United States v. Willena Stargell

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, No. 11-50392

Plaintiff-Appellee,

D.C. No.

v. 5:09-cr-00005-TJH-1

WILLENA STARGELL, ORDER AND

Defendant-Appellant. OPINION

Appeal from the United States District Court

for the Central District of California

Terry J. Hatter, Senior District Judge, Presiding

Argued and Submitted

March 7, 2013—Pasadena, California

Filed October 17, 2013

Before: Sidney R. Thomas, Andrew D. Hurwitz, Circuit

Judges, and Ralph R. Beistline, Chief District Judge.*

Opinion by Judge Beistline

*

The Honorable Ralph R. Beistline, Chief United States District Judge

for the District of Alaska, sitting by designation.

2 UNITED STATES V. STARGELL

SUMMARY**

Criminal Law

The panel withdrew an opinion filed August 2, 2013, and

filed a new opinion affirming a defendant’s convictions and

sentence for fraud by wire affecting a financial institution,

aiding and assisting in the preparation of a false return, fraud

by wire, and aggravated identity theft, arising out of the

defendant’s work as a tax preparer.

The panel held that new or increased risk of loss is

sufficient to establish that wire fraud “affects” a financial

institution within the meaning of 18 U.S.C. § 1343, and that

the fraudulent tax returns prepared by the defendant in

schemes to obtain refund anticipation loans “affected” banks,

regardless of whether the banks ultimately paid out on such

a loan or suffered any loss, because the banks’ risk of loss on

the loans was increased by the fraudulent nature of the

returns.

Because the wire fraud that was the predicate to the

aggravated identity theft did not occur until after 18 U.S.C.

§ 1028A’s enactment date, the panel rejected the defendant’s

contention that the jury may have convicted the defendant

based solely on pre-enactment conduct.

The panel rejected the defendant’s contention that

government and the district court infringed on the core of her

defense counsel’s role, in violation of the defendant’s Sixth

**

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

UNITED STATES V. STARGELL 3

Amendment rights, by allowing the defendant’s former

attorney to testify at sentencing regarding the loss and

restitution calculations, where the former attorney was called

by the defendant’s new attorney. Because the former

attorney’s testimony did not contain privileged

communications, the panel rejected the defendant’s

contention that admission of the testimony violated the

attorney-client privilege.

The panel held that the district court did not clearly err in

calculating the loss and restitution amounts.

COUNSEL

Marisa L. D. Conroy (argued), Encinitas, California, for

Defendant-Appellant.

André Birotte, Jr., United States Attorney; Antoine F.

Raphael, Assistant United States Attorney, Chief; Joseph B.

Widman, Assistant United States Attorney, Deputy Chief;

and Ryan White (argued), Assistant United States Attorney,

United States Attorneys’ Office, Riverside, California, for

Plaintiff-Appellee.

ORDER

In response to the parties’ filings regarding Appellant’s

Rehearing Petition of August 28, 2013, the opinion filed on

August 2, 2013, is hereby WITHDRAWN. Furthermore,

Appellant’s Motion For Leave To File Reply To Opposition

of October 4, 2013, is hereby DENIED.

4 UNITED STATES V. STARGELL

OPINION

BEISTLINE, Chief District Judge:

Willena Stargell appeals her convictions of twelve

felonies arising out of her work as a tax preparer for various

clients.

The superseding indictment charged fraud by wire

affecting a financial institution (Counts 1 to 6); aiding and

assisting in the preparation of a false return (Counts 7 to 12);

fraud by wire (Counts 13 to 15); and aggravated identity theft

(Counts 16 to 18). The district court dismissed Counts 6, 12,

and 18 on the government’s Motion. After the district court

granted her Motion For Acquittal on Counts 3, 9, and 15,

Stargell was convicted on the remaining charges. She claims

that the district court erred by: (1) failing to grant her Motion

For Judgment Of Acquittal as to Counts 1, 2, 4, and 5 of the

superseding indictment despite the government’s failure to

prove that the underlying conduct affected a financial

institution; (2) permitting convictions on Counts 16 and 17

without excluding the possibility that they were based on

conduct that preceded the enactment of 18 U.S.C. § 1028A;

(3) allowing Stargell’s former attorney to testify at the

sentencing hearing; and (4) improperly calculating loss and

restitution amounts.

We have jurisdiction under 28 U.S.C. § 1291, and we

affirm the convictions and sentences.

UNITED STATES V. STARGELL 5

I

A

After completing a course on tax preparation and

receiving state certification, Stargell began preparing taxes

for Liberty Tax Service (“LTS”) in Moreno Valley,

California. LTS terminated Stargell’s employment in 2003,

and Stargell began her own tax preparation business called

Liberty Bell Tax Service (“LBTS”).

The evidence at trial established that while operating

LBTS, Stargell prepared federal income tax returns

containing false statements and engaged in schemes to obtain

refund anticipation loans (“RAL”) based on these fraudulent

returns. In some instances, the IRS detected the fraud and

declined to issue a tax refund, resulting in a loss to the banks

that made the loans. The government also proved that

Stargell engaged in identity theft by using the names and

social security numbers of former clients or other individuals,

without their knowledge or consent, to file tax returns and to

request RALs.

B

Before sentencing, the district court held two evidentiary

hearings to determine loss and restitution. At the latter

hearing, Kay Otani, former counsel for Stargell, testified as

a witness. Stargell’s current counsel, the district court, and

the government inquired as to Otani’s method of calculating

loss and restitution, what documents he sought to obtain from

the government, how those documents would have assisted or

disadvantaged him, and what was ultimately provided to him.

6 UNITED STATES V. STARGELL

At the conclusion of the hearing, the district court found

an offense level of twenty-two, a criminal history category of

I, and an advisory guideline range of forty-one to fifty-one

months. The district court imposed a $1200.00 special

assessment, restitution in the amount of $362,796.07, and

incarceration for forty-two months. This appeal followed.

II

A

Stargell contends that the district court erred in failing to

grant her motion for acquittal as to Counts 1, 2, 4, and 5

because the government failed to prove that such counts

“affected a financial institution” as required by 18 U.S.C.

§ 1343. Stargell’s argument is unpersuasive.

“Where a defendant moves for acquittal at the close of the

government’s evidence, we review de novo whether sufficient

evidence exists to support a guilty verdict.” United States v.

Stewart, 420 F.3d 1007, 1014–15 (9th Cir. 2005) (citing

United States v. Carranza, 289 F.3d 634, 641 (9th Cir.

2002)). Our review of the sufficiency of the evidence

supporting a criminal conviction is to determine “whether the

record evidence could reasonably support a finding of guilt

beyond a reasonable doubt.” Jackson v. Virginia, 443 U.S.

307, 318 (1979). We do not ask whether we “believe[] that

the evidence at the trial established guilt beyond a reasonable

doubt.” Id. at 319 (quoting Woodby v. INS, 385 U.S. 276, 282

(1966)). “Instead, the relevant question is whether, after

viewing the evidence in the light most favorable to the

prosecution, any rational trier of fact could have found the

essential elements of the crime beyond a reasonable doubt.”

Id.

UNITED STATES V. STARGELL 7

Special Agent Juan Marquez of the IRS’s Criminal

Investigations Division (“IRS-CID”) testified as a summary

witness pursuant to Rule 1006 of the Federal Rules of

Evidence. Agent Marquez presented a summary chart based

upon his review of 143 tax returns,1 all of which either listed

Stargell as the tax preparer or were connected to her

company, LBTS. The summary chart demonstrated that each

of the 143 tax returns contained false wage or withholding

figures. The vast majority contained both false wage and

false withholding figures. Every return listed in the summary

chart sought a refund. The total amount of refunds sought in

these returns was $598,657.00. The IRS issued $276,331.74

of refunds in connection with these returns before it stopped

the remaining claimed refunds. Yet, when a bank issued a

RAL and the IRS later stopped the refund for the related

return, the bank was not able to recoup the value of the RAL

and suffered a financial loss.

To the government, the lost refund money was the main

“effect” that Stargell’s actions had on the banks. Yet, the

banks only lost money on one of the four fraudulent returns:

Count 4 ($6,013.00). The summary chart clearly shows that

the banks did not lose any refund money on the other three

returns in question here.

The government, nevertheless, argues that because the

returns were fraudulent, the banks “were exposed to the risk

of loss on each loan involved in the scheme.” Because RALs

based on fraudulent returns are riskier than RALs based on

1

IRS maintains tax records and information in its Integrated Data

Retrieval System (“IDRS”). The IDRS contains information regarding

filed tax returns and information provided by third parties, including

employers and financial institutions.

8 UNITED STATES V. STARGELL

non-fraudulent returns, the government argues that

fraudulent returns “affected” the banks regardless of whether

there was actual financial loss.

We agree. The increased risk of loss presented by

fraudulent terms is sufficient to “affect” a financial

institution. Regarding the definition of “affects” in 18 U.S.C.

§ 1343, we join our sister circuits in defining such term to

include new or increased risk of loss to financial institutions.

See United States v. Mullins, 613 F.3d 1273, 1278–79 (10th

Cir. 2010) (a new or increased risk of loss is sufficient to

establish that wire fraud affects a financial institution);

United States v. Serpico, 320 F.3d 691, 694 (7th Cir. 2003)

(fraud affects a financial institution if a bank is exposed to a

risk of loss even if the institution never suffers an actual loss).

Here, the fraudulent returns affected the banks regardless

of whether or not the banks ultimately paid out a RAL and

suffered any loss. The banks were affected because the risk

of loss on the RALs was increased by the fraudulent nature of

the related returns. Thus, the district court did not err in

denying Stargell’s Motion as to Counts 1, 2, 4, and 5.

B

Stargell claims for the first time on appeal that because

the government’s case regarding Counts 13 and 14 (wire

fraud, 18 U.S.C. § 1343), the predicate offenses for Counts 16

and 17 (aggravated identity theft, 18 U.S.C. § 1028A),

focused significantly on conduct that pre-dated the enactment

of § 1028A on July 15, 2004, the jury may have convicted

Stargell based solely on pre-enactment conduct. However,

because the wire fraud did not occur until January 15 and 18,

2005, the predicate offenses for the aggravated identity theft

UNITED STATES V. STARGELL 9

transpired well after § 1028A’s enactment date, and Stargell’s

argument fails.

Under 18 U.S.C. § 1028A(a)(1), “[w]hoever, during and

in relation to any felony violation . . . , knowingly transfers,

possesses, or uses, without lawful authority, a means of

identification of another person shall, in addition to the

punishment provided for such felony, be sentenced to a term

of imprisonment of 2 years.” (emphasis added).2

Additionally, under 18 U.S.C. § 1343, “[w]hoever, having

devised . . . any scheme for obtaining money or property by

means of false or fraudulent pretenses, representations, or

promises, transmits or causes to be transmitted by means of

wire, radio, or television communication in interstate or

foreign commerce, any writings . . . for the purpose of

executing such scheme or artifice, shall be fined under this

title or imprisoned not more than 20 years, or both.”

(emphasis added).

In proving its case on wire fraud and on the related

identity theft, the government referenced Stargell’s ongoing

wire fraud scheme starting in February 2004 and ending on

approximately January 27, 2005. Although the government

demonstrated that the scheme partially took place prior to the

enactment date of § 1028A, the superseding indictment

clearly shows that the tax returns in question were not filed,

and thus were not transmitted, until January 2005.

Transmission is a required element of wire fraud under

§ 1343. Consequently, the wire fraud did not occur until the

returns were filed in January 2005, a full six months after

2

For purposes of 18 U.S.C. § 1028A, the term “any felony violation” is

specifically defined as one of the felonies enumerated in § 1028A(c).

Counts 13 and 14 fall under § 1028A(c)(5).

10 UNITED STATES V. STARGELL

§ 1028A was enacted. The predicate offenses for Counts 16

and 17, therefore, happened after § 1028A was enacted.

Accordingly, the jury was not wrong in convicting Stargell of

aggravated identity theft while relying on the predicate wire

fraud offenses.

C

Stargell argues, again for the first time on appeal, that the

government and the district court infringed on the core of her

defense counsel’s role by allowing Stargell’s former attorney,

Otani, to testify at sentencing regarding the loss and

restitution calculations. Stargell also contends that since she

did not expressly consent to Otani giving testimony, the

attorney-client privilege was violated. We disagree.

1

“Government violates the right to effective assistance

when it interferes in certain ways with the ability of counsel

to make independent decisions about how to conduct the

defense.” Perry v. Leeke, 488 U.S. 272, 279–80 (1989)

(internal quotation marks and citation omitted). There was no

error here because it was Peter Swarth, Stargell’s new defense

attorney, who called Stargell’s former attorney to testify at

the sentencing hearing. Swarth examined Otani concerning

the discovery of audit files and other documents requested

from the IRS. The transcript is clear that Swarth acted

independently in calling Otani to testify in the second

sentencing hearing and that there was no interference of any

kind with Swarth’s presentation of the defense. Swarth was

not restricted in any way. Because there was no interference,

Stargell’s Sixth-Amendment rights were not violated, and the

district court committed no error.

UNITED STATES V. STARGELL 11

2

Stargell additionally contends that Otani’s testimony

violated the attorney-client privilege. Because Otani’s

testimony did not contain privileged communications, the

argument fails.

Otani’s testimony did not include protected attorney-

client communications of any kind. The majority of Otani’s

testimony dealt with audit documents requested by Otani

from the IRS through discovery while Otani was Stargell’s

defense attorney. In the entirety of Otani’s testimony,

nothing he said or referenced came from Stargell. The

attorney-client privilege was not implicated.

D

Stargell alleges that the district court committed three

errors in computing the amounts of loss and restitution in this

case: (1) never actually making a finding regarding the

amount of loss; (2) if a loss finding were made, such finding

was unsupported by the evidence because the amount should

not have included qualified refunds; and (3) the restitution

amount should not have included refunds the taxpayers were

legally entitled to claim. We find that the district court did

not clearly err in calculating the loss and restitution amounts.

“A calculation of the amount of loss is a factual finding

reviewed for clear error.” United States v. Garro, 517 F.3d

1163, 1167 (9th Cir. 2008). Under the clearly-erroneous

standard, a reviewing court will not reverse a lower court

merely because the reviewing court “‘would have decided the

case differently.’” Easley v. Cromartie, 532 U.S. 234, 242

(2001) (quoting Anderson v. Bessemer City, 470 U.S. 564,

12 UNITED STATES V. STARGELL

573 (1985)). “[A] reviewing court must ask whether, ‘on the

entire evidence,’ it is ‘left with the definite and firm

conviction that a mistake has been committed.’” Id. (quoting

United States v. United States Gypsum Co., 333 U.S. 364, 395

(1948)). In short, the clearly-erroneous “‘standard is

significantly deferential.’” Lentini v. Cal. Ctr. for the Arts,

370 F.3d 837, 843 (9th Cir. 2004) (quoting N. Queen Inc. v.

Kinnear, 298 F.3d 1090, 1095 (9th Cir. 2002)).

1

When determining an amount of loss for sentencing

purposes, a district court must “provide reasoning to explain

its determination of [such] loss . . . .” Yeung, 672 F.3d at

604–05. “Although the district court’s findings . . . must be

‘express[ed],’ they need only state the court’s resolution of

the disputed issues.” United States v. Karterman, 60 F.3d

576, 583 (9th Cir. 1995). If a district court does not provide

such a resolution, “we must remand for the district court to

recalculate and provide its reasoning for th[e] award.” Yeung,

672 F.3d at 604–05.

Stargell argues that the district court should have made an

explicit finding regarding the loss amount or, at a minimum,

explicitly adopted the government’s loss position. But the

district court did adopt the government’s suggested loss

amount. The district court stated, “[i]t just appears to me that

as had been suggested by you [the government] previously

that using either standard that you’ve been able to meet your

burden. And it very well may be that under this set of

circumstances, that clear and convincing would be proper.

And I’m satisfied with it.” The district court adequately

established its resolution of the loss-amount dispute in favor

of the government by holding that the government had

UNITED STATES V. STARGELL 13

established the loss-amount by clear and convincing

evidence. In total, the banks lost $107,931.96 in connection

with the 143 fraudulent tax returns listed in the summary

chart.

2

Stargell further alleges that the district court mistakenly

included in the loss amount the refunds to which the affected

taxpayers were entitled. Stargell’s argument is unpersuasive.

Under the Sentencing Guidelines, “[i]f the offense

involved tax evasion or a fraudulent or false return, statement,

or other document, the tax loss is the total amount of loss that

was the object of the offense (i.e., the loss that would have

resulted had the offense been successfully completed).”

U.S.S.G. § 2T1.1(c)(1) (emphasis added). Here, the

government recommended that tax loss equal the entire loss

that would have resulted had Stargell’s schemes been

successfully completed, i.e., the total refund amount claimed

on all of the fraudulent returns. The district court adopted the

government’s total loss figure.

Concerning the tax-loss amount, a district court should

“make a reasonable estimate based on the available facts.”

U.S.S.G. § 2T1.1 cmt. n. 1. Moreover, if higher than the

actual loss amount, the intended loss amount should be used.

United States v. Riley, 143 F.3d 1289, 1291–92 (9th Cir.

1998). It is not the government’s or the district court’s

responsibility to establish that defendant’s filed returns were

entitled to refunds if no entitled-refund information was

offered by the defendant. See United States v. Bishop,

291 F.3d 1100, 1116 (9th Cir. 2002) (“It is not the

government’s or the court’s responsibility to establish the

14 UNITED STATES V. STARGELL

defendants’ itemized deductions if no itemized deduction

information was offered by the defendants.”).

Stargell failed to provide any substantial evidence to

support her contention that she gave, or intended to give, the

involved taxpayers the refunds to which they were entitled.

The district court’s conclusion that Stargell intended to keep

the total amount of refunds claimed in the fraudulent returns

was reasonable based on the evidence in the record.

Likewise, using that amount as the “total tax loss” was also

reasonable.

At sentencing, the onus was on Stargell to establish a

lower tax-loss amount based on the allegedly entitled refunds

and to evidentially support such amount; yet, she did not. See

Bishop, 291 F.3d at 1116. Even at the appellate level,

Stargell has neither pointed to any evidence establishing that

the involved taxpayers were entitled to a refund nor provided

an entitled-refund amount by which the tax-loss figure should

be decreased.

Based on the record and in light of the dearth of evidence

to the contrary, the district court’s acceptance of the

government’s loss figure, the total refund amount claimed on

all of the fraudulent returns, was a “reasonable estimate based

on the available facts.” U.S.S.G. § 2T1.1 cmt. n. 1.3

3

Absent evidence to the contrary, it is also reasonable to presume that

each of the involved taxpayers would have had to file a non-fraudulent

return in order to obtain any refund to which he or she would have been

entitled. Carrying out Stargell’s fraud schemes to their completion,

therefore, would have required the IRS to pay the total amount of refunds

claimed by Stargell in her 143 fraudulent returns as well as any potential

refunds for the non-fraudulent returns filed by the persons named in

Stargell’s returns, conceivably requiring the IRS to pay a refund twice.

UNITED STATES V. STARGELL 15

3

Stargell also argues that the restitution amount determined

by the district court, like the tax-loss amount, included

refunds that the affected taxpayers were potentially entitled

to claim. A restitution amount can be calculated from “losses

proximately resulting from [a defendant’s] criminal conduct.”

Yeung, 672 F.3d at 606. Therefore, it was not error for the

district court to base Stargell’s restitution amount on the

actual losses minus the amount of paid-in withholding.

III

For all the reasons above, we affirm the judgment of the

district court.

AFFIRMED.