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United States v. Sleight

filed: January 12, 1987.


On Appeal from the United States District Court for the District of New Jersey, D.C. Civil No. 83-259.

Author: Sloviter



SLOVITER, Circuit Judge.


Peter Sleight, who was convicted on one count of conspiracy to commit mail fraud and one count of devising a scheme to commit mail fraud in violation of 18 U.S.C. §§ 371, 1341, and 2, and whose conviction was affirmed by this court, was ordered by the district court to pay restitution to his former employer pursuant to the Federal Probation Act. He appeals, challenging both the order of restitution and the amount.

Sleight had been employed as vice-president of sales for I.C.P. Cocoa, Inc. (I.C.P.) from 1973 until 1979, and had the responsibility for buying raw cocoa used in products sold by I.C.P. and for sale of the finished products. At trial, the government proved that Sleight, while so employed for I.C.P., had an arrangement with Milford Bonner, the owner of A.B.C. Food Ingredients, Inc. (A.B.C.), to speculate on the cocoa futures market and to share the profits. Pursuant to that arrangement, Sleight and Bonner engaged in at least five transactions with I.C.P. Sleight admitted receiving 17 checks from Bonner, totalling $152,484, as his share of the profits from transactions with I.C.P., his employer. Sleight views this money as a return on an investment; the government views it as representing impermissible kickbacks.

The two count amended indictment charged Sleight, in count 1, with conspiracy with Bonner to defraud I.C.P., to obtain money and property by means of false pretenses, and to deprive I.C.P. of Sleight's "honest, faithful and loyal performance," as a part of which conspiracy, Sleight received a kickback of $8,000 on September 22, 1978, and in count 2, with receipt through the mail of a check for $22,800 drawn on the account of a company owned and operated by Bonner pursuant to a scheme to defraud I.C.P.

Sleight was convicted by a jury on both counts. On May 3, 1984 he was sentenced to five years' probation and ordered to make "complete restitution" to I.C.P. pursuant to the Federal Probation Act, 18 U.S.C. § 3651.*fn1 The exact amount of restitution was not set at the time of sentencing. Instead, Sleight was ordered "as a special condition of probation" to enter into a restitution agreement under the supervision of the Probation Department "which will provide restitution to the defrauded company, the defendant's former employer." Supp. App. at 110; see also Supp. App. at 111.

Sleight appealed his conviction to this court, and after hearing oral argument, we affirmed the conviction by judgment order dated December 5, 1984. Sleight did not challenge the restitution order in his first appeal.

On June 20, 1985, the district court held a hearing to determine the amount of restitution because no restitution agreement had been entered into. On January 23, 1986, the district court entered an order which contained findings that the evidence at trial established "that the defendant, between 1976 and 1978, received at least 17 checks from Milford Bonner, t/a, A.B.C. Food Ingredients, Inc. totaling $152,484.00 and that the defendant received the proceeds from those checks"; "that the monies paid by [Bonner t/a A.B.C.] represented kickbacks paid to the defendant during his employment as vice-president of sales for [I.C.P.]"; and "that the payment of these monies were part and parcel of the scheme and artifice to defraud [I.C.P.] of the honest, loyal and faithful services of its employee, the defendant." The court also found that Sleight is financially able to make restitution if given sufficient time, and, accordingly, ordered him to make restitution to I.C.P. during his five year probationary period in the amount of $152,484, plus interest of 8 percent from the time the various 17 checks at issue were dated. Sleight challenges this order on various grounds.


Sleight's initial argument is that the district court erred in ordering any restitution because the district court permitted the jury to convict him of mail fraud without evidence that I.C.P. suffered any actual damage or loss. The government argues that we are limited to considering the amount of the restitution because Sleight failed to raise in his first appeal any challenge to the portion of the sentence requiring him to make complete restitution to I.C.P. As set forth in the preceding section, the amount of restitution was not fixed until a year and a half after the sentence was imposed.

The government has failed to direct us to any authority in support of its position that would require us to divide appellate consideration of restitution into two separate appeals, one on the award itself and the other on the amount awarded. Consideration of the propriety of the amount awarded, which the government concedes is properly before us, necessarily encompasses the possible ruling that zero dollars should have been awarded. Although not controlling, we find instructive our recent decision that a court order awarding "reasonable attorneys' fees" that has not yet been reduced to a definite amount is not a final decision within the meaning of 28 U.S.C. § 1291. See Becton Dickinson and Co. v. United Automobile, Aerospace and Agricultural Implement Workers of America, 799 F.2d 57, 61-62 (3d Cir. 1986). The same concerns with duplicative expenditure of judicial time and resources that underlie the finality requirement also militate against piecemeal appeals on the restitution award. Therefore, we reject the government's contention and turn to the substance of Sleight's argument.

Sleight argues that because the jury was not required to find economic injury to I.C.P. in order to find him guilty of mail fraud, there was no basis for finding that I.C.P. suffered "actual damages" or that it was an "aggrieved party" as required for an order of restitution under 18 U.S.C. § 3651. We may assume that the jury understood that it did not have to find that I.C.P. suffered a tangible financial loss.*fn2 Nonetheless, the court was fully capable of making the requisite findings as to loss.

Congress distinguished between the jury's role in convicting a defendant or an offense and the court's role in sentencing a defendant to make restitution as a condition of probation. The Federal Probation Act provides that "any court . . . when satisfied that the ends of justice and the best interest of the public as well as the defendant will be served thereby" may suspend a defendant's sentence and place the defendant on probation "for such period and upon such terms and condition as the court deems best." 18 U.S.C. § 3651 (emphasis added). The Act specifically includes restitution among the conditions of probation. The same section provides that "the defendant . . . may be required to make restitution or reparation to aggrieved parties for actual damages or loss caused by the offense for which conviction was had." Id.

It is evident from the statutory language that Congress has reposed in the court the power to utilize restitution as a condition of probation. This is consistent with the overall congressional scheme to place the sentencing function in the trial court in most circumstances. A necessary consequence of the district court's power to order restitution is its authority to make the factual findings upon which restitution must be based. As the Second Circuit stated, "But, except as Congress chooses to provide for jury decision-making see, e.g., Fed.R.Crim.P. 31(e) (authorizing special jury verdict as to extent of interest or property subject to forfeiture), the fact-finding necessary for sentencing is the responsibility of the sentencing judge, save in those rare situations where the degree of the offense, and the consequent maximum penalty, turns on a factual issue requiring jury consideration." United States v. Brown, 744 F.2d 905, 909 (2d Cir.) (footnote and citations omitted) (discussing restitution orders pursuant to the Victim and Witness Protection Act, 18 U.S.C. §§ 3579, 3580), cert. denied, 469 U.S. 1089, 83 L. Ed. 2d 708, 105 S. Ct. 599 (1984). Thus, we believe that Congress intended that the factual findings on which an order of restitution as a condition of probation must rest under the Federal Probation Act, i.e. that the person receiving restitution is an "aggrieved party" who suffered "actual damages or loss" that was "caused by the offense for which conviction was had," 18 U.S.C. § 3651, may be made by the trial court.

A challenge to restitution awarded under similar circumstances to those presented here was considered recently by the Court of Appeals for the District of Columbia. In United States v. Lemire, 232 U.S. App. D.C. 100, 720 F.2d 1327 (D.C. Cir. 1983), cert. denied, 467 U.S. 1226, 81 L. Ed. 2d 874, 104 S. Ct. 2678 (1984), defendants, who were convicted by the jury of wire fraud, argued "that the district court may not order restitution [as a condition of probation] because the jury verdict does not depend on a finding of an actual monetary loss to Raytheon." Id. at 1352. The court rejected this contention, noting that restitution is imposed as a probation condition as part of the permissible sanction for criminal activity. The court referred to "recent case law which holds generally that once the defendant has been convicted the trial judge may order restitution for the amount of loss she finds the criminal violation caused." Id. at 1353 (footnote omitted). We agree.

Of course, "where the trial record does not clearly support the district court's assessment of losses due to illegal activity, the court must support its restitution order with additional findings of fact." Id. at 1354. See United States v. Harris, 761 F.2d 394, 404 (7th Cir. 1985) (amount of loss caused by offense may be determined by proof at trial, judicial determination or agreement of the parties); United States v. Gering, 716 F.2d 615, 625 (9th Cir. 1983) (same); United States v. Brown, 699 F.2d 704, 711-12 (5th Cir. 1983) (remanding to district court to set forth factual basis to support specific amount of losses); United States v. Johnson, 700 F.2d 699, 701-02 (11th Cir. 1983) (remanding to district court to specify bases for its determination of restitution and to "reenter such sentences as it determines to be appropriate"); United States v. McMichael, 699 F.2d ...

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