USA v. Sherry Washington

Filing

OPINION and JUDGMENT filed: Washington's conviction and sentence are AFFIRMED. Decision for publication. Alan E. Norris, Julia Smith Gibbons, and Bernice Bouie Donald (AUTHORING), Circuit Judges.

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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 13a0138p.06

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
X
UNITED STATES OF AMERICA,
Plaintiff-Appellee, No. 11-2364
v.
>
,
SHERRY WASHINGTON,
Defendant-Appellant. N
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 2:10-cr-20202-3—Paul D. Borman, District Judge.

Argued: November 27, 2012
Decided and Filed: May 14, 2013
Before: NORRIS, GIBBONS, and DONALD, Circuit Judges.
_________________
COUNSEL
ARGUED: Carole M. Stanyar, Plymouth, Michigan, for Appellant. J. Michael Buckley,
UNITED STATES ATTORNEY’S OFFICE, Detroit, Michigan, for Appellee.
ON BRIEF: Carole M. Stanyar, Plymouth, Michigan, for Appellant. J. Michael
Buckley, UNITED STATES ATTORNEY’S OFFICE, Detroit, Michigan, for Appellee.
_________________
OPINION
_________________
BERNICE B. DONALD, Circuit Judge.

Sherry Washington appeals her

conviction and sentence for money laundering and conspiracy to commit program fraud
that arose out of her role in a business venture that ostensibly provided “wellness”
services to the Detroit Public School (“DPS”) system. We discern no error in the
sufficiency of the evidence, and we conclude that Washington was not prejudiced by
trial counsel’s errors.

We also hold that the district court properly enhanced

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Washington’s sentence based on her leadership or organizer role in the conspiracy and
based on an amount of loss of at least $2.5 million to DPS. Accordingly, we affirm.
I. BACKGROUND
Because the factual nuances assist in our analysis of this appeal, we first review
the evidence in detail.
A. The Government’s Evidence
In 2005, Stephen Hill, the Executive Director of Risk Management for DPS,
invited Washington to submit a proposal for implementing a wellness program for DPS
employees that would, among other things, use “e-Care” software that Hill had already
purchased to generate health assessments for each employee. Washington, along with
her friend Sally Jo Bond and her sister Dr. Gwendolyn Washington, then joined
Associates for Learning (“A4L”), an entity started by her friend Marilyn White.1
On September 6, 2005, A4L submitted a written proposal quoting $150,000 for
a pilot study of the “We Care” wellness program that would cover 2,946 employees
between November 2005 and March 2006. On the same day, A4L submitted an invoice
for $75,000. Hill did not open the program to competitive bidding and the parties signed
no written contract even though it was DPS policy to use a bidding process and negotiate
written contracts.
On September 10, 2005, Hill left the employ of DPS but continued meeting with
Washington to discuss A4L’s business with DPS. Christina Polk-Osumah, Hill’s former
lover and protegee at DPS, requested and approved payment for A4L’s first invoice.2
On October 27, 2005, DPS paid the invoice; the money was distributed to the four
partners the next day, with Washington receiving a slightly smaller share. Payment was

1

Marilyn White and Sally Jo Bond both pleaded guilty to conspiracy to commit program fraud
pursuant to cooperation agreements.
2

Polk-Osumah was charged in the original indictment, but the charges were dropped after her
death in 2010.

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made by wire transfer even though payment by check, which has more safeguards, was
normal DPS procedure.
Hill testified that he met with Washington in December 2005 to discuss whether
A4L could submit a new and larger invoice. Washington suggested that A4L pay Hill
five percent of the invoice amount, an arrangement the government characterized as a
“token of appreciation” for Hill’s assistance in getting the invoices paid. White and
Bond both testified that Washington and Hill had agreed that A4L could submit invoices
for $1 million. Both said that they thought this was “too much money” and that they did
not think that DPS would pay it.
Nonetheless, A4L submitted a second batch of invoices claiming 3,290 hours of
work at $300 per hour, plus $45,000 for “healthy tools,” “healthy lunches,” and
“incentive bonuses” to be provided to DPS employees, for a total of $1,042,000. As
Washington admits, the invoices were not for work already performed, but for “future
work,” but a DPS employee testified that DPS does not normally pay for future services.
The government characterized these invoices as fraudulent. White testified that A4L had
no system for tracking hours and that the partners simply agreed to bill for a certain
number of hours. Bond testified that she did not know the total number of hours spent
and a spreadsheet she created for a related civil suit showing hours performed by A4L
was “fraudulent.” White also testified that the hours on this spreadsheet had perhaps
been fabricated, and that the true cost of the “healthy tools” and “healthy lunches” listed
in the invoices was not what was billed.
The same day the second batch of invoices was submitted, Polk-Osumah
approved a second payment for $967,000. On January 9, the money was again wire
transferred to the A4L account, and again, the proceeds were immediately distributed to
the four partners. Washington emailed the invoices to Hill, and the remaining $75,000
balance was also wired to the A4L account soon thereafter. Washington sent text
messages to her partners instructing them to put five percent of their share in plain white
envelopes, in cash, as payment for Hill. Hill testified that Washington directed him to

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meet her privately in various public places to deliver the cash, including a public parking
garage.
On May 11, 2006, A4L submitted a third batch of invoices—one for $1,095,000,
and a second for $1,110,000—but these were not paid immediately. Around June 2006,
Hill returned to DPS as an unpaid Acting Executive Director of Risk Management “on
loan” from his paid employer, an insurance vendor that contracted with DPS. On August
11, 2006, A4L re-submitted the May invoices. That same day, Hill approved payment.
DPS soon wired the full amount in two payments. Again, the money was distributed to
the partners; Washington instructed each to give her five percent of their shares, in cash,
to pass on to Hill.
In February 2007, A4L received a message from DPS employee Anthony
Thornton to “cease going to the schools.”

A civil suit and a federal criminal

investigation against A4L soon followed.
B. Washington’s Rebuttal Evidence
Washington, her partners, and Hill all testified that the We Care program was a
legitimate program. There was also some evidence that A4L completed actual work
before DPS halted the program, including making presentations to staff about the health
assessment software, distributing flyers, helping a number of teachers complete health
assessments, and receiving an assessment of schools that cost the district the most
money. A4L also distributed “healthy tools” such as pedometers and healthy lunches,
and partners met weekly with DPS staff. Washington organized a “run/walk” event and
contacted fitness clubs, and Dr. Gwendolyn Washington produced “Ask the Doctor”
videos.
Washington and her partners testified that DPS staff, meaning Hill and PolkOsumah, knew they were paying for “future work,” and that the partners understood
advance payments to be standard practice in the Risk Management department of DPS.
They also testified that although A4L did not track hours, the partners had a general idea
of the number of tasks and the amount of time they spent on those tasks. The partners

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and Hill all testified that wire transfers and unwritten contracts were typical in the Risk
Management department, and the partners requested a contract but that Hill and PolkOsumah said they were “working on it.”
Finally, Washington claimed that she was misled by Hill, who was involved in
a variety of criminal schemes with other DPS vendors. According to her, she was
unaware that Hill had returned to work for DPS and she merely paid him a consulting
fee for his advice on DPS protocol and on expanding A4L. She also claimed that the
fees and cash payments were Hill’s idea.
C. Procedural History
Washington was charged with one count of conspiracy to commit program fraud,
in violation of 18 U.S.C. §§ 371 and 666, and one count of conspiracy to commit money
laundering, in violation of 18 U.S.C. § 1956. The jury returned a guilty verdict on both
counts. Washington subsequently filed a motion for a new trial on the basis of
ineffective assistance of trial counsel. The district court removed Washington’s original
attorney as counsel but denied the motion.
At the sentencing hearing, the district court enhanced Washington’s base offense
level by twenty-two levels, finding that Washington was an “organizer or leader” of a
criminal activity that involved at least five other people pursuant to Section 3B1.1 of the
United States Sentencing Guidelines and that the amount of loss to DPS was over
$2.5 million pursuant to Section 2B1.1(b)(1)(J) of the Guidelines. After considering the
factors set forth in 18 U.S.C. § 3553(a), the court granted a downward variance for
Washington’s charitable work and sentenced her to sixty months and eighty-four
months, to be served concurrently.
II. ANALYSIS
A. Sufficiency of the Evidence Claim
Washington claims that the government did not provide sufficient evidence to
support her conviction on either count. When a defendant appeals on the basis that the

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evidence was insufficient to support a guilty verdict, our role is to ask “whether, after
viewing the evidence in the light most favorable to the prosecution, any rational trier of
fact could have found the essential elements of the crime beyond a reasonable doubt.”
Jackson v. Virginia, 443 U.S. 307, 319 (1979) (emphasis in original). We do not insert
our own findings of fact; rather we give full credit to the responsibility of the jury to
weigh the evidence, to make credibility determinations, and to draw inferences. Id.
To support a jury verdict that Washington was guilty of money laundering under
18 U.S.C. § 1956(a)(1), the government had to provide sufficient evidence that
Washington conducted a financial transaction with the intent to carry on a “specified
unlawful activity” or with knowledge that the transaction was designed to disguise the
nature of the proceeds of a “specified unlawful activity.”3 Washington’s sole challenge
to the money laundering count is that the evidence is insufficient to prove program fraud,
which the parties agree is the relevant underlying “specified unlawful activity” in this
case. Therefore, we address only program fraud to resolve Washington’s appeal of both
counts.
Program fraud occurs where 1) a person who was an agent of a local government
agency receiving federal funding over $10,000 per year, 2) embezzled, stole or
fraudulently obtained property (including money), 3) the value of which was $5,000 or
more, and 4) which was owned or controlled by the government agency. 18 U.S.C.
§ 666; United States v. Hudson, 491 F.3d 590, 593 (6th Cir. 2007). Washington
challenges only the second element, arguing that the government did not prove beyond
a reasonable doubt that she fraudulently obtained money. However, Washington was
not convicted of program fraud itself, but of conspiracy to commit program fraud. Thus,
the government merely had to prove beyond a reasonable doubt that Washington
knowingly and voluntarily joined a conspiracy that intended to fraudulently obtain
3

The full list of elements the government must prove to support a money laundering verdict under
18 U.S.C. § 1956(a)(1) are as follows: 1) the defendant conducted or attempted to conduct a financial
transaction, 2) the transaction involved money or property that represented the proceeds of a “specified
unlawful activity,” 3) the defendant knew that the money was the proceeds of some form of unlawful
activity, and 4) the defendant did so with the intent to carry on the “specified unlawful activity” or knew
that the transaction was designed in whole or in part to conceal or disguise the nature, location, source,
ownership, or control of the proceeds of the “specified unlawful activity.”

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money4 and that a member of the conspiracy took at least one overt act in furtherance
of the conspiracy. See 18 U.S.C. § 371.
As we have noted in the past, it can be difficult to obtain direct evidence of
something so internal as intent to commit fraud, so if none is available, we have held that
juries may consider circumstantial evidence and draw reasonable inferences from such
evidence. United States v. Davis, 490 F.3d 541, 549 (6th Cir. 2007) (drawing inferences
from concealment of the activity, misrepresentation, proof of knowledge, and the amount
of profit); see also United States v. Jones, 641 F.3d 706, 710-11 (6th Cir. 2011)
(supporting healthcare and mail fraud convictions with suspicious bills and lack of
records for billed services); United States v. Thompson, Case No. 09-5181, 2012 U.S.
App. LEXIS 19246 at *37-38 (6th Cir. Sept. 11, 2012) (supporting conviction for § 666
fraud with timing of suspect employment relationships between a public agent and
private parties, creation of false receipts, and efforts to make a project appear legitimate).
Here, the government attempted to prove its case with circumstantial facts, asking the
jury to make inferences.
The government provided evidence that 1) A4L billed for work not yet
performed and that DPS did not allow such payments; 2) the arrangement was not
conducted in accordance with DPS policy and procedure; 3) the invoices submitted over
the course of nine months billed for three year’s worth of work; 4) A4L did not track
hours or keep records of work provided, but billed on an hourly basis; 5) the hours in the
invoices were fabricated or at least inflated; 6) at Washington’s instruction, A4L made
cash payments of tens of thousands of dollars to Hill while he was a DPS insider and
personally approving invoices; and 7) A4L immediately distributed almost all the
proceeds to the partners instead of maintaining money in the company account to pay
for expenses. A reasonable jury could infer that Washington, or other members of the

4

To obtain something fraudulently means to use misrepresentations or false promises, including
statements that are known untruths, statements made with reckless disregard for their truth, half-truths, and
the knowing concealment of material facts. 1A Edward J. Devitt et al., Federal Jury Practice and
Instructions, § 16.08 (6th ed. 2012); see also Kenty v. Bank One, 92 F.3d 384 , 389-90 (6th Cir. 1996).
The “intent to defraud” is knowingly acting to deceive and is usually accompanied by a purpose to gain
personal benefit. Devitt, supra, at § 16.07.

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conspiracy, did not bill for actual hour estimates, but for some made up number of hours
that would support the dollar amount desired. It could also infer that Hill used his inside
influence to circumvent DPS’s normal procedures and that A4L did not perform enough
work in the nine months that the We Care program was operational to indicate a
legitimate intent to complete the work. Considering the evidence of Washington’s role
in generating the invoices, getting the invoices paid, and in making payments to Hill, it
was reasonable for a jury to infer her knowledge and intent.
Washington argues that the jury inferred too much from this circumstantial
evidence because 1) her business partners did not testify that the invoices were
fabricated, 2) billing for future work is not itself fraudulent, and 3) the evidence
regarding advance payments, unwritten contracts and wire transfers was insufficient to
infer fraud where a member of DPS approved the practices. However, her partners also
testified that A4L did not track hours and that they thought the invoices asked for “too
much money.” The invoices were, at a minimum, inaccurate. And the fact that Hill,
himself a member of the alleged conspiracy, approved procedures outside of DPS policy
merely supports the inference of deceit and fraud.
Washington also argues that the jury did not give enough credit to 1) her own
testimony that the We Care program was legitimate and had performed real work, 2) the
testimony of her partners that they intended to perform the work, and 3) her own
testimony that she did not know that Hill was still affiliated with DPS when she made
the cash payments. However, it is the job of the jury, not this court, to weigh the
credibility of a witness and determine whose story is true. Jackson, 443 U.S. at 319. We
will not conduct independent fact-finding where, like here, the jury’s findings were
reasonable.
Viewed in the light most favorable to the prosecution, the government provided
sufficient evidence to support a jury verdict of conspiracy to commit program fraud. As
Washington’s objection to the money laundering count was limited to her objection to
the underlying “specified unlawful activity” of program fraud, that conviction is also
supported.

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B. Ineffective Assistance of Trial Counsel Claim
Washington next claims that her trial counsel was ineffective because he failed
to present the following exculpatory evidence to the jury: testimony from DPS employee
Lamont Satchel about internal DPS practices, character evidence on Washington’s
volunteerism, and testimony from Kaye Washington that she observed A4L performing
genuine wellness work. All three pieces of evidence were presented after the trial by
Washington’s new counsel.5
Normally, we do not entertain ineffective assistance of counsel claims on direct
appeal because of the lack of record evidence bearing on the question. United States v.
Crowe, 291 F.3d 884, 886 (6th Cir. 2002). However, both parties agree that the record
below is sufficient in this case because both sides briefed the issue when Washington
submitted a motion for a new trial and because Washington has had different counsel
since sentencing. Where the issue is fully briefed and the defendant has new counsel on
appeal, we have addressed such claims on direct appeal. See United States v. Williams,
176 F.3d 301, 312 (6th Cir. 1999). We address it here as well.
We will only find counsel to be constitutionally ineffective if the defendant meets
the heavy burden to show that counsel’s performance meets both prongs under United
States v. Strickland, 466 U.S. 668, 687 (1984). First, counsel’s performance must have
been deficient due to “errors so serious” that, “in light of all the circumstances, the
identified acts or omissions were outside the wide range of professional competent
assistance.” Id. at 687, 690. Second, the deficient performance must have prejudiced
the defense such that there is a reasonable probability that the result would have been
different but for counsel’s errors. Id. at 687, 694.
While we have no doubt that trial counsel might have done well to present the
evidence suggested, we do not conclude that trial counsel’s performance was deficient
for failing to introduce Satchel’s testimony that unwritten contracts and advance
5

Testimony from Satchel was presented with Washington’s motion for a new trial. from Kaye
Washington was presented at sentencing. Evidence on Washington’s community involvement was also
presented at sentencing.

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payments were not unusual in the Risk Management department and that DPS was
responsible for producing a contract. This evidence was duplicative of White’s and
Bond’s testimony, and exclusion of it is not outside the bounds of reasonable strategy.
See Strickland, 466 U.S. at 690-91 (holding that an attorney’s strategic decisions “are
virtually unchallengeable”). Nor do we conclude that trial counsel was deficient for
failing to present character evidence on Washington’s reputation for “volunteering
tirelessly on behalf of the City’s school children.” It is not clear that such evidence
would have even been admissible under Federal Rule of Evidence (“FRE”) 405 because
the government did not put Washington’s character at issue. However, even if it did,
such character evidence is tangential to the question of guilt. Failing to present such
evidence is hardly outside the bounds of professional norms.
Trial counsel’s failure to present testimony from Kaye Washington, the
appellant’s sister, is a closer issue. Assuming, however, that trial counsel was deficient
for this failure, we do not conclude that the deficiency prejudiced Washington. To find
Washington guilty, the jury had to find that, at minimum, the conspiracy intended to do
something fraudulent, such as inflating the invoices. Kaye Washington’s testimony
would have included information on her assessment and strategic planning report of the
We Care program and her observations of A4L’s genuine wellness work for a one-month
period. This could have undermined the government’s arguments that A4L did not
intend to perform the work billed. However, the testimony regarding the cash payments
to Hill and the secrecy surrounding it, which suggested fraudulent activity, was so
substantial that Kaye Washington’s testimony probably would not have changed the jury
verdict. Additionally, Kaye Washington’s relationship to the appellant may well have
undermined her testimony. Therefore, under Strickland, trial counsel cannot be found
constitutionally ineffective for this omission. See also Ross v. United States, 339 F.3d
483, 495 (6th Cir. 2003) (finding no ineffective assistance for lack of prejudice alone).

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C. Sentencing Enhancement Claims
Washington raises a procedural reasonableness challenge to the district court’s
sentencing decision, arguing that the court erred by applying two sentencing
enhancements. We address each in turn.
1.) Organizer or Leadership Role
Washington first challenges the district court’s decision to apply the Section
3B1.1(a) enhancement of the Guidelines, adding four levels to her base offense level for
her “organizer or leadership role.” The standard of review for the decision to apply a
Section 3B1.1 enhancement for an organizer or leadership role is unresolved in this
circuit. United States v. Castilla-Lugo, 699 F.3d 454, 459 (6th Cir. 2012). Traditionally,
legal conclusions are reviewed de novo and factual findings are reviewed for clear error.
Id. However, since the Supreme Court’s holding in Buford v. United States, 532 U.S.
59, 66 (2001), that review of sentencing enhancements under Section 4B1.2 of the
Guidelines is subject to deferential, rather than de novo, review “in light of the fact
bound nature of the legal decision,” we have repeatedly signaled that the standard of
review for Section 3B1.1 is in question. Id. (noting that the standard is unresolved and
declining to clarify); United States v. Vasquez, 560 F.3d 461, 473 (6th Cir. 2009) (same);
United States v. Moncivais, 492 F.3d 652, 660 (6th Cir. 2007) (same); United States v.
McDaniel, 398 F.3d 540, 552 n.10 (6th Cir. 2005) (same); United States v. Henley,
360 F.3d 509, 516 (6th Cir. 2004) (same). As the standard of review has been
unresolved for over a decade, we take this opportunity to clarify it now.
In Buford, the legal question was whether the district court erred in determining
that an offender’s prior convictions were not “related” enough to be consolidated for
sentencing purposes under Section 4B1.2(c) of the Guidelines. 532 U.S. at 60-61. The
question was not an underlying factual finding, but rather the legal conclusion that
certain prior convictions were not “functionally consolidated.” Id. at 63. The Supreme
Court determined that the district court had certain institutional advantages in resolving
the legal question, such as its expertise in classifying prior convictions and its closer

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understanding of the factual nuances of the case. Id. at 64-65. While the legal
conclusion that a person is an organizer or leader under Section 3B1.1 is less procedural
in nature than the Section 4B1.2(c) question, a Section 3B1.1 enhancement nonetheless
depends on a number of factual nuances that a district court is better positioned to
evaluate. The trial judge is most familiar with the facts and is best situated to determine
whether someone is or is not a “leader” of a conspiracy that the jury found existed.
Deferring to this advantage is appropriate. Accordingly, we hold that, under the
reasoning in Buford, review of the legal conclusion that a person is an organizer or
leader under Section 3B1.1 is also deferential. See also United States v. Webb, 335 F.3d
534, 538 (6th Cir. 2003) (extending the Buford deferential standard to review of Section
3E1.1 enhancements).
Having resolved the standard of review, we now turn to the enhancement itself.
Section 3B1.1(a) of the Guidelines calls for a sentencing enhancement when the
defendant “was an organizer or leader of a criminal activity that involved five or more
participants.” A defendant only needs to be a leader of “one or more other participants”
to qualify for the enhancement. SENTENCING GUIDELINES MANUAL § 3B1.1 cmt. 2; see
United States v. Baker, 559 F.3d 443, 449 (6th Cir. 2009). The Application Notes
include a non-exhaustive list of factors a court can use to distinguish between one who
is an “organizer or leader” from one who is merely a “manager or supervisor” to whom
a less severe enhancement would apply: “the exercise of decision making authority, the
nature of participation in the commission of the offense, the recruitment of accomplices,
the claimed right to a larger share of the fruits of the crime, the degree of participation
in planning or organizing the offense, the nature and scope of the illegal activity, and the
degree of control and authority exercised over others.” SENTENCING GUIDELINES
MANUAL § 3B1.1 cmt. 4; see also id. § 3B1.1(b) (providing for only a three level
enhancement for a “manager or supervisor” of the conspiracy).
The heart of the government’s case was a surreptitious arrangement in which
Washington suggested, agreed to, and organized surreptitious cash payments to a DPS
insider who exerted his influence to get invoices paid—invoices that were at least

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inflated at Washington’s suggestion. The district court is in the best position to know
whether Washington was a leader or organizer under Section 3B1.1 given the evidence
presented and the nature of the conspiracy. Any question as to the truth of the evidence
is an underlying credibility issue also appropriate for the district court. See Jackson,
443 U.S. at 319. While Washington may or may not have been a leader in the business,
it was not unreasonable for the district court to conclude that Washington was a leader
or organizer of the conspiracy. SENTENCING GUIDELINES MANUAL § 3B1.1(a) (requiring
that the defendant be an organizer or leader “of a criminal activity,” here the conspiracy).
It may be true that Hill or someone else was also a leader of the conspiracy, but this
does not undermine the district court’s conclusion because more than one person can be
an organizer or leader. See SENTENCING GUIDELINES MANUAL § 3B1.1 cmt. 4.
Accordingly, we defer to that conclusion.
2.) Loss Calculation
Washington next challenges the district court’s decision to apply an eighteenlevel enhancement under Section 2B1.1(b)(1)(J) of the Guidelines for an amount of loss
to DPS of between $2.5 million and $7 million. We review the district court’s
calculation of the “amount of loss” for clear error, but consider the methodology behind
it de novo. United States v. Poulsen, 655 F.3d 492, 512-13 (6th Cir. 2011). The
prosecution has the burden to prove by a preponderance of the evidence that the
enhancement applies. United States v. Dupree, 323 F.3d 480, 491 (6th Cir. 2003).
The relevant amount of loss for a Section 2B1.1 enhancement is the greater of
the actual loss, defined as the reasonably foreseeable pecuniary harm that resulted from
the offense, or the intended loss to the victim. SENTENCING GUIDELINES MANUAL
§ 2B1.1 cmt. 3(A). The district court’s duty is to make a reasonable estimate of the loss.
SENTENCING GUIDELINES MANUAL § 2B1.1 cmt. 3(C). However, that loss is to be
reduced by the fair market value of actual services rendered to the victim. SENTENCING
GUIDELINES MANUAL § 2B1.1 cmt. 3(E). Whether the district court appropriately
reduced the amount of loss by the value of services provided is the relevant inquiry on
appeal.

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Washington argued below, as she does here, that A4L performed actual work and
that it would have completed the work billed if DPS had not halted the project. The
government argued then, as it does now, that though A4L may have performed some
tasks, the actual loss to DPS was the entire $3.2 million that it paid to A4L because the
entire We Care program was a sham. After hearing both sides, the district court then
made the following findings and conclusion:
The Court finds that there is evidence of more than two and a half million
dollars of loss to the public schools through this fraudulent scheme, that
no records were kept, there was no contract, there were kickbacks, there
was cash, secretive cash, and so for both [Guidelines and restitution]
purposes the Court believes that there is more than $2.5 million loss
involved in this.
We should note first that the district court did not find that the amount of loss
was the entire $3.32 million, but only that the loss was at least $2.5 million, enough to
exceed the threshold for the amount of loss range in Section 2B1.1(b)(1)(J). Even so,
Washington argues that the court should have reduced the amount of loss further,
according to the fair market value of the work A4L performed, which included giving
seminars on using the health assessment software to teachers, distributing flyers, and
assisting teachers with their health assessments. However, Washington does not explain
how the court could have made a more detailed calculation of the value of work
performed, given that A4L did not keep records of hours or work completed. The
government met its burden to prove that DPS paid $3.32 million to A4L. Counsel for
Washington admitted during oral argument that Washington had the burden of proving
the specific value by which that amount should be reduced. We agree. The district
court’s obligation is only to “make a reasonable estimate of the loss” “based on available
information . . . as appropriate and practicable under the circumstances.” SENTENCING
GUIDELINES MANUAL § 2B1.1 cmt. 3(C). Washington provided no estimates of the
value of the work completed other than the hourly rates in the invoices that were found
to be fraudulent. As a result, the district court was justified in making an estimate based
on available information. Indeed, it would have been justified in finding the amount of

Case: 11-2364

No. 11-2364

Document: 006111688366

Filed: 05/14/2013

United States v. Washington

Page: 15

Page 15

loss to be the entire $3.32 million because it found that the entire wellness program was
a sham.
Washington also makes an argument that DPS’s decision to halt the program was
the true proximate cause of the loss because A4L would have otherwise completed the
work. This argument is unconvincing. It is reasonably foreseeable that a client who
receives fraudulent invoices will eventually terminate the program and, therefore, the
fraud is the proximate cause of any loss associated with the termination. The district
court did not err in applying this sentencing enhancement.
III. CONCLUSION
For the foregoing reasons, we affirm Washington’s conviction and sentence.