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Appeal No. 13-4174

IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

_____________________________

UNITED STATES OF AMERICA Plaintiff-Appellee

vs.

JEFFREY CHARLES ZANDER

Defendant-Appellant _____________________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF UTAH THE HONORABLE DAVID NUFFER, JUDGE

DISTRICT COURT CASE NO. 2:10-cr-01088-DN _____________________________

REPLY BRIEF OF APPELLANT JEFFREY CHARLES ZANDER _____________________________

Theresa M. Duncan, Esq. 515 Granite NW Albuquerque, New Mexico 87102 (505) 842-5196 Attorney for Defendant-Appellant Jeffrey Charles Zander

Appellate Case: 13-4174 Document: 01019344840 Date Filed: 11/20/2014 Page: 1

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TABLE OF CONTENTS TABLE OF AUTHORITIES ................................................................................ iii

ARGUMENT AND AUTHORITIES .................................................................... 1

I. THE EVIDENCE WAS INSUFFICIENT TO PROVE MR. ZANDER CAUSED THE GRANT AWARD LETTERS TO BE MAILED AND THAT THE MAILINGS WERE IN FURTHERANCE OF THE PURPORTED FRAUD. .................................................. 1

A. Mr. Zander did not—indeed could not—cause the mailing of the grant

award letters. ............................................................................................... 1

B. The mailing of the grant award letters was not essential to the scheme to defraud. ....................................................................................................... 7

II. THE EVIDENCE AT TRIAL WAS INSUFFICIENT TO SUPPORT CONVICTIONS FOR

WIRE FRAUD. ................................................................................................. 11

III. GIVEN THE LACK OF EVIDENCE TO SUPPORT MR. ZANDER’S CONVICTIONS FOR MAIL AND WIRE FRAUD, HE IS ALSO ENTITLED TO REVERSAL OF HIS CONVICTION FOR MONEY LAUNDERING, WHICH WAS PREDICATED ON THOSE OFFENSES. ..................................................................................................... 13

IV. THE TRIAL COURT ERRED IN CALCULATING THE RESTITUTION OWED TO

THE TRIBE. .................................................................................................. 15

A. Mr. Zander did not waive his argument that the trial court erred in calculating restitution. .............................................................................. 15

B. The trial court erred in calculating restitution. ......................................... 22

C. If the Court finds Mr. Zander failed to preserve his challenges to the

restitution order, it should nonetheless reverse as the trial court committed plain error. ................................................................................................ 26

CONCLUSION ..................................................................................................... 27

CERTIFICATE OF COMPLIANCE WITH RULE 32(A) .............................. 28


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CERTIFICATE OF PRIVACY REDACTIONS, DIGITAL TRANSMISSION AND VIRUS SCAN .............................................................................................. 29

CERTIFICATE OF SERVICE ........................................................................... 30


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TABLE OF AUTHORITIES

CASES Garrett v. State, 394 Md. 217, 905 A.2d 334 (2006) ............................................. 14 In re C.W. Mining Co., 740 F.3d 548 (10th Cir. 2014) .......................................... 14 Kann v. United States, 323 U.S. 88 (1944) ........................................................... 2, 9 McPhail v. Municipality of Culebra, 598 F.2d 603 (1st Cir. 1979) ....................... 14 Moore v. United States, 178 F.3d 994 (8th Cir. 1999) ............................................ 24 Parr v. United States, 363 U.S. 370 (1960) .......................................................... 1, 7 Schmuck v. United States, 489 U.S. 705 (1989) ................................................... 1, 9 United States v. Berry, 717 F.3d 823 (10th Cir. 2013) ........................................... 14 United States v. Gordon, 480 F.3d 1205 (10th Cir. 2007) ....................................... 26 United States v. Lake, 472 F.3d 1247 (10th Cir. 2007) ............................. 1, 7, 12, 31 United States v. Martinez-Barragan, 545 F.3d 894 (10th Cir. 2008) ................ 19, 20 United States v. Moore, 83 F.3d 1231 (10th Cir. 1996) ......................................... 26 United States v. Ortiz, 25 F.3d 934 (10th Cir. 1994) .............................................. 25 United States v. Patty, 992 F.2d 1045 (10th Cir. 1993) ..................................... 22, 26 United States v. Peterson, 236 F.3d 848 (7th Cir. 2001) ......................................... 14 United States v. Ramirez, 528 Fed. Appx. 915 (10th Cir. 2013) (unpublished) ...... 20 United States v. Ruiz, 589 F.3d 1310 (10th Cir. 2009) ...................................... 3, 4, 5 United States v. West, 646 F.3d 745 (10th Cir. 2011) ............................................. 25 United States v. Wilfong, 551 F.3d 1182 (10th Cir. 2008) ................................ 24, 25


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United States v. Wittig, 575 F.3d 1085 (10th Cir. 2009) ........................................... 1 United States v. Worley, 751 F.2d 348 (10th Cir. 1984) ............................................ 5

STATUTES 18 U.S.C. § 3663A ...................................................................................... 24, 25, 27 25 U.S.C. § 3701………………...………………………………………………2, 6 25 U.S.C. § 3711 ....................................................................................................... 6 25 U.S.C. § 450 ......................................................................................................... 8 25 U.S.C. § 450d ....................................................................................................... 2 25 U.S.C. § 450f ............................................................................................... 2, 5, 8 Fed. R. Crim. P. 51 ................................................................................................. 20

REGULATIONS 17 C.F. R. § 249.310 ................................................................................................. 8 25 C.F.R. § 900.3 ...................................................................................................... 3


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ARGUMENT AND AUTHORITIES

I. THE EVIDENCE WAS INSUFFICIENT TO PROVE MR. ZANDER CAUSED THE GRANT AWARD LETTERS TO BE MAILED AND THAT THE MAILINGS WERE IN FURTHERANCE OF THE PURPORTED FRAUD.

“There is no dispute that [Mr.] Zander did not personally mail the two letters

that formed the basis for the mail fraud charges.” (Aple. Br. 23.) The government

argues Mr. Zander’s actions nonetheless caused the mailings to happen. Because

Mr. Zander could not—as a matter of federal law—apply for and obtain the grants

at issue, the government’s argument fails. Because the mailing of the grant award

letters was not essential to the scheme to defraud, the government’s effort to

distinguish Parr and Lake likewise fails.

A. Mr. Zander did not—indeed could not—cause the mailing of the grant award letters.

The government is correct that a defendant need not personally use the mails

to commit mail fraud. However, federal law “does not establish a general federal

remedy against fraudulent conduct, with use of the mails as the jurisdictional

hook.” Schmuck v. United States, 489 U.S. 705, 722-23 (1989) (Scalia, J,

dissenting); see also United States v. Wittig, 575 F.3d 1085, 1093 (10th Cir. 2009)


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(“defrauding one’s employer does not itself violate federal law”).1 Rather, the mail

fraud statute reaches only “those limited instances in which the use of the mails is a

part of the execution of the fraud, leaving all other cases to be dealt with by

appropriate state law.” Kann v. United States, 323 U.S. 88, 95 (1944).

The statutes governing federal grants to Indian nations and steps others took

in this case create too attenuated a link between the proposals Mr. Zander prepared

and the award letters the BIA sent to prove his actions caused the mailing of the

two letters. The government seeks to oversimplify this case, suggesting that Mr.

Zander “applied for … money for the Tribe to create IRMPs” and the award letters

were in direct response to that action. (Aple. Br. 4, 24.) But that is not what the

government’s evidence showed. While Mr. Zander drafted the proposals for the

IRMP grants, he did not have legal authority to submit those proposals to the BIA.

Only the Paiute Tribe itself could do so and then only after the governing bodies of

the relevant Band and the Tribe adopted necessary tribal resolutions. See 25

U.S.C. § 450f(a)(1); Tr. 207-08, 333-34, 441-42, 630; Ex. 1-4, at 8-11 (Cedar

Band); Ex. 1-6, at 8-11(Shivwits Band). This is because the relationship between

the Tribe and the BIA is “government to government.” 25 U.S.C. § 3701(1). Only

the official actions of the Tribe’s governing body towards the federal government

1 The government chose not to charge Mr. Zander under 25 U.S.C. § 450d, which criminalizes fraud and misuse of federal funding to Indian tribes.


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have legal consequences. See 25 C.F.R. § 900.3(b)(4). While the Tribe had

designated representatives to execute documents on its behalf, Jeffrey Zander was

not one of those representatives. Tr. 740 (“[The BIA’s] relationship is Tribal

government to government relationship with the tribes. So the Tribe has designated

individuals authorized to sign on behalf of the Tribe, which is Gayle Rollo or the

Tribal chairs.”). Simply put, Mr. Zander could not apply for funding on behalf of

the Tribe. It was the Tribe, not Mr. Zander, who submitted the proposals to the

BIA. Tr. 443, 619, 621, 746-47.

Similarly, the decision to award the grants belonged to the BIA, not Mr.

Zander. IRMP grants are competitive. Tr. 645. After receiving proposals from

various tribes, a BIA review board ranks and approves only some of them. Tr.

641, 645. The award letters underlying Counts 1 and 2 were created only after the

review board approved the Tribe’s submissions. Mr. Zander could not compel the

BIA to take this action.

The government argues that the independent actions of the Tribe, the Bands

and the BIA are legally irrelevant because Mr. Zander set forces in motion that he

reasonably could have foreseen would result in the use of the mails, citing to

United States v. Ruiz, 589 F.3d 1310 (10th Cir. 2009). (Aple. Br. 25-26.) Ruiz is

distinguishable. In Ruiz, there was a direct link between the defendant’s actions

and the mailings supporting his convictions. Acting in his capacity as deputy


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superintendent of insurance, Ruiz would detect licensing violations by insurers and

threaten them with the maximum possible fines. Ruiz, 589 F.3d at 1311. Ruiz told

the insurers that they could avoid paying the fines if they contributed a lesser

amount to charities with which he was connected. Id. at 1311-12. Ruiz was

charged with two counts of mail fraud based on his demand that two insurance

companies make contributions directly to the charities, and those companies’

subsequent uses of the mail to deliver their contributions. Id. at 1314. Ruiz

argued that he could not be convicted of mail fraud because he had no control over

the companies’ decision to use the mails to send the contributions. This Court

rejected his argument, holding “[t]he evidence that Mr. Ruiz directed two

insurance companies to make charitable donations directly to the charities, alone,

establishes that he set forces in motion, the reasonably foreseeable result of which

would be the use of the mail to further his fraudulent scheme.” Id.

Although Ruiz did not control how insurers sent money to the charities, the

payments were in direct response to his demands. The connection in this case is

far more attenuated. Mr. Zander not only lacked control over the BIA’s decision to

mail the grant awards to the Tribe, he lacked control over every step in the grant

award process. It was the Tribe, not Mr. Zander, who had the power to apply for


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the grant.2 Although he drafted the proposals, the Tribe made the decision to

pursue them. And before it could do so the Tribe and the relevant bands had to

adopt tribal resolutions authorizing the Tribe to enter into self-determination

contracts with the BIA. See 25 U.S.C. § 450f(a). Once the Tribe applied for the

grant, it was then up to the BIA to decide—using a competitive process—whether

to fund that grant. Tr. 645. Having made that decision, the BIA sent the grant

award documents to the Tribe for its approval. Unlike Ruiz in which the mailing

was a direct response to the defendant’s actions, the mailings in this case came

only after the intervention of multiple independent actors and actions. The chain in

this case is too long and too attenuated to support a finding that the mailing of the

grant award letters was the foreseeable result of Mr. Zander providing draft

proposals to tribal officials.

The government also argues that Mr. Zander was the “but for” cause of the

mailings. In other words, the government argues that if Mr. Zander had not 2 This is another factor that distinguishes Ruiz. The defendant in Ruiz had the power to act on behalf of the state and could set fines and compel the insurance companies to pay them. Ruiz, 589 F.3d at 1313. If the insurance companies did not pay the charities as Ruiz demanded, Ruiz compelled them to pay fines and made public the licensing violations that gave rise to those fines. Id. at 1312; see also United States v. Worley, 751 F.2d 348 (10th Cir. 1984) (mail fraud conviction upheld where county commissioner entered into contracts on behalf of county and payments to vendors under contract were mailed). In Ruiz and Worley, the defendants did not draft a document for approval by governmental authorities. Rather, they exercised discretionary executive authority to perform governmental acts. By contrast, Mr. Zander had no authority to apply for a grant on behalf of the Tribe, but merely provided a draft proposal to tribal decision-makers.


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suggested to the Tribe that it pursue the IRMP grants, the BIA never would have

mailed the grant agreement letters underlying his convictions. (Aple. Br. 29-30.)

The government cites no authority to support its suggestion that “but for” causation

is sufficient to prove foreseeability. In addition, the record does not support it.

The American Indian Agricultural Resources Management Act (AIARMA), 25

U.S.C. § 3701 et seq., requires that an agricultural resources management plan “be

developed and implemented” for all federally recognized Indian tribes. 25 U.S.C.

§ 3711(b); 25 U.S.C. § 3701(4). These requirements are in place regardless of Mr.

Zander’s actions. To assist tribes in fulfilling this requirement, the BIA solicits

IRMP grant proposals from Indian tribes annually. Tr. 28; 621-22. In response to

one such solicitation, Mr. Zander drafted proposals and the Cedar and Shivwits

bands adopted tribal resolutions authorizing the Tribe to pursue grants. Ex. 1-4, at

10-11(Cedar Band resolution); Ex. 1-6, at 10-11 (Shivwits Band resolution). The

Tribe also adopted resolutions authorizing the work. Ex. 1-4, at 8-9; Ex. 1-6, at 8-

9.

Given that the AIARMA required the development of an agricultural

resources plan for the Tribe and the BIA sent annual solicitations to the Tribe for

grant proposals to fund such work, the Tribe likely would have pursued IRMP

grant funds regardless of Mr. Zander’s suggestions and regardless of his plan to

bill the Tribe for IRMP-related work allegedly performed by his four companies.


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For these reasons, the record does not support the government’s argument that Mr.

Zander was the “but for” cause of the mailings.

B. The mailing of the grant award letters was not essential to the scheme to defraud.

In his opening brief, Mr. Zander argued that the mailing of the two grant

award letters could not support his convictions for mail fraud because they were

mailed pursuant to a legal duty and they contained no false or fraudulent

information. (Aplt. Br. 21-22.) In support of this argument, Mr. Zander cited to

Parr v. United States, 363 U.S. 370 (1960), and United States v. Lake, 472 F.3d

1247 (10th Cir. 2007). The government seeks to distinguish Parr and Lake on

several grounds, all of which fail.

First, the government argues that Mr. Zander was required to cite a specific

law requiring the grant awards be mailed. (Aple. Br. 27-28.) The government

cites no authority in support of this argument, and Parr and Lake impose no such

requirement.3 The key fact in both cases was that the documents in question—tax

levies in Parr and SEC reports in Lake—were created pursuant to legal duties. See

Parr, 363 U.S. at 391 (“the Board was compelled to collect and receipt for the

3 Even if such a requirement existed, a government witness testified she was legally required to use certified mail. (Aple. Br. 22; Tr. 622 (“I put the package together according to the public law 93638, which is the vehicle that we award contracts to Indian tribes. That law says we have to put the award package together, mail it to them via certified mail, which is what I do.”).)


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taxes by state law, which, under the circumstances here, compelled it to use and

cause … the use of the mails for those purposes”); Lake, 472 F. 3d at 1252

(“[f]ederal law required Westar to submit annually to the SEC a 10-K Annual

Report, see 17 C.F.R. § 249.310 (2002) …”); see also 17 C.F. R. § 249.310

(requiring filing of report but not specifying the manner in which the report must

be filed (electronically, by mail, etc.)). Thus, the mailings in Parr and the wires in

Lake were made pursuant to a legal duty, although not necessarily under a statutory

requirement that the submissions be mailed or wired. Similarly, the award letters

at issue in this case were created pursuant to the BIA’s legal duty under the Indian

Self-Determination and Education Assistance Act, 25 U.S.C. § 450 et. seq., to

provide funding for certain tribal services. See 25 U.S.C. § 450f(a)(1) (“(1) The

Secretary is directed, upon the request of any Indian tribe by tribal resolution, to

enter into a self-determination contract or contracts with a tribal organization to

plan, conduct, and administer programs or portions thereof, …”) (emphasis added).

Second, the government argues that the mailing of the award packets was

“essential to the perpetration of [Mr.] Zander’s scheme.” (Aple. Br. 31.) The

evidence contradicts this contention. The Tribe received the grant award letters for

the Cedar (Count 1) and Shivwits (Count 2) bands on August 16, 2007. Tr. 624-

66; Ex. 1-4 at 1 (certified mail receipt); Ex. 1-6 at 1 (same). The Tribe began

making payments to Mr. Zander’s four companies for work on these IRMPs


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months before that. According to the government’s evidence, the Tribe wrote its

first check for work on the Cedar Band IRMP on May 18, 2007. Ex. 24-2 (check

79090). It wrote its first check for work on the Shivwits Band IRMP on June 1,

2007. Id. (check 79162). Before the Tribe received the grant award letters on

August 16, 2007, it paid the Zander companies $35,500 for work on the two

IRMPs. Id. (checks 79090, 79162, 79418, 79499, 79500, 79543, and 79629).

Thus, contrary to the government’s argument (Aple. Br. 31), the Tribe did

authorize payment to the Zander companies absent a grant award. Under these

circumstances, the mailing of the award packets from the BIA was not essential to

the scheme to defraud. Cf. Kann, 323 U.S. at 94 (mailing of check between banks

not in furtherance of scheme to defraud).

This case is distinguishable from Schmuck v. United States, 489 U.S. 705

(1989). In Schmuck, the defendant purchased used cars, rolled back their

odometers and sold the cars to unwitting automobile dealers. Id. at 707. The

dealers then sold the cars to consumers. To complete those sales, the dealers

submitted title application forms to the department of transportation, as the receipt

of an official title from the state was necessary to complete the sales. The dealers’

submission of the title applications supplied the mailing element of the alleged

mail frauds.


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Although the title applications were routine and not themselves fraudulent,

the Supreme Court held that their mailing was sufficient to sustain the defendant’s

mail fraud convictions. Id. at 716. The Court concluded that the successful

passage of title was essential to the defendant’s scheme to defraud and therefore

the mailing of the title applications were in furtherance of that scheme.

In this case, by contrast, the mailing of the grant award documents was not

essential to Mr. Zander’s plan to bill the Tribe for IRMP work that he was not

authorized to perform under the terms of his employment. As noted above, the

Tribe paid for IRMP-related work months before it received the contracts assuring

BIA funding for the work. Additional evidence showed that the Tribe committed

to the development of IRMPs for the Cedar and Shivwits Bands regardless of

whether the BIA awarded them grant money. The tribal resolutions provide, in

relevant part:

NOW THEREFORE, BE IT RESOLVED, that the Paiute Indian Tribe of Utah shall undertake an integrated resource management planning effort for the Cedar Band lands within the Paiute Indian Tribe of Utah reservation, under the direction of the Economic Development Director, resulting in a comprehensive Integrated Resource Management Plan for the Cedar Band.

Ex. 1-4 at 8-9; see also Ex. 1-6 at 8-9 (resolution for Shivwits Band). The

resolution is not contingent on BIA funding. And there is little indication that the

Tribe would not have undertaken the IRMP effort and paid the Zander companies


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for related work had the BIA not awarded it grant money to do so. Thus, the

receipt of grant money was not essential to the scheme.

II. THE EVIDENCE AT TRIAL WAS INSUFFICIENT TO SUPPORT CONVICTIONS FOR WIRE FRAUD.

As it did for the mail fraud counts, the government argues that Mr. Zander

was the cause of the wire transfers underlying Counts 3 and 4 because “the wiring

of the IRMP funds would not have occurred but for [Mr.] Zander’s scheme to

secure the grants so he could divert the money to his own personal use.” (Aple. Br.

33.) For the reasons given above, the government’s “but for” argument fails. It is

undisputed that the wires described in Counts 3 and 4 were authorized by the grant

agreements described in the award letters underlying Counts 1 and 2. Since the

evidence failed to show sufficient causation to support Mr. Zander’s convictions

on Counts 1 and 2, it is likewise insufficient to support his convictions on Counts 3

and 4.

It is undisputed that Mr. Zander did not personally fax the drawdown request

between BIA offices (Count 3) or transfer funds from the United States Treasury to

the Tribe (Count 4). Nor did he request or directly cause those communications.

Kellie Youngbear of the BIA testified that Mr. Zander had nothing to do with the

process by which the Tribe requested and received payments from the BIA. Tr.

739-40. Ms. Youngbear identified tribal administrator Gayle Rollo as the person


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who “caused” her to send the fax underlying Count 3, which triggered the ACH

transfer underlying Count 4.

Additionally, the communications underlying Counts 3 and 4 would have

occurred regardless of any action by Mr. Zander. Tr. 400-01, 737-38. The crime

of wire fraud requires evidence of “a purpose to use the wire communication to

execute the scheme.” Lake, 472 F.3d at 1255. There is no such evidence here.

The wire transmissions described in Counts 3 and 4 were initiated at the request of

Ms. Rollo. Tr. 400-01. As Ms. Rollo testified, these wires would have occurred

regardless of whether the Tribe sought reimbursement under the IRMP grants. Id.;

see also Tr. 737-39 (testimony of Kellie Youngbear).

The only differences would have been in the number of pages in the

facsimile and in the amount of the ACH transfer. Only two pages of the drawdown

request were specific to the IRMP grants. Ex. 26-1. Ms. Rollo sought $648,933,

which included $84,000 for the IRMP grant reimbursements. Ex. 26-1; Tr. 310.

These differences (two pages and less than 13% of the request) are insufficient to

transform the wires into acts in furtherance of fraud.

The evidence the government relies on to argue that Mr. Zander could have

reasonably foreseen the use of wire transmission does not support its contention.

Familiarity with the grant process does not translate into familiarity with internal

government procedures for disbursing funds. There is no evidence that Mr. Zander


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had any familiarity with how the BIA transmitted funds to the Tribe. Randall

Hoyt’s testimony does not help the government’s position. (Aple. Br. 35.)

Although he testified that he knew money would be sent from the BIA if a grant

was awarded, he also testified he had “never seen the money. The money comes

right directly to the administration.” Tr. 919. Given that Ms. Rollo, not Mr.

Zander, handled the Tribe’s finances, there was no evidence that Mr. Zander knew

how that process worked. For these reasons, the evidence was insufficient to

support his convictions on Counts 3 and 4.

III. GIVEN THE LACK OF EVIDENCE TO SUPPORT MR. ZANDER’S CONVICTIONS FOR MAIL AND WIRE FRAUD, HE IS ALSO ENTITLED TO REVERSAL OF HIS CONVICTION FOR MONEY LAUNDERING, WHICH WAS PREDICATED ON THOSE OFFENSES.

In a footnote, the government asserts that even if this Court were to find

insufficient evidence to sustain Mr. Zander’s convictions for mail and wire fraud, it

should nonetheless sustain the conviction for money laundering because there is

evidence of other wire communications that might sustain it. (Aple. Br. 37 n.7.)

In making this argument the government points to quarterly performance reports

Mr. Zander purportedly faxed to the BIA. [Id.] The government’s theory on appeal

is different from what it presented to the jury below and cannot be used to sustain

Mr. Zander’s conviction on Count 5.


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At trial, the government argued that Mr. Zander was guilty of money

laundering based on the conduct alleged in counts 1-4 of the indictment, which

relate to the IRMP grants for the Cedar and Shivwits Bands. Tr. 968. It did not

argue that the jury could convict Mr. Zander of money laundering based on

quarterly performance reports submitted in connection with IRMP grants for the

Koosharem and Indian Peaks Bands. Ex. 2-3 through 2-8. “A party may not

‘sandbag’ his case by presenting one theory to the trial court and then arguing for

another on appeal.” McPhail v. Municipality of Culebra, 598 F.2d 603, 607 (1st

Cir. 1979). It would be improper to sustain Mr. Zander’s conviction for money

laundering based on a theory to which he had no opportunity to respond during

trial. See United States v. Peterson, 236 F.3d 848, 856 (7th Cir. 2001) (“Fatal to the

government’s appeal is that this theory was not presented to the jury, and thus,

cannot support its verdict.”); Garrett v. State, 394 Md. 217, 226, n.5, 905 A.2d 334

(2006) (collecting cases holding appellate courts may not affirm a criminal

conviction on the basis of a theory not presented to the jury).

Further, the Court should find that the government waived this argument

since it raised it in a perfunctory manner in a footnote rather than in the body of its

brief. See In re C.W. Mining Co., 740 F.3d 548, 564 (10th Cir. 2014)

(“[A]rguments raised in a perfunctory manner, such as in a footnote, are waived.”),

quoting United States v. Berry, 717 F.3d 823, 834 n.7 (10th Cir. 2013).


15

IV. THE TRIAL COURT ERRED IN CALCULATING THE RESTITUTION OWED TO THE TRIBE.

The government’s primary argument against Mr. Zander’s claim that the

trial court erred in calculating restitution is that he waived this claim below.

Defense counsel’s objections at the sentencing hearing were more than sufficient to

preserve his claims, particularly in light of the lack of notice that the trial court was

considering ordering restitution greater than what the PSR recommended and the

government requested. The government also argues that the trial court’s errors in

calculating restitution do not rise to the level of plain error. Yet this Court has

repeatedly held that an illegal restitution order constitutes plain error.

A. Mr. Zander did not waive his argument that the trial court erred in calculating restitution.

The government argues that Mr. Zander waived his challenge to the amount

of the restitution award because his attorney failed to make more specific

objections to the three categories of restitution at issue on appeal. (Aple. Br. 46-

47.) Defense repeatedly objected to the trial court’s inclusion of additional losses

in its restitution award. 11/20/13 Tr. 39, 59. Given defense counsel had no prior

notice that the court was considering a greater restitution amount than

recommended in the PSR, her objections to the three additional categories of

restitution were sufficient to preserve Mr. Zander’s right to challenge those

categories on appeal.


16

At the time it prepared the PSR, the Probation Office was aware of the

Tribe’s claim of $212,543.92 in “financial impact.” The Financial Impact

Statement Worksheet was attached to the Tribe’s victim impact statement, dated

March 21, 2013. Both documents were attached to the PSR disclosed to the

parties. Despite its awareness of the $212,543.92 claim, the PSR recommended

restitution in the amount of $176,698 only (PSR, ¶84), the amount the Tribe paid to

the four Zander companies in connection with the development of the IRMPs. Id.

at ¶ 11. The PSR did not recommend that the trial court include in the restitution

award the Tribe’s claims for attorneys’ fees, Mr. Zander’s salary increase and

unemployment benefits, or tribal employees’ wages and travel expenses.

Although it also had the Tribe’s financial impact worksheet, the government

did not dispute the PSR’s calculation of the restitution amount in its written

objections to the PSR. Addendum to PSR at 1-3 (government objections). Mr.

Zander did object, arguing that the $176,698 should be reduced to $84,000, the

amount of grant funds he received pursuant to the offenses for which he was

convicted. Id. at 3-4, 5 (defense objections 1 and 9). The PSR author considered

and rejected this argument, deferring to the trial court “in this matter.” Id.

Heading into the sentencing hearing, Mr. Zander and his counsel had no notice that

the court might consider claims other than the $176,698 the Tribe paid to him in

determining the loss amount or the restitution award.


17

At the beginning of the sentencing hearing, the trial court raised the issue of

restitution “because it affects the application of the guidelines and so comes into

play in two instances.” 11/20/13 Tr. 4. The court then discussed with counsel Mr.

Zander’s assertion that the correct amount was $84,000. Id. at 4-7. During this

discussion, government counsel acknowledged that the Tribe had sought more than

$176,698 in restitution, but agreed with the PSR that “the loss amount should be

that $176,698[.]” Id. at 7. When the court asked government counsel why the

additional expenses were not included in the loss calculation, counsel offered a

number of explanations, including that he did not know “if the government can

show that to a level of certainty that would be required to include that in the loss

amount.” Id. at 8. The trial court then concluded that $176,698 was the proper

amount of loss, as stated in the PSR. Id.

After the Tribe’s oral victim impact statement, the court questioned tribal

representatives regarding the additional amounts the Tribe had claimed. Id. at 32-

37. The court then asked defense counsel to respond:

THE COURT: Okay. Let me invite you, Ms. Cordova, to respond. And I'd first like you to address these issues of restitution, and let me tell you what I see. I see that there is some substantiation of amounts, $13,910, $8,339, $3,595.94. Those amounts, according to my math, total $25,844.94. If those were added to the $176,000, those would increase the guideline calculation under 2B1.1(b)(1)(F) --sorry -- (G), to a guideline of 12, which would then increase the total offense level to 26, which would result in a guideline range of 57 to -- 63 to 78 months. I'm not saying I'm going to do that, I'm just trying to put the implications in front of us so that we understand if I found a higher amount of loss what the implications would be.


18

So I'd like you to address that first and then go on to your argument about what the appropriate sentence would be. … MS. CORDOVA: Thank you, Your Honor. … And so with these other fees that they are asking for, you know, I don't -- you know, I guess it's hard to address them because they were just addressed at the podium, and they didn't address the $10,000. THE COURT: Well, I don't think there's any substantiation for that, just so the record is clear. MS. CORDOVA: Okay. And then with the lost wages and employees' time and travel related to Mr. Zander's case, and, you know -- and I guess the basis for that is they wouldn't have to do it but for this case, but it's something that I think, as employees, that they would have to do as part of their job description anyway. And so, to ask Mr. Zander to pay for part of their salary that is part of their job description for them to cooperate in this case, they would have been paid that money regardless, depending on what they were doing, and so -- so that's why I don't think that that would -- that should be included.

And the money for the unemployment that Mr. Zander drew for the $8,339, I guess I don't understand. You know, and I guess -- you know, just off of the cuff, I don't have a lot of experience in addressing this right now, so I would need more time to respond for that and for the attorney's fees.

And I'm sorry, Your Honor, but I just am not fully prepared to address those issues right now. And maybe Mr. Zander can talk to that -- a little bit about that when he speaks to you, but we would object to adding those figures into his calculation for restitution that would increase his guideline. THE COURT: All right. I understand your argument. …

11/20/13 Tr. 38-39.

After listening to the arguments and Mr. Zander’s allocution, the court

reversed its earlier ruling and ordered $202,543.92 in restitution:

First of all, as to the issue of restitution, I find that the correct statement of the amount of restitution is $202,543.92. I believe there is sufficient substantiation of the material in the financial impact statement worksheet submitted by the [Paiute] Tribe to show that the grant money and


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other money delivered to Mr. Zander totals $176,698; that the Tribe incurred attorney's fees as itemized in that statement for services related to the improper activities of Mr. Zander in the amount of $13,910; that unemployment benefits paid through Utah Department of Work Force Services for California unemployment claims total $8,339.98; that lost wages and employees' time attributable to work and travel on the Zander case total $3,595.94.

Id. at 58-59. After increasing Mr. Zander’s offense level based on the increased

loss amount, the court asked the parties if they objected to its calculations:

THE COURT: … First of all, let me ask the government. Do you object to me finding that amount of restitution? MR. ROMNEY: No, Your Honor. No objection. THE COURT: And I know the defense does. MS. CORDOVA: Yes, Your Honor. THE COURT: That objection is preserved for the record.

Id. at 59.

Particularly given counsel’s lack of notice that the trial court would

consider the additional loss amounts, her objections to the court’s sua sponte

consideration of those amounts were sufficient to preserve Mr. Zander’s challenge

on appeal. This Court has held that “a defendant is not required to object when the

sentencing court commits an error that the defendant cannot be expected to

anticipate.” United States v. Martinez-Barragan, 545 F.3d 894, 899 (10th Cir.

2008); see also United States v. Ramirez, 528 Fed. Appx. 915, 917 n. 1 (10th Cir.


20

2013) (unpublished) (same).4 Here, Mr. Zander’s counsel did object to the trial

court’s restitution order, but the government asks this Court to treat those

objections as insufficient to preserve the issues he argues on appeal. Under the

circumstances, it would be manifestly unjust to do so. Cf. Martinez-Barragan, 545

at 899 (noting an exception to the preservation rule where a party lacks an

opportunity to object to a court’s actions), citing Fed. R. Crim. P. 51(b).

In discussing the court’s sentencing decision, the government acknowledges

the unfairness of increasing Mr. Zander’s sentence based on the trial court’s sua

sponte decision to increase the loss amount. (Aple. Br. 41 n.9 (“Arguably, [Mr.]

Zander’s counsel was not on notice prior to the hearing that the court might

consider a higher loss figure.”)). Nonetheless, the government seeks to distinguish

the trial court’s reliance on the higher figure for purposes of determining

restitution. (Id.) The basis on which the government seeks to distinguish the loss

calculation for sentencing from the loss calculation for restitution is non-existent.

The PSR used a single loss calculation for both purposes (PSR, ¶ 11, 84), as did the

government and the trial court at the sentencing hearing. 11/20/13 Tr. 4, 8-9, 36-

37, 58. The Tribe’s victim impact statement speaks not of restitution, but of the

“financial impact” of Mr. Zander’s offenses. See Victim Impact Statement at 1;

4 Although the Court has questioned whether the unforeseeable error doctrine is still good law, it has not yet decided that issue. See Martinez-Barragan, 545 F.3d at 899 n. 1.


21

Financial Impact Statement Worksheet. There is no basis for agreeing that defense

counsel lacked notice of the potentially higher loss amount for purposes of

sentencing, while arguing she had notice the court might rely on the higher loss

amount in setting restitution. The interests of justice require reversal of both the

sentence and the restitution order.

Furthermore, the government should not be permitted to argue waiver when

it contributed to the notice problem. If the government believed it had meritorious

arguments in support of an increased restitution amount, it should have raised those

arguments when it learned that the PSR recommended limiting restitution to the

amount the Tribe paid the Zander companies for IRMP-related work. The

government clearly considered and intentionally abandoned a request for

restitution beyond the amount the Tribe paid Mr. Zander. 11/20/13 Tr. 7

(acknowledging the higher loss amount but stating “as far as what the

government’s position is here today, we believe the loss amount should be that

$176,698 that is contained in the stipulated exhibit”). Had the government

objected to the PSR’s restitution recommendation, Mr. Zander’s counsel would

have been on notice of the issue and had time to prepare more specific objections

to the additional categories of expenses the court ultimately included in its

restitution order. The government’s agreement with the Probation Office and Mr.

Zander below that the court should not include the additional expenses in


22

calculating the loss amount should preclude it from arguing waiver regarding the

same issue on appeal.

The government also faults Mr. Zander for failing to include a standard of

review in his discussion of the restitution error. (Aple. Br. 46.) This was an

oversight by appellate counsel.5 Mr. Zander agrees with the standard of review the

government sets forth at page 43 of its brief. (Aple. Br. 43 (“This Court reviews

the legality of a restitution order de novo. Shengyang Zhou, 717 F.3d at 1152. The

factual findings underlying the order are reviewed for clear error and the amount of

restitution is reviewed for abuse of discretion. Id.”).) Under this standard, Mr.

Zander is entitled to reversal of the restitution order.

B. The trial court erred in calculating restitution.

The government makes several specific arguments in defense of the trial

court’s restitution order. (Aple. Br. 51-52.) It argues that the trial court correctly

ordered Mr. Zander to pay restitution for attorneys’ fees associated with the

Department of Interior’s efforts to recoup grant funds paid to the Tribe and with

Mr. Zander’s termination. (Aple Br. at 51.) This Circuit has held that attorneys’

fees incurred to recover property are not directly related to a defendant’s criminal

conduct and thus are not recoverable as restitution. United States v. Patty, 992

F.2d 1045, 1049 (10th Cir. 1993). Attorneys’ fees the Tribe incurred defending 5 Appellate counsel apologizes to this Court, Mr. Zander and the government for this oversight.


23

against the Department of Interior’s efforts to recoup grant funds and to avoid

paying Mr. Zander’s unemployment benefits fall squarely into this category.

Further, neither category of attorneys’ fees were “incurred during participation in

the investigation or prosecution of the offense” as required by 18 U.S.C. §

3663A(b)(4).

The government wrongly asserts that Mr. Zander makes no claim that

attorneys’ fees incurred in connection with his subpoena requests were improper.

(Aple. Br. 52.) Those fees were included in Mr. Zander’s challenge to fees

“‘associated with’ the investigation and prosecution of the offenses of conviction.”

(Aplt. Br. 36.)

In defending the trial court’s inclusion of employees’ wages and travel-

related costs in the restitution award, the government again argues waiver. (Aple.

Br. 53.) Defense counsel argued that these sums should not have been included in

the restitution award because the Tribe would have paid the employees’ wages

regardless of Mr. Zander’s case. 11/20/13 Tr. 39. In other words, the employee

wages were not an expense incurred as a result of the prosecution. That is the

same argument Mr. Zander makes on appeal. (Aplt. Br. 37.)

The cases the government cites in support of its argument that Mr. Zander

should be ordered to pay for the employees’ salaries miss the mark. In United

States v. Wilfong, the defendant was ordered to pay restitution for lost employee


24

work hours caused by the evacuation of a building after the defendant called in a

bomb threat. United States v. Wilfong, 551 F.3d 1182 (10th Cir. 2008). The Court

held that the lost hours were recoverable as lost “property” under 18 U.S.C. §

3663A(b)(1)(B) and that the loss was a proximate and direct result of the bomb

threat. Here, the trial court awarded restitution for wages paid to employees who

attended the trial. 11/20/13 Tr. 35-36. Thus, the salaries are not lost property

within the meaning of 3663A(b)(1)(B). Because the wages would have been paid

regardless of the Zander trial, they also do not qualify as “lost income … [or] other

expenses incurred during participation in the investigation or prosecution of the

offense or attendance at proceedings related to the offense.” 18 U.S.C. §

3663A(b)(4).

Moore v. United States is also distinguishable. The victim in that case was a

customer present during the attempted bank robbery for which the defendant was

convicted. Moore v. United States, 178 F.3d 994, 1001 (8th Cir. 1999). The victim

lost four days of work and $608 in earnings as the result of time spent giving

statements, identifying suspects, and preparing for and testifying at trial. Id. There

was no question that the victim lost income as a result of his participation in the

investigation and prosecution of the offense. The sole question on appeal was

whether he was a victim at all. Id. Here, there was no evidence that the Tribe

would not have paid its employees but for the Zander prosecution or that it


25

incurred additional expenses as a result of those employees’ participation in the

trial. For that reason, the trial court erred in including the employee-related

expenses in its restitution award.

The government’s sole argument with respect to the unemployment benefits

is waiver. (Aple. Br. 55.) For the reasons stated above, this issue has not been

waived and the trial court erred in including the benefits in the award. There is no

question that they were consequential damages and therefore improperly included

in the restitution award. See Wilfong, 551 F.3d at 1187.

Finally, Mr. Zander requested in his opening brief that, should the Court find

the trial court properly included some of the Tribe’s attorneys’ fees in the

restitution award, it reverse and remand for a determination of how much of the

attorneys’ fees are recoverable under Section 3663A(b)(4). (Aplt. Br. 36.) The

government objects to this request on waiver grounds, noting that trial counsel’s

arguments below were not specific to the various categories of work included in

the Tribe’s attorneys’ fee calculation. (Aple. Br. 48-49.) If the Court agrees with

Mr. Zander that the trial court erred in including any one of the many disputed

categories in its restitution award, the basic rule on remand is that the district court

is to conduct a de novo proceeding which “permits the receipt of any relevant

evidence the court could have heard at the first sentencing hearing.” United States

v. Ortiz, 25 F.3d 934, 935 (10th Cir. 1994) (emphasis in original); see also United


26

States v. West, 646 F.3d 745, 748 (10th Cir. 2011) (“[I]n this circuit ‘where the

appellate court has not specifically limited the scope of the remand, the district

court generally has discretion to expand the resentencing beyond the sentencing

error causing the reversal.’”), quoting United States v. Moore, 83 F.3d 1231, 1234

(10th Cir. 1996).6 There is no reason for the Court to depart from this general rule

here.

C. If the Court finds Mr. Zander failed to preserve his challenges to the restitution order, it should nonetheless reverse as the trial court committed plain error.

In addition to arguing that Mr. Zander failed to preserve his objections to the

restitution order, the government argues that the trial court’s errors in calculating

restitution do not satisfy the plain error standard. The government is wrong. This

Court has held that “the imposition of an illegal restitution order constitutes plain

error.” Patty, 992 F.2d at 1049; see also United States v. Gordon, 480 F.3d 1205,

1212 (10th Cir. 2007) (“Aside from the fact that an unlawful restitution order does

constitute a miscarriage of justice because it is beyond the remedy authorized by

statute, this court has, on several previous occasions, held that an unlawful

restitution order constitutes plain error.”) (internal citation omitted).

6 This rule is also applicable to a remand on the sentencing error, which the government agrees should happen given the trial court’s reliance on the same three categories of alleged loss in increasing Mr. Zander’s offense level and sentence. See Aplt. Br. at 29-33; Aple. Br. at 37-43.


27

As the government notes in its brief (Aple. Br. 43), this Court reviews

unpreserved legal errors “for ‘particularly egregious’ or ‘obvious’ and ‘substantial’

legal error, which our failure to consider would result in a ‘miscarriage of justice.’”

Patty, 992 F. 2d at 1049. The trial court’s errors in including attorneys’ fees,

unemployment benefits, and employee wages in its restitution award easily meet

this standard. The MVRA does not authorize a court to order a defendant to pay

collateral damages. See Wilfong, 551 F.3d at 1187. Attorneys’ fees incurred to

defend against collection efforts, participate in state court proceedings related to an

entirely separate offense, and “related Zander requirements” as well as

unemployment benefits are collateral damages. Employee wages that would have

been paid regardless of the case are not “lost income … [or] other expenses

incurred during … attendance at proceedings related to the offense.” 18 U.S.C. §

3663A(b)(4). Given the lack of statutory authority for the award of restitution for

these expenses, the trial court’s restitution order constitutes a miscarriage of justice

and must be reversed.

CONCLUSION

Defendant-Appellant Jeffrey Charles Zander respectfully asks the Court to

reverse his convictions for mail fraud, wire fraud and money laundering. In the


28

alternative, he asks this Court to reverse his sentence, including the restitution

award, and remand his case to the trial court for a new sentencing hearing.

Respectfully submitted,

/s/ Theresa M. Duncan Theresa M. Duncan, Esq. 515 Granite NW Albuquerque, New Mexico 87102 (505) 842-5196 Attorney for Defendant-Appellant Jeffrey Charles Zander

CERTIFICATE OF COMPLIANCE WITH RULE 32(A)

I hereby certify that this brief complies with the type-volume limitation of

Fed. R. App. P. 32(a)(7)(B) because it contains 6,944 words, excluding the parts of

the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii).

I further certify that this brief complies with the typeface requirements of

Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P.

32(a)(6) because it has been prepared in a proportionally spaced typeface using

Microsoft Word for Mac 2011 in 14 point Times New Roman font.

/s/ Theresa M. Duncan Theresa M. Duncan, Esq.

515 Granite NW Albuquerque, New Mexico 87102 (505) 842-5196


29

CERTIFICATE OF PRIVACY REDACTIONS, DIGITAL TRANSMISSION AND VIRUS SCAN

I hereby certify that all privacy redactions have been made as required by

10th Cir. R. 25.5.

I further certify that the hard copies of this brief to be submitted to the Court

are exact copies of the version submitted electronically.

I further certify that the electronic submission was scanned for viruses with

the avast! Antivirus program, version 2014.9.0.2021, Virus Definition File

Dated: 11/20/2014, and, according to the program, is free of viruses.

/s/ Theresa M. Duncan

Theresa M. Duncan, Esq. 515 Granite NW Albuquerque, New Mexico 87102 (505) 842-5196


30

CERTIFICATE OF SERVICE

I hereby certify that a copy of the foregoing brief was served by

(ECF) electronic service to the following on this 20th day of November

2014:

Elizabethanne C. Stevens 185 South State Street Suite 300 Salt Lake City, Utah 84111 [email protected]

/s/ Theresa M. Duncan

Theresa M. Duncan, Esq. 515 Granite NW Albuquerque, New Mexico 87102 (505) 842-5196


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