United States of America v. Scott Carlberg

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 23-2899
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
S COTT C ARLBERG,
Defendant-Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:21-cr-00232-1 — Edmond Chang, Judge.
____________________
A RGUED M AY 16, 2024 — DECIDED J ULY 23, 2024
____________________
Before EASTERBROOK, R IPPLE, and JACKSON -A KIWUMI , Cir-
cuit Judges.
JACKSON -A KIWUMI , Circuit Judge. A jury convicted Scott
Carlberg of four counts of wire fraud for fraudulently obtain-
ing disability benefits from the United States Railroad Retire-
ment Board. Carlberg asked the district judge to set aside the
jury’s verdict because he believed the evidence did not show
he intentionally participated in a scheme to defraud or made

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2 No. 23-2899
representations that were material to the agency’s decision to
grant him disability benefits. The judge denied Carlberg’s
motion and ordered him to pay $279,655.22 in restitution—
the full value of benefits he received during the six-year pe-
riod alleged in the indictment. Carlberg maintains both deci-
sions were wrong. We disagree and affirm.
I
A
Scott Carlberg began working at Soo Line Railroad in 1990.
His work was cut short in October 2012, when he suffered a
traumatic brain injury from exposure to electricity at the rail-
road. The injury prevented him from continuing to work at
the railroad, so Carlberg filed an application for occupational
disability with the United States Railroad Retirement Board
(“RRB”) in May 2013. Based in Chicago, Illinois, the RRB is a
federal agency that administers retirement, unemployment,
and disability benefits for current and former railroad em-
ployees.
To be eligible for an occupational disability annuity from
the RRB, an individual must have a “permanent” disability
that prevents them from working in their regular railroad oc-
cupation. But the RRB does not require prospective annui-
tants to cease all work. To the contrary, the agency allows an-
nuitants to work other, non-railroad jobs and still receive ben-
efits, so long as that job does not require a high level of phys-
ical or mental exertion and the annuitant falls under certain
earnings thresholds each month.
Once the RRB awards occupational disability benefits, reg-
ulations mandate that annuitants periodically disclose their
non-railroad related work and earnings to the agency. This

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No. 23-2899 3
mandate is made clear to applicants from the moment they
apply for benefits. The application includes a certification re-
quiring applicants to “immediately” notify the RRB “if I work
for any employer, railroad or nonrailroad, or perform any
self-employment work.” The certification also provides: “I
know that if I am receiving a disability annuity and fail to re-
port work and earnings promptly, I am committing a crime
punishable by Federal law that may result in criminal prose-
cution and/or penalty deductions in my annuity payments.”
Carlberg signed this certification when he applied for a disa-
bility annuity in May 2013.
Carlberg signed the certification again in February 2015,
when he reapplied to the RRB for occupational disability
“with a freeze.” Occupational disability with a freeze differs
from the benefits Carlberg was already receiving because a
“freeze” entitles an annuitant to early Medicare, tax benefits,
and higher monthly payments. But to receive those additional
benefits, the applicant must clear a higher bar: an applicant
“must have a permanent medical condition that prevents
[them] from performing any substantive gainful work”—not
just work on the railroad. Under RRB regulations, substantive
gainful work (sometimes called “substantial gainful activity”)
includes any work “involving the performance of significant
physical or mental duties.”
As with the regular occupational disability application,
the application for occupational disability with a freeze re-
quires annuitants to make certain attestations. Namely, they
must attest that “if I make a false or fraudulent statement in
order to receive benefits from the RRB or if I fail to disclose
earnings or report employment of any kind to the RRB, I am
committing a crime which is punishable under Federal law.”

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4 No. 23-2899
They must also certify that “the information I gave to the RRB
on this application is true to the best of my knowledge. I agree
to immediately notify the RRB: If I work for any employer,
railroad or nonrailroad, or perform any self-employment
work.” As before, Carlberg signed this certification. The RRB
approved Carlberg’s application for occupational disability
benefits with a freeze in June 2015.
B
That last application for benefits, in February 2015, gave
rise to Carlberg’s prosecution. In April 2021, the government
charged Carlberg with four counts of wire fraud for lying on
his application for disability with a freeze and in subsequent
submissions to the RRB. The government alleged that while
Carlberg was completing his application for disability bene-
fits with a freeze, he was also negotiating to purchase the Par-
rot Bay Tanning Salon in Menomonie, Wisconsin. But the
problem was not that he purchased the salon; RRB regula-
tions did not bar that. The problem, according to the govern-
ment, was that Carlberg “operated and managed the Salon
and its employees” all while misleading the RRB about the
substance of his work there.
And when the RRB asked him to provide additional infor-
mation about whether he was self-employed and the nature
of his work, he handwrote on his application that he had “no
work” and “no business.” In a subsequent report to the RRB
in July 2015 and a call in April 2016, Carlberg represented that
he was doing “small job[s]” like “blow[ing] off [the] drive-
way, water[ing] flower[s], and clean[ing] tanning beds” for
10-20 hours per week. The government alleges that these
statements were false and caused the United States Treasury
to wire Carlberg disability benefits that he would not have

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No. 23-2899 5
been entitled to had he submitted accurate information to the
RRB.
Carlberg contested the charges at trial. During five days in
January 2023, the government presented evidence showing
that, after purchasing the salon, Carlberg worked there daily.
His work included installing the security camera wiring, deal-
ing with customers, and handling physical tasks throughout
the day. He also used his personal credit cards to buy supplies
for the salon. He did not report any of this work to the RRB.
The government called several witnesses to make these
points. It called analysts from the RRB, who explained the cer-
tifications annuitants make when applying for occupational
disability benefits and how the RRB evaluates applications. It
called a forensic accountant from the FBI to explain Carlberg’s
financial statements and how he used revenues from the salon
to pay down his personal credit cards. It called Carlberg’s
family members, salon employees, and owners of neighbor-
ing businesses to talk about their observations of Carlberg’s
work at the salon and how he consistently switched out vari-
ous family members as nominal “owners” of the salon to hide
his ownership. The government also presented audio and
video from the undercover officers who worked the investi-
gation.
Carlberg called witnesses, too. His brother, Kevin, testi-
fied about their upbringing and Carlberg’s relatively normal
life before being electrocuted at the railroad. His daughter,
Kaitlyn, testified about the family’s conversations leading up
to the purchase of the salon, and how her mother was the one
“in charge” of the business. She explained that the tasks her
father completed at the salon were “pretty easy to do,” like
checking in clients, cleaning the beds, running errands, and

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6 No. 23-2899
ordering supplies. The bulk of Carlberg’s defense was sup-
ported by the testimony of Dr. David Lund, a clinical psy-
chologist who treated Carlberg for a cognitive disorder re-
lated to his electrocution. Dr. Lund testified that Carlberg’s
condition left him unable to be gainfully employed, and, in
his view, Carlberg could work a retail job but not manage one.
After considering this evidence, the jury convicted Carl-
berg on all counts. Shortly thereafter, Carlberg moved for a
judgment of acquittal, arguing that the government failed to
prove that he “knowingly devised or participated in a scheme
to defraud and that the scheme to defraud involved a materi-
ally false or fraudulent representation.” He argued that
“[w]hile [he] did receive payment from the tanning salon,”
the total amount of those payments “did not even match the
purchase price of the salon and barely surpassed legitimate
tanning salon expense reimbursements.” Finally, he argued
that the government failed to meet its burden because it “did
not offer any evidence that the differences between the work
he actually did at the tanning salon and what he disclosed to
the RRB were material to any decision made by the RRB.”
The district court denied Carlberg’s motion. The court
found “there was plenty of evidence to support the conclu-
sion that Carlberg bought the business and then tried to hide
his ownership and involvement.” Similarly, the court found
the evidence established that Carlberg’s misrepresentations
were material because the RRB witnesses testified that his ap-
proval for benefits was “based on Carlberg’s claimed inability
to work.” The court sentenced Carlberg to 30 months’ impris-
onment and ordered restitution to the RRB in the amount of
$279,655.22—the total amount of benefits Carlberg received
after filing his application for disability benefits with a freeze.

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No. 23-2899 7
On appeal, Carlberg challenges both the denial of his motion
for a judgment of acquittal and the restitution award.
II
A
Ordinarily, we review a district court’s denial of a motion
for a judgment of acquittal de novo. United States v. Polin, 194
F.3d 863, 865–66 (7th Cir. 1999). Under that standard, we leave
the jury’s verdict undisturbed unless we find, after viewing
the evidence in the light most favorable to the government,
that “the record contains no evidence, regardless of how it is
weighed, from which the jury could find guilt beyond a rea-
sonable doubt.” See United States v. Farmer, 38 F.4th 591, 602
(7th Cir. 2022), cert. denied, 143 S. Ct. 841 (2023).
But this case is a little different because the argument Carl-
berg advances on appeal was not presented to or considered
by the district court. In the district court, Carlberg simply ar-
gued that “the evidence fail[ed] to establish that [he] was en-
gaged in a scheme to defraud” and his misstatements were
not material. But Carlberg, having failed to convince the dis-
trict court that his misstatements to the RRB were immaterial
and that he did not engage in a scheme to defraud, now tells
us that the evidence at trial was insufficient to sustain his con-
viction because the government failed to show that he “ob-
tained property by dint of his bad conduct.” To do so, he ar-
gues the government would have had to prove that he was
barred from “rightfully receiving disability benefits.” And to
prove that, he asserts, the government had to show he earned
more than $1,090 in a month—the maximum sum the RRB
permits annuitants to earn before finding that they engaged
in substantial gainful activity. But, Carlberg continues, he

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8 No. 23-2899
never even turned a profit at the salon, so the government did
not prove that he earned that amount. Therefore, he con-
cludes, the government could not meet its burden to prove
that he fraudulently obtained RRB property in the form of dis-
ability benefits.
We have previously explained that “when a defendant
challenges the sufficiency of the evidence by motion for judg-
ment of acquittal and makes specific arguments in support of
that motion, any arguments omitted are thereby forfeited,”
and our review is for plain error. United States v. Hosseini, 679
F.3d 544, 550 (7th Cir. 2012) (citing United States v. Groves, 470
F.3d 311, 324 (7th Cir. 2006)). Thus, the new argument Carl-
berg presents to us is arguably forfeited, making plain error
the standard of review. It turns out, however, that, in this case,
the standard of review does not change the outcome: Carlberg
loses whether we review the district court’s decision de novo
or for plain error because there was no error to begin with.
The fatal flaw in Carlberg’s argument is that he assumes
there was only one way the jury could find that he engaged
in substantial gainful activity—he assumes that, to convict,
the jury must have found that his earned income exceeded the
maximum amount permitted by RRB regulations. But the ev-
idence at trial undermines that theory. The evidence at trial
established that, under RRB regulations, an annuitant could
be found to have engaged in substantial gainful activity—and
therefore be ineligible for benefits—if he undertook work that
“involve[d] performing significant physical or mental du-
ties,” regardless of his monthly income from that work. And
the evidence at trial showed that Carlberg was engaged in just
that type of work.

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No. 23-2899 9
For example, at the same time Carlberg was applying for
RRB benefits in early 2015, he was also negotiating with the
owner of the Parrot Bay Tanning Salon to purchase the prop-
erty. And witnesses testified that after he purchased it, they
would often find him working there, including negotiating
with various companies to procure new security systems
(which Carlberg installed himself), tanning beds, and other
tanning supplies.
The evidence showed that Carlberg’s work was not lim-
ited to handling the salon’s business on a high level. He was
also engaged in hands-on, day-to-day work at the salon. Kris-
tin Schenck owned an eatery down the street from Parrot Bay.
She testified that she saw Carlberg at the salon almost daily
from 2015 to 2020. When she saw him, he was working the
front desk and engaged in physical labor like painting the
building, shoveling the sidewalk, pressure washing the roof,
blowing debris off the parking lot, and re-tarring the parking
lot. Tammy Hollister, a former salon employee, testified that
it was Carlberg who trained her when she started at the busi-
ness, and who routinely ordered supplies and did mainte-
nance for the building. Former customers testified that when
they arrived at the salon, they observed Carlberg “on the
roof,” planting flowers, shoveling the sidewalks, and “in the
plow truck plowing.” And when the customers were ready to
depart after receiving their tans, it was Carlberg who checked
them out at the register.
Presented with this evidence, reasonable jurors could have
easily concluded that Carlberg was engaged in the kind of
“significant physical or mental duties” that would have pre-
cluded him from receiving benefits from the RRB had he re-
ported the full extent of his work. Hence, we have no trouble

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10 No. 23-2899
concluding that the evidence presented at trial was more than
sufficient to support the jury’s verdict.
B
Carlberg next argues that the district court erred in calcu-
lating the $279,655.22 restitution award because the govern-
ment failed to “prove beyond a reasonable doubt that Carl-
berg [] earned over $1,090 in a month,” the maximum amount
annuitants could earn at non-railroad jobs and still qualify for
occupational disability benefits. He argues that because his
income did not exceed that amount, he was entitled to the
$231,929 in occupational benefits payments he received dur-
ing the period alleged in the indictment. By his account, the
proper restitution amount should have been $47,726.22—the
value of the early Medicare benefits he received.
We review a district court’s “calculation of restitution for
abuse of discretion, viewing the evidence in the light most fa-
vorable to the Government.” United States v. Griffin, 76 F.4th
724, 749 (7th Cir. 2023). We will find an abuse of discretion if
there is no evidence in the record on which the district court
could have rationally based its decision. Brown v. J.I. Case Co.,
813 F.2d 848, 855 (7th Cir.), cert. denied, 484 U.S. 912 (1987).
Carlberg’s restitution argument is derivative of his suffi-
ciency-of-the-evidence argument and fails for the same rea-
son: to prevail on the wire fraud charges, the government was
not required to prove that he earned a certain amount of
money—only that he materially misrepresented facts or omit-
ted material facts about his work that met the RRB’s definition
of substantial gainful activity. Once the jury found Carlberg
guilty on all counts, it became the government’s burden to es-
tablish the actual or intended loss to the United States

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No. 23-2899 11
Treasury by a preponderance of the evidence. United States v.
Dickey, 52 F.4th 680, 687 (7th Cir. 2022).
The government met that burden by showing that its ac-
tual loss was the full extent of Carlberg’s ill-gotten occupa-
tional disability benefits during the period alleged in the in-
dictment. At sentencing, the government called Brittani Jef-
ferson, an operations analyst and disability trainer in the
RRB’s Disability Benefits Division. Jefferson testified that an-
alysts in her division examined the Inspector General’s Inves-
tigation Report plus exhibits and transcripts of witness testi-
mony from Carlberg’s trial to determine whether a hypothet-
ical individual like the one described in those documents
would qualify for occupational disability benefits or a disabil-
ity freeze under the RRB’s regulations. She explained that
such a person would not be eligible for benefits from the RRB
at all because the RRB would consider that person to be en-
gaged in substantial gainful activity.
The effect of that finding, Jefferson testified, was that no
occupational disability benefits, much less with a freeze,
would have been payable to Carlberg between 2015 and 2021
based on the scope and scale of his work during that period.
Carlberg, for his part, offered no testimony to contradict that
given by Jefferson. So, relying on this largely unchallenged
testimony, the district court found that “[t]he government
ha[d] satisfied its burden by a preponderance of the evidence
that the loss amount would be the full amount of the bene-
fits,” so it awarded $279,655.22. Because that finding was con-
sistent with the evidence introduced at sentencing, we cannot
say the district court abused its discretion.
AFFIRMED.

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