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United States v. Moose

United States Court of Appeals, Seventh Circuit

June 27, 2018

United States of America, Plaintiff-Appellee,
Carl Moose, Defendant-Appellant.

          Argued September 14, 2017

          Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 15-CR-175-1 - Charles R. Norgle, Judge.

          Wood, Chief Judge, and Ripple and Hamilton, Circuit Judges.

          Hamilton, Circuit Judge.

         Without a plea agreement, defendant Carl Moose pleaded guilty to defrauding investors in violation of the federal wire fraud statute, 18 U.S.C. § 1343. The district court gave him a below-guideline sentence of two years in prison and an additional two years of supervised release. Moose has appealed, challenging both his prison sentence and the length and several specific conditions of his supervised release. We affirm the prison sentence and the length of the supervised release term, but remand for the limited purpose of considering several conditions of supervised release. We address in turn Moose's challenges to: (1) the loss amount the district court used in calculating his guideline sentencing range; (2) the fraud guideline's treatment of loss amounts more generally; and (3) the supervised release portion of Moose's sentence, including the duration and conditions of the supervised release sentence.

         I. Loss Amount

         We review de novo the district court's legal interpretations of the Sentencing Guidelines, but we review factual findings as to loss amount for clear error. United States v. White, 883 F.3d 983, 986 (7th Cir. 2018). The district court found under U.S.S.G. § 2B1.1(b) (2015) that the applicable loss amount for Moose's offense was about $480, 000, which added 12 offense levels to his guideline calculation. Moose argues the correct amount was only about $70, 000.[1] If that were correct, six levels would need to be subtracted from the court's calculation of the offense level. See U.S.S.G. § 2B1.1(b)(1) (six-level increase for loss amount of $40, 000-$95, 000, and twelve-level increase for loss amount of $250, 000-$550, 000). To explain the issue, we must explain Moose's fraud.

         In early 2007, Moose began soliciting investors with a stock tip: a company called California Energy & Power (CEP) was developing vertical-axis wind turbines. He advised investors to act before an investment window closed and CEP began paying its first dividends. Rather than broker sales of CEP stock to the investors, though, Moose formed his own company, Infiniti Wind Technology, to serve as the investment vehicle for purchasing CEP stock. He persuaded his investors to buy shares of Infiniti, which he controlled, by saying that Infiniti would in turn buy shares of CEP.

         Moose told investors that he planned to raise $250, 000 through Infiniti to purchase four percent of CEP. He said that ownership of Infiniti would be divided into 20 units distributed to individuals based on their investments in that company. He did not tell the investors that he would reserve for himself a portion of the invested funds as either a finder's fee or management fees for Infiniti. In July 2008, Moose surpassed his goal of raising $250, 000. Based on his representations to his original investors, Moore should have stopped raising money under the Infiniti name at that point and invested Infiniti's cash in CEP stock.

         Moose broke the promises he made to investors in three ways. He continued to raise money from investors in exchange for ownership units of Infiniti after he reached his goal, raising a total of $680, 000. He bought only three percent of CEP stock despite a promise to buy four percent. Most important, instead of investing all the $680, 000 he received from 16 investors under this investment scheme or even the $250, 000 in his statements to investors, Moose invested only $200, 000 in CEP. The remaining $480, 000 he just took for himself. In July 2011, facing pressure from angry investors, he stepped down as manager of Infiniti and relinquished his control of the company.

         Moose eventually pleaded guilty to one count of wire fraud in violation of 18 U.S.C. § 1343. The district judge determined that the Sentencing Guidelines recommended a prison term of 41 to 51 months. In reaching this figure, the judge concluded that the intended loss resulting from the fraud was $480, 000 and the actual loss was $406, 000. The judge sentenced Moose to 24 months in prison and 24 months of supervised release.

         The Sentencing Guidelines for fraud and similar crimes give substantial weight to the relevant loss amount. See U.S.S.G. § 2B1.1. The relevant amount is the greater of the actual loss or the intended loss. Id., cmt. 3(A). Actual loss is "the reasonably foreseeable pecuniary harm that resulted from the offense," and intended loss is the "pecuniary harm that the defendant purposely sought to inflict." Id.

         Since Moose invested only $200, 000 as promised of the $680, 000 he persuaded investors to entrust to him and pocketed the other $480, 000, the district court's loss finding of $480, 000 is easy to understand. Moose argues, however, that he should have benefited from a guideline feature that calls for a measure of leniency on the loss calculation, at least in limited circumstances. If a defendant returned money or property to a victim before an offense was detected, the value of the returned money or property is deducted from the loss amount. Id., cmt. 3(E)(i). The time of detection is the earlier of either the time of actual discovery or the time when the "defendant knew or reasonably should have known that the offense was detected or about to be detected by a victim or government agency." Id.

         Though Moose admits that he pocketed the $480, 000, he argues for a loss figure of just $70, 000. To reach that amount, Moose begins with the $680, 000 that his victims gave him to invest in CEP. He points out that he initially invested $200, 000 of that money before fraud was detected. So far, so good. Moose then muddies the water with internally inconsistent arguments. To qualify for the discount based on returning stolen property before the crime was detected, he contends that he returned this property before the fraud detection in July 2011. His theory is that the investors always had ultimate control over Infiniti through their ownership shares, despite his day-to-day stewardship. Moose reasons, then, that he "returned" the investors' property on the days he purchased the CEP stock in 2007 and 2008. But if that were correct, the property had, at the time of the supposed return, a value of only $200, 000, which would not help him avoid the loss amount of $480, 000. To maximize the value of that property ...

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