Tactical Stop-Loss, LLC v. Travelers Casualty and Surety

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 10-3104
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United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the
* District of Nebraska.
Christian Quevedo, *
*
Appellant. *
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Submitted: May 10, 2011
Filed: September 8, 2011
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Before MURPHY, BEAM, and COLLOTON, Circuit Judges.
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COLLOTON, Circuit Judge.
After a jury trial, Christian Quevedo was convicted of ten counts of submitting
false claims against the United States and one count of conspiracy to defraud the
United States with respect to claims. The district court sentenced him to forty-six
months’ imprisonment on each count, to run concurrently, and three years’ supervised
release. The court also ordered Quevedo to pay restitution. Quevedo appeals his
conviction and sentence, and we affirm.

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I.
Quevedo is a native and citizen of Peru. He entered the United States in 2003,
on a visa that allowed him to work and attend school. He later moved to Lincoln,
Nebraska, where he attended the University of Nebraska. There Quevedo made
contact with other Peruvians, including Carlos Carpio, who had attended school with
Quevedo in Peru.
On October 21, 2009, a grand jury charged Quevedo and Carpio with one count
of conspiracy to defraud the United States with respect to claims, in violation of 18
U.S.C. § 286, and sixteen counts of submitting false claims against the United States,
in violation of 18 U.S.C. § 287. The indictment alleged that Quevedo and Carpio filed
sixteen fraudulent tax returns – two on behalf of Quevedo, two on behalf of Carpio,
and twelve on behalf of others. According to the indictment, the tax returns listed
inflated figures for both income earned and federal income tax withheld, and as a
result, the returns claimed refunds larger than those to which the filers were entitled.
Carpio pleaded guilty to the conspiracy count in exchange for dismissal of the other
counts. Quevedo proceeded to trial.
Five Peruvians, in whose names six of the returns were filed, testified at trial:
Ana Chirinos, Doris Jara, Michela Perleche, Pamela Pizzaro, and Jhonattan Sanchez.
Each of the Peruvians had spent time in the United States, either as a student at a
American college or university, or through an exchange program while attending a
university in Peru. Each also had worked in the United States – Sanchez in 2005;
Chirinos, Jara, and Pizzaro in 2006; and Perleche in 2005 and 2006. Thus, each
Peruvian was required to file one or more federal income tax returns.
Jara, Perleche, and Sanchez lived in Lincoln, and were friends with Quevedo.
They testified that Quevedo offered to help them file their tax returns. They gave
Quevedo their Social Security Numbers and Form W-2s from the relevant years, and

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some time later each received a payment from Quevedo that he claimed was a tax
refund. Chirinos and Pizzaro did not know Quevedo. They testified that they did not
try to file their tax returns until after they had returned to Peru. When they sought
assistance with filing their tax returns, they were referred by friends to Carpio.
Pizarro testified that she sent her Social Security Number and W-2s to Carpio, and that
six months later, Carpio told her that she could retrieve her refund from a certain bank.
Chirinos testified that she sent her Social Security Number and W-2s to Carpio, and
that Carpio told her that a company called Actax would file her return. She later
received a payment that she believed was a tax refund.
Following its case-in-chief, the government successfully moved to dismiss six
of the sixteen false claims counts; these counts did not involve returns filed on behalf
of Quevedo, Carpio, or the five Peruvians who testified at trial. The jury found
Quevedo guilty on the remaining counts. The district court sentenced him to forty-six
months’ imprisonment on each count, to run concurrently, and three years’ supervised
release. The court also ordered that Quevedo pay restitution in the amount of $79,796
– the sum of refunds the IRS paid on the fraudulent returns before it discovered the
scheme and stopped paying.
II.
A.
On appeal, Quevedo challenges the sufficiency of the evidence to support his
convictions. A person commits the offense of conspiracy to defraud the United States
with respect to claims if he “enters into any agreement, combination, or conspiracy to
defraud the United States, or any department or agency thereof, by obtaining or aiding
to obtain the payment or allowance of any false, fictitious or fraudulent claim.” 18
U.S.C. § 286. A person makes a false claim against the government if he “makes or
presents” to any department or agency of the United States “any claim upon or against

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the United States, or any department or agency thereof, knowing such claim to be
false, fictitious, or fraudulent.” Id. § 287. We review the sufficiency of the evidence
de novo, viewing the evidence in the light most favorable to the verdict, and we will
overturn a conviction only if no reasonable jury could find Quevedo guilty beyond a
reasonable doubt. United States v. McCraney, 612 F.3d 1057, 1063 (8th Cir. 2010),
cert. denied, 131 S. Ct. 1784 (2011).
Quevedo argues that the government presented no evidence that he ever filed
any income tax return, including his own. He cites his own testimony that a woman
named Amanda Martinez filed his tax returns, that she paid Quevedo to refer to her
other Peruvians who needed help with their tax returns, and that Quevedo gave
Martinez access to his Paypal account when she had trouble sending refunds to other
Peruvians. Quevedo contends that his explanation for the returns demonstrates that
there was insufficient proof for the jury to find him guilty of any count.
The evidence at trial, however, permitted a different conclusion. Quevedo’s
false claims convictions were based on ten fraudulent tax returns. Each of the ten
returns was filed electronically from one of four Internet protocol addresses that was
also used, at around the same time the returns were filed, to access Quevedo’s Paypal
account through Quevedo’s e-mail address. Paypal is a company that allows users to
create and maintain accounts for the purpose of transferring money over the Internet.
Seven of the returns were filed through Quevedo’s e-mail address and instructed the
IRS to deposit any refunds into bank accounts that belonged to Quevedo.
The other three returns were filed through Carpio’s e-mail address. Two of
them instructed the IRS to deposit any refund into Quevedo’s accounts. On the same
day that the refund for the third return was deposited into a bank account belonging
to Carpio, a sum identical to the refund was withdrawn from Carpio’s bank account
and placed in Quevedo’s Paypal account. Three Peruvians – Jara, Perleche, and

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Sanchez – testified that Quevedo told them that he would file their tax returns, and
two of the returns were filed on Quevedo’s own behalf.
Based on this evidence, the jury reasonably rejected Quevedo’s testimony that
Amanda Martinez filed the returns. There was sufficient evidence to show that
Quevedo filed each of the ten tax returns and committed the charged offenses.
B.
Quevedo also appeals his sentence, arguing that the district court committed
procedural error when calculating the advisory guideline range. He argues that the
court incorrectly applied two specific offense characteristics: one based on the
amount of loss caused by Quevedo’s offenses, and another based on the number of
victims of his offenses. See USSG § 2B1.1(b)(1)(G), (b)(2)(A)(i). We review the
district court’s interpretation of the sentencing guidelines de novo, and its factual
findings for clear error. United States v. Willett, 623 F.3d 546, 548 (8th Cir. 2010).
We first consider the amount of loss. The base offense level for a defendant
convicted under 18 U.S.C. §§ 286 or 287 is determined by USSG § 2B1.1. That
section also provides for a specific offense characteristic based on the amount of loss
that resulted from the defendant’s offense. Id. § 2B1.1(b)(1).
“[L]oss” is defined as “the greater of actual loss or intended loss.” Id. § 2B1.1
comment. (n.3(A)). “‘Actual loss’ means the reasonably foreseeable pecuniary harm
that resulted from the offense.” “‘Intended loss’ . . . means the pecuniary harm that
was intended to result from the offense,” including “pecuniary harm that would have
been impossible or unlikely to occur.” Id. § 2B1.1 comment. (n.3(A)(i)-(ii)).
“‘Pecuniary harm’” is “harm that is monetary or that otherwise is readily measurable
in money,” which “does not include emotional distress, harm to reputation, or other
non-economic harm.” Id. § 2B1.1 comment. (n.3(A)(iii)).

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A sentencing court must include in its calculation any losses caused by
“relevant conduct.” This includes, inter alia, charged and uncharged conduct that was
“part of the same course of conduct or common scheme or plan as the offense[s] of
conviction.” See USSG § 1B1.3(a)(2); see also United States v. McIntosh, 492 F.3d
956, 960-61 (8th Cir. 2007). The government has the burden of proving the amount
of loss attributable to a defendant by a preponderance of the evidence. United States
v. Hodge, 588 F.3d 970, 973 (8th Cir. 2009).
A presentence investigation report (“PSR”) prepared after Quevedo’s trial
calculated the intended loss from Quevedo’s offenses as $247,019, and the actual loss
as $79,796. To determine the intended loss, applying principles of relevant conduct,
the PSR added the following sums: the refunds claimed by the ten tax returns that
were the basis for Quevedo’s false claims convictions, the refunds claimed by the six
tax returns that were the basis for the six dismissed false claims counts, and the
refunds claimed by fourteen additional tax returns. To determine the actual loss, the
PSR added the refunds paid on those returns before the government discovered
Quevedo’s scheme and stopped paying the refunds.
After noting that the offenses of conviction must be “grouped” pursuant to
USSG § 3D1.2(d), the PSR recommended that the district court calculate an actual or
intended loss of greater than $200,000 but not greater than $400,000. According to
USSG § 2B1.1(b)(1)(G), the recommended loss amount would result in a twelve-level
specific offense characteristic.
Quevedo objected to the PSR’s loss calculation and the factual statements
underlying the calculation. In response, the government presented the testimony of
IRS Special Agent Terresa Lato. The government also offered a summary exhibit that
set forth relevant information about each of the thirty tax returns. Based on this
evidence, the district court overruled Quevedo’s objection to the amount of loss, and
applied the twelve-level adjustment set forth in § 2B1.1(b)(1)(G).

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On appeal, Quevedo first challenges the district court’s decision to include in
its calculation of intended loss the refunds claimed by seven of the fourteen uncharged
tax returns. Special Agent Lato admitted at the sentencing hearing that neither she nor
anyone else from the IRS talked to the six individuals in whose names those returns
were filed. Quevedo contends that the government therefore failed to prove by a
preponderance of the evidence that the refunds claimed on the returns were part of the
intended loss.
We see no error in the court’s consideration of the seven disputed returns.
Uncharged offenses may be considered at sentencing as relevant conduct if they are
part of the same course of conduct or common scheme or plan as the offenses of
conviction. USSG § 1B1.3(a)(2). Where the uncharged offenses are substantially
connected to the charged offenses by a “similar modus operandi,” then they qualify
as relevant conduct. Id. § 1B1.3, comment. (n.9(A)). The government presented
evidence that the refund claimed on each of the thirty returns on which the district
court based its loss calculation – including the seven to which Quevedo objects – was
to be deposited into a bank account belonging to either Quevedo or Carpio. All but
one of the returns was filed using either Quevedo’s or Carpio’s e-mail address. All
the returns claimed similar large deductions for medical expenses, moving expenses,
and unreimbursed employee expenses. Each of the returns listed employers for which
the filer had never worked, and five of the seven challenged returns named false
employers that also were listed on one or more of the other twenty-three returns. This
evidence was sufficient for the district court to find that the seven challenged returns
were part of the same course of conduct as the offenses of conviction, and to include
them as relevant conduct.
Quevedo also argues that the district court should have reduced the intended
loss figure by the amount of legitimate tax refunds to which he and some of the
Peruvian filers were entitled. He notes that Special Agent Lato testified that at least
one of the two tax returns that Quevedo filed on his own behalf included both real

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income and false income, and that Quevedo may therefore have been entitled to some
portion of the tax refund that he claimed in the return. She also testified that some of
the Peruvians would have received refunds if they had they filed accurate tax returns.
Each of the five Peruvians who testified during trial stated that he or she received a
sum of money, which each understood to be a refund, after Quevedo or Carpio filed
his or her tax return. Quevedo argues that the district court erred by calculating the
intended loss without considering the legitimate income included on the tax returns,
and the “refunds” that he and Carpio paid to the Peruvians. Cf. USSG § 2B1.1
comment. (n.3(F)(ii) (“In a case involving government benefits . . . , loss shall be
considered to be not less than the value of the benefits obtained by unintended
recipients or diverted to unintended uses, as the case may be. For example, if the
defendant was the intended recipient of food stamps having a value of $100 but
fraudulently received food stamps having a value of $150, loss is $50.”).
Assuming for the sake of analysis that the loss figure should have been reduced
by the amount of legitimate refunds, any error was harmless. Special Agent Lato
testified during the sentencing hearing that only some of the Peruvians were entitled
to a legitimate refund. She also said that any refund to which those Peruvians were
entitled was “small.” The largest payment that any of the five Peruvians who testified
at trial received from Quevedo or Carpio was $737. And the two tax returns that
Quevedo filed on his own behalf claimed refunds of only $979 and $1,753.
These numbers show that a reduction in the loss amount based on legitimate
refunds would not have changed Quevedo’s guideline range. The twelve-level
specific offense characteristic applies if the loss is greater than $200,000, see USSG
§ 2B1.1(b)(1)(G), and the district court found a loss amount of $247,019. The record
does not support a set-off for legitimate refunds that exceeds $47,019. Even if all of
the Peruvian filers, other than Quevedo and Carpio, were entitled to a “small” refund
that equaled the largest of the refunds paid to the five Peruvian trial witnesses ($737)
on each of the twenty-six returns filed in their names, the total set-off would have

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been only $19,162. Adding the refunds that Quevedo claimed on his own returns
would increase the set-off by $2,732 to a grand total of $21,894. Quevedo thus
suffered no prejudice from the asserted error.
Quevedo also challenges the district court’s application of a two-level specific
offense characteristic for an offense involving ten or more victims. See USSG
§ 2B1.1(b)(2)(A)(i). A “victim,” as relevant here, means “any person who sustained
any part of the actual loss determined under [USSG § 2B1.1(b)(1)].” Id. § 2B1.1
comment. (n.1). Actual loss means “the reasonably foreseeable pecuniary harm that
resulted from the offense.” USSG § 2B1.1, comment. (n.3(A)(i)). The district court
concluded that Quevedo’s offenses involved more than ten victims for three reasons:
first, because the Peruvians who are not United States citizens are potentially
precluded from earning a living in the United States as a result of the false tax returns
filed in their names; second, because some of the Peruvians likely would have been
entitled to a refund if a legitimate return had been filed; and third, because the “default
position” of the IRS is to hold the Peruvians responsible for the fraudulent returns
until they prove that they were not responsible for the fraud.
We conclude that the district court’s first and third rationales are sufficient to
sustain the finding, and we need not consider the second. Agent Lato testified that
several of the Peruvians expressed a desire or willingness to return to the United
States, and that the false claims filed in their names by Quevedo would be “an issue”
in the immigration process. Because their records with the IRS will show money due
from the taxpayers to the IRS, the Peruvians would face a “long drawn-out process”
to establish that they filed no false claims, owe no money, and should be permitted to
reenter the United States. The district court did not clearly err in finding that the
future adverse effect of battling the bureaucracy is a reasonably foreseeable pecuniary
harm to the victims: time is money. United States v. Abiodun, 536 F.3d 162, 168-69
(2d Cir. 2008). And given that the twenty-four Peruvian filers had entered the United
States to work or study at a young age, and several who were available for interview

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by the IRS expressed a desire or willingness to return, it was not clear error to find
that ten or more suffered this actual loss. The district court reasonably found that this
loss was reasonably foreseeable by Quevedo, especially given Quevedo’s status as an
alien who is familiar with the procedures for entering the United States.
Strictly speaking, the guideline commentary states that a “victim” is one who
sustained any part of the “actual loss determined” under USSG § 2B1.1(b)(1). USSG
§ 2B1.1, comment. (n.1); United States v. Skys, 637 F.3d 146, 155 (2d Cir. 2011). The
district court had no need to determine actual loss under § 2B1.1(b)(1): the intended
loss clearly exceeded the actual loss, and the guidelines call for use of the greater
amount. USSG § 2B1.1, comment. (n.3(A)). But the court did specifically find that
the Peruvians counted as victims were “out real money,” S. Tr. 31, meaning that they
suffered actual loss. Cf. United States v. Icaza, 492 F.3d 967, 969-70 (8th Cir. 2007).
Quevedo was not prejudiced by the court’s failure to make a formal determination of
“actual loss” under § 2B1.1(b)(1). The amount was unnecessary to the guideline
calculations, and the court otherwise found that ten or more Peruvians were victims
who suffered reasonably foreseeable pecuniary harm.
* * *
The judgment of the district court is affirmed.
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