United States of America v. Walter Nelson

*The Honorable R ichard M ills, United States District Judge for the
Central District of Illinois, sitting by designation.
1
5RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0034P (6th Cir.)
File Name: 04a0034p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
WALTER NELSON,
Defendant-Appellant.
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No. 02-2022
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 01-80583—Lawrence P. Zatkoff, Chief District Judge.
Argued: October 21, 2003
Decided and Filed: January 28, 2004
Before: MARTIN and SUTTON, Circuit Judges; MILLS,
District Judge.*
2 United States v. Nelson No. 02-2022
_________________
COUNSEL
ARGUED: Paul D. Muller, Farmington, Michigan, for
Appellant. Kathleen Moro Nesi, ASSISTANT UNITED
STATES ATTORNEY, Detroit, Michigan, for Appellee.
ON BRIEF: Paul D. Muller, Farmington, Michigan, for
Appellant. Kathleen Moro Nesi, ASSISTANT UNITED
STATES ATTORNEY, Detroit, Michigan, for Appellee.
_________________
OPINION
_________________
BOYCE F. MARTIN, JR., Circuit Judge. This case was
presented as part of a consolidated appeal with United States
v. Sims, No. 02-1734, which will be discussed in a separate
opinion. In this case, Walter Nelson appeals his sentence
following his guilty plea conviction for identity theft and
bank and mail fraud. For the following reasons, we affirm the
district court’s sentencing decision in part and vacate in part.
I.
On August 8, 2001, Walter Nelson was named in a thirty-
two count indictment for various offenses including
conspiracy to commit federal crimes, identity theft, bank and
credit card fraud, and mail fraud. Nelson entered a plea of not
guilty on all counts. On December 6, Nelson was named in
a forty-four count first superseding indictment that named
him in four additional charges and added four defendants.
Nelson pleaded not guilty to all counts contained in the
superseding indictment and was released on bond.
All charges against Nelson arose from a large-scale fraud
scheme in which Nelson played an active role. Nelson stole
personal information of individuals from mortgage
applications they filed at his places of employment and sold

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No. 02-2022 United States v. Nelson 3
that information to his co-conspirators, Vanessa Phillips and
Tanisha Hollman, and others. For his part, Nelson demanded
payment upon receipt of the information as well as a one-third
share of any proceeds attributable to his theft. Thereafter,
Nelson apparently began his own operation and recruited
others to assist him in fraudulently adding authorized users to
existing credit card accounts and then intercepting the cards
upon their shipment.
On January 30, 2002, while on release for the charges
contained in the first superseding indictment, Nelson was
arrested after a traffic stop uncovered an open beer can
underneath Nelson’s seat. Upon Nelson’s removal from the
police vehicle, the authorities discovered paperwork
containing the names, dates of birth, social security numbers
and addresses of several individuals. On February 1, a
warrant was issued to search Nelson’s vehicle and a search
revealed paperwork containing the personal information of
over sixty individuals.
Because of these new offenses, on March 7, 2002, a second
superseding indictment was issued against Nelson that added
five defendants. On March 15, Nelson pleaded not guilty to
all counts charged in the second superseding indictment. On
May 7, however, Nelson changed his plea to guilty of
conspiracy to commit federal crimes, bank fraud, identity
theft, mail fraud and credit card fraud, in return for the United
States’ dismissal of several charges. The parties did not enter
into a written Rule 11 plea agreement. Nelson was sentenced
to seven years, three months and one day imprisonment,
which included a two level reduction in his offense level for
acceptance of responsibility, a fourteen level increase for
committing conduct which resulted in more than $400,000 in
losses pursuant to United States Sentencing Guideline section
2B1.1(b)(1)(H), and a one-day consecutive sentence for
committing an offense while on release in violation of 28
U.S.C. § 3147. Nelson filed a timely notice of appeal.
4 United States v. Nelson No. 02-2022
1Congress’s recent enactment of the Prosecutorial Remedies and
Other Tools to end the Exploitation of Children Today Act, Pub. L. No.
108-21, 117 Stat. 650 (2003) (“PROT ECT Act”), has changed the law
with respect to the d efendant’s entitlement to the additional adjustment of
a one level decrease in offense level. Under the PROTE CT Act the
additional one level adjustment may only be granted upon the
prosecuto r’s motion at the pretrial stage. See PROT ECT Act, Pub. L. No.
108-21, § 401(g)(1)(A). Because, as discussed, we conclude that Nelson
was not entitled to the additional adjustment even under prior law, we find
it unnecessary to decide the question of whether this new pro vision would
app ly to a case pending review at the time of the PRO TE CT Act’s
enactment.
On appeal, Nelson challenges his sentence on two grounds.
First, Nelson argues that the district court erred when it
granted him a two level decrease in his offense level for
acceptance of responsibility instead of a three level decrease.
Second, Nelson argues that the district court erred in finding
him responsible for more than $400,000 in losses for his
fraudulent activities pursuant to section 2B1.1(b)(1)(H) of the
Sentencing Guidelines. Each of these arguments will be
addressed in turn.
II.
A.
Sentencing Guideline section 3E1.1(a) grants sentencing
courts discretion to reduce by two levels the offense level for
the defendant who has “demonstrate[d] acceptance of
responsibility for his [or her] offense.” Additionally, pursuant
to section 3E1.1(b), a district court may award an additional
one level reduction in the offense level of a defendant who
has demonstrated “super acceptance” of responsibility by
either “(1) timely providing complete information to the
government concerning his own involvement in the offense;
or (2) timely notifying authorities of his intention to enter a
plea of guilty, thereby permitting the government to avoid
preparing for trial and permitting the court to allocate its
resources efficiently.”1 Nelson argues that he should have

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No. 02-2022 United States v. Nelson 5
received this additional reduction in his offense level because
he informed the United States in a timely fashion of his intent
to plead guilty. We disagree.
Nelson’s appeal presents a simple argument–he met the
guilty plea cut-off date and therefore should have received the
additional one level decrease in his offense level. That
argument, however, ignores the policy reason behind such a
departure. As explained in the Guideline itself and
expounded upon in the application notes following the
Guideline, such a departure is warranted where the
defendant’s timely actions spared the government the expense
of trial preparation. U.S.S.G. § 3E1.1(b)(2). The “timely
actions” that merit the additional one level decrease generally
occur very early in the case. U.S.S.G. § 3E1.1 (Application
Note 6) (“In general, the conduct qualifying for a decrease in
offense level under subsection (b)(1) or (2) will occur
particularly early in the case.”).
In determining whether the district court erred by granting
only a two level departure for Nelson’s acceptance of
responsibility, we consider Nelson’s unlawful actions taken
after his initial indictment relevant to our inquiry. See United
States v. Harper, 246 F.3d 520, 525-27 (6th Cir. 2001)
(allowing consideration of all of the defendant’s post-
indictment behavior in determining whether the district court
erred in denying an acceptance of responsibility departure),
rev’d on other grounds, United States v. Leachman, 309 F.3d
377 (6th Cir. 2002). Upon examination of the record, we
conclude that the district court did not err in granting Nelson
a two level reduction for his acceptance of responsibility,
rather than a three level reduction.
Nelson indicated his intention to plead guilty only after the
United States expended considerable resources to investigate
his role in the large-scale conspiracy. Indeed, Nelson’s
refusal to accept responsibility and his demand for a trial
caused an extensive investigation that not only required the
issuance of a first superseding indictment, but also a second
6 United States v. Nelson No. 02-2022
superseding indictment. As the United States noted at
Nelson’s sentencing hearing, Nelson’s belated acceptance of
responsibility for his criminal actions caused its
“investigation to continue,” forced the expenditure of an
“incredible” amount of resources, and simply did not “spare[
the government] any work.” Thus, we affirm the decision of
district court granting Nelson only a two level reduction in his
offense level for his acceptance of responsibility.
B.
Next, we address Nelson’s argument that the district court
erred in finding him responsible for more than $400,000 in
damages, which resulted in a fourteen level increase in his
offense level pursuant to section 2B1.1(b)(1)(H) of the
Sentencing Guidelines.
On August 1, 2002, at the first sentencing hearing, Nelson
objected to that portion of his presentence report holding him
accountable for somewhere between $400,000 and
$1,000,000 in losses for his fraudulent activities.
Specifically, Nelson argued that he should not be held
responsible for losses that occurred before May 2000, the date
on which he admittedly entered into the conspiracy.
Additionally, Nelson argued that he could not be held
responsible for the losses of all of his alleged co-conspirators
because the full scope of the conspiratorial activities was
unknown and unforseen by him. The United States conceded
that its calculations included amounts from before May 2000.
It argued, however, that it would be nearly impossible to
calculate the loss as to the specific date that Nelson entered
the conspiracy. The district judge, who was given the United
States’ calculation exhibits only a short time before the first
sentencing hearing and had not had the time to review them,
adjourned the hearing until October 3, 2002, to give the
government the time it needed to do the calculations that
Nelson requested. Seven days later, on August 8, the district
court reconvened and accepted the United States’ initial
calculations over Nelson’s objection.

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No. 02-2022 United States v. Nelson 7
On appeal, Nelson argues that the district court’s summary
acceptance of the United States’ calculations did not comply
with its burden under Rule 32 of the Federal Rules of
Criminal Procedure. See FE D . R. CRIM . P.
32(i)(3)(B)(formerly FED. R. CRIM. P. 32(c)(1)). Rule 32
requires that the district court “for any disputed portion of the
presentence report or other controverted matter–rule on the
dispute or determine that a ruling is unnecessary either
because the matter will not affect sentencing, or because the
court will not consider the matter in sentencing.” We have
recently reiterated that “the purpose of this rule [is] ‘to ensure
that sentencing is based on reliable facts found by the court
itself after deliberation,’ and thus, the district court cannot
‘summarily adopt the factual findings in the presentence
report or simply declare that the facts are supported by a
preponderance of the evidence.’” United States v. Darwich,
337 F.3d 645, 666 (6th Cir. 2003) (quoting United States v.
Tarwater, 308 F.3d 494, 518 (6th Cir. 2002)).
This Court requires literal compliance with Rule 32 when
sentencing issues are contested by the parties. See United
States v. Monus, 128 F.3d 376, 396 (6th Cir. 1997); Darwich,
337 F.3d at 666. In Monus, we vacated the defendant’s
sentencing enhancement and remanded the case for re-
sentencing when the district court, over the objection of the
defendant, simply stated that it was “convinced that the
defendant is at least . . . responsible for in excess [of] 80
million dollars . . . .” Id. The fact that the district court failed
to explain how it calculated the amount of loss and failed
explicitly to respond to the defendant’s “specific factual
objections to the methods of calculation” troubled this Court.
Id. at 396-97. Moreover, we found that the district court
violated Rule 32 by failing to make written findings on the
controversy. Id. at 397. Indeed, we noted that while “the
court need not establish the value of the loss with precision,
Rule 32 requires it to publish the resolution of contested
8 United States v. Nelson No. 02-2022
2Since Monus, Rule 32 has been amended, but the essence of the
rule’s requirements remain unchanged. Thus, our analysis is guided by
Monus.
factual matters that formed the basis of its calculation.” Id.
(internal citations omitted).2
With respect to the Rule 32 issue, this case is virtually
indistinguishable from Monus. In this case, the only response
to Nelson’s objections to the calculations was when the
district judge announced, “I have had an opportunity to
review the submissions by both the defendant and the
government and I have concluded that the government is
correct and that it is no longer necessary to go through the
exercise of doing further research.” Similar to Monus, the
district court gave no indication as to how it calculated the
loss and determined that the government’s calculations were
correct nor did it respond to Nelson’s specific objections.
Moreover, even a cursory glance at the United States’ loss
exhibits raises concerns. For example, some of the sheets
contain no dates and there are several people who are
identified, presumably as part of the conspiracy, but there is
no indication as to how they fit into the conspiracy in relation
to Nelson. Indeed, there are several names mentioned for the
first time on these loss exhibits that are not found in any of
the indictments against Nelson or in his presentence report.
In response, the United States cites United States v.
Jackson, 25 F.3d 327 (6th Cir. 1994), for the proposition that
Nelson bears a heavy burden in establishing that the district
court erred in calculating the loss amount. Indeed, in Jackson
this Court stated that the defendant carries “a heavy burden of
persuading this Court that the evaluation of the loss was not
only inaccurate, but was outside the realm of permissible
computations.” 25 F.3d at 330 (citing U.S.S.G. § 2F1.1,
comments (now U.S.S.G. § 2B1.1, comment (2(C))).
However, whether the district court erred in its calculations is

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No. 02-2022 United States v. Nelson 9
a separate question from whether the district court failed to
meet its burden under Rule 32. Properly understood,
Nelson’s argument is not so much a challenge to the final
calculation decision made by the district court, but rather to
the fact that the district court failed specifically to respond to
his objections to these calculations. Moreover, in Jackson the
district court noted that it had “carefully considered [the]
evidence,” 25 F.3d at 330, before finding “that the aggregate
losses were in excess of $800,000.” Id. From the record
before us, we cannot determine whether the district court
“carefully considered the evidence” precisely because it failed
to respond to Nelson’s objections. Thus, we find Jackson
distinguishable.
In short, “[a]lthough the evidence may justify holding
[Nelson] accountable for [$593,366.60 in loss], the district
court’s failure to explain its factual determination requires
[this Court] to remand the case for his resentencing.” United
States v. Orlando, 281 F.3d 586, 601 (6th Cir. 2002) (finding
that the district court erred in failing to determine the date the
defendant entered into the conspiracy and the scope of
unlawful behavior that the defendant had agreed to
undertake). Thus, we VACATE Nelson’s fourteen level
sentencing enhancement and REMAND for re-sentencing at
which time the district court should issue findings with
respect to Nelson’s specific objections to the United States’
loss calculations.

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