§530 Criminal Livelihood
8th Circuit approves criminal livelihood increase. (240)(430)(530) The drug guideline provides for a two-level enhancement in § 2D1.1(b)(15)(E) if the defendant played an aggravating role in the offense, such as organizer or leader, and “committed the offense as part of a pattern of criminal conduct engaged in as a livelihood.” Defendant received an aggravating role adjustment, and the Eighth Circuit held that he also properly received the criminal livelihood adjustment. A government investigator testified that defendant had no reported income. Other trial evidence established that he was selling large quantities of methamphetamine every week, always paid his rent on time, purchased a car for $13,300 in cash, paid cash for $14,000 worth of repairs and improvements on his home, and purchased several businesses. U.S. v. Morris, __ F.3d __ (8th Cir. July 2, 2015) No. 14-2406. XE “U.S. v. Morris, __ F.3d __ (8th Cir. July 2, 2015) No. 14-2406.”
2nd Circuit says criminal livelihood enhancement does not require current offense to produce income. (530) Israeli authorities arrested defendant attempting to enter Israel using a stolen U.S. passport. Defendant had established a lifestyle based upon fraud. He acquired numerous fraudulent documents which he used to establish multiple identities; he then used the false identities to conceal his true identity as he fraudulently obtained money at various financial institutions. The § 4B1.3 criminal livelihood enhancement applies when a defendant commits “an offense as part of a pattern of criminal conduct engaged in as a livelihood.” The Second Circuit held that § 4B1.3 does not require the current offense to be a crime committed for pecuniary gain. The current offense must simply be “part of a pattern of criminal conduct engaged in as a livelihood.” The passport offense, while not itself an income-producing crime, was part of a larger and sustained pattern of criminal conduct. There was sufficient evidence that defendant obtained more than $10,300 from criminal activity over a 12-month period. He submitted a personal financial statement to the probation department listing $3,000 as his monthly income, and $2,000 as his monthly expenses. He also had a considerable amount of money stored in foreign banks, and no legitimate income. U.S. v. Burgess, 180 F.3d 37 (2d Cir. 1999).
3rd Circuit holds that criminal livelihood section requires that annual income from illicit activity be 2000 times minimum wage. (530) The district court increased defendant’s offense level based on the criminal livelihood guidelines § 4B1.3 after finding defendant derived a substantial portion of his income from criminal conduct. The 3rd Circuit reversed, holding that the guideline in effect on the date defendant was sentenced did not apply to someone whose income from illicit activity during any 12 month period was below 2000 times the hourly minimum wage then in effect. The court noted that this definition was derived from a November 1, 1989 amendment to the old guideline. The old guideline could not be applied solely on the basis of defendant’s present offenses but the guideline might be applicable if the present and past offense constituted a single pattern of conduct, the past offenses exceeded the 2000 times minimum and that profit amounted to more than half his gross income or the conduct was his primary occupation during that period. However the government conceded the livelihood provision did not apply to the facts of the instant case. U.S. v. Cianscewski, 894 F.2d 74 (3rd Cir. 1990).
4th Circuit permits criminal history departure despite criminal livelihood enhancement. (530) Defendant argued that an upward criminal history departure under § 4A1.3 and a criminal livelihood enhancement under § 4B1.3 was improper double counting. The Fourth Circuit found no double counting. Although both guideline sections examine past criminal conduct, each provision is designed to penalize a different type of criminal behavior. Section 4B1.3 attempts to ensure adequate punishment for those who prey on society for their livelihood. Section 4A1.3 is designed to deal with defendants who possess an “extensive record” that is not adequately reflected by their criminal history category or those whose criminal background shows them to “pose a greater risk of serious recidivism.” Moreover, double counting is not a problem unless the guidelines expressly prohibit it. U.S. v. Blake, 81 F.3d 498 (4th Cir. 1996).
5th Circuit includes amount of uncashed stolen checks as income from criminal livelihood. (530) There are two criteria that define whether a defendant engaged in a pattern of criminal conduct as a livelihood under guideline section 4B1.3: (1) the defendant must have derived income from his pattern of criminal conduct that in any 12-month period exceeded 2000 times the then-existing minimum wage, and (2) the criminal conduct must be the defendant’s primary occupation in that 12-month period. Defendant contended that the income from his criminal conduct was $2394. The 5th Circuit found that defendant neglected to include as income $6587.81 worth of stolen checks which authorities recovered from him. The court rejected defendant’s implicit argument that only actual cash amounts received by him could be counted as income. The court also rejected defendant’s claim that his criminal conduct was not his primary occupation. Although defendant claimed to have been self-employed as a roofer, he was unable to provide any records of his employment because he was always paid in cash. Others testified that defendant told them that he lived off the proceeds of the stolen mail. U.S. v. Quertermous, 946 F.2d 375 (5th Cir. 1991).
5th Circuit upholds consideration of entire value of stolen rental car to determine criminal income. (530) Four months after escaping from a halfway house, defendant was arrested in possession of stolen checks and credit cards, and a stolen rental car valued at $15,000. The district court enhanced his sentence under guideline § 4B1.3 for criminal livelihood. Defendant claimed he did not meet the criminal livelihood requirements because (a) he did not earn at least $6,700 from his pattern of criminal behavior, and (b) the criminal conduct was not his “primary occupation” during the prior 12-month period. The 5th Circuit rejected both of these arguments. The district court could have properly treated the entire market value of the stolen rental car as income for the year in which defendant stole it. Second, a defendant need not engage in criminal activity for 12 months to qualify for this enhancement; it need only be his primary occupation during the 12-month period. U.S. v. Cryer, 925 F.2d 828 (5th Cir. 1991).
6th Circuit says defendant who obtained jobs through fraud did not engage in criminal livelihood. (530) For over ten years, defendant assumed false identities and used phony credentials to obtain jobs as a physician’s assistant. The Sixth Circuit rejected a criminal livelihood enhancement, since although his jobs were obtained through fraud, the criminal activity was not his primary occupation. Defendant’s primary occupation, and his earning, were from the positions that he held, not from the fraud itself. U.S. v. Greene, 71 F.3d 232 (6th Cir. 1995).
6th Circuit permits consideration of any 12-month period to determine criminal livelihood. (530) From November 1, 1991 to June 30, 1992, defendant fraudulently obtained $15,917.41 from various local governments. The district court enhanced his sentence under the criminal livelihood provisions of § 4B1.3. This enhancement applies if the defendant derived income from a pattern of criminal conduct that in any 12-month period exceeded 2,000 times the then existing hourly minimum wage under federal law. Defendant argued that either calendar year 1991 or calendar year 1992 should have been chosen as the applicable 12-month period. The 6th Circuit held that the plain language of application note 2 entitled the trial court to consider any 12-month period in its calculation, including the period from November 1, 1991 to October 30, 1992. The 15,917.41 earned by defendant during this period was considerably in excess of 2,000 times the then existing minimum wage ($8500). U.S. v. Kellams, 26 F.3d 646 (6th Cir. 1994).
6th Circuit affirms criminal livelihood enhancement. (530) Defendant used an unauthorized credit card to fraudulently obtain $17,000 worth of merchandise. The 6th Circuit affirmed the district court’s ruling that defendant engaged in a pattern of criminal conduct as a livelihood under section 4B1.3. A pattern of criminal conduct” is defined to include independent offenses occurring over a substantial period of time. This implies that a pattern may contain gaps or lull periods. Defendant’s conduct began in August, 1989, and continued until his arrest in December, 1989. He then continued it again in March 1990. The seven-month period from August 1989 to March 1990 was long enough to constitute “a substantial period of time.” The court also found that defendant engaged in his fraud as a livelihood: during the seven-month period, he realized over $17,000 worth of merchandise, while his legitimate income was only $350. U.S. v. Reed, 951 F.2d 97 (6th Cir. 1991).
6th Circuit holds that criminal livelihood guideline does not violate equal protection clause. (530) A convicted credit card swindler argued that the criminal livelihood section (4B1.3), violates the equal protection clause because an indigent defendant would receive a more severe sentence than someone who has other sources of income. The 6th Circuit rejected his argument. Relying upon the commissions proposed amendment to § 4B1.3, the court held that the section does not unconstitutionally penalize a defendant based upon his or her wealth. The § is not based upon financial status alone, but upon a pattern of criminal conduct from which a defendant derives a substantial portion of his income, which is indicative that the criminal activity is the defendant’s primary source of income. That the guideline falls more heavily on indigents is but an ‘incidental effect’ of a legitimate scheme designated to “prevent recidivism by imposing heavier penalties on criminals who make their living from crime.” U.S. v. Luster, 889 F.2d 1523 (6th Cir. 1989).
6th Circuit holds that criminal livelihood section does not violate due process. (530) The 6th Circuit held that it is not unconstitutional under the due process clause for the guidelines to consider a defendant’s financial background under the criminal livelihood § (4B1.3). Congress may rationally conclude that a person who depends upon criminality for a living and has no other vocation is more likely to continue his criminal ways than one for whom crime is an avocation. There is nothing “arbitrary or unfair” in this sentencing scheme. U.S. v. Luster, 889 F.2d 1523 (6th Cir. 1989).
6th Circuit finds that credit card swindler was properly sentenced under the criminal livelihood section. (530) The 6th Circuit held that the application of the criminal livelihood section is a factual inquiry. Here, it was not clearly erroneous for the District Court to conclude that the prior criminal offense record of a credit card swindler constituted a pattern of criminal conduct. Under application note 1, a pattern may be a single course of conduct or independent offenses. In this case, the latter existed. Secondly, the District Court’s findings that the defendant “derived a substantial portion of his income” from criminal activity was not clearly erroneous. The defendant had been able to document only that he made $500 during two months of 1988, in contrast to the $8,223,58 worth of goods and services he obtained as a result of credit card fraud. Thus, both prongs of the criminal livelihood section were met and the defendant’s sentence was proper. U.S. v. Luster, 889 F.2d 1523 (6th Cir. 1989).
7th Circuit finds criminal livelihood where defendant regularly stole from mail to support heroin habit. (530) Defendant stole mail to support a $100-$150 a day heroin habit. He challenged a § 4B1.3 criminal livelihood enhancement on the grounds that the government did not prove that he had stolen more than $8500 (2000 times the minimum wage) in the 12 months before his arrest. The Seventh Circuit upheld the enhancement based on evidence that defendant (a) had a heroin habit that cost between $100 and $150 per day, (b) had no legitimate income for the 12 months before his arrest and had held a job for only three months in the prior 11 years, and (c) had an extensive history in the mail theft business. The district court properly relied on this evidence to conclude that defendant stole the required amount from the mails that year to live and feed his drug habit. U.S. v. Taylor, 45 F.3d 1104 (7th Cir. 1995).
7th Circuit reviews criminal livelihood determination under clearly erroneous standard. (530) The 7th Circuit found that whether defendant engaged in illegal gambling as a criminal livelihood is a finding of fact. Therefore, it would accept a district court’s finding on appeal unless it was clearly erroneous. U.S. v. Rosengard, 949 F.2d 905 (7th Cir. 1991).
7th Circuit affirms that defendant engaged in illegal gambling as a criminal livelihood. (530) Defendant admitted to his probation officer that he had been involved in organized gambling periodically throughout his life. During his best year, he earned $40,000, and in some years he lost money. His tax returns for 1984 through 1988 reflected an adjusted gross income in excess of $24,000 for each year. He held a nongambling job prior to 1984, but eventually quit, and because “really didn’t know anything else [he] could do,” he went back into organized gambling in 1985. The 7th Circuit affirmed a determination under guideline section 4B1.3 that defendant engaged in criminal conduct as a livelihood. Given defendant’s income tax returns and job history from the years 1984 to 1988, the district judge could have reasonably found that defendant derived a substantial portion of his income from illegal gambling or that his income from gambling exceeded $6,700 in any 12-month period. In addition, defendant admitted that he hoped to be successful enough to retire. U.S. v. Rosengard, 949 F.2d 905 (7th Cir. 1991).
7th Circuit holds criminal livelihood determination must be based on net income. (530) In this habeas corpus action, defendant claimed ineffective assistance of counsel because counsel failed to present evidence at the sentencing hearing that during defendant’s five-month crime spree, he had legitimate gross income of $400 per month, rather than $150 as the court believed. Defendant had received a two-level enhancement under guideline § 4B1.3 for deriving a substantial portion of his income from a pattern of criminal conduct. Defendant fraudulently used a credit card to obtain $8178 worth of merchandise, which he sold for $1000. The 7th Circuit held that under guideline § 4B1.3, the defendant’s net income, rather than gross income, is the relevant figure for both legitimate and criminal sources of income. The object of § 4B1.3 is to distinguish the professional from the amateur criminal on the basis of the extent to which a defendant derives his livelihood from his criminal as opposed to his legal activities. “And livelihood is a matter of net rather than gross income.” Lee v. U.S., 939 F.2d 503 (7th Cir. 1991).
8th Circuit applies criminal livelihood provision to possessor of numerous fraudulent credit cards. (530) The 8th Circuit affirmed the application of section 4B1.3, the criminal livelihood provision, to increase defendant’s base offense level. It was evident from the vast number of credit cards, cash cards and driver’s licenses in defendant’s possession that he had devised an extensive scheme to use these cards to fraudulently obtain money. Defendant’s previous convictions for forgery, possession of stolen property and theft by check dated back to 1981, thus establishing a long pattern of fraudulent activity. There was sufficient evidence that defendant earned $8,500 (2,000 times the $4.25 hourly minimum wage) from his scheme during the last year. The PSR detailed numerous transactions that totaled losses over $20,000. Even without the $8,000 transaction contested by defendant, $12,000 could be attributed to him. Finally, defendant had no steady source of income, and admitted he had a gambling addiction. U.S. v. Morse, 983 F.2d 851 (8th Cir. 1993).
8th Circuit reaffirms that criminal livelihood guideline applies only if defendant earns over federal minimum wage. (530) Following its opinion in U.S. v. Nolder, 887 F.2d 140 (8th Cir. 1990), the 8th Circuit found that in order for the criminal livelihood § 4B1.3 to apply, the defendant must earn more than the federal minimum wage, $6,700 over the course of a year, from his criminal activity. U.S. v. Manuel, 912 F.2d 204 (8th Cir. 1990).
8th Circuit reverses criminal livelihood finding for lack of “pattern of prior criminal activity.” (530) The bulk of defendant’s criminal history related to prostitution and theft-related offenses, not to forgery, which was the present offense. The 8th circuit pointed out that “[s]ection 4B1.3 was not intended to punish individuals who are merely frequent offenders; rather, it was designed to punish the defendant whose current crime was part of a larger pattern of illegal pecuniary activities.” Thus the court said that “even if the defendant has engaged in a life of crime to earn her livelihood, there must be a link between her present offense and her prior activity for § 4B1.3 enhancement to be warranted. The court remanded the case to allow the district court to reexamine the evidence in light of its opinion. U.S. v. Oliver, 908 F.2d 260 (8th Cir. 1990).
8th Circuit holds that substantial involvement in activity made it criminal livelihood. (530) The district court concluded that defendant engaged in a pattern of criminal conduct from which she made her livelihood. On appeal, the 8th Circuit rejected defendant’s arguments that the phrase “pattern of criminal conduct” was ambiguous, that she was not a professional criminal, and that the section for criminal livelihood should not apply since the criminal activity occurred over a short period of time. The 8th Circuit noted that the criminal activity lasted 8 months and took substantial planning, the defendant provided substantial assistance in the planning and that the defendants made approximately $16,000 per month from the criminal activity. U.S. v. Hearrin, 892 F.2d 756 (8th Cir. 1990).
9th Circuit holds that phrase “substantial portion of his income” must be defined in relative terms. (530) The criminal livelihood section of the guidelines, § 4B1.3, requires an offense level of not less than 13 if the defendant committed an offense “as part of a pattern of criminal conduct from which he derived a substantial portion of his income.” The Ninth Circuit held that the plain meaning of § 4B1.3 indicates that the phrase “a substantial portion of his income” must be defined in relative terms. Here the defendant’s 22 criminal history points established that he was involved in a “pattern of criminal conduct” for profit, with little or no legitimate income from employment. Thus the money he received from transporting illegal aliens was a substantial portion of his income. Judge Nelson agreed that substantial portion should be defined in relative terms but dissented on the ground that the income must at least reach the level of the minimum wage in order to qualify as “substantial.” U.S. v. Munster-Ramirez, 888 F.2d 1267 (9th Cir. 1989).
9th Circuit holds “criminal livelihood” section does not apply where income is below minimum wage. (530) The 8th Circuit held that the phrase “substantial portion of his income” was adopted from the Dangerous Special Offender statutes, 18 U.S.C. § 3575(e)(2) and 21 U.S.C. § 849(e)(2). These statutes define “substantial source of income” as an amount which exceeds the yearly minimum wage and which exceeds half of the defendant’s declared adjusted gross income. Accordingly, the same definition applies to the provision in the Criminal Livelihood guideline, § 4B1.3. Here the defendant earned only $1,525 in the past year, including $450 from his criminal activities. The court held, and the government agreed, that the Criminal Livelihood guideline should not have been applied in this case. The sentence was reversed. U.S. v. Nolder, 887 F.2d 140 (9th Cir. 1989.
10th Circuit uses uncharged conduct to determine that defendant engaged in criminal conduct as a livelihood. (530) Defendant entered into plea agreement under which the government agreed not to bring any further charges based on acts committed prior to December 31, 1988. Defendant argued it constituted “further charges” for the government to advise the court at his sentencing hearing that defendant had committed the same crime almost 100 times during a seven-to-eight month period prior to prosecution. The 10th Circuit found that this did not violate the plea agreement, and that it was proper for the district court to use this information to determine that defendant was engaged in a pattern of criminal conduct from which he made his livelihood. The 10th Circuit also found that such seven-to-eight month period constituted “a substantial period of time.” U.S. v. Salazar, 909 F.2d 1442 (10th Cir. 1990).
10th Circuit holds that criminal income of $6,700 is required for criminal livelihood guideline. (530) Effective November 1, 1989, the application notes to U.S.S.G. § 4B1.3 define the term “engaged in as a livelihood” to mean that the defendant’s criminal income in any twelve-month period exceeded 2,000 times the hourly minimum wage, i.e. $6,700. The 10th Circuit held that this amendment clarified, rather than altered the existing guideline. Accordingly, for this and three additional reasons, the 10th Circuit rejected rulings by the 6th and 9th Circuits, and agreed with the 3rd and 8th Circuits, that the $6,700 minimum is required even under the 1988 version of the criminal livelihood guideline. since the defendant here earned only $4,894.72 from his criminal activity, it was improper to enhance his sentence under the criminal livelihood guideline. U.S. v. Irvin, 906 F.2d 1424 (10th Cir. 1990).
10th Circuit upholds “criminal livelihood” finding where defendant engaged in credit card fraud for 5 to 7 months. (530) The 10th Circuit held that “defendant’s well-organized criminal venture continuing for a period of approximately five to seven months .ÿ.ÿ. fits within the definition of a pattern of criminal conduct” for purposes of the criminal livelihood section, 4B1.3. The court pointed out that the application note to § 4B1.3 “explains that a pattern of criminal conduct may involve only a single course of conduct.” The sentence was vacated on other grounds, however. U.S. v. Irvin, 906 F.2d 1424 (10th Cir. 1990).
Pennsylvania District Court holds criminal livelihood provision does not deprive an indigent defendant of equal protection. (530) An indigent defendant challenged the criminal livelihood provision of the guidelines (§ 4B1.3) claiming that its reliance on a defendant’s lack of wealth rendered him subject to a higher sentence than richer defendants would have received. Even though poverty is not a suspect classification, courts have a duty to scrutinize criminal statutes which penalize indigent defendants. Applying a “fundamental unfairness” test, the court held that this provision did not deprive the defendant of equal protection. Courts have always been free to consider a defendant’s financial resources in setting a sentence. When that is viewed against a defendant’s pattern of criminality and likelihood of committing future crimes, the provision survives. Courts have no constitutional duty to strike down all statutes which fall more heavily on the indigent, especially if the statute serves Congress’ goal of more severe sentences for recidivist criminals. U.S. v. Kerr, 686 F.Supp. 1174 (W.D. Pa. 1988).
New York District Court holds guideline enhancement for “professional criminal” not applicable even when defendant admitted that he was one. (530) Section 4B1.3 provides for enhancement of a sentence when a defendant commits an offense as part of a pattern of criminal conduct from which he derives a substantial portion of his income. The court held that the section was not applicable here. Although the defendant’s small income from drug selling was a large (unspecified) portion of his tiny overall income, the government never introduced evidence that the defendant derived substantial income from his activities. The defendant had $2.00 in his possession when arrested and admitted that he made most of his money selling drugs. But he also stated that he begged as well. Because there was no evidence of “substantial income” in absolute terms, the enhancement was not warranted. U.S. v. Rivera, 694 F.Supp. 1105 (S.D.N.Y. 1988).