir. 2020) (alterations in
original) (quoting 18 U.S.C. § 3663A(c)(1)(B)). In order to qualify as a victim
under the MVRA, an entity “must have suffered a harm that directly and
proximately results from the commission of [the defendant’s] offenses.” United
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States v. Robertson, 493 F.3d 1322, 1334 (11th Cir. 2007) (alteration adopted)
(quotation marks omitted). “The government must show [by a preponderance of
the evidence] not only that a particular loss would not have occurred but for the
conduct underlying the offense of conviction, but also that the causal connection
between the conduct and the loss is not too attenuated (either factually or
temporally).”
Id. (alteration adopted) (quotation marks omitted); see United States
v. Martin,
803 F.3d 581, 593 (11th Cir. 2015). The government also bears the
burden of proving by a preponderance of the evidence the existence and amount of
loss. See United States v. Sheffield,
939 F.3d 1274, 1276 (11th Cir. 2019). “As
part of its burden to prove a restitution amount, the government must deduct any
value that a defendant’s fraudulent scheme imparted to the victims.” United States
v. Huff,
609 F.3d 1240, 1247 (11th Cir. 2010) (alteration adopted) (quotation
marks omitted). “We review de novo questions of law concerning a restitution
order, and we review for clear error the factual findings supporting a restitution
order.”
Goldman, 953 F.3d at 1223.
Carty first asserts that restitution is inappropriate because the School District
did not suffer a pecuniary loss. He is mistaken. But for Carty’s misrepresentations
in the NComputing Invoice, the School District would not have paid the inflated
price of $3,768,000 for the NComputing devices. This qualifies the School District
as a victim under the MVRA. Robertson, 493 F.3d at 1334.
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Carty also says the district court erred by holding him jointly and severally
liable for the restitution amount with his codefendants. As evidenced by the jury
verdict on Count Two, Carty was culpable for the large loss suffered by the School
District. In this circumstance, the district court may apportion restitution jointly
and severally. See United States v. Puentes, 803 F.3d 597, 605 (11th Cir. 2015)
(explaining, that, in cases involving multiple defendants, a district court “may
make each defendant liable for the full amount of restitution, or may apportion
liability among the defendants based on their level of contribution to the victims’
losses”). The court did not err in doing so here.
Carty finally argues the district court erred in calculating the amount of
restitution. However, Carty has failed to show the district court committed clear
error in this regard. First, the court used the correct starting point for its
calculation: the $3,768,000 the School District paid pursuant to the NComputing
Invoice. The district court then correctly reduced this amount by $34,980, valuing
each of the 300 devices used in the pilot program at the $116.60 per device
charged by NComputing. Carty says the court should have used the 2019 GSA
schedule prices established at trial. However, it was reasonable for the court to
decline to use the 2019 GSA schedule values. As the court pointed out in its
restitution order, the 2019 GSA schedule single-device prices do not reflect the
value the School District received from negotiating and executing a large-volume
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purchase. The court did not err in using the $116.60 per-device price to calculate
the value the School District received for the pilot-project devices. The court also
properly reduced the restitution amount by the $856,666.64 the School District
received in the civil settlement.
Finally, the district court did not clearly err in its valuation of the remaining
14,700 NComputing devices. Unlike the 300 devices used in the pilot project, the
remaining devices were never installed. The district court found that the School
District purchased the NComputing devices assuming “installation, licensing, [and]
accessories” would be included. The court then found that, only after purchasing
the devices and running the 300-device pilot program did the School District
realize that “more substantial and prohibitive investment was required in order to
use the remaining 14,700 uninstalled terminals.” Because, in the court’s opinion, it
would not be fair to use the $116.60 figure to value devices that the School District
was cost prohibited from installing, the court valued the remaining devices at $65
each, based on the price Firefly offered the School District for them.
In order to vacate this calculation on appeal, Carty must show the district
court clearly erred in finding the School District could not realize the full value of
the NComputing devices and faulting Carty for this outcome. He cannot do so.
Carty’s few record citations do not persuade us it was clear error for the district
court to find the School District “could not afford” to install the remaining devices.
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Nor has Carty shown that the district court clearly erred in holding him responsible
for the unused devices. As the government points out, if Carty had “not
undertaken to disguise the source of the purchase of the NComputing devices, the
School [District] would never have been in the possession of goods that were not
suitable for its limited resources.” Br. of Appellee at 55. Carty does not—and
cannot—contest this obviously correct assertion. The district court’s choice to
value the 14,700 remaining devices at $65 each was thus reasonable.
C.
According to the sentencing guidelines, the base offense level for a
defendant convicted of fraud must be increased based on the amount of “loss”
caused by the defendant. See USSG § 2B1.1(b)(1). The loss amount “is the
greater of actual loss or intended loss.” Id. § 2B1.1 cmt. n.3(A). Although the
district court need not make “a precise determination of loss,” United States v.
Moran,
778 F.3d 942, 973 (11th Cir. 2015), the discretion of the court is “not
altogether unfettered in calculating the loss amount,” United States v. Campbell,
765 F.3d 1291, 1301 (11th Cir. 2014). Importantly, “the court must support its loss
calculation with reliable and specific evidence.”
Id. (quotation marks omitted).
The district court must also “make independent findings establishing the factual
basis for its Guidelines calculations,” including loss amount. United States v.
Hamaker,
455 F.3d 1316, 1338 (11th Cir. 2006). “Because district courts are in a
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unique position to evaluate the evidence relevant to a loss determination,” we
review this determination for clear error. United States v. Elbeblawy, 899 F.3d
925, 933, 940 (11th Cir. 2018) (alteration adopted) (quotation marks omitted).
Under this standard, we will only upset a loss determination if “we are left with a
definite and firm conviction that a mistake has been committed.”
Campbell, 765
F.3d at 1302 (quotation marks omitted). Objections or arguments not raised before
the district court are reviewed for plain error. See United States v. Evans,
478 F.3d
1332, 1338 (11th Cir. 2007).
Carty first argues that the district court failed to make an independent
finding of the loss amount. This challenge was not raised before the district court,
so we review it for plain error. See id. Carty focuses on the district court’s
statement at sentencing: “I’m satisfied that the loss amount exceeds $1.5 million.”
We disagree with Carty that this sentence shows that the district court failed to
make an independent finding. Just minutes before, the court went through several
aspects of the loss calculation and asked Carty’s attorney why the loss was not
Progressive’s $2 million upcharge for the devices. This shows the court did not
commit plain error by failing to make independent findings of loss.
Carty also argues the district court did not have an evidentiary basis for the
loss enhancement. We reject this challenge. While the district court did not
precisely specify which calculation it was using to determine loss, this was not
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error because the loss determination need not be “precise.” Moran, 778 F.3d at
973. No matter what, the correct loss amount falls within the range for a 16-level
loss enhancement. See USSG § 2B1.1(b)(1)(I); see also Br. of Appellee at 45–46
(setting forth alternative loss calculations, all of which are greater than $1.5 million
but less than $3.5 million). As a result, any error was harmless. See United States
v. Woodard,
459 F.3d 1078, 1087 (11th Cir. 2006) (per curiam). Carty renews his
argument that the 2019 GSA schedule prices mean the School District suffered a
smaller loss than what the government and district court submit. We reject Carty’s
alternative loss calculations for the same reasons as our earlier holding that the
district court did not clearly err in valuing the NComputing devices in the context
of restitution.
AFFIRMED.
19
