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United States v. Panice

March 17, 2010


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:06-cr-00876-1-Charles P. Kocoras, Judge.

The opinion of the court was delivered by: Tinder, Circuit Judge


Before ROVNER, WOOD, and TINDER, Circuit Judges.

Frank Panice's greed got the better of him. He pled guilty to twenty counts arising out of one fraudulent scheme and he stipulated to the offenses arising out of another scheme. The district court sentenced him to 360 months' imprisonment, which was within the Guidelines range. Panice appeals his sentence. We vacate the sentence and remand for resentencing.

I. Background

Frank Panice and six co-defendants were charged on December 1, 2005, in a ten-count indictment with mail and wire fraud and criminal copyright infringement. The charges arose out of an advance fee scheme to defraud persons seeking jobs in the technology sector. The scheme took place from April 2001 through December 2002. As part of the scheme, Panice offered interviews and promised jobs to applicants, provided they completed a training course that cost between $250 and $450. However, there were no jobs to be had, and the course was designed in such a way that it could not be completed. Hundreds paid the fee. Panice claimed that he hired six or seven people, but in reality, those persons were hired to hustle the program to others. Panice refused to refund the money paid, and he and his cohorts pocketed the fees. The case was assigned to Judge Robert W. Gettleman, see United States v. Panice, No. 05-CR-972 (N.D. Ill.), and is referred to as the "Receiver case."

Panice also engaged in another fraudulent scheme, this time an investment scheme, from late 2003 and continuing until his arrest in December 2006. Panice created an entity called "Bank Watch," purportedly a financial services company, and advertised that Bank Watch in-vested in CDs insured by the FDIC. Bank Watch did not invest a single penny of investor money. Panice and co-defendant Brian Jines (also a co-defendant in the Receiver case) kept the money for themselves. Panice and Jines communicated, and caused others to communicate, several false and fraudulent representations to Bank Watch investors and prospective investors to induce them to invest with Bank Watch. At least eighty-seven victims sent more than $5.4 million to Bank Watch. Panice was involved in this scheme while out on bond on the Receiver case. As a result of this scheme, Panice faced twenty counts, including mail fraud, interstate transportation of stolen securities, money laundering, and structuring of currency transactions. This case was assigned to Judge Charles P. Kocoras and is referred to as the "Bank Watch" case, see United States v. Panice, No. 06-CR-876 (N.D. Ill.). This appeal is from the "Bank Watch" case.

Panice pled guilty to all charges against him in the Bank Watch case. At his change of plea hearing on February 21, 2008, the government said that the parties had an agreement to put on the record. Government counsel stated:

The government agrees to dismiss the indictment in the Receiver Corp case . . . on three conditions.

The first one is that he [Panice] admits sufficient facts to form the factual basis of a plea in the Receiver Corp case; second, is that he agrees that that offense will constitute a stipulated offense, for purposes of the Sentencing Guidelines; and, the third condition is that he agrees to any restitution ordered by you for the Receiver Corp case.

Panice's attorney asked for clarification of the distinction between "stipulated conduct" and "relevant conduct," and the Assistant United States Attorney explained: "certain things are aggregated, if there is a stipulated-the loss amount will be aggregated; the number of victims, and such; and, that, essentially, it is that he was convicted of that case for purposes of these Guidelines, not that it was only considered for relevant conduct."

The court questioned Panice: "Did you get the three conditions now on which that indictment will go away; but, it, in effect, will be measured in terms of your possible punishment in this case? Do you understand that?" Panice answered, "Yes, sir." Then the court reiterated the three conditions including that "this offense conduct [in the other case] constitutes a stipulation . . . which has an effect on various calculations, as well as affording restitution to be ordered in my case for conduct engaged in in the other case." The court again asked Panice whether he understood; Panice said he did. Then after Panice was sworn, the court stated:

[Y]ou have a plea agreement in this case, even though it is not in writing. You understand that; do you not? And that is the plea agreement we talked about. The . . . other indictment . . . being dismissed on the satisfaction of the three conditions Ms. Nasser outlined and which I have just repeated for you. Do you understand that?

Panice answered, "yes," and the court added, "So, that is a binding plea agreement."

Thus, Panice stipulated to the facts and offenses charged in the Receiver case. He admitted under oath that "I am, beyond a reasonable doubt, . . . guilty of the offenses charged in the indictment" in the Bank Watch case. Panice agreed that Bank Watch had "87-some investors" and that a total of "5 million-some dollars" were sent to Bank Watch. Later, in response to the prosecutor's concern that Panice had to admit to other facts to support a guilty plea, the court stated that Panice "has admitted that he got money from 87 investors, to the tune of $5 million." Panice made no objection.

Panice also stated that "[w]ith respect to the indict-ment [in the Receiver case], I plead guilty to having participated together with Brian J[i]nes and Tony Volz in the offense as charged in that indictment." Panice said he thought between $160,000 and $200,000 was received from that scheme. He claimed that six or seven persons got jobs, but subsequently admitted that those people were hired to hustle the program to other applicants.

On August 19, 2008, Judge Kocoras sentenced Panice to a within-Guidelines sentence of 360 months' imprisonment (the range was 360 months to life). The judge ordered restitution of $4,915,683.52, which included $4,826,358.52 for Bank Watch victims and $89,325 for Receiver victims.

II. Discussion

Panice challenges his sentence only. He makes several arguments: First, he asserts that the district court's deter-mination of the number of victims, which resulted in an increase to his offense level under U.S.S.G. § 2B1.1, was erroneous; he claims that he should have been given a reduction for acceptance of responsibility under U.S.S.G. § 3E1.1; he submits that the court denied him his right to allocution before imposing the sentence; he contests the court's calculation of the amount of restitution; and, finally, he argues that the court presumed that a within-Guidelines sentence was reasonable and failed to consider what sentence was appropriate for him in light of the sentencing factors of 18 U.S.C. § 3553(a).

We review the district court's findings of fact at sentencing and applications of the Guidelines for clear error. United States v. House, 551 F.3d 694, 701 (7th Cir. 2008). When a defendant argues that the district court made a procedural error, such as failing to appreciate the Guidelines' advisory nature or failing to consider the § 3553(a) factors, we review the sentencing procedures de novo. Id. If the district court's sentencing procedures were sound, then we consider whether the sentence was substantively reasonable. United States v. Cooper, 591 F.3d 582, 590 (7th Cir. 2010).

A. Number of Victims & U.S.S.G. § 2B1(b)(2)(C)

Panice argues that the district court erred in calculating the number of victims to be 250 or more. U.S.S.G. § 2B1.1(b)(2)(C) instructs courts to apply a 6-level increase to the offense level if the offense involved 250 or more victims. The application notes define "victim" to include "any person who sustained any part of the actual loss determined under subsection (b)(1)." U.S.S.G. § 2B1.1 cmt. n.1. "Actual loss" is defined as "the reasonably foreseeable pecuniary harm that resulted from the offense." Id. n.3(A)(i). And "reasonably foreseeable pecuniary harm" is defined as "pecuniary harm that the defendant knew, or under the circumstances, reasonably should have known, was a potential result of the offense." Id. n.3(A)(iv). Panice raises several challenges to the number of victims, but we find no error.

Panice argues that the Receiver victims should not be counted because they were not victims of Bank Watch. Under the Guidelines, stipulated offenses are treated as offenses of conviction and are properly included in the offense level calculations. See United States v. Eske, 925 F.2d 205, 207 (7th Cir. 1991); U.S.S.G. § 1B1.2(c) & cmt. n.3. Panice admitted to facts sufficient to predicate a finding of guilt as to the conduct and charges in the Receiver case, and he has a binding plea agreement in which he agreed that the conduct in that case constituted stipulated offenses. Therefore, the court did not err in counting the Receiver victims in the victim total.

Next, Panice argues that the government failed to prove by a preponderance of the evidence that there were 212 Receiver victims. In considering evidence at sentencing, a court is not subject to a strict application of the rules of evidence. United States v. Rollins, 544 F.3d 820, 838 (7th Cir. 2008). The district court "may consider information that has 'sufficient indicia of reliability to support its probable accuracy.' " Id. (quoting United States v. Abdulahi, 523 F.3d 757, 761 (7th Cir.), cert. denied, 129 S.Ct. 265 (2008)). In finding the number of victims in the Receiver case, the district court relied on the representation of Assistant United States Attorney ("AUSA") John Podliska, the prosecutor in the Receiver case, that the Judgment and Commitment order ("J&C") entered by Judge Gettleman against Tony Volz in that case listed 212 victims to whom restitution was ordered. Podliska had a copy of the J&C entered by Judge Gettleman as supporting documentation. The J&C had sufficient indicia of reliability to support its probable accuracy, so the district court could rely on it. See id. And Panice had stipulated to the conduct charged in the Receiver indictment.

The district court had other reliable information about the number of Receiver victims. Panice's Presentence Investigation Report ("PSR") stated that according to the government's version of the offense, the Receiver scheme had 439 victims. The district court may rely on facts presented in the PSR if the PSR is based on sufficiently reliable information. Id. The defendant bears the burden of proving that the PSR is inaccurate or unreliable. Id. If he has no evidence to question the PSR's accuracy or reliability, the court may rely on the PSR. Id. Panice offered no evidence to counter the PSR's assertion of 439 Receiver victims; all he had was his bald assertion that there were fewer than 212 victims. This was insufficient. See id.

Moreover, Panice's own statements support the finding that there were more than 212 Receiver victims. During his change of plea hearing, the court asked Panice how much money he received from the training course fees; Panice answered, "I think $160,000 to $200,000." The record shows that the fee ranged from $250 to $450. If we assume that everyone paid the higher fee and take $160,000 as the amount of money received, then there would be 355 victims. Panice stated at his plea hearing that the fee had been $250 and was increased to $450, so we know that all ...

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