Submitted: December 16, 2016
from United States District Court for the District of South
Dakota - Aberdeen
KELLY and MURPHY, Circuit Judges, and MAGNUSON,  District
Sullivan pleaded guilty to one count of wire fraud, in
violation of 18 U.S.C. § 1343, and was sentenced to a
term of imprisonment of 41 months. Sullivan was ordered to
pay restitution in the amount of $56, 464 to Lowell
Lundstrom, Jr., of South Dakota, and in the amount of $48,
000 to Paul Rohde, of Kansas. Sullivan appeals his sentence
and the Lundstrom restitution order. Because we conclude the
district court committed procedural error when it departed
upward from the advisory sentencing guidelines, we remand for
resentencing. Because we conclude Sullivan's appeal
waiver is enforceable as to the restitution order, we dismiss
the appeal of the restitution order.
sold farm equipment on the internet, buying used tractors and
other farm equipment and reselling them. In 2010, Lundstrom
sent Sullivan two wire transfers totaling $51, 600 for the
purchase of a tractor and loader. Lundstrom received the
loader but Sullivan provided a different tractor from the one
he promised, which broke down and had to be repaired.
Lundstrom obtained a default judgment against Sullivan in
South Dakota state court in the amount of $56, 464.44,
reflecting the payments he sent Sullivan and reimbursement
for other costs associated with repairing the tractor
September 2015, Sullivan was charged by superseding
indictment with two counts of wire fraud based on the two
wire transfers Lundstrom had sent Sullivan. He pleaded guilty
pursuant to a written plea agreement to one of the counts,
and the parties agreed to recommend a sentence of time
served. Sullivan also agreed to pay restitution to Lundstrom
in an amount to be determined by the court and restitution to
Rohde in the amount of $48, 000 for a separate transaction.
Sullivan further agreed to waive his right to appeal any
non-jurisdictional issues except for "any decision by
the Court to depart upward pursuant to the sentencing
guidelines as well as the length of his sentence for a
determination of its substantive reasonableness should the
Court impose an upward departure or an upward variance
pursuant to 18 U.S.C. § 3553(a)."
presentence investigation report (PSR) was prepared. The PSR
calculated Sullivan's total offense level as
and his criminal history category as II, yielding an advisory
sentencing guideline range of 15 to 21 months. The court
notified the parties prior to sentencing that it was
considering a substantial upward departure from the
recommended sentencing Guidelines range based on
underrepresentation of criminal history. At the sentencing
hearing, the court heard testimony from the government's
case agent, FBI Special Agent (SA) Matt Miller, and
Sullivan's cousin, Roger Sullivan, who delivered farm
equipment for Sullivan. Lundstrom also made a statement to
the court. As anticipated in the plea agreement, the
government and Sullivan both recommended a sentence of time
served-about 17 months.
the offense as a "Ponzi scheme, " the district
court found that Sullivan had "escaped any punishment to
amount to anything in . . . various state courts." After
noting the advisory Guidelines range, the district court
found "that a criminal history category of II
substantially underrepresents the actual criminal history of
the defendant, as well as a likelihood that he will commit
further acts of fraud. He has committed the same fraud
several times." The court determined that Sullivan's
criminal history category should be VI instead of II, stating
that "the proper criminal history category for the
defendant is a VI. Not a II, not a III, and not a IV, and not
a V. A VI." Applying criminal history category VI, the
court determined Sullivan's new advisory range was 33 to
41 months and sentenced Sullivan to 41 months'
imprisonment, and three years of supervised release, and
ordered him to pay restitution of $56, 464.44 to Lundstrom
and $48, 000 to Rohde, and a $100 special assessment.
challenges his sentence as both procedurally and
substantively unreasonable. He also argues the district
court's restitution award to Lundstrom was not supported
by the evidence.
review the reasonableness of sentences in two parts: first,
for significant procedural error, and second, if there is no
significant procedural error, for substantive reasonableness.
United States v. Barker, 556 F.3d 682, 689 (8th Cir.
2009). "Procedural error includes . . . failing to
adequately explain the chosen sentence-including an
explanation for any deviation from the Guidelines
range." United States v. Scales, 735 F.3d 1048,
1051-52 (8th Cir. 2013) (quoting United States v.
Feemster, 572 F.3d 455, 461 (8th Cir. 2009) (en banc)).
"In reviewing a sentence for procedural error, we ...