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United States v. Carpenter

United States Court of Appeals, Eighth Circuit

November 23, 2016

United States of America Plaintiff- Appellee
v.
Coleman Carpenter Defendant-Appellant

          Submitted: September 23, 2016

         Appeal from United States District Court for the Eastern District of Missouri - St. Louis

          Before WOLLMAN, BRIGHT, and KELLY, Circuit Judges.

          BRIGHT, Circuit Judge.

         The government charged Coleman Carpenter with mail and wire fraud arising from a scheme in which he overpaid for commodities to the benefit of certain customers while managing a grain elevator for Bunge of North America (Bunge). After Carpenter pleaded guilty to one count of mail fraud, the district court sentenced him to twelve months and one day in prison. The district court also ordered him to pay $1, 561, 516.25 in restitution to Bunge, which included $87, 536.65 in attorney's fees and expenses Bunge paid to an outside counsel during the investigation of Carpenter's fraudulent scheme and his prosecution.

         Carpenter appeals arguing the district court erred in calculating the amount of restitution, and by including the attorney's fees from Bunge's outside counsel in the restitution award. We affirm the portion of the district court's restitution award which does not include attorney's fees ($1, 473, 980.00), but vacate the portion awarding attorney's fees and expenses ($87, 536.65), and remand to the district court for further proceedings.

         I

         Bunge, a global agriculture commodities business, employed Carpenter as the manager of a grain elevator in Hickman, Kentucky. Bunge authorized Carpenter to purchase agricultural commodities, which included corn, wheat and soybeans, from producers and merchants "on the spot." In addition, Carpenter could enter into futures contracts for commodities to be delivered at a later date.

         Futures contracts had two components: the futures price and the basis. The first component - the futures price - was set by commodities markets. Bunge provided Carpenter access to the current futures prices electronically and through a commercial trading desk (hedge desk) located at its St. Louis, Missouri headquarters. Carpenter was authorized to establish the futures price component of the per bushel price for a particular futures contract based upon the current futures price as determined by the Chicago Board of Trade (CBOT).

         The second component - the basis - was set by Bunge and depended on various market conditions, such as location of a point of purchase, operational needs of Bunge, and prices offered by a competitor.[1] Bunge gave Carpenter the authority to "push the basis" in order to respond to changing market conditions or the operational needs of Bunge, but limited this authority to $.08 per bushel at the most. So, for example, if the basis at a given time was $-.15, Carpenter had the authority to push it to $-.07.

         Between 2009 and 2013, Carpenter frequently entered into futures contracts in excess of the combination of the CBOT current futures price and Bunge's basis, and his limited authority to "push the basis." In fact, on some occasions Carpenter increased the price Bunge paid for commodities by $.30, $.40, or .$50 per bushel. For example, on August 1, 2013, Carpenter entered into a futures contract for 60, 000 bushels of corn at $5.25 per bushel. Carpenter utilized a futures price of $5.63 per bushel with a basis of $-.38, despite the fact that the hedge desk provided him with a CBOT current futures price of only $4.9075, and the highest price paid on the CBOT that day for corn was $4.9975.

         Thus, Carpenter inflated the futures price component of the contract by $.7225 per bushel based on the CBOT current futures prices, or by $.6325 per bushel based on the CBOT high price of the day. After adjusting for the basis, the amount Bunge lost on this single contract was $43, 350, as measured by the difference between the $5.63 futures price utilized by Carpenter and the approved CBOT current futures price of $4.9075 (60, 000 bushels x $.7225). Carpenter then misrepresented these unauthorized transactions in mailings to Bunge headquarters.

         During the scheme, Carpenter received large payments of money from some of the grain elevator customers. For example, in consecutive years in March 2009 and 2010, Carpenter received $10, 000 checks from Ronnie Bates Farms, one of the grain elevator's customers. Carpenter's bank account also showed large cash deposits made between 2009 and 2013 totaling over $38, 000. Carpenter denies the cash deposits he made to his bank account during that time were related to the fraud scheme.

         In 2013, Bunge discovered Carpenter's fraud during an internal audit. Bunge asked the Thompson Coburn law firm in St. Louis to assist in reviewing and assessing Carpenter's unauthorized transactions, while at the same time providing information to the government for potential criminal charges against Carpenter. Thompson Coburn assisted Bunge and the government in reviewing the transactions both before and after a federal grand jury returned an indictment against ...


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