03-1863 U. S. v. Swanson

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“Unlike a determination of the amount of loss for sentencing purposes, which can include the amount that the defendant placed at risk (United States v. Lauer, 148 F.3d 766, 768 (7th Cir. 1998)), a restitution order compensates a victim only for losses it has incurred. United States v. Genova, 333 F.3d 750, 761, 762 (7th Cir. 2003). For this reason the district court below had to tease from the complex web of transactions in this case which portion of those transactions represented actual losses to the victims-a task made extraordinarily difficult by the muddled explanation of the details of the transactions of these crimes. For example, from the record we can not comprehend the source of the $2.4 million restitution order to Countrymark. The government’s Statement of Significant Facts Concerning Sentencing -the substance of which was largely adopted in the PSI, contains a detailed and complicated chart indicating where funds went during Countrymark’s acquisition of Buckeye. We cannot discern from that chart, however, which of those transfers of funds resulted from illegal activity or, more importantly, which of those transfers constituted a loss to Countrymark. (R. at 114, Ex. B). It is similarly futile to attempt to link the other specific amounts found in the PSI’s list of restitution amounts with the numbers incorporated in the narrative description of Swanson’s offenses. (R. at 122). Nor should we or the district court have to. It was the government’s burden to make those specific connections as part of its burden to prove loss. It is not our responsibility to root through the thousands of pages that make up the record in this case in order to dissect legitimate expenditures from illegitimate, and the amounts placed at risk from amounts lost to the victims. See Corley v. Rosewood Care Ctr., Inc. of Peoria, 388 F.3d 990, 1001 (7th Cir. 2004) (refusing to root through thousands of pages of record to support a litigant’s position).

“At sentencing, the district court asked the government to justify just one of the many restitution amounts suggested in the PSI-the $1,161,000 for the Buckeye acquisition. (R. at 181, Sent. Trans. at p.45). Although the government presented evidence regarding the amount of each allegedly fraudulent transfer, it failed to explain how these transfers resulted in loss to the victim or whether these transfers were part of the illegal activity. Id. The PSI is no more helpful in deciphering these matters. (R. at 122). It was Swanson’s position, after all, that at least some (if not all) of the transactions described in the indictment were legitimate business transactions between sophisticated commercial entities. And it is possible, after all, that Countrymark- to name just one victim-received some value by acquiring working, viable businesses or other assets during these commercial transactions. To the extent that the acquisition of these commercial entities added value to the respective victims’ businesses, that value must be deducted from the restitution award. See United States v. Shepard, 269 F.3d 884, 887-888 (7th Cir. 2001) (bilked funds later used by defendant to make improvements to victim’s home constituted returned property for purposes of restitution award); Sensmeier, 361 F.3d at 989 (noting that defendants had the opportunity (but waived it) to present evidence of the value of property that the victimized business received as part of the scheme as a means of lowering the restitution amount).”

Reversed and Remanded.

Appeal from the United States District Court for the Southern District of Indiana, Barker, J., Rovner, J.