September 13, 2016
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 10 CR 394 -
Charles P. Kocoras, Judge.
Bauer, Kanne, and Hamilton, Circuit Judges.
Burns made fraudulent misrepresentations when soliciting
investments for his employer, USA Retirement Services
("USARMS"). Burns told investors that he had
experience managing investments and that he had personally
invested in USARMS's promissory notes. His statements
were false. Moreover, without Burns's knowledge, the
investment opportunity was fraudulent. USARMS's owners
were operating a Ponzi scheme.
USARMS's owners out of the picture for various reasons,
the government filed a superseding indictment against Burns.
The government alleged that Burns committed fraud by making
material misrepresentations to investors. A jury convicted
Burns on two counts of wire fraud and three counts of mail
fraud. Despite not alleging that Burns knew of or
participated in the Ponzi scheme, the government sought to
hold Burns accountable for the entire $3.3 million the
investors that he solicited lost as a result of the Ponzi
scheme. The district court enhanced Burns's sentence,
ordered restitution, and ordered forfeiture based on the
victims' $3.3 million total loss.
appeal, Burns argues that there was insufficient evidence to
convict him of making material misrepresentations. Burns also
challenges the sentencing enhancement and the restitution
order on grounds that the district court did not determine
that he proximately caused the victims' loss. Finally,
Burns argues that the forfeiture order was improper because
it was based on the victims' loss and not on his gain.
Because there was sufficient evidence to convict, we affirm
Burns's conviction. But because the district court erred
in calculating the sentence, restitution order, and
forfeiture order, we remand for resentencing.
ARMS, Burns's primary job was to provide estate-planning
services to clients. In addition to those services, Burns
would offer clients an opportunity to invest in promissory
notes that USARMS sold. The notes were allegedly backed by
Turkish bonds. USARMS's owners, Francois Durmaz and
Robert Pribilski, claimed to have a connection in the Turkish
government that allowed them to purchase the bonds at a
below-market rate. USARMS guaranteed an 8.5 percent rate of
return and told investors that returns could be as high as 14
high guaranteed rate of return might have hinted, the
investment opportunity was too good to be true. USARMS never
purchased Turkish bonds. Instead, Durmaz and Pribil-ski used
the investments for their personal use and to pay earlier
investors "returns" on their investment-indicia of
a classic Ponzi scheme.
government's original criminal complaint charged only
Durmaz with wire fraud in connection with the Ponzi scheme.
Perhaps aware that the scam had run its course and was about
to collapse, Durmaz fled the country before the original
complaint was filed. Roughly two years later, the government
filed an indictment against Durmaz, Pribilski, and Burns,
charging them with various counts of wire and mail fraud.
Pribilski pled guilty to the charges. But before he could be
sentenced, he died.
only Burns left alive and in the United States, the
government filed a superseding indictment. The government
alleged that Burns had induced certain victims to invest in
USARMS by falsely telling them that he had experience
managing investments and that he and his family had invested
in the Turkish bonds. The superseding indictment made no
reference to the Ponzi scheme. In its response to Burns's
motion in limine, the government stated that the
"Defendant is not alleged to have knowingly participated
in the Ponzi scheme" and that the lies about his
credentials and his personal investment are "the only
crimes that defendant is alleged to have committed." (R.
104 at 4.)
trial, the government called six of the victims Burns had
solicited investments from. Five victims testified that they
had relied on Burns's statements that he and his family
had invested in the Turkish bonds. A sixth victim testified
that Burns said that he had experience handling investments
and that he personally allocated Turkish bonds to investor
close of evidence, the jury convicted Burns on two counts of
wire fraud and three counts of mail fraud. The district court
sentenced Burns to eighty-four months in prison and three
years' supervised release. When calculating the sentence,
the district court applied an 18-level enhancement to account
for the roughly $3.3 million Burns's victims lost in
their investment with USARMS. The district court also entered
a restitution order and forfeiture order, both for $3.3
million. Burns filed a motion for judgment of acquittal and a
motion for a new trial. The district court denied the
motions, and this appeal followed.
appeal, Burns challenges his conviction, his sentence, the
restitution order, and the forfeiture order. Burns argues
that his statements about his financial background and his
personal investment in USARMS were puffery and thus could not
have been material misrepresentations. Regarding the length
of his sentence and the restitution order, Burns contends
that the district court did not establish that he proximately
caused the victims' loss. Accordingly, Burns claims that
the court improperly enhanced his sentence and ordered him to
pay more in restitution than the loss that he caused.
Finally, Burns challenges the forfeiture order because the
court ordered forfeiture based on the victims' $3.3
million loss instead of the amount that he gained from his
Sufficiency of the Evidence
review de novo the denial of a motion for the
judgment of acquittal. United States v. Peterson,
823 F.3d 1113, 1120 (7th Cir. 2016). In reality, however, we
apply the same analysis that we use when reviewing for the
sufficiency of the evidence. Id. The burden for
proving insufficiency of the evidence is "heavy"
and "nearly insurmountable." United States v.
Des-sart, 823 F.3d 395, 403 (7th Cir. 2016). Burns must
prove "that even after viewing the evidence in the light
most favorable to the prosecution, no rational trier of fact
could have found him guilty beyond a reasonable doubt."
Id. (internal quotation marks omitted); see also
United States v. Clarke, 801 F.3d 824, 827 (7th Cir.
statement is material if it has the ability to influence a
person's decision. United States v. Seidling,
737 F.3d 1155, 1160 (7th Cir. 2013) (citing Neder v.
United States, 527 U.S. 1, 16 (1999)). Burns's
argument that his statements were puffery, akin to a used-car
salesman's sales pitch, is unavailing.
"Puffing" is "[t]he expression of an
exaggerated opinion-as opposed to a factual
misrepresentation-with the intent to sell a good or
service." Black's Law Dictionary 1269 (8th
ed. 2004). We have said that puffery is nonactionable because
no reasonable person would rely on such "empty
superlatives." F.T.C. v. Tru-deau, 579 F.3d
754, 765 (7th Cir. 2009).
puffery involves ambiguous and vague promises, Burns's
comments were factual and specific. He told investors that he
and his family had invested in the bonds and were reaping the
rewards of having done so. He told investors that he had a
history of managing investments. He told investors that he
had quit a reputable bank job to work at U.S. ARMS. All of
these were factual misrepresentations, not exaggerated
opinions. All of these were a far cry from promises of a
"good" investment, "can't miss"
opportunity, or other equivocal sales pitches buyers hear
every day and are expected to discern and discount.
United States v. Coffman, 94 F.3d 330, 334 (7th Cir.
1996). Accordingly, the jury's verdict will be affirmed.
Sentencing, Restitution, and Forfeiture
government argues that Burns waived or at least forfeited his
arguments about his sentence, the restitution order, and the
forfeiture order. Consequently, we must first determine
whether he preserved, forfeited, or waived his objection to
preserve an issue for appeal, an appellant must make a
"timely and specific objection" at trial in order
to notify the court and the opposing party of the potential
error and the ground for objection. United States v.
Ousley, 698 F.3d 972, 975 (7th Cir. 2012).
failed to preserve his objections in this case. When
discussing the restitution and forfeiture orders at
sentencing, Burns asked only if he alone would be responsible
for the $3.3 million or if the awards would be apportioned
(presumably among USARMS's owners and himself). The
apportionment argument does not articulate a specific
objection to how restitution and forfeiture were calculated.
Burns specifically object to the loss calculation used to
enhance his sentence. At sentencing, Burns argued that he
should be responsible for 10 percent of the victims' $3.3
million loss. But that argument was based on the fact that
$3.3 million was only 10 percent of the entire loss that the
Ponzi scheme caused. Although Burns intimated that he was not
responsible alone for the loss, he never articulated the
proximate-cause objection that he makes here.
Burns did not properly preserve his objection during
sentencing, we must determine whether Burns waived or merely
forfeited his objection. "Waiver is the intentional
relinquishment of a known right" and precludes judicial
review by extinguishing the error. United States v.
Butler, 777 F.3d 382, 387 (7th Cir. 2015) (citing
United States v. Olano, 507 U.S. 725, 733 (1993)).
Forfeiture, however, "is the failure to make the timely
assertion of a right... by accident or neglect."
Id. (citation and internal quotation marks omitted).
Courts have only a limited power to correct forfeited errors.
Id. at 386 (citing Olano, 507 U.S. at 731).
difference between forfeiture and waiver is hard to
delineate. United States v. Garcia, 580 F.3d 528,
541 (7th Cir. 2009). At one point, the case law in this
circuit suggested that a defendant's failure to
specifically object at sentencing established waiver in the
strict sense of the term. See United States v.
Martinez-Jimenez, 294 F.3d 921, 923 (7th Cir. 2002);
United States v. Richardson, 238 F.3d 837, 841 (7th
Cir. 2001). We have since declined to read those early cases
as creating a bright-line rule that every objection not
raised at sentencing is waived. Instead, we have held that
"the important concern is whether a defendant chose, as
a matter of strategy, not to present an argument."
Garcia, 580 F.3d at 541; see also United States
v. Brodie, 507 F.3d 527, 531 (7th Cir. 2007); United
States v. Jaimes-Jaimes, 406 F.3d 845, 848 (7th Cir.
2005). A strategic decision demonstrates that the defendant
made a knowing and intelligent waiver and did not negligently
fail to raise the argument. The analysis requires some
conjecture on our part in light of the record viewed as a
whole. Garcia, 580 F.3d at 542.
of the rule that waiver is to be "construed liberally in
favor of the defendant/' Butler, 777 F.3d at
387, we cannot find that Burns waived his objections at
government offers three strategic reasons why Burns waived
the objections that he makes here: (1) he accepted
responsibility for the total loss so that he could argue for
a lesser prison sentence, which would allow him to work and
repay the debt quicker; (2) he agreed that $3.3 million was
the appropriate number; and (3) he accepted $3.3 million
because it was less than the total loss that the Ponzi scheme
caused. All three arguments hinge on the idea that Burns
accepted that he was responsible for the victims' $3.3
million loss. All three arguments fail because the sentencing
transcript belies Burns's acceptance.
consider restitution and forfeiture first. At sentencing,
Burns questioned whether he would be responsible for the
entirety of the orders. By asking whether the restitution and
forfeiture orders would be apportioned, Burns necessarily
implied that he should have to pay less than $3.3 million.
The record does not reflect a strategic decision to accept
the $3.3 million figure because Burns actually argued
(although in a legally deficient manner) that the orders
should be reduced. The omission was not "the result of a
deliberate and strategic choice to pursue one sentencing
argument" over another, and therefore, the argument is
not waived. Butler, 777 F.3d at 387.
same holds true for Burns's objection to the loss amount
used to enhance his sentence. Again using the $3.3 million
figure, the district court increased Burns's offense
level by 18. U.S.S.G. § 2B1.1(b)(1)(I) (2014). Although
failing to properly preserve the objection, Burns argued at
sentencing that using $3.3 million to enhance his sentence
was excessive because of how small a portion his
investors' losses were out of the entire loss caused by
the Ponzi scheme. That the argument was based on questionable
legal reasoning is irrelevant. However weak the argument
presented at sentencing may have been, it shows that he did
not intentionally waive his objection to the loss amount used
to enhance his sentence. A defendant does not strategically
waive an argument that was inartfully articulated; instead,
counsel was deficient for failing to properly raise the
objection. Brodie, 507 F.3d at 532.
our discussion above, the dissent makes much of the fact that
Burns "agreed" with the $3.3 million number. The
full dialogue at the sentencing hearing contradicts the
dissent's argument that Burns agreed that he
proximately caused the full loss. The judge told
Burns that he thought Burns agreed with the government's
loss number. Burns's counsel responded that, "Well,
we agree with the number. The only question is whether or not
he is going to be responsible for the entire amount, which, I
guess, is a restitution issue, or if it will be
apportioned." (R. 174 at 2.) The second part of
Burns's response discredits any claim that he agreed that
he caused the victims' full loss. That interpretation is
buttressed by additional dialogue at sentencing. Moments
later, Burns's counsel again said, "We agree that
that is the correct number, Judge." (R. 174 at 3.) But
that statement came only after counsel stated that $3.3
million "is the total amount of the loss." (R. 174
at 3.) In context, we read Burns's comments at sentencing
as agreeing only that his victims lost $3.3 million, not that
he proxi- mately caused the full loss. Burns did not make a
strategic decision to forgo the arguments he raises here when
he actually argued that he shouldn't be responsible for
the entirety of the victims' loss. At most, Burns's
attorney negligently failed to raise the proximate-cause and
forfeiture arguments. United States v. Jenkins, 772
F.3d 1092, 1096 (7th Cir. 2014).
remain unconvinced that Burns strategically decided to accept
the $3.3 million figure so that he could plead for leniency
in his sentence. Burns asked the judge for a lesser sentence
so that he could work to pay off the restitution and
forfeiture orders. Again, however, that argument did not
depend on accepting responsibility for the full $3.3 million
that his victims lost. He argued for leniency after he argued
that he should be responsible for only 10 percent of the
victims' loss for sentencing purposes and that the
restitution and forfeiture awards should be apportioned.
duty when considering waiver is to divine from the record an
intent to forego an argument ... ." Garcia, 580
F.3d at 542. We cannot divine a strategic decision to forgo
an argument when a defendant makes both arguments. See
Butler, 777 F.3d at 387 (finding forfeiture because the
"omission was due to defense counsel's oversight,
rather than the result of a deliberate and strategic choice
to pursue one sentencing argument while forgoing
another"). The substance of what Burns argued at
sentencing would have had the same effect as the arguments he
makes on appeal-namely a shorter sentence and reduced
restitution and forfeiture orders. Agreeing with the
victims' loss total or indicating that a punishment is
just no more signifies a knowing and intelligent waiver than
explicitly telling the district court there are no further
objections to a sentence. "We must consider the
lawyer's statement in light of the surrounding
circumstances and determine whether counsel made a knowing
and intentional decision." Garcia, 580 F.3d at
542. Without a convincing strategic explanation that would
demonstrate a knowing and intelligent waiver, we conclude
that Burns forfeited-but did not waive-his objections.
Jaimes-Jaimes, 406 F.3d at 848.
Burns forfeited his arguments, we review the district
court's decision for plain error. Under plain-error
review, we reverse the district court "only when we
find: (1) an error or defect (2) that is clear or obvious (3)
affecting the defendant's substantial rights (4) and
seriously impugning the fairness, integrity, or public
reputation of judicial proceedings." United States
v. Anderson, 604 F.3d 997, 1002 (7th Cir. 2010).
pause here to address the dissent's concern about our
application of plain-error review. Our opinion should not be
read as chastising Judge Kocoras for failing to address the
arguments Burns presents here: indeed, we review for plain
error because we explicitly hold that Burns did not preserve
the arguments he now makes. Judge Kocoras, a learned and
experienced jurist, did not intentionally or knowingly fail
to address the arguments Burns raises here. The second
element in plain-error review, that the error was
"plain, " means that the error was
"clear" or "obvious." Olano, 507
U.S. at 734. We have never required, however, that the error
be obvious to the district court, only that the error was
obvious under the law. See Jenkins, 772 F.3d at 1098
(holding that the district court plainly erred when it
adopted "erroneous information in a PSR" no matter
how "correct such information appears"); see
also Henderson v. United States, 133 S.Ct. 1121, 1130
(2013) ("The Rule's requirement that an error be
'plain' means that lower court decisions that are
questionable but not plainly wrong (at time of trial
or at time of appeal) fall outside the Rule's
scope."). That Judge Kocoras understandably did not
recognize the errors we address here does not factor into our
analysis of whether the errors were plain.
plain error has occurred, the next step is to determine
whether the defendant's substantial rights are affected.
Substantial rights are affected when the defendant can show
"a reasonable probability that, but for the error, the
outcome of the proceeding would have been different."
United States v. Hurlburt,835 F.3d 715, 725 (7th
Cir. 2016) (quoting Molina-Martinez v. United
States,136 S.Ct. 1338, 1343 (2016)). The defendant need
not show that the outcome certainly would have been
different. Id.; see also United States v. Feinberg,89 F.3d 333, 336 (7th Cir. 1996) (holding that to show
prejudice, a defendant "must show that but for the
[error], the outcome of the trial probably would have been
different"). We agree with the dissent that plain-error
review is to be applied rigorously. United States v.
Hallahan,756 F.3d 962, 979 (7th Cir. 2014). We
disagree, however, about whether the facts show a reasonable
probability that, but for ...