§220 Theft, Embezzlement, Burglary
6th Circuit allows consecutive sentences for identity theft without expressly considering factors. (220)(650) The identity theft statute, 18 U.S.C. § 1028A, requires a mandatory two-year sentence for each violation, but the sentences may run concurrently or consecutively. The commentary to § 5G1.2 provides factors that the district court should consider in determining whether to impose concurrent or consecutive sentences. Here, defendant was convicted of two counts, and the district court imposed consecutive sentences without mentioning the factors in § 5G1.2. The Sixth Circuit found no error, holding that the court need not expressly refer to the guideline factors as long as the record suggests that those factors were considered. U.S. v. Potts, __ F.3d __ (6th Cir. Jan. 13, 2020) No. 18-4092.
7th Circuit reverses risk of death or serious bodily injury increase for selling synthetic marijuana. (220) (348) Defendants were the owner and a cashier at a store that sold synthetic marijuana labeled as incense and potpourri. One teen who smoked substances purchased at the store crashed his car and died. Defendants pled guilty to conspiring to distribute misbranded drugs. The Seventh Circuit reversed an increase for engaging in conduct entailing “the conscious or reckless risk of death or serious bodily injury,” under § 2B1.1(b)(15)(A). In applying the enhancement to the first defendant, the district court relied on defendant’s personal experience in using and administering medications. However, this did not show that defendant knew synthetic marijuana posed a risk of death or serious bodily injury. As for the second defendant, the fact that he sometimes sold the products to teenagers without knowing what effect they might have, did not show that he was aware of, or had reason to suspect, that the products posed a risk of death or serious injury. U.S. v. Mohsin, __ F.3d __ (7th Cir. Sept. 25, 2018) No. 18-1275.
7th Circuit holds receiver violated specific judicial orders. (220) As receiver for Tip Top Supermarkets, defendant stole more than $330,000 from the receivership, and then evaded detection by diverting funds from other sources to pay the receiver’s bills. The Seventh Circuit upheld a § 2B1.1(b)(9)(C) enhancement for an offense that involved “a violation of any prior, specific judicial or administrative order.” The state court had ordered defendant to “report his actions to the [c]ourt” and “remain subject to the further order and directions of the [c]ourt.” Defendant nonetheless raided the receivership and engaged in an elaborate scheme to cover up the embezzlement, ignoring several court directives along the way. The panel rejected defendant’s claim that the state-court order was not specific enough. The order instructed defendant to “marshal” Tip Top’s assets and then “report his actions to the [c]ourt.” If nothing else, that required defendant to notify the court when he withdrew funds from the receivership; he obviously did not comply. U.S. v. Stochel, __ F.3d __ (7th Cir. Aug. 27, 2018) No. 17-3576.
11th Circuit says VA official who improperly closed accounts recklessly risked death or serious bodily injury. (220) Defendant, the Chief of the Fee Division at a VA hospital, was involved in the improper closing of outside consults for healthcare services that the VA could not provide its patients through its own facilities. The district court applied a § 2B1.1(b)(15)(A) enhancement for a theft offense involving “the conscious or reckless risk of death or serious bodily injury.” Defendant objected, arguing that he was not a medical professional and was acting under protest, as evidenced by his email chain with his superior about his hesitation to work on the project. Later, in a Rule 35 motion, he argued that § 2B1.1(b)(15)(A) should not apply because its ambiguous language meant that in all cases, medical professionals would require follow-up clinical review, so there was no risk to patient health. The Eleventh Circuit upheld the increase. Defendant’s initial refusal to participate, coupled with his eventual acquiescence, demonstrated both that he was aware of the risks posed by closing consults with inaccurate statements and that he consciously disregarded that risk. U.S. v. Henderson, 893 F.3d 1338 (11th Cir. 2018).
1st Circuit reverses finding that defendant was more culpable than co-defendants in robbery. (220) Defendant and two others pled guilty to robbing two Kmarts. Their plea agreements incorporated identical stipulated facts. However, at defendant’s sentencing, the court applied a two-level role increase under §2B3.1(b)(3)(A) because a victim sustained a bodily injury. When counsel objected that the court had not imposed the enhancement on the other two defendants, the court admonished him, stating that co-defendant Zambrana-Sierra was less culpable because, unlike defendant, he “did not drive anybody to the Kmart, nor picked up any victims in the Kmart” and that “[i]t’s completely different. It’s not the same.” The judge asserted on the record no fewer than eight times that defendant’s role in the crime was factually distinct from Zambrana-Sierra’s. The First Circuit reversed, finding no basis for the court’s conclusion. All three plea agreements and at least two of the PSRs reported the exact same facts about the robbery and depicted identical roles for each defendant. The district court cited no evidence in the record showing, for example, that defendant was the driver of the vehicle involved in the offense. U.S. v. Cotto-Negron, 845 F.3d 434 (1st Cir. 2017).
4th Circuit rules court improperly sentenced for bank robbery rather than bank burglary. (220)(224) Defendant pled guilty to attempting to enter a bank with the intent to commit a felony affecting it, in violation of 18 U.S.C. §2113(a). At sentencing, the district court applied the bank robbery guideline, §2B3.1, rather than the bank burglary guideline, §2B2.1. The Fourth Circuit reversed, concluding that the grand jury indictment described bank burglary and not bank robbery. Section 2113(a) can be violated in two distinct ways: (1) bank robbery, which involves taking or attempting to take from a bank by force and violence, intimidation, or extortion; and (2) bank burglary, which involves entry or attempted entry into a bank with the intent to commit a crime therein. Defendant was indicted for attempting to enter a bank with an intent to commit a felony and larceny therein, i.e. Pg. a bank burglary. Moreover, his indictment failed to reference “the element of ‘force and violence, or [extortion or] intimidation’ which is required for conviction of bank robbery” under §2113(a). U.S. v. Williams, 841 F.3d 656 (4th Cir. 2016).
5th Circuit upholds increase for using dead woman’s name and SSN to open bank account. (220) For almost 25 years, defendant received social security benefits for his mother’s former caregiver, who died in 1990. In 2008, after the government began requiring direct deposit of payments, defendant forged the caregiver’s name on a signature card and used her social-security number to open a joint checking account in his and the caregiver’s names. He repeated this process in 2011 when he had to change banks. Defendant pled guilty to theft of government property. The Fifth Circuit upheld a two-level enhancement under §2B1.1(b)(11)(C)(i) for using an unauthorized means of identification to obtain another means of identification. It was clear from the record and common sense that the caregiver did not authorize the creation of the fraudulent accounts in 2008 and 2011 without. Although the non-exhaustive list of “means of identification” in 18 U.S.C. §1028(d)(7) does not include signature cards or bank account, it does include names, social-security numbers, and routing codes. Nor is the increase not limited to credit fraud situations. U.S. v. Suchowski, __ F.3d __ (5th Cir. Sept. 26, 2016) No. 15-20409.
5th Circuit reverses cross-reference to obstruction guideline where facts did not show another offense. (220)(320) Defendant pled guilty to aiding and abetting the making of false statements to the U.S. Marshal’s Service, in violation of 18 U.S.C. §§1001(a)(2). The district court applied the cross-reference provision in §2B1.1(c)(3) to §2J1.2. Defendant argued that the district court erred in applying the cross-reference because the government did not specify, and the district court did not find, that the facts alleged in the indictment supported any offense other than a violation of §1001(a)(2). The Fifth Circuit agreed. A district court may apply the cross-reference in §2B1.1(c)(3) only if the facts alleged in the indictment establish the elements of another offense for which the other guideline is applicable. The facts alleged in the indictment did not support a conviction under 18 U.S.C. §1505, which required proof that the defendant acted “corruptly.” The generalized mens rea required to violate §1001 was not sufficient to prove the more specific mens rea required to violate §1505. U.S. v. Griego, __ F.3d __ (5th Cir. Sept. 15, 2016) No. 15-51197.
7th Circuit agrees that 10 uncharged stolen cars were relevant conduct for chop shop operator. (220) Defendant operated a “chop shop”, and was convicted of trafficking in vehicles with altered vehicle identification numbers (VIN), and possessing counterfeit state securities. Four vehicles formed the basis of his conviction. The Seventh Circuit held that the district court did not commit clear error in finding that defendant’s theft of 10 other vehicles constituted relevant conduct. The evidence at trial and sentencing showed a “common scheme or plan,” under §1B1.3(a)(2), because there were multiple commonalities that substantially connected the charged and uncharged vehicles. The common purpose for stealing and altering the identities of all fourteen vehicles was to sell them. Furthermore, there was a common modus operandi for both the charged and uncharged vehicles. U.S. v. Robey, __ F.3d __ (7th Cir. Aug. 3, 2016) No. 15-2172.
8th Circuit holds defendant who stole vehicles liable for loss from co-conspirators’ altering VINs. (219) (220) Defendant was involved in a conspiracy to steal commercial trucks, trailers, and cargo, and alter vehicle identification information. Defendant stole and sold the vehicles to the Dickersons, co-conspirators who owned several trucking companies. Defendant also sold stolen cargo to other customers and stored stolen property at a storage unit paid for by the Dickersons. Defendant contended he was only liable for the losses from the conspiracy to possess stolen vehicles and goods, and not the separate conspiracy between the Dickersons to alter VIN numbers. The Eighth Circuit disagreed. A witness testified that defendant watched him clean VIN numbers off trucks and trailers, which aided the conspirators in possessing stolen vehicles without police detection. Even if the Dickersons were involved in a separate conspiracy to alter VIN numbers, defendant knew of the activity and knew it furthered their conspiracy to steal trucks and trailers. U.S. v. Borders, __ F.3d __ (8th Cir. July 12, 2016) No. 14-3828.
8th Circuit upholds “in the business” increases for defendants in stolen vehicle conspiracy. (220) Defendants were involved in a conspiracy to steal commercial trucks, trailers, and cargo, and alter vehicle identification information. They challenged a §2B1.1(b)(4) enhancement for being “in the business of receiving and selling stolen property.” Defendant Jon, who owned several trucking companies, gave co-defendant Borders “shopping lists” of trucks and trailers to steal. He also stole trucks, license plates, and fuel-tax stickers. Jon directed his son to cut up any unusable part of the trucks and trailers to sell for scrap. The value of property stolen exceeded $1 million dollars. In light of the totality of the circumstances, the Eighth Circuit ruled that it was not clear error to apply the “in the business” enhancement to Jon. The panel also found no plain error in applying the “in the business” enhancement to Borders. Borders stole and sold trucks, trailers, and cargo. He rented a storage unit for the stolen property, and sold the property to numerous buyers. Even if he was not himself a fence, he personally participated in Jon’s activities. U.S. v. Borders, __ F.3d __ (8th Cir. July 12, 2016) No. 14-3828.
8th Circuit agrees that stolen vehicle ring used “sophisticated means.” (220) Defendant was convicted of charges relating to a conspiracy to steal commercial trucks, trailers, and cargo, and alter vehicle identification information. The Eighth Circuit upheld a §2B1.1(10) enhancement for “sophisticated means.” Defendant was connected to at least nine separate events, over a period of four years, involving six trucks, 15 trailers, and thousands of dollars in cargo. He conducted scouting missions, worked with a co-conspirator who owned a trucking company to fill “shopping lists,” procured buyers, and gave trucks and trailers to co-conspirators to remove VIN numbers. U.S. v. Borders, __ F.3d __ (8th Cir. July 12, 2016) No. 14-3828.
10th Circuit affirms loss finding based on unobjected-to facts in PSR. (220)(765) Defendant was an officer of the Muscogee (Creek) Nation who had authorization to provide assistance to tribal members in need. He was convicted of embezzling funds from the Tribe, using money he had withdrawn from ATMs to pay his gambling expenses. The district court found that defendant embezzled all of the money that he withdrew from the ATMs. The Tenth Circuit rejected defendant’s claim that the court improperly relied on the PSR and Addendum to make its loss finding. Defendant’s objections to the factual recitations in the PSR were inadequate, and the unobjected-to factual recitation in the report adequately supported the court’s findings. Defendant provided no receipts for the ATM withdrawals or documentation of their purposes, despite multiple requests from the Tribe. This lack of documentation was contrary to defendant’s practice when providing assistance using other methods of payment. The Addendum concluded that the loss equaled the total amount of ATM withdrawals. The district court’s view of the evidence was reasonable. U.S. v. Barnett, __ F.3d __ (10th Cir. July 11, 2016) No. 15-5055.
8th Circuit affirms “in the business” and stolen vehicle increase as not improper double counting. (125) (220) Defendants were involved in a conspiracy to steal commercial trucks, trailers, and cargo, and to alter vehicle identification information. They argued that it was impermissible double counting to apply both an “in the business” enhancement under §2B1.1(b)(4) and a two-level enhancement under §2B1.1(b)(14) for an offense involving an organized scheme to steal or receive stolen vehicles, vehicle parts, and cargo. The Eighth Circuit upheld both enhancements. The “in the business” enhancement addressed the harm of fencing. The “stolen vehicle” enhancement addressed the harm to the transportation industry that results from either buying or selling stolen vehicles. U.S. v. Borders, __ F.3d __ (8th Cir. July 12, 2016) No. 14-3828.
2nd Circuit refuses to reduce value of improper payments by value of legitimate services provided as cover-up. (220)(230) Defendant, the former governor of Connecticut, was convicted of charges stemming from his efforts to obtain paid political consulting work on behalf of two Congressional candidates. One of those candidates arranged to pay defendant through Apple Rehab, a related nursing home company, to avoid reporting the payments to the Federal Election Commission. Defendant was convicted of seven counts of violating campaign finance laws and falsifying records. The district court applied a six-level increase under §§2C1.8 and 2B1.1, based on the $35,000 in illegal transactions defendant received from Apple. Defendant argued that this should have been offset by $5,000, the value of the services he actually provided to Apple. The district court rejected this argument, finding the value of defendant’s services was simply “a byproduct of the attempted cover-up of the true nature of the campaign contributions.” The Second Circuit agreed. Defendant would not have performed services for Apple at all but for his planned cover-up. U.S. v. Rowland, __ F.3d __ (2d Cir. June 17, 2015) No. 15-985.
11th Circuit says §2B1.6 does not bar enhancement in §1028A case based on defendant’s “production” of unauthorized access device. (220) Defendant used stolen information to add himself as an authorized user to other individuals’ credit card accounts and open new accounts in the names of stolen identities. He pled guilty to trafficking in unauthorized access devices, 18 U.S.C. §1029(a)(2), and aggravated identity theft, 18 U.S.C. §1028A(a)(1). He challenged the application of a two-level §2B1.1 production enhancement, arguing that §2B1.6 prohibited this enhancement for defendants also convicted under §1028A. The Eleventh Circuit held that §2B1.1(b)(11)(B)(i) is not prohibited in §1028A cases, so long as the enhancement is premised on the defendant’s “production” of an unauthorized access device. Under §1028A, a defendant automatically receives an additional two-year increase to his or her sentence if the offense involved transferring, possessing, or using a means of identification of another. Section 2B1.6 proscribes any enhancement for a separate conviction for the underlying offense based on those acts. However, not all conduct under §1028A involves merely transferring, possessing, or using a means of identification of another. The production of an unauthorized access device/means of identification is separate and distinguishable from the mere transfer, possession, or use of such device. U.S. v. Taylor, __ F.3d __ (11th Cir. Mar. 28, 2016) No. 14-13288.
11th Circuit holds that causing innocent third party to produce fraudulent credit card qualifies as “production.” (220) Defendant used stolen information to add himself as an authorized user to other individuals’ credit card accounts and to open new accounts in the names of stolen identities, causing banks to create new credit cards that included him as an authorized user. He challenged a two-level §2B1.1 production enhancement, arguing that he did not “produce” unauthorized access devices, given that an innocent third party (the banks) created the credit cards. The Eleventh Circuit upheld the enhancement, holding that willfully causing an innocent third party to produce a fraudulent credit card qualifies as “production” under the guidelines. Here, the government showed that defendant induced and willfully caused the production of unauthorized access devices when he contacted banks using stolen identities, added himself as an authorized user to the accounts associated with those identities, and directed the banks to issue new credit cards. U.S. v. Taylor, __ F.3d __ (11th Cir. Mar. 28, 2016) No. 14-13288.
8th Circuit finds defendant used sophisticated means in filing 200 fraudulent tax returns. (220) Defendant and other family members were involved in fraud scheme in which they filed more than 200 tax returns claiming first-time homebuyer tax credits for unknowing taxpayers. The tax refunds were then deposited into one of 17 bank accounts controlled by a member of defendants’ family. The district court concluded that the “repetitive and coordinated conduct” involved in the offense supported a two-level sophisticated means enhancement under §2B1.1(b)(10(C). The Eighth Circuit agreed. The combination of multiple bank accounts, multiple P.O. boxes, the filing of returns with no preparer listed, and the filing of returns listing false addresses, demonstrated a carefully-considered attempt to conceal the nature of the scheme, to make identifying its multiple perpetrators more difficult, and to partially obscure the identity of the victims. This, combined with the fact that at least six people were involved in executing the scheme and collectively managed to file more than 200 fraudulent returns claiming over $1.7 million in refunds, made the offense conduct in this case “notably more intricate” than the garden-variety conspiracy to defraud the United States. U.S. v. Laws, __ F.3d __ (8th Cir. Mar. 15, 2015) No. 14-3636.
11th Circuit says fraudulent tax return scheme had more than 50 victims. (220) Defendant participated in a scheme to file fraudulent income tax returns with stolen identities. The district court applied a four-level enhancement under §2B1.1(b)(2)(B) for an offense involving 50 or more victims. Defendant argued that his victims were not “victims” under the guidelines because he merely transferred their identifications to an undercover agent so that the agent could cash the refund checks. The Eleventh Circuit upheld the enhancement. Although the agent never “used” the victim’s identification to cash the Treasury checks, defendant’s cohort’s “used” the identification to obtain the Treasury checks in the first place. Defendant was responsible for that conduct. The panel also rejected defendant’s argument that the government failed to prove that the identifications belonged to 50 real individuals. The IRS issued 75 Treasury checks, and an IRS agent testified that it does not issue a tax refund without a valid social security number. This fact alone proved defendant’s victims were real individuals. Moreover, the agent heard from 47 of the victims. The court reasonably extrapolated that at least three of the remaining victims, would have been verified if they had current phone numbers. U.S. v. Sammour, __ F.3d __ (11th Cir. Mar. 16, 2016) No. 13-13962.
7th Circuit reverses intended loss based on victim’s cost of developing trade secrets. (219)(220) Defendant used his position as a quantitative finance analyst with corporations to secretly download proprietary information which he used to trade stock for his personal benefit. He pled guilty to unlawful possession and transmission of trade secrets. The parties agreed, and the district court found, that there was no actual monetary loss. However, the court found an intended loss of approximately $12 million, which was how much money the companies paid their respective employees to develop the algorithms or source code he stole. The Seventh Circuit agreed with defendant that the district court’s findings did not support its loss calculation. There was no evidence that defendant intended to cause the victims any loss. In a trade secrets case, the cost of developing the information should be considered only when that factor is “appropriate and practicable under the circumstances.” U.S.S.G. §2B1.1 n. 3(C). Absent evidence of intent to cause a loss equal to the cost of development, reliance on that cost was not appropriate. U.S. v. Yihao Pu, __ F.3d __ (7th Cir. Feb. 24, 2016) No. 15-1180.
4th Circuit directs expanded inquiry into intended victims of stolen cigarette scheme. (220) Defendants purchased thousands of cases of purportedly stolen cigarettes from undercover officers, who represented that the cigarettes had been stolen from Philip Morris trucks. They argued that the district court erroneously calculated loss by relying on the retail value of the cigarettes, rather than their wholesale value. In rejecting the wholesale value of the cigarettes, the district court relied on §2B1.1(b)(1) and Application Note 3(A) to conclude that it should apply the “greatest intended loss” as between the wholesale and retail value of the cigarettes. The Fourth Circuit remanded, directing the district court to expand its inquiry into the intended victim or victims of the offense. If the cigarettes had actually been stolen, the obvious victim would have been the property’s owner, which defendants believed to be Philip Morris. The loss would have been the amount of money that Philip Morris’ otherwise would have received for selling the purportedly stolen cigarettes. Other potential intended victims could have included the states that were denied cigarette taxes that otherwise would have been paid. Defendants also might have intended to harm legitimate retailers by enabling conspiring retailers to sell the cigarettes at a discount. The case was remanded for the district court to consider the loss to all intended victims. U.S. v. Qazah, __ F.3d __ (4th Cir. Nov. 17, 2015) No. 14-4204.
11th Circuit holds theft counts were felonies because total in all counts exceeded $1000. (220) Defendant was convicted of seven felony counts of theft of public money, in violation of 18 U.S.C. §641. The stolen amounts charged in the seven counts totaled $2,300. Defendant argued that her seven felony convictions were actually misdemeanors because each involved a sum below $1,000. The Eleventh Circuit disagreed. Defendant’s interpretation ignored unambiguous language in §641 that designates all §641 convictions as felonies first, and reduces them to misdemeanors only if the sum of the amounts in all of the §641 convictions equals $1,000 or less. U.S. v. Feaster, 798 F.3d 1374 (11th Cir. 2015).
11th Circuit finds fraud involved sophisticated means based on “totality of the scheme.” (220) Defendant, an employee at a VA medical center, used a government credit card for her own personal expenses. She was convicted of seven felony counts of theft of public money. The district court applied a §2B1.1(b)(10)(C) sophisticated means enhancement, finding that the totality of the scheme made defendant’s actions sophisticated. The Eleventh Circuit affirmed, noting that courts have repeatedly endorsed the “totality of the scheme” standard in determining whether the sophisticated-means enhancement applies. Here, Defendant used inside information and her position at the VA to perpetrate the fraud. In addition, each time she stole VA funds, defendant performed at least three affirmative acts of concealment: (1) preparing a fraudulent purchase order to obtain approval to use the credit card, (2) buying gift cards with the credit card, thereby building in another layer of concealment, and (3) making fictitious entries in the VA’s system. Defendant repeated these same steps numerous times during the life of the scheme. Because of the design of the scheme and defendant’s proficiency in running it, the scheme went undetected for two years. U.S. v. Feaster, 798 F.3d 1374 (11th Cir. 2015).
10th Circuit reverses improper reliance on relevant conduct in determining offense guideline. (220) Defendant was convicted of tax evasion and conspiracy to steal federal money. The district court sentenced him under §2C1.1, finding that the conspiracy (1) involved fraud against the federal government, and (2) included participation by New Mexico ‘s Secretary of State, an elected official. Based on these findings, the court characterized the conspiracy as one involving fraud and participation by a public official. The Tenth Circuit held that the district court chose the wrong guideline. Under Amendment 591, effective in 2000, a district court may consider other relevant conduct later in the guideline calculation process, but not when selecting the offense of conviction. The district court determined that §2C1.1 was appropriate only by examining the trial evidence in addition to the indictment and jury instructions. However, §2B1.1 appeared in the statutory index and fit the substantive offense that was the object of the conspiracy. U.S. v. Kupfer, __ F.3d __ (10th Cir. Aug. 19, 2015) No. 13-2189.
9th Circuit upholds loss amount for conversion from tribal organization. (219)(220) Defendant received funds that had been designated to pay subcontractors on building projects on Indian land and used some of the funds for personal expenses. Based on this conduct, he was convicted of conversion of funds from a tribal organization, in violation of 18 U.S.C. § 1163. At sentencing, the district court found that defendant’s offense involved between $1 million and $2.5 million. The court included in that amount the funds that defendant converted, as well as the consequential damages that the contracting agency incurred once it learned that subcontractors had not been paid. The Ninth Circuit found that the district court had not clearly erred in determining the loss amount. U.S. v. Aubrey, __ F.3d __ (9th Cir. Sept. 8, 2015) No. 13-10510.
11th Circuit agrees that stolen goods offense was part of organized scheme. (220) Defendant pleaded guilty to receiving, possessing, and selling stolen goods, and received an enhancement under §2B1.1(b)(14)(B) for “an organized scheme to steal … goods … that are part of a cargo shipment.” Defendant argued that this was not an ongoing, sophisticated operation but rather, “a one-time event where the defendant attempts to resell stolen items that he had purchased cheaply.” The Eleventh Circuit found no error. Defendant did not simply stumble across a good deal and make an impulsive purchase. His crime was financed, planned, and deliberate. He first obtained $10,000 by factoring his company’s invoices with a finance company. Then in the span of one day, he purchased the stolen cargo; loaded the stolen cargo onto a trailer; arranged for a co-defendant to broker the sale; and instructed another co-defendant to drive the load to Miami, where he would meet with the broker and show him the goods. That defendant was able to make all these arrangements in one day reflected the crime’s sophistication. Moreover, defendant planned for the operation to be ongoing. He told the buyer that he could bring more loads, but was arrested before he had a chance to accomplish another transaction. U.S. v. Dimitrovski, __ F.3d __ (11th Cir. Apr. 2, 2015) No. 14-12417.
1st Circuit holds that court erred selecting guideline based on conduct not alleged in indictment. (220) Defendant was convicted of bank burglary under 18 U.S.C. § 2113(a). Subsection 2113(a) can be violated in two distinct ways: (1) bank robbery, and (2) bank burglary. The Statutory Appendix lists both the burglary guideline (§ 2B2.1) and the robbery guideline (§ 2B3.1) as potentially applicable. The district court applied the robbery guideline based on the head teller’s trial testimony, which described conduct that amounted to bank robbery, i.e., taking from a bank by force, violence, or intimidation. The indictment, however, did not allege the use of force, but used language that closely tracked § 2113(a)’s bank burglary prong. The First Circuit remanded, holding that under Note 1 to U.S.S.G. § 1B1.2 and the introduction to the Statutory Appendix, where the guidelines specify more than one guideline for a particular statutory offense, the district court must select the most appropriate guideline based only on conduct charged in the indictment. The district court erred by selecting the guideline applicable to defendant’s crime on the basis of conduct not alleged in the indictment. U.S. v. Almeida, 710 F.3d 437 (1st Cir. 2014).
1st Circuit says defendant could foresee guns hidden in home she shared with fugitive. (220) Defendant pled guilty to crimes committed during her 16 years on the run with a wanted fugitive, Bulger. The court applied a two-level firearm increase under § 2B1.1(b)(14)(B) for possessing a dangerous weapon in connection with the offense. The judge found that defendant “knew that there were lots of weapons” in the apartment she shared with Bulger and that she was “fully knowledgeable” that those weapons were there, at least in part, “for preventing apprehension.” The First Circuit found more than sufficient evidence to support the district court’s findings. Police found 30 weapons in defendant’s and Bulger’s modest two-bedroom apartment, where they had lived for about 15 years. Many of the weapons were hidden in the walls, as was the pair’s money that defendant used for day-to-day needs. The walls had visible plaster repair marks on them, which were not the result of work done by building maintenance. Finally, defendant kept a notebook that listed various wall repair supplies next to the notation “Home Depot.” U.S. v. Greig, 717 F.3d 212 (1st Cir. 2013).
1st Circuit includes in loss value of stolen painting returned to owner before defendant’s identity was discovered. (220) Defendant, a defense attorney, was convicted of possessing, concealing or storing stolen paintings, including a rare Cezanne valued at $29 million. The paintings had been in possession of a client who was killed, and defendant happened upon them after the client’s death in 1979. In March 1999, over 20 years later, defendant used an agent to anonymously negotiate with the owner to return the Cezanne, in exchange for ownership of the other six paintings (together worth about $1 million). It was not until 2006 that defendant’s identity was discovered and he was arrested, after he attempted to sell the six paintings through an auction house. The district court included in the loss calculation the $29 million Cezanne, although defendant argued that it should be excluded because he returned it before his offense was detected. The Fifth Circuit disagreed. The “offense” did not refer to the discovery of the identity of the perpetrator, but the crime itself. Credit for the return of the property under Note 3(e) to § 2B1.1 is only available if the property is returned before either the victim or law enforcement becomes aware of the crime. U.S. v. Mardirosian, 602 F.3d 1 (1st Cir. 2010).
1st Circuit uses appreciated value of stolen painting in loss calculation. (220) Defendant, a defense attorney, was convicted of possessing, concealing or storing stolen paintings, including a rare Cezanne. When the owner recovered the Cezanne in 1999, 20 years after its original theft, he sold it for $29 million. Defendant argued that for loss purposes, the court should have assigned the Cezanne its value at time of its 1978 theft, rather than the $29 million price it sold for in 1999. The First Circuit found no error. Although defendant argued that it was not reasonably foreseeable that the Cezanne would appreciate almost 50-fold between 1978 and 1999, the panel found it “entirely foreseeable” that a painting by a famous artist would appreciate with time, even if defendant did not know by exactly how much. That the painting’s value would grow exponentially was a risk he assumed when he concealed t he painting for two decades. U.S. v. Mardirosian, 602 F.3d 1 (1st Cir. 2010).
1st Circuit applies sophisticated means increase to defendants who used multiple names to commit frauds in multiple states. (220) Defendant and his wife engaged in a series of frauds by intentionally ingesting glass and then claiming that it came from food sold by various restaurants, supermarkets and hotels. To avoid detection, they used fictitious identifications and submitted false insurance claims in several states. The First Circuit upheld a §2B1.1(b)(9)(C)(i) sophisticated means enhancement. The judge imposed the increase not simply because defendant used false IDs and documents, but because he undertook elaborate efforts to conceal his scheme. Defendant and his wife targeted multiple restaurants, hotels, supermarkets, hospitals, doctors and insurance companies in several different regions. They used fictitious names, fake identifications and most importantly, they actually ingested glass particles. U.S. v. Evano, 553 F.3d 109 (1st Cir. 2009).
1st Circuit rules identity theft increase does not require knowledge that false ID is of actual person. (220) Defendant and his wife engaged in a series of frauds by intentionally ingesting glass and then claiming that it came from food sold by various restaurants, supermarkets and hotels. To avoid detection, they used fictitious identifications and submitted false insurance claims in several states. Defendant received an identity theft enhancement under §2B1.1(b)(10)(C)(ii) for “possession of five or more means of identification that unlawfully were produced from, or obtained by the use of, another means of identification.” Relying on U.S. v. Godin, 534 F.3d 51 (1st Cir. 2008), defendant argued that the government failed to prove that he knew the false ID information was of an actual person. Godin held that a federal identity theft statute, 18 U.S.C. §1028(a)(1), requires that the defendant knew that the false information belonged to a real person. The First Circuit held that the sentencing enhancement did not require this showing. Sentencing enhancements often apply even without a strong mens rea requirement, and the legislative history of the enhancement here supported this reading. U.S. v. Evano, 553 F.3d 109 (1st Cir. 2009).
1st Circuit uses wrongly obtained discount as loss amount in pharmaceutical drug fraud case. (220) Defendant purchased pharmaceutical drugs at a 20 percent discount because she represented to drug companies that the drugs were to be resold in Brazil and Puerto Rico. Instead, she sent the drugs back for resale at higher prices to a drug wholesaler in New York grossing about $21 million and profiting from her share of the subverted discount. She also increased her profits by reselling about $1.5 million of prescription drugs she knew were stolen. To calculate loss, the district court found that the wrongfully-obtained 20 percent discount constituted pecuniary harm to the drug manufacturer, and based the loss on this amount. As to the resale of the stolen drugs, the court used the amount that defendant paid for those drugs, calculated based on the cashier’s checks used for payment. The First Circuit found no error in the loss calculation. In reselling the discount vaccines to the New York drug wholesaler, it was entirely foreseeable to defendant that the manufacturer was being deprived of the opportunity to sell those same vaccines at a non-discounted price. The loss was entirely commensurate with the degree of loss that defendant reasonably expected to occur. U.S. v. Marti-Lon, 524 F.3d 295 (1st Cir. 2008).
1st Circuit applies “gross receipts” increase where defendant enjoyed fraud proceeds issued to his wife. (220) Defendant was convicted of bank fraud after he used forged documents to obtain and later refinance a mortgage in his wife’s name. Guideline § 2B1.1 (b)(13)(a) provides for a two-level enhancement if “the defendant derived more than $1,000,000 in gross receipts from one or more financial institution as a result of the offense.” Defendant argued that this “gross receipts” enhancement did not apply because the gross receipts were derived by his wife, not him. A prenuptial agreement with his wife provided that property and assets obtained by her were to be and remained her personal property. The First Circuit upheld the application of the gross receipts enhancement. The guideline may be applied where the defendant either controlled (even though indirectly) the fraud proceeds attributed to him or where he causes them to be lodged in another with the expectation that he will enjoy the benefits. Defendant easily met this standard. He used the borrowed money to finance a lavish lifestyle for himself and his family, and clearly enjoyed the fruits of the scheme to defraud. Although one of the lenders was a “private mortgage lender,” it still qualified as a financial institution under the guidelines’ definition in Note 1 to § 2B1.1. U.S. v. Edelkind, 467 F.3d 791 (1st Cir. 2006).
1st Circuit holds that intended loss includes amounts that offender knew confederates intended to inflict. (220) Defendant, a former postal employee, pled guilty to mail theft after he was caught stealing letters containing credit cards. Defendant admitted that he had intended to send the cards to a contact in the Netherlands in exchange for money. The First Circuit held that the district court did not err in calculating the intended loss by adding together the credit limits of the stolen credit cards. The fact that defendant did not himself intend to use the cards did not limit the loss to $500 per card under Note 3(F) of § 2B1.1. Although defendant never intended to be the ultimate user of the stolen card and thus lacked intent to run up charges on the cards himself, he specifically intended to sell the cards to someone who was quite likely to do so. Intended loss includes loss that an offender knows will occur, or should reasonably expect to occur, as a result of his offense. U.S. v. Alli, 444 F.3d 34 (1st Cir. 2006).
1st Circuit holds that increase for “trafficking” stolen credit cards does not require offender to have violated federal trafficking law. (220) Defendant, a former postal employee, pled guilty to mail theft after he was caught stealing letters containing credit cards. Defendant admitted that he had intended to send the cards to a contact in the Netherlands in exchange for money. The First Circuit upheld a § 2B1.1(b) (9)(B) increase for an offense involving the “trafficking” of unauthorized access devices, rejecting defendant’s argument that the enhancement requires an offender to have violated the federal trafficking law, 18 U.S.C. § 1029(a). Section 2B1.1(b)(9)(B) applies to offenders whose offenses involves credit card trafficking whether or not that offense would also qualify as a violation of § 1029(a). Therefore, while the statute requires that a defendant have obtained at least $1000 in value from his trafficking, it was not necessary to determine how much defendant was to be paid for sending the stolen credit cards to the Netherlands. U.S. v. Alli, 444 F.3d 34 (1st Cir. 2006).
1st Circuit holds that sentence was reasonable despite court’s “terse” explanation. (220) Defendant, a former postal employee, pled guilty to mail theft after he was caught stealing letters containing credit cards. His guideline range was 18-24 months, and the district court imposed a 21-month sentence. Although district judge’s explanation for his sentence was “admittedly terse,” the First Circuit ruled that the court acted reasonably in imposing the 21-month sentence. Except for the guidelines range, the judge discussed none of the § 3553(a) factors individually, stating only that these factors “had been adequately taken into account by the guidelines, and the guideline range … produces a reasonable sentence.” Although this language was close to an assumption that the guideline sentence is automatically reasonable, the sentence was reasonable At. sentencing, defendant did not identify any factor (other than challenges to the court’s guideline calculation) that would arguably militate in favor of a sentence below the guideline range, and the government did not raise any factors in support of an above-range sentence. Thus, the judge could not be faulted for not speaking further about the § 3553(a) factors, given none were raised for his consideration. U.S. v. Alli, 444 F.3d 34 (1st Cir. 2006).
1st Circuit upholds loss based on testimony from lawyer of insurance company victims. (220) Defendant participated in a fraudulent car insurance scheme in which he and his co-conspirator staged car crashes and then, through defendant’s repair shop, prepared inflated estimates for insurance claims. Based on testimony by an attorney for the defrauded insurance companies, the district court found that the loss attributable to defendant was in excess of $500,000, which was less than the $600,000 that the victim supplied to the court as its total loss. The First Circuit affirmed. The lawyer’s testimony that the losses were attributable to defendant’s participation in the insurance fraud scheme established that they were relevant conduct for sentencing purposes, and defendant did not offer any evidence to the contrary. Although defendant challenged the reliability of the attorney’s claim, he made no effort to impeach the testimony, nor did he offer an alternative estimate. U.S. v. Flores-Seda, 423 F.3d 17 (1st Cir. 2005).
1st Circuit refuses to reduce embezzlement loss by amount repaid to victim. (220) Over a three-year period, defendant embezzled a total of $933,369 from an employee benefit plan. At various times during the embezzlement, defendant returned money to the plan, leaving an actual shortfall of $468,663. Moreover, the plan never contained at any one time much more than $500,000. The district court calculated the loss by adding all 11 of defendant’s unlawful withdrawals, totaling $933,360, and refusing to reduce this loss by the amount of money defendant returned to the plan. The First Circuit agreed that the loss calculation for embezzlement uses the amount of each embezzlement, without credit for any money returned to the victim. The crime of embezzlement does not include as an element an intent to permanently deprive the victim of the funds. The crimes were complete at the time that defendant made the unlawful withdrawals. U.S. v. Walker, 234 F.3d 780 (1st Cir. 2000).
1st Circuit holds that Microsoft, not manufacturer, was victim of theft of discs from manufacturer. (220) Defendant purchased and resold computer diskettes that had been stolen from KAO Infosystems, a computer disc manufacturer that produced the discs for Microsoft. Although the discos were stolen from KOA, the First Circuit upheld the district court’s finding that Microsoft, rather than KOA, was the victim of defendant’s theft for loss calculation purposes. Microsoft had a significant ownership interest in the CD-ROMs. Although KAO was under contract to manufacture and package the discs, Microsoft retained ownership rights in the software. The substantial value was not the discs themselves, but the computer programs on those discs, intellectual property that plainly belonged to Microsoft. The First Circuit also agreed that the district court properly based the loss on the wholesale price of $486 per unit of Microsoft Office and $165 per unit of Windows 95. A representative from Staples, an international office supply store, testified that these were the prices it paid for the Microsoft products during the relevant time period. The price should not be discounted because the CD-ROMs did not contain a legitimate license. This boiled down to an argument that the loss should be discounted because the goods were “hot” and therefore could not be sold at market price. U.S. v. Coviello, 225 F.3d 54 (1st Cir. 2000).
1st Circuit applies “in the business” increase where stolen goods were sold though legitimate business. (220) Defendants operated Crazy Bob’s, a discount computer products outlet. Acting through Crazy Bob’s, defendants purchased and resold stolen computer diskettes, tapes and CDs. Defendants argued that a § 2B1.1(b)(4) increase for being “in the business of receiving and selling stolen property” was improper because Crazy Bob’s was a legitimate business. The First Circuit upheld “in the business” enhancement, finding nothing in the guidelines, the commentary or the caselaw to suggest that the enhancement does not apply to a “fence” who sells stolen goods through the cover of a legitimate business. A store employee, Rosengard also properly received the increase. Rosengard was far more than a delivery boy. As Crazy Bob’s buyer, defendant Rosengard was the primary contact in virtually all of the stolen property dealings, arranging which items would be purchased, for how much, and how the seller would be paid. Moreover, Rosengard personally delivered the payments to the seller and personally received the stolen software. Rosengard was the only defendant personally involved with making sales of certain stolen discs. Moreover, defendant received about $20,000 in commissions for his role in the purchase and sale of the stolen discs. U.S. v. Coviello, 225 F.3d 54 (1st Cir. 2000).
1st Circuit says defendant is not “in the business” unless he sells goods stolen by others. (220) Defendant was convicted of several counts relating to his acquisition, interstate transportation, and sale of stolen audio and video components. The district court enhanced his sentence under § 2B1.1(b)(4)(B) for engaging “in the business of receiving and selling stolen property.” The First Circuit held that the “in the business” enhancement only applies if the defendant was in the business of receiving and selling property stolen by others. The enhancement does not apply to a defendant who makes a business of stealing property. Stealing property from another does not equate with “receiving” property from its rightful owner. The record here did not show that defendant sold property that he had not stolen. The government bears the burden of proving that defendant received and sold goods stolen by others. U.S. v. McMinn, 103 F.3d 216 (1st Cir. 1997).
1st Circuit holds price at which defendant negotiated to purchase vehicles was market value. (220) Defendant negotiated the purchase of four expensive cars from out-of-state dealers. He then tricked the dealers into believing that they had received wire transfers in payment for the cars. The cars were shipped to defendant before the dealers discovered the fraud. The First Circuit agreed that the market value of the stolen cars under § 2B1.1 was the price defendant negotiated to pay the dealers for the cars. Although defendant claimed these prices were overstated in order to induce the dealers’ agreement, the price was determined during an arm’s length transaction. Loss need not be determined with precision, and may be inferred from any reasonably reliable information. U.S. v. Carrington, 96 F.3d 1 (1st Cir. 1996).
1st Circuit finds that defendant knowingly received stolen property. (220) Defendant sold numerous stolen vehicles to a car dealership. The district court imposed a § 2B1.1(b)(5)(B) enhancement for being in the business of receiving and selling stolen goods. Defendant argued for the first time on appeal that the sentencing court made no explicit findings that the offenses of conviction involved knowingly receiving stolen property, and that neither the indictment nor the trial record would support it. The 1st Circuit held that the record supported a finding that defendant knowingly received stolen property. The parties stipulated that defendant did not steal the motor vehicles, but the jury supportably found that defendant knew the vehicles were stolen. Thus, defendant must have knowingly received the stolen vehicles. U.S. v. Tutiven, 40 F.3d 1 (1st Cir. 1994).
1st Circuit finds no double counting in using same money for laundering and stolen goods offenses. (220) Defendant stole computer equipment from a manufacturer’s warehouse, and then resold the equipment. He was convicted of transporting stolen property and money laundering (in connection with his use of the sale proceeds). He asked for a downward departure on the ground that the same amount of money was double counted—once in the offense level calculations for money laundering and once in the offense level calculations for transporting stolen goods. The 1st Circuit doubted that this practice could be called double counting, since each crime was separate and distinct with its own measure of loss. The two figures were determined differently. The existence of some indeterminate degree of overlap between these figures did not constitute double counting. Moreover, even if there was double counting, it was not sufficiently “unusual” or “special” to warrant a downward departure. U.S. v. Pierro, 32 F.3d 611 (1st Cir. 1994).
1st Circuit upholds calculation of value of stolen used computer boards. (220) While employed at a computer company, defendant sold 241 used computer boards without invoices or other documentary evidence. The government was able to trace 112 of the boards to the employer’s stockroom. Defendant argued that because the employer did not sell used boards, the loss under section 2B1.1 should be based on the employer’s cost of producing the boards. The 1st Circuit upheld the calculation of loss. There was adequate evidence to determine that the value of the missing boards exceeded $800,000. The employer reported that the fair market value of the 29 boards defendant admitted knowing were stolen was $278,800, while the value of the remaining 83 boards was $1.2 million. Defendant’s bank statements revealed that during the time he sold the boards, he received over $1 million in payment. U.S. v. Skrodzki, 9 F.3d 198 (1st Cir. 1993).
1st Circuit upholds loss calculation for defendant who sold stolen jewelry. (220) Defendant received stolen jewelry, which he then sold through his coin shop. The 1st Circuit upheld the loss under section 2B1.1 as $288,853, which was the most conservative estimate in the presentence report. The district court considered the total amount of jewelry that passed through defendant during the 18-month conspiracy, It also took into account several inventory valuation figures. Documentary evidence showed that defendant paid at least $179,000 for the jewelry. The sales to the three main purchasers of the jewelry totaled $392,878, which was supported by computer and invoice records. The probation officer, after carefully reviewing all receipts and inventory records, subtracted from the total sales all sales which arguably could have been for non-jewelry items. This resulted in the $288,853 adopted by the court. U.S. v. Richardson, 8 F.3d 769 (11th Cir. 1993).
1st Circuit finds defendant was in the business of receiving and selling stolen property. (220) Over an 18-month period, defendant purchased stolen jewelry and resold it in his coin shop. The 1st Circuit affirmed an enhancement under section 2B1.1(b)(5)(B) for a person in the business of receiving and selling stolen property. The evidence demonstrated that defendant was a fence. He bought stolen jewelry on a weekly basis for an 18-month period. The sale of the stolen jewelry was vital to defendant’s business — after he started selling the stolen jewelry, his business tripled. Although the business arrangements between defendant and his jewelry source were not sophisticated in the dictionary sense, they had a modus operandi designed to minimize suspicion and to keep both supplier and receiver financially satisfied. Until the police blew the whistle, defendant ran a successful fencing operation. U.S. v. Richardson, 8 F.3d 769 (11th Cir. 1993).
1st Circuit affirms that increase for serious bodily injury was not double counting. (220) Defendant, a police officer, beat a prisoner and was convicted of depriving a pretrial detainee of his civil rights. Section 2H1.4(a)(2) provides that the base offense level is to be set six levels above the base offense level for the underlying offense. At sentencing, the district court determined that the underlying offense was aggravated assault, since it involved serious bodily injury. Thus, the base offense level was set at 21, and then adjusted upward by four more levels under section 2A2.2(b)(3)(B) because the victim suffered serious bodily injury. The 1st Circuit rejected defendant’s claim that the enhancement for serious bodily injury constituted impermissible double counting. The commission was aware of the problem of double counting, and expressly forbid it in certain places, but not here. The notes to section 2H1.4 prohibit the application of the abuse of trust or special skill enhancement as impermissible double counting, but give no indication that the bodily injury enhancement is improper. Bodily injury is not an inherent characteristic of the offense of interfering with civil rights under color of law. U.S. v. Newman, 982 F.2d 665 (1st Cir. 1992).
1st Circuit reviews de novo whether predisposition toward fencing justified enhancement. (220) Guideline section 2B1.2(b)(4)(A) provides a four-level enhancement for a defendant who is in the business of receiving and selling stolen property. The 1st Circuit reviewed de novo the district court’s determination that defendant’s predisposition toward fencing activities brought him within the ambit of section 2B1.2(b)(4)(A). U.S. v. St. Cyr, 977 F.2d 698 (1st Cir. 1992).
1st Circuit rejects enhancement for being in the business of receiving and selling stolen property. (220) Defendant pled guilty to two counts of possessing stolen property in connection with his possession of 22 sweaters. The district court imposed an enhancement under section 2B1.2(b)(4)(A) for being in the business of receiving and selling stolen property, inferring from defendant’s willingness to come into the scheme that he was predisposed toward buying and selling stolen property. The 5th Circuit found defendant’s casual trafficking in sweaters insufficient to justify the enhancement. A court should consider evidence of the amount of income generated through fencing, the defendant’s past activities, his demonstrated interest in continuing or expanding the operation, and the value of the property handled. Even in the absence of regularity, the sophistication of the defendant’s operation may indicate business conduct. Here, there was no evidence of either regularity or sophistication. U.S. v. St. Cyr, 977 F.2d 698 (1st Cir. 1992).
1st Circuit affirms that loss calculation should include amount of interest victim lost on embezzled funds. (220) Defendant, a bankruptcy trustee, embezzled approximately $174,000 and deposited it into accounts he controlled. An auditor concluded that the embezzled funds would have earned more than $10,000 interest in the victim’s account. The 1st Circuit affirmed that the lost interest was properly included in the calculation of loss under guideline section 2B1.1. The court also held that on remand (for other reasons) the district court must accept as correct the auditor’s $10,000 figure as the amount of the lost interest. Defendant did not challenge the $10,000 interest calculation in the presentence report, did not object to the calculation at sentencing, did not seek to call the auditor as a witness, and did not, on appeal, give any reason for the court to believe that the figure was incorrect. U.S. v. Curran, 967 F.2d 5 (1st Cir. 1992).
1st Circuit affirms that attempts to illegally transfer bank funds were completed. (220) Defendant arranged for his bank to transfer money from unclaimed accounts to accounts he controlled at other banks. At the time he submitted the forms for one of the transfers, he also submitted two additional forms to transfer $191,985 from another unclaimed account. Before the bank transferred the money, however, he retrieved the forms and stopped the process. The 1st Circuit affirmed the inclusion of the $191,985 in his offense level under section 2B1.1(b)(1). Application note 2 says attempts are to be determined under section 2X1.1. Under 2X1.1(b)(1), the attempt is treated as a completed attempt if the defendant was about to complete the offense but for apprehension or interruption by a similar event beyond defendant’s control. Here, testimony indicated that defendant withdrew the transfer request after a bank officer became suspicious and asked questions about the transfers. U.S. v. Oyegbola, 961 F.2d 11 (1st Cir. 1992).
1st Circuit upholds calculation of loss caused by defendant’s theft. (220) Defendant was a bank teller convicted of conspiring with two other bank employees to obtain fraudulent loans. Defendant contended that her offense level was incorrectly increased by six under guideline § 2B1.1 based upon her involvement in a theft of between $20,000 and $50,000. The 1st Circuit upheld the determination. The record contained evidence of checks totalling $44,000 which were issued on the basis of false application information. U.S. v. Moore, 923 F.2d 910 (1st Cir. 1991).
1st Circuit affirms upward departure based on large amount of money embezzled. (220) The district court departed upward because the amount of money defendant embezzled was far in excess of the highest dollar amount mentioned in the 1987 version of guideline § 2B1.1(b)(1). Losses over $5 million require a 13 level upward adjustment in offense level, and defendant had embezzled $11 million. The 1st Circuit agreed that the magnitude of the amount embezzled “was sufficiently unique and meaningful to warrant a departure,” and the two level increase in offense level was reasonable. It was proper for the district court to compare defendant’s sentence to the sentence he would have received under the amended guidelines. U.S. v. Harotunian, 920 F.2d 1040 (1st Cir. 1990).
1st Circuit holds that consideration of four prior instances of embezzlement was proper in determining relevant conduct under the guidelines. (220) The 1st Circuit held it was proper for the district court to consider the fact that defendant had fraudulently obtained four other loans from the bank where she worked when it sentenced her for a fifth, even though the other four were not charged. Under the modified “real offense” system established by the guidelines, such consideration was proper. Here, there was no question that the conduct factored into the sentence was relevant and related. U.S. v. Fox, 889 F.2d 357 (1st Cir. 1989).
2nd Circuit says dangerous weapon need not be used as weapon to justify enhancement. (220) Defendant pled guilty to bank burglary, and his sentence was increased for possessing a dangerous weapon under § 2B2.1(b)(4) based on the sledgehammer he used to break a side window of the bank. Defendant argued that this was inappropriate because the sledgehammer was not used or possessed as a weapon, but instead to facilitate the burglary. The Second Circuit held that § 2B2.1(b)(4) only requires possession of a dangerous weapon, regardless of whether the weapon was employed as a weapon during the commission of a crime. Application Note 1(D) to § 1B1.1 states that a dangerous weapon is “an instrument capable of inflicting death or serious bodily injury,” and a sledgehammer is capable of causing such harm. Accordingly, a sledgehammer is a “dangerous weapon” under § 2B2.1(b)(4). Defendant possessed the weapon during the burglary; the fact that he did not use the sledgehammer as a weapon was irrelevant to the issue of possession. U.S. v. Pope, 554 F.3d 240 (2d Cir. 2009).
2nd Circuit remands where court failed to consider other factors that may have caused decrease in stock price. (220) Defendant and his brokerage firm participated in a securities fraud conspiracy in connection with the company’s purchase and sale of stock in NetBet, a start-up internet gaming company. To determine loss sustained by firm’s customers, the court used the difference between purchase price of the NetBet stock and its value on July 29, 1999. That date was the last date for which the parties had “blue sheets” reporting forms for market makers. That date had no particular relevance to the charged conspiracy, and was in fact three months after the end of the charged conspiracy. This method implicitly attributed the total amount of the decline in the value of NetBet shares to defendant’s criminal conduct. The Second Circuit reversed, finding that the district court’s failure to at least approximate the amount of loss caused by the fraud without even considering other factors relevant to a decline in NetBet share price required a remand to redetermine the amount of the loss. U.S. v. Rutkoske, 506 F.3d 170 (2d Cir. 2007).
2nd Circuit holds that failure to repay fraudulently obtained loan did not continue offense for ex post facto purposes. (220) Beginning in September 2000, defendant fraudulently obtained over a dozen bank loans, and pled guilty to three counts. The district court sentenced him under the 2002 version of the guidelines, which resulted in a higher sentencing range than if he had been sentenced under the 2000 guidelines. At issue was whether the offense continued past the effective date of the new guidelines. The indictment alleged that the offense continued through May 2002. Because a sentencing court may not consider uncharged or acquitted conduct in determining the last date of the offense of conviction, the dates alleged in the charging instrument will generally be determinative for ex post facto purposes. However, when the date in the charging documents clearly exceeds the offensive conduct, it is clearly erroneous for a court to rely on this date. Here, the time period in the charging documents clearly exceeded the offensive conduct. Neither the information nor the stipulated facts accompanying the plea agreement described any conduct taken by defendant after 2000 in connection with the counts of conviction. It was uncontested that the loan was applied for and received in September 2000. Defendant took no further actions with respect to that loan – apart from failing to repay it – after September 2000. The Second Circuit held that defendant’s failure to repay the fraudulently obtained loan was not part of the offense, and could not be considered a continuation of the offense for ex post facto purposes. The offense was executed no later than when defendant received the funds from his fraudulent loan application. U.S. v. Kilkenny, 493 F.3d 122 (2d Cir. 2007).
2nd Circuit holds that enhancement for deriving more than $1 million from financial institution was not improper double counting. (220) Defendant fraudulently obtained over a dozen bank loans. He argued that the two-level enhancement under § 2B1.1(b)(12)(A) for having derived more than $1 million from a financial institution constituted impermissible double counting because the amount had already been taken into account in determining the offense level under § 2B1.1(b)(1)(K). The Second Circuit has previously ruled that the cumulation of the dollar amount enhancement and the financial institution enhancement do not constitute impermissible double counting because the two enhancements serve different purposes. See U.S. v. Lauersen, 348 F.3d 329 (2d Cir. 2003). Although there is a substantial overlap between the two enhancements that might justify a downward departure in some circumstances, any such departure would be discretionary. U.S. v. Kilkenny, 493 F.3d 122 (2d Cir. 2007).
2nd Circuit upholds enhancement based on finding that defendant was aware of plan to use a firearm in robbery. (220) Defendant, a pressman at a federal credit union, provided co-conspirators with uniforms and a sketch of the credit union showing the location of the money. He was convicted of conspiracy to rob the credit union. On his first appeal, the Second Circuit held that a § 2B3.1(b)(2)(C) firearm enhancement was proper if it could be established with reasonable certainty that the conspirators specifically intended that a firearm be brandished or possessed, although it was unnecessary that any brandishing or possession actually occurred. On remand, the district court applied the enhancement. The district court found that defendant was “fully cognizant” of the conspiratorial plan, and that one aspect of the plan was the possession or brandishing of firearms during the robbery. The court’s finding that defendant himself specifically intended that firearms be used was unnecessary for application of the enhancement. U.S. v. Capanelli, 479 F.3d 163 (2d Cir. 2007).
2nd Circuit orders defendant convicted of fraudulent possession of credit cards to pay restitution for fraudulent use of credit cards. (220) Defendant pled guilty to fraudulently possessing unauthorized access devices. He challenged an order to pay over $42,000 in restitution, since these damages arose not from his possession of those unauthorized access devices (the crime of conviction), but from their use. The Second Circuit held that the restitution was proper. A “victim” is defined as “a person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered including, in the case of an offense that involves as an element a scheme, conspiracy, or pattern of criminal activity, any person directly harmed by the defendant’s criminal conduct in the course of the scheme, conspiracy, or pattern.” This language made clear Congress’s intent to include losses resulting from harmful acts committed in the course of inchoate crimes. The statute of conviction, 18 U.S.C. § 1029(a)(3), includes as an element that the possession be “with intent to defraud.” Intent to defraud is a “scheme,” as used in § 3663A, and thus losses suffered as the result of the fraudulent use of a credit card whose illegal possession with intent to defraud is charged under § 1029(a)(3) are compensable by restitution under § 3663A (a)(1). U.S. v. Oladimeji, 463 F.3d 152 (2d Cir. 2006).
2nd Circuit bases loss calculation on drop in stock price after announcement of fraud. (220) Defendant was the Chief Executive Officer of WorldCom, Inc, a publicly traded global telecommunications company. He engineered a scheme to disguise WorldCom’s declining operating performance by falsifying its financial reports. Loss was suffered by those investors who bought or held WorldCom stock during the fraud period, either in express reliance on the accuracy of the financial statements or in reliance on the “integrity” of the existing market price. The Second Circuit found that determining the loss was not easy because of the difficulty in knowing what investors would have done had they known the truth, and determining what portion of any loss was a result of the fraud. Nonetheless, 26-level loss enhancement applied by the district court, which had a $100 million threshold, was easily surpassed under any calculation. There were about 2.9 billion shares of WorldCom stock outstanding on the date the company announced the improper accounting and restated its results. Within a week, the price per share dropped from 83 cents to six cents. A 77 cent loss per share resulted in a loss of over $2 billion. Even if other factors contributed to the decline of the stock, the loss was still well above $1 billion, or ten times greater than the $100 million threshold for the 26-level enhancement. U.S. v. Ebbers, 458 F.3d 110 (2d Cir. 2006).
2nd Circuit holds that enhancement for violation of prior judicial order was not double counting. (220) Defendant pled guilty to willfully failing to pay court-ordered child support, in violation of 18 U.S.C. § 228(a)(3) and (c)(2). He argued that a two-level enhancement under § 2B1.1(b)(7) (C) for violating a prior judicial order constituted double counting, because the conduct triggering the enhancement – violation of a court order – was already taken into account in setting the base offense level of the charged crime. The Second Circuit found no impermissible double counting. Congress and the Sentencing Commission have clearly instructed that judges imposing sentences for violations of 18 U.S.C. § 228 should apply U.S.S.G. § 2B1.1 in its entirety, including the enhancements, of which § 2B1.1(b)(7)(C) is one. Moreover, double counting is permissible where, as here, each of the multiple guidelines sections applicable to a single act served a distinct purpose or represented a discrete harm. The base offense level in § 2B1.1 accounts for the harm to the child and custodial parent, who do not receive the money due them. A defendant who violates § 228 inflicts a different harms on the state, and the enhancement accounts for this harm. U.S. v. Maloney, 406 F.3d 149 (2d Cir. 2005).
2nd Circuit remands where court applied wrong standard for robbery conspiracy increase. (220) Defendant acted as the “inside man” in a conspiracy to rob a federal credit union. The conspiracy guideline uses the base offense level from the substantive offense, plus any adjustments “that can be established with reasonable certainty.” U.S.S.G. § 2X1.1(a). The base offense level for robbery (20) is increased by five “if a firearm was brandished or possessed.” U.S.S.G. § 2B3.1(b)(2)(C). In applying this enhancement, the district court erroneously stated that the proper test was “whether it was reasonably foreseeable that a firearm would be brandished or possessed during the commission of the robbery.” The government offered no evidence that a firearm was actually possessed in connection with the conspiracy. A conspirator cannot be held liable for an action that was intended by a co-conspirator (reasonably foreseeable or not) if the action did not actually occur, unless it was within the specifically intended scope of the conspiracy. The district court’s misstatement of the law may not have affected defendant’s sentence, since the court made findings that could have supported the increase. It could have concluded that the use of firearms was a specifically intended element of the conspiracy. However, as the district court was proceeding under an inapplicable legal standard, it never made that finding. The Second Circuit remanded. U.S. v. Savarese, 404 F.3d 651 (2d Cir. 2005).
2nd Circuit holds that police officer badges were “means of identification.” (220) Defendant pled guilty to possessing 15 or more counterfeit UPC bar codes for fraud purposes, and producing and possessing hundreds of NYPD identification cards and badges. Defendant objected to the application of a § 2B1.1(b)(9) (C)(ii) enhancement for possession of multiple identifications, contending that identity theft, as discussed in the background commentary, must be an element of the crime of conviction. The Second Circuit disagreed. A court need not resort to background commentary interpretations when the language of the guidelines is plain. An officer’s badge-and-shield number unquestionably constitutes a unique, government-issued identification, as it identifies an actual, specific officer of the NYPD, and thus, is a “means of identification.” Even though defendant may have received permission from various police officers to produce a duplicate badge, defendant was still “unlawfully” producing a “means of identification” under the plain meaning of the enhancement. U.S. v. Sash, 396 F.3d 515 (2d Cir. 2005).
2nd Circuit holds that district court properly relied on plea agreement stipulation to determine loss. (220) Defendant was involved in a scheme to defraud a jeweler by purchasing jewelry with a counterfeit certified bank check. Defendant argued that the district court erred in calculating the loss amount using a co-conspirator’s estimate of the jewelry’s $590,000 “cost,” rather than the co-conspirators’ estimate of what they would have to pay for the jewelry. The Second Circuit held that the court properly relied on defendant’s stipulation in his plea agreement to calculate loss. Under circuit precedent, a stipulation in a plea agreement, although not binding, may be relied upon in finding facts relevant to sentencing. Because defendant’s loss amount stipulation was knowing and voluntary, the district court could have properly found loss amount based solely on the stipulation, as long as it also considered any other relevant information presented to it. There was ample evidence in the record supporting a loss finding of between $500,000 and $800,000. U.S. v. Granik, 386 F.3d 404 (2d Cir. 2004).
2nd Circuit remands for findings to support departure. (220) Defendant, a worker on a foreign oil tanker, falsified log entries to conceal the ship’s discharge of oil-contaminated bilge water into international waters. He pled guilty to making a materially false statement on a matter within the jurisdiction of the U.S., in violation of 18 U.S.C. § 1001. At sentencing, the government urged the court to add a six-level enhancement because a substantial part of the scheme occurred outside the U.S. Without explicitly deciding whether the enhancement applied, the court determined that if it were to adopt the government’s version of the facts, and thus apply the enhancement, that it would grant defendant a six-level downward departure on the ground that § 2B1.1(b)(8)(B) contemplates sophisticated conduct, and that defendant’s conduct fell outside this heartland. The Second Circuit disagreed. Defendant’s conduct, as described in the government’s proffer, was sophisticated. The government alleged that he made false entries in two oil records books on 30 separate occasions. These entries concealed the fact that defendant routinely instructed his subordinates to dump oily water directly into sea, most often at night. These falsified entries had numerous technical components. However, the court did not find these facts; its simply assumed them to be true. On remand, the court should specifically rule on the following issues: (1) whether defendant’s conduct fell within § 2B1.1(b)(8)(B); (2) whether defendant should receive an adjustment for acceptance of responsibility; (3) whether the facts as the court finds them justify a departure on the grounds originally used, and (4) whether defendant should receive a departure based on a combination of circumstances, the ground he originally proposed. U.S. v. Kostakis, 364 F.3d 45 (2d Cir. 2004).
2nd Circuit rejects enhancement where no evidence that defendant engaged in joint criminal activity. (220) Over a several month period, defendant used false identification at different bank branches to make unauthorized withdrawals of money from other people’s accounts. She also used altered identification documents of other persons, specifically drivers licenses and credit cards, to commit these acts. The Second Circuit ruled that a § 2B1.1(b)(3) increase for an offense involving “theft from the person of another” was clearly erroneous. To support the enhancement, the government was required to prove that: (1) the documents used by defendant were obtained by a third party through pick-pocketing, purse snatching or other theft from the person; (2) defendant had entered into an agreement with the third party to obtain the identification documents; (3) the third party’s theft of documents was in furtherance and within the scope of defendant’s agreement; and (4) the third party’s theft was reasonably foreseeable to defendant. The government presented no evidence that defendant engaged in joint criminal activity. The fact that defendant obtained documents relating to seven victims over a nine-month period was equally consistent with numerous non-joint activities, such as purchasing the documents on the black market. U.S. v. Rizzo, 349 F.3d 94 (2d Cir. 2003).
2nd Circuit affirms increase for risk of serious bodily injury from staged car accidents. (220) Defendant was convicted of federal health care fraud in connection with a series of staged automobile accidents. The district court enhanced her offense level under § 2F1.1(b)(4)(A) of the 1997 guidelines (now codified at § 2B1.1(b) (11)(A)) for an offense involving “the conscious or reckless risk of serious bodily injury.” Defendant argued that the guidelines require a finding that she was conscious of or in reckless disregard of a risk of serious bodily injury, but the Second Circuit found no error. The panel agreed with the Ninth Circuit’s conclusion that a defendant does not have to subjectively know that his conduct created a serious bodily risk. See U.S. v. Johansson, 249 F.3d 848 (9th Cir. 2001). Rather, “for the 1997 § 2F1.1(b)(4)(A) enhancement to apply, a defendant’s fraudulent conduct must have created a risk that others would suffer serious bodily injury; moreover, said risk must have either been known to the defendant (conscious), or, if unknown to the defendant, the type of risk that is obvious to a reasonable person and for which disregard of said risk represents a gross deviation from what a reasonable person would do (reckless).” The enhancement was proper here: defendant intended to participate in a staged, deliberate car accident, and the district court found that the serious risk of bodily injury was inherent to this type of criminal activity. U.S. v. Lucien, 347 F.3d 45 (2d Cir. 2003).
2nd Circuit holds that cross-reference applies only if elements of another offense are established by conduct set forth in indictment. (220) Defendant pled guilty to one count of making false statements to representatives of the U.S. Attorney’s office and the FBI, in violation of 18 U.S.C. § 1001. At sentencing, the government argued that U.S.S.G. § 2B1.1(c)(3), a cross-reference provision, permitted the court to sentence defendant under U.S.S.G. § 2J1.2(c)(1), the obstruction of justice guideline, rather than under § 2B1.1, the fraud guideline that applied to § 1001 violations. The Second Circuit held that the § 2B1.1(c)(3) cross-reference applies only if the elements of another offense are established by conduct set forth in the count of conviction and proven by a preponderance of the evidence. The cross-reference was not applicable here. The indictment did not set forth a sufficient nexus between defendant’s false statements and a federal judicial proceeding to set forth a violation of 18 U.S.C. § 1503. The indictment also did not establish a violation of 18 U.S.C. § 1512, which requires a specific intent to interfere with the communication of information to authorities. However, the fact that the cross-reference was not applicable did not bar the district court from departing under Note 15 to § 2B1.1, which permits a departure where the primary objective of the offense was an aggravating non-monetary objective. The district court incorrectly concluded that Note 15 could not be used “as a back door to allowing an upward departure” that was otherwise prohibited by the inapplicability of the § 2B1.1(c)(3) cross-reference. U.S. v. Genao, 343 F.3d 578 (2d Cir. 2003).
2nd Circuit holds that value of artwork stolen twice should be assessed from perspective of last legitimate owner. (220) In 1945, Soviet soldiers looted a German castle and removed artwork belonging to the Bremen Museum. Years later, the KGB donated 14 of these drawings to the Baku Museum in Azerbaijan. In 1993, 12 drawings originally from the Bremen Museum disappeared from the Baku Museum. In 1997, defendant was arrested in the U.S. after she and her husband attempted to sell the stolen Bremen drawings. At sentencing, defense expert testified that the cloud on the title of the Bremen drawings due to the thefts from the Bremen and Baku Museums rendered their worth “nil” because no art gallery or collector would buy them. The district court rejected the government’s argument that the art’s value should be assessed from the perspective of the Bremen Museum, without consideration of the 1945 theft by the Soviet Army. As a result, the court found that the art was only worth $183,500. The Second Circuit held that it was proper to use of the value of the artwork to the last possessor who operates on the legitimate market, in this case the Baku Museum. “Given the state of uncertainty created by the cloud on the title and the ongoing dispute over which museum could claim legitimate ownership of the drawings, the district court’s decision to identify the ‘victim’ as the Baku Museum (the entity directly impacted by the loss due to the chain of theft in which the defendant participated) and not the Bremen Museum (an earlier owner whose claim was uncertain and whose loss, if loss there be, was the fault of a different set of actors) was not clearly erroneous for purposes of § 2B1.1.” U.S. v. Aleskerova, 300 F.3d 286 (2d Cir. 2002).
2nd Circuit holds loss question sufficiently novel or complex to be excepted from plain error rule. (220) Defendant worked for a company hired by the U.S. Postal Service to print commemorative Richard Nixon stamps. Defendant stole from the company’s vault 160 stamps that were mistakenly printed with the words “Richard Nixon” upside down. Defendant argued for the first time on appeal that there was no loss from his theft because the stamps would have been destroyed had he not stolen them. Generally, issues not raised in the trial court will be deemed waived on appeal in the absence of plain error or defects affecting substantial rights. The Second Circuit held that the loss issue fell within the exception to this rule “warranted for novel or complex sentencing issues.” Thus, it decided to consider the merits of defendant’s claim. U.S. v. Robie, 166 F.3d 444 (2d Cir. 1999).
2nd Circuit rejects use of defendant’s gain where it bore no relation to victim’s loss. (220) Defendant worked for a company hired by the U.S. Postal Service to print commemorative Richard Nixon stamps. Defendant stole from the company’s vault 160 stamps that were mistakenly printed with the words “Richard Nixon” upside down. Stamps with such misprints, if officially and accidentally issued by the Postal Service, are highly valuable to collectors. Defendant sold the stamps to stamp dealers, misrepresenting that they had been purchased from a post office. The district court, applying the loss provision in § 2B1.1, calculated the actual value of the 160 stamps to defendant to be about $400 a stamp. Defendant argued that Postal Service suffered no economic loss because it would have destroyed the misprinted stamps if he had not stolen them. The Second Circuit agreed that in this case it was not proper to substitute defendant’s gain for the victim’s loss. The value of the misprinted stamps to defendant did not in any way relate to the loss to the Postal Service, which had no use for the stamps. If there was no economic loss to the Postal Service, there was no “loss” for guidelines purposes. Gain is not a proxy for loss where there is none. However, an upward departure might be warranted if the guidelines loss did not fully capture the harmfulness of defendant’s conduct. The Postal Service suffered a real but intangible loss in the form of embarrassment and the appearance of incompetence. Also, the loss to the stamp dealers might constitute relevant uncharged conduct which could be considered in calculating defendant’s sentence. U.S. v. Robie, 166 F.3d 444 (2d Cir. 1999).
2nd Circuit holds possessing unsold stolen parts was relevant conduct to transporting stolen parts. (220) Defendant operated a company that restored aircraft and bought and sold aircraft parts. He was convicted of transporting stolen aircraft parts in interstate commerce. The district court found that his possession of additional stolen parts that he never sold or transported was relevant conduct. The Second Circuit agreed that defendant’s possession of unsold stolen parts from the same victim as the parts he transported in interstate commerce easily qualified as relevant conduct. The offenses were part of a common scheme or plan because they had a common victim, a common time period, and a common type of merchandise. At a minimum, defendant’s possession of stolen parts was part of the same course of conduct as his transportation of stolen parts. The charged and uncharged offenses were similar: all involved avionics equipment stolen from the same airline, the offenses occurred within a short period of time, and the sales, possessions, and attempted sales were repetitious. U.S. v. Martin, 157 F.3d 46 (2d Cir. 1998).
2nd Circuit rejects attempt guideline for possessing stolen property with intent to sell. (220) Defendant claimed that the district court should have computed his offense level under § 2X1.1, the guideline for attempt, because his possession of additional stolen parts was part of an uncompleted attempt to transport the parts. The Second Circuit held that defendant was properly sentenced under § 2B1.1, which is specifically called “Possessing Stolen Property.” Defendant did not simply attempt to possess stolen property, he actually possessed it. Defendant could not recharacterize his possession of stolen property as an uncompleted attempt to commit some other crime in an effort to receive the more beneficial treatment provided by § 2X1.1. U.S. v. Martin, 157 F.3d 46 (2d Cir. 1998).
2nd Circuit excludes from loss the stolen painting’s appreciation while it was missing. (220) In 1978, defendant purchased a stolen painting for $100,000, which also represented the fair market value of the painting at the time of the sale. In 1990, he attempted to sell the painting for $350,000, when its fair market value was between $1 and $1.5 million. Defendant was convicted of possessing stolen property. The district court found that the loss under § 2B1.1 was the fair market value of the painting in 1978 when defendant purchased it, reasoning that the increased value of the painting was similar to interest, which is excluded from loss calculations under note 2 to § 2B1.1. The Second Circuit upheld excluding the painting’s appreciation from the loss calculation. Because defendant did not attempt to sell the painting at its full market value, the appellate court would not second guess the lower court’s decision to value the painting at the lower amount. However, this did not mean that appreciation in value can never be considered when calculating loss. U.S. v. Trupin, 117 F.3d 678 (2d Cir. 1997).
2nd Circuit says “financial institution” enhancement must be based on defendant’s individual receipts. (220) Defendant and a co‑conspirator were involved in the robbery of $7.4 million from an armored car. The district court applied an enhancement under the 1993 version of § 2B1.1(b)(7)(B) because the offense affected a financial institution and defendant derived more than $1 million in gross receipts from the offense. The Second Circuit remanded because the enhancement must be based on the receipts defendant individually derived from the robbery. The robbery affected a financial institution, even though the banks whose money was in the armored car were insured against the loss. However, the court did not resolve how much money defendant individually received from the robbery. Defendant possessed $168,000 in his apartment. In another apartment to which defendant had full access police found a suitcase bearing his name containing $849,000, and a locked closet containing $2.1 million. The enhancement could be based on the amounts found in defendant’s apartment and in the suitcase bearing his name. U.S. v. Millar, 79 F.3d 338 (2d Cir. 1996).
2nd Circuit considers criminal history and sophistication in imposing fencing enhancement. (220) Conspirators stole silver ingots in New York, and shipped them to defendant in Hawaii. Defendant sold the ingots to a dealer in Hawaii, who sold them to refineries in Rhode Island and Massachusetts. The district court enhanced defendant’s sentence under § 2B1.2(b) (4)(A) (1992) for being in the business of receiving and selling stolen property. The Second Circuit held that the district court properly considered the sophistication of defendant’s acts and his criminal history, including police reports of suspected fencing, in imposing the fencing enhancement. Defendant drew on his earlier acquired expertise to accomplish the charged activities. It was not error to cite police reports of suspicions that defendant was involved in fencing. A court may consider uncharged criminal activity. The level of sophistication also supported the § 2B1.2(b)(4)(A) enhancement. The fact that his co-conspirators would steal the silver in New York, and ship it all the way to Hawaii, only to have it shipped back to the mainland for smelting, suggested defendant had a level of expertise sufficiently high to justify the additional risk associated with shipping. U.S. v. Salemi, 46 F.3d 207 (2d Cir. 1995).
2nd Circuit finds warehouse theft did not involve more than minimal planning. (220) A month after defendant was fired, he remembered he still had keys to the warehouse. He drove his taxicab to the well-lighted warehouse and began to load computer equipment into it. He put on a pair of rubber surgical gloves he found inside the warehouse. When he discovered the cab was too small to hold the packaged equipment, he removed the computer parts from the boxes, and loaded them into his cab. He disconnected the warehouse phones, and stole two of them. The Second Circuit found that defendant’s theft was a “spontaneous, reckless caper” that did not involve more than minimal planning under § 2B1.1(b)(5). Defendant drove up to a well-lighted warehouse in a conspicuous yellow taxicab that was too small to carry the boxes of computer components he stole. He only disabled the warehouse phones in order to steal them. His use of the gloves he found was not significant. If he had really planned the offense, he would have brought gloves with him. U.S. v. Cropper, 42 F.3d 755 (2d Cir. 1994).
2nd Circuit extends relevant conduct to date of defendant’s arrest on similar state charges. (220) Defendant shoplifted merchandise, and then conspired to transport the stolen goods in interstate commerce. She had 40 prior convictions for larceny, receiving stolen property, forgery and theft. Her most recent offense was a 1992 Vermont conviction for felony theft based on similar shoplifting conduct. Note 8 to § 1B1.3 states that conduct associated with a sentence that was imposed prior to the acts constituting the instant federal offense should not be considered relevant conduct. The 2nd Circuit upheld the district court’s determination that the period of defendant’s relevant conduct began on October 28, 1991, the date she was arrested on the Vermont offense, rather than on February 4, 1992, the date on which she was sentenced for that offense. Defendant made no showing that the state court took her post-arrest theft activity into account in setting her state sentence. U.S. v. Defeo, 36 F.3d 272 (2nd Cir. 1994).
2nd Circuit holds defendants accountable for stolen goods they intended to purchase. (220) Defendants were convicted of conspiracy to receive and resell stolen goods, primarily silver and gold. The district court included in its offense calculation under section 2B1.1(b)(1) the value of a planned purchase of 5600 pounds of silver from a government agent. The 2nd Circuit affirmed. Agreement for the purchase had been reached, and there were extensive negotiations concerning the method and timing of delivery. Defendants were not entitled to a reduction under § 2X1.1(b)(2) for a conspiracy where the substantive offense is not committed. The reduction is appropriate only where the arrest occurs well before any of the acts necessary for the substantive offense are completed. These defendants undoubtedly had completed all the acts they believed necessary to receive the goods. Finally, even if sentencing entrapment is a valid claim, that defense was inapplicable here, since defendants were predisposed to engage in further transactions. U.S. v. Rosa, 11 F.3d 315 (2nd Cir. 1993).
2nd Circuit says defendant need not be involved in planning to receive more than minimal planning enhancement. (220) Defendants were convicted of conspiracy to receive and resell stolen goods, primarily silver and gold. The 2nd Circuit upheld a more than minimal planning enhancement under section 2B1.2(b)(4)(B) despite defendants’ claim that they were not personally involved in the planning. Such planning is an offense characteristic, not a characteristic of the individual defendant. The numerous steps taken to conceal the offense, including the decision to melt all the silver and jewelry, the plan to obliterate the watches’ serial numbers, and the discussion of shipping goods outside of New York, more than adequately demonstrated the requisite planning. U.S. v. Rosa, 11 F.3d 315 (2nd Cir. 1993).
2nd Circuit agrees that defendants were in the business of receiving stolen goods. (220) Defendants were convicted of conspiracy to receive and resell stolen goods, primarily silver and gold. The 2nd Circuit approved an enhancement under section 2B1.2(b)(4)(A) for being in the business of receiving stolen goods. Defendant told an undercover agent that he would be smart to bring his goods to defendant, and made it clear that these were not his first such transactions. He also revealed familiarity with the need to resell goods that bore serial numbers outside of New York, telling the agent that the people he dealt with were “professionals.” Numerous recorded conversations demonstrated that defendant was willing to deal in a broad variety of stolen goods for resale; that the other defendant was willing and able to purchase large quantities of stolen goods; and that the other defendant would provide defendant with $700,000 for the transaction on a day’s notice. U.S. v. Rosa, 11 F.3d 315 (2nd Cir. 1993).
2nd Circuit says use of a weapon is not considered in stolen property guideline. (220) Defendant was convicted of possessing stolen mail after a co-defendant used a gun to rob a mailman. The 2nd Circuit held that the use of a gun justified an upward departure. There was sufficient evidence that defendant knew a gun was involved in the offense. The stolen property guidelines do not account for the use of a weapon. Section 2B1.2(b)(2)’s enhancement applies when the stolen property includes a firearm, which was not relevant here. Moreover, section 5K2.6 provides that weapons used in the commission of a crime may warrant a departure. The five level departure was not unreasonable. An analogous guideline, § 2B3.1(b)(2)(C), provides for a five level enhancement if a firearm is brandished, displayed or possessed in the course of a robbery. However, remand was required because the district court did not state on the record its reasons for the extent of the departure. U.S. v. Stephens, 7 F.3d 285 (2nd Cir. 1993).
2nd Circuit holds defendant accountable for value of all checks in stolen mailbag. (220) One of defendant’s co-defendants stole a mailbag from a mailman. The mailbag contained $26,000 worth of stolen checks. Defendant was convicted of possessing stolen mail. The 2nd Circuit found that under section 2B1.2(b)(1) the value of the stolen property was $26,000, rather than just the amount of the checks on which defendants fingerprints were found. Defendant and his two co-defendants segregated the envelopes containing checks from the rest of the mailbag’s contents, opened the envelopes, and divided the checks among themselves. Therefore, defendant was accountable for all the stolen checks because he aided and abetted the others in possessing the stolen mail. In addition, the conduct of his co-defendants was in furtherance of jointly undertaken activity and reasonably foreseeable to defendant. U.S. v. Stephens, 7 F.3d 285 (2nd Cir. 1993).
2nd Circuit bases loss on face value of forged money orders. (220) Defendant was arrested for selling money orders with imprinted values totaling $47,330 to a government agent in exchange for $2,500. The 2nd Circuit held that under the commentary to sections 2B1.1 and 2F1.1, the district court correctly calculated defendant’s offense level based on the face value of the seized instruments. The district court’s refusal to adjust defendant’s base offense level under application note 10 to section 2F1.1 constituted a non-appealable refusal to depart downward. U.S. v. Agwu, 5 F.3d 614 (2nd Cir. 1993).
2nd Circuit applies obstruction guideline to atypical theft conviction. (220) Defendant, who was helping the government translate tape recordings of wiretaps in an ongoing investigation, became concerned that a new courier was becoming involved in the activity being investigated without knowledge of its criminality. Defendant warned the new courier, and in the process revealed information from the wiretap to both the courier and another target of the investigation. Defendant was convicted of theft of government property under 18 U.S.C. §641. Though the statutory index lists the general theft guideline, §2B1.1, as appropriate for that offense, the district court applied the guideline for obstruction of justice, §2J1.2. The 2nd Circuit affirmed based on the unusual facts of the case. Section 2J1.2 was the guideline “most applicable.” U.S. v. Elefant, 999 F.2d 674 (2nd Cir. 1993).
2nd Circuit upholds stolen property enhancement based on dismissed counts. (220) The district court imposed an enhancement under section 2B1.2(b)(1) for possessing stolen property worth $2,460 based on facts contained in the dismissed count of defendant’s indictment. The 2nd Circuit rejected the claim that basing a sentence enhancement upon the dismissed count violated defendant’s due process, double jeopardy, or 8th Amendment rights. A court may rely upon facts not proven beyond a reasonable doubt in sentencing. A defendant’s right to be free from double jeopardy is not infringed by enhancements based upon acquitted, much less dismissed, counts of an indictment. There was no 8th Amendment violation since defendant’s 18-month sentence was 102 months less than the statutory maximum. U.S. v. Streich, 987 F.2d 104 (2nd Cir. 1993).
2nd Circuit says transfer of stolen property to mother’s house showed more than minimal planning. (220) Defendant was convicted of several counts relating to the theft and possession of stolen government property. The 2nd Circuit held that an enhancement under section 2B1.2(b)(4)(B) for more than minimal planning was supported by defendant’s transfer of the stolen property to his mother’s house and its concealment there, 70 miles from the site of the burglary. U.S. v. Streich, 987 F.2d 104 (2nd Cir. 1993).
2nd Circuit affirms refusal to return stolen money as grounds for upward departure. (220) Defendants were convicted of stealing $3.7 million from their armored car company. The district court departed for refusal to return the stolen money. The 2nd Circuit agreed that the guidelines did not adequately consider the defendants’ refusal to return stolen money because they were willing to exchange time in prison for “instant riches” upon release. The court rejected the argument that consideration of defendants’ failure to return the stolen money violated their right against self-incrimination, noting that producing the money would not implicate them in any crimes other than those for which they had already been convicted. Nor would it prejudice defendants’ rights on appeal, since production of the money would not be part of the appellate record. Here, however, the district court failed to make proper findings of fact concerning defendant’s possession of the money. The case was remanded to permit defendants to present evidence indicating that they did not have control over the money. U.S. v. Bryser, 954 F.2d 79 (2nd Cir. 1992).
2nd Circuit upholds calculation of loss based upon entire sum on money embezzled by defendant. (220) Defendant, a bank employee, embezzled approximately $750,000 in loan processing fees by instructing loan customers to make checks payable to an account maintained by defendant and his wife at another bank. Defendant contended that the district court improperly viewed the entire $750,000 as “Loss” under guideline § 2B1.1, because the bank would not have been entitled to retain the amounts it charged as processing fees since the amounts exceeded the bank’s costs. The 2nd Circuit found defendant’s argument to be meritless. Loss is not limited to the harm done by the defendant when, for some reason, the amount taken exceeds the harm. Moreover, if the bank was not entitled to keep the entire sum it charged, it must repay that amount to its customers. The bank and the borrowers together suffered a total loss of $750,000. U.S. v. Cea, 925 F.2d 56 (2nd Cir. 1991).
2nd Circuit holds that “amount of loss” is that taken from a rightful owner, even if some is immediately recovered. (220) Defendant commandeered an armored car at gunpoint, removed its occupants, and drove away. Before abandoning the car they removed $247,000 of the $357,000 in the car. Defendant’s base offense level was determined by the amount of loss, which was found to be the $347,000 amount. The 2nd Circuit affirmed, holding that under guidelines § 2B1.1 application note 2, property removed from its rightful owner is properly considered taken even if immediately recovered. By driving the car away, defendants exercised dominion and control over the entire amount even though they subsequently left some money behind in their transfer to a getaway car. U.S. v. Parker, 903 F.2d 91 (2nd Cir. 1990).
3rd Circuit does not resolve whether interest amendment was substantive or clarifying. (220) Defendant was involved in a mortgage and bank fraud conspiracy. He challenged the inclusion $132,000 of bargained-for interest in the loss calculation. On November 1, 2001, the Sentencing Commission amended the commentary to § 2B1.1 to exclude interest from the loss calculation. Prior to that amendment, the Third Circuit had included bargained-for interest in calculating loss in bank fraud cases. The district court used the 2000 Guidelines in effect when the crimes were completed in June 2001 to calculate defendant’s sentence because other amendments to the 2001 Guidelines significantly increased the enhancements related to the amount of loss. The court refused to consider the 2001 amendment excluding all interest from the loss calculation under § 2B1.1, finding that the amendment was substantive, not clarifying. The Third Circuit found it unnecessary to resolve whether the 2001 amendment was a clarification or a substantive change because any error was harmless. Excluding the interest from the total loss of $2.7 million would have resulted in the same 13-level enhancement for losses between $2.5 million and $5 million. U.S. v. Jimenez, __ F.3d __ (3d Cir. Jan. 14, 2008) No. 05-4098.
3rd Circuit refuses to reduce loss based on speculative amount victim bank might receive from sale of property. (220) Defendant was involved in a mortgage and bank fraud conspiracy. He argued that the loss from one commercial loan should have been reduced by the value of the property pledged to secure the loan. At the time of sentencing, the loan had been in default for over five years, the victim bank had charged off a balance of $165,000 on the loan, the borrower had filed bankruptcy, the collateral was tied up in that proceeding, and the bank’s priority was subordinate to another loan and to the bankruptcy trustee. The court reduced the loss amount by the proceeds that the bank had received from the bankruptcy trustee by the time of sentencing (about $27,000) but refused to reduce the amount further for any potential future recovery from the sale of the pledged real estate because of the speculative nature of any recovery. The Third Circuit found no error. Given the conflicting evidence of the value of the collateral, the bank’s subordinate position, and the uncertainty of collection, the district court did not clearly err in determining that the bank suffered a loss of about $138,000 at the time of the sentencing hearing. U.S. v. Jimenez, __ F.3d __ (3d Cir. Jan. 14, 2008) No. 05-4098.
3rd Circuit reverses downward departure from fraud guideline. (220) Defendants were convicted of fraud for using a school to obtain federal funds for classes that were never conducted. The district court departed downward to sentences of probation with periods of in-home confinement. The court cited (1) defendants’ good works and community support, (2) their lack of an initial intent to defraud, (3) defendant Spicer’s minor role, and (4) the “exculpatory no” doctrine in Spicer’s case. The Third Circuit reversed, finding none of the factors relied upon supported the departures. First, public service and good works are discouraged bases for departures. See § 5H1.1. Most of the good works occurred during work at the school and involved no special sacrifice. As for defendants’ intent, it is inappropriate to consider intent as a departure factor where the crime specified an intent element. Defendant Spicer received a minor role reduction, and the court failed to outline how that role was “exceptional.” Finally, Spicer lied to the grand jury and was convicted of perjury for this lie. U.S. v. Ali, 508 F.3d 136 (3d Cir. 2007).
3rd Circuit holds that loss was difference between benefits obtained and amount defendant was entitled to receive. (220) Defendant was convicted of making false representations in connection with his receipt of workers’ compensation benefits. He failed to report income he received while receiving worker’s compensation benefits for an injury. The Third Circuit held that the district court erred in finding that the entire amount of benefits defendant received as a result of the false application for workers’ compensation constituted the “loss amount” under § 2B1.1. Rather, the correct measure of loss was the difference between what defendant actually received and what he would have received if his forms had been accurate. The government failed to show that full retroactive termination of defendant’s benefits was among the possible results of any re-evaluations by the U.S. Office of Workers’ Compensation. U.S. v. Tupone, 442 F.3d 145 (3d Cir. 2006).
3rd Circuit applies enhancement for taking stolen personal information to forge new identifications. (220) Guideline § 2B1.1(b)(9)(C) (i) provides for a two-level sentencing enhancement for “the unauthorized transfer or use of any means of identification unlawfully to produce or obtain any other means of identification.” Defendant and his co-conspirators obtained personal contact and account information of bank customers, and used the information to forge driver’s licenses and employer IDs for the purpose of making fraudulent bank withdrawals. Defendant argued that taking misappropriated means of identification – a name or number – and putting it on a new physical document does not trigger the enhancement because the new physical document, which contains the same “means of identification” does not constitute “another means of identification.” The Third Circuit disagreed. The phrase “any other means of identification” in § 2B1.1(b) (9)(C)(i) does not mean “different.” Rather, it is a broader phrase meaning “additional.” By taking a means of identification – the information from the fraud victim’s driver’s license and employer ID – and combining that information with a photograph of one of the conspirators, defendant produced “another means of identification” – a means of identification of the victim which would give the conspirators access to the victim’s assets. U.S. v. Newsome, 439 F.3d 181 (3d Cir. 2006).
3rd Circuit agrees that amount of counterfeit checks was intended loss. (220) Defendant, using a false name, bought a condominium using two counterfeit cashier’s checks totaling $195,000. He challenged the district court’s finding that he intended to cause a loss of between $120,000 and $200,000, contending that he presented the counterfeit checks at closing because he had promised his girlfriend that he would buy the condo and was embarrassed to tell her he did not have the money to do so. He contended that he did not want to take possession of the condo and did not expect the counterfeit checks to be accepted at the closing or honored by the bank. The Third Circuit found no error in the court’s determination of intended loss. Defendant had many opportunities to come forward and admit to the forgery had he really wanted to “get caught.” Defendant handed over two forged checks in the combined amount of $195,000 for the purpose of buying a condo. It was reasonable for the court to infer that he intended to reap the benefit of all $195,000. U.S. v. Himler, 355 F.3d 735 (3d Cir. 2004).
3rd Circuit says loss from stealing cultural objects did not adequately reflect harm. (220) Defendants stole various cultural objects from a historical museum. Finding defendants’ sentencing range of 27 to 33 months did not sufficient capture the egregiousness of the offenses, the district court departed upward by four levels. The Third Circuit remanded because the district court departed without providing advance notice to defendants of its intention to depart upward, as required by Burns v. United States, 501 U.S. 129 (1991). However, the court agreed that a departure was warranted. The price of the stolen artifacts as set by the commercial market was insufficient to “fully capture the harmfulness of the [defendants’] conduct.” The stolen antiques had historical and cultural importance. Moreover, the thefts affected the museum by damaging its reputation. Finally, the monetary value of the objects did not adequately take into consideration the real but intangible harm inflicted upon all of the other victims of the offense, including the City of Philadelphia and the general public. U.S. v. Medford, 194 F.3d 419 (3d Cir. 1999).
3rd Circuit rejects arbitrary selection of midpoint between two loss estimates. (220) Defendants stole various cultural objects from a historical museum. One expert appraised the total monetary value of the stolen objects at $2,452,471; a second appraiser found the value was $2,579,500. The district court selected the midpoint of the two estimates for a total loss of $2,515,985.50, resulting in a 15-point enhancement under § 2B1.1 for a loss exceeding $2.5 million. The Third Circuit found that the district court’s arbitrary selection of the midpoint between the high and low estimates violated U.S. v. Miele, 989 F.2d 659 (3d Cir. 1993). Miele held that in cases in which the fair market value ranges between two estimates, and either end of the range is equally plausible, courts should generally adopt the lower end of the estimated range. Where there is other evidence to support the higher end of an estimated range, the court may rely on the higher estimate. In the present case, the district court selected the middle value between the high and low estimates without assessing the reliability of the higher estimate. U.S. v. Medford, 194 F.3d 419 (3d Cir. 1999).
3rd Circuit says placing robbery victim in fireplace and placing fire screen across is physical restraint. (220) Defendant and an accomplice robbed an inn, using what appeared to be an automatic pistol. As they were leaving, defendant forced the night clerk into an office, put him in the fireplace, and placed the fire screen across it. The Third Circuit held that defendant’s actions constituted “physical restraint” under § 2B3.1(b)(4)(B). Section 1B1.1 defines “physically restrained” as “the forcible restraint of the victim such as by being tied, bound or locked up.” Force is not limited to physical force, and may encompass other circumstances that permit no alternative to compliance. See U.S. v. Doubet, 969 F.3d 341 (7th Cir. 1992) (applying physical restraint enhancement where bank robber herded victims into unlocked bathroom, yelling death threats). No actual touching is required to effect physical restraint. Defendant had repeatedly threatened to “waste” the clerk and displayed a gun. Placing the screen in front of the fireplace signified defendant’s intention to impede the victim from intervening the commission of the crime and calling for help. The fact that the fire screen was easily moveable did not make the enhancement improper. U.S. v. Copenhaver, 185 F.3d 178 (3d Cir. 1999).
3rd Circuit says being “in the business” does not require defendant to be driving force in fencing operation. (220) On three occasions, defendant sold a total of 231 stolen cable boxes to an undercover agent. Defendant told the agent that although he usually got 100-200 units per week, at one time he received 300 cable boxes a week from his sources. He worked with people employed by the cable companies who would pilfer the cable boxes by erasing them from the inventory lists on the company computers. Defendant challenged a § 2B1.1(b)(4) “in the business” enhancement, claiming he was merely a low level delivery boy for the true fence in the operation. The Third Circuit held that the “in the business” enhancement does not require proof that the defendant was the leader, organizer or driving force behind the fencing operation. Defendant’s boasting about his history of trafficking in illegal cable boxes provided a sufficient foundation to conclude that he had previously engaged in fencing activities. Moreover, lack of regularity can be compensated by a strong showing of sophistication. There was abundant evidence that defendant’s operation was run with great professionalism. U.S. v. Cottman, 142 F.3d 160 (3d Cir. 1998).
3rd Circuit upholds use of face value of stolen checks to determine loss. (220) Defendant deposited stolen and forged checks into an account. He then withdrew funds from the account, and forged a stolen check to buy a car for about $14,000. When he was arrested, he had $25,152 in stolen checks. Following Note 2 to § 2B1.1, the district court determined that the loss in regard to the stolen checks was $25,152, the face value of the stolen checks. The 3rd Circuit affirmed. The fact that some of the checks may no longer have had any value as a result of the passage of time or because payment had been stopped was irrelevant. Note 2 specifically states that “loss” is the “loss that would have occurred if the check or money order had been cashed.” Defendant’s crime of theft was complete, even though his criminal conduct was only partially completed. U.S. v. Hallman, 23 F.3d 821 (3rd Cir. 1994).
3rd Circuit suggests downward departure where large loss over magnifies sentence. (220) Defendant assisted a co-defendant in selling stolen government bonds with a face value of $129,000 and received a nine level enhancement under §2B1.1(b)(1)(J). He argued that he should only have received a two level enhancement, since the most he could have received from his participation in the scheme was $2,000. The 3rd Circuit approved the enhancement, since under application note 2 to §2B1.1, loss is the fair market value of the particular property at issue. However, the court suggested that, notwithstanding the proper application of the guidelines, the nine-level enhancement overstated both the degree of defendant’s criminality and his need to be corrected. Where application of the guidelines’ monetary tables bears little or no relationship to a defendant’s role in the offense, and greatly magnifies the sentence, the district court should have the discretion to depart downward. U.S. v. Stuart, 22 F.3d 76 (3rd Cir. 1994).
3rd Circuit says selling 220 stolen bonds was not a “business” of selling and stolen property. (220) Defendant possessed 220 government bonds that were stolen from a home during a burglary. He sold 129 of them to a government agent in two separate transactions, and turned the remaining bonds over to the FBI on the day of sentencing. The 3rd Circuit reversed an enhancement under § 2B1.2(b)(4)(A) for being in the business of selling and receiving stolen property. The court distinguished U.S. v. Esquivel, 919 F.3d 957 (5th Cir. 1990) which held that the “in the business” enhancement does not require that a defendant be previously engaged in fencing activities. The facts in Esquivel were markedly different. All of defendant’s transactions involved a single purchaser. His sales did not involve the same level of sophistication, and were not even remotely as repetitive as Esquivel’s. Regularity of conduct is one universal thread in virtually all legal definitions of business. There was no evidence that defendant’s irregular and occasional sales underrepresented the scope of his criminality or the extent to which he encouraged or facilitated other crimes. U.S. v. King, 21 F.3d 1302 (3d Cir. 1994).
3rd Circuit says “gross receipts from the offense” includes property obtained indirectly. (220) Defendant illegally wired money from a bank to accounts controlled by others. About $476,000 was transferred to a company in which defendant held no interest. However, the parent corporation of this company later gave defendant a $300,000 promissory note which provided that the principal would be repaid directly to defendant in quarterly installments. The 3rd Circuit held that the $300,000 promissory note constituted property obtained as a result of the offense, and thus constituted “gross receipts from participation in the offense” for purposes of a section 2B1.1(b)(7)(B) enhancement. Gross receipts from the offense includes all property which is obtained either directly or indirectly as a result of the offense. U.S. v. Wong, 3 F.3d 667 (3rd Cir. 1993).
3rd Circuit rules abuse of trust is not an element of bank embezzlement. (220) Defendant pled guilty to four counts of bank embezzlement. He contended it was improper to assess him a two-level enhancement for abuse of trust because abuse of trust was an element of his embezzlement offense. The 3rd Circuit rejected this, finding abuse of trust under the guidelines requires something more than mere embezzlement. The abuse of trust must have contributed in some substantial way to facilitating the crime and not merely provide an opportunity that could have as easily been provided to others. U.S. v. Georgiadis, 933 F.2d 1219 (3rd Cir. 1991).
3rd Circuit finds no double counting in upward adjustment for amount of loss and enhancement for abuse of trust. (220) Defendant pled guilty to four counts of bank embezzlement. He contended that the enhancement for abuse of trust was improper because abuse of trust was implicitly reflect in the adjustments made by the district court under guideline sections 2B1.1(b)(1) and (5), which increase a defendant’s offense level based on the amount of loss and for more than minimal planning. The 3rd Circuit rejected this argument. The adjustment based on the amount of loss caused by defendant’s embezzlement and the abuse of trust enhancement operate independently and respond to “different evils.” “[I]t is not hard to imagine cases where the amount of money stolen by an embezzler will not depend on whether he abused any position of trust.” Similarly, the enhancement for more than minimal planning and abuse of trust dealt with separate concerns. U.S. v. Georgiadis, 933 F.2d 1219 (3rd Cir. 1991).
3rd Circuit affirms refusal to consider recovery of stolen property at sentencing. (220) Defendant argued that the district court erred in refusing to consider the recovery of the stolen property a mitigating factor, thereby depriving him of his due process right to consideration of factors peculiar to him that are relevant at sentencing. The 3rd Circuit rejected this argument, noting that its decision in U.S. v. Frank, 864 F.2d 992, 1009 (3rd Cir. 1989) held there is no substantive right to individualized due process at sentencing. Further, the application notes to U.S.S.G. § 2B1.2 state that the value of stolen property is to be determined without regard as to whether it was recovered. U.S. v. Chiarelli, 898 F.2d 373 (3rd Cir. 1990).
3rd Circuit reverses upward departure because factors for departure were already taken into account by guidelines. (220) At sentencing for receipt of stolen property, the court departed upward, relying in part on the great value of the property stolen and the “association” between defendants and the sophisticated burglars who stole the property. The 3rd Circuit reversed, holding these were not permissible bases for departure because they are already taken into account by the stolen property guideline. U.S. v. Chiarelli, 898 F.2d 373 (3rd Cir. 1990).
3rd Circuit upholds upward departure since “risk of harm” is not factored into stolen property guideline. (220) Defendant was convicted of possession of stolen property and conspiracy to receive stolen property. At sentencing, the district court departed upward based on defendant’s attempt to escape in a van at high speed. Defendant appealed, arguing that the guideline covering stolen property, U.S.S.G. § 2B1.2, adequately accounts for the danger to the public arising from escape. The 3rd Circuit disagreed, ruling that 2B1.2 “takes no account of any risk of harm that might arise from receiving stolen property.” Since risk of harm is not included in the guideline, it was a valid basis for an upward departure. U.S. v. Chiarelli, 898 F.2d 373 (3rd Cir. 1990).
3rd Circuit holds plea agreement binding when indictment contains specific factual allegations. (220) Defendant pled guilty to one count of stealing 122 pieces of mail worth approximately $22,500. At sentencing, he claimed the value of the mail stolen was less, seeking to benefit from a lower offense level. The trial court rejected his attempt to raise a factual issue, ruling that the facts were established by the guilty plea, and the 3rd Circuit agreed. When the plea agreement itself provides for a plea to the facts relevant to sentencing, a separate stipulation of facts is not necessary. Thus, it is proper for the sentencing court to rely on admissions of material facts made during pleas in sentencing defendants. The value of the mail in this case was a material fact because it was very significant in determining both the sentence and the defendant’s willingness to plead. U.S. v. Parker, 874 F.2d 174 (3rd Cir. 1989).
4th Circuit holds defendant accountable for gain realized by co-conspirators from securities fraud. (220) Defendant was involved in a securities “pump and dump” fraud scheme, which artificially inflated the value of securities, and then sold them at the inflated value to the public. The district court was unable to accurately determine the loss to the victims. Relying on Note 3(B) to § 2B1.1(b)(1), the court used the “gain that resulted from the offense” as an alternative measure of loss, and found it appropriate to use the total amount of gain by the conspiracy, which was in excess of $1 million. This figure included both the payments directly received by defendant and the value of stock sales made by his co-conspirators to the public. The Fourth Circuit upheld the imputation to defendant of the gain realized by his co-conspirators. Reasonably foreseeable losses attributable to the acts of co-conspirators may be included in a defendant’s loss calculation under § 2B1.1. Moreover, Note 3(B) to § 2B1.1 directs a court to use the gain that resulted from the offense. The word “offense” refers to the conspiracy. Thus, defendant could be imputed with the gain of the conspiracy, so long as that gain was reasonably foreseeable to him. U.S. v. Offill, 666 F.3d 168 (4th Cir. 2011).
4th Circuit uses perjury guideline for defendant who filed bankruptcy petitions in violation of court order. (220) Since 1995, defendant filed for bankruptcy 16 times in three different districts. In 2007, a bankruptcy court barred defendant for five years from filing another bankruptcy case. Defendant violated that order about three months later when she filed a chapter 13 bankruptcy petition in South Carolina. Although the petition required her to disclose, under penalty of perjury, all her previous bankruptcy cases filed in the past eight years, defendant failed to disclose nine cases she previously filed. She pled guilty to fraudulently making a declaration under penalty of perjury in a bankruptcy case. The Fourth Circuit upheld the district court’s use of § 2J1.3 rather than § 2B1.1 to set defendant’s offense level. Defendant’s offense was not, as she contended, more akin to fraud than to perjury. The indictment focused on the fact that her nondisclosure constituted a false declaration made to the bankruptcy court under penalty of perjury. The gravamen of the charge was that defendant interfered with the bankruptcy court’s administration of justice, not that she defrauded any creditors. U.S. v. Boulware, 604 F.3d 832 (4th Cir. 2010).
4th Circuit holds that 480% increase above guideline range was not reasonable. (220) Defendant embezzled $77,222 from her employer. She pled guilty to one count of bank fraud, resulting in an advisory guideline range of 24-30 months. The Fourth Circuit held that the 144-month sentence imposed by the district court, which represented a 480% increase over the high end of the guideline range, was not reasonable. The main § 3553(a) factor cited by the district court, defendant’s risk of recidivism and the need to protect the public, supported a variance. Defendant’s prior convictions were for similar offenses, and she was still serving the term of supervised release from the second offense when she was arrested and charged in this case. The district court found that defendant was a “habitual thief. “ However, the court did not articulate sufficiently compelling reasons to justify the extent of the variance. The court did not explain how it concluded that a 144-month sentence was necessary to serve the goals of § 3553(a). Many of the bases articulated by the court were already contemplated by the guidelines. U.S. v. Tucker, 473 F.3d 556 (4th Cir. 2007).
4th Circuit rejects use of expected loss where actual loss has already materialized. (220) Defendant, the owner of a construction company, was convicted of a variety of fraud counts in connection with use of false performance and payment bonds for two projects for which he was unable to obtain bonding. The district court found that the defendant exposed his victims to a potential loss of $3,000,000, resulting in a 13-level enhancement under U.S.S.G. § 2F1.1(b)(1) (N). Note 8(b) to § 2F1.1 provides that in “fraudulent loan application cases and contract procurement cases, the loss is the actual loss to the victim (or if the loss has not yet come about, the expected loss)….” The Fourth Circuit reversed, holding that because the actual loss had come about, expected loss was not the applicable standard. Defendant’s sentence could be enhanced only on a finding of actual loss or intended loss. However, the district court found that there was no intended loss. Instead, the court based its adjustment on the conclusion that the reasonable amount of loss the victim could have faced was $3 million. However, in cases where the loss has already materialized, comment 8(b) does not provide for damages based on the risk of loss to which the defendant exposes the victim, but only based on intended or actual loss. U.S. v. Pendergraph, 388 F.3d 109 (4th Cir. 2004).
4th Circuit holds that court properly ordered restitution for loss caused by entire conspiracy. (220) Defendants participated in a conspiracy to cut down and steal black cherry trees from a national forest, causing the U.S. a total loss of $248,459.53. He argued that, based on a special interrogatory answered by the jury, the loss attributable to him could be no more than $1000, both for purposes of sentencing and restitution. The Fourth Circuit disagreed. Although the special interrogatory stated that the value of the property that defendant stole involved $1000 or less, this finding did not contradict the jury’s finding that defendant was guilty of conspiracy to steal. The district court properly ordered restitution with respect to the loss caused by the conspiracy as a whole. U.S. v. Newsome, 322 F.3d 328 (4th Cir. 2003).
4th Circuit holds that concealed hand appeared to be dangerous weapon. (220) During two bank robberies, defendant handed a bank teller a note that stated: “I have a gun. Be quiet.” He kept his hands in his coat pocket during the majority of both robberies. The district court applied a § 2B3.1(b)(2)(E) dangerous weapon increase. Under Note 2, the enhancement applies if the robber brandishes, displays or possesses an object that appears to be a dangerous weapon but in fact is not. The Fourth Circuit held that defendant’s concealed hand was an object that appeared, by virtue of his statement that he possessed a gun, to be a dangerous weapon. When defendant presented the teller with a note stating that he had a gun and placed his hand in his coat pocket, he created the appearance that he had a gun in his pocket, regardless of whether he actually had a gun. A body part such as a hand can serve as an “object” that appears to be a dangerous weapon. See, e.g. U.S. v. Vincent, 121 F.3d 1451 (11th Cir. 1997); U.S. v. Dixon, 982 F.2d 116 (3d Cir. 1992). Although the hand was not given the visual appearance of a gun, the panel refused to restrict the meaning of the word “appear” to visual or sensorial appearance. Defendant’s hand appeared to be a gun because it was concealed in his coat pocket and because he told the teller he possessed a gun. U.S. v. Souther, 221 F.3d 626 (4th Cir. 2000).
4th Circuit says defendant’s gain not a proxy for victim’s loss where there is no loss. (220) Defendant sold aircraft parts that had been stolen from the scrap cage of an aircraft manufacturer. The district court found that the loss under § 2B1.1 was $86,100, the value paid by defendant for the scrap parts. This was same valuation approach the jury presumably used for jurisdictional purposes. See 18 U.S.C. § 2314 (federal courts only have jurisdiction when the value of the stolen goods is $5000 or more). The Fourth Circuit held that the value of goods for sentencing purposes was not the same as for jurisdictional purposes, and that district court improperly examined defendant’s gain rather than the victim’s loss. For jurisdictional purposes, § 2311 requires a determination of the “value” of the goods, defined as “face, par or market value.” In contrast, the guidelines are concerned with the “loss” to the victim. A defendant’s gain can only be used as a proxy for determining the loss to the victim. A defendant’s gain is not a proxy for loss when there is no loss. U.S. v. Chatterji, 46 F.3d 1336 (4th Cir. 1995). Thus, for those parts which the manufacturer would have sold for scrap, the scrap value was the most accurate method of valuing loss. U.S. v. Ruhe, 191 F.3d 376 (4th Cir. 1999).
4th Circuit approves of use of four previous mail thefts as relevant conduct. (220) Defendant pled guilty to a single count of stealing an article of registered mail. The 4th Circuit upheld the court’s use of four previous thefts of cash and currency from the mail as relevant conduct in determining his sentence. The government presented evidence that (a) mail containing cash and checks had been stolen from a registered mail pouch dispatched from one post office on four different Saturdays, (b) defendant was the mail driver on each of these occasions, (c) defendant had access to the registered mail pouch, (d) defendant was the only person who could have broken the seal on the trailer on the relevant dates, and (e) defendant had regularly seen postal workers counting money prior to its dispatch and often asked how much cash was in the shipment. U.S. v. Jones, 31 F.3d 1304 (4th Cir. 1994).
4th Circuit rejects extortion guideline for striking Greyhound worker who attempted to damage bus. (220) Defendant, a striking Greyhound worker, pled guilty to violating 18 U.S.C. section 33 for attempting to damage a bus with reckless disregard for human life. The 4th Circuit held that the district court improperly sentenced him under sections 2E1.5 (Hobbs Act extortion violations) and 2B3.2 (Extortion), rather than section 2B1.3 (Property Damage or Destruction). Defendant did not commit extortion under the Hobbs Act. When the charged conduct does not fit within the guideline’s express description, that guideline can only be relied on in sentencing by analogy. But analogies are permitted only where no sentencing guideline fits the offense. Here, by its terms, section 2B1.3 applied, addressing property damage and destruction. U.S. v. Lambert, 994 F.2d 1088 (4th Cir. 1993).
5th Circuit uses offense level for alien smuggling, rather than for making a false statement. (220) At a port of entry in Texas, defendant told a border patrol officer that he and his passengers were U.S. citizens, although he knew that two of the passengers were not. He pled guilty to one count of making a false statement, in violation of 18 U.S.C. § 1001(a)(2). Defendant contended that the conduct underlying his conviction was “specifically covered” by 8 U.S.C. § 1185(A) (3) (making a false statement in an application for permission to enter the U.S.), and therefore, the court should have sentenced him under § 2L2.1 or § 2L2.2. The Fifth Circuit held that a sentencing court may apply the cross-reference provision in § 2B1.1(c)(3) only if the application of that provision is supported by the conduct alleged in the indictment. Under this standard, the district court’s decision to use the alien smuggling guideline (§ 2L1.1) was not erroneous. Defendant’s “count of conviction” alleged that he made a false statement about his passenger’s citizenship to a border officer in an attempt “to aid the female passenger’s entry into the United States.” The alien-smuggling statute, § 1185(a)(2), expressly covers this conduct. U.S. v. Arturo Garcia, 590 F.3d 308 (5th Cir. 2009).
5th Circuit includes in gross receipts fraudulently-obtained loans used to pay off pre-existing liens. (220) Defendant was involved in a large-scale conspiracy to defraud lenders by obtaining residential real estate loans by means of false statements. Section 2B1.1 (13)(a) provides for a two-level enhancement if “the defendant derived more than $1,000,000 in gross receipts from one or more financial institutions as a result of the offense.” The government argued that to determine gross receipts, the court should use the face amount of all the loans defendant fraudulently obtained. Defendant argued that “gross receipts” did not include loan proceeds that were used to pay off the pre-existing mortgages on some of these properties. The district court agreed with defendant and excluded such funds because they went to pay “otherwise legitimate debts.” The Fifth Circuit reversed, holding that the “gross receipts” meant the full amount of the loans that defendant fraudulently obtained. “Gross proceeds” includes all property that is obtained “directly or indirectly” as a result of the offense. U.S. v. Gharbi, 510 F.3d 550 (5th Cir. 2007).
5th Circuit holds that participant in crime constituted “victim” for loss purposes. (220) Defendant, the Chief of Police, established a program using federal funds that allowed police officers to earn extra money by serving warrants for the city. At some point, defendant and Cooper, another officer, were the only officers involved in the program, and they began serving warrants together and splitting the proceeds. Defendant then decided to stop serving the warrants, but persuaded Cooper to serve the warrants on his own, but submit pay sheets with both officers’ name. Defendant then continued to collect half of the reimbursements. The Fifth Circuit ruled that Cooper, who was a participant in the fraud offense, could be considered a “victim” for purposes of determining the amount of actual loss under U.S.S.G. § 2B1.1. Cooper’s agreement to participate in defendant’s scheme to defraud the city was not entirely voluntary. Defendant was Cooper’s superior and controlled access to the warrant service program. Cooper’s agreement was similar to an agreement to an extortion demand. U.S. v. Geeslin, 447 F.3d 408 (5th Cir. 2006).
5th Circuit holds that Medicare is not a “financial institution.” (220) Defendants were convicted of multiple crimes related to fraud on the Medicare program. The district court applied a two-level increase under the 2001 version of U.S.S.G. § 2B1.1(b)(12)(A) for deriving “more than $1,000,000 in gross receipts from one or more financial institutions as a result of the offense.” The court also applied a four-level increase to another defendant under the 2000 version of U.S.S.G. § 2F1.1(b)(8)(B). The government conceded that under a recent decision, Medicare is not a “financial institution” within the meaning of the relevant guideline. See U.S. v. Soileau, 309 F.3d 877, 881 (5th Cir. 2002). While Soileau dealt with the 2000 guidelines, the relevant provision is in pertinent part identical in the 2001 guidelines. The Fifth Circuit vacated the sentences containing this incorrect enhancement. U.S. v. Miles, 360 F.3d 472 (5th Cir. 2004).
5th Circuit upholds loss equal to amount written on face of blank tickets. (220) Defendant was involved in a conspiracy to traffic in stolen airline tickets. The district court measured the loss as the amount written on the face of the blank tickets. Defendant argued that the fair market value was better estimated by the amount he actually received for the stolen tickets. The Fifth Circuit found this argument unpersuasive. The black market value of the blank airline tickets, i.e. defendant’s proceeds from the sale of the tickets, was not the same as the fair market value of those tickets. The black market value of a stolen good will reflect a discount from the fair market price of that good. The district court had little evidence of the fair market value of the blank tickets. Under Note 2, where the market value is difficult to determine, the court may measure loss in some other way. Here, the district court’s decision to measure loss as the amount billed by the airlines to the victim travel agency was entirely appropriate. U.S. v. Onyiego, 286 F.3d 249 (5th Cir. 2002).
5th Circuit holds that theft of case about 10 feet from victim was not “from the person of another.” (220) After Ben-Yosef, a diamond salesman, placed his case on the x-ray belt at the airport’s security checkpoint and started through the magnetometer, Charry stepped in front of Ben-Yosef and dropped her wallet. Charry blocked Ben-Yosef’s path while Gomez picked up Ben-Yosef’s bag containing diamonds and walked out of the secured area of the airport. Defendant served as the lookout, and stood next to Gomez as he stole the bag. Ben-Yosef was about ten feet from the case at the time it was stolen, a distance described by an FBI agent as being “within a leap and a grab.” The Fifth Circuit reversed a § 2B1.1(b)(2) increase for theft from the person of another, finding it irreconcilable with the plain wording of the guideline and the accompanying notes. Note 1 to § 2B1.1 states that “Theft from the person of another” means theft, without the use of force, of property that was being held by another person or was within arms’ reach. Here, Ben-Yosef was about ten feet away from the diamond case at the moment of its theft. In addition to linear separation, at least three impediments separated Ben-Yosef from his property: Charry, the magnetometer, and the x-ray machine. Thus, the diamonds were not “within arms’ reach” of Ben-Yosef when they were stolen. U.S. v. Londono, 285 F.3d 348 (5th Cir. 2002).
5th Circuit upholds reliance on forensic audit to determine loss from embezzlement. (220) Defendant charged personal expenses on his union American Express card and misused funds in several union accounts. The district court based its loss calculation on $189,790 in questionable credit card charges found by the union’s forensic audit. Defendant argued that this should be lowered because (a) the union found only $60,000 of loss due to defendant’s misuse of his credit card, (2) the FBI excluded certain expenditures the court’s calculation included, and (3) defendant was convicted of embezzling $101,200, only $59,450 of which was related to credit card charges. The Fifth Circuit held that the court’s reliance on the forensic audit for its loss finding was not clearly erroneous. The government and the union attributed a lower loss total to defendant because their investigation required a higher standard of proof. At sentencing, the government need only prove facts by a preponderance of the evidence. In the present case, the cards contained charges for thousands of dollars worth of guns, clothing, luggage bearing defendant’s initials, and other non-business items. U.S. v. Hammond, 201 F.3d 346 (5th Cir. 1999).
5th Circuit says defendant not responsible for third–party loss unless part of joint undertaking. (220) Defendant, the former president and business manager of a local union, embezzled union funds by charging personal expenses on his union credit card. The district court attributed to defendant losses caused by two union employees who also made improper charges to union credit cards. The court found “you were their leader, you ran things, you knew what they were doing and you knew why they were being allowed to get along.” The Fifth Circuit held that these findings were insufficient to hold defendant accountable for the employees’ conduct. Although the court found that the employees’ activity was foreseeable, the court did not make a particularized finding that defendant agreed to participate in a joint scheme with the employees, and it did not explain how the employees’ charges were within the scope of any joint undertaking with defendant. Such findings are “absolute prerequisites” to a sentence adjustment based on third-party misconduct. U.S. v. Evbuomwan, 992 F.2d 70, 74 (5th Cir. 1993). “[M]ere knowledge that criminal activity is taking place is not enough for sentence enhancement under § 1B1.3.” U.S. v. Hammond, 201 F.3d 346 (5th Cir. 1999).
5th Circuit upholds enhancement for being “in the business” of receiving stolen property.” (220) Guideline § 2B1.1(b)(4)(B) authorizes a four-level enhancement if “the offense involved receiving stolen property, and the defendant was a person in the business of receiving and selling stolen property.” The enhancement is intended as “punishment for fences, people who buy and sell stolen goods … as opposed to thieves who merely sell the goods which they have stolen.” U.S. v. Sutton, 77 F.3d 91 (5th Cir. 1996). Defendant stole a recreational vehicle (RV) from a dealer’s lot. After defendant was arrested, police found in the stolen RV blank identification documents, counterfeit identification documents, 347 blank authentic State of Virginia vehicle titles, and various document-making devices. Evidence that defendant received the stolen Virginia vehicle titles from a third person showed that defendant’s offense involved “receiving stolen property.” Moreover, defendant’s admission at sentencing that he previously sold counterfeit titles to people who had stolen RVs supported a finding that he intended to sell the Virginia vehicle titles, and thus, was “in the business of receiving and selling stolen property.” Accordingly, the Fifth Circuit affirmed an “in the business” enhancement. U.S. v. Myers, 198 F.3d 160 (5th Cir. 1999).
5th Circuit holds that stolen RV could be considered as loss under fraud guideline. (220) Defendant pled guilty to conspiracy to transport stolen motor vehicles across state lines, to possess stolen motor vehicles, to make and possess forged state securities, to produce false identification documents, and to possess implements for making forged state securities and false identification documents. He argued that the district court should not have used the value of a stolen RV in the loss under both the theft guideline (§ 2B1.1) and the fraud guideline (§ 2F1.1). The Fifth Circuit disagreed. First, because his offenses were grouped, only the higher theft offense level was used in calculating defendant’s sentence. Moreover, there was no error. Since defendant pled guilty to a multiple-object conspiracy, the probation officer correctly looked to the guidelines for the substantive offenses. Because the substantive offenses fell under both the theft guideline and the fraud guideline, they were properly grouped under § 3D1.2(d). The amount of loss is a specific offense characteristic under the fraud guideline. Thus, the district court did not err in using the value of the stolen RV as the amount of loss under the fraud guideline, because the stolen RV was part of “the combined offense behavior taken as a whole.” U.S. v. Myers, 198 F.3d 160 (5th Cir. 1999).
5th Circuit says defendant’s attempts to conceal theft involved more than minimal planning. (220) Defendant participated in the theft of an interstate shipment of computers. The Fifth Circuit approved a § 2B1.1(b)(4) more than minimal planning enhancement based on testimony that defendant helped examine and approve the warehouse used to store the stolen computers, picked up the warehouse key, and signed rent checks with an assumed name and address. In other words, defendant arranged a manner of concealing the theft that required numerous contacts with a real estate broker, the acquisition of money orders, and the use of false information. U.S. v. Lage, 183 F.3d 374 (5th Cir. 1999).
5th Circuit holds that theft of letters from postal worker was reasonably foreseeable. (220) An unidentified person stole two bundles of mail from a postal worker at gunpoint. The mail, minus Social Security checks, was found several blocks away. Using false identification, defendant later cashed a check stolen from these bundles of mail. The Fifth Circuit upheld a § 2B1.1(b)(2) enhancement for theft from the person of another, ruling that the theft from the postal worker was relevant conduct. Defendant admitted that he had been cashing checks for the couple who gave him the check and the false ID for several months. In addition, fingerprints of defendant and his associate were found on mail recovered 30 minutes after the theft and about eight blocks from the scene. U.S. v. Nevels, 160 F.3d 226 (5th Cir. 1998).
5th Circuit approves § 5K2.0 departure based on likelihood of recidivism. (220) While working as a bookkeeper, defendant embezzled over $290,000 from her employer. Defendant had been caught embezzling $10,000 from a previous employer only two months before she began working at this job. She had not been prosecuted because her mother made restitution to the employer. The Fifth Circuit approved an upward departure under § 5K2.0 based on the prior offense. Although the court referred to § 4A1.3, this was not a criminal history departure. The district court found a high probability of recidivism based on defendant’s prior conduct. Although § 4A1.3 deals with prior, uncharged conduct, the district court found aspects of this case atypical and the Fifth Circuit agreed that departure under § 5K2.0 was appropriate. On the other hand, it was improper for the court to depart based on the “inadequate” sentencing range. However, remand was not required because the court had authority to make the departure based only upon the likelihood of recidivism. U.S. v. McDowell, 109 F.3d 214 (5th Cir. 1997).
5th Circuit affirms loss where defendant’s calculation would reach same result. (220) Defendant sold stolen vehicles out of his used car dealership. The district court calculated the loss according to the amount the insurance companies paid out to the owners, $153,343.61. Defendant argued that the proper measure of the loss was the fair market value of the vehicles as determined by the National Association of Automobile Dealers. The Fifth Circuit found no error, since defendant did not explain how this would change the result. At sentencing, defendant objected to the NADA values, arguing that they were inflated. The NADA values used in the PSR resulted in a loss of $140,165, which was within the same guideline range as the $153,343.61 found by the district court. U.S. v. Sutton, 77 F.3d 91 (5th Cir. 1996).
5th Circuit approves “in the business” increase even though the only goods fenced were those for which defendant was convicted. (220) Defendant was convicted of selling stolen vehicles out of his used car dealership. The district court enhanced his sentence under § 2B1.1(b)(5)(B) for being “in the business” of receiving and selling stolen property. The Fifth Circuit affirmed, holding that the enhancement was not limited to professional fences, but applied to those who sold only the property for which they were convicted. Previous Fifth Circuit cases have established that the enhancement does not require the defendant to have previously fenced goods other than those for which he has been convicted. A criminal can be “in the business” even though it is his first time to fence. Over five months, defendant took orders for particular cars, had them stolen, and then sold them. Clearly, he was in the business of receiving and selling stolen property. U.S. v. Sutton, 77 F.3d 91 (5th Cir. 1996).
5th Circuit upholds enhancement despite contradictory evidence on whether defendant stole goods himself. (220) Defendant transported a stolen backhoe to Dallas, advertised it for sale, and arranged for it to be shown to interested buyers. Defendant contended that a § 2B1.2(b)(4)(A) enhancement for being in the business of receiving and selling stolen goods was improper because he had stolen the backhoe himself. The 5th Circuit upheld the enhancement, even though there was contradictory evidence on this issue. The enhancement does not apply to thieves who sell their own stolen goods. Thus, where the record is clear that the defendants themselves have stolen the goods, the enhancement is improper. However, where there is contradictory evidence, the enhancement is not clearly erroneous. U.S. v. Mackay, 33 F.3d 489 (5th Cir. 1994).
5th Circuit agrees that loss from credit card thefts equaled combined credit limits of all the cards. (220) Defendant, a postal employee, was apprehended attempting to take letters carrying 113 credit cards from the post office. The 5th Circuit affirmed that the loss under section 2B1.1 was the combined credit limits of all the stolen cards. The district court concluded that the intended loss was the credit available under the cards. Defendant’s method of operation, which included selling or giving away some of the cards to others, increased the likelihood that the cards could have been charged to the maximum credit limit. Had defendant completed or withdrawn from his offense before being apprehended, he might have been able to rebut the evidence that he intended to charge the cards to their limit. Application note 4 to section 2B1.1, which provides that loss includes any unauthorized charges made with stolen credit cards, is not inconsistent with this result. U.S. v. Sowels, 998 F.2d 249 (5th Cir. 1993).
5th Circuit includes embezzled funds in pre-guidelines counts in offense level for guidelines counts. (220) Defendant committed a series of embezzlements and was sentenced under pre-guidelines law for the first 18 counts and under the guidelines for the last five counts. The 5th Circuit affirmed the district court’s consideration of the funds involved in the pre-guidelines counts to determine defendant’s base offense level for the guidelines counts. This case could not be distinguished from U.S. v. Parks, 924 F.2d 68 (5th Cir. 1991), which held that it was within the district court’s discretion to impose consecutive sentences for pre-guidelines and guidelines offenses even if it used pre-guidelines conduct to determine the guideline offense level. U.S. v. Gaudet, 966 F.2d 959 (5th Cir. 1992).
5th Circuit affirms use of retail value of stolen goods to prove wholesaler’s loss. (220) Defendant was convicted of theft under 18 U.S.C. section 659. He received a five-point enhancement under section 2B1.1(b)(1)(F) based on a loss in excess of $10,000. The loss valuation was based upon the retail value of the goods, including warehousing and shipping costs. Defendant argued that the restitution amount, $4,564.80, should be used as the amount of loss. Since the goods he stole were being shipped wholesale, the wholesaler was the victim and the retail value was a speculative future value. The 5th Circuit rejected the argument. In U.S. v. Payne, 467 F.2d 828 (5th Cir. 1972), the court had previously determined that “value” under section 659 meant the greater of the wholesale or retail price. The 8th Circuit was in accord. Moreover, even if the wholesale value were the proper measure, the $4,564.80 restitution figure was not the wholesale value of the stolen goods, but the manufactured cost of the product. There was no clear error in including shipping and warehouse costs in the calculation. U.S. v. Watson, 966 F.2d 161 (5th Cir. 1992).
5th Circuit considers relevant conduct in determining loss under theft guideline. (220) Defendant was convicted of 14 counts of altering vehicle identification numbers. The 5th Circuit found that since the retail value of each vehicle was agreed upon by the parties, and since retail value was a practical measure of loss, the district court erred in considering incidental costs before retail value. However, the error was harmless since using retail value would have increased defendant’s base offense level. There was evidence that 30 cars were involved in defendant’s scheme. Each had a retail value of $20,000, resulting in a total loss of $600,000. Defendant’s sentence was based on a loss of between $350,000 and $500,000. It would be proper for the district court to consider all of these vehicles as part of defendant’s relevant conduct, for purposes of determining his base offense level. U.S. v. Thomas, 963 F.2d 63 (5th Cir. 1992).
5th Circuit considers loss, rather than retail value, in determining enhancement under section 2B6.1. (220) Defendant was convicted of altering motor vehicle identification numbers. Section 2B6.1 directs that if the retail value of the motor vehicles or parts involved exceeded $2,000, the base offense level should be increased by the corresponding number of levels from the fraud table in section 2F1.1. The fraud table provides for increases if the loss exceeded $2,000. The 5th Circuit rejected defendant’s argument that the district court should have used retail value, rather than loss, in determining the amount of enhancement under section 2B6.1. Section 2B6.1 clearly directs a district court, upon finding that the retail value exceeded $2,000, to use the amount of loss in applying the loss table in section 2F1.1. Neither section 2B6.1 nor 2F1.1 mention using retail value in applying the loss table in section 2F1.1. U.S. v. Thomas, 963 F.2d 63 (5th Cir. 1992).
5th Circuit upholds sentence based upon aggregate value of all vehicles within course of conspiracy. (220) Defendant was convicted of seven counts of illegal activities involving stolen vehicles. The district court determined defendant’s base offense level on the basis of the aggregate value of eight vehicles. The 5th Circuit affirmed that it was proper to base defendant’s sentence on all of the vehicles involved in the conspiracy. Under guideline section 1B1.3(a)(1), a defendant is accountable for the conduct of others in furtherance of a jointly-undertaken criminal activity that was reasonably foreseeable by the defendant. U.S. v. Patterson, 962 F.2d 409 (5th Cir. 1992).
5th Circuit finds use of stolen car to be relevant conduct for stolen credit card offense. (220) Defendant was arrested after unsuccessfully attempting to cash a stolen payroll check. He was in possession of a stolen rental card containing several stolen checks and credit cars. Defendant pled guilty to unlawfully possessing a stolen credit card. The 5th Circuit found that defendant’s use of the stolen rental car was relevant conduct under guideline § 1B1.3 for defendant’s credit card offense, especially since the stolen cards and checks were found in the car. U.S. v. Cryer, 925 F.2d 828 (5th Cir. 1991).
5th Circuit determines that dismissed counts were relevant conduct to offense of conviction. (220) Defendant was a bank president convicted of various counts of bank fraud. His offense level was increased by nine under guideline § 2B1.1, based on the district court’s consideration losses caused by transactions underlying dismissed counts as relevant conduct. Defendant argued that the dismissed counts should not be considered relevant conduct because they were of a different type and were perpetrated in a different time frame than the bank fraud. The 5th Circuit rejected this argument. The dismissed counts involved misapplication of bank funds through a loan and a letter of credit. Defendant held the same position at the bank as he did during the offenses for which he was convicted. Defendant continually made use of his position at the bank to improperly engage in loan transactions for the benefit of himself and others. Defendant also contended that no “loss” to the bank occurred because the loans at issue were repaid. However, the commentary to guideline § 2B1.1 defines loss to include the value of all property taken, even if recovered or returned. U.S. v. Cockerham, 919 F.2d 286 (5th Cir. 1990), superseded by statute on other grounds as stated in U.S. v. Arnold, 947 F.2d 1236 (5th Cir. 1991).
5th Circuit finds defendant need not have previously fenced property to be in the business of receiving and selling stolen goods. (220) Defendant contended that it was improper to enhance his sentence under guideline § 2B1.2(b) (3)(A) for being in the business of receiving and selling stolen goods because there was no evidence that he had previously fenced stolen property. He argued that the phrase “in the business of” implies a prior course of conduct exclusive of the conduct that forms the basis of the immediate charge. The 5th Circuit rejected this interpretation of the guidelines. A finding that a defendant has previously engaged in fencing activities is not a prerequisite for offense level enhancement under guideline § 2B1.2(b)(3)(A). The fact that defendant was gainfully employed in a legitimate business did not preclude the enhancement. U.S. v. Esquivel, 919 F.2d 957 (5th Cir. 1990).
5th Circuit finds that cutting wire from Army communications line involved more than minimal planning. (220) Defendant received information from telephone workers as to which cables on an Army missile range were not in service. He collected cutting tools, cut the wires, loaded the wires into his vehicle, sought a buyer, transported the wires to the buyer, and made the sale. Reviewing the district court’s ruling under the clearly erroneous standard, the 5th Circuit agreed that defendant had committed a crime involving more than minimal planning, justifying a two level increase under guideline § 2B1.1(b)(4). U.S. v. Barndt, 913 F.2d 201 (5th Cir. 1990).
5th Circuit upholds upward departure in mail theft case where loss was not capable of determination. (220) Defendant was convicted of theft of mail. The commentary to guideline § 2B1.1 states that “the value of property taken plays an important role in determining sentences for theft offenses.” Section 5K2.5, entitled “property damage or loss,” states that “if the offense caused property damage or loss not taken into account within the guidelines, the court may increase the sentence above the guideline range.” Here the district court departed upward after finding that the loss involved was “not capable of determination.” The 5th Circuit affirmed, ruling that the guidelines did not adequately take into account the “undeterminable and incalculable losses or the extremely large volume of mail involved in this case.” U.S. v. Garcia, 900 F.2d 45 (5th Cir. 1990).
6th Circuit finds court’s comments as a whole supported loss increase. (220) Defendant was convicted of stealing two cultural heritage items (two antique books), in violation of 18 U.S.C. § 668(b). The Sixth Circuit upheld a ten-level enhancement under § 2B1.1(b)(1)(F) for a stolen property value of more than $120,000, but less than $200,000. The court received numerous estimates from various sources on the value of the stolen books. Ultimately, the court stated that the value of the books was “at a minimum of $120,000,” but that there was “some significant evidence of value in excess of 135,000.” The court reiterated: “I find that the combined value of [the books] is at least $120,000, but no more than $200,000.” Although the district court’s precise language did not definitely establish that it found the books to be worth greater than $120,000, the court’s comments as a whole suggested that the court intended to find the books worth greater than $120,000. U.S. v. McCarty, 628 F.3d 284 (6th Cir. 2010).
6th Circuit finds theft of antique books was committed for pecuniary gain. (220) Defendant was convicted of knowingly stealing two cultural heritage objects (two antique books), in violation of 18 U.S.C. § 668(b). The Sixth Circuit upheld a § 2B1.5(b)(4) increase for an offense committed for pecuniary gain.” The district court found that the enhancement applied since defendant sold one of the books for $35,000. While the ultimate sale might speak of defendant’s intention at the time of theft, it did not inherently do so, and so by itself, was not adequate evidence to justify application of § 2B1.5(b)(4). However, the court also received evidence from a special agent that defendant regularly bought and sold books, including antique books, and that defendant had discussed his purported ownership of one book and the possible sale of the other book even before stealing at least one of the books. These two facts, coupled with the ultimate sale, supported the court’s finding that “pecuniary gain” motivated defendant’s thefts. U.S. v. McCarty, 628 F.3d 284 (6th Cir. 2010).
6th Circuit finds insufficient evidence that items were “cultural heritage resources” but error was harmless. (220) Defendant was convicted of stealing two cultural heritage objects (two antique books). The court applied an increase under § 2B1.5(b)(5) for engaging in “a pattern of misconduct involving cultural heritage resources.” This increase requires “two or more separate instances of conduct involving a cultural heritage resource that did not occur during the course of the offense.” Note 6(A) to § 2B1.5. Here, the increase was based on defendant’s involvement in three other thefts of historical maps and books. The Sixth Circuit rejected the enhancement, finding insufficient evidence that the other stolen items qualified as “cultural heritage resources.” A “cultural heritage resource” must be over 100 years old and worth more than $1,000. See 18 U.S.C. § 668(a)(2)(A). The evidence from one theft did not identify the age of the books or their value. The 50 or 60 maps stolen in a second theft were worth a combined value of $20,000, but the record showed only a single map from 1865, and its value was unknown. Nevertheless, the error was harmless, because the court said its sentence would be the same regardless. U.S. v. McCarty, 628 F.3d 284 (6th Cir. 2010).
6th Circuit reverses sentence for transporting aliens to obtain “certificates for driving.” (220) Defendant pled guilty to transporting illegal aliens from New Jersey to Tennessee for the purpose of obtaining “certificates for driving” for the aliens. The district court applied § 2L2.1, finding that defendant trafficked in documents relating to naturalization, citizenship, or legal resident status. However, at the time, Tennessee had a dual system of driver’s licenses and “certificates for driving.” The certificates were issued to illegal aliens and aliens who were not lawful permanent residents of the state, while licenses were issued only to citizens and lawful permanent residents. The certificates could not be used for identification, but they could be used for motor vehicle operation both in Tennessee and in other states. This was the intended use proffered by the aliens, who told their arresting officer that they wanted the licenses so that they could drive to their jobs in New Jersey. Because the certificates were not related to immigration or naturalization, the Sixth Circuit held that the district court erred in applying § 2L2.1 rather than § 2B1.1, the guideline applicable to generic fraud and forgery. U.S. v. Rivera, 516 F.3d 500 (6th Cir. 2008).
6th Circuit affirms separate increases for abuse of trust and claiming to act on behalf of charity. (220) Defendant fraudulently obtained a job as the executive director of a local Red Cross chapter one day before the September 11 attacks. The chapter obtained a large amount of donations earmarked for the victims of the attack. Defendant used the donations and other money from the chapter’s bank accounts to support her drug and alcohol habits and to purchase personal items and luxuries. The Sixth Circuit held that enhancements for abusing a position of public or private trust, § 3B1.3, and for misrepresenting that her actions were on behalf of a charitable organization, § 2B1.1(b)(8)(A), did not constitute improper double counting. The two enhancements penalized distinct aspects of defendant’s conduct and distinct harms. The abuse of trust enhancement accounted for defendant’s exploitation of her position as executive director, while the misrepresentation enhancement accounted for her deception in misleading contributors that their donations would go to charitable purposes rather than her own. Defendant’s conduct harmed the charity, thus meriting the abuse of trust enhancement, as well as the charity’s donors, warranting a separate enhancement for misrepresentation of a charity. U.S. v. Smith, 516 F.3d 473 (6th Cir. 2008).
6th Circuit holds that defendant could not reasonably foresee large fraudulent check deposited into bank account. (220) Defendant opened a bank account in the name of “Tommy Cypress” as part of a scheme to enable illegal immigrants without bank accounts to cash their payroll checks. Defendant was to receive a fee for setting up the account and cashing the checks. Nine months after the account was opened, a fraudulent check in the amount of $155,160 was deposited. The check had been stolen from a corporation, and was altered to name “Tommy Cypress” as the recipient. Three weeks later, defendant was arrested after trying to purchase an expensive television with a check. The district court applied a seven-level enhancement based on its finding that the amount of loss was greater than $120,000. The Sixth Circuit reversed. With regard to the $155,000 check, defendant contended that he did not deposit the check and did not even know of its existence. While it was reasonably foreseeable to defendant that payroll checks would be deposited into the fraudulent account, it was not reasonably foreseeable that a check originally payable to a corporate entity, that was drawn on an account with insufficient funds, in an amount far exceeding a payroll check, would be deposited into the account. U.S. v. Tudeme, 457 F.3d 577 (6th Cir. 2006).
6th Circuit holds that 220-month sentence for armed bank robber was reasonable. (220) Defendant pled guilty to armed bank robbery, resulting in an advisory guideline range of 188 to 234 months. The court sentenced defendant to a 220-month term of imprisonment. The Sixth Circuit upheld the sentence as reasonable. The sentencing court treated the guidelines as advisory and gave sufficient indication of its consideration of the § 3553(a) factors to provide a basis for the court to review the sentence for reasonableness. The court balanced defendant’s drug history and the need for defendant to participate in a substance abuse program with the severity of his offense, and his history of criminal activity. The court also investigated the kinds of sentences available in light of the fact that it imposed restitution on defendant. Finally, the court selected a sentence within the recommended guideline range. Such a sentence was entitled to a presumption of reasonableness. U.S. v. Ward, 447 F.3d 869 (6th Cir. 2006).
6th Circuit agrees that loss equaled amount of fraudulent “charge back.” (220) Defendants were convicted of fraud relating to a scheme involving bogus “charge backs” on orders their medical supply company placed with a pharmaceutical manufacturer. They misrepresented that certain sales they made were to federal facilities eligible for a reduced price, and the manufacturer would credit defendant’s account with the difference between the discounted price and the contract price. That difference was known as a “charge back.” The Sixth Circuit held that the district court properly based the loss and restitution on the amount of the fraudulent “charge backs.” The standard test for determining fair market value is to look at “the price a willing buyer would pay a willing seller at the time and place the property was stolen.” The original price that the manufacturer sold the pharmaceuticals to defendant was the market price. U.S. v. Sosebee, 419 F.3d 451 (6th Cir. 2005).
6th Circuit holds that account holders who only temporarily lost funds because banks reimbursed them were not victims. (220) Defendant participated in a scheme involving stolen checks drawn on about 13 different accounts, depositing more than $88,000 into the accounts of over 50 individuals using their stolen bank information. After depositing the stolen checks, defendant withdrew portions of the deposited funds from 47 of those accounts, receiving over $20,000 in cash. The district court applied a two-level increase under § 2B1.1(b)(2) (A) based on its finding that the offense involved more than 10, but less than 50 victims. The court found at least 11 victims – the five banks defrauded and the six account holders who had to open new accounts and buy new checks as a result of defendant’s actions. The Sixth Circuit held that those account holders who only temporarily lost funds because their banks reimbursed them for their losses were not victims because they were fully reimbursed for their temporary financial losses. Moreover, the court also erred in finding sufficient evidence that six account holders suffered pecuniary harm. While there was testimony that six account holders were required to open new accounts and obtain new checks, the witness later admitted that the account holders did not tell him whether they were reimbursed for their purchase of the new checks. U.S. v. Yagar, 404 F.3d 967 (6th Cir. 2005).
6th Circuit holds that stolen checks involved in state court offenses were relevant conduct. (220) Defendant was involved in a scheme in which participants stole checks from the mail, altered them, and then cashed them. The indictment charged nine individuals, who collectively stole 36 checks, with defrauding banks of over $43,000. Of this defendant was directly involved in the theft of only one check for 939.56. The district court attributed a loss of over $17,000 to defendant, which included amounts covered by defendant’s state-court convictions on similar charges. The Sixth Circuit agreed that the checks forming the basis for defendant’s state-court convictions qualified as relevant conduct. The modus operandi (stealing mail, washing checks in acetone, and altering the checks’ payees and amounts), the victims (financial institutions in the same town), and the time period (fall 2001) involved in defendants’ state and federal prosecutions were the same. Thus, for purposes of the guidelines’ amount-of-loss calculation, the checks forming the basis for defendant’s state-court convictions qualified as relevant conduct. U.S. v. McDaniel, 398 F.3d 540 (6th Cir. 2005).
6th Circuit reverses loss where no causation between defendant’s fraud and later loan default. (220) Defendant, a contractor with the Small Business Administration disaster relief program, filed a false request for progress payments of $103,370. In spite of the false certification, defendant claimed that he replaced the funds that he fraudulently obtained from the SBA and that such funds were used in the construction of the building. Defendant ended up defaulting on the loan and the SBA foreclosed. The district court found a loss of between $70-$130,000. The Sixth Circuit reversed, because the court ignored causation rules for determining loss. Defendant’s act of fraudulently obtaining one or more progress payments in an otherwise legitimate loan transaction could not reasonably be considered to have caused the SBA’s loss under either a “but for” or a legal cause analysis. The SBA incurred the loss on foreclosure because defendant was unable to make the loan repayments. Neither the district court nor the government provided any explanation of why or how defendant’s fraudulent conduct during the construction of the building made it more likely that defendant would later default on the loan. U.S. v. Rothwell, 387 F.3d 579 (6th Cir. 2004).
6th Circuit remands where court was not aware of authority to depart for overstated loss. (220) Defendant submitted bad checks to the county treasurer’s office to purportedly pay the real estate taxes on the residences of a judge, two attorneys, and an IRS revenue agent. Defendant then filed four involuntary bankruptcy petitions against the four victims, using the statements from the treasurer’s office as evidence of his creditor status. Even though defendant would never have succeeded in obtaining possession of his victims’ residences, the district court felt obligated to use the residences’ value in its intended loss calculation because intended loss includes “harm that would have been impossible or unlikely to occur.” However, “out of an abundance of caution,” the court reduced the probation officer’s loss figure by 15 percent. The Sixth Circuit held that the intended loss properly included the total market value of the residences, despite the fact that defendant could never have caused the victims to lose their homes. See Amendment 617 to Sentencing Guidelines. However, Note 18(C) to § 2B1.1 provides that a downward departure may be proper where the offense level “substantially overstates the seriousness of the offense.” Here, the impossibility that defendant’s scheme would succeed, and the gross disparity between the actual loss of $800 and the intended loss (over $1 million) demonstrated such overstatement. Because the record suggested that the judge did not recognize his authority to depart, the panel remanded for resentencing. U.S. v. McBride, 362 F.3d 360 (6th Cir. 2004).
6th Circuit finds Rule 32 violation where court did not respond to defendant’s objections to loss calculation. (220) Defendant was involved in a large-scale fraud scheme in which he stole personal information of individuals from mortgage applications they filed at his places of employment and sold that information to his co-conspirators. The PSR recommended that defendant was responsible for more than $400,000 in damages under § 2B1.1(b)(1)(H), and defendant objected, challenging several aspects of this calculation. The district court accepted the government’s calculation, without giving any indication as to how it calculated the loss. The Sixth Circuit held that the district court violated Rule 32 of the Federal Rules of Criminal Procedure when it rejected defendant’s challenge to the loss calculation without responding to his specific objections. Even a cursory glance at the government’s loss exhibit raised concerns, since some of the sheets contained no dates and did not indicate how several identified people fit into the conspiracy in relation to defendant. From the record, the appellate court could not determine whether the district court “carefully considered the evidence” because it failed to respond to defendant’s objections. U.S. v. Nelson, 356 F.3d 719 (6th Cir. 2004).
6th Circuit holds that financial crimes amendment was substantive and not retroactive. (220) Defendant, convicted in 1995 of an assortment of financial crimes, moved under 18 U.S.C. § 3582(c) for a sentence reduction based on the November 2001 guideline amendments, which overhauled the financial crimes guidelines. Defendant had received a four-level increase under the 1995 version of § 2B1.1(b)(6)(B) because his offense “affected a financial institution and [he] derived more than $1,000,000 in gross receipts from the offense.” The November 2001 amendments altered this provision to provide for a two-level increase in § 2B1.1(b)(12) (A) “if the defendant derived more than $1,000,000 in gross receipts from one or more financial institutions as a result of the offense.” While defendant conceded that the 2001 amendments “as a whole” were substantive in nature,” he contended that the 2001 amendment clarified what it means to “affect” a financial institution, and that the amendment should have been applied retroactively to him. Relying on U.S. v. Hartz, 296 F.3d 595 (7th Cir. 2002), the Sixth Circuit rejected this argument, finding that the amendment was substantive and could not be applied retroactively. There was no indication that the Sentencing Commission intended the amendment to be clarifying, the amendment changed the plain language of the guideline, and the original version was not ambiguous. U.S. v. Monus, 356 F.3d 714 (6th Cir. 2004).
6th Circuit applies increase for using false social security number to obtain bank loan in own name. (220) Defendants used false identifying information to obtain home loans. guideline § 2B1.1(b)(9)(C)(i) of the 2002 guidelines provides for an enhancement for “the unauthorized transfer or use of a means of identification unlawfully to produce or obtain any other means of identification.” The district court applied the increase because defendants used a means of identification, i.e. the social security number of another, to obtain another means of identification, i.e. a bank loan number. The Sixth Circuit agreed that the bank loan number qualified as another “means of identification,” and thus affirmed the enhancement. Note 7(C)(ii)(II) provides for the imposition of the enhancement when “[a] defendant obtains an individual’s name and social security number from a source … and obtains a bank loan in that individual’s name. In this example, the account number of the bank loan is the other means of identification that has been obtained unlawfully.” Since a bank loan number is an account number that can be used to obtain money, it is a “means of identification” as that term is defined in 18 U.S.C. § 1028. The fact that defendants obtained the loan in their own names did not matter. U.S. v. Williams, 355 F.3d 893 (6th Cir. 2003).
6th Circuit holds that upward departure for physical injury to guard was improper double counting. (220) Defendants committed an armed robbery of a restaurant, shooting and severely injuring a private security guard. They received a six-level enhancement under § 2B3.1(b)(3)(C) for permanent or life-threatening bodily injury. In addition, the district court departed upward by five levels under § 5K2.2 for the gravity of the injury inflicted on the guard (his dominant right arm had to be amputated). The Sixth Circuit held that the § 5K2.2 departure constituted improper double counting. Section 5K2.0 states that “physical injury would not warrant departure from the guidelines when the robbery offense guideline is applicable because the robbery guidelines includes a specific adjustment based on the extent of any injury.” Departure may be proper in “unusual circumstances” if the weight attached to a particular factor under the guidelines “is inadequate or excessive.” Such extreme or unusual circumstances did not exist here. If physical injury no worse than the guard’s justified an upward departure, it would be justified in most robberies involving life-threatening or permanent injury. U.S. v. Baker, 339 F.3d 400 (6th Cir. 2003).
6th Circuit holds that fraud guideline only supplements theft offenses if listed in Appendix A. (220) Defendant was convicted of embezzling from an employee benefit plan, in violation of 18 U.S.C. § 664. Embezzlement and other forms of theft are usually sentenced under § 2B1.1. However, Note 2 states that where the offense involved making a fraudulent loan, the loss is to be determined under § 2F1.1. Defendant claimed that his embezzlements were actual loans, and thus he should have been sentenced under § 2F1.1. In U.S. v. Lucas, 99 F.3d 1290 (6th Cir. 1996), the court followed Note 2 to use § 2F1.1 in connection with an 18 U.S.C. § 656 offense, even though the commentary to § 2F1.1 did not include § 656 as a statute to which it applied. Lucas also considered the fact that Appendix A included § 2F1.1 and § 2B1.1 as guidelines applicable to § 656. This case was distinguishable from Lucas, because Appendix A does not list § 2F1.1 as an applicable guideline for § 664. The Sixth Circuit concluded that by listing § 2F1.1 as applicable to § 656 and not § 664, the Sentencing Commission did not intend Note 2 to apply to § 664 offenses. Note 2 directs a court to supplement § 2B1.1 with § 2F1.1 only for those statutes in Appendix A which list both guidelines. Since Appendix A lists only § 2B1.1 as a guideline for a § 664 convictions, defendant’s sentence was proper. U.S. v. Krimsky, 230 F.3d 855 (6th Cir. 2000).
6th Circuit holds that court properly based theft loss on expected selling price rather than replacement cost. (220) Defendant was involved in a conspiracy to steal and redistribute stolen diamonds. The victim paid $158,663.62 for the diamonds and expected to sell them for $224,051.70. The district court measured the loss under § 2B1.1 based on the diamonds’ wholesale market value, rather than their known replacement cost. In U.S. v. Warshawsky, 20 F.3d 204 (6th Cir. 1994), the Sixth Circuit articulated a two-step process to assist district courts in determining the § 2B1.1 loss. First, the court should determine whether a market value for the stolen property is readily ascertainable. Second, if a market value is ascertainable, a court should determine whether that figure corresponds with the greater of the harm suffered by the victim and the gain realized by the defendant. “[T]he price a willing buyer would pay a willing seller at the time and place the property was stolen or at any time during the receipt or concealment of stolen property” is the customary test for determining market value. Thus, the Sixth Circuit ruled that here, the district court properly relied on the expected market selling price. U.S. v. Moore, 225 F.3d 637 (6th Cir. 2000).
6th Circuit finds more than minimal planning where defendant traveled to another state, burned ID tags and buried stolen diamonds. (220) Davis, an acquaintance of defendant, stole about 128 diamonds from his employer. Davis flew to Florida, where he contacted defendant and asked him to retrieve some of the contraband. Defendant drove from Tennessee to Florida, picked up some diamonds, and returned to Tennessee. He burned the diamonds’ identifying tags and buried them for safe-keeping. Over a five-month period, defendant sold diamonds to various individuals in Tennessee. The Sixth Circuit affirmed a § 2B1.1(b)(4) increase for more than minimal planning. Defendant traveled to another state to pick up the diamonds, returned home, burned the diamonds’ identification tags to avoid detection, buried the diamonds, fronted diamonds to others for resale, and sold diamonds himself. Given defendant’s attempts to conceal his criminal activity, the court’s finding of more than minimal planning was not clearly erroneous. U.S. v. Moore, 225 F.3d 637 (6th Cir. 2000).
6th Circuit rejects departure intended to overcome harsh guidelines for minor white-collar offenders. (220) Defendant, a letter carrier for the postal service, stole credit cards from the mail and used them to charge $11,000. The district court, sua sponte, departed downward based on the guidelines’ disparate treatment of defendant, a relatively minor white-collar offender, as compared with a more egregious offender who committed bank fraud in excess of $300,000. The Sixth Circuit held that the disproportionately harsh treatment of “minor” white-collar offenders as opposed to “serious” offenders was not a proper ground for departure. The Sentencing Commission intentionally gave low-level offenders sentences that appear harsh when compared with high-level fraud because of its belief that low-level fraud should be classified as “serious.” The Commission was concerned that in pre-guidelines practice, such offenders were often sentenced to probation. The Commission believed that the definite prospect of prison, even though for a short time, would serve as a significant deterrent to such offenders. The fact that this arrangement produces disproportionate results between high- and low-level offenders cannot serve as the legal basis for a downward departure absent unusual circumstances. U.S. v. Weaver, 126 F.3d 789 (6th Cir. 1997).
6th Circuit includes in loss, repayments made after victim discovered fraud. (220) Defendant, the vice president of a bank, was convicted of misapplying bank funds under 18 U.S.C. § 656. When he and his business partner were short of the funds, he made an unsecured loan from the bank to his partner’s brother, falsely representing the brother’s financial status and the purpose of the loan. The brother then gave the loan proceeds to defendant and his partner. The loan was repaid in full on January 15, 1993. The FBI’s investigation began on January 5, 1993, but it was unclear whether defendant knew this. The Sixth Circuit held that, under Note 7(b) to § 2F1.1, the loss is the amount of loan not repaid at the time the offense is discovered—by the victim or authorities, whichever comes first. Amounts repaid after that cannot be set off from the loss, even if defendant was unaware that the offense had been discovered. Thus, the district court erred in following U.S. v. Dion, 32 F.3d 1147 (7th Cir. 1994), which held that Note 7 did not apply to bank misapplication cases. U.S. v. Lucas, 99 F.3d 1290 (6th Cir. 1996).
6th Circuit finds acquitted theft was not proved sufficiently to include it in loss. (220) Defendant, a postal employee, repeatedly stole articles from registered parcels. The stolen items included jewelry and five $5,000 bearer bonds. In calculating the loss, the district court included jewelry in an acquitted count. The Sixth Circuit held that the government did not sufficiently prove defendant committed the acquitted conduct to hold him responsible for it at sentencing. A court may consider relevant acquitted conduct at sentencing if it has been proved by a preponderance of the evidence. But here the only evidence linking defendant to the stolen jewelry in the acquitted count was the fact that defendant stole jewelry on other occasions. This was insufficient by itself. U.S. v. Comer, 93 F.3d 1271 (6th Cir. 1996).
6th Circuit agrees that postal employee’s thefts involved more than minimal planning. (220) Defendant, a postal employee, repeatedly stole articles from registered parcels. The Sixth Circuit affirmed a § 2B1.1(b)(5)(A) enhancement for more than minimal planning since the conduct took place over several months and the scheme was complicated. Defendant first had to steal the items from the mail and then package and sell them. Also, he had to transport and negotiate the bearer bonds he stole. U.S. v. Comer, 93 F.3d 1271 (6th Cir. 1996).
6th Circuit holds embezzler responsible for full amount taken. (220) Defendant and other city workers embezzled money from their employer. She argued that she was only accountable for the amount that she actually received from the scheme. The Sixth Circuit disagreed, holding that defendant was accountable for the amount that she could reasonably foresee being taken in the scheme. Under § 1B1.3(a)(1)(B), in the case of a jointly undertaken criminal activity, a defendant is responsible for all reasonably foreseeable acts and omissions of others in furtherance of the activity. Given defendant’s central role in the embezzlement scheme, she could reasonably foresee the theft of $66,680. U.S. v. Brown, 66 F.3d 124 (6th Cir. 1995).
6th Circuit holds conspiracy to convert proceeds from sale of HUD-owned property involved more than minimal planning. (220) Defendant was involved in a conspiracy to defraud HUD by converting the proceeds from the sale of HUD-owned properties. Defendant challenged a more than minimal planning enhancement under § 2B1.1(b)(5)(A) because the organizer of the scheme, and not defendant, did the planning. The Sixth Circuit upheld the enhancement because defendant engaged in repeated acts over time and took significant affirmative steps to conceal the offense. He transferred funds on several occasions and had multiple meetings with his co-conspirators. After defendant was contacted by FBI investigators, he contacted the leader in order to camouflage his involvement in the conspiracy. U.S. v. Griggs, 47 F.3d 827 (6th Cir. 1995).
6th Circuit finds defendant was in the business of receiving and selling stolen property. (220) Defendant was convicted of three counts of engaging in transactions involving stolen and counterfeit automobile parts. He challenged a § 2B1.2(b)(4)(A) enhancement for being in the business of receiving and selling stolen property, claiming that in his 24 years in the auto parts business he had engaged in only two transactions involving stolen property. The 6th Circuit upheld the enhancement. Defendant both bought and sold stolen automobile parts that he did not steal himself. The criminal activity was a part of defendant’s business, even though the prosecution proved only two stolen property transactions. This enhancement was supported by taped conversations in which defendant stated that he operated a sophisticated ongoing business dealing in stolen auto parts. This activity encouraged theft by others. U.S. v. Koehler, 24 F.3d 867 (6th Cir. 1994).
6th Circuit upholds “fencing” enhancement where operation encouraged others to commit property crimes. (220) Defendants purchased auto parts which had been stolen from a GM plant. The 6th Circuit upheld an enhancement under section 2B1.2(b)(4)(A) for being in the business of receiving and selling stolen property. A sentencing court should examine a defendant’s operation to determine if (a) stolen property was bought and sold, and (2) the stolen property transactions encouraged others to commit property crimes. Defendants’ operation clearly met this test, for it provided a “powerful conduit for the distribution of stolen auto parts.” Defendants purchased tens of thousands of dollars of stolen property and “bestowed bountiful rewards” on individuals willing to steal the property of others. U.S. v. Warshawsky, 20 F.3d 204 (6th Cir. 1994).
6th Circuit says court should have used wholesale cost of stolen goods to determine loss. (220) Defendants purchased auto parts which had been stolen from a GM plant. The district court used the retail value of the stolen goods to determine loss under section 2B1.1. The 6th Circuit reversed, concluding the court should have used the wholesale cost of the goods as a measure of loss. Usually, fair market value is the proper measure of the value of stolen property. All of the participants in the case interacted solely in the wholesale market, not the retail market. Here, the market value of the parts clearly was their wholesale price of $173,376, a reliable value readily ascertainable by the district court. There was no indication from the sentencing court that the wholesale market value of the parts was an inadequate measure of the harm to GM or the gain to defendants. In the absence of a detailed justification for deviating from the market value, the district court’s action could not be upheld. U.S. v. Warshawsky, 20 F.3d 204 (6th Cir. 1994).
6th Circuit says pharmacy burglars should have been sentenced under burglary guideline, not assault guideline. (220) After burglarizing a pharmacy, defendants fled and their car hit a police car trying to intercept them. The officer in the car was seriously injured. The 6th Circuit held that defendants should have been sentenced under §2B2.2, burglary of other structures, rather than §2A2.2, aggravated assault. The gravamen of the offense was pharmacy burglary; the assault merely enhanced defendants’ sentences. The assault was an aggravating circumstance that might qualify for enhancement under 18 U.S.C. §2118(c)(1), but it could not be fairly described as the offense of conviction within the meaning of the guidelines. Since §2A2.2 was not the appropriate guideline, enhancements under §2A2.2(b)(1), (b)(2)(B) and (b)(3)(B) were vacated. U.S. v. Mills, 1 F.3d 414 (6th Cir. 1993).
6th Circuit affirms that car burglary involved more than minimal planning. (220) The 6th Circuit affirmed that defendant’s theft of a purse from a locked, parked car involved more than minimal planning. Defendant was observed walking through the parking lot for 30 minutes prior to the theft, looking into a number of cars until he found a suitable target. He twice attempted to gain entry into the car, not giving up the attempt even after setting off the car alarm two times. He brought with him a contorted wire hanger to unlock the car and a towel to conceal both the hanger and his loot, he drove to a more remote parking lot in order to dispose of the purse and he drove to yet another area to change clothes. U.S. v. Gerry, 960 F.2d 599 (6th Cir. 1992).
6th Circuit affirms enhancement in car burglary for gun found under back seat of defendant’s car. (220) Defendant stole a purse from a locked, parked car. His own car was parked in the same lot. The 6th Circuit affirmed an enhancement under section 2B2.2(b)(4) based on defendant’s possession of a gun which was found under the back seat of his car. Unlike the firearm enhancement provision under the drug guidelines, nothing in the burglary guideline indicates that there must be a particular connection between the weapon and the offense. The only issue is whether the weapon was possessed during the offense. The possession requirement ensures that the enhancement will not apply where the firearm is located at a remote distance from the scene. Here, the firearm was under defendant’s control and was readily accessible to him. Senior Judge Wellford dissented, believing that the connection between the theft from an unoccupied car and the location of firearm to be too tenuous to warrant the enhancement. U.S. v. Gerry, 960 F.2d 599 (6th Cir. 1992).
6th Circuit affirms that car thefts involved more than minimal planning. (220) Defendant was convicted of stealing an FBI vehicle and unlawful conversion with intent to steal a second FBI vehicle. The 6th Circuit affirmed that the offenses involved more than minimal planning. Defendant repeatedly asked his brother-in-law, who was working undercover for the FBI, to watch for a Blazer or Cadillac worth stealing. The brother-in-law then notified defendant of an FBI Cadillac located at a motel parting lot. While en route to the motel to steal the vehicle, defendant stole a different Cadillac parked at another motel, which he stated was necessary to avoid using his own car to steal the FBI vehicle. The method of stealing the FBI Cadillac clearly indicated prior planning. U.S. v. Clark, 957 F.2d 248 (6th Cir. 1992).
6th Circuit applies aggravated assault guideline to striker who fired gun at Greyhound bus. (220) Defendant, a striking Greyhound Bus employee, fired a gun at a Greyhound bus traveling on the road, and was convicted of damaging a motor vehicle with reckless disregard for human life, in violation of 18 U.S.C. section 33. Although the Statutory Index in effect in March, 1990, provided that guideline sections 2K1.4 (Arson) and section 2B1.3 (Property Damage) were “ordinarily applicable” to violations of section 33, the court used section 2A2.2, the aggravated assault guideline. The 6th Circuit affirmed. Appendix A to the guidelines states that in an “atypical case” where the guideline is inappropriate, a court may use the guideline “most applicable” to the offense. The district court’s choice was confirmed by the current version of the Statutory Index, which lists section 2A2.2 as an appropriate guideline for a violation of section 33. U.S. v. Daniels, 948 F.2d 1033 (6th Cir. 1991).
6th Circuit holds that co-defendant’s possession of nunchucks was properly attributed to defendant. (220) Defendant and a co-defendant broke into a bank at night and stole various personal possessions belonging to bank employees and damaged the bank vault in an attempt to open it. Defendant and the co-defendant were apprehended in the building adjacent to the bank, lying on the floor with their eyes closed. Co-defendant had a set of nunchucks, a martial arts weapon, under his head. Defendant objected to the two level increase in his base offense level based upon his co-defendant’s possession of the nunchucks. The 6th Circuit found the increase was proper under guideline § 2B2.2. Possession of a weapon in the commission of an entry into a federally insured bank was foreseeable and it was reasonable to infer that defendant had knowledge of the weapon. U.S. v. King, 915 F.2d 269 (6th Cir. 1990).
6th Circuit holds that loss includes cost of hiring security guards pending repair of damaged bank vault. (220) Defendants broke into a bank and damaged the vault in an attempt to open it. Defendant’s offense level was increased under guideline § 2B2.2 because the amount of the loss exceeded $2,500. The 6th Circuit held that the district court properly included in the calculation of loss the bank’s cost of hiring extra security guards to guard the vault while it was being repaired. “Although the guards obviously are not part of the broken door, it is wholly foreseeable that demolition to bank vaults or mechanical mishaps during an attempted burglary would result in increased security while the integrity of the bank vault is restored.” U.S. v. King, 915 F.2d 269 (6th Cir. 1990).
7th Circuit upholds increase for theft that benefitted foreign government despite acquittal of economic espionage. (220) Defendant, a former Motorola software engineer, was convicted of theft of trade secrets after she downloaded thousands of internal Motorola documents, all stamped proprietary, disclosing details of its cellular phone technology. She was stopped by Customs agents at the airport, headed to China. The trial judge acquitted her of economic espionage, although he stated that he thought her guilty of the offense, but ruled it had not been proved beyond a reasonable doubt. Nevertheless, the judge applied a two-level sentencing enhancement under § 2B1.1(b)(5), which applies “if the offense involved misappropriation of a trade secret and the defendant knew or intended that the offense would benefit a foreign government, foreign instrumentality, or foreign agent.” The Seventh Circuit upheld the increase. A judge need only determine relevant conduct by a preponderance of the evidence in order to use that conduct at sentencing. U.S. v. Hanjuan Jin, 733 F.3d 718 (7th Cir. 2013).
7th Circuit approves “in the business” increase even though defendant also operated legitimate business. (220) Defendant was convicted of four counts of interstate transportation of stolen property, in violation of 18 U.S.C. § 2314. The Seventh Circuit upheld a two-level enhancement under § 2B1.1(b)(4) for being “in the business of receiving and selling stolen property.” Defendant’s only challenge appeared to be that he was involved in a legitimate business, in addition to being involved in the current offense, and was not a professional “fence.” The district court rejected this argument, ruling that defendant could have a legitimate business and still be in the business of buying and selling stolen property. The enhancement accounted for the scope of the defendant’s conduct. He made four large shipments of illegally-obtained phones, valued between $100,000 and $300,000, in less than a month. In order to operate his end of the illegal business, others had to obtain phones illegally for him, and still others had to sell to consumers the phones so obtained; thus, his behavior encouraged additional criminal conduct. Defendant’s operation of a separate, legitimate enterprise did not undermine the fact that, over a period of several months, he engaged in a pattern of serious criminal conduct involving a significant quantity of stolen goods. U.S. v. Natour, 700 F.3d 962 (7th Cir. 2012).
7th Circuit upholds loss estimate for stolen shipments of cell phones. (220) Defendant was convicted of interstate transportation of stolen property, based on four shipments of illegally obtained phones. The PSR estimated the loss as the $104,742 loss claimed by Sprint. Defendant argued that the total loss was lower, because there was insufficient evidence that all 708 phones were stolen. The government argued that Sprint’s minimum loss estimate understated the actual loss because it related only to 379 particular accounts, and that the MSRP of all 708 phones should be counted. The court ultimately accepted the government’s figures, but omitted 55 phones associated with a dismissed count, resulting in a loss of $292,000. Defendant argued that the district court effectively “gave up,” and accepted the government’s figures without explanation. The Seventh Circuit ruled that the court gave an adequate explanation for its loss calculation, and affirmed. Although the district court’s ruling was not a model of clarity, and it struggled to put a number to the loss, there was no reversible error. U.S. v. Natour, 700 F.3d 962 (7th Cir. 2012).
7th Circuit holds that error in ignoring store’s legitimate profit was harmless. (220) Defendant operated several grocery stores that made phony sales to food-stamp recipients looking to exchange their benefits for discounted amounts of cash. He challenged the district court’s loss calculation, contending that the court ignored legitimate profit margin in assessing what portion of the food-stamp benefits were obtained fraudulently. The Seventh Circuit found that any error was harmless. Although the district court made no attempt to accurately account for profits on legitimate sales, this misstep had no practical effect on defendant’s sentence. First, the court’s loss calculation ignored receipts at two of the stores operated by defendant, even though the fraud at those locations was relevant conduct. Second, the court assumed, to defendant’s benefit, that legitimate customers bought all of the food inventory at two of the stores, although bank records showed that both stores received a small portion of their proceeds in cash. Finally, any adjustment for gross profits at these stores would have been too minimal to affect the guidelines calculation. U.S. v. Hussein, 664 F.3d 155 (7th Cir. 2011).
7th Circuit says kickback scheme was properly sentenced under § 2C1.1. (220) Defendant was convicted of using his position as a township official to secure contracts for a counseling company owned by an acquaintance, in exchange for a share of the proceeds. He argued that the district court should have applied § 2B1.1 instead of § 2C1.1, because his conduct was more akin to simple theft than honest services fraud. The Seventh Circuit held that the district court properly sentenced defendant under § 2C1.1. Defendant did not just steal money from the township. He used his position in the township to steer contracts and renewals to a third party, which compensated defendant with proceeds from the contracts. This was a kickback scheme under 18 U.S.C. § 1346, and therefore came within the ambit of § 3C1.1. U.S. v. Cantrell, 617 F.3d 919 (7th Cir. 2010).
7th Circuit says using later advisory guidelines does not violate Ex Post Facto Clause. (220) Defendant argued that the court’s reliance on the 2008 version of the guidelines violated the Constitution’s prohibition against ex post facto laws. He claimed that the 2008 guidelines imposed a more serious offense level, and thus a harsher sentence, than the Guidelines in effect in 2001 and 2002 when he committed the offense. Section 2B1.1 of the 2002 guidelines calls for a base offense level of six, and a four-point enhancement for the number of victims, instead of the six-point enhancement defendant received under the 2008 guidelines. The Seventh Circuit found this argument foreclosed by U.S. v. Demaree, 459 F.3d 791 (7th Cir. 2006), which held that because the guidelines are only advisory in nature, a court’s use of a later version does not offend the Ex Post Facto Clause. U.S. v. Favara, 615 F.3d 824 (7th Cir. 2010).
7th Circuit says increases for violating judicial orders and for obstructing justice were not double counting. (220) Defendant was convicted of fraudulently acquiring and selling corporate securities. He argued that the district court impermissibly double-counted when it increased his offense level for violating a judicial order, § 2B1.1(b)(8)(c), and for obstructing justice, § 3C1.1. The Seventh Circuit found no double counting here because each enhancement was based on distinct conduct, one for transferring frozen funds in violation of a judicial orders, and the other for interfering with the SEC’s investigation. U.S. v. Favara, 615 F.3d 824 (7th Cir. 2010).
7th Circuit affirms that scratches and bruises from being dragged constituted bodily injury. (220) Defendant and four others committed a string of armed robberies. During the robbery of a jewelry store, defendant hopped over the front counter and forced a store employee to the ground at gunpoint. He then dragged a second store employee about six feet, from the back room of the store to the front room, causing minor injuries consisting of scratches and bruising. The Seventh Circuit upheld a two-level bodily injury enhancement under § 2B3.1. The district court examined an affidavit and a photo of the victim’s injuries, and found that the victim’s scrapes and bruises amounted to significant injures that were “painful and obvious.” The panel deferred to the district court on this fact-specific inquiry. U.S. v. Eubanks, 593 F.3d 645 (7th Cir. 2010).
7th Circuit says defendant who pointed gun and forced person to ground “otherwise used” the gun. (220) Defendant and four others committed a string of armed robberies. He pled guilty to two robberies and firearms charges. The district court applied a six-level increase under § 2B3.1(b)(2)(B) for “otherwise using” a firearm because during one of the robberies, defendant hopped over the front counter and pointed his weapon at a store employee, forcing the employee to the ground. Defendant contended that his conduct only warranted a five-level enhancement for “brandishing” a firearm. The Seventh Circuit agreed with the district court that defendant’s act of pointing the weapon at a specific victim and forcing that victim to the ground created a personalized threat of harm warranting the “otherwise used” adjustment. U.S. v. Eubanks, 593 F.3d 645 (7th Cir. 2010).
7th Circuit says head wound that required four staples fell between bodily injury and serious bodily injury. (220) Defendant and four others committed a string of armed robberies. In one of the robberies, defendant and a co-defendant beat the store owner. Defendant hit the owner in the head with his BB gun, causing bruising and lacerations. The injuries required medical attention, including four staples to the victim’s head. The Seventh Circuit upheld a three-level increase under § 2B3.1(b)(3) for an injury between bodily injury and serious bodily injury. The court properly found that because the bruises and lacerations required medical attention, including four staples to close the head wound, and because the victim almost lost consciousness, the injury fell somewhere in the continuum between “bodily injury” and “serious bodily injury.” U.S. v. Eubanks, 593 F.3d 645 (7th Cir. 2010).
7th Circuit reverses increase for use of BB gun even though conviction was based on other weapons. (220) Defendant pled guilty to two armed robberies and using and carrying a firearm during the commission of one of those robberies. He received a four-level enhancement under § 2B3.1(b)(2)(D) for “otherwise using” a dangerous weapon because in one robbery, he beat the store owner on the head with a plastic BB gun. Defendant argued that this was impermissible double counting because he also received an 84-month sentence for using and carrying a firearm pursuant to 18 U.S.C. § 924(c). See Note 4 to § 2K2.4. The Seventh Circuit agreed with defendant that the court erred in applying the firearm enhancement even though the semi-automatic weapons possessed by his co-defendants were different than the weapon responsible for the enhancement (the plastic BB gun). For enhancement purposes, real guns are treated as indistinguishable from fake guns. U.S. v. Eubanks, 593 F.3d 645 (7th Cir. 2010).
7th Circuit rejects abduction increase for forcing store employee from one room to another. (220) Defendant and four others committed a string of armed robberies. The Guidelines provide for a four-level increase for abduction and a two-level increase for restraint of a victim. See § 2B3.1(b)(4). The district court applied a four-level abduction enhancement because in one of the robberies, a co-defendant forced an employee to the back of the store to retrieve a surveillance video. In another robbery, a victim was dragged less than six feet from the back room of the store to the front room. The Seventh Circuit held that on these facts, and taking into account the physical dimensions of the structure, transporting the victims from one room to another was not enough to warrant the abduction enhancement. While there might be situations in which an abduction enhancement is proper even though the victim remained within a single building, these facts were not present here. U.S. v. Eubanks, 593 F.3d 645 (7th Cir. 2010).
7th Circuit bases loss from vandalism on scientist’s estimate of loss to government experiments. (220) Defendants, members of the Earth Liberation Front, vandalized a government facility where the U.S. Forest Service was conducting genetic engineering experiments on trees. At sentencing, a scientist at the facility estimated a total loss in excess of $420,000 based on the damage caused to two experiments that were destroyed. On appeal, defendants argued that the Forest Service did not suffer a loss because one experiment was terminated and thus worthless. They also argued that the court erred in calculating the loss amount at $424,361 because the evidence presented on the value of the experiments was unreliable. The Seventh Circuit found no clear error in the loss calculation. The scientist testified to the costs associated with the experiments and based these estimates on what he knew from his work on the projects. His testimony and estimates were in accord with the report he prepared a month after the damage. The district court credited the scientist’s testimony. There was no showing that the loss amount was inaccurate. U.S. v. Christianson, 586 F.3d 532 (7th Cir. 2009).
7th Circuit agrees that fraud defendant used sophisticated means. (220) Defendant fraudulently obtained commissions from Hewlett-Packard (HP) by submitting paperwork to make it look as if he had sold HP computers to third party buyers. The Seventh Circuit upheld a § 2B1.1(b)(9)(C) sophisticated means enhancement. Defendant used fictitious business entities to conceal his offense from HP, a sophisticated company. He evaded discovery for over a year by doctoring fax headers and fashioning phony email addresses to resemble legitimate contact information. Moreover, after HP detected the fraud and removed defendant from its list of referral partners, defendant perpetrated a similar scheme with another company for another month. U.S. v. Allan, 513 F.3d 712 (7th Cir. 2008).
7th Circuit applies increase for misrepresentation involving a religious organization. (220) With an offer of “Free Electricity for Life! Plus – the Opportunity to make $492,000 per year” and similar offers, defendant enticed at least 90 people to join his organization, the Christian Freedom Foundation. These offers were advertised in various editions of his Christian Freedom Chronicle. Victims paid $498.75 to join the Christian Freedom Foundation, but none of them received free electricity or any payments in excess of what they had paid to the organization. The Seventh Circuit affirmed a § 2F1.1(b)(4)(a) enhancement for misrepresenting that defendant was acting on behalf of a religious organization. One victim testified that she had joined the Christian Freedom Foundation after attending a presentation at her sister’s house, and that she assumed it was good deal because it was a Christian organization. Although defendant did not make any express promises to use the funds obtained from new members of his organization to advance a specific, religious goal, his cloaked his scheme under the mantle of a religious organization. By placing his ads in the Christian Freedom Chronicle, he targeted a specific audience. The ads were not merely for generators or money-making opportunities, they were solicitations for membership in a “Christian” organization. At least one of defendant’s victims was duped by the Christian aspect of the organization into thinking that the fraudulent offer was legitimate. U.S. v. Sloan, 492 F.3d 884 (7th Cir. 2007).
7th Circuit holds that fraud involving multiple ads over several months involved more than minimal planning. (220) With an offer of “Free Electricity for Life! Plus – the Opportunity to make $492,000 per year” and similar offers, defendant enticed at least 90 people to join his organization, the Christian Freedom Foundation. These offers were advertised in various editions of his Christian Freedom Chronicle. Victims paid $498.75 to join the Christian Freedom Foundation, but none of them received free electricity or any payments in excess of what they had paid to the organization. The Seventh Circuit upheld a two-level enhancement under § 2F1.1(b)(2)(A) for more than minimal planning. Defendant’s acts were not purely opportune. The activity spanned several months, during which time he drafted and printed four false advertisements, withdrew money from the bank accounts of his victims, and wrote and mailed checks to his victims under the guise of earnings. These actions were deliberate and made in such a way as to conceal the fraudulent scheme. U.S. v. Sloan, 492 F.3d 884 (7th Cir. 2007).
7th Circuit holds that estimated loss was improperly based on tax liability unrelated to defendant’s embezzlement. (220) Defendant was the owner and operator of a landscaping and building company that performed work for the local YMCA. Defendant and the YMCA’s executive director embezzled money from the YMCA by inflating defendant’s charges to the YMCA, obtaining free supplies, shifting labor costs from projects for other customers to the YMCA, and paying for work performed by defendant for the executive’s house and gardens. The court estimated a loss of $1.4 million, which reflected the YMCA’s tax liability, which arose from the organization’s failure to pay payroll taxes for certain employees, most of whom were unconnected to defendant in any way. The organization’s tax liability bore no proven relationship to the work defendant did, and was not supported by any evidence of defendant’s own involvement in the YMCA’s tax evasion. The Seventh Circuit held that it was unreasonable for the district court to base its loss calculation on the YMCA’s estimated tax liability relating to employees unconnected to defendant. The government also conceded at oral argument that the amount of loss also included amounts legitimately paid to defendant for work he did perform for the YMCA. U.S. v. Patrick, 479 F.3d 760 (7th Cir. 2007).
7th Circuit approves risk of death or injury increase for helping immigrants fraudulently obtain truck driver licenses. (220) Defendant ran a service that assisted recent immigrants who did not speak or write English to fraudulently obtain commercial driver’s licenses. In some cases, he hired translators who told the applicants the answers to the test. He also directed his clients to a road test administrator who, for a fee, assigned the applicants passing grades no matter how badly they drove. Section 2B1.1(b)(12)(A) provides for a minimum offense level of 14 if the offense involved “the conscious or reckless risk of death or serious bodily injury.” The judge applied the increase, reasoning that putting 200 incompetent truck drivers on the road created such a risk. The Seventh Circuit affirmed, although there was no empirical evidence presented by either side on whether the untested truck drivers were incompetent. However, drivers who use bribery and fraud to obtain licenses have identified themselves as more likely to be incompetent than drivers who obtain licenses the honest way. Published studies conclude that unlicensed drivers are involved in substantially more collisions than licensed drivers. The provision speaks of “risk” rather than “substantial” or even “material” risk, and defendant’s crime must have created some risk. Defendant’s 41-month sentence was not unreasonably high. U.S. v. Babul, 476 F.3d 498 (7th Cir. 2007).
7th Circuit applies identity theft enhancement to defendant who directed associate to pose as victim. (220) Defendant was convicted of mail and wire fraud in connection with a scheme to obtain real estate loans through false representations. The Seventh Circuit affirmed a § 2B1.1(b) (10)(C)(i) for the theft and misuse of Plewa’s identity. Defendant did not dispute that Plewa’s identity was stolen and used, but argued that it should apply only to Filipowicz, the one who actually posed as Plewa. However, given that defendant directed Filipowicz to pose as Plewa and provided him the means to do so, the enhancement was properly applied to defendant. U.S. v. Radziszewski, 474 F.3d 480 (7th Cir. 2007).
7th Circuit upholds loss based on price realized on foreclosure of property. (220) Defendant was convicted of mail and wire fraud in connection with a scheme to obtain real estate loans through false representations. The court found an actual loss amount of $115,979 and an intended loss of $108,500. The Seventh Circuit affirmed an eight-level enhancement for a loss of between $70,000 and $120,000. While the court’s calculation of actual loss was problematic, the intended loss of $108,500 also supported the eight-level enhancement. The court arrived at the $108,500 intended loss amount by deducting the price realized upon foreclosure of one property ($170,500) from the amount of the loan that the mortgage company intended to issue ($279,000). There was no error in the court’s decision to base its loss calculation on a certain figure (the price realized on foreclosure) rather than a sum determined by conjecture. U.S. v. Radziszewski, 474 F.3d 480 (7th Cir. 2007).
7th Circuit upholds loss based on fraudulent demand amount tacitly approved by defendants. (220) Defendants were convicted of mail fraud stemming from their involvement in a scheme to collect money from an insurance company for a fraudulent automobile accident. The district court found a loss of $30,00 to $70,000, which was based on a $52,414 claim submitted in a demand letter to the insurance company on their behalf. The amount was three times the amount of actual medical costs. The claim was formulated by their attorney (who was working with the government), and defendants argued that he formulated the demand without their specific knowledge, although they learned of the demand amount later. They ultimately settled for less than $21,000. However, there was no evidence that they repudiated the demand amount, and the attorney testified that defendants “wanted more money” than they received, and had expected to receive three times the amount of their medical bills. Because the intended loss figure was rationally based on claims submitted and defendants tacitly approved this request, the Seventh Circuit affirmed. U.S. v. Al-Shahin, 474 F.3d 941 (7th Cir. 2007).
7th Circuit holds that mandatory add-on sentence did not justify reduction in sentence for underlying offense. (220) Defendant pled guilty to bank robbery and using a firearm in a crime of violence. Eighty-four months was the minimum sentence for the firearm offense if the gun was “brandished,” § 924(c)(1)(A)(ii), and a section § 924(c)(1) sentence cannot be made to run concurrently with any other sentence. § 924 (c)(1)(D). The minimum guideline sentence for a bank robbery that did not involve the use of a gun was 46 months, and when the consecutive 84-month sentence required by § 924(c)(1) was tacked on, the total was 130 months. The district court found a 130-month sentence was “unreasonable” and contrary to § 3553(a). Because the court had no authority to alter the 84-month sentence, it sentenced defendant to one month for the bank robbery and the statutorily required consecutive 84 months on the weapons charge. The Seventh Circuit reversed the sentence, holding that the mandatory add-on sentence for using a firearm during a crime of violence or drug crime could not be used to justify a reduction of sentence for the underlying crime. Booker does not give judges authority to disregard statutes. The judge also was not permitted to second-guess the government’s decision to charge a violation of § 924(c)(1). The judge should have picked a sentence for the bank robbery without regard for the fact that a gun had been used in it, and then tacked on 84 months. U.S. v. Roberson, 474 F.3d 432 (7th Cir. 2007).
7th Circuit rules that the district court improperly applied the loss causation standard by finding both no causation and causation. (220) Defendant was convicted of converting funds withdrawn from employee paychecks for health insurance and making a false statements relating to health care matters. The jury convicted defendant of converting $66,117, but the district court based his guideline range on a loss of $921,380. The court found that defendant’s misrepresentations caused the total loss of all unpaid medical claims. The court correctly applied the standard of whether the losses were “reasonable foreseeable pecuniary harm” and acknowledged that Note 3(a) to § 2B1.1 requires a finding that the false statements were a cause-in-fact of the loss. The court then conceded that the statement was “not really causal of losses relative to the unpaid medical claims” and stated that “there isn’t strict causal – and I think the defense focused too much on cause.” Nonetheless, the district court applied the unpaid claims to defendant’s loss figure because the employees had trusted defendant to provide health care. The Seventh Circuit ruled that the district court improperly applied the loss causation standard by finding both no causation and causation. U.S. v. Whiting, 471 F.3d 792 (7th Cir. 2006).
7th Circuit includes victim’s lost productivity in loss from interference with internet access. (220) Defendant was a computer technician who provided technical support to a wireless internet service provider and its customers. When he was terminated from his job, he continued to access the wireless network with his home computer, using the internet access information of various of the provider’s customers, one of which was TD Fischer. As a result, defendant disrupted TD Fischer’s wireless internet connection, which adversely affected its productivity. The Seventh Circuit upheld the inclusion in the loss calculation of $5850 in lost productivity to TD Fischer and $164 that TD Fischer spent to switch internet providers. The unexplained problems suffered by TD Fischer were consistent with defendant’s use of its internet access information. The timing coincided with his use, and he informed a former co-worker that he was leaving his home’s equipment “plugged in” to harass his former employer and the internet service provider. He also conducted computer searches and was involved in internet chat sessions that indicated that he was trying to find a way to broadcast interference from his wireless antenna. U.S. v. Schuster, 467 F.3d 614 (7th Cir. 2006).
7th Circuit says defendant was liable for client losses caused by his own conduct but not losses from auditors’ malpractice. (220) Defendant was convicted of two securities laws violations for operating his registered broker-dealership without enough money in its reserve accounts. The Seventh Circuit upheld the district court’s loss calculation. Most of the $1.2 million in loss was attributable to relevant conduct that was part of defendant’ scheme to operate his brokerage firm without enough money on hand to comply with securities law requirements. When the authorities shut the company down, there was not enough money to pay clients what they were owed. Insurer’s payments were made to cover these client losses, and the district court did not clearly err by including them in the loss amount calculation. However, the $190,000 payment by the brokerage firm’s auditors’ malpractice carrier should not have been included in the loss calculation. This money was attributable to losses sustained by the brokerage’s clients as a result of the auditor’s acts or omissions, not defendant’s. Finally, the district court properly applied a § 2F1.1(b)(6)(A) increase for substantially jeopardizing the safety and soundness of a financial institution. The court did not have to consider defendant’s relevant conduct, since operating the brokerage even for a single day meant that it could not pay its debts on demand. U.S. v. Frith, 461 F.3d 914 (7th Cir. 2006).
7th Circuit uses retail value of stolen goods as estimate of loss. (220) Defendant and her son used pawn shops she owned as a front for selling stolen goods on eBay. The Seventh Circuit upheld the district court’s use of the retail value of the stolen merchandise as a reasonable method of calculating “loss” under the Sentencing Guidelines. When stolen merchandize has been taken from retailers, the price at which the retailers would have sold that merchandise serves as a reasonable estimate of the loss. Here, the merchandise stolen was ready for sale – defendants’ co-conspirators literally took the merchandise off the retailers’ shelves and out of the stores, bypassing the cashiers on their way out. U.S. v. Wasz, 450 F.3d 720 (7th Cir. 2006).
7th Circuit upholds use of check register to determine intended loss. (220) To help determine intended loss in a check kiting scheme, the district court relied on a “check register” that detectives found stored in a computer. Defendant argued that the check register should be excluded because it in included “hearsay statements as to dates, amounts, payees,” and it was unreliable because it was unknown what computer hardware or software was used to generate the document, there was no evidence as to how the report was generated, how the dates and check numbers were inserted on the checks, and whether the listed checks were “spoiled checks.” The Seventh Circuit held that the district court properly considered the check register in determining the intended loss. The check register had sufficient indicia of reliability. The government presented evidence that defendant purchased software, and other items that could be used to create counterfeit checks. Fingerprint reports showed that defendant’s prints were on blank and printed check stock found at the conspiracy’s apartment. In addition, the government recovered about $16 million in checks that were intended to go into a bank account in Israel, Defendant’s fingerprints were found on some of these checks. U.S. v. Sliman, 449 F.3d 797 (7th Cir. 2006).
7th Circuit holds that court applied proper standard for determining loss amount. (220) Defendant admitted that he intended to complete a $ 4 million check kiting scheme. The district court, however, found that the intended loss was the amount of loss that was reasonably foreseeable to defendant that the conspiracy was designed to cause – $20 million. The Seventh Circuit found no error in the court’s legal standard for determining intended loss. Defendant was a participant in a conspiracy, and thus his offense level was determined by examining all reasonable foreseeable acts and omissions of defendant and his co-conspirators in furtherance of the jointly undertaken criminal activity. Note 2 to § 1B1.3 provides that a defendant will be held accountable for the relevant conduct of others when that conduct is (1) in furtherance of a jointly undertaken criminal activity, and (2) reasonably foreseeable in connection with that activity. The district court applied the correct legal standard in determining the intended loss amount. U.S. v. Sliman, 449 F.3d 797 (7th Cir. 2006).
7th Circuit holds that court erred in requiring defendant to prove false identification was not of actual person. (220) Section 2B1.1(b)(10) (C)(i) provides for an enhancement for “use of any means of identification unlawfully to produce or obtain any other means of identification.” Note 9(A) provides that the false means of identification used must be that “of an actual (i.e. not fictitious) individual, other than the defendant.” Because testimony indicating that the name, social security number and birth date defendant used to obtain an Ohio driver’s license did not belong to a real person, defendant argued that the enhancement was improper. The Seventh Circuit held that the district court erred in requiring defendant to bear the initial burden of production concerning whether his false identification was that of an “actual individual.” The government has the burden to prove by a preponderance of the evidence that a particular sentencing enhancement is warranted. While a defendant must make a specific objection to a sentencing enhancement, no principle of law requires that such an objection be supported by the testimony of a witness called by the defense. An oral or written statement of reasons for the objection suffices to place the court and the government on notice of the content of the challenge. U.S. v. Hines, 449 F.3d 808 (7th Cir. 2006).
7th Circuit applies increase for scheme outside the U.S. where charitable funds were diverted to violent overseas causes. (220) Defendant represented to donors that his charitable organization would use donated funds solely for humanitarian purposes, but diverted a portion of the money raised to support groups engaged in armed confrontations and violence overseas. Section 2B1.1(b)(8)(B) provides for a two-point enhancement if a substantial part of a fraudulent scheme was committed from outside the U.S. The Seventh Circuit held that the district court did not err in applying this enhancement to defendant. Even though all of defendant’s racketeering activities occurred within the U.S., the fraud was not complete until the diverted funds were used to deliver resources to soldiers overseas. U.S. v. Arnaout, 431 F.3d 994 (7th Cir. 2005).
7th Circuit rejects multiple victim enhancement where court did not trace diverted money back to victims. (220) Defendant represented to donors that his charitable organization would use donated funds solely for humanitarian purposes, but diverted a portion of the money raised to support groups engaged in armed confrontations and violence overseas. Section 2B1.1(b)(2)(B) provides for a four-level enhancement where an offense involves 50 or more victims. The Seventh Circuit held that the court erred in applying this enhancement, since there was no showing that the funds of 50 donors were illegally diverted. Although the organization received $17 million in donations from over 17,000 individuals, businesses and organizations over a seven-year period, the amount of loss was only $300,000. While it was possible that more than 50 victims contributed to the $300,000, there was no proof in the record on this issue. U.S. v. Arnaout, 431 F.3d 994 (7th Cir. 2005).
7th Circuit upholds physical restraint increase where robber forced teller at gunpoint from vault to teller drawer. (220) Defendant was convicted of bank robbery and related charges. The district court added two offense levels under § 2B3.1(b)(4) for physically restraining a person because defendant forced a teller from the bank’s vault to her teller drawer at the point of a gun. Note 1(K) to § 1B1.1 provides that “physical restraint” means the forcible restraint of the victim such as by being tied, bound or locked up. The Seventh Circuit affirmed. The phrase “such as” indicates that the words “tied, bound or locked up” are listed by way of example rather than limitation. Physical restraint is not present when an armed robber simply orders his victims not to move during an armed robbery. Something more is required, and that something was present here. Defendant, in the immediate presence of the teller, focused his gun on her and then, sustaining that focus, moved her out of the bank’s vault to her drawer against her will. The sustained focus of the weapon on the victim coupled with the compelled movement of the victim to another area constituted sufficient forcible restraint to warrant the enhancement. U.S. v. Carter, 410 F.3d 942 (7th Cir. 2005).
7th Circuit relies on defendant’s intent to purchase additional stolen cigarettes. (220) Defendant was involved in a scheme to steal and resell a trailer load of cigarettes. The evidence showed that defendant intended to purchase 480,000 packs of cigarettes, valued at $421,920, but that there were only 324,600 packs in the trailer, valued at $285,323. He argued that the district court should have based his sentence on the lower value, because he intended only to purchase the cigarettes that were in the trailer, whatever that number was. The Seventh Circuit found no error – there was ample evidence to support a finding that defendant intended to purchase 480,000 packs of cigarettes with a value of $421,920, and that was sufficient to support the use of the higher dollar amount under § 2B1.1. U.S. v. Skoczen, 405 F.3d 537 (7th Cir. 2005).
7th Circuit says city’s radio system for emergency communications was “critical infrastructure.” (220) Madison, Wisconsin uses a computer-based radio system for police, fire, ambulance and other emergency communications. Defendant created a signal that blanketed with the city’s communications towers and prevented its computer from receiving data. The district court added offense levels under § 2B1.1(b)(13)(A)(iii) and (B) after concluding that defendant had disrupted a “critical infrastructure.” Defendant conceded that an emergency radio system fit the definition. Emergency services are one of the examples in Application Note 12. The Seventh Circuit upheld the enhancement. Defendant’s argument seemed to take the form that the authors of this language could not have meant what they said. Nonetheless, a limited remand was required so that the judge could inform the appellate court whether the additional discretion provided by Booker would affect defendant’s sentence. U.S. v. Mitra, 405 F.3d 492 (7th Cir. 2005).
7th Circuit rejects upward departure for unrealized appreciation of artwork. (220) Defendant was convicted of fraud in connection with the sale of Walt Disney animation cels. The district court originally found that the total loss stemming from defendant’s fraudulent activities (both charged and uncharged) was $231,000. A 7th Circuit panel remanded because there were no findings that defendant’s uncharged conduct was unlawful. On remand, a different judge found that the total loss from sales to the three identified victims was $81,801, and then sua sponte added a three-level upward departure because the identifiable losses grossly understated the actual loss: (1) one level because defendant’s overall earnings of $420,000 from 1994-1999 was virtually all fraudulently generated; (2) one level because the extent of the intended loss as shown by the seizure of $500,000 in inventory, and (3) one level because of the loss to purchasers from unrealized appreciation. The Seventh Circuit affirmed the first two grounds for departure, but rejected the departure based on unrealized appreciation. Although misrepresentation of a rate of return may in some circumstances be included in a loss calculation, unrealized appreciation may not be used without a guaranteed rate of return or other indication of a specific degree of appreciation. While defendant promised his customers they would realize an appreciation in value because he was selling his artwork at below market value, he did not make specific representations as to actual market value of those pieces. U.S. v. Schaefer, 384 F.3d 326 (7th Cir. 2004).
7th Circuit says counterfeiting guideline did not apply to defendant who altered genuine bills. (220) Defendant removed the ink from genuine $5 bills with a chemical solution and used an inkjet printer to produce facsimiles of $100 bills on the blank sheets. The district court calculated his sentence under § 2B1.1, the generic provision for frauds. The court found the counterfeiting guideline, § 2B5.1, was inapplicable, based on Note 3 to § 2B5.1. Note 3 provides that “‘Counterfeit,’ as used in this section, means an instrument that purports to be genuine but is not, because it has been falsely made or manufactured in its entirely. Offenses involving genuine instruments that have been altered are covered under § 2B1.1 (Theft, Property, Destruction, and Fraud).” The Seventh Circuit agreed that under this Note, the counterfeiting guideline did not apply to defendant’s offense. The outcome was “unsettling” because it meant a lower sentence for someone like defendant, whose crime was harder to detect than that of a counterfeiter who starts with plain bond paper. Although Note 3 was probably not written with this sort of counterfeiting in mind, defendant was a beneficiary of it, even if an accidental one. U.S. v. Schreckengost, 384 F.3d 922 (7th Cir. 2004).
7th Circuit finds no error in failure to reduce intended loss by amount victims allegedly received. (220) Defendants falsified customer complaints to their employer, using third-party names, and causing refund checks to be issued to these third parties. In total, defendants caused their employer to issue 178 warranty checks in the amount of $100,254.88. Defendants argued that the district court improperly failed to offset the amount of loss to the employer by the value defendants claimed the employer gained through the resale of defective parts that defendants allegedly sent to the employer to facilitate their fraud. The Seventh Circuit found that defendants waived this issue at sentencing by withdrawing their objections to the loss calculations. The argument also failed on the merits, since the government demonstrated that the intended loss was $100,254.88. Moreover, even if intended loss amounts should be reduced by any value received by the victim, the record contained no mention of any amount of value received by the employer in conjunction with the fraud scheme. U.S. v. Sensmeier, 361 F.3d 982 (7th Cir. 2004).
7th Circuit holds defendant accountable for total amount of fraudulent deposits. (220) Over a several year period, defendant manufactured counterfeit checks on his home computer and used them to defraud about 20 different banks and investment companies. Before being caught, he caused over $1 million of actual loss to his victims. He argued that the district court failed to explain its conclusion that he intended to inflict over $10 million of loss. The Seventh Circuit found no error in the court’s finding that defendant intended to steal the total amount of the fraudulent deposits and wire transfers. The district court clearly resolved the controversy and provided a basis for its ruling, in accordance with Rule 32. When the court adopted the government’s theory of the case (rather than defendant’s claim that he only intended to steal as much as necessary to satisfy his personal debts), the court cited relevant case law, explained that it agreed with the government’s analysis of the facts, and then explained that it was rejecting defendant’s calculations because it believed that he intended to steal the total amount of money he deposited into the accounts. The court was not required to accept defendant’s claim about the portion of the worthless deposits he hoped to access. U.S. v. Sykes, 357 F.3d 672 (7th Cir. 2004).
7th Circuit remands for state law determination of defendant’s accountability of company’s receipts. (220) Defendant managed a company that built single-family homes. The company defrauded its customers and their lender by making false certifications in order to obtain progress payments for uncompleted work. Former § 2F1.1(b)(7)(B) (1998) provided for a four-level increase if the offense “affected a financial institution and the defendant derived more than $1,000,000 in gross receipts from the offense.” Note 18 provided that the enhancement should be based on the gross receipts to the defendant individually, rather than to all participants. Defendant’s company obtained more than $1,000,000 from the bank as a result of the premature certifications, but the money entered the corporation’s coffers, not defendant’s pocket, and mostly was distributed to pay the expenses of construction. The district court found that such corporate formalities should be disregarded for closely held firms, or those dominated by one person. The Seventh Circuit remanded for determination of whether under state law, defendant was personally accountable for the receipts and obligations of his company. States have developed substantial bodies of law addressing whether corporate receipts or debts may be imputed to investors or managers. How the proceeds were carved up among the three defendants – defendant, his son, and the corporation, did not appear to be vital to federal sentencing policy. U.S. v. Castellano, 349 F.3d 483 (7th Cir. 2003).
7th Circuit rules defendant cannot reduce loss by value of free services and fee reductions firm provided to clients. (220) Defendant, a personal injury lawyer, referred certain of his clients to a chiropractor for services paid from insurance settlement proceeds, in return for which the chiropractor kicked back 20 percent of the fee he collected for those services. He argued that the court erred in refusing to reduce the value of the loss by the amount of “valuable free services” and fee reductions that defendant’s firm provided to clients. The Seventh Circuit disagreed. The free services and reduction that the firm provided to the victims were services routinely provided to all clients, not just those who were defrauded. Thus, those service and reductions did not lessen the net detriment to victims of the fraud. U.S. v. Hausmann, 345 F.3d 952 (7th Cir. 2003).
7th Circuit holds that faking disability for insurance fraud involved sophisticated means. (220) Defendant and his wife defrauded insurers plus the Social Security Administration by pretending that defendant was disabled. The Seventh Circuit agreed that “sophisticated means” had been used to bilk the insurers. According to U.S.S.G. § 2B1.1(b)(8)(C), Application Note 6 and its predecessor § 2F1.1(b)(6)(C), Application Note 18, means are sophisticated when they entail “especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense.” Defendant fooled a skilled neurologist and 14 insurers, which required intricate maneuvers. Defendant and his wife had to present a picture consistent with the head injury defendant allegedly suffered. His wife had to describe the conduct both in writing and in interviews with physicians, and defendant had to mimic it on demand. Careful execution and coordination over an extended period enabled defendant to bilk more insurers and reduce the risk of detection. The fact that defendant eventually slipped up, and the deception was caught as a result of his errors, plus the private investigation, did not make the scheme any less complex. U.S. v. Rettenberger, 344 F.3d 702 (7th Cir. 2003).
7th Circuit assumes that defendant would have continued faking disability until insurance coverage ended. (220) Defendant and his wife defrauded insurers plus the Social Security Administration by pretending that defendant was disabled. In calculating the intended loss (the loss the insurers would have suffered if defendant had not been caught, see U.S.S.G. § 2B1.1 Note 2(A)(ii)(I)), the district judge assumed that defendant would have continued faking disability until he reached 65, the age at which most policies’ coverage ended. The Seventh Circuit affirmed. Defendant set out to take the insurers for all they were worth, and that meant benefits through age 65. Other than being caught, there was nothing that would have induced him to disclaim benefits earlier. U.S. v. Rettenberger, 344 F.3d 702 (7th Cir. 2003).
7th Circuit includes value of tractor-trailer in theft less, even though driver left behind newer truck for repairs. (220) Defendant, a licensed commercial truck driver, picked up a load containing more than $64,000 worth of toys. Instead of delivering the shipment, defendant pulled off the road at various points and sold toys off the back of the truck, using the money to support his drug habit. The Seventh Circuit held that the district court properly included the value of the tractor trailer, as well as the contents, in its loss calculation. The fact that defendant left his own truck, a newer model, for repairs with the truck company did not negate defendant’s intent to steal the truck. Defendant was two weeks late in delivering the truck and the goods to their destination, and he had disabled the truck’s global positioning device. Having sold the contents of the truck, it was counter intuitive to assume that he would return the empty truck to his employer with no explanation about the missing load. Moreover, defendant had only $4,000 in equity in the truck he left behind for repairs, which was considerably less than the estimated $47,000 market value of the stolen truck. U.S. v. Smith, 332 F.3d 455 (7th Cir. 2003).
7th Circuit holds that court should have applied reduction for partially completed theft. (220) Defendant broke into a bank carrying a screwdriver, wire cutters, and a crowbar. With these tools, he was only able to damage the main vault’s handle and locking mechanism. However, he managed to take $350 from two coin vaults. Concluding that defendant “intended” to steal everything he could lay his hands on, the district court included in the loss calculation the contents of the main vault, about $200,000. The Seventh Circuit held that the contents of the main vault could not be counted in the loss without subtracting three levels under § 2X1.1(b)(1) for a partially completed offense. Section 2X1.1(b)(1) says that such a three-level decrease applies to an attempt, unless the defendant completed all the acts he believed necessary for success or he was about to complete them when caught. Note 4 gives an illustration that speaks directly to defendant’s theft. Although neither party discussed with the judge how § 2X1.1(b)(1) works, the guideline is straightforward, and the failure to apply the three-level reduction was plain error. U.S. v. Lamb, 207 F.3d 1006 (7th Cir. 2000).
7th Circuit agrees that leasing of stolen trucks involved more than minimal planning. (220) Defendant and his associates ran a business that leased stolen trucks that had been furnished with new, fraudulent VIN numbers, re-titled and re-tagged. The Seventh Circuit approved a more than minimal planning enhancement under § 2B1.1 (b)(5). Defendant engaged in repetitive criminal acts over a period of time, and entered into two separate lease agreements. Defendant’s receipt of lease payments showed his control position and that he was involved in several different transactions involving both the leasing and the licensing aspects of the conspiracy. U.S. v. Brown, 71 F.3d 1352 (7th Cir. 1995).
7th Circuit upholds more than minimal planning increase for possessing 73 stolen checks. (220) Defendant was involved in a stolen check cashing operation. The Seventh Circuit agreed that the offense involved more than minimal planning under § 2B1.1(b)(5)(A). Defendant was found in possession of 73 checks belonging to a number of individuals. The checks were the result of repeated mail thefts. Moreover, defendant sought and obtained the assistance of at least two other individuals to help in the scheme. U.S. v. Woody, 55 F.3d 1257 (7th Cir. 1995).
7th Circuit says car used to assault police was a dangerous weapon. (220) When postal inspectors attempted to arrest defendant, he drove his car at them, hitting one inspector on the knee and forcing another inspector to jump out of the way to avoid being hit. Defendant was convicted of two counts of assaulting federal law enforcement officers. The Seventh Circuit upheld a dangerous weapon enhancement under § 2A2.2(b)(2)(B). Under note 1(d) to § 1B1.1, a car can be used as a dangerous weapon because it is an instrument capable of inflicting death or serious bodily injury. Defendant knew that the men approaching his car were law enforcement officers trying to arrest him. He nonetheless accelerated directly toward them. Defendant’s actions fit squarely within the guidelines’ adjustment for use of a dangerous weapon. In addition, there was substantial evidence to support the characterization of defendant’s assault as aggravated under note 1 to § 2A2.2. U.S. v. Woody, 55 F.3d 1257 (7th Cir. 1995).
7th Circuit agrees that possession of stolen property involved more than minimal planning. (220) Defendant pled guilty to possessing stolen goods (zinc) that had crossed a state boundary. The Seventh Circuit agreed that the offense involved more than minimal planning. The district court considered the number of phone calls, the arrangements that were made to have the materials delivered to Wisconsin, the numerous discussions with a man who was familiar with the pricing of metal, the negotiations to sell the zinc, the actual selling of the zinc, and the attempted plan to have the funds disbursed. The fact that the district court once used the word “simplest” instead of “simple” did not show it applied the wrong standard in assessing what constitutes more than minimal planning. U.S. v. Leblanc, 45 F.3d 192 (7th Cir. 1995).
7th Circuit rules custodian who learned location of food stamps engaged in more than minimal planning. (220) Defendant, a contract custodian, stole food stamps from a branch post office. The Seventh Circuit agreed that the thefts involved more than minimal planning. Defendant engaged in a fair amount of information gathering before executing the thefts. As custodian, he would not normally have known where the food stamp envelopes were kept. However, he entered the post office on two occasions and headed directly for the stamps. Thus, defendant took the time before the thefts to learn where the food stamps were located. Defendant’s actions were analogous to a thief who obtains information on delivery dates so that he can steal an especially valuable item. U.S. v. Harrison, 42 F.3d 427 (7th Cir. 1994).
7th Circuit agrees that theft of trailer and resale of stolen goods involved more than minimal planning. (220) Defendant and an associate stole a trailer containing $70,000 worth of hot dogs from a truck stop. They resold the hot dogs the next day and abandoned the trailer in another city. The Seventh Circuit agreed that the theft involved more than minimal planning. The abbreviated time span in which the activities took place evidenced pre-planning. In addition, the various steps taken to conceal the thefts justified the enhancement. Defendant tried to remove an identifying decal from the stolen trailer. On the day of the sale, defendant and his associate traveled to a relatively distant city to dispose of the stolen trailer. Also, to conceal the theft, defendant helped create a forged receipt documenting the sale, which he faxed to the buyer. U.S. v. Lewis, 41 F.3d 1209 (7th Cir. 1994).
7th Circuit says § 2B1.1 applies to misapplication of bank funds. (220) Defendant, an installment loan officer, wrote six fraudulent loans and used the proceeds to pay personal obligations. The 7th Circuit held that § 2B1.1, and not 2F1.1, applied to defendant’s conviction for misapplying bank funds in violation of 18 U.S.C. § 656. Section 2B1.1 addresses larceny, embezzlement and other forms of theft. Defendant’s conduct fit the common law form of embezzlement. In addition, the commentary to § 2B1.1 lists § 656 as an applicable statutory provision. Section 2F1.1 applies to bank customers who use fraud to obtain bank loans. Defendant never obtained bank loans. He merely prepared the loan documentation to prevent his superiors from discovering his crime. The bank did not loan defendant the money. He stole it. Judge Cudahy dissented, since defendant intended to repay the money and was making payments on the illegal loans. U.S. v. Dion, 32 F.3d 1147 (7th Cir. 1994).
7th Circuit upholds finding of single conspiracy in determining loss from criminal activity. (220) Defendant, a fare collector, bribed a supervisor to be assigned to a high-traffic position and then misrepresented the fares he collected, keeping some for himself. He appealed the district court’s inclusion of losses caused by other fare collectors who also were engaged in the same activity. The 7th Circuit affirmed, concluding that defendant was part of a single, large conspiracy including the other fare collectors rather than merely being involved in a smaller conspiracy. Defendant’s contacts with the other fare collectors bolstered the court’s conclusion. U.S. v. Narvaez, 995 F.2d 759 (7th Cir. 1993).
7th Circuit affirms loss estimate notwithstanding tension with findings in related sentencing. (220) Defendant, a fare collector, bribed a supervisor to be assigned to a high-traffic position and then misrepresented the fares she collected, keeping some for herself. She argued that her restitution order was based on an unreliable estimate that she was responsible for $25,000 in losses. The 7th Circuit affirmed the determination even though the $25,000, when added to the $42,000 attributed to another defendant in a related case, exceeded the estimated total loss of $62,000. The district court had reached its conclusion by relying on evidence indicating that defendant usually stole over $100 per day, sometimes stealing as much as $300. The district court multiplied $100 by the number of days defendant worked during the scheme. U.S. v. Narvaez, 995 F.2d 759 (7th Cir. 1993).
7th Circuit says conspiracy to fraudulently receive public assistance benefits involved more than minimal planning. (220) Defendant participated for four months in a conspiracy to fraudulently receive public assistance benefits. The conspiracy was organized by someone else and spanned a period of seven years. The 7th Circuit affirmed an enhancement for more than minimal planning, under section 2B1.1(b)(5). Defendant directed a female confederate to take forged birth certificates to the Social Security office and obtain cards for herself and two fictitious children. He then directed her to apply for public aid, using defendant’s home address. Only after this preparation did defendant and his confederate begin to profit from their scheme by receiving checks and food stamps. The fact that defendant used his real address was outweighed by facts showing premeditation and repeated criminal activity. The fact that others organized the scheme was relevant to defendant’s role, not the nature of the offense. U.S. v. Moore, 991 F.2d 409 (7th Cir. 1993).
7th Circuit remands for reconsideration of whether defendant committed repeated acts over a period of time. (220) Defendant was arrested in possession of three stolen motor vehicles. The district court imposed an enhancement for more than minimal planning under section 2B1.2(b)(4)(B), finding that defendant committed “repeated acts” because he possessed three separate vehicles. It also found that these acts took place “over time” because defendant possessed them on the date of his arrest, and therefore must also have possessed all three vehicles prior to that date. The 7th Circuit remanded for reconsideration of whether defendant committed repeated acts over a period of time. Just because defendant had all three vehicles in his possession at his arrest did not mean that he also must have possessed them before that date. In addition, the court inferred that defendant had committed repeated acts simply because he possessed three vehicles, without determining whether the vehicles were obtained on one occasion or several. U.S. v. Nafzger, 974 F.2d 906 (7th Cir. 1992).
7th Circuit says enhancements based on total value of stolen goods and more than minimal planning were not double counting. (220) Defendant pled guilty to one count of knowingly possessing a stolen motor vehicle. In calculating the value of the stolen property under section 2B1.2, the district court took into account the value of all three of the stolen vehicles found on defendant’s farm, even though he pled guilty to possessing only one of them. The court also imposed an enhancement for more than minimal planning under section 2B1.2(b0(4)(B), finding that defendant committed repeated acts because he possessed three separate vehicles. The 7th Circuit rejected defendant’s claim that the more than minimal planning enhancement constituted impermissible double counting. Even though his possession of these vehicles had been considered as part of the relevant conduct in determining his offense level, the two enhancements addressed different aspects of the offense, and were not mutually exclusive. U.S. v. Nafzger, 974 F.2d 906 (7th Cir. 1992).
7th Circuit reverses determination that security guard’s two bank thefts involved more than minimal planning. (220) Defendant, a security guard at a bank, stole money from the night depository on two different occasions. The second theft occurred after defendant accidentally set off one of the alarms. The 7th Circuit reversed an enhancement for more than minimal planning. Defendant’s offenses did not involve more planning than typical. The fact that in both thefts defendant deactivated the alarm was not significant since deactivating the alarm was part of his ordinary duties. Defendant did not commit repeated acts over a period of time. The appellate court found no cases where the enhancement was applied to fewer than three repeated acts. Finally, defendant did not do anything extraordinary to conceal his crime. When the enhancement has been applied based on significant steps to conceal an offense, evidence of some pre-offense planning of the concealment has been present. Here, there was no evidence of any advance planning of defendant’s efforts at concealment. U.S. v. Maciaga, 965 F.2d 404 (7th Cir. 1992).
7th Circuit rejects departure for prior similar offenses because defendant already received enhancement. (220) The district court departed upward in part because the similarity between defendant’s instant conviction for interstate transportation of stolen property and his 1975 conviction involving stolen property showed a need for greater deterrence. The 7th Circuit rejected this as a proper ground for departure because defendant had already received a four-level enhancement under guideline section 2B1.2(b)(3)(a) for being in the business of receiving and selling stolen property. This enhancement adequately reflected the need for extra deterrence because only those who have previously engaged in significant illegal conduct similar to the instant offense would receive such an enhancement. Judge Kane dissented. U.S. v. Connor, 950 F.2d 1267 (7th Cir. 1991).
7th Circuit rules government failed to prove any “loss” caused by contractor’s fraud. (220) Defendant and his wife obtained two government contracts by fraud. In the husband’s case, the court calculated the loss as the difference between defendants’ bids and the increased prices at which the two contracts were ultimately awarded to other contractors. In the wife’s case, the court simply added together the defendants’ two bids. The 7th Circuit found that not only was there was no rational reason to treat the two defendants differently, but that both calculations of “loss” were incorrect. The amount bid is not a reasonable estimate of loss where the contract is terminated before any money is paid. Moreover, the defendants did not intend to pocket the entire proceeds of the contract without performing services. The government may have incurred expenses in terminating the contract or in obtaining a substitute contract, but the government failed to present any evidence of such expenses. Thus, it was improper to increase either defendants’ offense level based upon the amount of loss caused. U.S. v. Schneider, 930 F.2d 555 (7th Cir. 1991).
7th Circuit holds that defendant was not in the business of receiving and selling stolen goods. (220) Defendant burglarized at least 11 businesses, transported the stolen goods across state lines, and sold it to third parties. Defendant pled guilty to one count of interstate transporttation of stolen property. Four points were added to defendant’s offense level because the district court determined that defendant was in the business of receiving and selling stolen property, pursuant to guideline § 2B1.2(b)(3)(A). The 7th Circuit reversed, finding that section inapplicable to one who sells property that he himself has stolen. The intent of the section is to punish professional fences, who facilitate the commission of many thefts by creating a clearinghouse for stolen goods. U.S. v. Braslawsky, 913 F.2d 466 (7th Cir. 1990).
7th Circuit upholds adjustment for “more than minimal planning” in automobile theft. (220) Defendant denied that he had any real plan, arguing that he simply stole the car from the kidnap victim when the opportunity arose. The 7th Circuit rejected the argument, upholding the district court’s conclusion that the combination of kidnapping and theft to facilitate an escape and the rather elaborate theft scheme were sufficient to support the conclusion that defendant’s theft of the automobile involved more than minimal planning under § 2B1.1(b)(4). U.S. v. White, 903 F.2d 457 (7th Cir. 1990).
7th Circuit rules that “multiple count” guideline rendered error in choice of theft guideline “a mere technicality.” (220) The district court improperly applied the theft guideline, § 2B1.1, rather than the robbery guideline, § 2B3.1, to defendant’s theft of the kidnap victim’s automobile. However, the 7th Circuit held that this was “a mere technicality” because in calculating the sentence, the theft offenses were “grouped” with the kidnapping count under § 3D1.3(a). Since the offense level for the kidnapping count was higher than the theft offense, the kidnapping count determined the group’s offense level. Thus the offense level applicable to the interstate transportation of a motor vehicle had no affect on defendant’s sentence. U.S. v. White, 903 F.2d 457 (7th Cir. 1990).
7th Circuit holds that drug guideline was proper for attempt to deal cocaine. (220) Defendant and two companions had conspired to steal an automobile that they believed contained cocaine and cash. The scheme was foiled by law enforcement officers just as the defendants were attempting to make their getaway. The defendant pled guilty to conspiracy to distribute and to possess cocaine with intent to distribute. The sentencing court applied guidelines § 2D1.4 which relates to conspiracies involving controlled substances. The defendant appealed, claiming that guidelines § 2B1.1, which relates to larceny, embezzlement and theft should have been applied. The 7th Circuit disagreed, noting that although § 2B1.1 may apply when a defendant is convicted of stealing a controlled substance, he did not plead guilty to theft, rather he pled guilty to conspiracy to distribute cocaine. The district court therefore correctly relied upon § 2D1.4. That was the guideline that most closely correlated with the offense to which the defendant pled guilty. Schetz v. U.S., 901 F.2d 85 (7th Cir. 1990).
8th Circuit finds jail administrator intended assault on inmates. (220) During his tenure as the chief administrator of a county jail in Missouri, defendant either personally injured or caused the injuries of four prisoners. He was convicted of deprivation of rights and making false statements. He argued that the district court erred in using the aggravated assault guideline, § 2A2.2, since there was no evidence that he intended to commit the assaults. The Eighth Circuit ruled that the court did not err in finding that defendant had the requisite intent to assault the prisoners. The district court could reasonably infer that defendant intended to harm two prisoners by placing them in the C Tank, which was known as the “rougher tank” because it contained Mackley, a detainee who was known to be violent. Not only did defendant insinuate to Mackley and the other prisoners in C Tank that they should assault the victims, but he also rewarded them with cigarettes after each of the incidents. U.S. v. Wilson, 686 F.3d 868 (8th Cir. 2012).
8th Circuit holds that assault victim suffered serious bodily injury. (220) Defendant either personally injured or caused the injuries of four prisoners while he was the chief administrator of a county jail in Missouri. The Eighth Circuit upheld a five-level enhancement under § 2A2.2(b)(3)(B) for serious bodily injury. The guidelines define “serious bodily injury” as “injury involving extreme physical pain or the impairment of a function of a bodily member, organ, or mental faculty; or requiring medical intervention such as surgery, hospitalization, or physical rehabilitation.” One victim suffered injuries that required hospitalization, including facial swelling, a lacerated lip, multiple facial wounds, and a swollen ear. The victim also lost some range of motion in his jaw and suffered damage to his teeth. Finally, a CT scan showed that the victim sustained a fractured orbital bone. There was no error in finding that the victim sustained serious bodily jury. U.S. v. Wilson, 686 F.3d 868 (8th Cir. 2012)..
8th Circuit says increase for “device-making equipment” does not apply to check-cashing scheme. (220) Defendant recruited other individuals to cash counterfeit checks as part of a fraudulent check-cashing scheme. On appeal, the government conceded that the district court erred in applying a § 2B1.1(b)(10) enhancement for an offense involving a “device-making equipment.” The Eighth Circuit agreed. Section 2B1.1(b)(10) cannot be applied to offenses that involve a transfer originated solely by paper instrument, i.e., a scheme limited to fraudulent check-cashing. The definition of access devices excludes transfers “originated solely by paper instrument.” U.S. v. Butler, 646 F.3d 1038 (8th Cir. 2011).
8th Circuit applies gun increase based on police officer’s possession of “duty” weapon. (220) Defendant, a police officer, was caught in a sting by federal authorities after he conducted a police stop of a vehicle that contained stolen goods, seized the items without reporting them, and split the goods with a third party. Defendant pled guilty to the theft of federal government property. At sentencing, the district court added eight levels under § 2B1.1(b)(13) for his possession of a dangerous weapon, his duty firearm, in connection with the offense. The Eighth Circuit affirmed the enhancement. The firearm was clearly connected to his theft of electronics. It was defendant’s police uniform, which included the firearm, that cloaked him with the apparent authority to arrest the driver with the electronics, search her vehicle, and confiscate the electronics. Had he not been in uniform, it was not improbable that the driver would have regarded him as just another civilian, and it was unlikely she would have complied so readily. Further, an officer’s visible possession of a firearm, even when it remains holstered, is a signal of authority that will usually promote compliance in an ordinary citizen. U.S. v. Jackson, 639 F.3d 479 (8th Cir. 2011).
8th Circuit upholds physical restraint increase for striking patron attempting to leave scene of robbery. (220) Defendant, Melton and Newsome robbed a post office. Defendant and Melton entered the post office armed with handguns. A patron attempted to leave the post office unnoticed, but Newsome confronted her outside. When she refused to give Newsome her car keys, he struck her in the back of the neck with his handgun, causing her to fall to the ground. Newsome was then joined by defendant and Melton, and they sped away in a car. The Eighth Circuit upheld a §2B3.1(b)(4)(B) enhancement for physically restraining a victim during the robbery. Regardless of the actions of defendant and Melton inside the post office, Newsome physically restrained the woman attempting to leave the post office when he struck her with his handgun. This action facilitated the commission of the robbery and the escape. U.S. v. Lee, 570 F.3d 979 (8th Cir. 2009).
8th Circuit approves upward variance for defendant who previously received lenient state sentences. (220) Defendant pled guilty to fraudulent use of an unauthorized access device. Although the Guidelines recommended a sentence of 15-21 months, the district court sentenced defendant to 48 months. The court noted that courts had been lenient to defendant in the past, yet she continued to commit crimes of fraud and theft. The court believed that a guideline range sentence would not stop the criminal activity. The Eighth Circuit, affirmed the sentence as reasonable, noting that Gall v. U.S., 552 U.S. __ (2007) rejected the argument that “extraordinary” circumstances were required to justify a sentence outside the Guidelines range. In addition, the Court rejected “the use of a rigid mathematical formula that uses the percentage of a departure as the standard for determining the strength of the justifications required for a specific sentence.” The district court properly considered the factors in § 3553(a) when it imposed defendant’s sentence. U.S. v. Braggs, 511 F.3d 808 (8th Cir. 2008).
8th Circuit remands because not clear if court considered proper factors in imposing consecutive sentences. (220) Defendant pled guilty to five counts of bank fraud and five counts of aggravated identity theft. The guideline range for each of the bank fraud counts was 37-46 months, and the court sentenced defendant to 46-month concurrent sentences for each of these counts. In addition, the court imposed five statutorily mandated terms of 24 months for the identity theft counts. 18 U.S.C. §1028A(a)(1), (b); U.S.S.G. § 2B1.6. The court ran three of the counts consecutive to the bank fraud terms and to each other, and the remaining two concurrently to the other terms. This resulted in a 118-month total sentence. Defendant challenged the district court’s decision to run three of the identity theft counts consecutively. The Eighth Circuit remanded because the district court did not adequately explain its decision to impose consecutive sentences. The district court did little to explain on the record why it chose to essentially follow the government’s recommendation for a 10-year sentence. The panel was not convinced that the district court considered the factors that must inform its decision whether to run multiple § 1028A counts concurrently or consecutively. U.S. v. Lee, 502 F.3d 780 (8th Cir. 2007).
8th Circuit says establishing post office box under assumed name was not “sophisticated means.” (220) Note 15 to § 2F1.1 of the 1998 guidelines provided for a sophisticated means enhancement if the defendant’s fraudulent conduct was “especially complex or especially intricate….” Here, defendant (1) rented a post office box in his own neighborhood under an assumed name, and, in the national mailings to his victims, used this post office box as his return address, and (2) included in the mailings fake testimonials from individuals. The Eighth Circuit held that these acts were insufficient to show sophisticated means. When measured for their complexity and intricacy, these acts did not distinguish themselves from the multitude of other mail fraud cases. Renting a post office box under an assumed name is a common means of carrying out mail fraud. U.S. v. Hance, 501 F.3d 900 (8th Cir. 2007).
8th Circuit holds that individual stores owned by a single corporation did not constitute separate victims. (220) Defendant and others traveled across the U.S. shoplifting over-the-counter medicines and other items from numerous retails stores. The court found that each of the 407 Walgreens stores involved in the offenses were separate victims, and applied a six-level enhancement under § 2B1.1(b)(2) for more than 250 victims. The Eighth Circuit held that the court erred in treating each retail store of a corporation as a separate victim. A Walgreens official testified that the individual Walgreens stores did not sustain any part of the actual loss under subsection (b)(1) – the corporation took the loss. U.S. v. Icaza, 492 F.3d 967 (8th Cir. 2007).
8th Circuit holds that numerous false documents established sophisticated means. (220) Defendant was convicted of a variety of fraud counts based on misrepresentations she made to a business lender, a mortgage company, and an investor. She challenged a sophisticated means enhancement under § 2F1.1(b)(6)(c) because she only made simple false statements in applying for loans, created false documents that were easy to generate, copied forms from the IRS website that was easily accessed, and ran a real, not fictitious, business. She also never used corporate shells or offshore bank accounts. The Eighth Circuit nonetheless affirmed the sophisticated means enhancement. Defendant created and used numerous false documents, including multiple years of federal tax returns, supporting federal tax documents, such as W-2 and 1999 forms, bank statements (created from whole cloth), Articles of Incorporation from the Arkansas Secretary of State, profit and loss statements, and a series of bank letters. Collectively, these false documents demonstrated that defendant used sophisticated means. U.S. v. Edelmann, 458 F.3d 791 (8th Cir. 2006).
8th Circuit upholds increase for representing to victims that defendant was acting on behalf of charitable business. (220) Defendant was convicted of a variety of fraud counts. The government presented evidence that, in seeking “bridge loans” from two investors, defendant represented her business as a non-profit, humanitarian project providing legal services to indigent criminal defendants. In addition, she represented to them that she was in the process of gaining primary funding for her project from another source. She promised them high returns on their loans when her primary investment source paid out. Also, she submitted a letter to the victims from a third party stating that defendant would received two million dollars a week for 40 weeks and that part of this money would be used for humanitarian projects. Based on these representations, the Eighth Circuit upheld a two-point enhancement under § 2F1.1(b)(40(A) of the 2000 guidelines for a misrepresentation that the defendant was acting on behalf of a charitable, educational, religious or political organization. U.S. v. Edelmann, 458 F.3d 791 (8th Cir. 2006).
8th Circuit finds multiple victims of single fraud scheme rather than separate fraud schemes. (220) Defendant was convicted of a variety of fraud counts, and received an enhancement under § 2F1.1(b)(2)(B) of the 2000 guidelines for an offense involving a scheme to defraud more than one victim. She argued that there was not one scheme to defraud multiple victims but three separate schemes, each with one victim. The Eighth Circuit found no error. The government presented evidence that defendant used her business as a front to swindle three different parties out of money within a very short time frame. First, she used similar business records with each victim, such as false profit and loss statements, tax records, bank statements and letters, and documents relating to her anticipated earnings from an overseas program. The frauds were committed within a three-month period, and two of the frauds took place within the same time frame and for the same purpose. The scheme to defraud two of the victims “were inextricably intertwined.” U.S. v. Edelmann, 458 F.3d 791 (8th Cir. 2006).
8th Circuit approves upward departure for defendant who robbed 22 banks in 18-month period. (220) Over an eighteen-month period, defendant committed 22 bank robberies. His guideline range was 87-108 months’, but the court departed upward by six offense levels, and imposed a sentence of 180 months. The court found that the guidelines did not adequately account for the magnitude of defendant’s crime spree, since it stops counting at more than five offenses. Thus, a defendant who commits six bank robberies is treated the same under the guidelines as a person who has robbed 22 banks. The court also considered the impact of defendant’s threats of violence on bank personnel and the community as a whole. The Eighth Circuit affirmed the sentence, ruling that defendant failed to demonstrate that his sentence was unreasonable. The guidelines did not adequately account for his robbery of 22 banks. U.S. v. Whitrock, 454 F.3d 866 (8th Cir. 2006).
8th Circuit approves upward departure for same injury that was basis for permanent injury enhancement. (220) Defendant fired a gun several times toward a house. One of the bullets struck a three-year old girl, severing her spinal cord and paralyzing her from the chest down. Defendant pled guilty to assault with a firearm with intent to do bodily harm and to use of a firearm to commit a crime of violence. The district court found that a sentence within the advisory guideline range would not be sufficient under the facts of the case, including the extent and permanence of the girl’s injuries and defendant’s “knowing risk” of shooting “out of the window of a moving car multiple times into a yard full of people” while intoxicated. Defendant argued that the court erred in departing upward on the firearm charge for the same injury that was the basis of a seven-level enhancement under § 2A2.2(b)(3) for permanent or life-threatening injury to the victim. The Eighth Circuit affirmed the upward departure. The girl suffered psychological or emotional injury as well as physical, and her physical injuries were compounded by sustaining them at the young age of three, thus affecting the length and quality of her whole life span. The court explicitly stated that the guideline sentence was insufficient, and its departure satisfied the guidelines rules for upward departure. Double counting is permissible in the departure context if the facts support it. The 228-month sentence was not unreasonable. Although defendant was remorseful and had not intended to shoot the girl, the court found that her acts had been reckless and that her warning to a 13-year old standing in the front yard showed an awareness that someone could be injured by gunshots. U.S. v. Hawkman, 438 F.3d 879 (8th Cir. 2006).
8th Circuit holds that guidelines preserved original definition of “means of identification” even though definition was moved. (220) Defendant pled guilty to credit card fraud and identity theft. The district court applied an enhancement under § 2B1.1 (b)(9)(C)(i) for the unauthorized use of any means of identification to produce or obtain any other means of identification. The 2003 guidelines states that “means of identification” has the meaning given that term in 18 U.S.C. § 1028(d)(4). See Note 8 to § 2B1.1 The district court applied the statutory definition of “means of identification” found at § 1028(d)(7) because an April 2003 reorganization of § 1028 moved the statutory definition from subsection (d)(4) to (d)(7). The Eighth Circuit found no error. The guidelines incorporated the statutory definition of “means of identification” found at § 1028(d)(4) prior to the definition’s migration to § 1028(d)(7). Thus, the 2003 guidelines preserved the original definition notwithstanding the failure to correctly cross-reference the statute after its reorganization. The enhancement was proper. Defendant used one means of identification (a victim’s social security number) to obtain another means of identification (a credit card account number). Although the credit card account was obtained in the name of a fictitious business, rather than an actual individual, it was still a means of identifying an actual individual. Defendant’s fraudulent activity was reflected on the victim’s credit report. When an actual individual’s social security number is paired with a fictitious name on a subsequently obtained means of identification, it does not necessarily “sever the ties linking the victim and the Social Security numbers.” U.S. v. Oates, 427 F.3d 1086 (8th Cir. 2005).
8th Circuit holds that “gain resulting from offense” in insider trading case was defendant’s gain, not loss to market. (220) Defendant was convicted of various securities fraud counts relating to insider trading. He was sentenced under the 1994 guidelines. The district court found that under § 2B1.4 the gain resulting from defendant’s offenses was the total amount he gained from his illegal purchase and sale of call options. Defendant argued that the court should borrow the “market absorption” approach from civil insider trading cases. Under this approach, defrauded sellers can recover the amount they lost before they could have reasonably obtained access to the material nonpublic information. Defendant claimed that the market would have reasonably absorbed his inside information. The Eighth Circuit rejected defendant’s argument. The guideline refers to the defendant’s gain, not to market gain. The official commentary to § 2B1.4 states that the guideline applies to insider trading cases, and by gain it means “the total increase in value realized through trading in securities.” By use of the word “realized”, the commentary makes clear that gain is the total profit actually made from a defendant’s illegal securities transactions. U.S. v. Mooney, 425 F.3d 1093 (8th Cir. 2005) (en banc).
8th Circuit holds that counterfeit check scheme involved sophisticated means. (220) Defendants were involved in a check counterfeiting scheme. The Eighth Circuit ruled that the district court’s finding under § 2B1.1(b)(9)(C) that they used sophisticated means was not clear error. Defendant’s jointly planned, coordinated and carried out activities to carry out their fraud. For example, they moved from state to state to obtain false identification cards using various individuals’ identities. They went to substantial efforts to hide their activities within Fort Smith, the city where they were apprehended. The two men went to different branches of the state revenue office to obtain fraudulent identification cards in order to prevent clerks at the same office from recognizing them. They also went to great lengths to make their transactions look legitimate. They obtained identification from real people, used that information to obtain false identification cards, and then used those identities to open checking accounts under the assumed identities. Defendant also put legitimate bank information on counterfeit checks, and used a computer to generate checks that looked authentic. These actions provided “strong evidence” of a scheme that was “extensively planned” and which was “executed with careful attention to detail.” U.S. v. Harvey, 413 F.3d 850 (8th Cir. 2005).
8th Circuit says defendants could be held responsible for losses caused by co-conspirator. (220) Defendants were involved in a check counterfeiting scheme. The district court found that defendants acted in concert and therefore each could be held responsible for the losses caused by the other. The Eighth Circuit affirmed, finding defendants’ actions met the definition of jointly undertaken criminal activity. Defendants planned and carried out a scheme to achieve the unlawful end of possessing and passing counterfeit checks and possessing false identification. They traveled together to a state revenue office with the intent of obtaining identifications as part of the larger scheme of using those identifications to pass counterfeit checks. The two were photographed passing counterfeit checks at about the same time at different cash registers within the same Wal-Mart. There was evidence that they had been traveling together for at least two months prior to their arrest. Further, the two men shared resources to carry out their scheme when the both used the same apartment and van to carry out their criminal enterprise. U.S. v. Harvey, 413 F.3d 850 (8th Cir. 2005).
8th Circuit relies on loss estimate by victim’s employees as to value of stolen software. (220) Defendant was the employee of a company hired by the state of Arkansas to develop and install document production software in facilities such as drivers’ license stations. He stole a copy of the software and used it to produce high-quality, false identification documents and to perpetrate various forms of fraud. Trial evidence demonstrated that the stolen software was at the heart of the contractor’s $10 million contract with Arkansas. The software was developed specifically to ensure security and deter counterfeiting in the production of state identification documents; development cost for the software was about $700,000; the software was not generally available for sale separate from an installation contract so there was not a verifiable “fair market value.” An employee of the contractor estimated the fair market value for a copy of the software to be about $1 million. In addition, the contractor estimated that it spent between 300 to 500 man hours over the course of two years dealing with the fallout from the software theft. The district court found that the loss under § 2B1.1(b) was about $1.4 million, and the Eighth Circuit affirmed. The panel rejected defendant’s claim that the contractor’s own estimates about the value of its software was tainted by self-interest. There was a contract that placed the value of the software substantially above the figure adopted by the court. Further, the contractor’s employees testified as to their estimates of development cost and the value of a single copy of the software in light of the development cost and the overall contract with the state. The guidelines do not demand precision in loss calculation. U.S. v. Ameri, 412 F.3d 893 (8th Cir. 2005).
8th Circuit holds that court should have reduced intended loss by value of collateral. (220) At a real estate closing, defendant gave the title company a fake check for $249,493, the purchase price of the house. The title company issued a check for $76,000 to the seller, a participant in the fraud, which he cashed before the title company discovered the fraud. The bank, which was owed about $170,000 on the mortgage, foreclosed on the mortgage and sold the house, receiving only about $85,000 for the house. The parties agreed that the actual loss was about $161,000. At issue was the amount of intended loss – whether the apparent value of the house should be deducted from the intended loss. The Eighth Circuit held that courts should consider collateral when determining the intended loss amounts attendant to transactions like the one involved here. If a reasonable person intends for the collateral to revert to the defrauded party (or understands that it will), then he or she does not intend to obtain the value of that collateral. The defendant’s intent is the touchstone. Here, intended loss was less than the actual loss. A reasonable person in defendant’s position would not have thought that he could keep the house because a house cannot be hidden like a car or other mobile form of security. In addition, a reasonable person would have thought that the house was worth at least as much as the outstanding value of the mortgage, and hence could be sold to recoup much of the loss. Since the actual loss of $161,000 was greater than the intended loss, it should have been used to calculate defendant’s offense level. U.S. v. Staples, 410 F.3d 484 (8th Cir. 2005).
8th Circuit remands for development of record as to loss where government presented no evidence. (220) Defendant was convicted of various counts involving a home health care fraud scheme. The PSR recommended a loss amount in excess of $ 1 million. The government responded by indicating it was recommending a loss of $122,336. This was consistent with the plea agreement, which recommended a ten-level enhancement, which corresponded to a loss between $120,000 to $200,000. The plea agreement recited that defendant disputed this loss amount. The district court found the loss was $122,336. However, the Eighth Circuit was unable to determine from the record the basis for this finding. After the court stated it was imposing the amount mentioned in the PSR, defendant’s attorney stated that she disputed that amount and set forth the reasons for the dispute. The government presented no evidence to support the $122,386 figure. Accordingly, the panel remanded for further development of the record as to the amount of loss. U.S. v. Liveoak, 377 F.3d 859 (8th Cir. 2004).
8th Circuit says that middleman’s profit should have been included in loss from fraud. (220) Defendants participated in a conspiracy to commit fraud in the sales and distribution of Freon through Sam’s Club. The district court found that the amount of loss to Sam’s Club was the total amount of kickbacks, $459,047.02, instead of the full amount of money retained by all of the conspirators. The Eighth Circuit agreed that the middleman’s profit of $277,412.98 should have been included in the loss calculation. When defendants conspired with the middleman for the middleman to purchase Freon from a third party and then sell the same Freon to Sam’s Club for a profit, Sam’s Club was improperly deprived of the net profit shared by the co-conspirators, including the middleman. U.S. v. O’Malley, 364 F.3d 974 (8th Cir. 2004).
8th Circuit holds that logger who wrongfully diverted timber engaged in more than minimal planning. (220) Defendant contracted to cut and haul timber for several different landowners. Defendant was to deliver the timber to specific mills, but diverted some of the loads to unauthorized mills and disguised the source of the timber. As a result of the scheme, defendant received in excess of $350,000. The Eighth Circuit held that the district court did not commit plain error when it imposed a two-level increase for more than minimal planning. Defendant’s scheme required considerable effort, including taking loads to multiple mills and issuing landowners fraudulent scale tickets, over an extended period of time. U.S. v. Wainright, 351 F.3d 816 (8th Cir. 2003).
8th Circuit holds that use of relevant conduct did not violate Apprendi. (220) Defendant contracted to cut and haul timber for several different landowners. Defendant was to deliver the timber to specific mills, but diverted some of the loads to unauthorized mills and disguised the source of the timber. The district court included in its sentencing calculations the loss caused by relevant conduct, and concluded that a loss of more than $350,000 was supported by a preponderance of the evidence. The Eighth Circuit held that the use of relevant conduct did not violate Apprendi v. New Jersey, 530 U.S. 466 (2000), since the use of defendant’s acquitted conduct did not put his sentence beyond the statutory maximum. A jury is not required to make factual findings as to all matters that enhance a sentence. See U.S. v. Madrid, 224 F.3d 757 (8th Cir. 2000) (acquitted conduct proven by a preponderance of the evidence can be used to enhance sentence). U.S. v. Wainright, 351 F.3d 816 (8th Cir. 2003).
8th Circuit includes additional thefts in loss calculation. (220) Defendant was convicted of organizing a theft ring involving four-wheelers, small tractors, and other small motorized vehicles. In addition to the 13 vehicles listed in the indictment, the district court included in its loss calculation the value of other vehicles stolen during the conspiracy and testified to at trial. The Eighth Circuit held that the district court was correct in basing the loss calculation on all of the vehicles proven by a preponderance of the evidence to have been stolen as a part of the conspiracy, and not only the 13 vehicles listed in the indictment. U.S. v. Holliman, 291 F.3d 498 (8th Cir. 2002).
8th Circuit reverses where court never found whether gun possession was part of foreseeable joint activity. (220) Defendant advised Mitchell not to use a gun during a planned bank robbery. At the bank, Mitchell went inside while defendant waited in the car. Mitchell did not take a gun into the bank, although he told the teller that he had one. While fleeing from police, Mitchell discarded the money. Officers recovered a loaded pistol next to the bag of money. Mitchell admitted that he put the gun in the glove compartment of the car before he and defendant drove to the bank. The district court applied a five-level increase under § 2B3.1(b)(2)(C) for possessing a gun during the offense. The Eighth Circuit reversed. Defendant was accountable, under § 1B1.3(a)(1) (B), for the reasonably foreseeable acts of Mitchell in furtherance of their jointly undertaken activity, which could include conduct during their attempted escape. However, Mitchell’s threat to the bank teller that he had a gun at most supported only a two-level enhancement under § 2B3.1(b)(2)(F) for making a threat of death. The district court’s reasoning was flawed because: (1) the court relied upon Mitchell’s threat to the teller to support a five-level increase under § 2B3.1(b)(2)(C), and (2) the court made no findings as to whether Mitchell’s possession of the gun during their attempted escape was in furtherance of jointly undertaken criminal activity or reasonably foreseeable to defendant. U.S. v. Roberts, 253 F.3d 1131 (8th Cir. 2001).
8th Circuit rejects enhancement for “theft from the person of another.” (220) Defendant, an armored car messenger, opened the back of the truck and allowed an accomplice to take four bags containing $185,000. While the accomplice ran to a getaway car, defendant acted as if he had been robbed. During the theft, the armored car driver, who was not involved in the scheme, remained in the driver’s seat, which was separated from the back of the truck by a bulkhead with a plexiglass window. The Eighth Circuit reversed a § 2B1.1(b)(2) enhancement for “theft from the person of another.” Note 7 explains that “‘from the person of another’ refers to property, taken without the use of force, that was being held by another person or was within arms’ reach.” While the driver was present at the scene of the robbery, he was not holding the money nor was he within arms’ reach of the money. From the driver’s seat, the driver could not have reached the money, which was in the back of the truck, and was separated from the driver by a bulkhead with a plexiglass window. U.S. v. Jankowski, 194 F.3d 878 (8th Cir. 1999).
8th Circuit defers to district court’s credibility finding on defendant’s possession of broken bottle. (220) Witnesses testified that defendant kicked in the door of their house and entered the house carrying a beer bottle, which broke on the door frame. Defendant confronted the occupants with the broken beer bottle, extending the jagged edge toward them as he approached. Several of the occupants fled the house. Defendant testified that he went to the house in search of his girlfriend and that one of the occupants, unprovoked, broke a beer bottle over defendant’s face and cut him with the broken bottle. The jury, disbelieving defendant’s testimony, convicted him of burglary. The Eighth Circuit affirmed a § 2B2.1(b)(4) dangerous weapon enhancement. Although defendant testified that one of the occupants brandished the broken bottle, it was evident that the district court believed the testimony of the various witnesses and did not believe defendant. A district court’s credibility determinations are virtually unreviewable on appeal. There was ample evidence that defendant possessed and brandished a broken bottle in the course of the burglary. U.S. v. Gomez, 165 F.3d 650 (8th Cir. 1999).
8th Circuit rejects using burglary guideline for bank theft. (220) Defendant entered three bank branches and used a screwdriver to open the backs of ATM machines, taking money on two occasions. He later was involving in passing counterfeit bills and using fraudulently obtained credit card numbers. He pled guilty to one count of bank theft, two counts of counterfeiting and one count of access device fraud. The PSR recommended grouping the offenses together under § 3D1.1. The government requested an upward departure because it believed that grouping would result in no incremental punishment. Instead of granting the departure, the district court treated the bank theft as a burglary so it would not “group” with the other counts. The Eighth Circuit held that this was error because defendant did not stipulate to facts that established the more serious burglary offense and this was not an “atypical” case. The court did not decide whether Appendix A contains an “atypical” case exception because this was not an atypical case. A case is not “atypical” simply because the total criminal conduct includes some acts more serious than the charged offense. The fact that defendant did not object to facts in the PSR that could arguably be considered burglary, did not amount to a stipulation. U.S. v. Casey, 158 F.3d 993 (8th Cir. 1998).
8th Circuit affirms “in the business” enhancement. (220) During a four month period, defendant broke into and stole items from numerous locked storage bins. His partner was the owner of an auction house who would sell the items through the auction house and split the proceeds with defendant. The Eighth Circuit affirmed an increase under § 2B1.1(b)(4)(B) for being in the business of receiving and transporting stolen goods. The auction house was a business that received and sold stolen goods. Defendant was an integral part of the scheme by which the auction house received and sold stolen goods. Since defendant split the proceeds, defendant was part of a business that received and sold stolen goods. U.S. v. Collins, 104 F.3d 143 (8th Cir. 1997).
8th Circuit upholds enhancement for being “in the business.” (220) Defendant was convicted of interstate transportation of stolen property. The district court imposed a two level increase for more than minimal planning under § 2B1.1 (b)(4)(A) and a four level increase for being “in the business” of receiving and selling stolen goods under § 2B1.1(b)(4)(B). The government acknowledged that enhancements under both subparts (A) and (B) was improper because section 2B1.1(b)(4) is written with the conjunctive “or” between subparts (A) and (B). Therefore only one enhancement may be applied at a time. The Eighth Circuit agreed, but found that the “in the business” enhancement was properly applied. The record supported the finding that defendant was in the business of receiving and selling stolen goods. She admitted purchasing products that she knew were stolen. U.S. v. Payseno, 104 F.3d 191 (8th Cir. 1997).
8th Circuit bases loss on market value of converted collateral. (220) Defendant borrowed money from the Farmers Home Administration (FmHA), pledging his cattle as security for the loan. Defendant failed to report to the FmHA, as required by his loan agreement, the sale of 542 cattle worth $331,000. The Eighth Circuit agreed that defendant’s sale of $331,000 worth of collateral resulted in a loss under § 2B1.1 of more than $100,000. Loss is defined in note 2 as the value of the property taken, damaged, or destroyed. Fair market value of the lost property is ordinarily the measure of loss. Here, the collateral that was converted sold for $331,000 at a livestock sale. This figure closely approximated the fair market value of the converted collateral. U.S. v. French, 46 F.3d 710 (8th Cir. 1995).
8th Circuit excludes from loss amounts embezzler moved from one credit union account to another. (220) Defendant, a credit union employee, embezzled $88,000 from credit union accounts and misapplied $320,000. She misapplied funds by transferring money from one credit union account to another credit union account. The 8th Circuit held that the district court properly excluded from the calculation of loss under section 2B1.1 the $320,000 in misapplied funds, because they were never removed from the credit union. The credit union was never “at risk” to lose the misapplied funds. U.S. v. Johnson, 993 F.2d 1358 (8th Cir. 1993).
8th Circuit affirms adoption of PSR’s determination of loss without specific finding of fact. (220) The 8th Circuit affirmed the district court’s decision to accept the PSR’s calculation of the loss caused by defendant’s embezzlement without making specific findings of fact. Defendant entered into a plea agreement that stated the amount of loss was between $800,000 and $2.5 million, leaving the final determination to the district court. Defendant urged the court to attach a copy of the auditor’s report to the plea agreement in order to provide the district court with guidance. The report, like the PSR, indicated that defendant had embezzled $1.5 million. But in both his written objections to the PSR and at the sentencing hearing, defendant failed to object to the PSR’s determination of the amount of loss. The appellate court also affirmed it was proper to include a lost interest calculation in the total amount of loss. An accurate determination of loss must contain a calculation for lost interest. U.S. v. Bartsh, 985 F.2d 930 (8th Cir. 1993).
8th Circuit affirms use of loss in dismissed counts as relevant conduct. (220) Defendant pled guilty to two counts of converting grain he had pledged as collateral for a federal farm loan. The 8th Circuit affirmed including the loss in the dismissed counts in calculating the loss under section 2B1.1. Defendant admitted that he had disposed of all of the grain for which he was initially charged. He also admitted that these actions were part of a continuing course of conduct he undertook to cover up for missing grain. The district court properly concluded that the loss in the dismissed counts constituted relevant conduct under section 1B1.3. U.S. v. Redlin, 983 F.2d 893 (8th Cir. 1993).
8th Circuit says failure to specify alternative basis for loss calculation was a waiver. (220) Defendant pled guilty to two counts of converting mortgaged property. At sentencing, he challenged the calculation of loss under section 2B1.1 on the grounds that (1) the loss from dismissed counts should not be included because he did not intend to convert the property involved, (2) he did not plead guilty to the charges, and (3) he paid back the loans within 20 days of the inspection that revealed the conversion. On appeal, he challenged the attribution of any loss to his conduct, suggesting that his conduct was more akin to a fraud in which no loss was intended, and that his loss should have been calculated under the analysis in section 2F1.1. The 8th Circuit held that defendant’s failure to suggest this alternative loss calculation scheme at sentencing constituted a waiver. Defendant’s objections failed to alert the judge to the error he now asserted. U.S. v. Redlin, 983 F.2d 893 (8th Cir. 1993).
8th Circuit affirms more than minimal planning adjustment for repeated thefts. (220) Defendants were part of a conspiracy which used “boosters” to shoplift merchandise from retail outlets, and then retagged the merchandise and resold it through another retail outlet. Over time, the conspiracy stole $475,000 worth of merchandise. The 8th Circuit upheld an enhancement under section 2B1.2(b)(4)(B) for more than minimal planning, rejecting defendants’ claim that the conspiracy charge and the nine level increase they received for the value of the stolen property both took into account this aspect of their crimes. The more than minimal planning enhancement increases the punishment for repeated criminal acts, regardless of the amount stolen. The court rejected defendants’ claim that the enhancement requires extensive planning, complex activity or concealment. The conspiracy clearly involved more than minimal planning, even if defendants were not the planners. U.S. v. Wilson, 955 F.2d 547 (8th Cir. 1992).
8th Circuit affirms that theft by armored car employee involved more than minimal planning. (220) Defendant worked for an armored car company as a messenger responsible for accepting and distributing the car’s currency or cargo. One day after receiving a bag containing $25,000 without having to sign for it, he stole the money. The 8th Circuit affirmed a two-level increase under guideline section 2B1.1(b)(5) for more than minimal planning. The district court found that defendant had stolen money from the armored car’s cargo on several earlier occasions and had taken substantial steps to conceal his thefts, including the final theft of $25,000. U.S. v. Coney, 949 F.2d 966 (8th Cir. 1991).
8th Circuit upholds increase in offense level for value of plane and more than minimal planning. (220) Defendant was convicted of conspiracy to transport a stolen aircraft. The district court increased his offense level because the airplane was worth over a million dollars and the offense involved more than minimal planning. The 8th Circuit upheld both adjustments. Although defendant presented evidence that the plane was worth less than one million dollars, there was conflicting evidence from witnesses who testified that the plane was worth several million dollars. Defendant had purchased disguises for himself and his girlfriend, which by itself, was sufficient to establish that the offense involved more than minimal planning. U.S. v. Culver, 929 F.2d 389 (8th Cir. 1991).
8th Circuit finds postal employee who stole from mail abused position of trust. (220) Defendant pled guilty to theft of government mail by a postal employee. The district court refused to enhance defendant’s sentence based on abuse of a position of trust, because it believed that in all postal theft cases, trust is built into the guidelines. The 8th Circuit disagreed, finding that while the underlying criminal statute does assume an abuse of public trust, the guidelines do not. Defendant was sentenced under guideline § 2B1.1, which applies to any theft, not just theft by a postal employee. The court rejected defendant’s argument that any postal employee could have committed his crime. Defendant had direct access to express and certified mail as a substitute handler one day a week. Other employees did not have access to such mail, which by its nature was especially sensitive and more likely to contain things of value than mail in general. Judge Heaney dissented, finding defendant’s job provided the same opportunity for crime that was afforded to every other handler of express and certified mail. U.S. v. Lange, 918 F.2d 707 (8th Cir. 1990).
8th Circuit reverses valuation of stolen property based upon hearsay opinion of owner. (220) Defendant’s offense level was increased by one under guideline § 2B2.1(b)(2)(B), based on the district court’s determination that the value of property stolen by defendant exceeded $2,500. The only evidence of the value of the property was the owner’s estimate. The 8th Circuit remanded, finding that the government failed to prove the value of the stolen goods by a preponderance of the evidence. The owner was unavailable to testify, and therefore her opinion was presented by a police officer who spoke with her on the phone. The testimony indicated that many of the stolen items were gifts, and that the owner’s estimate was based on conjecture or sentimental value. The fact that the victim was well educated and the president of a local college was insufficient to support a conclusion that the victim’s estimates were accurate. U.S. v. Rivers, 917 F.2d 369 (8th Cir. 1990).
8th Circuit finds that defendant who ran stolen goods ring was in the business of selling stolen property. (220) The district court found that defendant was in the business of selling stolen property and added four points to his offense level under guidelines § 2B1.2(b)(3)(A). The 8th Circuit found that this was supported by defendant’s statement to an informant that he could supply stolen checks, jewelry, and credit cards. U.S. v. Russell, 913 F.2d 1288 (8th Cir. 1990).
8th Circuit holds that retail value of stolen goods is proper measure of loss. (220) Defendant argued that the district court erred in applying the retail value of stolen goods as the measure of loss under guidelines § 2B1.1(b)(1). The 8th Circuit rejected this argument, finding that under 18 U.S.C. § 659, the statute under which defendant was convicted, property is to be valued as set forth in 18 U.S.C. § 641, which provides that value means “face, par, or market value, or cost price, either wholesale or retail, whichever is greater.” The court also rejected defendant’s argument that the value used for purposes of conviction should not be used for purposes of sentencing. “Use of wholesale as opposed to retail valuation would only encourage disparate sentencing for essentially similar criminal acts, especially in cases involving stolen property with several tiers of distribution.” Judge McMillian disagreed, arguing that since the victims were wholesale distributors the value of the stolen goods was the wholesale market value. U.S. v. Russell, 913 F.2d 1288 (8th Cir. 1990).
8th Circuit upholds accumulating the value of all stolen goods and transactions for which codefendants were indicted. (220) Defendant was a participant in a stolen goods ring involving several other people. Defendant argued that it was improper to accumulate the value of all stolen goods and transactions for which his codefendants were indicted. The 8th Circuit rejected this contention, finding that guidelines § 1B1.3(a)(2) authorized the district court to consider amounts beyond those to which defendant pled guilty. Defendant relied upon the commentary to 1B1.3, which provides that in a robbery case in which a defendant robbed two banks, money taken in one robbery cannot be considered in determining the guidelines range for the other robbery. The 8th Circuit found defendant’s reliance to be misplaced, since robbery is not an offense to be grouped together under 3D1.2(a)(2). However, possession of stolen property is an offense grouped together. U.S. v. Russell, 913 F.2d 1288 (8th Cir. 1990).
8th Circuit holds that prior version of § 2B1.2(b)(4) authorized increase in offense level for broad range of organized criminal activity. (220) Defendants pled guilty to possession of stolen goods, and received a sentence enhancement under guidelines § 2B1.2(b)(4) since the offense involved “organized criminal activity,” i.e. “operations such as car theft rings or chop shops, where the scope of the activity is clearly significant but difficult to ascertain.” After defendant was sentenced, § 2B1.2(b)(4) was amended to provide for an increase in offense level only if “the offense involved an organized scheme to receive stolen vehicles or vehicle parts.” The 8th Circuit found that it was proper to apply the version of the guidelines in effect when defendant was sentenced. The revision significantly limited the application of the section. Therefore, the increase in defendant’s offense level under § 2B1.2(b)(4) was proper. Judge McMillian disagreed with this conclusion, arguing that the purpose of the amendment was to clarify that “organized criminal activity” under § 2B1.2(b)(4) was limited to schemes to receive stolen vehicles and vehicle parts. U.S. v. Russell, 913 F.2d 1288 (8th Cir. 1990).
8th Circuit finds that forgery and possession of stolen mail were properly grouped together. (220) Defendant was involved in stealing and forging United States treasury instruments and pled guilty to forgery and possession of stolen mail. The 8th Circuit found that since both counts arose from defendant’s theft of the treasury instruments, the counts were sufficiently linked to group them together under guideline § 3D1.2(d). U.S. v. Manuel, 912 F.2d 204 (8th Cir. 1990).
8th Circuit holds that adjustment for more than minimal planning was improperly based on same conduct as obstruction adjustment. (220) The bank embezzlement guideline, § 2B1.1, authorizes a two-level upward adjustment for “more than minimal planning,” when “significant affirmative steps are taken to conceal the offense.” Since the district court found there was more than minimal planning here, it was improper for the court to find on the same facts that defendant obstructed justice under U.S.S.G. § 3C1.1. This constituted cumulative punishment for the same conduct, and required reversal. U.S. v. Werlinger, 894 F.2d 1015 (8th Cir. 1990).
9th Circuit upholds sophisticated means enhancement for executive who committed fraud. (220) At defendant’s sentencing for committing fraud, the district court imposed a two-level enhancement under 2B1.1(b)(10(C) because the offense involved sophisticated means. Defendant executed a scheme in which he embezzled money from two businesses over 16 months while he was employed as an executive at one of the businesses. To accomplish the fraud, defendant created false invoices and falsified checks. The Ninth Circuit held that these means as a whole were sufficiently sophisticated to warrant the enhancement. U.S. v. Tanke, 743 F.3d 1296 (9th Cir. 2014).
9th Circuit finds misrepresentation in bankruptcy was relevant conduct for fraud. (220) The fraud guideline, 2B1.1(b)(9)(B), requires a two-level enhancement if the offense involved misrepresentation during a bankruptcy proceeding. Defendant gave a false statement in a bankruptcy proceeding four years after completing the fraud for which he was convicted. The Ninth Circuit held that the misrepresentation in the bankruptcy proceeding was relevant conduct to the fraud offense because it occurred in attempting to avoid detection for that offense. U.S. v. Tanke, 743 F.3d 1296 (9th Cir. 2014).
9th Circuit says loss for theft of mail may include costs of preventing additional losses. (220) Defendants pleaded guilty to receipt of stolen mail, in violation of 18 U.S.C. § 1708. In calculating loss under § 2B1.1, the district court included costs incurred by the Postal Service in response to defendants’ conduct to prevent additional mail thefts during the period in which defendants were stealing mail. The Ninth Circuit held that the district court properly included these costs in the loss calculation. U.S. v. May, 706 F.3d 1209 (9th Cir. 2013).
9th Circuit holds that restitution for mail theft may not include cost of theft prevention. (220) Defendants pleaded guilty to stealing mail on a particular day. At defendants’ sentencing, the district court ordered them to pay restitution for costs associated with steps the Postal Service took in response to defendants’ theft of mailed packages before the day of the defendants’ offense but while the defendants were engaged in stealing mail. The Ninth Circuit held that because the costs of prevention did not flow directly from defendants’ offense, the district court erred in ordering restitution to the Postal Service for those costs. U.S. v. May, 706 F.3d 1209 (9th Cir. 2013).
9th Circuit holds that retail gift cards constitute “access devices.” (220) Defendant stole gift cards from retail stores, duplicated them, and returned the duplicate to the store of origin. When a customer bought the duplicate and activated it for use, defendant used the original to make purchases or obtain cash. Defendant pleaded guilty to possessing 15 or more “access devices” with intent to defraud, in violation of 18 U.S.C. § 1029(a)(3). At sentencing, defendant argued that a retail gift card is not an “access device.” The Guidelines draw their definition of that term from 18 U.S.C. § 1029(e)(1), which provides that an “access device” must access an “account.” The Ninth Circuit held that a retail gift card accesses the “account” created when the card’s buyer purchases the card from the seller. U.S. v. Truong, 587 F.3d 1049 (9th Cir. 2009).
9th Circuit says 120-month above-Guidelines sentence is reasonable for access device fraud. (220) Defendant executed a scheme to obtain money and goods by using stolen retail gift cards. When officers tried to arrest defendant, he led them on a high-speed chase before crashing into another car and injuring its occupant. When arrested, defendant had nearly 4,000 stolen or duplicated gift cards, as well as documents containing account numbers for another 4,000 gift cards. At sentencing, the district court calculated defendant’s sentencing range as 70 to 87 months. Because of defendant’s history of repeated access-device offenses and his effort to escape the police, the district court imposed the statutory maximum of 120 months. The Ninth Circuit held that 120 months was a reasonable sentence. U.S. v. Truong, 587 F.3d 1049 (9th Cir. 2009).
9th Circuit finds unreasonable one-month reduction in sentence after finding of unreasonableness. (220) Defendant was convicted of misappropriation of federal program funds, in violation of 18 U.S.C. § 666(a)(1)(A). The district court sentenced defendant to 16 months’ imprisonment. On appeal, the Ninth Circuit held that defendant’s sentence was substantively unreasonable because the district court failed to take into account her lack of criminal record, prompt return of the funds, remorse prior to the filing of criminal charges, and belief that the stolen funds represented compensation for work she had performed. On remand, the district court stated that it believed its original sentence was reasonable and imposed a 15-month sentence. A divided panel of the Ninth Circuit held that the district court’s imposition of sentence violated “both the spirit and express instructions” of its mandate. The court ordered the case reassigned to a different judge on remand. U.S. v. Paul, 561 F.3d 970 (9th Cir. 2009).
9th Circuit finds 21-month sentence reasonable for possession of access device. (220) Defendant provided a “skimmer” to an undercover law enforcement officer posing as a hotel employee and instructed her to use it to steal the credit card numbers of hotel guests. He pleaded guilty to possession of equipment used for making access devices, in violation of 18 U.S.C. § 1029(a)(4). Applying § 2B1.1, the district court calculated defendant’s offense level as 10 and imposed a sentence of 21 months. The court noted that defendant had a prior conviction for credit card fraud and that if he had not been brought to the attention of law enforcement by an informant, he could have caused very large losses. The Ninth Circuit held that the 21-month sentence was not unreasonable. U.S. v. Barsumyan, 517 F.3d 1154 (9th Cir. 2008).
9th Circuit says that thief who sells goods he stole is not in stolen property business. (220) The guideline for fraud and theft offenses, § 2B1.1(b)(4), requires a two-level enhancement “if the offense involved receiving stolen property, and the defendant was a person in the business of receiving and selling stolen property.” Defendant engaged in a scheme to defraud computer suppliers by establishing lines of credit, then buying computer equipment without paying for it. The Ninth Circuit vacated defendant’s sentence enhancement under § 2B1.1(b)(4), holding that a thief who sells goods that he has stolen is not in the business of receiving and selling stolen property. U.S. v. Kimbrew, 406 F.3d 1149 (9th Cir. 2005).
9th Circuit says wholesale price is measure of loss when goods are stolen from wholesaler. (220) The theft guideline, § 2B1.1, sets the loss used to calculate a defendant’s offense level based on the fair market value of the goods stolen. The Ninth Circuit held that when a defendant is convicted of an offense involving goods stolen in wholesale lots from a wholesaler, the fair market value of the goods is the wholesale price at which the victim would have offered the goods for sale, not the retail value of the goods. Because the evidence showed that the DVDs that defendant attempted to sell were in their original wholesale packaging and that defendant did not attempt to sell the goods in the retail market, the court held that the wholesale price was the proper measure of loss for defendant’s offense. U.S. v. Hardy, 289 F.3d 608 (9th Cir. 2002).
9th Circuit finds no clear error in district court’s refusal to treat losses as loans. (220) At sentencing, defendants asked the district court to reduce the amount of loss caused by their embezzlement from an ERISA-protected pension fund on the ground that the amount they withdrew from the pension fund was a loan. The Ninth Circuit noted that the promissory notes evidencing the purported loans were prepared long after the government began to investigate defendants’ withdrawal of the funds. The district court was not clearly erroneous in rejecting defendants’ proposed loss calculation. U.S. v. Wiseman, 274 F.3d 1235 (9th Cir. 2001).
9th Circuit reverses theft sentence where one of court’s findings was clearly erroneous. (220) The Ninth Circuit held that the district court clearly erred in stating that the victim’s credit card had been stolen on March 26. Uncontroverted evidence demonstrated that the credit card had been used without authorization before March 26 and this undermined the court’s assumption that defendant was responsible for using the credit card at Nordstrom’s on March 26. Although the timing of the theft of the credit card was only one factor in the court’s conclusion that defendant was responsible for the loss amount, the Ninth Circuit reversed and remanded for sentencing “because we do not know how heavily this erroneous finding weighed in the district court’s consideration of the loss amount enhancement.” U.S. v. Sager, 227 F.3d 1138 (9th Cir. 2000).
9th Circuit holds that relevant conduct includes acts beyond the statute of limitations. (220) In sentencing defendant for embezzlement under § 2B1.1, the court included twelve checks written more than five years before the return of the indictment, which were beyond the applicable statute of limitations. Including these amounts increased defendant’s base offense level by one level. On appeal, the Ninth Circuit affirmed, agreeing with eight other circuits which have held that consideration of conduct outside the statute of limitations is permitted under the guidelines. This is consistent with Congress’s directive in 18 U.S.C. § 3661 that “[n]o limitation shall be placed on the information concerning the background, character, and conduct of a person convicted of an offense which a court of the United State may receive and consider for the purpose of imposing an appropriate sentence.” U.S. v. Williams, 217 F.3d 751 (9th Cir. 2000).
9th Circuit uses “asking price” to calculate loss for Native American cultural items. (220) Defendant was convicted of trafficking in Native American cultural items. Ordinarily when property is taken or destroyed, the loss is the fair market value. However here, the Hopi masks did not have a broad and active market. Accordingly, the district court valued the masks at the prices defendant asked the government agent to pay for them. The Ninth Circuit held that this decision to use defendant’s “asking price” was not clearly erroneous. U.S. v. Tidwell, 191 F.3d 976 (9th Cir. 1999).
9th Circuit rejects upward departure for consequential losses from property damage. (220) Defendant stole three cars and wrecked two of them. The district court departed upward by four levels by analogy to §2B1.3 because the guidelines would have given defendant the same guideline range if he had simply stolen the cars, without wrecking them. The Ninth Circuit reversed, ruling that under U.S. v. Dayea, 32 F.3d 1377, 1382 (9th Cir. 1994) “property damage or loss” means only loss of property, and not consequential financial losses. But see U.S. v. Newman, 6 F.3d 623, 630 (9th Cir. 1993) (consequential losses may be grounds for upward departure under § 2B1.3). The court observed that under § 2B1.1, it is “irrelevant” whether the stolen items are recovered. U.S. v. G.L., 143 F.3d 1249 (9th Cir. 1998).
9th Circuit upholds increase for affecting a financial institution by embezzling more than $1,000,000. (220) While working as a bank teller, defendant embezzled $1,468,205. She pleaded guilty to bank fraud under 18 U.S.C. § 1344. At sentencing, the court increased her offense level under § 2F1.1(b)(6)(B) for “affecting” a financial institution where the defendant derived more than $1,000,000 in gross receipts. On appeal, defendant argued that the word “affect” in the guideline was vague and ambiguous. The Ninth Circuit rejected the argument, holding that the guideline gives fair notice to a person of ordinary intelligence that it would apply to one who defrauds a bank of more than $1.4 million. The court found that the bank was “affected,” although it recovered much of the financial loss from restitution and its bonding company. The bank suffered an unreimbursed financial loss of approximately $500,000, including a $50,000 deductible under the bank’s fidelity bond, legal expenses, auditor’s fees, and wages for extra staff hours spent dealing with the offense. In addition, defendant’s thievery “damaged employee morale and customer relationships, marred the bank’s reputation and influenced the bank’s immediate and long term operations and policies. Employees spent substantial time dealing with the fraud, and as a result of the incident, the bank revised its policy on government relations and hired a full time internal auditor.” U.S. v. Johnson, 130 F.3d 1352 (9th Cir. 1997).
9th Circuit upholds increase for being “in the business” of selling stolen property. (220) Guideline § 2B1.1(b)(5)(B) provides a four-level increase if the offense involved receiving stolen property and the defendant was “in the business of receiving and selling stolen property.” Three circuits have adopted the so-called “fence” test, holding that the enhancement applies only if defendant encourages others to commit property crimes, and does not apply to a defendant who only sells property that he himself has stolen. U.S. v. Warshawsky, 20 F.3d 204, 214 (6th Cir. 1994); U.S. v. Esquivel, 919 F.2d 957, 959 (5th Cir. 1990); U.S. v. Braslawsky, 913 F.2d 466, 468 (7th Cir. 1990). Two other circuits have adopted the “totality of circumstances” test, basing the enhancement on the “regularity and sophistication” of the defendant’s operation. U.S. v. King, 21 F.3d 1302, 1306 (3rd Cir. 1994); U.S. v. St. Cyr, 977 F.2d 698, 703 (1st Cir. 1992); See also U.S. v. Rosa, 17 F.3d 1531, 1551-52 (2nd Cir.), cert. denied, 115 S.Ct. 211 (1994). In the present case, the Ninth Circuit adopted the “totality of the circumstances” test, and upheld the district court’s finding that defendant was “in the business” of receiving and selling stolen property. U.S. v. Zuniga, 66 F.3d 225 (9th Cir. 1995).
9th Circuit uses retail value of cigarettes, including taxes and shipping costs as “loss.” (220) Defendant was convicted of conspiring to steal a large shipment of cigarettes and aiding and abetting the theft, in violation of 18 U.S.C. § 659. Under U.S.S.G. § 2B1.1(b)(1), the offense level depends on the value of the “loss.” A representative of Philip Morris International testified that the fair market value of the cigarettes was basically the retail value–$900,000 to $950,000. The Ninth Circuit noted that although this figure may have included taxes and shipping costs, it “has previously included these amounts in the loss calculation under § 2B1.1.” See U.S. v. Burns, 894 F.2d 334, 335-36 (9th Cir. 1990). The Commission did not intend for the district courts to “pars[e] . . . the loss figure” and break it down into its myriad components. The district court did not clearly err in using retail value as an estimate of fair market value. U.S. v. Lopez, 64 F.3d 1425 (9th Cir. 1995).
9th Circuit says gun is used “in connection with” a felony when it facilitates or emboldens defendant. (220) Section 2K2.1(b)(5) provides for a four level enhancement if the defendant possesses a firearm or ammunition “in connection with” another felony offense. The 9th Circuit interpreted this language to require a higher showing than in drug cases under §2D1.1(b)(1) which requires the government to prove “merely” that the defendant possessed a firearm, unless the defendant can show that it was clearly improbable that the firearm was “connected with” an offense. Thus, the court in this case held that “the prosecution will have to make a greater showing than a defendant’s mere possession of a firearm to obtain a §2K2.1(b)(5) enhancement.” Instead, the government must show that the firearm was “possessed in a manner that permits an inference that it facilitated or potentially facilitated–i.e., had some potential emboldening role in–a defendant’s felonious conduct. The court thus agreed with the 10th Circuit and disagreed with the 5th Circuit. In this case, since the defendant kept the firearm in the glove compartment of the stolen car, the district court properly found that the gun facilitated and emboldened him to continue his illegal conduct. U.S. v. Routon, 25 F.3d 815 (9th Cir. 1994).
9th Circuit applies minimum loss for stolen credit cards to stolen credit card numbers. (220) Defendant was convicted of offenses involving the unauthorized use of access devices arising out of a scheme to make unauthorized use of over 8,500 stolen credit card numbers. In calculating loss, the district court applied application note 4 to §2B1.1 and multiplied the minimum $100 loss per card by 7,000 of the cards. The Ninth Circuit upheld the use of the $100 minimum per stolen number even though the application note refers to stolen credit cards. Nothing in §2F1.1 or §2B1.1 suggests that loss having to do with unauthorized charges made with stolen credit card numbers should be treated differently from unauthorized charges made with the plastic itself. In both cases, the value of the unauthorized use exceeds the intrinsic value of the device. U.S. v. Yellowe, 24 F.3d 1110 (9th Cir. 1994).
9th Circuit finds Washington attempted burglary not an ACCA predicate. (220) Defendant was convicted of being a felon in possession of a firearm and the government sought an enhanced sentence under 18 U.S.C. §924(e), the Armed Career Criminal Act. Two of defendant’s prior offenses were for burglary, which is a specifically enumerated predicate under §924(e)(2) (B)(i). But the district court and Judges Wright, Schroeder and Brunetti ruled that defendant’s Washington state conviction for attempted burglary did not “involve conduct that presents a serious potential risk of physical injury to another” within the meaning of §924(e)(2) (B)(ii). The categorical approach in U.S. v. Taylor, 495 U.S. 575 (1990) limits the court’s inquiry to the facts of conviction and the statutory definition or charging instrument and jury instructions. Because Washington allows attempted burglary convictions for relatively unrisky “substantial step” conduct, and there was nothing in the charging instruments or plea agreement indicating defendant’s prior conduct entailed entry or near-entry into a building, the conviction could not count under ACCA. U.S. v. Weekley, 24 F.3d 1125 (9th Cir. 1994).
9th Circuit holds that lack of statutory minimum sentence does not permit guideline to be ignored. (220) In U.S. v. Sharp, 883 F.2d 829 (9th Cir. 1989), the 9th Circuit held that a statutory mandatory minimum sentence must be imposed even when the guideline sentence would be lower. Based on Sharp, the defendant in this case argued that since the embezzlement statute does not specify a minimum sentence, the minimum term of “no imprisonment” must control over the guideline sentence. Thus, he argued that it was proper for the district court to impose a sentence of probation even though the guidelines called for 15 to 21 months. The 9th Circuit rejected the argument, stating that Congress could not have intended for the silence of the statute to invalidate guideline sentences. U.S. v. Berlier, 948 F.2d 1093 (9th Cir. 1991).
9th Circuit approves determining value of stolen architect’s drawings by reference to contract price. (220) Defendant was convicted of receiving 30 stolen architect’s technical drawings of designs for a commercial development. The sentencing judge valued the drawings at $118,400 by multiplying their commissioned price by their percentage of completion (80 percent). Defendant argued that the drawings should have been valued at zero because they were worthless to defendant and were incomplete and therefore worthless to the architect’s client. Circuit Judges Canby and Schroeder and District Judge Rea disagreed. An enhancement based on value is permissible when the stolen property has value to the victim even if it has none to the defendant. And although the drawings were unfinished, the victim may have been able to pay to have them completed for 20 percent of the commissioned price. In light of the unique nature of the stolen property, the court held that the district judge acted within his discretion in valuing the property. U.S. v. Pemberton, 904 F.2d 515 (9th Cir. 1990).
10th Circuit says defendant need not actually know of risk of bodily injury. (220) Defendant, a technician at Los Alamos National Laboratory, attempted to leave the facility with a piece of gold contaminated with plutonium. He pled guilty to theft of government property, and received a § 2B1.1(b)(13) enhancement for an offense involving “the conscious or reckless risk of death or serious bodily injury.” The Tenth Circuit upheld the increase, joining the Second and Ninth Circuits in holding that the government does not have to prove that the defendant was actually aware of the risk of serious bodily injury or death when seeking a § 2B1.1(b)(13) enhancement. Rather, the guideline requires the defendant to have been conscious of or reckless as to the existence of the risk created by his or her conduct. Here, the evidence was sufficient to support the court’s findings that defendant knew the gold was contaminated with plutonium and that he knew of the health risks the conduct created. U.S. v. Maestas, 642 F.3d 1315 (10th Cir. 2011).
10th Circuit rejects “in the business” enhancement for lack of evidence that defendant sold stolen property. (220) Defendant was arrested after police pulled him over and found a vast cache of counterfeit identifications and other materials indicative of identity theft in his car. The Tenth Circuit rejected a two-level enhancement under § 2B1.1(b)(4) for being “in the business of receiving and selling stolen property.” The enhancement is directed at professional fences – those that receive and sell stolen goods, not those that merely receive goods for their own use or sell goods that they themselves steal. Here, the court erred by applying the enhancement without making a factual finding that defendant actually sold stolen property. There was no evidence that defendant ever sold any stolen property, much less that he was “in the business” of selling stolen property. The error was not harmless. At no point did the court state that the sentence would be the same even if its calculation of the guideline range were in error. U.S. v. Vigil, 644 F.3d 1113 (10th Cir. 2011).
10th Circuit says defendant need not actually know of risk of bodily injury. (220) Defendant, a technician at Los Alamos National Laboratory, attempted to leave the facility with a piece of gold contaminated with plutonium. He pled guilty to theft of government property, and received a § 2B1.1(b)(13) enhancement for an offense involving “the conscious or reckless risk of death or serious bodily injury.” The Tenth Circuit upheld the increase, joining the Second and Ninth Circuits in holding that the government does not have to prove that the defendant was actually aware of the risk of serious bodily injury or death when seeking a § 2B1.1(b)(13) enhancement. Rather, the guideline requires the defendant to have been conscious of or reckless as to the existence of the risk created by his or her conduct. Here, the evidence was sufficient to support the court’s findings that defendant knew the gold was contaminated with plutonium and that he knew of the health risks the conduct created. U.S. v. Maestas, 642 F.3d 1315 (10th Cir. 2011).
10th Circuit rules reimbursed account holders were not victims of credit card fraud. (220) Defendant was convicted of credit card fraud. He challenged a two-level enhancement under § 2B1.1(b)(2)(A) for an offense involving ten or more victims, arguing that one can only be counted as a victim if that person or entity has suffered monetary harm. Here, the persons whose credit cards were fraudulently used were not victims under this definition because their losses were reimbursed by the credit card companies. This left only five credit card companies as countable victims. The Tenth Circuit agreed that the district court erred in counting the reimbursed cardholders as victims. Section 2B1.1 and its application notes all focus on actual loss, and if an individual credit card account holding is fully and timely reimbursed by his or her credit card company or issuing bank for any fraudulent charges made with the account, then he or she has suffered no actual loss. U.S. v. Orr, 567 F.3d 610 (10th Cir. 2009) No. 08-7070.
10th Circuit upholds loss estimate based on cash deposits defendant made to own bank account. (220) Defendant worked for a bank as an ATM technician. He was fired after authorities discovered he was stealing from the ATMs in his route. The district court based its loss determination on cash deposits defendant made to his bank account during his employment with the bank. Defendant told investigators that he deposited the cash he took from ATMs into his bank account. He admitted to having a gambling problem, but said that he kept his gambling winnings at home. Defendant did not identify any other sources of income to explain the cash deposits. The Tenth Circuit found sufficient evidence to support the court’s loss calculation, even though the government did not present any direct evidence linking the cash deposits to the bank’s losses. Audits of defendant’s routes revealed shortages, the losses to the region dropped off drastically following his termination, and defendant admitted he deposited cash from the ATM thefts into his account and was unable to name any other source for the cash deposits. U.S. v. Hahn, 551 F.3d 977 (10th Cir. 2008).
10th Circuit says note threatening to use gun justified increase for “threat of death.” (220) if a threat of death is made during an offense, Guideline § 2B3.1(b)(2)(F) requires a two-level enhancement. The threat can be an oral or written statement, act, gesture, or combination thereof, and is meant to punish an offender for engaging in conduct that would instill in a reasonable person, who is a victim of the offense, a fear of death. Here, defendant’s co-conspirator handed a note to the assistant branch manager stating: “I have a gun and I want you to give me all of your large bills or I’ll use it! Place all of it in the bag. From all registers.” The Tenth Circuit that the threat of death enhancement was applicable. The note did not merely say the robber was willing to use the gun, but said that she would use the gun if the tellers did not comply. The court properly applied § 2B3.1. U.S. v. Ellis, 525 F.3d 960 (10th Cir. 2008).
10th Circuit holds that counterfeit checks were not “access devices.” (220) Defendant created counterfeit checks and false driver’s licenses by means of a computer and scanner. Section 2B1.1(b)(1) provides for an enhanced offense level if the offense involved any one of three conditions, including “the production or trafficking of any (i) unauthorized access device or counterfeit access device.” An access device is defined in 18 U.S.C. § 1029(e)(1) as “any card, plate, code, account number … or other means of account access that can used be … to obtain money, goods, services, or any other thing of value, or that can be used to initiate a transfer of funds (other than a transfer originated solely by paper instrument.” The district court found that the account numbers printed on the counterfeit checks were access devices, but the Tenth Circuit reversed. The statute defining access devices has a key limitation. The parenthetical “(other than a transfer originated solely by paper instrument)” unambiguously places the passing of bad checks and similar conduct outside the scope of the federal statute. Both counterfeit checks and the account numbers printed on those checks fall outside the statutory definition of an access device. U.S. v. Tatum, 518 F.3d 769 (10th Cir. 2008).
10th Circuit rejects use of gain as estimate where court did not decide whether loss occurred. (220) Defendant participated in a scheme to obtain mortgages and mortgage insurance for unqualified home buyers. The district court found that defendant’s fraudulent conduct caused a loss to HUD, but that it could not reasonably quantify the precise amount of loss given the conflicting data submitted by the government. The court chose to estimate the loss using defendant’s total gain (his commissions) of $29,359.20, an undisputed amount. The Tenth Circuit held that the district court erred in using defendant’s gain as a substitute for loss. Faced with ever-changing and conflicting data on the loss sustained by HUD, as well as arguments by defendant that HUD sustained no loss, the district court concluded without explanation that a loss occurred, and then determined it could not reasonably quantify the actual or intended loss. However, a defendant’s gain may only be used as an alternative estimate of loss; it does not support an enhancement on its own if there is no actual or intended loss to the victims. U.S. v. Galloway, 509 F.3d 1246 (10th Cir. 2007).
10th Circuit upholds reliance on court’s independent findings of intended loss rather than jury finding of actual loss. (220) Defendant was convicted of trafficking and using fraudulent credit cards. The verdict form asked the jury to find “the dollar amount of anything of value [defendant] obtained or attempted to obtain.” The jury checked the box that read “$30,000 to $70,000.” The district court, however, found that defendant and his co-defendants had intended a loss of over $150,000. Defendant argued that the court violated his Sixth Amendment rights by disregarding the jury’s findings on the amount of intended loss and increasing his offense level based upon its own findings. The Tenth Circuit disagreed, holding that the district court’s findings of the amount of intended loss were not necessarily inconsistent with the jury’s verdict. The jury’s findings focused exclusively on what amounted to actual loss, while § 2B1.1 commentary directs the court to base the loss enhancement on the greater of actual loss or intended loss. Moreover, the court was not bound by the jury’s findings for purposes of sentencing. The court’s reliance on its own independent factual findings did not violate defendant’s Sixth Amendment rights. “[W]hen a district court makes a determination of sentencing facts by a preponderance test under the now-advisory guidelines, it is not bound by jury determinations reached through application of the more onerous reasonable doubt standard.” U.S. v. Wilfong, 475 F.3d 1214 (10th Cir. 2007).
10th Circuit upholds consideration of criminal history and defendant’s role in assault as grounds for variance above guideline range. (220) Defendant was sentenced for bank robbery above the advisory guideline range because the district court believed the guidelines failed to account for defendant’s criminal history and his role in assaulting a bank employee. Defendant argued that his 105-month sentence was unreasonable because the court simply increased his sentence to reach a sentence comparable to a co-defendant’s sentence, who had a different criminal history and therefore had a higher guideline range. The Tenth Circuit held that the sentence was reasonable. Although defendant and his co-defendant fell within different criminal history categories, the district court concluded that their records were quite similar and the guidelines did not adequately account for that similarity. The co-defendant received criminal history points because he committed the bank robbery while on parole or within two years of his release from incarceration, while defendant missed this benchmark by only 10 days. In addition, defendant’s conduct was more serious than his co-defendant’s because defendant was the one who actually assaulted the bank manager. Given the court’s careful explanation of its reasoning as to why defendant’s guideline calculation underestimated his culpability, there was substantial justification for the court’s divergence from the guideline range. U.S. v. Shaw, 471 F.3d 1136 (10th Cir. 2006).
10th Circuit upholds guideline sentence as reasonable even though court did not specifically mention § 3553(a) factors. (220) Defendant was involved in an interstate fraud scheme in which co-conspirators would open fraudulent bank accounts, purchase electronic goods with checks, and then empty the bank account before the checks cleared. The district court sentenced defendant to 37 months, at the bottom of his 37-46 month guideline range. The Tenth Circuit held that the sentence was reasonable. The court is not required to “recite any magic words” to show that it considered the factors required by § 3553(a). Here, the district court reviewed the guidelines calculation, and, after the defense and prosecution presented their arguments, explained that it was adopting a sentence at the low end of the applicable guideline range. Although the court did not specifically mention the factors in § 3553(a), neither did defendant made a “nonfrivolous argument that the § 3553(a) factors warrant[ed] a below-guideline sentence” that would have triggered the court’s obligation to address the factors on the record. U.S. v. Paredes, 461 F.3d 1190 (10th Cir. 2006).
10th Circuit approves increase for relocating fraud scheme to evade police. (220) Defendant recruited others, primarily from New York, to come West for work. Upon arriving, the recruits would open bank accounts with cash provided by defendant and purchase electronic equipment at local retailers using checks on the account. Before the checks cleared, the money was withdrawn. The Tenth Circuit affirmed a § 2F1.1(b)(9)(A) (now § 2B1.1(b)(9)(a)) increase which applies if “the defendant relocated, or participated in relocating, a fraudulent scheme to another jurisdiction to evade law enforcement or regulatory officials.” One of the recruits testified about an occasions when the participants, including defendant, and a U-Haul full of fraudulently obtained goods, moved from Utah to Idaho because Utah became “hot” after one of the recruits was arrested. This testimony was sufficient to establish that the relocation was “to evade law enforcement.” The fact that defendant himself may not have relocated did not matter. The language of the guideline clearly refers to the relocation of the scheme, not the defendant. There was no requirement in the guideline that defendant be the driving force behind the relocation. U.S. v. Paredes, 461 F.3d 1190 (10th Cir. 2006).
10th Circuit upholds increase for violating prior, specific injunction. (220) Defendant pled guilty to charges stemming from his participation in an Internet fraud scheme. Defendant had previously been subject to a fraud investigation in Idaho, and an Idaho court permanently enjoined him from making false, deceptive or misleading statements, misleading consumers, and failing to deliver goods or services within a reasonable time following receipt of payment. The Tenth Circuit upheld a two-level enhancement under § 2B1.1(b) (7)(C) for an offense involving “a violation of any prior, specific judicial or administrative order, injunction, decree, or process not addressed elsewhere in the guidelines.” The term “prior” refers to notice and “specific” refers to the action or conduct of the defendant. The consent judgment by its terms (1) prohibited three types of specific conduct in line with defendant’s prior frauds and (2) provided defendant with prior adequate notice of the type of conduct prohibited. Because the order was designed to prohibit prior misconduct of the very same nature as his federal crimes (deception of consumers) and gave specific notice as to prohibited conduct, it satisfied the requirements of § 2B1.1(b)(7)(C). U.S. v. Pentrack, 428 F.3d 986 (10th Cir. 2005).
10th Circuit upholds aggregation of credit limits of all counterfeit or stolen credit cards. (220) Authorities recovered from defendants 34 counterfeit or altered credit cards and merchandise obtained with such cards. Of the 34 total credit cards, defendant used 21 credit card accounts for fraudulent purchases. The parties stipulated that the actual loss was $35,674.80. The district court, however, calculated the loss under § 2B1.1 based on the total credit limit of all the cards. The Tenth Circuit found no error. Defendants argued that the court ignored evidence they did not intend to use the cards to their credit limits. However, to calculate intended loss, the district court is to make only a reasonable estimate of the loss given the available information. The determination focuses on the amount that the scheme placed at risk, not the amount of money or property stolen. Although one investigator stated that he would “expect” fraud loss in this case to be 25 to 50 percent of the aggregate credit limits, it was not a positive statement that defendants said they had no intention to use the full amount of the credit limits. The agent’s statement was merely a hypothesis. It was far from evidence so strong that the district court’s failure to mention it constituted clear error. U.S. v. Lin, 410 F.3d 1187 (10th Cir. 2005).
10th Circuit applies production enhancement for altering stolen/counterfeit credit cards. (220) Authorities from recovered from defendants 34 counterfeit or altered credit cards. Section 2B1.1(b)(9)(B) provides for a two-level enhancement for the production or trafficking of any unauthorized access device or counterfeit access device. The district court applied the enhancement based on testimony that defendants had attempted to iron silver foil on several credit cards to transfer silver from the foil to the embossed numbers on the cards. The alleged purpose for attempting to do so was to promote the acceptability of the cards (because they looked too old or they looked fake). The district court reasoned the sentencing enhancement should pertain because the definition of the word “produce” includes “altering” under Note 8(A) to § 2B1.1. The Tenth Circuit affirmed. The fact that the offense of conviction does not use “alteration” of a credit device as an inclusion within the prohibition of “producing” a counterfeit access device did not matter. The alteration of the cards was part of the specific offense characteristics of the offense of conviction. U.S. v. Lin, 410 F.3d 1187 (10th Cir. 2005).
10th Circuit upholds using face value of counterfeit checks to determine intended loss. (220) To determine the intended loss from a counterfeiting organization, the district court included $708,519, the face value of stolen and counterfeit checks seized from the residence of the bosses of the organization. Defendant challenged this calculation, arguing that the face amount of the stolen checks had nothing to do with the amount for which said checks would be counterfeited. A postal inspector testified that the seized checks included stolen checks as well as counterfeit checks. Although the evidence suggested that not all of these would actually be negotiated, the inspector testified that “any checks with an account number on it could have been used and all of the checks that amounted to $708,000 had an account number on them.” Given this testimony, and the uncontroverted fact that a single stolen check would be counterfeited multiple times for increased amounts, the Tenth Circuit held that the district court was not clearly erroneous in using the face value of the seized checks to estimate the intended loss. Moreover, to account for its imprecision in estimating potential loss, the sentencing court granted a three-point reduction for attempt under § 2X1.1. U.S. v. Osborne, 332 F.3d 1307 (10th Cir. 2003).
10th Circuit holds middleman accountable for intended loss of entire check-counterfeiting organization. (220) Defendant was a “front-runner” in a three-tiered check-counterfeiting scheme. Front-runners recruited “cashers,” and acted as buffers between cashers and bosses, to protect the bosses in the event a casher was apprehended. The district court found that the intended loss for the entire organization was over $825,000, reflecting (1) actual losses of $157,019, and (2) potential losses of $708,519, the face value of stolen and counterfeit checks seized from the residence of the bosses of the organization, minus $40,000, the estimated value of the unusable checks. The Tenth Circuit upheld the district court’s decision to hold defendant accountable for the intended loss of the entire organization, rather than limiting loss to the amount obtained by the three cashers who he personally employed. Defendant played a managerial role in the organization by recruiting cashers and admitted that he was “working together” with the bosses and other front-runners to executed a scheme to defraud. This supported the district court’s finding that the aggregate losses of the entire scheme were foreseeable to defendant. U.S. v. Osborne, 332 F.3d 1307 (10th Cir. 2003).
10th Circuit bases loss on amount of child support defendant owed. (220) Defendant was convicted of two counts of failure to pay child support obligations in violation of the Child Support Recovery Act, 18 U.S.C. § 228(a)(1), and the Deadbeat Parents Punishment Act, 18 U.S.C. § 228(a)(3). The Tenth Circuit ruled that the government presented sufficient evidence at trial to prove that defendant owed more than $40,000 in unpaid child support, thus establishing the amount of “loss” under U.S.S.G. § 2B1.1 and supporting a seven-level upward adjustment in offense level. See U.S.S.G. § 2J1.1 (most analogous guideline is § 2B1.1). The district court properly relied on a calculation by the Virginia Division of Child Support Enforcement to find that defendant owed $66,415.56 in child support. U.S. v. Monts, 311 F.3d 993 (10th Cir. 2002).
10th Circuit holds that failure to pay child support involved more than minimal planning. (220) Defendant was convicted of two counts of failure to pay child support obligations in violation of the Child Support Recovery Act, 18 U.S.C. § 228(a)(1), and the Deadbeat Parents Punishment Act, 18 U.S.C. § 228(a)(3). The Tenth Circuit affirmed a § 2B1.1(b)(4) increase for more than minimal planning. Defendant went to “great lengths to avoid paying child support by his varying efforts of moving, and not filing tax returns, and generally being obstructive with the authorities on this.” This was not simply a failure to pay. U.S. v. Monts, 311 F.3d 993 (10th Cir. 2002).
10th Circuit holds minimal planning increase for embezzlement was not double counting. (220) Defendant embezzled over $81,000 from her former employer. Then, in the present case, she embezzled $131,794 from a new employer, some of which she used to make restitution to her former employer. She was convicted of three counts of uttering forged checks and three counts of money laundering. She conceded that her repeated acts of uttering forged documents constituted more than minimal planning under § 2F1.1(a)(2), but argued that this enhancement constituted double counting. The Tenth Circuit found no double counting problem. The fact that money laundering could also have been the basis for the enhancement was irrelevant because there were also repeated acts over a period of time. Congress intended to impose separate punishments for money laundering and for the underlying criminal activity. U.S. v. Allen, 129 F.3d 1159 (10th Cir. 1997).
10th Circuit uses loss estimates in federal regulations to calculate loss from illegal excavation. (220) Defendant made several unauthorized excavations from archaeological sites located on government land. To calculate the loss under § 2B1.1, the district court used the regulations promulgated under the Archaeological Resources Protection Act. During trial, two archaeologists testified as to both “archaeological value” and “cost of restoration and repair” under these regulations. The district court added these two estimates of loss as calculated under federal regulations to enhance defendant’s sentence. Defendant argued that the court should have relied solely on the cost of repairs to the sites and the fair market value of the artifacts taken. The Tenth Circuit upheld the district court’s use of the federal archaeological regulations to calculate the guidelines loss. The loss under defendant’s method of calculation, $9,122, was grossly insufficient to quantify the devastating cultural, scientific and spiritual damage defendant caused the American people and the Native American community. U.S. v. Shumway, 112 F.3d 1413 (10th Cir. 1997).
10th Circuit uses retail value of stolen jewelry as amount of loss. (220) Defendant was convicted of transporting stolen jewelry. The district court used the retail price of the stolen jewelry, $125,000, to calculate loss under § 2B1.1. Defendant argued that the loss was $32,701, the jewelry’s wholesale value. The Tenth Circuit approved the use of the retail price of the stolen jewelry since it had been stolen from a retail establishment, not a wholesaler. At the time and place of the theft, the value of the goods was $125,000. Thus, this was the amount of loss under § 2B1.1. U.S. v. Williams, 50 F.3d 863 (10th Cir. 1995).
10th Circuit looks to guideline, not crime of conviction, to determine if trust adjustment is appropriate. (220) Defendant was convicted of embezzlement by a trustee and officer under 18 U.S.C. section 153. The district court adjusted his offense level for abuse of a position of trust. Defendant argued that this adjustment was inappropriate, because abuse of trust is an inherent aspect of the crime of conviction. The 10th Circuit upheld the adjustment, stating that the guideline, rather than the crime of conviction, must be examined to determine whether the adjustment is appropriate. The applicable guideline, 2B1.1, applies to many forms of theft that do not involve abuse of a position of trust. Nor do the specific offense characteristics under that guideline speak to the issue of abuse of trust. The court noted earlier circuit authority suggesting a different focus. U.S. v. Levy, 992 F.2d 1081 (10th Cir. 1993).
10th Circuit affirms that embezzlement involved more than minimal planning. (220) Defendant, the comptroller for a business, added commission checks to the business’s normal bank deposit tickets and withdrew an equivalent amount of cash, thus keeping the total amount of the deposit the same. She then failed to record the business’s receipt of the commission checks. The 10th Circuit affirmed that the embezzlements involved more than minimal planning under section 2B1.1(5). Defendant had access to the commission checks and concealed them until the time was right to make the switch for cash on the deposit slips. These actions involved repeated acts and required planning over an extended period of time. U.S. v. Chimal, 976 F.2d 608 (10th Cir. 1992).
10th Circuit includes value of software in loss from computer theft. (220) Convicted of stealing computer hardware, defendant objected to the district court’s including the value of software found on the hard disks defendant was convicted of stealing. Defendant maintained he was convicted only of stealing the hardware. The 10th Circuit questioned defendant’s characterization of his conviction, but held that the district court would properly have included the value of the software even if defendant’s assertion was correct. Theft of the software constituted relevant conduct under 1B1.3. Nor did the district court err in valuing the software at $265,000, the cost of a single sublicensed copy of the stolen software. U.S. v. Lyons, 992 F.2d 1029 (10th Cir. 1993).
10th Circuit upholds more than minimal planning enhancement for six embezzlements by bank employee. (220) On six different occasions, defendant, a customer services officer at a bank, represented to elderly bank customers that she would take their deposit slips to a teller for deposit in the customer’s account. Instead, she deposited the funds into accounts within her control. The 10th Circuit upheld an enhancement for more than minimal planning under section 2B1.1(b)(5). Under application note 1 to section 1B1.1, more than minimal planning is deemed present in any case involving repeated acts over a period of time, unless it is clear that each instance was purely opportune. Here, the district court heard evidence that five different dates were involved, and that each occasion involved repetition of essentially the same conduct. U.S. v. Lee, 973 F.2d 832 (10th Cir. 1992).
10th Circuit rejects ex post facto challenge to aggregation of losses from pre-guidelines and post-guidelines offenses. (220) Counts 1 through 7 were pre-guidelines offenses and counts 8 through 10 were post-guidelines offenses. The 10th Circuit rejected defendant’s claim that it violated the ex post facto clause to calculate the loss caused by his crime under guideline sections 2B1.1 and 2F1.1 based upon the total loss involved in both the pre- and post-guidelines offenses. Enhancement of a guidelines sentence based on losses associated with pre-guidelines offenses does not violate the ex post facto clause. U.S. v. Haddock, 956 F.2d 1534 (10th Cir. 1992), unaffected on rehearing, 961 F.2d 933 (10th Cir. 1992), abrogated on other grounds by U.S. v. Wells, 519 U.S. 482, 117 S.Ct. 921 (1997).
10th Circuit rules “loss” included value of real estate gained by fraud. (220) Defendant purchased 18 residential properties each carrying a mortgage which was insured against default by the U.S. Department of Housing and Urban Development. Although he collected a total of $16,000 in rent from the properties’ tenants, defendant never made a single mortgage payment. The rent money was spent on personal expenses. Defendant was convicted of mail fraud and equity skimming. The 10th Circuit affirmed that the “loss” caused by defendant’s activities included the value of the real estate, and not just the loss of the rent money. Defendant was convicted of acquiring the property by fraudulent means and misappropriating the rent checks. The real estate was “taken” within the meaning of guideline § 2B1.1. The government’s re-acquisition of the property through foreclosure did not change the fact that defendant took the property in the first place. Under the guidelines, property value is defined by its fair market value. Since the court was unable to determine whether this had been done properly, the case was remanded. U.S. v. Johnson, 941 F.2d 1102 (10th Cir. 1991).
10th Circuit holds that amount of “loss” is not reduced by amounts ultimately recovered. (220) Defendant stole a tractor-trailer and goods with a total value of $691,311. The total value of items never recovered by police was $10,768. Defendant argued that the amount of loss under guideline § 2B1.1 was the amount of goods never recovered. The 10th Circuit rejected this argument, finding that the term “loss” is determined solely by the amount of items taken in the theft, and that this figure is not reduced by the value of the items ultimately recovered by the victim. U.S. v. Westmoreland, 911 F.2d 398 (10th Cir. 1990).
11th Circuit rules professional fees were received by firm “in return for” cash payments. (220) From 2003 to 2006, U.S. Infrastructure, an engineering firm, paid $22,000 in bribes to defendant, a county commissioner. At the same time, the county entered into 48 contracts with U.S. Infrastructure, paying $1,107,755.55 in professional fees to the firm. Section 2B1.1(b)(1)(I) provides for a 16-level increase if “the value of the payment, the benefit received or to be received in return for the payment . . . whichever is greatest” is more than $1,000,000. Because the $1,107,755.55 in fees were greater than the $22,000 in cash payments that defendant received, the court applied a 16-level enhancement. The Eleventh Circuit affirmed, rejecting defendant’s argument that the U.S. Infrastructure contracts were not made “in return for the payment.” The evidence established a sufficient level of causation between the bribes and the contracts. The U.S. Infrastructure president testified that he paid defendant only during a period in which the company entered into the 48 contracts at issue, and that he did so to keep defendant “pretty much happy with” U.S. Infrastructure. A contract could have been stopped at “any point along the way.” U.S. v. White, 663 F.3d 1207 (11th Cir. 2011).
11th Circuit rejects “fence” enhancement for defendants who initiated fraud. (220) Defendant and his father owned a wholesaler that purchased and sold blood-derivatives. They were convicted of crimes related to multiple schemes to defraud the Florida and California Medicaid programs by causing them to pay for blood-derivative medications more than once. The district court applied a § 2B1.1(b)(4) enhancement for a defendant in the business and receiving and selling stolen property, an enhancement that applies to those who act as a “fence.” The Eleventh Circuit reversed, finding that defendant was more like the actual thief of the recycled medications, rather than like a fence who received and sold drugs stolen by others. Defendant initiated the frauds, paying others to obtain drugs that he would later resell. He could therefore be charged with the theft of most, if not all, of the prescription pharmaceuticals obtained by others at his behest. He was a thief and not a fence. U.S. v. Bradley, 644 F.3d 1213 (11th Cir. 2011).
11th Circuit upholds sophisticated means increase for defrauding companies by impersonating officials. (220) Defendant researched companies and then called them on the telephone, identifying himself as a high-ranking company official, and claiming that he needed an immediate cash transfer to resolve an urgent matter. Although it was a close question, the Eleventh Circuit upheld a § 2B1.1(b)(9)(C) sophisticated means enhancement. The district court found that defendant had to conduct extensive research on the victim companies to develop inside information which facilitated the scheme, used unwitting couriers to pick up and deliver some of the proceeds of his fraud in an effort to conceal the scheme, forged false company documents, on at least one occasions referenced a confidential internal account number of facilitate the transaction, and had funds transferred to the accounts of unwitting third parties, who in turn withdrew and transferred cash to him. Although aspects of his scheme were not sophisticated, the totality of these activities carried out over an extended period of time was sufficient to support the enhancement. U.S. v. Ghertler, 605 F.3d 1256 (11th Cir. 2010).
11th Circuit says court erred in basing loss on forfeiture verdict. (220) Defendant was convicted of fraud and money laundering for his participation in a Ponzi-type investment scheme. The Eleventh Circuit held that the district court erred in calculating the loss by deferring to the $2 million forfeiture verdict returned by the jury. Forfeiture and loss are distinct calculations. The court failed to take into account all relevant conduct or explain why certain conduct was not relevant, failed to understand the different between forfeiture and loss, and abdicated its responsibility to make independent findings under the guidelines. The court also erred in determining the number of victims based on the number of responses received to a letter sent by the probation office about restitution. U.S. v. Foley, 508 F.3d 627 (11th Cir. 2007).
11th Circuit holds that enhancement for misrepresentation of a charitable institution and abuse of trust was not double counting. (220) Defendant was convicted of charges stemming from stealing cash proceeds from annual fundraising events run by a charity he ran. He argued that enhancements he received under § 3B1.3 for abuse of trust and under § 2B1.1(b) (8)(A) for misrepresentation of a charitable organization led to impermissible double counting. The Eleventh Circuit disagreed, finding that the Sentencing Guidelines intend to apply these two enhancements cumulatively. Each guideline section concerns conceptually separate notions relating to sentencing. Defendant’s conduct harmed the charity, thus meriting an abuse of trust enhancement, as well as the charitable donors, warranting a separate enhancement for misrepresentation of a charity. U.S. v. Walker, 490 F.3d 1282 (11th Cir. 2007).
11th Circuit holds that Department of Transportation Notice of Claim was not prior administrative order. (220) Defendant was convicted of fraud, extortion, and conspiracy involving moving companies he owned. The district court applied a two-level enhancement under § 2B1.1(b)(7)(B) for violating a Notice of Claim defendant received from the Department of Transportation (DOT). The court held that the Notice of Claim was a “prior, specific judicial or administrative order, injunction, decree or process.” The Eleventh Circuit reversed. After defendant received the Notice of Claim, defendant’s attorney sent a written request for a hearing. The hearing was never held because criminal charges were pending. DOT never adjudicated its case against defendant. Defendant had a legal right to contest the allegations in the Notice of Claim and he did so. There was no final adjudication. The Notice of Claim was merely a warning that defendant’s activities were illegal. The notice failed to meet the requirements of § 2B1.1(b)(7)(c). U.S. v. Malol, 476 F.3d 1283 (11th Cir. 2007) No. 05-10688.
11th Circuit holds that loss could not include both fair market value of stolen watches and cost of repairing recovered watches. (220) Defendants participated in a smash-and-grab robbery of a jewelry store, stealing 108 expensive watches with a total value of $1,485,000. The store got the watches back after the police recovered them, and it spent $13,929 repairing the damage some of the watches suffered during the robbery. The Eleventh Circuit held that the district court could not include both the fair market value of the watches and the cost of repairing the watches in its loss calculation. The most the jewelry store could have lost from the robbery was the full value of the watches, $1,485,000. It would be an odd construction of § 2B3.1 that allowed recovery of property to actually increase the sentence of a thief. U.S. v. Cedeno, 471 F.3d 1193 (11th Cir. 2006).
11th Circuit holds that zero loss estimate was unreasonable in Medicare fraud case. (220) Defendant, a private health care consultant, was involved in a Medicare fraud scheme designed to hide the “related party” status of corporations providing goods and services to home health agencies. Under Medicare regulations, if a provider receives services from a “related” organization, its reimbursement is limited to the supplier’s cost rather than the amount paid by the provider. Although experts opined that the loss was between three and six million dollars, the district found that the government incurred no loss. It found that the loss was the amount by which each of the defendants exceeded the applicable Medicare reimbursement caps, which was zero because the companies operated below the applicable caps. The Eleventh Circuit held that the district court’s finding of no loss was not a reasonable estimate. The purpose of the related party rule is to prevent the payment of artificially inflated consulting fees. Medicare’s willingness to pay up to its costs caps did not absolve defendant from his violation of the related party regulations or from his liability for submitting false claims to Medicare. The amount the government paid in response to the false claims was an appropriate measure of damages. U.S. v. Gupta, 463 F.3d 1182 (11th Cir. 2006).
11th Circuit includes in loss calculation the full face value of photocopied checks possessed by defendant. (220) Defendant and his co-conspirators participated in an identity theft scheme. Defendant’s role was to obtain photocopies of legitimate checks, input the information on them onto a computer with check writing software, and then reproduce checks that could be negotiated. He argued that the district court’s intended loss calculation should not include the full face value of four photocopied checks found in his apartment. The Eleventh Circuit held that when an individual possesses a stolen check, or a photocopy of a stolen check, for the purpose of counterfeiting, the district court does not clearly err when it uses the full face value of that stolen check in making a reasonable calculation of the intended loss. Although a court cannot equate the full face value of stolen checks with intended loss as a matter of law in every case, it can still find a defendant intended to use the full face value of stolen checks. Defendant admitted the purpose of the photocopied checks was to use them as templates for producing counterfeit checks on his personal computer. Other circumstantial evidence suggested he intended to use the full face value appearing on the photocopies, and defendant did not produce any evidence to the contrary. The district court did not err in including the full face value of the checks in its intended loss calculation. U.S. v. Grant, 431 F.3d 760 (11th Cir. 2005).
11th Circuit holds that victim who is reimbursed for his loss qualifies as victim under § 2B1.1(b)(2)(A). (220) Section 2B1.1(b) (2)(A) (i) provides for a two level enhancement if the offense involved ten or more victims. A victim is “any person who sustained any part of the actual loss determined under subsection (b)(1).” § 2B1.1, Note 3(A)(iii). Defendants argued that many of their victims were able to offset their losses through such means as collateral and repossession and these secured individuals should not be considered victims. The Eleventh Circuit disagreed. Although a defendant is entitled to a credit against the total loss for the value of any returned or recovered loss, there was still an initial loss, and the individuals still are victims. U.S. v. Lee, 427 F.3d 881 (11th Cir. 2005).
11th Circuit holds that defendants not entitled to reduction for uncompleted fraud. (220) Defendants contended that they should have received a reduction under § 2X1.1(b)(1), which applies “unless the defendant completed all the acts the defendant believed necessary for successful completion of the substantive offense.” The Eleventh Circuit held that defendants were not entitled to the reduction – the facts clearly demonstrated that defendants completed all the acts necessary to commit mail fraud. Defendants actually mailed the letters in question. Moreover, defendant completed the acts underlying their scheme to defraud – they wrote checks on closed accounts, provided misleading information to banks and payees in an attempt to have the bad checks honored, and thus were able to either keep outright or to retain for a length period of time their ill-gotten gains. The fact that their offset checks were not in fact honored could not be credited to defendants but rather to the good sense of the banks and merchants involved in the scheme. U.S. v. Lee, 427 F.3d 881 (11th Cir. 2005).
11th Circuit says account information was “means of identification” for enhancement purposes. (220) Guideline § 2B1.1(b)(9)(C)(i) requires a two-level enhancement where an offense involved “the unauthorized transfer or use of any means of identification unlawfully to produce or obtain any means of identification.” An American Express employee provided defendant with the account number of an American Express customer. Defendant had herself added to the victim’s account as a secondary cardholder and changed the account’s address so that she could receive a credit card in her name. The Eleventh Circuit upheld the application of the § 2B1.1(b)(9)(C)(i) increase to defendant, finding that the victim’s account number uniquely identified a cardholder. Defendant’s receipt of the victim’s account information gave her a “means of identification.” The fact that defendant used her own name on the credit cards and used existing lines of credit rather than opening new ones was irrelevant. By getting her own name placed on the victims’ account, defendant simply provided evidence that she used one means of identification (account numbers) to obtain another (credit cards). U.S. v. Auguste, 392 F.3d 1266 (11th Cir. 2004).
11th Circuit holds that defendant who bleached genuine bills should be sentenced under § 2B1.1 rather than 2B5.1. (220) Defendant bleached genuine lower denomination Federal Reserve Notes and then transferred onto the bleached paper an image of higher-denomination Federal Reserve Notes. The district applied § 2B5.1, entitled “Offenses Involving Counterfeit Bearer Obligations of the United States.” The Eleventh Circuit agreed with defendant that because he merely “altered” genuine Federal Reserve Notes, the court should have applied § 2B1.1 instead of § 2B5.1. The commentary to § 2B5.1 states that offenses involving genuine instruments that have been altered are to be sentenced under the provisions of § 2B1.1, and those that are manufactured in their entirety are to be sentenced under § 2B5.1. U.S. v. Inclema, 363 F.3d 1177 (11th Cir. 2004).
11th Circuit holds that increase for violation of judicial order was not double counting. (220) Defendant was convicted of failure to pay court-ordered child support, in violation of the Deadbeat Parents Punishment Act, 18 U.S.C. § 228(a)(3). Guideline § 2J1.1 says that for offenses involving the willful failure to pay court-ordered child support, the most analogous guideline is § 2B1.1. The Eleventh Circuit held that a two-level enhancement under § 2B1.1(b)(7)(C) for an offense involving “a violation of any prior specific judicial … order” was not improper double counting. Section 2B1.1 is not limited to those who willfully fail to pay court-ordered child support, but addresses a wide variety of crimes, including larceny, embezzlement, and other forms of theft. U.S. v. Phillips, 363 F.3d 1167 (11th Cir. 2004).
11th Circuit says public official who committed fraud was properly sentenced under conflict of interest guideline. (220) Defendant was the chairman of the Palm Beach Housing Finance Authority (HFA), a government entity chartered under state law to fund low-cost housing. Defendant was convicted of a variety of fraud charges, including a conspiracy to defraud the HFA of his honest services and to acquire money and property through fraudulent misrepresentations, in violation of 18 U.S.C. § 1341, 1346. The Statutory Index lists both U.S.S.G. §§ 2B1.1 and 2C1.7 as applicable to convictions under § 1341. Section 2C1.7 applies to the deprivation of the intangible right to the honest services of public officials. Section 2B1.1 applies to various theft crimes. The Eleventh Circuit agreed that as between these two guidelines, § 2C1.7 was the most applicable. However, § 2C1.7(c)(4) provides that if the offense is covered more specifically under § 2C1.3, the guideline applicable to conflict of interest offenses, the court should apply § 2C1.3. Because the offenses at issue essentially involved defendant’s failure to disclose his conflicts of interest, the district court did not clearly err by applying § 2C1.3. U.S. v. Hasner, 340 F.3d 1261 (11th Cir. 2003).
11th Circuit says court must examine circumstances of case to determine relevant market value. (220) Defendant stole a trailer containing about 132,000 pieces of women’s underwear. Police discovered the merchandise stashed in a warehouse rented by defendant, along with large amounts of stolen blue jeans and computer monitors. The district court calculated the loss using the retail value of the theft rather than the wholesale value under § 2B1.1(b)(1). Defendant argued that because the goods were stolen from a wholesale dealer and were going to be resold wholesale, a wholesale valuation was more appropriate. Although some circuits have held that the retail value is proper in all cases, the Eleventh Circuit sided with those circuits that focus on the particular facts of a case when determining the relevant market valuation. The loss to the victim should be determined within the factual context of the case, using wholesale, retail, or other relative values as the circumstances warrant. The fair market value as used in § 2B1.1 does not refer to one uniform measure, such as the retail value, bur rather the market in which the property was in at the time of the offense. Here, the district court erred in measuring loss on the basis of the retail value of the property without considering the factual circumstances of defendant’s case. U.S. v. Machado, 333 F.3d 1225 (11th Cir. 2003).
11th Circuit holds that lease payments were part of kickbacks for patient referrals. (220) A Florida lab that conducted blood and urine testing developed a scheme to defraud Medicare by paying doctors to refer their Medicare patients to the lab in return for kickbacks from the lab. The kickbacks were disguised as consulting fees. Defendant was one of those doctors. In addition to the consulting fees, the lab made 28 equipment sublease payments on behalf of defendant, and made office rental payments for him. Defendant argued that the rental and sublease payments should not be included in the calculation of loss because neither of these payments represented remuneration in exchange for kickbacks, but rather were payments under legitimate fair market agreements. The Eleventh Circuit upheld the district court’s finding that the payments for office space and equipment were in fact remuneration for referrals. One lab employee testified at trial that these payments were made in exchange for defendant referring his patients to the lab for lab work. However, the district court failed to make sufficient factual findings regarding the amount of loss as detailed in the PSR. The case was remanded for further findings on this issue. U.S. v. Liss, 265 F.3d 1220 (11th Cir. 2001).
11th Circuit holds that thefts by armed security guard involved more than minimal planning. (220) Defendant, an armed security guard, was assigned to accompany Brinks armored cars during the pick-up and delivery of bank deposits. One day, while the other guard working with him was absent, defendant removed $20,000 from an unsealed money bag and placed the money in his lunch box. Twenty days later, while working as the only security guard in the back of the car, defendant broke the seal on a money bag, removed $70,000 in currency, and placed the money in his lunch box. He had somehow gotten an unbroken seal in advance, and when the armored car arrived at the Brinks office, he obtained a crimper and used it to place the unbroken seal on the bag. The Eleventh Circuit affirmed a more than minimal planning enhancement under § 2B1.1(b)(4)(A). Defendant’s actions in the two thefts showed more planning that is required for the crime in its simplest form, and he took affirmative steps to conceal his offense. In preparation for the second theft, he somehow obtained a seal. When he got to the Brinks office, he got a crimper from inside the office, and used it to place the seal on the bag, in an attempt to prevent anyone from noticing the unsealed bag. Moreover, defendant did not commit a single theft, but two thefts on separate occasions. U.S. v. Ward, 222 F.3d 909 (11th Cir. 2000).
11th Circuit finds state chop shop operation was relevant conduct to federal chop shop. (220) Defendant pled guilty in federal court to running a “chop shop” operation. Before the federal prosecution he had been convicted in state court for stealing and “chopping” three different Porsche automobiles. The Eleventh Circuit held that the state chop shop charges were relevant conduct to the federal charges. The offenses met the test of similarity, regularity, and temporal proximity. Both offenses were very similar, if not identical. The offenses were committed with clear regularity and within a very close time period. In a one year period, defendant stole and chopped Porsches at least 18 times. The last state Porsche was stolen in March 1991, and five of the federal Porsches were stolen at unknown dates in 1991. The offenses formed an ongoing series of offenses and therefore qualified as the same course of conduct. U.S. v. Fuentes, 107 F.3d 1515 (11th Cir. 1997).
11th Circuit holds that interstate thefts involved more than minimal planning. (220) Defendant was involved in a conspiracy to steal trucks containing frozen seafood, which the conspirators then resold. The 11th Circuit affirmed an enhancement under § 2B1.2(b)(3)(B) for more than minimal planning. The conspirators engaged in repeated acts over a period of time as they frequently searched for tractor trailers loaded with seafood, stole several tractor trailers, hid them in a warehouse, and then fenced the stolen merchandise. The use of an abandoned warehouse to secrete the stolen trucks showed that the thefts were deliberate. U.S. v. Garcia, 13 F.3d 1464 (11th Cir. 1994).
11th Circuit holds that transportation of stolen autos involved more than minimal planning. (220) Over a 30-day period, defendant purchased three vehicles with three worthless checks, and then transported the vehicles over state lines. He then sold the vehicles as new from his own dealership. The 11th Circuit upheld a more than minimal planning enhancement under section 2B1.2(b)(4)(B). The unlawful conduct was not purely opportune. Prior to transporting the cars over state lines, defendant had to identify a dealer who had the car he was looking for, obtain a price, take delivery of the car, and then transport the cars over state lines. These premeditated acts committed prior to the commission of the offense showed more than minimal planning. U.S. v. Mullins, 996 F.2d 1170 (11th Cir. 1993).
11th Circuit holds that value of stolen stock certificates is face value at time of theft. (220) Defendant’s base offense level was calculated according to the face value of the stock certificates he had stolen. Defendant argued that since the certificates were non-negotiable, the face value did not equal the actual value lost. The 11th Circuit disagreed, holding that because the certificates were worth the face value to the victims “in some way and at some time,” the fact that they could be replaced did not change their value. The court relied in part on application note 2 to guideline § 2B1.1. U.S. v. Jenkins, 901 F.2d 1075 (11th Cir. 1990).
11th Circuit upholds sentence for bank larceny. (220) Defendant was convicted of bank larceny after he presented a demand note to a teller and received approximately $2,500. The guideline for bank larceny, 2B1.1, provides for an increase of two levels “if the theft was from the person of another.” Defendant argued that his conduct did not involve such a taking because there was no intimidation or physical invasion of the teller’s personal “space.” The 11th Circuit rejected the argument noting that the phrase “from the person of another” refers to property taken without the use of force. Here the defendant took the money from the bank teller’s hands. The two level increase was proper. U.S. v. Jones, 899 F.2d 1097 (11th Cir. 1990), overruled on other grounds by U.S. v. Morrill, 984 F.2d 1136 (11th Cir. 1993).
11th Circuit finds retention of stolen check count should have been grouped with possession counts. (220) Defendant pled guilty to three counts of possession of stolen treasury checks and one count of retaining them. In sentencing the defendant, the district court grouped counts 1-3 separately from count 4 and the defendant appealed. The 11th Circuit reversed and remanded, holding that retaining and concealing the stolen checks was not “significant additional conduct” under the guidelines because essentially the same harm and conduct was involved. The court illustrated a simple example of count grouping, relying on a model contained in § 3D1.2(d) of the guidelines. U.S. v. Cain, 881 F.2d 980 (11th Cir. 1989).
11th Circuit finds that sentence was properly based on all nineteen thefts, even though defendant pled guilty to only one. (220) Since all nineteen thefts were “part of the same course of conduct,” the sentencing court properly considered them under the “relevant conduct” section of the guidelines, 1B1.3(a). In a lengthy discussion of the theory behind the sentencing guidelines, the Eleventh Circuit explained that defendant was “sentenced for the December 16 theft alone, but in assessing the seriousness of that offense the guidelines took into account the fact that appellant’s offense of conviction was not an isolated event but rather was the last of a series of offenses.” The fact that defendant had “nothing to gain” from the plea agreement which dropped the other charges, did not make the sentence unfair or inequitable. U.S. v. Scroggins, 880 F.2d 1204 (11th Cir. 1989).
11th Circuit holds that loss from thefts of postal vending machines properly included cost of repairing damage to the machines. (220) The Eleventh Circuit held that in calculating the loss resulting from the thefts, the district court properly considered the cost of repairing the damage to the machines caused by the thefts. The court based its conclusion on the commentary to guidelines 2B1.1(b), which was amended after the offense to state that “When property is damaged, the loss is the cost of repairs, not to exceed the loss had the property been destroyed.” U.S. v. Scroggins, 880 F.2d 1204 (11th Cir. 1989).
D.C. Circuit holds that jury’s forfeiture verdict did not limit loss determination. (220) Defendant contended that the jury’s forfeiture verdict should control the district court’s loss determination under § 2B1.1. The district court disagreed, and independently calculated the loss to be $74,588.42, which was higher than the jury’s forfeiture verdict and resulted in an additional two-level enhancement. The D.C. Circuit found no error. The forfeiture verdict did not collaterally estop the court from recalculating the loss amount at sentencing. Forfeiture and loss calculations are distinct. Forfeiture is a means for forcing a criminal defendant to disgorge ill-gotten profits. Loss involves the “reasonably foreseeable pecuniary harm that results from the offense.” U.S. v. Hoover-Hankerson, 511 F.3d 164 (D.C. Cir. 2007).
D.C. Circuit rules court erred holding defendant liable for all stolen property wife brought into house. (220) Defendant’s wife defrauded the U.S. government of electronic goods worth hundreds of thousands of dollars, giving most of them to her relatives. Defendant took part in the criminal activity to the extent of joining with his wife to obtain a stolen laptop computer for his son from a previous marriage, and using some of the stolen goods around the home he shared with his wife. He appeared to have stayed out of the broad conspiracy. The D.C. Circuit held that the district court erred by holding defendant accountable for the total value of the stolen property brought into his house by his wife. The scope of a defendant’s particular conspiratorial agreement controls his sentencing exposure. While defendant certainly was responsible for the laptop and any equipment he used, for the bulk of the stolen equipment, the government showed at most, that defendant knew about its transitory presence in the house. The evidence of such knowledge did not show agreement, and such a showing was required to attribute the stolen equipment to defendant. The fact that defendant and his wife share a house was insufficient, particularly given that his wife tried to keep defendant from discovering much of the stolen goods present in the home. U.S. v. Mellen, 393 F.3d 175 (D.C Cir. 2004).
D.C. Circuit approves more than minimal planning increase despite defendant’s limited involvement in conspiracy. (220) Defendant’s wife defrauded the U.S. government of electronic goods worth hundreds of thousands of dollars, giving most of them to her relatives. Defendant took part in the criminal activity to the extent of joining with his wife to obtain a stolen laptop computer for his son from a previous marriage, and using some of the stolen goods around the home he shared with his wife. Although defendant’s participation in the conspiracy was limited, the D.C. Circuit nonetheless approved a more than minimal planning enhancement. The series of transactions relating to the laptop alone involved “more planning than is typical for the commission of the offense in a simple form”: defendant’s wife placed an order with a government employee, the employee had to deliver the computer to defendant’s home, and defendant had to deliver it to his son in North Carolina. Defendant also participated in the concealment of the laptop – when he found out that the family was under investigation, defendant instructed his son not to “be around” the computer, as a result of which the son hid it in the mountains of North Carolina. In addition to the laptop, defendant also sent his son several power cords, which were also paid for by the government. U.S. v. Mellen, 393 F.3d 175 (D.C Cir. 2004).
D.C. Circuit agrees that intended loss was maximum penalty avoided by fraudulent statement. (220) While under investigation by the SEC, defendant submitted to it a sworn financial statement in which he failed to disclose numerous assets, income, cash transfers, and other accounts he controlled. After the SEC filed a complaint, defendant and the SEC entered into a settlement agreement. The allegations in the complaint carried a maximum penalty of $100,000 per violation, but based on his sworn financial statement showing a negative net worth, the agreement sought a penalty of only $10,000. He was later convicted of making a material false statement to the SEC. The district court found that defendant hid his assets to evade the maximum possible fine, and therefore the intended loss was $90,000 (the $100,000 he sought to evade, less the $10,000 penalty he paid). Because defendant failed to raise his challenge to the use of intended loss below, his claim could be considered only under a plain error standard of review. The D.C. Circuit ruled that the court’s calculation and use of intended loss was not plain error. Intent to inflict loss may be inferred from the concealment of large amounts of assets. The only evidence contrary to the court’s finding of intent was defendant’s own explanation, which the district court was entitled to dismiss. There was nothing “wildly implausible” in inferring that a defendant who conceals assets in the face of a penalty does so to avoid the penalty to which he is subject, and as much as possible. U.S. v. Bolla, 346 F.3d 1148 (D.C. Cir. 2003).
D.C. Circuit finds insufficient evidence to hold defendant accountable for additional checks. (220) Defendant, a supervisor at the main post office in Washington D.C., was convicted of misappropriation of postal funds. At sentencing, in addition to the thefts charged in the indictment, the court held defendant accountable for 11 additional losses totaling $56,382. These thefts occurred immediately before and during the time of the thefts charged in the indictment. The D.C. Circuit ruled that the attribution of $22,817 in losses was not supported by the evidence, since there was no evidence that checks for this amount were ever received at the post office. The government’s theory was that defendant stole cash and covered his theft by depositing (but not logging) postage meter checks. The theory could not hold with respect to the $22,817. Since checks totaling this amount never cleared, there was no way of knowing when the loss occurred. Without a date, there was no way of knowing whether defendant worked on the day the check came in and no way of matching unexplained cash deposits in defendant’s account with the loss. Although the $22,817 loss occurred close in time to the indicted offense, that evidence alone could not constitute a preponderance of the evidence. For the other attributed losses, the government could at least prove that defendant worked at the post office on the date the check was deposited and that his bank accounts showed cash deposits shortly thereafter. U.S. v. Weaver, 281 F.3d 228 (D.C. Cir. 2002).
D.C. Circuit includes overhead expenses in loss from reprocessing cases that defendant improperly handled. (220) Defendant, an attorney for the Bureau of Veterans’ Appeals, reduced his workload by destroying documents from files, then recommending that the case be sent back to the regional office because the file was incomplete. In 32 of 38 cases received during a three-month period, defendant removed and destroyed records, and recommended that the Board remand the case without deciding the merits. The D.C. Circuit included in the § 2B1.3(b)(1) loss calculation the estimated $39,931 the government spent to reprocess the 32 cases. The Board’s pro rata overhead expenses were properly included in this figure. The time and resources spent reprocessing the appeals could have been devoted to processing new ones. The government’s failure to prove a loss for all 1008 appeals defendant handled over a four-year period was inconsequential. The government clearly proved tampering in at least one of these 1008 cases. The Board’s standard processing cost of $1247.85 for this one case, plus the $39,931 for the other 32 cases, added up to more than $40,000. This was the minimum necessary for the seven level enhancement that defendant received. U.S. v. Gottfried, 58 F.3d 648 (D.C. Cir. 1995).
California District Court finds “more than minimal planning” justified increase in theft guideline range. (220) The defendant pled guilty to possession of a $468 check stolen from the U.S. mail. In exchange, the government dismissed two counts charging him with possession and distribution of stolen mail and treasury checks. Two levels were added to the defendant’s base offense level due to the fact that “more than minimal planning” was involved to perpetrate the scheme, under § 2B1.2(b)(3) (B) of the guidelines. The court stated that since the guidelines permit consideration of acts and offenses which were part of the relevant conduct constituting the offense of conviction, the increase on these grounds was warranted. U.S. v. Ruelas-Armenta, 684 F.Supp. 1048 (C.D. Cal. 1988).
Commission adds penalties for theft of “pre-retail medical products.” (220) The Strengthening and Focusing Enforcement to Deter Organized Stealing and Enhance Safety Act of 2012, Pub. L. 112–186 (enacted October 5, 2012), creates a new criminal offense at 18 U.S.C. § 670 for theft of “pre-retail medical products.” In response to a directive in the Act, the Commission amended Appendix A (Statutory Index) to reference the new offense to §2B1.1 (Theft, Property Destruction, and Fraud), and added a 2-level enhancement at §2B1.1(b)(8) if the offense involved conduct described in 18 U.S.C. § 670 and a 4-level enhancement if the offense involved conduct described in 18 U.S.C. § 670 and the defendant was employed by, or an agent of, an organization in the supply chain for the pre-retail product. The Commission also authorized an upward departure in Application Note 19(A) if the 18 U.S.C. § 670 offense resulted in serious bodily injury or death. Amendment 772, effective November 1, 2013.
Commission increases penalties for theft of trade secrets and economic espionage. (220) Responding to a directive in section 3 of the Foreign and Economic Espionage Penalty Enhancement Act of 2012, Pub. L. 112–269 (enacted January 14, 2013), the Commission increased the offense levels for convictions under 18 U.S.C. § 1831 (economic espionage), and 18 U.S.C. § 1832 (theft of trade secrets), by revising the specific offense characteristic at §2B1.1(b)(5) in two ways. First, it provided a 2-level increase for trade secret offenses in which the defendant knew or intended that the trade secret would be transported or transmitted out of the United States. Second, it provided a 4-level enhancement and a minimum offense level of 14 for trade secret offenses in which the defendant knew or intended that the offense would benefit a foreign government, foreign instrumentality, or foreign agent. The enhancement also was redesignated as subsection (b)(13). Amendment 771, effective November 1, 2013.
Commission clarifies counterfeiting guidelines regarding “bleached notes.” (220) A bleached note is genuine United States currency stripped of its original image through the use of solvents or other chemicals and then reprinted to appear to be a note of higher denomination. Courts in different circuits have resolved differently the question of whether an offense involving bleached notes should be sentenced under §2B5.1 (Counterfeiting) or §2B1.1 (Offenses Involving Altered or Counterfeit Instruments Other than Counterfeit Bearer Obligations). Compare U.S. v. Schreckengost, 384 F.3d 922 (7th Cir. 2004) (holding that bleached notes should be sentenced under §2B1.1), and U.S. v. Inclema, 363 F.3d 1177 (11th Cir. 2004) (same), with U.S. v. Dison, 2008 WL 351935 (W.D. La. Feb. 8, 2008) (applying §2B5.1 in a case involving bleached notes), and U.S. v. Vice, 2008 WL 113970 (W.D. La. Jan. 3, 2008) (same). The Commission resolved this issue by providing that an offense involving bleached notes is sentenced under §2B5.1. Amendment 731, effective November 1, 2009.
Commission adopts guidelines for unlawful demonstrations at cemeteries and internet gambling. (220) A new offense at 38 U.S.C. § 2413 prohibits certain demonstrations at cemeteries controlled by the National Cemetery Administration. The Commission referenced convictions under 38 U.S.C. § 2413 to guideline § 2B2.3 (Trespass) and expanded the scope of the two-level enhancement at § 2B2.3(b)(1). A new offense at 31 U.S.C. § 5363 prohibits acceptance of any financial instrument for unlawful Internet gambling and provides a statutory maximum term of imprisonment of five years. In response, the Commission referenced convictions under 31 U.S.C. § 5363 to § 2E3.1 (Gambling Offenses). Amendment 703, effective November 1, 2007.
Commission corrects typographical errors in fraud and alien smuggling guidelines. (220). The Commission corrected a typographical error in § 2B1.1(b)(13)(C) that stemmed from redesignations made to § 2B1.1 in 2004 when the Commission added a new subsection (b)(7) in response to the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM Act”), Pub. L. 108–187. (U.S.S.G. App. C Amendment 665) (November 1, 2004). The Commission also corrected a typographical error in § 2L1.1(b)(1) that stemmed from redesignations made to § 2L1.1 in 2006 when the Commission added a new subsection (a)(1) for aliens who are inadmissible for national security related reasons. (U.S.S.G. App. C Amendment 692) (November 1, 2006). The Commission decided that these corrections should be applied retroactively. Amendment 702, effective November 1, 2007.
Commission adds new guideline for aggravated identity theft. (220) The Identity Theft Penalty Enhancement Act, Public Law 108–275, 118 Stat. 831 created two new criminal offenses at 18 U.S.C. § 1028A. In response, the Commission created a new guideline at § 2B1.6. Because the new offenses carry a fixed, mandatory consecutive term of imprisonment, the new guideline provides that the guideline sentence is the term of imprisonment required by statute. An application note says that adjustments under Chapters Three and Four are inapplicable to sentences under this guideline. The Commission also amended the guideline for abuse of trust or use of special skill, § 3B1.3, in Application Note 2, to cover defendants who abuse their position to unlawfully obtain or use any means of identification.” The amendment also states in the multiple count guideline, § 5G1.2, Application Note 2(B), that the court has discretion to impose concurrent or consecutive, or partially concurrent and partially consecutive, terms of imprisonment for multiple violations of 18 U.S.C. § 1028A. Finally, the amendment modifies § 3D1.1 to clarify that § 1028A offenses are excluded from the general grouping rules in §§ 3D1.2 – 3D1.5. 2005 Amendment 677, effective November 1, 2005.
Commission addresses anti-SPAM legislation in § 2B1.1. (220) Legislation titled Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM Act) of 2003, created five new felony offenses aimed at reducing unsolicited electronic mail, including fraud, identity theft, obscenity, child pornography and sexual exploitation of children. The Commission referenced violations of § 1037 in the fraud guideline § 2B1.1 and added a two-level increase in § 2B1.1(b)(7) if the defendant was convicted under § 1037 and the offense involved obtaining electronic mail addressed through improper means. In addition, an amendment to the obscenity guideline, § 2G3.1, added a two-level enhancement if the offense involved the use of a computer or interactive computer service. Amendment 665, effective November 1, 2004.
Commission makes permanent the emergency amendments to the corporate fraud guidelines. (220) Effective January 25, 2003, in response to the Sarbanes-Oxley Act of 2002, Pub. L. 107–204, the Sentencing Commission adopted emergency amendments to the corporate fraud guidelines, which were modified and became permanent on November 1, 2003. The amendments increased to level 7 the base offense level for offenses with a statutory maximum sentence of 20 years or more. Two categories were added to the top of the Loss Table to provide increases of 28 levels for losses of $200 million or more, and 30 levels for $400 million or more, with similar changes to the Tax Table. A six-level increase was added if the offense involved 250 or more victims. In addition, the four-level increase in §2B1.1(b)(12)(B) for offenses that substantially jeopardize the soundness of a financial institution was broadened to include offenses involving a publicly traded company or an organization with 1,000 or more employees. Increases were also provided for violations of securities laws where the defendant was an officer or director of a publicly traded company, or a registered broker, dealer, investment adviser or associated person. and for shredding documents. Amendment 653, effective November 1, 2003.
Commission increases sentences involving cybersecurity. (220) The Commission increased sentences under §2B1.1(b)(13) for convictions under 18 U.S.C. §1030 that involve computer systems used (1) to maintain or operate a critical infrastructure or involving justice, national defense, or national security; or (2) an intent to obtain private personal information. The amendment also changed the definition of loss, expanded the upward departure note in §2B1.1, and provided an enhancement in §2B2.3 regarding trespass on a government computer. Amendment 654, effective November 1, 2003.
Commission adopts new guideline for crimes involving cultural heritage. (220) The Commission adopted a new guideline, § 2B1.5, to cover offenses involving cultural heritage, stating that “the existing guidelines for economic and property destruction crimes are inadequate to punish in an appropriate and proportional way the variety of federal crimes involving the theft of, damage to, destruction of, or illicit trafficking in, cultural heritage resources,” The new guideline has a base offense level of 8, and does not use § 2B1.1’s concept of “loss.” Instead, value is based on commercial value, archaeological value, and the cost of restoration and repair. Amendment 638, effective November 1, 2002.
Commission combines theft and fraud guidelines. (220) In a sweeping modification of the guidelines for economic crimes, the Commission combined the guidelines for theft, fraud, and property destruction into a revised § 2B1.1. The combined theft and fraud Loss Table applies to all economic crimes, decreasing penalties at the low end of the Table and increasing penalties at the high end. The amendment resolves numerous circuit conflicts over the meaning of “loss,” redefining “actual loss” as “reasonably foreseeable pecuniary harm,” and clarifying related issues in specific kinds of cases. The Commission deleted the two-level increase for more than minimal planning and replaced it with victim-related increases. The amendment also resolves circuit conflicts over (1) being “in the business of” receiving and selling stolen property, (2) claiming to act on behalf of a charity or government agency. Amendment 617, effective November 1, 2001.
Commission proposes to consolidate guidelines for theft, property destruction and fraud. (220) As part of its Economic Crime Package, the Commission proposes to consolidate the three guidelines covering theft (§ 2B1.1), property destruction (§ 2D1.3), and fraud (§ 2F1.1). The proposal responds to concerns raised by probation officers, judges and practitioners over several years. The issues were among those discussed during Commission public hearings in 1997 and 1998 on difficulties posed by having different commentary in the theft and fraud guideline applicable to the calculation and definition of loss and related issues. The proposal calls for a base offense level of six and a consolidated loss table with two-level increments for increasing loss amounts beginning at $5,000. The proposal deletes the enhancement for more than minimal planning due to the potential overlap between this enhancement and the sophisticated means enhancement. The proposal also makes other changes. 2001 Proposed Amendment 12A.
Commission proposes to revise definition of loss for theft and fraud guidelines. (220)The proposed amendment provides two major options to create one definition of loss for offenses sentenced under the theft and fraud guidelines. The first option was prepared by the Commission and is intended to invite comment on the major issues related to the definition of loss, including those presented in the second option. The second option was prepared by the Criminal Law Committee of the Judicial Conference and is included for publication in its entirety “in recognition of the years of effort that the members of that committee have put into the preparation of a new definition of loss.” 2001 Proposed Amendment 12C.
Commission proposes options for combining theft, fraud and tax tables. (220) This amendment proposes three options for a loss table for the proposed consolidated theft and fraud guideline and two options for a tax loss table. If a decision is made to use the same table for theft, fraud, and tax, the effect would be to sentence the offenses under both guidelines in a similar manner. According to the Commission, this would represent a change from the current relationship in which tax offenses generally face slightly higher offense levels for a given loss amount than fraud and theft offenses. 2001 Proposed Amendment 12B.
Commission proposes options for considering aggravating and mitigating factors in theft and fraud cases. (220) This amendment proposes two options to provide for the consideration of a number of aggravating and mitigating factors that may be present in theft and fraud cases. Option One provides for a four-level increase if the offense involved significantly aggravating factors, a two-level increase if the offense involved aggravating factors, a two-level decrease if the offense involved mitigating factors and a four-level decrease if the offense involved significantly mitigating factors. Option Two provides an exhaustive list of aggravating and mitigating factors that may trigger application of the enhancement. 2001 Proposed Amendment 13.
Commission provides increased penalties for identity theft and wireless phone cloning. (220) First, the amendment provides an enhancement and a minimum offense level for offenses involving equipment used to manufacture access devices or trafficking in counterfeit access devices such as stolen credit cards and wireless cloned telephones or the possession or production of documents to commit identity theft. Second, the amendment provides a rebuttable presumption that the offense involved “more than minimal planning” when the enhancement for identity theft or wireless cloning applies. Third, the amendment adds a new application note to § 2F1.1 which extends the minimum loss rule for stolen credit cards at § 2B1.1 (Application Note 4) to all unauthorized and counterfeit access devices. Fourth, the amendment invites an upward departure if there are multiple victims of an identity theft or an individual is subjected to an arrest as a result of the identity theft. Amendment No. 596, effective November 1, 2000.
Articles provide history behind the 2001 Economic Crime Package which rewrote guidelines 2B and 2F. (220) The 2001 Economic Crime Package – a sweeping consolidation and rewriting of guideline sections 2B and 2F – becomes effective November 1, 2001. Professor Frank O. Bowman, III was a moving force behind the amendments, and in an issue of the Federal Sentencing Reporter, he provides “a set of materials to assist lawyers and judges in understanding and tracing the genesis of the reforms contained in the economic crime package.” The issue includes articles by Catharine Goodwin, Attorney Advisor for the Administrative Office of the Courts, defense attorneys Barry Boss and Jude Wikramanayake, and Second Circuit Judge Jon O. Newman. In addition, the issue includes draft documents, briefing papers, and transcripts which led up to the amendments that were finally adopted by the Commission and sent to Congress on May 1, 2001. Despite the indicated date of publication, the material was compiled after May 1, 2001. Frank O. Bowman, III, The 2001 Economic Crime Package: Resolving Issues of Severity, Definition, and Flexibility, 13 Fed. Sent. Rptr. 3 (July/Aug 2000).
Commission amends guidelines to punish computer-related offenses (220) The Commission made a number of changes in the theft, property destruction, trespass, extortion, and fraud guidelines to more effectively punish computer-related offenses. The amendments address new offenses under 18 U.S.C. § 1030(a)(7), prohibiting extortion by threats of damage to a non-public government computer or a computer of a financial institution; 18 U.S.C. § 1831, prohibiting “economic espionage” and 18 U.S.C. § 1832, prohibiting theft of “trade secrets” as broadly defined at 18 U.S.C. § 1839. Offenses under 18 U.S.C. § 1030(a)(7) are referenced to § 2B3.2 (Extortion by Force or Threat of Injury or Serious Damage); offenses under 18 U.S.C. §§ 1031 and 1832 are referenced to § 2B1.1 (Larceny, Embezzlement, and Other Forms of Theft). Special instructions have been added to § 2B1.3 and 2F1.1 to provide that the minimum guideline sentence for those convicted under 18 U.S.C. § 1030(a)(4) and (5) is six months’ imprisonment. These provisions implement a directive to the Commission in section 805(c) of the Antiterrorism and Effective Death Penalty Act of 1996, Pub. L. 104-132, 110 Stat. 1305. Amendment 551, effective November 1, 1997.
Articles explore proposals to change fraud and theft guidelines. (220) Professor Frank O. Bowman is guest editor for a series of articles in the Federal Sentencing Reporter debating current proposals to increase the guidelines for theft and fraud, and to clarify the definition of “loss.” Federal Defender Barry Boss disputes the notion that sentences for economic crime are too low, arguing that it only seems that way because drug sentences are too high. Judge Phil Gilbert’s statement to the Commission on behalf of the Judicial Conference Criminal Law Committee supports increasing the offense levels in the fraud and theft tables, and adoption of a simplified definition of loss. Probation Officer Fred S. Tryles argues that modifications to the fraud and theft guidelines are “necessary,” beginning with “a single coherent, more encompassing definition of loss.” James Gibson, Attorney-Advisor at the Sentencing Commission, points out the difficulties in applying current loss definitions to cases involving procurement fraud, loan application frauds, credit card thefts and inchoate offenses. Defense Attorney John D. Cline urges the Commission to adopt the “economic reality doctrine” to discount harms that a defendant intended but did not actually risk. AUSA Carol C. Lam suggests that health care fraud defendants should not receive credit for services or goods provided. AUSAs Stephen V. Manning and Barbara Bailey Jongbloed point out that loss calculations in fraudulent loan cases can be “quite complex,” urging an amendment to determine the actual loss at the time of sentencing, rather than when the offense was discovered. Professor Russell Coombs advocates a completely different approach, arguing that economic criminals should be sentenced primarily for future dangerousness. Defense Attorney James E. Felman contributes interesting excerpts from the testimony at the Commission’s October, 1997 hearing on the definition of “loss.” Frank O. Bowman, III, Back to Basics: Helping the Commission Solve the “Loss” Mess With Old Familiar Tools, 10 Fed. Sent. Rptr. 115 (1997).
Commission provides for use of drug or firearms guidelines if drugs or guns are stolen. (220) In Amendment 512, effective November 1, 1995, the Commission deleted §2B1.1(b)(2) and replaced it with a new subsection (c) providing a cross-reference to the drug or firearms guidelines if drugs or firearms were stolen or received. The Commission says the purpose of the amendment is to address an inconsistency between the theft guidelines and the drug and firearm guidelines when the property stolen is drugs or firearms.