United States v. Dennis

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________
No. 01-20726
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UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
JAMES WILLIAM DENNIS,
Defendant-Appellant.
_________________________
Appeal from the United States District Court
for the Southern District of Texas
H-00-CR-819-ALL
_________________________
June 11, 2002
Before KING, Chief Judge, SMITH
and PARKER, Circuit Judges.
JERRY E. SMITH, Circuit Judge:*
James Dennis pleaded no contest to fifteen
counts of theft from an organization receiving
federal funds and twelve counts of theft of
public money. The district court made a two-
level upward departure because Dennis’s theft
inflicted nonobvious, indirect financial harms
and directly tainted a nonprofit organization’s
reputation. Dennis now argues that the guide-
lines discourage counting consequential, tan-
gible harms toward the loss calculation, even
through departures.
* Pursuant to 5TH CIR. R. 47.5, the court has
determined that this opinion should not be pub-
lished and is not precedent except under the limited
circumstances set forth in 5TH CIR. R. 47.5.4.

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2
Dennis did not make this argument to the
district court. He admits that court could law-
fully impose an identical sentence on remand
based only on the harm to reputation. We
conclude that the district court did not commit
plain error.
I.
Dennis worked as vice president for Shel-
tering Arms Senior Services, Inc. (“SASS”), a
nonprofit organization administering grants
from various federal agencies. The Texas De-
partment of Housing and Community Affairs
and the Harris County Community Develop-
ment Department contracted with SASS to
provide services for the elderly. Dennis or-
dered and tracked equipment such as heaters
and air conditioners.
In April 1999, SASS learned of inventory
irregularities and began reviewing its purchas-
es and installations. SASS discovered that
Dennis had contracted, submitted, and ap-
proved payments to South Texas Supply Com-
pany (“STSC”). Dennis had manually de-
livered payments to the vendor, which was not
located at the address listed in the file.
In 1994, Dennis had registered STSC as an
unincorporated business and listed himself as
the owner. SASS did not know that Dennis
owned the vendor or had used STSC to pro-
vide heaters and air conditioners, in violation
of SASS’s conflict of interest policy. From
October 1994 through April 1995, Dennis had
submitted thirty-three fraudulent invoices paid
to STSC, totaling $334,679.48.
Dennis pleaded no contest to fifteen counts
of theft from an organization receiving federal
funds, 18 U.S.C. § 666, and twelve counts of
theft of public money, 18 U.S.C. § 641. Based
on the 2000 sentencing guidelines, the Presen-
tence Report (“PSR”) recommended increas-
ing Dennis’s base offense level of four by ten
levels because the loss was between $250,000
and $300,000; a two-level increase because the
offense involved more than minimal planning;
and a two-level increase for abuse of a position
of public or private trust. These increases
yielded a total offense level of 18. Dennis’s
criminal history category was I, yielding a
guideline range of 27 to 33 months.
The PSR recommended an upward depar-
ture for two reasons. First, Robert Phillips,
the president of SASS, explained that SASS
sustained additional costs not included in the
original loss calculation: $160,000 in staff time
assessing the total financial damage, $109,500
in audit fees, and $11,413 for Dennis’s unap-
proved equipment storage fees. The PSR
found that these losses fell outside U.S.S.G.
§ 2B1.1’s definition of loss and 18 U.S.C.
§ 3663A’s statutory definition of restitution.
Second, Phillips stated that SASS’s reputation
and fundraising suffered because of media re-
ports of Dennis’s criminal conduct. SASS is
an agency of the United Way, and the media
publicized the theft just as a United Way fund-
raiser began. Phillips averred that Dennis’s
crime harmed the United Way’s and SASS’s
public image, lowering donations.
Dennis filed objections to the PSR, includ-
ing an objection to its recommendation for an
upward departure. The district court, relying
on a comment to § 2B1.1, departed upward
because the guidelines did not adequately cap-
ture the tangible or intangible harms SASS had
suffered. The court noted that the tangible,
consequential harms totaled at least $281,000,
but the court did not rely on the entire amount
to depart upward; it departed upward by two
levels for a total offense level of twenty and a
corresponding guideline range of 33 to 41

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months. The court sentenced Dennis to con-
current 41-month prison terms on each count,
three years of supervised release, a special
assessment of $2,600, and restitution of
$206,759.87.
II.
Ordinarily we review for abuse of discretion
a decision to depart from the guidelines. Koon
v. United States, 518 U.S. 81, 98 (1996);
United States v. Nevels, 160 F.3d 226, 229
(5th Cir. 1998). A decision to consider an im-
permissible factor is legal error, which we re-
view de novo. United States v. Reyes, 239
F.3d 722, 744 (5th Cir.) (“Whether a factor is
a permissible basis for departure is a question
of law we review de novo.”), cert. denied, __
U.S. __, 122 S. Ct. 156, and cert. denied, 533
U.S. 961 (2001).
Dennis, however, failed to raise his current
argument in the district court. He made three
arguments to that court. First, in his written
objections to the PSR, he contended that there
was no causal connection between his criminal
conduct and the auditing, staff, reporting, or
fundraising costs. Second, at the sentencing
hearing, he claimed that the district court
lacked a reliable standard or measure for the
indirect costs created by his theft. For
example, he accused the accounting firm of
tabulating the audit costs inaccurately. Third,
he argued that SASS only incurred costs
typical to all “federal government program
type cases,” so the district court could not
reasonably conclude that the guidelines had
not taken the full costs into account.
On appeal, Dennis contends only that
courts should not depart upward from
§ 2B1.1’s loss table on the basis of consequen-
tial financial harms. His argument on appeal
bears no relation to any of the arguments he
made to the district court. None of his initial
objections to the sentence informed the district
court that relying on consequential, financial
harms was problematic. We therefore
consider these arguments waived and review
the sentence only for plain error.1
Under plain error review, the defendant
must show (1) error (2) that is plain and
(3) affects substantial rights.2 Even if the de-
fendant establishes all three factors, we retain
the discretion to refuse to correct the error,
United States v. McDowell, 109 F.3d 214, 216
(5th Cir. 1997), and will not exercise our dis-
cretion to correct it unless it seriously impairs
the fairness, integrity, or public reputation of
judicial proceedings. Id.
Dennis admits that the district court could
permissibly depart upward for the intangible
harm caused to United Way’s reputation. The
1 United States v. Izaguirre-Losoya, 219 F.3d
437, 441-42 (5th Cir. 2000) (finding plain error
review applicable where defendant failed to raise
objection in district court), cert. denied, 531 U.S.
1097 (2001); United States v. Ocana, 204 F.3d
585, 588 (5th Cir.) (“Failure to object to either the
PSR or the district court's sentence results in re-
view for plain error.”), cert. denied, 531 U.S. 880
(2000); United States v. Krout, 66 F.3d 1420,
1434 (5th Cir. 1995) (“A party must raise a claim
of error with the district court in such a manner so
that the district court may correct itself and thus,
obviate the need for our review.”) (citation
omitted).
2 United States v. Olano, 507 U.S. 725, 736-37
(1993); United States v. Calverley, 37 F.3d 160,
162-64 (5th Cir. 1994) (en banc) (“[A]ppellate
courts possess the discretion to decline to correct
errors which do not “seriously affect the fairness,
integrity, or public reputation of judicial
proceedings.”) (citation omitted).

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district court noted that it did not rely on the
full indirect and consequential financial harms
for the upward departure. Assuming arguen-
do that the court erred by departing upward
based on consequential financial harms, it
could have imposed the same departure based
on the intangible harm to United Way’s
reputation.3 Under plain error review, where
the district court could impose the same
sentence on remand, we have the discretion to
affirm on one of the district court’s alternate
grounds. We need not reject the legally flawed
rationale and remand to see whether the court
will impose the same sentence.4
On this basis, we affirm the upward
departure based on the harm caused to SASS’s
and United Way’s reputations. We do not
reach the question whether the district court
properly considered consequential, financial
harms.
AFFIRMED.
3 Two other circuits have affirmed upward de-
partures based on the reputational harm caused to
public or nonprofit institutions. United States v.
Robie, 166 F.3d 444, 455-56 (2d Cir. 1999) (af-
firming upward departure where theft resulted in
“the real but intangible loss inflicted in the form of
embarrassment and the appearance of
incompetence inflicted on the Postal Service”);
United States v. Medford, 194 F.3d 419, 425 (3d
Cir. 1999) (affirming departure based on intangible
harms caused by theft of museum antiques and suf-
fered by museum and members of general public).
4 United States v. Leonard, 157 F.3d 343, 346
(5th Cir. 1998) (“In the sentencing context, this
court has concluded that if the trial judge, on re-
mand, could reinstate the same sentence, it will up-
hold the sentence imposed despite the trial court’s
error.”); United States v. Ravitch, 128 F.3d 865,
869 (5th Cir. 1997) (“As we must uphold a
sentence reviewed for plain error if the court could
lawfully and reasonably reinstate it on remand, we
address each of these bases for departure in turn.”);
United States v. Brunson, 915 F.2d 942, 944 (5th
Cir. 1990) (“If the case were remanded the trial
judge could reinstate the same sentence (assuming
of course that he included a reasonable explanation
for the departure). We can find no miscarriage of
justice in the court’s failure to apply Guidelines
(continued...)
4(...continued)
§ 3B1.3. Finding no plain error, we AFFIRM.”).

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