United States v. Richard Brown

In the

United States Court of Appeals

For the Seventh Circuit

No. 12-3313

UNITED STATES OF AMERICA ,

Plaintiff-Appellee,

v.

RICHARD E. BROWN ,

Defendant-Appellant.

Appeal from the United States District Court

for the Southern District of Indiana, Evansville Division.

No. 3:11CR00011-001 — Richard L. Young, Chief Judge.

ARGUED FEBRUARY 25, 2013 — DECIDED OCTOBER 11, 2013

Before BAUER, POSNER, and SYKES, Circuit Judges.

SYKES, Circuit Judge. For 20 years Richard Brown was the

office manager and accountant for a cluster of small businesses

in southern Indiana owned by the Walker family. In 2009 the

family patriarch discovered that Brown was embezzling

money by using company credit cards and writing company

2 No. 12-3313

checks to pay for personal items and expenses. An audit

revealed that during the course of at least a decade, Brown had

stolen hundreds of thousands of dollars, gradually putting the

businesses in financial straits and destroying their credit.

A federal grand jury indicted Brown on more than

150 counts of wire fraud, mail fraud, and tax fraud. Brown

pleaded guilty to a single count of each of these crimes. The

advisory guidelines sentencing range was 21 to 27 months’

imprisonment, but the district judge thought that was far too

low. The judge settled on a sentence of 60 months, a significant

variance from the top of the range. Judgment was entered and

Brown appealed.

Weeks later, without warning, the judge filed an amended

judgment and attached a written “statement of reasons” to

“supplement” the reasons he had given in open court for the

sentence. Apparently applying “departure” analysis, the judge

recalculated the guidelines range, adding upward adjustments

based on the amount Brown embezzled, the duration of the

scheme, and the vulnerability of one of the victims. On this

revised calculation, the guidelines range was 41 to 51 months.

Compared to this range, the 60-month sentence seemed like a

less significant variance from the guidelines.

On appeal Brown argues that the district judge violated

Rule 32(h) of the Federal Rules of Criminal Procedure by

failing to give notice of his intent to apply upward “depar-

tures.” He also argues that his 60-month sentence is substan-

tively unreasonable.

We affirm. The judge’s belated effort to adjust the guide-

lines range introduced complications but did not violate

No. 12-3313 3

Rule 32(h). That rule requires “reasonable notice” when the

district court is “contemplating” a departure from the sentenc-

ing guidelines. FED . R. CRIM . P. 32(h). But “[t]he old regime of

‘departures’ is defunct,” United States v. Barlett, 567 F.3d 901,

909 (7th Cir. 2009), and Rule 32(h) does not apply to an upward

variance from the advisory guidelines range, see Irizarry v.

United States, 553 U.S. 708, 714 (2008). Because departures are

obsolete, Rule 32(h) no longer has any work to do.

Moreover, because the judge’s written statement of reasons

was filed after Brown appealed, the court lacked the power to

substantively alter the sentence because jurisdiction had shifted

to this court. Brown’s sentence did not change, though the

rationale for it certainly did. To the extent that the judge’s

recalculation of the guidelines range amounts to a substantive

change, it is a nullity because the court lacked jurisdiction to

make the change. If the recalculation simply introduced an

inconsistency between the written statement and the oral

pronouncement of the sentence, the oral pronouncement

controls. Either way, we disregard the written statement of

reasons. Considered in light of the court’s oral pronouncement

of sentence, the 60-month sentence is reasonable.

I. Background

From 1989 until 2009, Brown worked as the office manager,

bookkeeper, and accountant for a group of small businesses in

Evansville, Indiana, owned by the Walker family. In that

capacity he was authorized to write company checks and use

company credit cards for business purposes. Unbeknownst to

the Walkers, for many years Brown abused the trust they

4 No. 12-3313

placed in him by paying himself unauthorized bonuses. He

also repeatedly wrote company checks and used company

credit cards for personal expenses like gas, household items,

and home repairs. In addition to making these personal

purchases, Brown also used company funds to pay the credi-

tors of his church, the Oak Hill Christian Center, where he

served as the bookkeeper.

Not surprisingly, Brown failed to report any of this extra

income on his federal tax returns. He also failed to report

money he earned doing work for the church. Instead, he had

his compensation made payable to the Oak Hill Christian

Center and placed in tithing envelopes to conceal the income,

and then claimed charitable deductions for the amounts.

Brown’s crimes came to light in October 2009 while he was

on vacation. Lowell Walker, the family patriarch and the

primary owner of the Walker enterprises, intercepted an

invoice detailing the use of company checks to pay for ex-

penses relating to Brown’s rental properties. This precipitated

an internal audit, which revealed the extent of Brown’s misuse

of company funds. When Brown returned from vacation, the

Walkers confronted and fired him. Brown claimed that he was

simply reimbursing himself for promised pay raises that he

never received.

A federal grand jury indicted Brown for embezzlement

dating from 2004 to October 2009, when he was fired. He was

charged in a superseding indictment with 135 counts of wire

fraud, 15 counts of mail fraud, and 5 counts of tax fraud. He

agreed to plead guilty to one count each of wire and mail fraud

and one count of tax fraud. The plea agreement called for

No. 12-3313 5

restitution to the Walker family in the amount of $151,233 and

$38,675 to the Internal Revenue Service for tax losses. The

district court accepted the guilty pleas.

Based on the contents of the plea agreement and the

presentence report, Brown’s offense level under the sentencing

guidelines was 16, which when combined with a criminal

history category I yielded an advisory guidelines range of 21

to 27 months’ imprisonment. At the sentencing hearing, the

court accepted this guidelines calculation and then heard

testimony from three witnesses who spoke on Brown’s behalf.

All three were friends from the Oak Hill Christian Center; one

was the pastor of the church. They extolled Brown’s extensive

service to the church and said they believed him to be an

honest, loyal man.

The court also heard from two members of the Walker

family: Barbara Wilson, the co-owner who conducted the

internal audit; and Lowell Walker, the head of the family.

Wilson testified about Brown’s elaborate method of concealing

his embezzlement and how his deceit placed the family

businesses in a precarious financial situation and destroyed

their credit. Wilson, an experienced auditor with a master’s

degree in business administration, also testified that according

to her audit, Brown embezzled company funds on many

hundreds of occasions totaling approximately $667,000. That

total may understate the loss; Wilson explained that because of

missing records, her audit went back only as far as 1996.

When it was his turn to address the court, Brown mostly

described what he’d been up to since being fired by the

Walkers: He’d taught at a technical college, provided services

6 No. 12-3313

to the church, obtained a master’s degree and minister’s

license, and served as the legal guardian for a 70-year-old

cousin who was mentally handicapped.

Before imposing sentence the district court thoroughly

examined the sentencing factors listed in 18 U.S.C. § 3553(a),

placing special emphasis on the sophisticated nature of

Brown’s embezzlement scheme, its long duration, and the deep

breach of trust that his conduct entailed. The judge accepted

the results of the Walker family’s internal audit and explained

that the loss—more than $600,000—was significant for a small

business. On the other side of the ledger, the judge recognized

that Brown had no criminal history and had a great deal of

support from members of his church community, including

“somewhere between 40 and 50“ people who wrote letters to

the court on his behalf. These letters, the court said, stressed

Brown’s “high moral character, … his fairness, his devotion to

his church, his community, [all] the charitable things that he

was involved with.”

In the end, however, the judge contrasted the altruistic

picture painted by Brown’s supporters with the admitted facts

of the case. “It’s almost like you have two personalities,” the

judge said. “One is with your church,” and the other is “a

greedy individual who just wants to enrich himself at the

expense of others.” After touching on the remaining § 3553(a)

factors, the judge imposed a sentence of 60 months concurrent

on each count of wire and mail fraud and a concurrent

36 months on the tax-fraud count. The judge explained that

this variance from the guidelines range was based on “the

No. 12-3313 7

[§] 3553(a) factors and the extensive nature and duration of the

defendant’s criminal activity.”

The court entered judgment on October 1, 2012. Brown filed

a notice of appeal four days later. On October 24, 2012, the

district court issued an amended judgment and attached a

written statement of reasons explaining the sentence. The

purpose of the amendment was to correct a clerical mistake,

but the only difference between the original and amended

judgments was that the latter waived interest on the restitution

award. In the attached statement of reasons, however, the

judge sought to supplement his reasons for the sentence

announced in open court. In an apparent effort to apply

departure analysis, the judge recalculated Brown’s guidelines

range.

It’s not entirely clear what the judge was trying to accom-

plish. He began by noting that the original guidelines range

was 21 to 27 months and then stated as follows: “After giving

respectful consideration to the Sentencing Guidelines, the

Court believes the guidelines do not adequately reflect the

seriousness and entirety of the defendant’s conduct.” The

judge went on to find that Brown’s offense conduct warranted

the following upward adjustments to his offense level: a two-

level increase for the amount of the loss (more than $600,000);

a two-level increase for the extended duration of the scheme;

and a two-level increase for “a vulnerable victim” (referring to

Lowell Walker’s lack of computer skills). These upward

adjustments boosted Brown’s offense level from 16 to 22. The

judge concluded that “an offense level of 22 provides a

sentencing range of 41 to 51 months and more adequately

8 No. 12-3313

reflects the defendant’s criminal conduct in this matter.” The

judge then re-reviewed the § 3553(a) factors and reiterated that

60 months in prison was an appropriate sentence under all of

the circumstances.

II. Discussion

Brown challenges the district court’s sentencing procedure

and the substantive reasonableness of the sentence. We review

the procedural challenge de novo. United States v. Annoreno,

713 F.3d 352, 356 (7th Cir. 2013). Our review of the substantive

reasonableness of the sentence is more deferential; we look

only for an abuse of discretion. See United States v. Conaway,

713 F.3d 897, 901 (7th Cir. 2013); Annoreno, 713 F.3d at 355–56.

Brown’s principal argument is that the district court

violated Rule 32(h) by failing to give notice before applying

“departures” to recalculate his guidelines range in the post-

judgment statement of reasons. Rule 32(h) provides that

“[b]efore the court may depart from the applicable sentencing

range on a ground not identified for departure either in the

presentence report or in a party’s prehearing submission, the

court must give the parties reasonable notice that it is contem-

plating such a departure.” FED . R. CRIM . P. 32(h).

By its terms Rule 32(h) applies only to departures from an

otherwise applicable guidelines range. See id.; see also Irizarry,

553 U.S. at 714. “ ‘Departure’ is a term of art under the Guide-

lines and refers only to non-Guidelines sentences imposed

under the framework set out in the Guidelines.” Irizarry,

No. 12-3313 9

553 U.S. at 714. Since Booker1 we have repeatedly emphasized

that formal departure analysis is obsolete. See, e.g., United States

v. Lucas, 670 F.3d 784, 791 (7th Cir. 2012); United States v. Spano,

476 F.3d 476, 480 (7th Cir. 2007); United States v. Walker,

447 F.3d 999, 1006 (7th Cir. 2006); United States v. Blue, 453 F.3d

948, 952 (7th Cir. 2006). We reiterate the point here.

When the guidelines were mandatory, departure analysis

was the only way a district court could impose a sentence

outside the otherwise applicable guidelines ranges. Irizarry,

553 U.S. at 714; Spano, 476 F.3d at 480; United States v. Castro-

Juarez, 425 F.3d 430, 434–35 (7th Cir. 2005). By making the

guidelines advisory, Booker removed those constraints. Now

the district court’s obligation is simply to calculate the guide-

lines range correctly and arrive at a reasonable sentence after

weighing the sentencing factors in § 3553(a), varying upward

or downward from the guidelines range in its discretion.

United States v. Munoz, 610 F.3d 989, 994 (7th Cir. 2010) (citing

Gall v. United States, 552 U.S. 38, 51 (2007)); Spano, 476 F.3d at

480.

That isn’t to say that departures are completely useless;

“district courts can still take guidance from the departure

provisions in the guidelines and apply them by way of analogy

when assessing the § 3553(a) factors.” Lucas, 670 F.3d at 791.

But the only boundaries on the court’s Booker discretion are the

more capacious § 3553(a) factors. So analogizing to departures

is just one way for the district court to explain a sentence; it has

no legal force or effect.

1

United States v. Booker, 543 U.S. 220 (2005).

10 No. 12-3313

With the demise of departures as a constraint on the district

court’s sentencing discretion, Rule 32(h) has lost all utility. See

Walker, 447 F.3d at 1006–07. The rule does not apply to vari-

ances from the guidelines range. See Irizarry, 553 U.S. at 714–16;

United States v. Gooden, 564 F.3d 887, 891 (7th Cir. 2009) (per

curiam); Walker, 447 F.3d at 1006–07. Likewise, when a judge

chooses to use departure analysis “by way of analogy” to help

explain a sentence that varies from the guidelines, Lucas,

670 F.3d at 791, the rule does not apply.

Accordingly, if there was error below, it was not the district

court’s failure to give notice under Rule 32(h), it was the court’s

effort to recalculate Brown’s guidelines range after the notice

of appeal was filed.2 At the sentencing hearing, the district

court correctly calculated the guidelines range and then varied

upwardly based on the § 3553(a) factors, explaining why the

sentence was appropriate. The court’s post-appeal statement of

reasons needlessly introduced complication.

2

The government maintains that the district court did not recalculate the

guidelines range. That position is hard to reconcile with the record;

although as we’ve said, it’s not entirely clear what the judge was trying to

do in his written statement of reasons. At the sentencing hearing, the judge

accepted the original guidelines range of 21 to 27 months based on an

offense level of 16. In the statement of reasons attached to the amended

judgment, the court for the first time imposed three two-level increases to

reach an offense level of 22, which raised the guidelines range to 41 to

51 months. The judge either recalculated the guidelines range or was using

departure analysis to more fully explain his decision to impose an above-

guidelines sentence. We can’t tell which. Either way, for the reasons

explained in the text, we disregard the post-judgment written statement of

reasons.

No. 12-3313 11

Though neither Brown nor the government has recognized

it, the real problem with the court’s recalculation of the

guidelines range is that the judge lacked the power to amend

his decision once the case was in this court. “The filing of a

notice of appeal is an event of jurisdictional significance—it

confers jurisdiction on the court of appeals and divests the

district court of its control over those aspects of the case

involved in the appeal.” Griggs v. Provident Consumer Disc. Co.,

459 U.S. 56, 58 (1982) (per curiam); see also United States v.

Burton, 543 F.3d 950, 952 (7th Cir. 2008); United States v.

McHugh, 528 F.3d 538, 540 (7th Cir. 2008). “Only one court at

a time has jurisdiction over a subject.” McHugh, 528 F.3d at 540.

The point of the rule is to “avoid the confusion of placing the

same matter before two courts at the same time and to pre-

serve the integrity of the appeal process.” In re Teknek, LLC,

563 F.3d 639, 650 (7th Cir. 2009).

There are a few exceptions. “Ancillary issues, such as

attorney’s fees, may still be dealt with by the district court even

after an appeal has been lodged[, and] [t]he district court may

also issue orders ‘in aid of the appeal, to correct clerical

mistakes under [FED . R. CRIM . P. 36], or in aid of execution of a

judgment that has not been stayed or superseded.’ ” Burton,

543 F.3d at 952 (quoting Henry v. Farmer City State Bank,

808 F.2d 1228, 1240 (7th Cir. 1986)). Also, we held in Burton that

the district court may file a written sentencing memorandum

more fully explaining the sentence “up to the time when the

judgment is entered on its docket, and even thereafter, if a

proper post-judgment motion has been filed.” Id. at 953. But a

later-filed sentencing memorandum “cannot effect a substan-

tive change from the [sentence] announced at the hearing.” Id.

12 No. 12-3313

Thus, a written sentencing statement filed after the sentencing

is permissible if it simply “replicates” or “expands on the

judge’s reasoning without changing the ultimate judgment.”

Id. But the district court is “without authority to make any

substantive change in the sentence after the appeal [i]s lodged

in this court.”3 Id.

Here, the judge filed the written statement of reasons sua

sponte, after the notice of appeal was filed, as an attachment to

an amended judgment correcting a clerical error. The written

statement purported to recalculate the guidelines range and

thus differed in substance from the judge’s oral explanation of

the sentence. Because jurisdiction had shifted to this court, the

judge lacked authority to make this substantive change, so we

will disregard it. See Kusay v. United States, 62 F.3d 192, 194 (7th

Cir. 1995) (an action taken by the district court without

jurisdiction is a “nullity”).

Even if we construed the recalculated range as a

nonsubstantive change in the rationale for the sentence—after

all, the 60-month sentence was unaffected—the judge’s written

explanation is plainly at odds with his oral statement from the

bench. In cases of conflict between the written and oral

pronouncement of sentence, the oral pronouncement controls.

See United States v. Cephus, 684 F.3d 703, 709 (7th Cir. 2012)

(“What the judge says in sentencing a defendant takes prece-

3

In Burton we alluded to the difficulty of classifying a later-filed written

statement of reasons as a substantive change or merely a nonsubstantive

elaboration of the reasons for the sentence. United States v. Burton, 543 F.3d

950, 953 (7th Cir. 2008). Because of this difficulty, we discourage the use of

these statements after the notice of appeal has been filed.

No. 12-3313 13

dence over the written judgment” when the two conflict.);

United States v. Alburay, 415 F.3d 782, 788 (7th Cir. 2008) (“If an

inconsistency exists between an oral and the later written

sentence, the sentence pronounced from the bench controls.“

(internal quotation marks omitted)).

So we evaluate the reasonableness of the 60-month sentence

by reference to the court’s oral statement alone, without regard

to the later-filed written statement of reasons. Our review is

deferential. Brown’s main attack on the sentence is that it

varies too greatly from the original guidelines range. This

misunderstands the scope of the district court’s discretion.

“The judge’s task is to choose a reasonable sentence.” Bartlett,

567 F.3d at 909. A sentence is reasonable “if the district court

‘gives meaningful consideration to the factors enumerated

in … § 3553(a), including the advisory sentencing guidelines,

and arrives at a sentence that is objectively reasonable in light

of the statutory factors and the individual circumstances of the

case.’ ” United States v. Boroczk, 705 F.3d 616, 623 (7th Cir. 2013)

(quoting United States v. Shannon, 518 F.3d 494, 496 (7th Cir.

2008)). Judges “need not—indeed must not—begin with a

presumption in favor of a Guideline sentence.” Bartlett,

567 F.3d at 909. So just as “there is no need to start from the

perspective that an in-range sentence usually is best, there is

also no need to explain why some different sentence is better.”

Id. In other words, “a sentence cannot be called ‘unreasonable’

just because the judge explains why he chose that sentence,

rather than explaining his decision from the Guidelines’

perspective.” Id.

14 No. 12-3313

The district court gave meaningful consideration to the

advisory guidelines range and each of the § 3553(a) factors,

giving special weight to the aggravated nature and circum-

stances of the offense. The court was well within its discretion

to emphasize these factors. The three counts of conviction

hardly captured the scope and duration of the scheme. Brown

stole from his employer for many years causing significant

losses. Over time he dealt a serious financial blow to these

small family businesses and damaged their credit. Brown

quibbles that the court gave insufficient weight to his church

work and service to others. But the court meaningfully

considered Brown’s service to his church and his support from

the church’s members and simply discounted these fac-

tors—not an unreasonable approach based on the double life

that Brown had led. Moreover, the court distinguished Brown

from other defendants who may turn to embezzlement in

response to catastrophic family events or desperate personal

circumstances; the court concluded that Brown’s motive was

pure greed.

Finally, Brown argues that the district court failed to

account for “the need to avoid unwarranted sentence dispari-

ties among defendants with similar records who have been

found guilty of similar conduct.” 18 U.S.C. § 3553(a)(6). As the

qualifier “unwarranted” reflects, this provision leaves plenty

of room for differences in sentences when warranted under the

circumstances. See United States v. Boscarino, 437 F.3d 634, 638

(7th Cir. 2006) (“After all, § 3553(a)(6) disallows ‘unwarranted

sentence disparities’ (emphasis added), not all sentence

differences.”). And of course sentencing disparities become a

point of concern only when the sentences being compared

No. 12-3313 15

involve similar conduct and defendants with similar records.

Brown compares his above-guidelines sentence to other cases

involving within-guidelines sentences for wire- and mail-fraud

convictions. But he does not explain how the cases involve

conduct similar to his conduct here; a different sentence for the

same charge does not alone raise any concern about unwar-

ranted disparities under § 3553(a)(6). Brown’s above-guidelines

sentence was reasonable.

AFFIRMED .