United States v. Hilgers

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,  No. 08-30078

Plaintiff-Appellee,

v.  D.C. No.

6:7-cr-00012-CCL

SCOTT WILLIAM HILGERS,

OPINION

Defendant-Appellant.



Appeal from the United States District Court

for the District of Montana

Charles C. Lovell, District Judge, Presiding

Argued and Submitted

December 8, 2008—Portland, Oregon

Filed March 11, 2009

Before: Diarmuid F. O’Scannlain, Susan P. Graber, and

Jay S. Bybee, Circuit Judges.

Opinion by Judge O’Scannlain

3207

UNITED STATES v. HILGERS 3209

COUNSEL

Steven C. Haddon, Haddon Law Office, Helena, Montana,

argued the cause for the defendant-appellant and submitted a

brief.

Carl E. Rostad, Assistant United States Attorney, Great Falls,

Montana, argued the cause for the plaintiff-appellee and sub-

mitted a brief. William M. Mercer, United States Attorney,

was on the briefs.

OPINION

O’SCANNLAIN, Circuit Judge:

We must decide whether an above-Guidelines prison sen-

tence of a mortgage broker convicted of wire fraud is reason-

able.

I

A

Scott Hilgers was a mortgage broker, that is, one who finds

homeowner buyers for institutional mortgage lenders. Hilgers

brokered mortgages on four separate residences in Helena,

Montana, for property owner Todd Rice. Each mortgage was

for 100% of the property’s value in varying principal amounts

totaling $686,000. Because Rice did not have sufficient

income to qualify for even one of these mortgages, Hilgers

3210 UNITED STATES v. HILGERS

and Rice agreed to use counterfeit W-2 statements to deceive

lenders. In addition, because it is easier to get a loan for a

house in which the owner will live, Rice represented in paper-

work for each of the four mortgages that the property in ques-

tion would be his primary residence. In fact, none of the four

houses were Rice’s primary residence.

The mortgage lenders indicated that, if they had known

about the misrepresentations, they would not have funded the

loans. If they were compelled to lend, they at least would

have charged higher rates of interest and required a 10%

down payment in each case. Each lender indicated that it had

suffered no loss but would suffer losses if Rice were to

default on the loans. One mortgage lender indicated that it

would have demanded $1,539 in fees had Rice provided accu-

rate information on his loan application.

B

Hilgers and Rice pled guilty to wire fraud in violation of 18

U.S.C. § 1343. The probation officer computed the offense

level, with the base offense level at seven. The offense level

was increased by eight levels because the intended loss

amount was $70,139. The officer calculated this number by

considering the down payments that would have been

required had the lenders been forced to lend the money know-

ing the true facts ($686,000 x 10%), as well as the lost $1,539

in fees. Two levels were added for abuse of a position of trust

or use of a special skill, because Hilgers was licensed, trained,

and knowledgeable about the mortgage industry. The offense

level was reduced by two points for acceptance of responsibil-

ity, and by another point for timely notification of the plea.

The resulting offense level was fourteen. Hilgers had a long

criminal history, including convictions for passing bad

checks, embezzlement, and other fraudulent conduct. His

criminal history category was Category V. The Probation

Officer thus set the Guidelines range at 33 to 41 months.

UNITED STATES v. HILGERS 3211

C

The pre-sentence report also touched on a few miscella-

neous matters. A note from a state probation officer expressed

concerns that Hilgers was financially manipulating his wife

and mother, and reported:

Victims have repeated over and over that Hilgers

presented himself as an honest individual who

gained their trust, could then look them straight in

the eye, and knowingly tell the most outrageous lies.

I have heard the phrase “this guy is a master manipu-

lator” on way too many occasions.

Hilgers wrote a letter to the sentencing judge in which he

claims to have “accepted full responsibility for [his] unethical

and criminal behavior from the initial moments of the investi-

gation.” He stated that he “can offer no excuses for [his] role

in this despicable criminal act,” but then went on to state that,

“[p]erhaps, [he] was under considerable pressures from sev-

eral realtors, property owners and the actual lender to com-

plete these transactions,” particularly because the incomes of

everyone involved in the process were based on volume com-

mission.

D

At sentencing, Hilgers objected to the loss calculation per-

formed by the probation officer, stating that it was too specu-

lative. The trial judge agreed, setting Hilgers’ offense level at

seven1 and noting that the Guidelines sentence for an offense

1

The court computed the base office level at seven, with a two-point

increase for abuse of a special skill or position of trust, and a two-point

decrease for acceptance of responsibility. The one-point timely plea

decrease is not available unless the offense level prior to the acceptance-

of-responsibility reduction is at least sixteen.

3212 UNITED STATES v. HILGERS

level of seven and criminal history Category V was 12 to 18

months.2

Nevertheless, immediately upon calculating the Guidelines

range excluding any loss amount enhancement, the sentencing

court found that “a reasonable sentence would be above the

[defendants’] guidelines ranges.” The court went on to state,

“I have to set the guidelines aside because we are outside the

heartland, and I have to fashion a sentence based on the statu-

tory factors.”

After hearing from the defendants, the district judge sen-

tenced Hilgers to five years in prison, to be followed by five

years of supervised release. Hilgers timely appeals.

II

[1] Hilgers argues that “the Guidelines were not utilized in

crafting the sentence imposed.” Because he did not raise this

claim below, review is for plain error. See United States v.

Knows His Gun, 438 F.3d 913, 918 (9th Cir. 2006). “[G]iven

the District Court’s ruling [that] it was setting aside the

Guidelines,” Hilgers asserts, “it failed to keep the Guidelines

in mind throughout the sentencing process.” However, the

trial judge pointed out that his reference to setting aside the

Guidelines was part of a clarification. Hilgers’ attorney had

objected to the judge “departing from . . . consideration of”

the Guidelines. The judge reminded counsel that a “depar-

ture” from the Guidelines is a term of art, pointing out that the

word “depart” “sometimes has a pretty technical” meaning.

Here, as in United States v. Carty, 520 F.3d 984, 994 (9th

Cir.) (en banc), cert. denied, 128 S. Ct. 2491 (2008), “[t]o the

extent the sentencing judge’s initial characterization was

inopportune, we cannot say that it was significant procedural

2

The government does not appeal the district court’s decision not to use

the loss figures provided by the probation officer. Thus, the correctness of

that decision is not before us.

UNITED STATES v. HILGERS 3213

error because the court corrected itself.” Absent the court’s

remark about setting aside the Guidelines, Hilgers can offer

no evidence that an error (much less plain error) occurred.

[2] A defendant has no right to a Guidelines sentence. See

id. at 991 (“[T]he Guidelines factor [should not] be given

more or less weight than any other.”). The mere fact that the

Guidelines sentence is substantially more or less severe than

the sentence imposed hardly demonstrates that the Guidelines

were not considered. See Gall v. United States, 128 S. Ct. 586

(2007) (upholding a sentence of probation as reasonable

where the Guidelines sentence was 30 to 37 months).

[3] Hilgers also argues that the trial judge failed to “ade-

quately . . . explain the sentence selected, including any devia-

tion from the Guidelines range.” Carty, 520 F.3d at 993.

Although the judge merely mentioned that the case is out of

the heartland when deciding to impose a non-Guidelines sen-

tence, the rest of the facts found at sentencing (e.g., that Hil-

gers is a con man in need of a long period of incarceration for

deterrence) expand on the simple “heartland” explanation.

There is no plain procedural error in this case.

III

As to the substantive sentencing issue, review of a district

court’s sentence is for reasonableness. Gall, 128 S. Ct. at 591.

The court noted that Hilgers had “quite a criminal history”

and had “repeatedly been engaged in fraudulent conduct in

the past [including] similar fraudulent conduct.” “[T]he record

reflects,” the court asserted, “that [Hilgers is] a con man

[with] . . . a very sordid history with the Department of Cor-

rections.” The court told Hilgers: “Even your current victims,

including your mother, seem to still think highly of you, and

you have cheated and committed fraud on your own mother.

Repeatedly here.” Even though “the nature of this offense is

not uncommon in the real estate industry,” the district judge

found that Hilgers had “stretched it . . . to the maximum.” He

3214 UNITED STATES v. HILGERS

was “the person in the position to facilitate the crime, and

[was] the person without whom the crime would not have

occurred.”

The court then discussed the § 3553 factors, noting that it

had given consideration to the requirement that the sentence

imposed reflect the seriousness of the offense and promote

respect for the law, and the requirement to impose just pun-

ishment for the offense. On deterrence, the court stated: “I

don’t know if there is an effective way to deter a repeated con

man from cheating and defrauding others, but I think that a

five-year consecutive sentence in this case will go a long way

to accomplishing that result.” The court also stated that the

interests of protecting the public would be served by the sen-

tence. Considering the kinds of sentences available, the court

noted that probation was not authorized. The court asserted

that the punishments imposed on Hilgers and Rice (who

received one year in prison but had neither abused a special

skill nor amassed any criminal history) were free of unwar-

ranted sentencing disparities.3

[4] In challenging the sentence, Hilgers emphasizes that it

is much higher than the Guidelines sentence. However, an

appeals court may not presume that an out-of-Guidelines sen-

tence is unreasonable. Carty, 520 F.3d at 994. Furthermore,

section 2B1.1(b) of the Guidelines was clearly written with

the assumption that the amount of loss could be ascertained.

Ascribing a loss of $0 to Hilgers’ conduct because the losses

may or may not happen clearly understates the seriousness of

the violation. It is appropriate for the district court to tailor the

sentence to the seriousness of the defendant’s conduct, see 18

U.S.C. § 3553(a)(1), and the district court’s consideration of

the large potential loss that could result from Hilgers’ action

was not unreasonable.

3

Rice’s sentence is not before us.

UNITED STATES v. HILGERS 3215

[5] It is true that a more compelling reason should be

required where the deviation is large. See Gall, 128 S. Ct. at

597 (“We find it uncontroversial that a major departure

should be supported by a more significant justification than a

minor one.”). The departure here is large — Hilgers was sen-

tenced to 3 years longer than the top of the Guidelines range

and almost three times the uppermost Guidelines sentence of

eighteen months. However, given the various factors consid-

ered by the district court — chief among them the inadequacy

of the Guidelines sentence in reflecting the potential loss to

the victims — we cannot say that a five-year sentence was

unreasonable. The district court’s conclusion that a significant

sentence was necessary to accomplish the purposes of the

Sentencing Reform Act is supported by its findings as to Hil-

gers’ past criminality, his lack of response to prior sentences,

his personal characteristics and his lack of remorse.

AFFIRMED.4

4

Hilgers alleges that the district court judge improperly considered dur-

ing sentencing certain financial dealings between Hilgers and his mother,

as well as between Hilgers and his wife. Because Hilgers did not object

to the factual accuracy of the Pre-Sentence Report (“PSR”), the district

court was entitled to treat the factual assertions therein as established. Fed.

R. Crim. Proc. 32(i)(3)(A). The trial court did not plainly err when it

found, based on the facts as reported in the PSR, that Hilgers had

defrauded his mother and his wife.