United States District Court, E.D. Kentucky, Central Division, at Lexington
MEMORANDUM OPINION AND ORDER
JOSEPH M. HOOD, District Judge.
This matter is before the Court with respect to restitution as to Defendant Nicholas Corey Garner. The Court has had the benefit of the United States' Memorandum on Restitution [DE 691], as well as the presentation of evidence by the United States and argument by counsel for the United States and the attorney for Defendant Garner during the hearing conducted on April 20, 2015 [DE 738, 739]. At the conclusion of the hearing, the Court announced its decision with respect to restitution due from Defendant Garner in this matter. The Court memorializes some aspects of that decision in this Memorandum Opinion, as set forth below, and announces one modification to that decision, as well.
The Mandatory Victims Restitution Act (MVRA) requires district courts to award restitution to identifiable victims of fraud. 18 U.S.C. §§ 3663A(a)(1), 3663A(c)(1)(A)(ii). A "victim, " for purposes of the MRVA, is defined as any "person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered including, in the case of an offense that involves as an element a scheme, conspiracy, or pattern of criminal activity, any person directly harmed by the defendant's conduct in the course of the scheme, conspiracy, or pattern." Id. at § 3663A(a)(2). For purposes of restitution liability, "co-conspirators are held jointly and severally liable for all foreseeable losses within the scope of their conspiracy regardless of whether a specific loss is attributable to a particular conspirator." United States v. Moeser, 758 F.3d 793, 797 (7th Cir. 2014) ( citing United States v. Berkowitz, 732 F.3d 850, 853 (7th Cir. 2013); United States v. Dokich, 614 F.3d 314, 318 (7th Cir.2010); United States v. Martin, 195 F.3d 961, 968-69 (7th Cir.1999)). Accordingly, the United States need not "prove a direct causal relationship between the defendant's personal conduct and a victim's loss, ' because the MVRA imposes joint liability on all defendants for loss caused by others participating in the scheme.'" Id. (citing Dokich, 614 F.3d at 318 (emphasis added)). Still, in a multi-defendant case where joint and several liability is applicable, the government is required to establish, by a preponderance of the evidence, a causal connection between the victims loss and the fraudulent scheme. See United States v. Martin, 195 F.3d 961, 969 (7th Cir. 1999).
In its decision on the issue of the amount of loss attributable to each defendant in this matter for the purposes of properly calculating the sentencing guidelines [DE 558], this Court reached a conclusion with respect to the amount of time, demonstrated by a preponderance of the evidence, that each defendant was part of the conspiracy charged in this matter. For the purposes of restitution, the United States has asked that the Court impose joint and several liability on each of the defendants in the amount of actual loss suffered by individuals who were victimized by the scheme during the defendants' individual periods of involvement in the scheme. In light of the case law and the Court's earlier decisions, the Court concludes that this is an appropriate attribution of loss for purposes of restitution in light of the conspiracy conducted by the defendants and others. Thus, Defendant Garner will be held jointly and severally liable for all foreseeable losses within the scope of the conspiracy during the course of his involvement regardless of whether a specific loss is attributable to him - so long as the loss was caused by others participating in the conspiracy. In reaching this conclusion, the Court rejects Garner's argument that the United States' has presented insufficient evidence and failed to carry its burden to support the claim for restitution by a preponderance of the evidence.
Garner argues, primarily, that the United States has failed to present evidence of actual loss for each and every victim identified, i.e., proof that the individuals identified as victims did not receive vehicles in exchange for the money sent to bank accounts or through Western Union or MoneyGram. He has also attacked the reliability of the evidence on the grounds that the summary chart upon which the United States' relies does not list dates and that such a chart would not be admissible in a civil proceeding. He also objects to Agent Lowe's testimony concerning what he has learned from others and from the evidence available on the grounds that it is hearsay.
With respect to Garner's first objection, Agent Lowe testified that he had found no individuals who received a vehicle in return for their transmittal of funds under the scheme - certainly none of the individuals that he interviewed on the telephone or those who returned documentation to the United States Probation Office or the United States Attorney's Office as part of its investigation. The Court considers his testimony to be sufficient to support the government's position by a preponderance of the evidence. Defendant has produced no evidence which would persuade the Court otherwise.
The Court considers Garner's next objections in light of three natural groupings of evidence identified by the United States: those transactions which were recorded in the ledger discovered in the car at the time of Nicholas Corey Garner and Eli Holley's arrest (WU/MG); those related to victims who sent money via the wires to bank accounts set up by the coconspirators (BLV); and that related to those transactions investigated or discovered through the investigation conducted by the Louisville Metro Police Department (LMPD).
During the restitution hearing, the United States introduced a spreadsheet which United States Secret Service Special Agent Allen Lowe testified to be a list that he compiled from information that he had obtained from the course of the investigation of this matter and which identified each individual victim of the conspiracy known to him and the amount of loss suffered by each those victims. The United States also introduced an individual spreadsheet for Defendant Garner, which Agent Lowe testified to be a list of the same information as contained in the larger spreadsheet in light of Garner's period of involvement in the conspiracy.
The Court also heard testimony from Agent Lowe during the restitution hearing, which piggybacked onto his testimony during the hearing on the amount of loss and the sentencing hearings in this matter, in which he described how a black notebook or ledger was seized from the car in which Defendants Nicholas Corey Garner and Eli Holley were arrested in September 2011. That ledger was entered into evidence in this matter during the loss hearing. Lowe explained and the Court has observed itself that the ledger contains what appear to be lists of transactions. Using that information, investigators sent subpoenas to Western Union and Money Gram for information connected to the notations found in that ledger which, as it turns out, corresponded to actual transactions conducted via Western Union and MoneyGram and received by members of the Garner group in the course of their conspiracy. Lowe has also testified before this Court, during other proceedings, that he contacted as many of the individuals who sent money in those transactions as he could (over 250 individuals) and that each told him that he or she had been defrauded of funds sent for the purchase of a vehicle advertised at one of many online sites which was never delivered to them.
Agent Lowe has also testified that some of the information that he gathered about these victims and the amount of loss incurred as a result of those transactions was obtained from records provided by the victims themselves - victim impact statements, declarations of victim loss, other types of statements, receipts, and the like. Those victims and losses are reflected in those entries in the spreadsheet designated "WU" or "MG".
Other transactions attributable to the conspiracy were discovered through other means during the investigation, and Lowe has indicated them as "BVL, " meaning that the transaction in question was a bank wire transfer from an individual victim for the purchase of vehicle into an account established by someone within the conspiracy group, or "LMPD, " meaning that the information concerning these victims was provided to him by investigators from the Louisville Metro Police Department who were investigating internet fraud activities in that geographic area. Again, Lowe indicated during his testimony and notations on his spreadsheet that in some instances he also relied on additional supporting documents to establish the identities of these victims and their amounts of loss - declarations of victim loss, victim impact statements, or other materials, like receipts - suffered as a result of the activities of the conspiracy.
The Court has already accepted that the transactions recorded in the ledger (WU/MG) or received by bank wire (BLV) are evidence of intended or actual loss attributable to the conspiracy for the purposes of calculating the sentencing guidelines. Now, the Court sees that collection of ledger notations, from which investigators were able to craft subpoenas and recover information from Western Union and Moneygram as to the true identity of the payors listed in that ledger and their amount of loss, as evidence of actual loss which impacted real, identifiable people, directly and proximately harmed by the fraudulent activities conducted by the conspirators. The same is true for the evidence concerning the bank wires and information gained related to those individuals who wired money into those accounts but never received the item they sought to purchase. The Court considers this evidence sufficient for its purposes in the restitution inquiry. The evidence presented makes it more likely than not that the victims' losses as identified by Agent Lowe were caused by acts undertaken in the course of the conspiracy by indicted (and now convicted) and unindicted co-conspirators.
As for those transactions investigated by the LMPD, Agent Lowe testified that his contact in that agency, Detective Maroni, advised him that he had learned through the course of his investigation that the named individuals were each the victim of an Internet scam which was conducted in the same way as that conducted by the co-conspirators in the instant matter. The individuals sent money in amounts similar to the those transactions recorded in the ledger, ranging from around $2, 500 to around $3, 500, for the purchase of a vehicle advertised on a sales websites and never received a vehicle in return. As the Court has heard before, some of those individuals received emails indicating that the vehicle "for sale" had belonged to the "sellers'" son who had died following a car accident and that the "seller" wished to get rid of the vehicle because of the sad memories associated with it. The Court recalls evidence from the loss hearing which revealed that files or emails containing that narrative were found on computers in the possession of and used by some of the co-conspirators in this matter. Further, as Agent Lowe explained, the funds from each of these individuals were sent to the Louisville area in the same time frame as the co-conspirators in this matter were operating in the area, receiving funds from other locations. Finally, Agent Lowe testified that at least two of the transactions investigated by the LMPD were also listed in the ledger and were verified by materials received in response to subpoenas issued to WU and MG as part of his own investigation.
Agent Lowe has also testified that Detective Maroni was, at that time, the only investigator at LMPD assigned to track and investigate internet-based crimes and that Detective Maroni had informed him that the Garner group was the only group of which he was aware which was conducting fraudulent activities of this sort in the area. The Court considers all of this evidence sufficient for its purposes in the restitution inquiry. The evidence presented makes it more likely than not that the victims' losses as identified by ...