United States of America v. Richard Shannon

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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 15a0250p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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UNITED STATES OF AMERICA ,
Plaintiff-Appellee,
v.
RICHARD SHANNON ,
Defendant-Appellant.
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No. 14-1727
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 2:10-cr-20014—Denise Page Hood, District Judge.
Argued: June 9, 2015
Decided and Filed: September 1, 2015*
Before: KEITH, CLAY, and STRANCH, Circuit Judges.
_________________
COUNSEL
ARGUED: Michael R. Dezsi, LAW OFFICE OF MICHAEL R. DEZSI, PLLC, Detroit,
Michigan, for Appellant. Mark J. Chasteen, UNITED STATES ATTORNEY’S OFFICE,
Detroit, Michigan, for Appellee. ON BRIEF: Michael R. Dezsi, LAW OFFICE OF MICHAEL
R. DEZSI, PLLC, Detroit, Michigan, for Appellant. Mark J. Chasteen, UNITED STATES
ATTORNEY’S OFFICE, Detroit, Michigan, for Appellee.
*This decision was originally issued as an “unpublished decision” filed on September 1, 2015. The court
has now designated the opinion as one recommended for full-text publication.
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No. 14-1727 United States v. Shannon Page 2
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OPINION
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DAMON J. KEITH, Circuit Judge. Defendant-Appellant, Richard Shannon, appeals his
conviction and sentence stemming from his involvement in a large-scale Medicare fraud scheme
in which twenty-one people were indicted. Shannon was convicted of one count of conspiracy to
commit health care fraud in violation of 18 U.S.C. § 1349 and sentenced to 86 months
imprisonment. On appeal, Shannon argues that (1) the district court erred in allowing the
Government to introduce his proffer statements into evidence during trial; and (2) the district
court’s sentence was procedurally unreasonable. We AFFIRM the district court’s ruling
admitting Shannon’s proffer statements. However, because the district court’s sentence failed to
comport with Federal Rule of Criminal Procedure 32(i)(3)(B), we VACATE Shannon’s sentence
and REMAND for resentencing.
I. BACKGROUND
On October 26, 2012, a jury found Shannon guilty of one count of conspiracy to commit
health care fraud. The district court subsequently sentenced Shannon to 86 months
imprisonment. The circumstances surrounding Shannon’s conviction are as follows:
In 2008, Shannon met Mohammed Shahab, an owner and operator of various health care
agencies in Michigan, through another co-conspirator. At this meeting, Shahab discussed the
details of his health care business and sought Shannon to work for him. Shannon subsequently
agreed to work for Shahab as a “marketer” or “recruiter” for two of Shahab’s home health-care
agencies: All American Home Health Care (“All American”) and Patient Choice Home Health
Care (“Patient Choice”). Both agencies were run by Hassan Akhtar. Shannon’s role required
him to seek out Medicare beneficiaries to obtain their account information and signatures on pre-
signed medical notes in exchange for $50-$100 and/or prescription narcotics. Shannon then
delivered these pre-signed notes to the health care agencies where they were fraudulently signed
by medical professionals. The billing staff thereafter billed the Medicare accounts for services
that were not rendered. Shannon was paid $400-$600 for each “patient” he recruited. To

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No. 14-1727 United States v. Shannon Page 3
disguise their illegal scheme, Shahab instructed Shannon to establish his own company in order
to submit invoices to Shahab’s agencies as legitimate payment for services rendered to Shahab’s
agencies. Shannon established Shannon Community Liaison and Richard Shannon Community
Liaison, to receive payment.
On July 13, 2010, an indictment charged Shannon and several others with conspiracy to
commit health care fraud in violation of 18 U.S.C. § 1349. On December 3, 2010, Shannon,
along with counsel, met with the Government to make a proffer statement. Prior to the proffer
statement, Shannon and his attorney were provided with a proffer agreement, also known as a
Kastigar letter. The agreement was signed by the Government, Shannon, and his defense
counsel. The agreement provided, in relevant part, that:
(2) Except as otherwise specified in this letter, no statement made by you or your
client during this proffer discussion will be offered against your client in the
government’s case-in-chief in any criminal prosecution of your client for the
matters currently under investigation.
(3) If your client is prosecuted, the government may use your client’s statements
in cross-examining your client, and to rebut any evidence offered by your client
that is inconsistent with the statements made during this discussion. This is to
ensure your client does not abuse the opportunity for this proffer discussion by
making false or misleading statements, either at the proffer discussion or at trial.
(R. 496-2, Proffer Agreement, Pg ID 2149). During the proffer session, Shannon made several
inculpatory statements regarding his involvement in the health care fraud conspiracy.
At Shannon’s trial, the Government offered the testimony of Akhtar, who pleaded guilty
and cooperated with the Government. Akhtar testified that he ran Shahab’s clinics, Patient
Choice and All American (R. 622, Trial Transcript, Pg ID 3633), and that he knew Shannon as a
recruiter for these clinics. (Id. at Pg ID 3634). Akhtar also testified that he paid Shannon
$400 for every patient Shannon recruited, and that Shannon claimed to pay each patient between
$50 and $100, in addition to prescription pain pills. (Id. at Pg ID 3643, 3640). Akhtar further
testified that he received a call from a patient whom stated that he had not received money that
Shannon promised him. (Id. at Pg ID 3637-39). On cross-examination, defense counsel
questioned Ahkhtar about these payments to patients and the following exchange occurred:

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No. 14-1727 United States v. Shannon Page 4
Q [defense counsel]: Okay. And that’s not firsthand knowledge,
correct? You didn’t see Mr.—Mr. Shannon
paying any patients, correct?
A [Akhtar]: No, sir.
Q [defense counsel]: Okay. And you didn’t direct Mr. Shannon
to pay any patients, correct?
A [Akhtar]: No, sir.
Q [defense counsel]: That was just the rumor going around in the
office, correct?
A [Akhtar]: No.
Q [defense counsel] That wasn’t a rumor?
A [Akhtar] It was not a rumor if patient is calling and
asking that Shannon had me sign the
paperwork and did not give me the money
he promised.
Q [defense counsel] Okay. Well, if he didn’t pay him the money
that he promised, that means he didn’t pay
them, correct?
A [Akhtar] That’s why patient was calling, to get the
money.
Q [defense counsel] Okay. I understand that’s why they were
calling, but they weren’t paid, correct?
A [Akhtar] At that time, yes.
Q [defense counsel] Okay. And you have no firsthand
knowledge of them actually paying the
patient, correct? We’ve already established
that, right?
A [Akhtar] Right, I did not see him because I was in the office.
(R. 623, Trial Transcript, Pg ID # 3802). On October 16, 2012, in response to this exchange and
Shannon’s questioning of other witnesses, the Government filed its Motion to Use Statements
Made by Defendant Richard Shannon During Proffer Sessions.1 (R. 496, Pg ID # 2140-58). In
its motion, the Government asserted that Shannon waived the restrictions on the use of his
proffer statements when Shannon’s counsel “repeatedly attempted to elicit testimony that [was]
inconsistent with [] statements by [Defendant].” The district court found that the defense’s
cross-examination of Akhtar went “too far,” and led to an inference that was inconsistent with
Shannon’s proffer. (R. 674, Trial Transcript at 19, Page ID 5638). It granted the Government’s
1The Government also asserted that the defense’s cross-examination of other witnesses triggered the waiver
provision of Shannon’s proffer agreement. However, the district court found that the defense’s cross-examination of
these additional witnesses was merely to test the witnesses’ credibility, and thus found no waiver. Therefore, the
waiver issue before this Court pertains only to the cross-examination of Akhtar.

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No. 14-1727 United States v. Shannon Page 5
motion to allow introduction of Shannon’s proffer statements. The jury subsequently found
Shannon guilty of one count of conspiracy to commit health care fraud.
During sentencing, Shannon objected to the Government’s fraud loss calculation.2
Particularly, Shannon disputed the Government’s assertion that he received $186,775.00 from
the conspiracy, contending that at trial, the Government had argued and put forth proof only that
he profited $55,350.00. Using a statistical extrapolation formula, the Government calculated the
total amount of fraud loss as $1,680,975.00.3 This amount was derived from an extrapolation of:
(1) the total amount paid to Shannon of $186,775.00; (2) divided by an average payment to
Shannon of $500 per patient; and (3) multiplied by the average Medicare payment of $4,500 per
patient episode. While not disputing that it had only put forth evidence of $55,350.00 at trial, the
Government countered that during the sentencing phase, the court was free to consider evidence
of Shannon’s other relevant conduct. Thus, the Government submitted charts as an exhibit to its
Sentencing Memorandum that purported to show additional payments to Shannon. These charts
appeared to show that Shannon had actually profited an additional $131,425.00 from separate,
but related, schemes of health care Medicare fraud, bringing his total profit to $186,775.004
The district court accepted the Government’s $1,680,975.00 fraud loss calculation, which
resulted in a 16-point increase and an advisory guideline sentence range of 92-115 months. The
district court sentenced Shannon below the guidelines range to 86 months imprisonment.
Shannon filed this timely appeal.
2On appeal, Shannon does not challenge or dispute the formula the Government used to calculate the fraud
loss amount.
3Shannon’s Presentence Report also attributed $1,680,975 in fraud loss to Shannon.
4The Government asserts that upon further review, it found that Shannon actually received a total of
$191,175 from the fraud, but that for purposes of sentencing, it would use the amount identified by the Probation
Department in Shannon’s Presentence Report.

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No. 14-1727 United States v. Shannon Page 6
II. DISCUSSION
A. Admission of Proffer Statement
1. Waiver Language
Shannon first argues that the district court erred in allowing the Government to introduce
portions of his proffer statements into evidence. Specifically, Shannon challenges the district
court’s determination that he waived the protections of his proffer agreement by offering
evidence that was inconsistent with his proffer statements. Shannon contends that he did not
“offer any evidence” because he did not “call any witnesses or put on any defense case.”
Appellant Br. 20. The Government, on the other hand, asserts that Shannon waived the
protections of his proffer agreement when he cross-examined Akhtar, thereby eliciting responses
that were inconsistent with his proffer statements. This cross-examination, the Government
argues, amounts to an “offer of evidence.”
In considering whether Shannon waived the protections of his proffer agreement, we
engage in a two-part analysis. We first look at the terms of Shannon’s proffer agreement for an
interpretation of its contents. The agreement is a “contract that must be interpreted ‘to give
effect to the intent of the parties.’” United States v. Barrow, 400 F.3d 109, 117 (2d Cir. 2005).
“Because the interpretation of a contract is generally a question of law, we review the first issue
de novo.” Id. “If we conclude that the proffer agreement waiver does apply in this case, our
second step is to review for abuse of discretion the district court’s evidentiary rulings admitting
[Shannon’s] proffer statements, and we will not reverse unless an error affects a ‘substantial
right.’” Id. (internal citations omitted).
Generally, statements made by defendants in proffer sessions are inadmissible under Rule
410 of the Federal Rules of Evidence. Barrow, 400 F.3d at 116. The rule states in pertinent part:
Except as otherwise provided in this rule, evidence of the following is not, in any
civil or criminal proceeding, admissible against the defendant who made the plea
or was a participant in the plea discussions:
(4) a statement made during plea discussions with an
attorney for the prosecuting authority if the discussions
did not result in a guilty plea or they resulted in a later-
withdrawn guilty plea.

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No. 14-1727 United States v. Shannon Page 7
Fed. R. Evid. 410. However, defendants may waive Rule 410 objections, “absent evidence that a
waiver is unknowing or involuntary.” United States v. Fifer, 206 F. App’x 502, 509 (6th Cir.
2006); see also United States v. Mezzanatto, 513 U.S. 196, 205 (1995) (holding that Rule 410
creates “‘a privilege of the defendant,’ and, like other evidentiary privileges, [it] may be waived
or varied at the defendant’s request.”).
The waiver provision at issue here, permitted the Government to use Shannon’s proffer
statements “to rebut any evidence offered by [Shannon] that [was] inconsistent with the
statements made during [the proffer session].” (R. 496-2, Proffer Agreement, Pg ID 2149).
Shannon does not challenge the validity of the proffer agreement; instead, he urges this Court to
find that he did not violate the provisions of the agreement because he did not “offer evidence”
by cross-examining Akhtar. Shannon contends that his cross-examination of Akhtar was simply
a rebuttal of the Government’s direct questioning and was aimed at establishing Akhtar’s lack of
first-hand knowledge about payments to beneficiaries. While Shannon relies heavily on this
argument, we find it unpersuasive. Guidance from our sister circuits’ precedent compels our
decision to the contrary.
In United States v. Krilich, 159 F.3d 1020 (7th Cir. 1998), the defendant contended that
the waiver provision in his proffer agreement was limited to evidence presented through his own
witnesses, not evidence obtained by cross-examination of the prosecution’s witnesses. 159 F.3d
at 1025. The waiver provision stated:
[S]hould [defendant] subsequently testify contrary to the substance of the proffer
or otherwise present a position inconsistent with the proffer, nothing shall prevent
the government from using the substance of the proffer at sentencing for any
purpose, at trial for impeachment or in rebuttal testimony, or in a prosecution for
perjury.
Id. at 1024. The Seventh Circuit rejected this argument finding that “[e]vidence is evidence,
whether it comes out on direct or cross-examination.” Id. at 1025. It opined that “[o]ne can
‘otherwise present’ a position through arguments of counsel alone, so it is very easy to see how a
position can be ‘presented’ by evidence developed on cross-examination and elaborated by
counsel.” Id. The court concluded that “[i]ntroduction of the [proffer] statements [] was proper

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No. 14-1727 United States v. Shannon Page 8
if either [the defendant’s] testimony, or evidence that he presented through the testimony of
others, contradicted the proffer.” Id. (internal citations omitted) (emphasis added).
In Barrow, 400 F.3d 109, the defendant challenged the district court’s finding that his
counsel’s trial conduct triggered the waiver clause of his proffer agreement. The waiver
provision permitted the government to use the defendant’s proffer statements “‘to rebut any
evidence offered or elicited, or factual assertions made, by or on behalf of [him] at any stage of a
criminal prosecution.’” Id. at 116. The defendant contended that only a “specific or direct
contradiction between his proffer statement and an assertion by counsel” would trigger the
waiver clause. Id. at 117. The court disagreed, determining that the use of the words “any
evidence,” created an expansive waiver, and applied to all evidence, whether “offered directly or
elicited on cross-examination.” Id. at 118 (emphasis added). Finally, in United States v.
Hardwick, 544 F.3d 565 (3d Cir. 2008), the defendant’s proffer agreement provided that the
government could “rebut any evidence or arguments offered on [the defendant’s] behalf.”
544 F.3d at 570. The Third Circuit determined that the “testimony elicited from [] witnesses on
cross-examination was aimed at inferring that [others], rather than [the defendant], were
responsible for the murders [], contrary to the statements [defendant] made under the proffer
agreement.” Id. at 571 (emphasis added). Thus, based on this cross-examination questioning,
the court found that defendant had waived the protections of his proffer agreement.
Relying on these cases, we agree with the district court that Shannon did offer evidence
when he elicited testimony from Akhtar on cross-examination. Shannon’s argument that he did
not offer any evidence because he did not call any witnesses or put on a defense case is
unconvincing. Evidence is defined as “something (including testimony, documents, and tangible
objects) that tends to prove or disprove the existence of an alleged fact; anything presented to the
senses and offered to prove the existence or nonexistence of a fact.” Black’s Law Dictionary
(10th ed. 2014). A party does not offer evidence only by calling its own witnesses or putting on
its own case. Indeed, as noted by the Krilich court, evidence may be offered through cross-
examination. Krilich, 159 F.3d at 1025. And as is consistent with the Barrow court’s
determination, because Shannon’s waiver provision allowed the government to rebut “any
evidence,” this included evidence offered on direct or elicited on cross-examination. Thus, we

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No. 14-1727 United States v. Shannon Page 9
reject Shannon’s argument and conclude that the elicitation of testimony from Akhtar on cross-
examination amounted to an “offer of evidence” under the terms of the proffer agreement.
Shannon contends that reliance on these cases is misplaced because the waiver provision
at issue in each of these cases was broader than the waiver provision in the instance case.
Shannon argues that the waiver provisions are distinguishable because an “offer of evidence”
does not equate to an “argument” as used in Hardwick; a “position” as used in Krilich; or
“elicited evidence” as used in Barrow. Shannon’s argument is unavailing. While the waivers are
not identical, they need not be. All three cases support the general rule that cross-examination of
a witness can amount to an “offer of evidence.”
2. Triggering the Waiver Provision
Having determined that Shannon did offer evidence when he cross-examined Akhtar, we
must now consider whether this evidence was inconsistent with Shannon’s proffer, thereby
triggering the waiver provision. Because this is an evidentiary ruling, we review the district’s
court decision to admit Shannon’s proffer statement for abuse of discretion. United States v.
Henderson, 626 F.3d 326, 333 (6th Cir. 2010). We will not reverse unless an error affects a
“substantial right”—that is, if the error had a “substantial and injurious effect or influence” on
the jury’s verdict. Id. (citation omitted). “[A]n erroneous admission of evidence that does not
affect the ‘substantial rights’ of a party is considered harmless, and should be disregarded.”
United States v. Whittington, 455 F.3d 736, 738 (6th Cir. 2006) (citation omitted).
Shannon asserts that his cross-examination was aimed at challenging the accuracy and
credibility of Akhtar’s testimony. He claims that defense counsel was merely responding to the
testimony elicited by the Government from Akhtar and establishing that Akhtar did not have
first-hand knowledge about the payments to beneficiaries. The district court, however,
concluded that defense counsel’s cross-examination “went too far” and was “problematic.”
We agree.
While Shannon certainly has the constitutional right to confront and question the
witnesses against him, see U.S. Const. amend. VI, “[i]mpeachment of a witness need not be
‘contrary to’ or ‘inconsistent with’ a defendant’s admission of guilt in a bargaining proffer.”

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No. 14-1727 United States v. Shannon Page 10
Krilich, 159 F.3d at 1025. “Statements are inconsistent only if the truth of one implies the falsity
of the other.” Id. at 1025-26. In Hardwick, the court rejected the defendant’s contention that his
questioning on cross-examination was “intended only to impeach the credibility of the
Government’s cooperating witnesses and to challenge their recollections of certain events.”
Hardwick, 544 F.3d at 571. The court found no error in the district court’s determination that the
defendant also attempted to challenge his role in the crimes, contrary to his proffer statements.
Id. Accordingly, the court found that the district court did not abuse its discretion in admitting
the defendant’s proffer statements. Id.
Similarly, we find that the testimony elicited from Akhtar was not only aimed at
challenging his credibility and accuracy, but also at inferring that Shannon did not pay
beneficiaries, an inference that is inconsistent with his proffer statements. A review of the trial
transcript shows that Shannon’s counsel elicited from Akhtar the admission that Akhtar lacked
first-hand knowledge about the payments:
Q [Defense Counsel]: . . . [Y]ou indicated on direct examination that you
had knowledge of Mr. Shannon paying patients. You
remember that testimony?
A [Akhtar]: Yes, sir.
Q [Defense Counsel]: Okay. And that’s not firsthand knowledge, correct?
You didn’t see Mr.—Mr. Shannon paying any patients,
correct?
A [Akhtar]: No, sir.
(R. 623, Trial Transcript, Pg ID 3801-02). But Shannon’s counsel did not stop there.
Subsequent questioning was aimed at eliciting testimony from Akhtar that was inconsistent with
Shannon’s proffer—that Shannon did, in fact, pay beneficiaries. Shannon’s counsel attempted to
create the inference that Shannon did not pay beneficiaries at all because a beneficiary
complained to Akhtar to that Shannon had not paid him:
Q [Defense Counsel]: That was just the rumor going around in the office,
correct?
A [Akhtar]: No.
Q [Defense Counsel]: That wasn’t a rumor?

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No. 14-1727 United States v. Shannon Page 11
A [Akhtar]: It was not a rumor if patient is calling and asking that
Shannon had me sign the paperwork and did not give
me the money he promised.
Q [Defense Counsel]: Okay. Well, if he didn’t give him the money that he
promised, that means he didn’t pay them, correct?
A [Akhtar]: That’s why patient was calling, to get the money.
Q [Defense Counsel]: Okay. I understand that’s why they were calling, but
they weren’t paid, correct?
A [Akhtar]: At that time, yes.
(Id. at 3802) (emphasis added). Counsel’s questions about the payments were not confined to
temporal proximity (i.e., that means he didn’t pay them at that time, correct?); nor were they
limited to that particular patient (i.e., that means he didn’t pay him, correct?). Rather, the
questioning demonstrates that counsel was attempting to negate the fact that Shannon had ever
paid beneficiaries—in contradiction to his proffer. And because prior questioning of Akhtar had
already established that he lacked first-hand knowledge of the payments to patients, we reject
Shannon’s argument that subsequent questioning was intended for that purpose. Accordingly,
because Shannon’s cross-examination evidence was inconsistent with his proffer statements, the
Government was free to rebut this evidence by introducing Shannon’s proffer statements.
We find that the district court did not abuse its discretion in so concluding.
Shannon also contends that the admission of his proffer statements affected his
substantial rights and denied him a fair trial because the “central theme of [his] defense was to
challenge his knowledge and culpability of the offenses.” Appellant Br. at 26. Shannon claims
that the Government offered little proof that he knew about and intended to participate in the
conspiracy, but that it then “trumpeted” Shannon’s proffer statements in its closing as evidence
of Shannon’s guilt. See Appellant Br. at 26-27. Having determined that the district court did not
err in admitting Shannon’s proffer statements, we reject this argument. As explained above, it
was not an abuse of discretion for the district court to conclude that Shannon triggered the waiver
provision of his proffer agreement, thereby allowing the Government to use his proffer
statements to rebut the inconsistent evidence that he offered. Shannon, with counsel present,
freely stipulated to the conditional use of his statements by signing the proffer agreement,
evidencing that he was aware of the conditions that would ultimately allow the Government to

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No. 14-1727 United States v. Shannon Page 12
use his proffer statements. Shannon was free to present his defense as he so chose, under the risk
that any inconsistent evidence that he offered could be rebutted by his proffer statements. The
fact that Shannon’s properly admitted proffer statement may have proven his knowledge and
culpability of the conspiracy, does not evidence that the admission affected his substantial rights
or denied him a fair trial. Furthermore, Shannon has not argued that the waiver was made
unknowingly or involuntarily to warrant it inadmissible.
Accordingly, we conclude that Shannon did offer evidence when he cross-examined
Akhtar, and that this testimonial evidence was inconsistent with his proffer statements.
Consequently, the district court did not abuse its discretion in admitting Shannon’s proffer
statements into evidence.
B. Sentencing
Shannon also argues that his sentence was procedurally unreasonable. Shannon bases his
argument on two assignments of error: (1) that the district court failed to comply with Federal
Rule of Criminal Procedure 32 when it ruled on Shannon’s objection to the fraud loss
calculation; and (2) that the district court erroneously relied on the Government’s relevant
conduct evidence in determining the fraud loss amount.
We review sentences under a deferential abuse-of-discretion standard. United States v.
Wallace, 597 F.3d 794, 802 (6th Cir. 2010). A court will be deemed to have imposed a
procedurally unreasonable sentence if it “failed to calculate the Guidelines range properly;
treated the Guidelines as mandatory; failed to consider the factors prescribed at 18 U.S.C.
§ 3553(a); based the sentence on clearly erroneous facts; or failed to adequately explain the
sentence.” United States v. Coppenger, 775 F.3d 799, 803 (6th Cir. 2015) (citations omitted).
For purposes of sentencing enhancements under the Guidelines, we review the district court’s
method of calculating loss de novo. United States v. White, 492 F.3d 380, 414 (6th Cir. 2007).
Findings of fact underlying the district court’s loss calculations, however, are reviewed for clear
error. Id. “A finding that the calculations were clearly erroneous will follow only if this Court
‘on the entire evidence is left with the definite and firm conviction that a mistake has been
committed.’” Id. (quoting United States v. Ware, 282 F.3d 902, 907 (6th Cir. 2002)).

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No. 14-1727 United States v. Shannon Page 13
In its Sentencing Memorandum and during sentencing, the Government argued that
Shannon had actually profited $186,775.00, contrary to the $55,350.00 it asserted and proved at
trial. The Government contends that it is a well-established principle that a sentencing court may
consider “relevant conduct” in estimating a loss amount. Thus, the Government asserts, during
the sentencing phase, it was free to introduce, and the district court was free to consider,
evidence of Shannon’s relevant conduct. At the sentencing hearing, the Government introduced
evidence that Shannon received additional money recruiting for other Shahab-related health care
agencies and Acure—a Shahab-affiliated health care agency. In the separate prosecution of
Acure’s owner, the Government introduced a chart purporting to show that, in addition to the
$55,350.00 Shannon made recruiting for All American and Patient First, he also made
$120,975.00 recruiting for Acure and $10,450.00 recruiting for the other Shahab-related entities.
During Shannon’s sentencing phase, the Government re-submitted this same chart with its
Sentencing Memorandum and referred to it during sentencing. The Government never sought to
introduce this chart during Shannon’s trial.
Under § 1B1.3 of the Sentencing Guidelines, “[c]onduct that is not formally charged or is
not an element of the offense of conviction may enter into the determination of the applicable
guideline sentencing range.” United States v. Hill, 79 F.3d 1477, 1481 (6th Cir. 1996) (citing
U.S.S.G. § 1B1.3, background). This “relevant conduct” may be considered if it is “part of the
same course of conduct or common scheme or plan as the offense of conviction.” Id. (citing
U.S.S.G. § 1B1.3(a)(2)). “To qualify as part of a ‘common scheme or plan’ under the ‘relevant
conduct’ guideline, the offenses ‘must be substantially connected to each other by at least one
common factor, such as common victims, common accomplices, common purpose, or similar
modus operandi.’” Id. (citing U.S.S.G. § 1B1.3, application note 9(A)). Relevant conduct is not
limited to conduct for which the defendant has been convicted. United States v. Maken, 510 F.3d
654, 658 (6th Cir. 2007).
As an initial matter, Shannon contends that admission of the Government’s relevant
conduct evidence was error because the evidence was not a part of the record and the
Government submitted the evidence at sentencing without any foundation. Shannon asserted at
sentencing that some “minimum concern of due process” needed to be met before the

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No. 14-1727 United States v. Shannon Page 14
Government would be allowed to introduce the evidence. (R. 705, Sentencing Transcript, Pg ID
6844). But Shannon’s argument disregards our precedent that sentencing judges may engage in
judicial fact-finding and consider evidence under a preponderance of the evidence standard.
United States v. Moncivais, 492 F.3d 652, 665 (6th Cir. 2007) (quoting United States v. Gates,
461 F.3d 703, 708 (6th Cir. 2006) (“[W]e find that judicial fact-finding in sentencing
proceedings using a preponderance of the evidence standard. . . does not violate either Fifth
Amendment due process rights, or the Sixth Amendment right to trial by jury.”). Accordingly,
consideration of relevant conduct evidence during sentencing does not violate a defendant’s due
process rights.
However, failure to actually “find” facts by a preponderance of the evidence on contested
matters during sentencing is error. Federal Rule of Criminal Procedure 32(i)(3)(B) requires the
district court to rule on “any disputed portion of the presentence report or other controverted
matter,” at sentencing. White, 492 F.3d at 415 (quoting Fed. R. Crim. P. 32(i)(3)(B)). In White,
we stated that the “‘court may not merely summarily adopt the factual findings in the
presentence report or simply declare that the facts are supported by a preponderance of the
evidence.’” Id. (internal citation omitted). Rather, once the defendant raises a dispute regarding
the presentence report during sentencing, the district court must “actually find facts, and it must
do so by a preponderance of the evidence.” Id. at 416 (emphasis in original). And we reiterated
that “literal compliance” with Rule 32 is required “‘for a variety of reasons, such as enhancing
the accuracy of the sentence and the clarity of the record.’” Id. at 415. Furthermore, “[w]hen a
defendant raises a particular[, nonfrivolous] argument in seeking a lower sentence, the record
must reflect both that the district judge considered the defendant’s argument and that the judge
explained the basis for rejecting it.” Wallace, 597 F.3d at 803 (internal quotation marks omitted).
Shannon objected to the Government’s fraud loss calculation during sentencing, arguing
that the Government failed to submit any evidence at trial that he profited $186,775.00 from the
conspiracy. The Government countered that the “fraud loss. . . [was] tied directly to the amount
of payments that were paid to Mr. Shannon directly or to his company. . . ,” and that “[t]he Court
need only make a reasonable estimate of loss.” (R. 705, Sentencing Transcript, Pg ID 6841).
The Government further asserted that the additional profit was a part of Shannon’s relevant

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No. 14-1727 United States v. Shannon Page 15
conduct and that the district court was free to consider the additional amount that Shannon
allegedly gained. In response to Shannon’s objection and the Government’s explanation, the
district court stated:
Okay. I’m satisfied that the amount of loss calculated by the Government of 1.6
million dollars in false payments by Medicare is the amount of loss that the Court
should consider in this particular case based upon the $186,775 and the $4,500
per home health care episode, and the Court so finds.
(R. 705, Sentencing Transcript, Pg ID 6845). We agree with Shannon that the district court erred
in failing to comply with Federal Rule of Criminal Procedure 32(i)(3)(B).
Once Shannon objected to the Government’s fraud loss calculation, the district court was
required to explain its factual findings for determining that Shannon would be held accountable
for the fraud loss amount. The district court not only failed to make any factual findings for this
amount, but failed to do so by a preponderance of the evidence. United States v. Triana,
468 F.3d 308, 321 (6th Cir. 2006) (“Under the Guidelines, the district court is to determine the
amount of loss by a preponderance of the evidence…”). Indeed, the district court failed to even
state whether it accepted the Government’s relevant conduct evidence. While consideration of
relevant conduct evidence may have been appropriate in this case, we make no determination as
to its weight. We conclude only that the district court did not satisfy Rule 32 in determining
Shannon’s fraud loss. Thus, although the district court may have properly relied on the
Government’s relevant conduct evidence, it did not articulate, on the record, its factual findings
proved by a preponderance of the evidence, for attributing the $186,775.00 amount to Shannon.
Accordingly, we must remand the case to the district court for resentencing. See United States v.
Orlando, 281 F.3d 586, 601 (6th Cir. 2002) (“Although the evidence may justify holding
[defendant] accountable for $449,000 of laundered money, the district court’s failure to explain
its factual determination requires us to remand the case for his resentencing.”).
III. CONCLUSION
For the reasons stated above, we AFFIRM the district court’s admission of Shannon’s
proffer statement. However, we VACATE Shannon’s sentence and REMAND for resentencing.

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