Unpublished Disposition, 940 F.2d 1536 (9th Cir. 1991)

* Goldberg was an Executive Vice-President and a major stockholder of Matthews & Wright, Inc.. Matthews & Wright entered into a contract with the Guam Economic Development Authority ("GEDA") for the underwriting of $300 million worth of bonds. Under the contract, Matthews & Wright was required to deposit $4.5 million of the proceeds of the sale of the bonds into a trust fund (The Program Development Fund ("PDF")) to pay the costs of financing multifamily housing on Guam.

According to the United States Attorney, Goldberg, as well as others at Matthews & Wright, was actually engaged in a scheme of fraud. As a result of this alleged fraudulent scheme, the GEDA's plan to help finance housing collapsed. In order to preclude the Internal Revenue Service from attempting to collect taxes from the bondholders, the GEDA agreed to a settlement that included payment of a large portion of the PDF to the IRS. Matthews & Wright agreed in a stipulation in a civil suit brought by Guam to release any claim it had to the money still remaining in the PDF. After all payments were made, Guam's resulting profit from the GEDA issue was over $1.2 million.

Goldberg pleaded guilty to three counts of mail fraud involving disbursements from the PDF. At Goldberg's sentencing hearing, the judge sentenced him to pay a fine of $100,000 and to be imprisoned for 18 months. He also ordered Goldberg to pay restitution to Guam in the sum of $300,000, pursuant to the Victim and Witness Protection Act (VWPA), 18 U.S.C. §§ 3663, 3664 (1986).

II

Goldberg first argues that the district court erred by ordering any restitution. He presents several arguments to support this assertion. First, he claims that the PDF, from which he took the money, did not belong to Guam. This claim has no merit. The PDF was funded from the proceeds of the GEDA bond issue. The GEDA was an organization created by Guam for the purpose of benefiting the citizens of the territory. The money in the PDF was to be used on behalf of the GEDA in order to help provide financing for multifamily housing units on Guam.

Goldberg claims that the PDF was created from "funds transferred by Matthews & Wright out of its profits from the bond proceeds." This is a mischaracterization; the PDF was created, pursuant to contract, from the proceeds of the bond issuance. At no time was that money part of Matthews & Wright's profits since Matthews & Wright always had an obligation to place the money into the fund.

There is no evidence that Matthews & Wright had any ownership over the PDF. While the company had control over the disbursements from the fund, disbursements were limited to those necessary to further the "Program." PDF Agreement, paragraphs 5, 6. The agreement explained, "the [GEDA] has undertaken a program of providing permanent financing to certain developers of multifamily residential rental housing to be located in the Territory of Guam (the 'Program')." PDF Agreement, first "Whereas" clause. Thus, Matthews and Wright was to use the funds in the PDF for the GEDA's benefit. By making unauthorized disbursements, Goldberg defrauded Guam.

Goldberg next argues that no restitution is owed because Guam profited from the bond issuance. But these profits are not at issue. In Hughey, the Supreme Court noted that "the ordinary meaning of 'restitution' is restoring someone to the position he occupied before a particular event." 110 S. Ct. at 1982. "Congress intended restitution to be tied to the loss caused by the offense of conviction." Id. at 1984 (emphasis added).

Although the fraudulent scheme described in the indictment involved Matthews & Wright's entire underwriting of the bond issuance,²  Goldberg's guilty plea related only to three counts alleging that he had made improper disbursements from the PDF. Goldberg "has steadfastly denied any wrongdoing in connection with the bond issuance." But for Goldberg's fraud, the PDF residuary, which properly belonged to Guam, would have been larger. Thus, the acts of conviction cost Guam money and restitution is proper.

Third, Goldberg argues that the settlement agreement between Guam and Matthews & Wright, by which Matthews & Wright released all claim to the PDF, "constitutes payment in full of any and all amounts previously misappropriated by defendant." Goldberg asserts that because the settlement expressly covered the PDF, it precluded restitution.

But the settlement only covered what was left in the PDF after Goldberg's embezzlement. At the time of the settlement, Guam was entitled to the entire $4.5 million, less legitimate disbursements. Guam never received compensation for the money which had been illegally disbursed prior to the settlement agreement. Thus, contrary to Goldberg's claim, 18 U.S.C. § 3663(e) (1)'s limitation that, " [t]he court shall not impose restitution with respect to a loss for which the victim has received ... compensation" is inapplicable.

Finally, Goldberg argues that by its settlement, Guam "released and forever discharged defendant." But Guam could not discharge Goldberg. A similar argument was made in United States v. Cloud, 872 F.2d 846 (9th Cir.), cert. denied, 110 S. Ct. 561 (1989), where we stated,

A faulty premise underlying Cloud's argument here is that Continental had a pre-existing "right" to receive restitution under the VWPA that it could assert or waive. The Supreme Court has held that criminal restitution is not ordered because victims have an independent legal entitlement to it but, rather, as a means of achieving penal objectives such as deterrence, rehabilitation, or retribution....' The victim has no control over the amount of restitution awarded or over the decision to award restitution.'

Cloud, 872 F.2d at 854 (quoting Kelly v. Robinson, 479 U.S. 36, 52 (1986)).³  Thus, even though Guam settled with Matthews and Wright, Goldberg can still be ordered to pay restitution.

III

Goldberg next argues, and the government concedes, that the amount of restitution ordered was excessive. As noted above, in Hughey the Supreme Court held that restitution under the VWPA is limited to the loss caused by the offenses for which the defendant is convicted. 110 S. Ct. at 1984. We have recently held in United States v. Sharp, No. 88-5122, slip. op. 10211 (9th Cir. August 5, 1991) that Hughey includes cases of wire fraud. "Even when the offense of conviction involves a conspiracy or scheme, restitution must be limited to the loss attributable to the specific conduct underlying the conviction." Id. at 10218.

Here, Goldberg pled guilty to three counts of mail fraud in retain for the government's dismissal of the other 49 counts. Even the government now admits that the loss caused by these three counts was less than the $300,000 restitution amount that Goldberg was ordered to pay.⁴ 

Therefore, under both Hughey and Sharp the amount of restitution imposed was improper. "The appropriate remedy for a sentence imposed in excess of the sentencing court's authority is to vacate the entire sentence and remand for resentencing." Sharp, slip. op. at 10219 (quoting United States v. Blue Mountain Bottling Co., 929 F.2d 526, 529 (9th Cir. 1991) and citing United States v. Jenkins, 884 F.2d 433, 441 (9th Cir.), cert. denied, 110 S. Ct. 568 (1989)). We therefore vacate the district court's sentencing order and remand this case for resentencing.⁵ 

VACATED AND REMANDED FOR RESENTENCING