United States of America v. Timothy Herman

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued October 1, 2024
Decided October 15, 2024
Before
MICHAEL B. BRENNAN, Circuit Judge
MICHAEL Y. SCUDDER, Circuit Judge
NANCY L. MALDONADO, Circuit Judge
No. 24-1453
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
TIMOTHY HERMAN,
Defendant-Appellant.
Appeal from the United States District
Court for the Central District of Illinois.
No. 18-CR-10032-001
Michael M. Mihm,
Judge.
O R D E R
Timothy Herman, who was convicted of fraud, appeals the denial of his proposal
to solicit funds for a business start-up during his supervised release. The district court
declined to approve Herman’s proposal based on a condition of his supervised release
that bars him from handling other people’s money without court approval. The district
court was rightly concerned that Herman’s proposed activity, which mirrored his
offense activity, would encourage recidivism. On appeal, Herman argues that his
conditions of release permit him to solicit funds without court approval and that, even
if his conditions of release forbid it, the district court abused its discretion when it
NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with F ED. R. APP . P. 32.1

-- 1 of 4 --

No. 24-1453 Page 2
denied Herman permission to do so. Because the court did not abuse its discretion in
denying Herman’s request, we affirm.
In 2012 and 2013, Timothy Herman owned several businesses in financial
distress and began to defraud people out of their money to make ends meet. Herman
partnered with a company that he misled into believing his businesses were successful.
The joint business attracted a client, and Herman stole almost $300,000 from the client’s
payments to the business. He also defrauded a woman into loaning him roughly
$600,000 on the promise that he could provide her with an 8% return. He instead used it
for personal expenses.
In 2018, Herman was found guilty of mail fraud, 18 U.S.C. § 1341, wire fraud,
18 U.S.C § 1343, interstate transportation of stolen property, 18 U.S.C. § 2314, and
making a false statement, 18 U.S.C. § 10001. The district court imposed 78 months’
imprisonment, five years of supervised release, and over $500,000 in restitution.
Herman sought collateral relief under 28 U.S.C. § 2255 but was unsuccessful.
About six months before starting his supervised release, Herman moved to
change the conditions of release. He explained that he wanted to start a
waste-management company and hoped both to solicit start-up capital from felons and
to employ them. To this end, he asked to modify his conditions of release, which he said
forbade him from associating with felons. Though his conditions of release never
included such a prohibition, the government still opposed the motion. The government
pointed out that he described a plan to solicit and control investments. And that plan
contravened a condition the court had imposed forbidding him from “obtain[ing]
employment at any place where you will be involved in the management or handling of
cash, credit, or any other financial instruments, without prior approval of the Court….”
The court held a hearing on the motion and declined to approve the plan.
Herman argued that the conditions of release did not forbid his proposal, which
contemplated only that he would solicit funds. Herman explained that before he accepted
any money, he would again ask the court for approval, just as his condition of release
required. In response, the judge noted the similarity between the conduct Herman was
asking him to approve and Herman’s offense, and worried that Herman might once
again defraud a new group of investors. The judge also remarked that “the Court
should [not] be in that business,” referring to its continued oversight of how Herman
managed other people’s funds. The judge concluded that Herman would need to wait
until after his supervision ended for “this type of business activity.”

-- 2 of 4 --

No. 24-1453 Page 3
On appeal, Herman first briefly contends that the district court misinterpreted
the release condition that bars him from “the management or handling” of money by
ruling that it covered Herman’s proposal. We review contentions of legal
misinterpretation de novo. United States v. Shaffers, 22 F.4th 655, 664 (7th Cir. 2022).
According to Herman, this condition does not bar him from soliciting funds because
solicitation is separate from managing and handling funds. But his distinction is
unpersuasive: In the context of his proposed self-employed business, he hopes to solicit
investments in order to handle the funds to capitalize his start up. Herman insists that
the time lag between soliciting funds and managing them means that the condition
need not apply to the former. But because Herman proposed soliciting funds for the
sole purpose of managing them for his proposed business venture, the district court
properly concluded that the prohibition on “handling” other people’s money included a
ban on soliciting funds with the aim of managing them.
Legal interpretation to the side, Herman’s next argument is that the district court
wrongly denied his motion under the standards of 18 U.S.C. § 3583(e)(2). That provision
requires that district courts consider certain § 3553(a) sentencing factors when deciding
whether to modify a condition of supervised release. But the court never modified
Herman’s conditions. True, the district court scheduled a hearing to discuss Herman’s
motion to modify a condition of his supervised release that he believed blocked him
from associating with felons. But at the hearing the parties agreed that Herman was not
subject to a condition that barred him from associating with felons. The argument then
moved to whether the court should apply to Herman’s proposed solicitation scheme the
existing condition of supervised release that required Herman to seek court approval
before handling other people’s money. Because the court did not change any existing
condition, it had no need to consider the § 3553(a) factors when it applied a current
condition to his proposal and rejected it.
When we view the district court’s decision as applying a current condition of
release to Herman’s proposal, we see no problem. A decision declining to approve an
activity for which a defendant must receive court approval while on supervised release
is fact-intensive and involves managerial issues best suited to the sentencing judge. We
review such decisions for abuse of discretion. See United States v. Coney, 76 F.4th 602,
607–08 (7th Cir. 2023) (abuse of discretion is the standard for reviewing a ruling on a
motion for a new trial because the inquiry is fact-intensive, managerial, and best
resolved by the district judge). And none occurred here. The district court reasonably
justified its decision by highlighting the similarities between the proposed scheme and
Herman’s offense conduct and its ongoing concerns about the risk of recidivism.

-- 3 of 4 --

No. 24-1453 Page 4
But even if we view this appeal as a challenge to the denial of a motion to modify
the conditions of supervised release, Herman cannot prevail. We review a ruling
denying a motion to modify a condition of supervised release for abuse of discretion.
United States v. Evans, 727 F.3d 730, 732 (7th Cir. 2013). Section 3583(e) requires district
courts to consider certain § 3553(a) sentencing factors when deciding whether to modify
conditions of supervised release. We will approve a ruling so long as it (1) reasonably
relates to the offense and the defendant; (2) reasonably relates to deterrence, protecting
the public, and providing needed correctional training; (3) involves no greater
deprivation of liberty necessary to achieve these goals; and (4) is consistent with any
pertinent statements by the Sentencing Commission. United States v. Sines, 303 F.3d 793,
800 (7th Cir. 2002).
The district court’s ruling adequately covered these grounds. To begin, Herman
concedes that the court considered the first two factors. On the last two factors, Herman
insists that the court failed to consider: (1) whether the condition involved a greater
than necessary deprivation of Herman’s liberty interest in running a business; or (2)
statements by the Sentencing Commission. But, regarding the first factor, it is enough
for the district court to determine that the requested modification would be detrimental
to rehabilitation. See id. at 801. The district court did so: It reasonably pointed out that
Herman’s proposal required too much court involvement to prevent him from
recidivating. And as Herman and the government agree, the Sentencing Commission
has made no policy statement pertaining to this kind of condition of release. Thus, the
court had nothing to consider regarding this factor.
AFFIRMED

-- 4 of 4 --