Wake Forest Law Review
1Apr

Bank Fraudster’s Conviction Affirmed

Categories: 4th Cir. Blog
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By Andrew Kilpinen

Today, in an unpublished opinion in U.S. v. Daren Gadsden, the 4th Circuit affirmed the convictions and sentence of the district court for the District of Maryland and remanded with instructions to reduce the restitution amount.

Gadsden Orchestrates Scheme to Defraud Section 8 Housing Authority

Daren Karem Gadsden (“Gadsden”) was a landlord in the Housing Authority of Baltimore City’s (“HABC”) Section 8 program. In 2010, Gadsden, with the help of three others, established bank accounts in fake business names, fraudulently created a consulting agreement between one of these fake businesses and the HABC with a forged signature of HABC’s CFO, and ultimately transferred $1.3 million of unauthorized funds into the accounts. A jury convicted Gadsden of one count of conspiracy to commit bank fraud, eight counts of bank fraud, two counts of aggravated identity theft, and two counts of evidence tampering. Gadsden was sentenced to 286 months imprisonment.

District Court Denies Gadsden Rule 29 Motion for Acquital

After the jury verdict, Gadsden moved for a judgment of acquittal under Rule 29 arguing that the evidence offered at trial did not support the conviction. Gadsden argued that the government did not satisfy it’s burden for the bank fraud charges, and as a consequence, did not satisfy the elements of the conspiracy or aggravated identity theft charges. The 4th Circuit reviewed the district court’s denial of the Rule 29 motion de novo.

Gadsden Scheme Placed Both Banks at Risk of Loss

On appeal, Gadsden argued that the government failed to satisfy its burden under § 1344(2). At trial, the government argued that Gadsden orchestrated an integrated scheme to obtain funds from HABC’s bank account and the fraudulently opened business accounts. Therefore, Gadsden argued, the government had to prove that Gadsden violated § 1344 as to both banks. While the Court refused to opine as to whether this standard was appropriate under the facts, the Court held that a reasonable jury could find that Gadsden placed both banks at a risk of loss that the banks did not knowingly accept. As a result, the district court did not err in denying Gadsden Rule 29 motion.

Conspiracy and Aggravated Identity Theft Charges Affirmed

As a result of finding that the evidence was sufficient to affirm the bank fraud charges, the Court affirmed the conspiracy charge and the aggravated identity theft charge as well.

Restitution Remanded for Reduction

The district court originally ordered Gadsden to pay $1.3 million in restitution to the bank that opened the fraudulent accounts. The Court found that because the bank was able to mitigate its losses to $1.1 million, Gadsden’s restitution should be reduced to that amount.

District Court Affirmed in Part and Remanded in Part

The 4th Circuit affirmed Gadsden’s convictions and sentence, and remanded the restitution judgment with instructions to reduce the amount to $1.1 million.

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6Nov

Defendant Must Provide Restitution to Victim of Child Pornography

Categories: 4th Cir. Blog
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By: Steven M. Franklin

Yesterday, in U.S. v. Borowski, the District Court for the Eastern District of North Carolina upheld a restitution order for a victim of child pornography pursuant to 18 U.S.C. §§ 3663 and 3663A.

Defendant Pleads Guilty to Child Pornography and Signs Appeal Waiver

The defendant, Matthew Paul Borowski, pled guilty to one count of receipt of child pornography in violation of 18 U.S.C. § 2252(a)(2). Pursuant to his plea agreement, Mr. Borowski waived his right of appeal under 18 U.S.C. § 3742. However, he could nonetheless appeal if his sentence exceeded the advisory Guideline range, or if he claimed ineffective assistance of counsel or prosecutorial misconduct.  Mr. Borowski was sentenced below the advisory guidelines range to 174 months in prison, and ordered to provide $8000 in restitution to the victim.

Defendant Challenges Restitution Order in Light of Paroline v. United States

Courts enforce appeal waivers so long as the defendant knowingly and intelligently waived his right of appeal, and the issues raised on appeal fall within the scope of the agreement. Mr. Borowski admitted that he knowingly agreed to the appeal waiver, and he did not argue that the restitution order fell outside of the scope of the agreement. Instead, he appealed on the basis that, had he known the Supreme Court was going to hear Paroline v. U.S., he would have requested the restitution order to be excluded from the plea agreement.

Paroline Addresses Calculation of Restitution for Victims of Child Pornography

In Paroline, the Supreme Court determined that restitution orders for child pornography offenses must bear a causal relationship to the victim’s losses. Essentially, similar to when multiple defendants appear before the court and are found to have contributed to the loss of a victim, the court should analyze the proportion of the individual defendant’s contribution to the victim’s losses. Although there is no precise mathematical formula to determine such losses, courts may consider the number of other past defendants who contributed to the victims losses, reasonable predictions of the number of future offenders likely to be caught, and whether the defendant contributed to the actual creation of the images, among other factors.

Change in Law Does Not Effect Restitution Order

The 4th Circuit found Mr. Borowski’s argument unconvincing. A party cannot re-bargain its appeal waiver due to changes in the law, and a change in law does not render a valid plea agreement unenforceable. Thus, simply failing to expect a ruling regarding the calculation of restitution for victims of child pornography does not render Mr. Borowski’s waiver unenforceable.

The Fourth Circuit Dismisses

For these reasons, the 4th Circuit dismissed Mr. Borowski’s appeal, effectively upholding the District Court’s restitution order.

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