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United States of America v. Thomas M. Klassy

January 18, 2011


Appeal from the United States District Court for the Eastern District of California D.C. No. CR 2:05-503 MCE Morrison C. England, District Judge, Presiding






Argued and Submitted December 10, 2010

San Francisco, California Before: HUG, D.W. NELSON, MCKEOWN, Circuit Judges.

Thomas M. Klassy appeals the sentence imposed pursuant to his conviction for making a false declaration under penalty of perjury in relation to a bankruptcy case (18 U.S.C. § 152(3)), fraudulent concealment of property in connection with a bankruptcy case (18 U.S.C. § 152(1)), money laundering to conceal the proceeds of specified unlawful activity (18 U.S.C. § 1956(a)(1)(B)(i)), and engaging in monetary transactions over $10,000 in property derived from specified unlawful activities (18 U.S.C. § 1957(a)). We have jurisdiction pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742. We vacate the district court's base offense level determination, affirm on all other counts, and remand to the district court for re-sentencing on a base offense level of six.

We review "'the district court's interpretation of the Sentencing Guidelines de novo, [its] application of the Sentencing Guidelines to the facts of a case for abuse of discretion, and [its] factual findings for clear error.'" United States v. Grissom, 525 F.3d 691, 696 (9th Cir. 2008) (quoting United States v. Cantrell, 433 F.3d 1269, 1279 (9th Cir. 2006)). "'To be clearly erroneous,' we have often repeated, 'a decision must strike us [as] more than just maybe or probably wrong; it must . . . strike us as wrong with the force of a five-week-old, unrefrigerated dead fish.'" United States v. Bussell, 504 F.3d 956, 962 (9th Cir. 2007) (quoting Hayes v. Woodford, 301 F.3d 1054, 1067 n.8 (9th Cir. 2002)). The government has the burden of proving the factual basis for a sentence enhancement by a preponderance of the evidence. United States v. Burnett, 16 F.3d 358, 361 (9th Cir. 1994).

Klassy argues first that the district court incorrectly used a base offense level of seven in calculating his sentence. He contends that his base offense level should have been six, because he was only convicted of an offense cross-referenced, rather than referenced, to Section 2B1.1 of the Guidelines. See U.S.S.G. § 2B1.1(a)(1) (authorizing a base level of only six unless "(A) the defendant was convicted of an offense referenced to this guideline; and (B) that offense of conviction has a statutory maximum term of imprisonment of 20 years or more") (emphasis added). Because this argument was raised for the first time on appeal, we review for plain error. Fed. R. Crim. P. 52(b). In this case, the government concedes plain error. Therefore, we remand to the district court for re-sentencing with a base offense level of six.

Second, Klassy contends that the district court erred in imposing a fourteen-level increase under the Guidelines for losses exceeding $400,000. U.S.S.G. § 2B1.1(b)(1)(H). Under the Guidelines, "loss is the greater of actual loss or intended loss." Id. § 2B1.1, cmt. n. 3(A). Klassy argues that both of the court's alternative methods for calculating loss-the amount Klassy sought to discharge in bankruptcy ($539,000) and the value of assets Klassy concealed ($414,000)-were erroneous.

The record as it stands does not demonstrate that the district court clearly erred in finding that Klassy concealed over $400,000 in assets, even using the lower loss calculation of $414,000. The key dispute on this question is the fire insurance payout Klassy received from an arson at his business. Klassy contends that the $49,000 he declared was a sub-part of the total of $130,000 he received, which would make his total assets concealed only $365,000. On the other hand, the government points to the bankruptcy trustee's statement that the $130,000 concealed was in addition to what Klassy had already declared, rendering his total assets concealed $414,000.

It was not clear error for the district court to accept the bankruptcy trustee's version of events, as there is no competing evidence in the record. Bussell rejects a categorical limitation on calculating intended or actual loss, and gives the court considerable freedom to calculate loss depending on the circumstances. See 504 F.3d at 962-63. In addition, the calculation itself does not have to be exact. Rather, the court is only required to determine a "reasonable estimate of the loss, given the available information." Id. at 960 (internal quotations omitted); see U.S.S.G. § 2B1.1, cmt. n.3(C).

The district court did not err in adding a two-level sentencing enhancement for an offense involving ten or more victims. U.S.S.G. § 2B1.1(b)(2)(A)(i). The bankruptcy trustee may properly be considered a victim because he collects fees based on the size of the estate. See United States v. Nazifpour, 944 F.2d 472, 474 (9th Cir. 1991); see also United States v. Shadduck, 112 F.3d 523, 531 (1st Cir. 1997) ("[N]ot only creditors but the chapter 7 trustee as well may be victimized directly by a bankruptcy fraud to the extent it deprives the estate of assets otherwise ...

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