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United States v. Evans

United States Court of Appeals, Tenth Circuit

March 11, 2014

UNITED STATES OF AMERICA, Plaintiff - Appellee,
v.
THOMAS B. EVANS, Defendant - Appellant

Page 1193

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO. (D.C. No. 1:11-CR-00481-CMA-1).

Veronica Rossman, Assistant Federal Public Defender, (Warren R. Williamson, Federal Public Defender, Interim and Virginia L. Grady, Federal Public Defender, Interim, on the briefs), Denver, Colorado, for Defendant - Appellant.

Ellen Meltzer, (Fred G. Medick of Fraud Section, Criminal Division of the United States Department of Justice, Mythili Raman, Acting Assistant Attorney General, and Denis J. McInerney, Acting Deputy Assistant Attorney General, on the brief), Washington, D.C., for Plaintiff - Appellee.

Before KELLY, GORSUCH, and HOLMES, Circuit Judges.

OPINION

Page 1194

KELLY, Circuit Judge.

Defendant-Appellant Thomas Evans pled guilty to one count of conspiracy to commit mail and wire fraud, 18 U.S.C. § § 1349, 1341, 1343, and was sentenced to 168 months' imprisonment and five years' supervised release. He now appeals his sentence. Our jurisdiction arises under 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a). Because the district court erred in calculating loss and failing to award an offense level reduction for acceptance of responsibility, we remand for the district court to vacate the sentence and resentence.

Background

Mr. Evans was a property manager and organizer of real estate investment funds, and was owner and president of Evans Real Estate Group, LLC. V R. 212. Between May 2003 and August 2005, Mr. Evans solicited investors for three limited partnerships that would acquire, renovate, and operate low-income apartment complexes in Texas, ultimately selling them at a profit. V R. 213. For example, Garden Stone Apartments, LP, was capitalized utilizing limited partnership interests and certificates (debt) bearing interest at 12% with an expected maturity of seven years. I R. 128, 150. The offering statements contained lengthy disclosure of the substantial risks of these investments: " there is no assurance that the Properties will be operated successfully, that the limited partners will receive a cash return on their investment or that the Certificate Holders will receive interest or principal payments." I R. 164; see also I R. 181, 216 (Ventana Apartments, LP); I R. 231, 258 (Aspen Chase Investments, LP). All told, Mr. Evans raised over $16 million. V R. 215. Mr. Evans, through various companies, served as general partner of each limited partnership. I R. 143, 199, 246.

These were legitimate (if highly risky) investment ventures at their outset. V R. 214. But by April 2005, Mr. Evans experienced cash flow problems and was unable to make the high interest payments to investors. V R. 452. He contributed his own funds, but represented that his management company was renting units from the various entities. Id. Ultimately, Mr. Evans contributed approximately $4.5 million of his own money to keep the investments solvent. IV R. 90-91; V R. 452. He also commingled funds of the ventures, using funds from each offering to pay operational expenses of others. V R. 213-14. He changed some of the income and decreased some of the expenses reported by the entities. V R. 214, 452. This was accomplished, at least in part, by false journal entries in an electronic accounting system that generated monthly financial statements; once the statements were generated, the entries were corrected. The statements would reflect greater gross potential rent, rental income and occupancy rates, lower vacancy and delinquency rates, and fewer renewal concessions. The false reports were provided to investors, lending institutions, and others. V R. 214.

Mr. Evans' activities continued until April 2007, when he was removed as property manager and an appointed receiver took control of the projects. V R. 213, 214. In September 2007, the receiver recommended that one of the remaining properties be abandoned to foreclosure, but believed that two others retained value and

Page 1195

could be salvaged with additional investment. I R. 470-71. At the receiver's behest, Mr. Evans' investors, although not required to, ...


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