United States v. Robert Stochel

In the

United States Court of Appeals

For the Seventh Circuit

____________________

No. 17-3576

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

ROBERT E. STOCHEL,

Defendant-Appellant.

____________________

Appeal from the United States District Court for

the Northern District of Indiana, Hammond Division.

No. 2:16CR30-001 — James T. Moody, Judge.

____________________

ARGUED APRIL 20, 2018 — DECIDED AUGUST 27, 2018

____________________

SYKES and BARRETT, Circuit Judges, and DURKIN, District

Judge. ∗

SYKES, Circuit Judge. An Indiana judge appointed Robert

Stochel as receiver for Tip Top Supermarkets, Inc., while its

proprietors were embroiled in protracted litigation. Over

several years Stochel stole more than $330,000 from the

∗ Of the Northern District of Illinois, sitting by designation.

2 No. 17-3576

receivership. After draining its coffers, Stochel evaded

detection by diverting funds from other sources to pay the

receivership’s bills. But the scheme was unsustainable. As

the litigation and receivership were winding down, the

principals suspected that something was amiss and asked

the state court to appoint an independent auditor. The judge

granted the request and ordered Stochel to turn over the

receivership’s files. To delay the day of reckoning, Stochel

filed a motion to vacate the order, falsely stating that the

receivership had sufficient funds to pay the auditor and

claiming that he needed more time to assemble the records.

This brought a brief reprieve, but the judge soon realized it

was a con and removed Stochel as receiver. Not long after,

the auditor uncovered the fraud.

A federal grand jury indicted Stochel for mail fraud. See

18 U.S.C. § 1341. The factual basis for the charge was

Stochel’s motion, which he had mailed to the court; the

indictment alleged that the motion perpetuated the fraudu-

lent scheme by delaying the detection of Stochel’s embez-

zlement. A jury found him guilty, and the district judge

imposed a sentence of 24 months in prison.

Stochel challenges the sufficiency of the evidence to sup-

port his conviction. He also contests three of the judge’s

sentencing determinations: (1) the denial of credit for ac-

ceptance of responsibility, see U.S.S.G. § 3E1.1(a); (2) the loss-

amount calculation, see id. § 2B1.1(b)(1)(G); and (3) the

application of a two-level enhancement for violating a

judicial order, see id. § 2B1.1(b)(9)(C). We affirm across the

board. There was plenty of evidence to convict Stochel of

mail fraud, and the judge’s sentencing rulings were sound.

No. 17-3576 3

I. Background

The Schwartz family established the Tip Top Supermar-

ket in Gary, Indiana, in the 1950s. Years later brothers Alan

and Maurice Schwartz came to own the grocery store

through a corporation called Tip Top Supermarkets, Inc.

Eventually the siblings had a falling-out and the collabora-

tion turned sour. In 1987 Maurice sued Alan in Indiana state

court alleging various financial improprieties, and Alan

responded with similar accusations. The court appointed a

receiver to oversee the corporation while the litigation was

under way.

Tip Top’s first receiver died in early 1999, and the judge

appointed Stochel to replace him. Under the appointment

order, Stochel had authority to “assemble and marshal” Tip

Top’s assets and was required to “report his actions to the

[c]ourt” and “remain subject to the further order and direc-

tions of the [c]ourt.” Stochel admits that the appointment

order required him to report the receivership’s expenses and

to secure the court’s approval before withdrawing corporate

funds.

Stochel flagrantly disregarded these instructions and in-

stead raided the receivership. By March 2004 he had zeroed

out its bank account, stealing $331,840 for his personal use.

He then went to extraordinary lengths to cover up the

embezzlement. Whenever the Schwartz brothers requested a

disbursement from the receivership, Stochel transferred

money from elsewhere to hide the shortfall. Alan and

Maurice were none the wiser. These call-and-response

transactions continued through November 2006, totaling

approximately $216,000 in payments of genuine receivership

4 No. 17-3576

expenses. Stochel made no further disbursements thereafter,

and he closed the receivership account in March 2010.

Stochel also made numerous fraudulent representations

to the state court to conceal his theft. In 2008 the court issued

a notice that the Tip Top litigation was concluding and the

case would be dismissed. Stochel objected and promised “to

file a lengthy update and report regarding all pending

matters and … assets within the next 30 days.” That dead-

line came and went with no report. The court repeatedly

ordered Stochel to provide an accounting over the next two

years, but he obstructed at every turn. Finally, Stochel

submitted his report in September 2010. It was riddled with

lies. Stochel claimed that the receivership had almost

$230,000 in assets, and he requested $93,000 in compensation

for his services. Unaware of the fraud, the court authorized

the payment in March 2011.

Soon thereafter the scheme began to unravel. The parties

balked at Stochel’s accounting and asked the judge to ap-

point an independent auditor to review the receivership’s

finances. The judge did so in November 2011 over Stochel’s

vigorous and protracted objection. Stochel delayed several

months longer by refusing to execute the auditor’s engage-

ment letter, but eventually the judge had had enough. On

March 7, 2012, the judge instructed the clerk of court to hire

the auditor and ordered Stochel to immediately turn over all

receivership files. The day of reckoning was nigh.

Stochel made a last stand nonetheless. On March 12,

2012, he moved for “[r]elief from judgment or order” under

Rule 60(B) of the Indiana Rules of Trial Procedure. Stochel

served the motion on the parties and delivered it to the court

by mail. The motion asked the court to vacate the March 7

No. 17-3576 5

order, falsely represented that the receivership had $8,000 to

pay an auditor, requested more time to assemble the receiv-

ership’s files, and asked the court to set a new auditing

schedule. The judge granted the motion in part and ordered

Stochel to deliver the receivership’s records by April 23.

Unsurprisingly, Stochel did not comply. Finally, on June 19

the judge vacated the award of receiver fees, removed

Stochel as receiver, and appointed the auditor to take his

place. The disarray in Stochel’s records prevented a com-

plete audit, but the auditor reported that the receivership

account had been empty and closed for years.

On March 16, 2016, a grand jury indicted Stochel on one

count of mail fraud. See 18 U.S.C. § 1341. The indictment

alleged that Stochel mailed the Rule 60(B) motion “for the

purpose of executing” the fraudulent scheme to steal the

receivership’s funds. More specifically, the indictment

charged that Stochel intended to “prevent[] the parties and

counsel … from learning of his scheme by lulling them into a

false sense of security.” Stochel moved to dismiss the in-

dictment as untimely. The judge denied the motion, and a

jury found Stochel guilty after a three-day trial. 1

The probation office prepared a presentence report, pro-

posing an offense level of 23 under the Sentencing Guide-

lines. Three elements of this calculation are relevant here.

First, the offense level included a twelve-level enhancement

for an intended loss greater than $250,000. U.S.S.G.

§ 2B1.1(b)(1)(G). The probation office concluded that Stochel

intended a loss of $331,840, representing the full amount he

1 The case was tried twice. The first trial ended in a mistrial when the

jury could not reach a verdict.

6 No. 17-3576

drained from the receivership. Second, the PSR applied a

two-level enhancement for violating a “prior, specific judi-

cial or administrative order,” id. § 2B1.1(b)(9)(C), because

Stochel had defied the state court’s order to “report his

actions” and “remain subject to the further order and direc-

tions of the [c]ourt.” Third, the PSR recommended against a

two-point reduction for acceptance of responsibility because

Stochel contested his guilt at trial. Id. § 3E1.1(a).

Stochel objected to all three sentencing recommenda-

tions. He claimed he should get credit for accepting respon-

sibility because he never denied stealing from the

receivership but only challenged the timeliness of the

charge. He also maintained that the intended loss amount

was less than $250,000 because he was entitled to offsets for

the receivership expenses he paid with diverted funds and

for the value of the services he provided. Finally, Stochel

argued that the two-level enhancement for violating a

judicial order was improper because the state-court order

did not qualify as a “specific” order under the Guidelines.

The judge overruled Stochel’s objections, adopted the

PSR’s recommendations, and calculated an advisory sen-

tencing range of 37 to 46 months in prison. The judge then

opted for a below-Guidelines sentence of 24 months based

on certain mitigating factors. This appeal followed.

II. Discussion

Stochel raises two sets of claims on appeal. He first ar-

gues that the evidence presented at trial was insufficient to

convict him of mail fraud. Our review of that claim is ex-

ceedingly limited. “A challenge to the sufficiency of the

evidence can be successful only when, after viewing the

No. 17-3576 7

evidence in the light most favorable to the prosecution, we

nevertheless are convinced that no rational jury could have

found the defendant guilty beyond a reasonable doubt.”

United States v. Caguana, 884 F.3d 681, 687 (7th Cir. 2018).

Stochel also renews his challenges to the three sentencing

rulings described above. On these issues we review the

judge’s factual findings for clear error and his legal conclu-

sions de novo. See United States v. DeLeon, 603 F.3d 397, 406

(7th Cir. 2010) (acceptance-of-responsibility enhancement);

United States v. Moose, 893 F.3d 951, 954 (7th Cir. 2018) (loss

calculation); United States v. Parolin, 239 F.3d 922, 928 (7th

Cir. 2001) (judicial-order enhancement).

A. Sufficiency of the Evidence

Stochel’s challenge to the sufficiency of the evidence is

confusingly mixed with an argument about the indictment’s

timeliness. He argues that his March 12, 2012 Rule 60(B)

motion was not mailed in furtherance of the fraudulent

scheme, which (he says) ended years earlier—either in

March 2004 when he last withdrew receivership funds for

his personal use or at the latest in November 2006, the last

time he deposited money to cover up the fraud. Either way,

he insists, the indictment came long after the statute of

limitations expired.

That’s incorrect. For mail fraud “the five-year statute of

limitations begins to run from the date of mailing of the

fraudulent information.” United States v. Tadros, 310 F.3d 999,

1006 (7th Cir. 2002). Stochel mailed the Rule 60(B) motion on

March 12, 2012, and he was indicted on March 16, 2016, so

clearly there’s no statute-of-limitations problem. Indeed,

Stochel’s argument about untimeliness tacitly admits as

8 No. 17-3576

much. He views the Rule 60(B) motion as irrelevant to the

scheme.

That’s really an attack on the sufficiency of the evidence.

To convict a defendant of mail fraud, the government must

prove: “(1) a scheme to defraud; (2) an intent to defraud; and

(3) use of the mails … in furtherance of the scheme.” United

States v. Leahy, 464 F.3d 773, 786 (7th Cir. 2006). Stochel

concedes the first two elements; his untimeliness argument

is in effect a challenge to the third element. He starts the

clock in 2006 (or even earlier, in 2004) instead of 2012 be-

cause he denies that the Rule 60(B) motion had anything to

do with his scheme. In other words, Stochel claims he was

not timely indicted for mail fraud because the government

never proved that he sent a fraudulent mailing within the

relevant timeframe. That’s a textbook challenge to the suffi-

ciency of the evidence.

And the challenge falls flat. The Supreme Court has held:

Mailings occurring after receipt of the goods

obtained by fraud are within the statute if they

were designed to lull the victims into a false

sense of security, postpone their ultimate com-

plaint to the authorities, and therefore make

the apprehension of the defendants less likely

than if no mailings had taken place.

United States v. Lane, 474 U.S. 438, 451–52 (1986) (internal

quotation marks omitted). So a mailing sent “long after the

scheme” concludes still furthers the fraud if it was intended

to “preserve[] the appearance of propriety” and keep “eve-

rything copacetic.” United States v. Mankarious, 151 F.3d 694,

705 (7th Cir. 1998). Put another way, a mailing furthers a

No. 17-3576 9

fraudulent scheme if it was designed to “facilitate conceal-

ment or postpone investigation of the scheme.” United States

v. O'Connor, 874 F.2d 483, 486 (7th Cir. 1989) (quotation

marks omitted).

That describes Stochel’s Rule 60(B) motion to a T. A jury

could reasonably find that Stochel filed the motion to delay

the investigation and discovery of the fraud. It’s also reason-

able to conclude that Stochel was trying to convey the

impression that all was well by falsely representing that the

receivership had sufficient funds to pay an auditor and that

he simply needed more time to assemble the receivership’s

records. See Mankarious, 151 F.3d at 705. Finally, the motion

could be seen as part of Stochel’s ongoing effort to facilitate

concealment of the scheme. See O’Connor, 874 F.2d at 486.

There’s good reason to think that he asked for more time and

a heads up on the auditing schedule because he wanted to

know how long he had to plot his next move. The jury was

entitled to make any and all of these inferences. The evi-

dence was easily sufficient to convict Stochel of mail fraud.

B. Acceptance of Responsibility

A defendant qualifies for a two-point reduction in his of-

fense level under the Guidelines if he “clearly demonstrates

acceptance of responsibility for his offense.” U.S.S.G.

§ 3E1.1(a). Proceeding to trial is not automatically disqualify-

ing, but a defendant cannot contest “an essential factual

element of guilt” and expect to get acceptance-of-

responsibility credit. United States v. Hendricks, 319 F.3d 993,

1009 (7th Cir. 2003); see also U.S.S.G. § 3E1.1 cmt. n.2 (ex-

plaining that a defendant can go “to trial to assert and

preserve issues that do not relate to factual guilt”). Stochel

insists that he’s entitled to credit for accepting responsibility

10 No. 17-3576

because he did not deny that he swindled the receivership

and engaged in a scheme to cover it up, but instead contest-

ed only whether the Rule 60(B) motion was in furtherance of

the scheme.

That argument fails for reasons we’ve already discussed.

Whether the use of the mails was “in furtherance of the

scheme” is the third element of the crime. Leahy, 464 F.3d at

786. Stochel’s decision to pick that fight is fatal to his claim

for acceptance-of-responsibility credit; defendants don’t get

credit for two-thirds of a contrite heart. See, e.g., United States

v. Williams, 202 F.3d 959, 963 (7th Cir. 2000).

C. Loss Amount

The base offense level for fraud offenses depends in part

on the loss amount, see U.S.S.G. § 2B1.1, and that, in turn,

depends on the monetary loss the defendant either intended

or actually caused, whichever is greater, see United States v.

Williams, 892 F.3d 242, 250 (7th Cir. 2018). In the context of

mail fraud, the lodestar of intended loss is “the amount

placed at risk by the scheme.” United States v. Durham,

766 F.3d 672, 687 (7th Cir. 2014). The analysis starts there

“because the purpose of fraud statutes … is to punish the

scheme, not simply the unlawful taking of money or proper-

ty.” United States v. Mei, 315 F.3d 788, 792 (7th Cir. 2003).

The parties agree that Stochel drained $331,840 from the

receivership, zeroing out its bank account and thus neces-

sarily putting that amount at risk. The central question is

how to account for the $216,000 in receivership expenses he

paid with funds he deposited to cover up his embezzlement.

We have held that “[l]oss cannot include the value of ser-

vices a defendant legitimately performed for the victims of

No. 17-3576 11

his fraud.” United States v. Swanson, 483 F.3d 509, 513 (7th

Cir. 2007) (emphasis added). Stochel admits that his later

deposits to cover disbursements were meant to conceal his

fraud, but he claims they count as “legitimate” payments

nonetheless.

This argument centers on the government’s concession

that the $216,000 in cover-up funds went toward genuine

receivership expenses. To Stochel’s mind that makes the

payments per se legitimate, entitling him to an offset. This

reasoning misses a key element in the analysis. Nominally

legitimate payments are not offset against intended loss

when they are “intertwined with and an ingredient of [an]

overall fraudulent scheme.” United States v. Marvin, 28 F.3d

663, 665 (7th Cir. 1994). The reason why is easy to grasp:

“[T]he fraudster’s costs shouldn’t be deducted any more

than the costs of a burglar’s tool should be deducted in

determining the loss suffered by the victim of the burglary.”

United States v. Spano, 421 F.3d 599, 607 (7th Cir. 2005) (cita-

tion omitted). On this understanding, Stochel’s payments to

cover his tracks were essentially the cost of perpetuating the

scheme. He admits that they were designed to lull his vic-

tims so that he could avoid detection.

Stochel responds that he was nevertheless entitled to an

offset because the victims received a substantial financial

benefit from the payments. Our cases support the judge’s

decision to reject this argument. In United States v. Lane,

323 F.3d 568, 585 n.4 (7th Cir. 2003), we refused to credit

“gains made by successful investors in a fraudulent invest-

ing scheme, as those gains are only intended to lure and

defraud other investors.” Stochel’s payments served a

similar purpose. Like a Ponzi schemer, he stole receivership

12 No. 17-3576

funds and covered his tracks with money from other sources

for the purpose of throwing the Schwartz brothers off his

scent and keeping the scam alive. We have affirmed the

denial of an offset in similar cases. See, e.g., United States v.

Peugh, 675 F.3d 736, 742 (7th Cir. 2012), rev'd on other grounds,

569 U.S. 530 (2013), opinion reinstated in part, 527 F. App’x 554

(7th Cir. 2013); United States v. Powell, 576 F.3d 482, 497 (7th

Cir. 2009).

Stochel’s second claim doesn’t fare any better. He insists

that he’s entitled to credit for the value of the services he

provided for the receivership. This argument is facially

implausible. The state judge concluded that Stochel was not

entitled to any payment for his services, and the district

judge reasonably relied on that decision. Moreover, even if

we considered the claim anew, Stochel has nothing to back it

up. He does little more than proclaim an entitlement to an

offset of more than $127,000 for his services as receiver.

Nowhere does he explain what services he provided and

how much they were worth. The judge was right to deny

this offset.

D. Judicial Order

The Guidelines call for a two-level increase in the offense

level “[i]f the offense involved … a violation of any prior,

specific judicial or administrative order.” U.S.S.G.

§ 2B1.1(b)(9)(C). The order in question must instruct the

defendant “to take or not to take a specified action.” Id.

§ 2B1.1(b)(9) cmt. n.8(C); see also United States v. Pentrack,

428 F.3d 986, 990 (10th Cir. 2005) (holding that a judicial

order must “provide the defendant with adequate notice of

the prohibited conduct”). Here, the state court ordered

Stochel to “report his actions to the [c]ourt” and “remain

No. 17-3576 13

subject to the further order and directions of the [c]ourt.”

Stochel nonetheless raided the receivership and engaged in

an elaborate scheme to cover up the embezzlement, ignoring

several court directives along the way. For this conduct the

judge added two points to the offense level.

Stochel argues that the enhancement was improperly ap-

plied because the state-court order was not specific

enough—that is, it did not describe the “specified action” he

was supposed to either undertake or forgo. That’s doubly

incorrect. The order instructed Stochel to “marshal” Tip

Top’s assets and then “report his actions to the [c]ourt.” If

nothing else, that required Stochel to notify the court when

he withdrew funds from the receivership; he obviously did

not comply. Stochel admits as much, and that concession

would resolve any ambiguity even if we were inclined to

find it. See United States v. Gist, 79 F.3d 52, 54 (7th Cir. 1996)

(holding that a judicial order was sufficiently specific when

the defendant “admitted the breadth of the injunction”).

The instruction to “remain subject to the further order

and directions of the [c]ourt” is similarly clear. Stochel

repeatedly violated specific directions from the court as the

scheme was unraveling. He blew through court-imposed

deadlines, thwarted the court’s efforts to appoint an auditor,

and stymied the court’s efforts to obtain the receivership’s

files. The enhancement was properly applied.

AFFIRMED.