United States v. Stone

866 F.3d 219

UNITED STATES of America, Plaintiff–Appellee,

v.Charise Shanell STONE, a/k/a Charise Stone Crumbly, Defendant–Appellant.

No. 15-4510

United States Court of Appeals, Fourth Circuit.

Argued: March 24, 2017

Decided: August 2, 2017

ARGUED: Alan Hideto Yamamoto, Alexandria, Virginia, for Appellant. Elissa Hart-Mahan, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON BRIEF: Caroline D. Ciraolo, Acting Assistant Attorney General, S. Robert Lyons, Acting Chief, Criminal Appeals & Tax Enforcement Policy Section, Gregory Victor Davis, Tax Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee.

Before WILKINSON, KING, and AGEE, Circuit Judges.

Affirmed by published opinion. Judge Agee wrote the opinion, in which Judge Wilkinson and Judge King joined.

AGEE, Circuit Judge:

Charise Shanell Stone was indicted for orchestrating a scheme to defraud mortgage companies. During trial, Stone made a motion for recusal based on the district court's ownership of stock in some of the companies, which the court denied. After she was convicted, the district court sentenced Stone to sixty months' imprisonment and ordered her to pay approximately $2.3 million in restitution. Stone appeals the district court's restitution calculation, determination of loss for purposes of sentencing, and denial of her motion for recusal. We affirm the district court for the reasons stated below.

I.

In April 2014, a grand jury in the Eastern District of Virginia indicted Stone for conspiracy to commit wire fraud in violation of 18 U.S.C. § 1349, wire fraud in violation of 18 U.S.C. § 1343, false statements in violation of 18 U.S.C. § 1014, fictitious obligations in violation of 18 U.S.C. § 514, obstructing and impeding the due administration of internal revenue laws in violation of 26 U.S.C. § 7212, and failure to file an individual tax return in violation of 26 U.S.C. § 7203. As represented in the indictment, Stone convinced financially distressed homeowners to engage her services as a real estate agent to negotiate "short sales" with the mortgage holders on behalf of those homeowners. In such a short sale, a real estate agent finds a buyer for a mortgaged home at a price less than the balance owed on the mortgage and then negotiates with the mortgage holder for the holder to accept the sale price as satisfaction of the mortgage.

In this case, Stone fraudulently reported short sale prices to the mortgage holders in lower amounts than the sale proceeds that she actually received. She initially transferred ownership in the properties to herself, her husband, or one of her controlled entities and reported the sales to the mortgage companies, concealing these fraudulent transactions from both the homeowners and mortgage holders. Stone then quickly resold the properties, or "flipped" them, to predetermined buyers for more than the amounts she paid to the mortgage companies from the original short sales, again concealing these actions from the homeowners, buyers, and lenders. Stone also collected commissions and other fees on the sales as the real estate agent, although she was not licensed to sell real estate.

At trial, Stone filed a largely unintelligible motion for recusal,¹ providing the following grounds:

1. Defendant [sic] rights to due process have been violated, in light of the Court's performance and quest for defense to waive rights.

2. A conflict of interest. The Court has unconsentually [sic] appointed unwarranted counsel, to which alleged defendant's estate respectfully declines the ‘offer’ to contract thereto. Affirmative.

Further, be it known, as the Court is the arbitrator, to which alleged defendant has no ‘beneficial ties', the same sits in consort with the accuser(s).

Therefore, let the record show, the hands of Hilton, Claude dba Judge Claude M. Hilton are in fact ‘unclean’. Affirmative.

3. The Court has willfully dishonored the ‘Constitutional Challenge’ as set forth in Law and is HEREBY requested to respectfully RECUSE himself.

J.A. 463–64. At a hearing on the motion, the district court stated, "There's a motion here for me to recuse myself. I find that there's no basis. I never want any extra cases, but there's no basis for me to recuse myself on this one. And that motion is denied." J.A. 469. Representing herself on the motion, albeit with counsel at the table with her, Stone stated, "And the motion for recusal, Your Honor, is because when you asked the jury was there anyone here that had any mortgages, any stock in any of the banks—JP Morgan Chase, Bank of America, Ocwen—I would [like to] know if there's a conflict of interest with your financials, the prosecutors' financials, or any of the agents that are represented at this table." J.A. 470.² The court responded, "If there was a conflict, I wouldn't be here." J.A. 470. Stone pressed, "So you're saying that you don't have any stock in JP Morgan Chase or prison bonds or anything of that matter?" J.A. 470. The court repeated, "If there was a conflict, I wouldn't be here." J.A. 471. Stone continued, "Or any of the banks? So you don't have—" J.A. 471. The court again stated, "If there was a conflict, I wouldn't be here." J.A. 471.

During the trial presentation of its case in chief, the Government introduced documentary evidence and testimony of the homeowners, representatives of the lenders, investigators, and Stone's co-conspirators. Stone did not put on a defense. The jury found her guilty on all counts.

The presentence investigation report ("PSR") prepared by the probation office indicated that the "victim mortgage lenders suffered losses of approximately $2,330,722," representing the difference between the balances on the mortgages and the amounts Stone paid them from the short sales. J.A. 983. The PSR recommended the court order that amount be paid to the victim lenders in restitution and also utilize that same amount to calculate the recommended sentence under the advisory Sentencing Guidelines. Stone objected to the loss amount for purposes of the sentencing calculation, stating,

While [the] probation office correctly calculated the loss amount of $2,330,722 based on the difference between the outstanding mortgage amount less the short sale proceeds, Ms. Stone contends that figure gives a distorted picture as to the actual losses by the lenders and gives the lenders a windfall they never would have realized had the lenders foreclosed and sold the properties in a foreclosure sale.

J.A. 912–13. She did not, however, object to the court fixing the restitution as the amount in the PSR. Stone requested a Guidelines-range sentence of sixty-three to seventy-eight months, "[s]hould the Court consider a variance for the loss amount." J.A. 914. At the sentencing hearing, Stone again stated, "Additionally, Your Honor, we would ask the Court to consider a variance in this case because the probation officer correctly calculated the [G]uideline loss as approximately $2.3 million, but this was a case involving short sales." J.A. 933. Specifically, Stone requested the district court "to consider a variance and ... a sentence below the [G]uideline range." J.A. 934.

The district court adopted the PSR and calculated Stone's offense level at 28 with a criminal history category of I, resulting in a Guidelines range of seventy-eight to ninety-seven months' imprisonment. The court sentenced Stone to a below-Guidelines sixty months' imprisonment and ordered restitution to the victim lenders in the full amount recommended by the PSR, approximately $2.3 million.³ Stone filed a timely notice of appeal, and we have jurisdiction pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742.

After sentencing and while this appeal was pending, Stone filed a motion for a new trial in the district court "based on her allegation that [the district court] should have recused itself based on an alleged conflict of interest stemming from its ownership of stock in some of the victim banks." United States v. Stone , No. 1:14CR127, 2016 WL 4707991, at *1 (E.D. Va. Sept. 7, 2016). The district court determined that this Court "has held that a judge's interest in the victim of a crime does not necessarily require recusal." Id. While conceding that it "did have a financial interest in some of the victim banks during the period it was assigned to [Stone's] case," the court nonetheless concluded that Stone "has not shown that either the interest or the restitution ordered was so substantial as to require recusal." Id. The court also noted that "[t]he banks at issue here—Wells Fargo, PNC, and JP Morgan Chase—are all large corporations that seemingly would not be significantly affected by the restitution ordered here." Id. at *2. For those reasons, the district court denied Stone's motion. Id.

II.

On appeal, Stone challenges the district court's restitution order, loss determination for its sentencing calculation, and denial of her motion for recusal. We address each in turn.

A.

First we consider the district court's restitution determination. Ordinarily, the Court reviews a district court's restitution order for abuse of discretion. See United States v. Freeman , 741 F.3d 426, 431 (4th Cir. 2014). See generally United States v. Alvarado , 840 F.3d 184, 189 (4th Cir. 2016) ("A district court abuses its discretion when it (1) acts arbitrarily, as if neither by rule nor discretion, (2) fails to adequately take into account judicially recognized factors constraining its exercise of discretion, or (3) rests its decision on erroneous factual or legal premises.").⁴ However, when, as here, the defendant fails to object to the restitution order, we review for plain error, which places a heavier burden on the appellant than abuse-of-discretion review. See United States v. Seignious , 757 F.3d 155, 160 (4th Cir. 2014). A finding of plain error requires: (1) "the existence of legal error that has not been intentionally relinquished or abandoned, i.e. , affirmatively waived, by the appellant"; (2) "that the legal...