00-1241 U.S. v. Seward

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“The district court’s bare holding that Seward was ‘being untruthful’ falls short of even a liberal application of Dunnigan. Although the district court’s ruling certainly indicates that the court found one element of perjury, false testimony, and read generously, could also indicate a finding that Seward’s false testimony was willful, the district court gave no indication that it considered the false testimony material to any of the matters before the court.

Indeed, although the court found that Seward’s testimony was ‘peppered with untruths,’ it did not identify any particular statements it believed were false. This makes it nearly impossible for us to assess whether the district court’s errors were harmless in the end, because we cannot assess the materiality of any of the lies the court found Seward was telling.

“Seward asserts that the district court should not have included the attorneys’ and executor’s fees in the loss calculations… Attorneys’ fees incurred in fighting a fraudulent scheme are properly classified as consequential, not direct, damages, as we held in Arvanitis, 902 F.2d at 497. For this reason, it was clear error for the district court to include the attorneys’ and executor’s fees in its calculation of the intended loss and the restitution amount.

“Before leaving this subject, however, we note that we are somewhat puzzled as to why Seward raised this issue in his appeal, because it appears that the district court actually calculated the intended loss from his scheme at an amount lower than the loss that Seward’s scheme, if successful, would have caused. According to the government’s version of this case, Seward’s scheme had two distinct phases: the fraudulent bank transfers and the attempt to force the 1989 will through probate. We have no quarrel with the district court’s calculation of the intended loss from the first phase of the scheme. We do not understand, however, why the second phase did not place at risk the entire estate, given that success would have left Seward as the sole inheritor. On remand, the government is free to argue that the appropriate amount of intended loss from that portion of the scheme was the full value of the estate.

“We cannot accept the idea that the Guidelines go so far as to recognize the deceased for purposes of the vulnerable victim enhancement. It is the estate in the first instance, and ultimately the living heirs, whose interests took over at the moment of O’Neal’s death… In that sense, we believe they can be considered as victims of Seward’s fraud, even if the estate was the technical victim during probate.”

Affirmed, vacated, and remanded.

Appeal from the United States District Court for the Northern District of Illinois, Manning, J., Diane P. Wood, J.