United States v. Bobby Walker

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 09-2091
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United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the
* Western District of Arkansas
Acambaro Mexican Restaurant, Inc., *
*
Appellant. *
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Submitted: January 13, 2010
Filed: February 2, 2011
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Before SMITH, COLLOTON, Circuit Judges, and KORNMANN, 1 District Judge.
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KORNMANN, District Judge.
The defendant, a Subchapter S corporation, which owned and operated a
number of Mexican restaurants, and two other closely-held corporations were indicted
on one count of harboring aliens who were unlawfully residing in the United States,
and who were ineligible for employment in the United States. Such activities were
alleged to be in violation of 8 U.S.C. § 1324 (a)(1)(A)(iii) & (v)(II) and 8 U.S.C.
§1324 (a)(1)(B)(i). The other two corporations are not parties to this appeal.
1The Honorable Charles B. Kornmann, United States District Judge for the
District of South Dakota, sitting by designation.

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Under 18 U.S.C. § 982, upon conviction of the offense charged in the
indictment, the defendant was required to forfeit, to the United States, any property
or proceeds used in committing the charged offense. The property subject to the
forfeiture allegation included $149,932.46 of United States currency and eleven tracts
of real estate, including the buildings and fixtures built thereon, all of which were
owned by the defendant.
On August 7, 2008, the defendant plead guilty and agreed to the forfeiture of
$400,000, consisting of the $149,932.46 in currency as alleged in the indictment as
well as an additional $250,067.54 of currency in lieu of the tracts of real estate.
Consequently, the defendant retained the buildings and assets that were subject to the
indictment, which it used to operate its restaurants.
At sentencing, the district court 2 inquired as to the financial status of Arturo
Reyes, Sr. (“Reyes”), the sole owner of Acambaro’s stock, in determining whether it
was readily ascertainable that the defendant could not pay a fine. Despite the court’s
inquiry, Reyes’ personal income tax returns and other financial data were never made
available or offered as exhibits during the sentencing.
The district court calculated Acambaro’s guideline fine range to be $420,000
to $500,000. The defendant objected to the imposition of a fine, arguing it did not
have the financial resources to pay a fine, especially in light of the $400,000 it spent
on satisfying the forfeiture claim. The district court overruled Acambaro’s objections
and adopted the guideline fine range, although it imposed a fine substantially lower
than the guideline range. Acambaro was sentenced to 5 years probation and fined
$250,000.
2The Honorable Jimm Larry Hendren, Chief Judge, United States District Court
for the Western District of Arkansas.
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Acambaro appeals its sentence, alleging the district court erred in imposing a
fine, in the face of its insolvency. Acambaro also appeals the district court’s use of
the term “illegal alien” during the sentencing hearing.
We first review a sentence for significant procedural error and then for
substantive reasonableness. United States v. Fischer, 551 F.3d 751, 754 (8th Cir.
2008). In reviewing a sentence for procedural errors, we review a district court’s
factual findings for clear error and its interpretation and application of the guidelines
de novo. Id.
Procedural errors include “failing to calculate (or improperly calculating) the
Guidelines range, treating the Guidelines as mandatory, failing to consider the §
3553(a) factors, selecting a sentence based on clearly erroneous facts, or failing to
adequately explain the chosen sentence—including an explanation for any deviation
from the Guidelines range.” Gall v. United States, 552 U.S. 38, 51 (2007). If the
district court did not commit a significant procedural error, we review the sentence for
substantive reasonableness under a “deferential abuse-of-discretion standard.” Id. at
41.
A. Piercing the Corporate Veil
Acambaro contends the district court committed error when it, in effect,
“pierced the corporate veil” in considering Reyes’ personal financial situation when
deciding to impose a fine. We disagree. “It is a nearly universal rule that a
corporation and its stockholders are separate and distinct entities, even though a
stockholder may own the majority of the stock.” K.C. Properties of N.W. Arkansas,
Inc. v. Lowell Inv. Partners, LLC, 373 Ark. 14, 32, 280 S.W.3d 1, 15 (2008) (citing
Anderson v. Stewart, 366 Ark. 203, 234 S.W.3d 295 (2006), and First Commercial
Bank v. Walker, 333 Ark. 100, 969 S.W.2d 146 (1998)).
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There is no question that the defendant is a corporate entity, separate and
distinct from its sole shareholder, Reyes. On the other hand, all profits and losses in
a Subchapter S corporation are passed through to shareholders in proportion to the
percentage of stock owned by the shareholders. However, determining whether the
corporate veil was pierced requires more than just recognizing the nexus between a
corporation and its shareholders.
It is well-established that, “[t]he effect of piercing a corporate veil is to hold the
owner of the corporation liable.” U.S. v. Northeastern Pharmaceutical & Chemical
Co., Inc., 810 F.2d 726, 744 (8th Cir. 1986) (emphasis added) (internal citations
omitted). Thus, piercing the corporate veil requires, at a minimum, a court to hold the
stockholders personally liable for the obligations of the corporation. Here, that never
happened. The district court never attached personal liability to Reyes for Acambaro’s
obligation.
At sentencing, the district court simply inquired how it could conclude that it
was readily ascertainable that Acambaro could not pay a fine when it had no
information on Reyes’ personal financial picture. Inquiring about Reyes’ financial
status without imposing any personal liability for Acambaro’s obligations is not
tantamount to piercing the corporate veil. Not only did the district court not
wrongfully pierce the corporate veil, it did not pierce the corporate veil at all. We
reject Acambaro’s contention that its corporate veil was pierced.
B. Imposition of a Fine
Having decided that the district court did not pierce the corporate veil, we next
determine whether the district court committed error in imposing a fine against the
defendant. Acambaro only objected to its ability to pay a fine. When the district court
announced its intention to impose a fine of $250,000, Acambaro advised the court that
it did not object to the fine amount. Since Acambaro raised no objection to the form
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of the sentence with the district court, any procedural sentencing errors are reviewed
for plain error. See Fed.R.Crim.P. 52(b). We may reverse Acambaro’s sentence only
if the district court committed error “that is plain, . . . that affects substantial rights[,
and that] . . . seriously affects the fairness, integrity, or public reputation of judicial
proceedings.” U.S. v. Lewis, 593 F.3d 765, 772 (8th Cir. 2010) (quoting United
States v. Pirani, 406 F.3d 543, 550 (8th Cir. 2005) (en banc)).
We have previously held that, “[a] defendant’s financial condition must be
considered in determining the amount of a fine.” U.S. v. Patient Transfer Service, Inc.,
465 F.3d 826, 827 (8th Cir. 2006). Moreover, “[a] sentencing court must make
specific factual findings on the record demonstrating that it has considered the
defendant’s ability to pay the fine.” Id. (citing United States v. Walker, 900 F.2d 1201,
1206 (8th Cir.1990)).
Guidelines §8C2.2(b) provides:
Where it is readily ascertainable through a preliminary determination of
the minimum of the guideline fine range (see §§ 8C2.3 through 8C2.7)
that the organization cannot and is not likely to become able (even on an
installment schedule) to pay such minimum guideline fine, a further
determination of the guideline fine range is unnecessary. Instead, the
court may use the preliminary determination and impose the fine that
would result from the application of § 8C3.3 (Reduction of Fine Based
on Inability to Pay).
§8C2.2(b) requires the court to engage in a two-part test to determine whether
a corporate defendant should be relieved of its ability to pay at least the minimum of
the guideline fine range. First, the court must determine that the organization cannot
pay such a minimum guideline fine. Second, assuming the organization cannot pay
the minimum guideline fine, the court must also determine that it is not likely that the
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corporation will become able, even on an installment plan, to pay the minimum
guideline fine. We address each of these components in turn.
The presentence report calculated the defendant as having a substantial negative
net worth. The government failed to object to this factual determination.
Consequently, the district court could have accepted this fact as true, which revealed
that Acambaro was insolvent. Had the district court relied on the presentence report
alone, it would have been apparent that Acambaro was insolvent and could not pay
a fine.
However, the district court considered other factors in concluding that it was
“not readily ascertainable” that the defendant could not pay a fine. The district court
noted that the defendant was still operating at least four3 restaurants and retained at
least $400,000 of equity in the properties as to which the government originally
asserted a forfeiture claim. Therefore, the district court committed no error in
concluding that it was not “readily ascertainable” that Acambaro could not pay the
minimum guideline fine.
With respect to the second requirement of §8C2.2(b), at sentencing, the district
court said:
“But, you know, it certainly looks like from that, that they are having some
problems as far as trying to get everything in a position where it can be paid in
a timely manner, but at the same time, the corporation continues to operate,
which suggests that they do have promise for the future. So I think that there’s
probably some kind of conditions that the Court could set to make sure that any
fine that’s imposed can be paid over time, if the Court’s so inclined, and can be
3 At oral argument, counsel for Acambaro said only two restaurants were still
in operation. Regardless of whether Acambaro was operating two restaurants or four
restaurants, our analysis is the same.
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paid in a manner that’s consistent with not causing their business to go under
in that regard.”
Thus, even assuming, arguendo, that it was readily ascertainable that the
defendant could not have paid a fine, the district court concluded that it was not likely
that the defendant would not have become able to pay a fine. The district court
allowed Acambaro to pay the fine in installments of at least $1,000 a month. At oral
argument, counsel for Acambaro acknowledged that Acambaro has been able to make
these monthly payments, which indicates that Acambaro has been able to pay a fine.
The district court did not err in its application of §8C2.2(b).
The district court considered Acambaro’s financial condition in fashioning an
appropriate fine amount. The district court also made specific findings regarding
Acambaro’s ability to pay the fine. Therefore, we find no error, procedurally or
substantively, in either the imposition of a fine or the amount of the fine imposed.
C. The Use of the Term “Illegal Alien” at Sentencing
Finally, Acambaro contends that the district court committed reversible error
by using the term “illegal alien” during the sentencing hearing. Acambaro claims that
the use of this term violated its due process rights and the right to the appearance of
fairness in a sentencing proceeding. To support its claim, Acambaro cites to United
States v. Cruiz-Padilla, 227 F.3d 1064 (8th Cir. 2000). Acambaro’s reliance on Cruiz-
Padilla is misplaced. Cruiz-Padilla involved the use of the term “illegal alien” during
closing arguments of a jury trial in which the argument was that, the defendant’s status
as an illegal alien made him more likely to commit crimes.
Here, however, the term “illegal alien” was never used in front of a jury; this
case resulted in a conviction by plea. Moreover, the term “illegal alien” was used by
the district court to describe the individuals working for the defendant, not the
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defendant itself. Additionally, along with this term being used by the district court,
the term “illegal alien” was also used in the indictment and it was used at least twelve
times in the presentence report. Despite the numerous times the phrase “illegal alien”
was used, the defendant never objected to the use of that term. Therefore, our review
is for plain error. U.S. v. McGlothen, 556 F.3d 698, 702 (8th Cir. 2009).
The use of the term “illegal alien” was not error and in no way affected any of
Acambaro’s rights. The arguments regarding the use of the term “illegal aliens” are
meritless.
For the foregoing reasons, we affirm the judgment of the district court.
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