§432 Cases Rejecting Aggravating Role
7th Circuit finds role increase improper for drug “middleman,” but error was harmless. (432)(850) A jury convicted defendant of fraud, money laundering, and drug conspiracy. At sentencing, the district court added four levels for aggravating role under § 3B1.1 because defendant was a “central figure” who sold “huge quantities” of drugs and had directed drug couriers on how and where to make deliveries. The Seventh Circuit held that the increase was improper because defendant acted only as a “middleman” who did not play a meaningful role in structuring or overseeing drug shipments. Nevertheless, the court found the error harmless, because the district court said it would impose the same sentence regardless of the enhancement. U.S. v. Colon, __ F.3d __ (7th Cir. Mar. 22, 2019) No. 18-1233.
7th Circuit finds managerial increase in drug case was error, but harmless. (432)(850) At defendant’s sentencing for drug-trafficking offenses, the district court enhanced defendant’s offense level under § 3B1.1(b), finding that he was the manager or supervisor of criminal activity. Defendant disputed the enhancement, but the district court made no findings supporting it, simply stating that it would impose the same sentence regardless of the enhancement. The Seventh Circuit ruled that the district court erred in failing to make factual findings to support the enhancement. Nevertheless, the panel found that the error was harmless because the district court said it would impose the same sentence even if it erred in applying the enhancement. U.S. v. Salgado, __ F.3d __ (7th Cir. Mar. 6, 2019) No. 18-2194.
6th Circuit reverses where unclear if defendant managed any criminal participants. (432) Defendant was one of five men convicted of multiple counts of health care fraud based on their operation of PremierTox, a urinalysis testing company. He challenged a three-level managerial role enhancement. The district court made no finding that defendant managed or supervised another criminal participant. The court simply said the enhancement was appropriate because “everybody’s making decisions in this case.” At no point did the court find that defendant exercised control over a criminal participant. The Sixth Circuit reversed, finding the enhancement was not harmless error. It was unclear whether anyone defendant managed or supervised was criminally responsible. U.S. v. Bertram, __ F.3d __ (6th Cir. Aug. 20, 2018) No. 17-6527.
9th Circuit reverses “organizer” increase for joint venturer. (432) Defendant and another individual organized a fraud scheme that based on a joint venture agreement to start a biofuel refining project. Defendant was responsible for getting the refinery running. At sentencing, the district court found that defendant was an “organizer” under § 3B1.1(c). The Ninth Circuit reversed, noting that defendant and his accomplice equally contributed to the fraud and agreed to split the profits from the refining project equally. At most, defendant “facilitated” the offense; he did not exercise “organizational control” over his coconspirator. U.S. v. Holden, __ F.3d __ (9th Cir. July 26, 2018) No. 16-30186.
8th Circuit remands to clarify whether defendant was leader of at least one participant. (432) Defendant pled guilty to failing to pay the IRS the full amount of his employees’ tax withholdings. He objected at sentencing to a four-level leadership enhancement under §3B1.1(a), arguing that his crime was a one-person offense. The district court overruled his objection, finding that the offense was “otherwise extensive” because defendant had authority over six businesses for 11 years. The Eighth Circuit reversed, because the court failed to identify any other participant whose activities defendant directed. Although the government argued that the district court implicitly found that defendant’s family members were “participants,” the disrict court mistakenly stated that the enhancement applied “regardless of whether there were others involved in this criminal activity.” The panel remanded to provide the district court the opportunity to clarify whether defendant organized or led at least one other participant. U.S. v. Musa, __ F.3d __ (8th Cir. July 28, 2016) No. 15-2078.
9th Circuit upholds failure to give minor-role reduction. (432) Defendant was convicted of possession of methamphetamine with intent to distribute, in violation of 21 U.S.C. §841(a), after he was found with more than a kilogram of methamphetamine on a bus that crossed the border with Mexico. At sentencing, the district court, on its own motion, raised the question whether defendant should receive a minor role reduction under §3B1.1. After hearing argument from both sides, the court found that defendant had not carried his burden and denied the minor-role adjustment. The Ninth Circuit affirmed, finding that defendant had not carried his burden of showing that he was substantially less culpable than the average participant. U.S. v. Herrera-Rivera, __ F.3d __ (9th Cir. Aug. 12, 2016) No. 15-50141.
D.C. Circuit reverses managerial role increase for insufficient findings. (432) Defendant was part of a Columbian organization that conducted a large-scale cocaine-trafficking operation. The district court applied a three-level enhancement under §3B1.1(b) for being a manager or supervisor in the drug conspiracy. However, the court failed to consider whether the persons defendant allegedly supervised qualified as “participants” under §3B1.1. This was contested at sentencing, but the court made no finding that the supervised individuals had the requisite criminal mens rea to count as participants. The court’s “otherwise extensive” finding also came up short. The court found that defendant’s “activities were otherwise quite extensive in this area” of “transport[ing] … narcotics and weaponry.” However, the guidelines’ “otherwise extensive” inquiry pertains to the scope of the criminal activity as a whole, not the defendant’s involvement. The D.C. Circuit vacated defendant’s sentence and remanded for resentencing. U.S. v. Vega, __ F.3d __ (D.C. Cir. June 24, 2016) No. 10-3083.
9th Circuit reverses managerial enhancement for insufficient evidence. (432)(770) At defendant’s sentencing for drug trafficking, the district court enhanced his sentence under §3B1.1(c) because the defendant directed the behavior of his coconspirators. The district court relied on an agent’s testimony at sentencing that defendant told a coconspirator’s fiancée to rent a house where drugs could be distributed. It also relied on a coconspirator’s pre-trial statement that defendant directed two individuals to deposit proceeds of drug sales into a bank account. The Ninth Circuit held that because this information had not been corroborated by trial testimony, it was not sufficiently reliable to support an increase under §3B1.1(c). U.S. v. Pimentel-Lopez, __ F.3d __ (9th Cir. July 15, 2016) No. 14-10210.
2nd Circuit reverses finding that scheme was otherwise extensive. (432) Defendant and others were involved in an “advance fee” scheme in which companies operated by defendant falsely promised loans and collected fees for fraudulent expenses, while never issuing any loans. The Second Circuit held that the district court erred in finding that defendant was a leader of “otherwise extensive” criminal activity under §3B1.1(a). The court failed to consider the number of knowing participants and the number of unknowing participants organized by the defendant to render services peculiar and necessary to the criminal scheme. Here, defendant was a leader of a scheme involving only four knowing participants, including himself. The court did not find any facts regarding the number of unknowing participants, and it was not clear from the record whether such unknowing participants existed and whether their services were peculiar and necessary to the scheme. The court did identify other factors in the PSR that supported the 3B1.1(a) enhancement, but some of these factors had an unclear nexus to the “otherwise extensive” prong of §3B1.1(a) or were duplicative of factors already taken into account in calculating defendant’s offense level. U.S. v. Kent, __ F.3d __ (2d Cir. May 16, 2016) No. 14-2082-cr(L).
8th Circuit rejects leader increase even though defendant owned house where family conducted fraud. (432) Defendant and other family members were involved in a fraud scheme in which they filed more than 200 tax returns claiming first-time homebuyer tax credits for unknowing taxpayers. The Eighth Circuit found insufficient evidence to support a four-level organizer or leader enhancement under §3B1.1(a). Defendant owned the house where the IRS seized relevant evidence, and was the owner and subscriber of the internet access used to submit the fraudulent tax returns. However, there was no evidence that defendant planned the scheme, organized or directed her co-conspirators, or otherwise controlled the commission of the offense. The fact that defendant’s co-conspirators were her adult children and that the offense was committed in her home might suggest that defendant was in control of the family’s conspiracy, but this was insufficient to prove, by a preponderance of the evidence, that defendant was an organizer or leader of the offense. U.S. v. Laws, __ F.3d __ (8th Cir. Mar. 15, 2015) No. 14-3636.
6th Circuit reverses increase for property management. (432) Defendant was part of a four-member Memphis truck theft ring, and pled guilty to possession of stolen goods. Over defendant’s objection, the district court applied a § 3B1.1(c) managerial role enhancement. However, the court never clearly stated the object of defendant’s control. At one point, the court emphasized defendant’s control of stolen tires, and stated that it agreed that defendant was, in fact, “managing and supervising the items that are the subject of the heist” because he held the code for the storage unit where the stolen tires were held. However, the court did not state that defendant controlled a co-participant, so the Sixth Circuit reversed. The government may show control over co-participants in many ways, but cannot base an adjustment on property management alone. Defendant did not receive a larger share of the theft-ring proceeds than other participants, he did not recruit others to join the truck theft ring, and did not help plan any of the theft. He did not provide the group with information that facilitated the crimes, and did not issue orders to any group member. U.S. v. Christian, 804 F.3d 819 (6th Cir. 2015).
1st Circuit reverses managerial role increase. (432) On two occasions, defendant supplied drugs to Gabelino, who then sold them to an undercover agent. The district court applied a § 3B1.1(a) role enhancement, finding that defendant held a managerial role over Gabelino. The First Circuit reversed, ruling that the government did not meet its burden of establishing defendant’s role in the offense. There was no proof of orders given and obeyed. There was no proof that defendant paid Gabelino for her services. There was no proof of either a committed relationship or an exclusive course of dealing. In short, there was no proof that Gabelino was either subservient to defendant or subject to his authority. The evidence suggested that Gabelino acted as a free agent, dealing with defendant as any street-level seller would deal with a source of supply. U.S. v. Al-Rikabi, 606 F.3d 11 (1st Cir. 2010).
1st Circuit holds that drug runner who kept drug point stocked was not “manager.” (432) Defendant was one of 12 co-defendants involved in a drug trafficking enterprise at a public housing facility. He challenged a three-level managerial role enhancement, §3B1.1(b), arguing that there was no evidence that he ever exercised control over other conspirators, since his role was “simply to deliver drugs to the point and to collect the money and to sell.” The government alleged that defendant also “oversaw” the drug point to make sure the operation was running smoothly, and this oversight included collecting the money from the sellers and restocking the point when the drugs sold out. The First Circuit rejected the enhancement. Medina, the sole source of testimony at trial about defendant’s role, used the word “manager” and “runner” interchangeably, and his particular choice of language was not a proper basis for the enhancement. As a drug runner, defendant played an essential role in the drug trafficking operation. But keeping the drug points well stocked and collecting the proceeds to deliver to the point’s owners or leaders is insufficient to establish the requisite control over another criminal actor. U.S. v. Flores-de-Jesus, 569 F.3d 8 (1st Cir. 2009).
1st Circuit reverses managerial role increase where others were merely present. (432) Defendant was involved in a gang that owned and operated several drugs points from which members of the organization sold large quantities of cocaine, crack, heroin and marijuana. Defendant challenged a managerial role enhancement, arguing that he acted alone in operating the Santa Ana drug point, located at his house, and the drug point located at his bar. An informant testified that other people were present in the backyard of defendant’s house when the informant made a controlled purchase of crack, and the audio recording of the transaction revealed another voice or voices in the background. Moreover, there was testimony that the drug point was open 24 hours a day. The First Circuit held that this was not a sufficient basis for the § 3B1.1(c) increase. Even if defendant associated with others in operating the drug point 24 hours a day, there was no basis for finding that he oversaw their activities. Defendant’s control over “the property, assets or activities of a criminal organization” did not qualify him for the enhancement. U.S. v. Ofray-Campos, 534 F.3d 1 (1st Cir. 2008).
1st Circuit reverses role enhancement based on control over activities of enterprise rather than participants. (432) Defendant argued that that there was insufficient evidence to support a § 3B1.1(c) managerial role enhancement, and the First Circuit agreed. Although the district court indicated that defendant oversaw Cintron, Cintron was acting undercover as part of a government sting and thus did not count as a participant under § 3B1.1. The court appeared to base the enhancement primarily on defendant’s control over the activities of the criminal enterprise rather than over any participants in it. See Note 2 to § 3B1.1. The court observed that defendant was the principal contact for the smuggled aliens, that she was responsible for determining fees and accepting payments, that she procured false identification documents, and had some influence over the scheduling of the transports. However, the application note cited by the court makes it clear that the management of criminal activities (as opposed to criminal actors) may be grounds for an upward departure, but not a role in the offense adjustment. There is an important structural distinction between sentencing enhancements and sentencing departures. Even under an advisory guideline regime, the sentencing court must calculate the guideline range correctly. U.S. v. Ramos-Paulino, 488 F.3d 459 (1st Cir. 2007).
1st Circuit remands where court adopted PSR’s factual findings in direct conflict with its prior express findings. (432) A jury convicted defendant of various charges related to a two-year conspiracy to gain illegal admission into the U.S. for Kenyan nationals. During sentencing, the district court applied a § 3B1.1 aggravating role adjustment to both a conspiracy to induce an alien to enter the U.S. count and a conspiracy to commit visa fraud count. However, it appeared from the sentencing transcript that the district court did not intend to apply the adjustment to the conspiracy to induce count. Application of the § 3B1.1 adjustment to the visa fraud conspiracy was proper based on the court’s finding that defendant organized a scheme that was otherwise extensive. However, the court erred in adopting the PSR’s recommendation to apply the adjustment to the conspiracy to induce count. The court expressly declined to apply the enhancement based on the involvement of other non-aliens involved in the conspiracy. Based on this factual finding, defendant did not qualify for a leadership enhancement on the conspiracy to induce count. The PSR, adopted by the district court, found defendant was such an organizer based on the involvement of non-alien individuals. Thus, in adopting the PSR, the district court adopted factual findings in direct conflict with its prior express finding. These prior express findings also conflicted with the court’s decision to impose the § 3B1.1 enhancement on the conspiracy to induce count. The First Circuit remanded. U.S. v. Thiongo, 344 F.3d 55 (1st Cir. 2003).
1st Circuit says basis for managerial enhancement not sufficiently clear for appellate review. (432) Defendant pled guilty to drug conspiracy charges based on his sale of cocaine to a confidential informant and to a DEA supervisor. The First Circuit vacated a § 3B1.1(c) enhancement because its basis was not sufficiently clear for meaningful appellate review. When the basis for a role in the offense enhancement is not apparent from the record, the sentencing court, in order to apply such an enhancement, must make a specific finding which identifies those being managed with enough particularity to give credence to the upward adjustment. Without reasonably specific findings or some satisfactory surrogate in the record, an appellate court cannot engage in meaningful review to determine whether the decision was clearly erroneous. In this case, none of the usual sources provided any guidance. The sentencing court’s statements on the record were not illuminating. The court’s questions and counsel’s answers did not address whom defendant controlled. The PSR offered equally little assistance. It concluded that defendant occupied a leadership role, but contained no explicit analysis of defendant’s managerial or supervisory activities. U.S. v. Medina, 167 F.3d 77 (1st Cir. 1999).
1st Circuit remands for findings on five or more participants or “otherwise extensive.” (432) Defendant challenged a § 3B1.1(a) enhancement. The First Circuit remanded because the district court did not make a finding as to whether the enterprise involved five or more participants or was otherwise extensive. The court adopted the PSR by checking the appropriate box, but the report itself was a source of uncertainty. It originally relied on the five participants prong, but defendant objected that none of the persons named in the report other than the four main actors were criminally responsible. In response, the probation officer took the position that defendant’s activities were “otherwise extensive.” However, the report did not clearly abandon the five or more participants position. The government conceded that the findings were not sufficient, and the facts did not require the court to find the criminal activity was otherwise extensive. U.S. v. Wester, 90 F.3d 592 (1st Cir. 1996).
1st Circuit holds management of assets did not warrant role increase but did justify departure. (432) Defendant worked for a large‑scale gambling enterprise, accepting bets and transmitting the information directly to the leader, with whom he was in daily telephone contact. The First Circuit rejected a § 3B1.1 role enhancement based on defendant’s management of the assets of the gambling organization. Amendment 500, effective November 1993, revised note 2 to provide that the defendant must have been the organizer, leader, manager or supervisor of other participants. However, management responsibility over the property, assets or activities of a criminal organization may warrant a departure. Thus, the district court’s alternative basis for its adjustment—an upward departure—was proper. The government presented solid evidence that defendant managed assets and was more than a mere “bookie” or “telephone operator” in the business. Defendant directly reviewed betting and makeup figures with the leader, and participated in “charting,” i.e. assessing the organization’s risk of loss. U.S. v. Cali, 87 F.3d 571 (1st Cir. 1996).
1st Circuit says control over others is important where scheme is not “otherwise extensive.” (432) Defendant, a political activist, was convicted of obstruction charges in connection with the prosecution of a “skinhead” youth for attacks on Jewish temples and harassment of young African-American girls. The First Circuit reversed a supervisor enhancement, finding the district court relied too heavily on defendant’s greater experience without considering whether he exercised control over the youth or was otherwise responsible for organizing the youth in the commission of the offense. In U.S. v. Tejado‑Beltran, 50 F.3d 105 (1st Cir. 1995), the court held that direct control over other participants in an extensive criminal enterprise was not necessary for an organizer enhancement; the key was relative responsibility. The First Circuit refused to apply Tejado‑Beltran where the criminal activity was not “otherwise extensive.” Although a defendant’s greater experience may be a factor supporting a supervisory role, it is not, by itself, sufficient. U.S. v. Frankhauser, 80 F.3d 641 (1st Cir. 1996).
1st Circuit says adoption of PSR was not adequate for leadership enhancement. (432) The district court imposed a four-level leadership enhancement, finding that defendant was “the principal figure, the organizer” of a drug conspiracy. The court checked the box on the judgment form that states “The court adopts the factual findings and guideline application in the presentence report.” The First Circuit ruled that the adoption of the PSR did not satisfy § 3553(c)’s requirement of a statement of reasons, since the PSR did not demonstrate why defendant was a “leader or organizer” rather than a “manager or supervisor.” In many cases the adoption of the PSR will provide adequate reasons for the sentence. Here, however, the PSR never analyzed why it concluded that defendant was a “leader or organizer” rather than a “manager or supervisor.” U.S. v. Catano, 65 F.3d 219 (1st Cir. 1995).
1st Circuit reverses managerial enhancement for street-level drug dealer. (432) The 1st Circuit reversed a managerial enhancement for a defendant who sold marijuana to an undercover agent on two occasions. Defendant determined who purchased the drugs, when and where sales took place, and the prices and profit. But this could be said of any independent street-level dealer. No street-level drug sale could ever be made without a customer, a time and location for the sale, and a price. The profit defendant made was his own, not his supplier’s. Moreover, there was no evidence that defendant exercised any control over the movement of his supplier or anyone else. U.S. v. Castellone, 985 F.2d 21 (1st Cir. 1993).
1st Circuit reverses supervisory role enhancement for drug “steerer.” (432) Defendant was characterized as a drug “steerer” by both sides. A steerer was defined as one who “directs buyers to sellers in circumstances in which the sellers attempt to conceal themselves from casual observation.” The 1st Circuit reversed a “supervisor” enhancement under section 3B1.1(b). Although defendant contacted the source and escorted the purchasers to the room where the transaction took place, nothing in the record indicated that defendant held a supervisory role in the conspiracy. At no time did defendant have control over the cocaine, nor was he the principal with whom the government agents transacted the sale. Before making representations to the buyers, defendant always had to check with his co-defendants. Defendant did not exercise control over any of the other co-defendants, with the possible exception of his brother, who served as a lookout. U.S. v. Sostre, 967 F.2d 728 (1st Cir. 1992).
1st Circuit reverses where record did not support supervisor enhancement. (432) The 1st Circuit reversed a supervisor enhancement since the sentencing court’s subsidiary findings of fact did not support the enhancement. The record did not reveal any facts and at oral argument, the government conceded that the record did not justify the enhancement. Because relatively small increases in base offense level can have serious consequences at sentencing, an enhancement must be based on more than the trial judge’s hunch, no matter how sound his instincts or how sagacious his judgment. U.S. v. Ortiz, 966 F.2d 707 (1st Cir. 1992).
2nd Circuit rejects findings as insufficient to support leadership enhancement. (432) Defendant was convicted of securities and bank fraud based on a scheme to obtain large sums of money from four different financial institutions. All of these attempts failed. The PSR also described defendant’s involvement in additional uncharged fraudulent conduct. The Second Circuit held that the district court made insufficient findings to support a § 3B1.1(a) enhancement for being an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive. For either branch of § 3B1.1(a) to apply, at least one person besides defendant must be criminally responsible for the offense. The court’s statement that defendant “had” Cunningham was not a finding that Cunningham acted with knowledge that her conduct was criminal. Nor did the court make such a finding as to any other individual. Second, the court did not explain how defendant’s criminal activity was extensive. Statements that defendant led “entirely a life of fraud” and was “constantly seeking new victims” indicated repeated criminal conduct, but was not a finding of extensiveness. U.S. v. Skys, 637 F.3d 146 (2d Cir. 2011).
2nd Circuit reverses four-level leadership increase for insufficient findings. (432) Defendant was convicted of securities fraud based on his involvement in a “pump and dump” scheme involving fraudulent press releases that artificially inflated the prices of publicly-traded shares of two small companies. The Second Circuit held that the court plainly erred in applying a four-level leadership enhancement. The court stated that the offense “obviously involved a criminal enterprise with five or more participants and unknowing participants and was otherwise extensive.” This explanation was problematic for several reasons. First, a “participant” is one who is “criminally responsible for the commission of the offense.” The court’s statement lacked the specificity needed to conduct a meaningful review, as there were only four obvious participants. U.S. v. Ware, 577 F.3d 442 (2d Cir. 2009).
2nd Circuit holds court did not clearly err in refusing leadership increase for boss of New York crime family. (432) Defendant, the acting boss of the Gambino crime family, was convicted of a variety of racketeering offenses. However, the district court declined to impose a § 3B1.1 leadership increase, explaining that it did not “think it automatically follows that because somebody is the acting boss of the crime family that he’s responsible for these four level enhancements in each and every relevant conduct scenario.” The court noted that the government was required to present some evidence to show an active role, and that defendant did not “exhibit typical leadership characteristics that one would expect of the acting crime boss of a New York crime family, but was simply filling a power vacuum brought about by the incarceration of other members of the Gotti family.” The Second Circuit held that the clear error standard of review was appropriate because the court’s application of U.S.S.G. § 3B1.1 to the facts of the case presented an issue that was predominantly factual rather than legal. There was no dispute about the relevant facts. The panel further found no clear error in the court’s refusal to apply the enhancement. U.S. v. Gotti, 459 F.3d 296 (2d Cir. 2006).
2nd Circuit says defendant did not hold managerial role in check cashing scheme. (432) Defendant cashed checks he knew to be stolen. He challenged a managerial role enhancement, arguing that he did not manage or supervise the people who brought him checks (stolen from one bank) or the people (on the other end) who accepted the checks at discount. The Second Circuit agreed that the increase was improper. Neither of the two facts cited by the court supported the adjustment. The fact that Alejo brought checks to defendant for cashing did not indicate that defendant exercised control over Alejo. Defendant simply offered his services as a broker of stolen checks and furnished a cash incentive for Alejo’s thefts, but there was no evidence that defendant directed Alejo in any way. The court also found that defendant was “instrumental” in advancing the negotiation of one check by pressuring Infanti, the man who was to get the check cashed and demanding a good faith advance. However, this communication did not reflect defendant exercising control over Infanti. Although defendant demanded that Infanti speed up the process and provide an advance, a demand that a debtor pay up, or make an advance, does not support an inference that the debtor is a subordinate. If anything, Infanti’s nonpayment suggested independence. U.S. v. Burgos, 324 F.3d 88 (2d Cir. 2003).
2nd Circuit upholds three rather than four level increase for middlemen in drug distribution. (432) From 1989 to 1991, defendants were involved in offloading many tons of hashish from vessels in the St. Lawrence River into Canada and the United States. The district court found that they were managers or supervisors of criminal activity rather than leaders or organizers, and increased their offense levels by three rather than four points under § 3B1.1(b). The court found that the criminal organization included Dutch and Canadian groups, and in the context of this broader enterprise, defendant were simply middlemen. The Second Circuit affirmed this conclusion. The course of conduct reasonably included the Dutch and Canadian organizations’ activities. After considering such factors as decision-making authority, claim to proceeds, degree of participation in planning, scope of activity, and degree of control over others, the district court found that the “real leaders or organizers” resided in Holland and Canada. This holding was reasonable given that the entire quantity of drugs on the ships were part of the defendants’ relevant conduct. U.S. U.S. v. Greer, 285 F.3d 158 (2d Cir. 2002).
2nd Circuit bases “otherwise extensive” criminal activity primarily on number of people involved. (432) Defendant induced clients to entrust money to him for investment. He misrepresented to his investors that the investments were doing well and continued to solicit new funds. The district court imposed a § 3B1.1(a) enhancement for being the leader of criminal activity that was “otherwise extensive.” The Second Circuit held that in determining whether a criminal activity is “otherwise extensive,” the main consideration is the number of people involved, criminally and non-criminally. The application notes state that the enhancement is based on the size of the organization, i.e., the number of participants. In determining whether a criminal activity is otherwise extensive, the sentencing court must determine (1) the number of knowing participants, (2) the number of unknowing participants whose activities were organized or led by the defendant with specific criminal intent, and (3) the extent to which the services of the unknowing participants were peculiar and necessary to the criminal scheme. Here, the district court improperly considered the number of clients defrauded and the sophistication of the scheme in making its § 3B1.1 determination. U.S. v. Carrozzella, 105 F.3d 796 (2d Cir. 1997).
2nd Circuit holds role increase must be based on control or organization of another person. (432) Defendant and two others participated in a bank fraud scheme. Defendant and one man were equal partners in the scheme. The third man was recruited and supervised by defendant’s partner. The Second Circuit found that a § 3B1.1 organizer enhancement could not be supported without further findings about defendant’s role in recruiting and supervising the third participant. The enhancement could not be based on defendant’s relationship to his partner or on his planning for the offense. Defendant’s management responsibility over the property, assets, or activities of the organization also could not be the basis for the enhancement. To qualify for a § 3B1.1 adjustment, the defendant must have exercised some control over others in the commission of the offense or must have been responsible for organizing others. To be found responsible for organizing others, defendant must have at least played a significant role in the decision to recruit or to supervise lower-level participants. U.S. v. Greenfield, 44 F.3d 1141 (2d Cir. 1995).
2nd Circuit says that those who received stolen cash were not participants in its theft. (432) Defendant, a postal worker, stole $700,000 from the branch of the postal service. Another employee originally planned to assist defendant in the theft, although he ultimately refused to participate. Another individual agreed to obtain a safe deposit box to hold the money for defendant. Three other individuals received proceeds from the theft and spent the money for their own purposes. The Second Circuit held that the criminal activity did not involve five or more participants under § 3B1.1(a). The three individuals who received the stolen proceeds could not be counted as participants. None of them were involved in the crime to which defendant pled guilty. Rather, they were convicted of receiving stolen property. There was no evidence that they had advance knowledge of the theft, expected to receive proceeds from the theft, or otherwise participated in it. On remand the district court could consider whether the criminal activity was “otherwise extensive.” U.S. v. Melendez, 41 F.3d 797 (2d Cir. 1994).
2nd Circuit finds that court’s conclusory statements did not support managerial enhancement. (432) Defendant contended that the district court’s conclusory statements at sentencing concerning his role in the offense did not support his three level increase under § 3B1.1(b). The 2nd Circuit agreed. The court’s conclusory references to various “transcripts” established only that defendant was an active member of the conspiracy, not that he was a manager or supervisor as required for a § 3B1.1(b) enhancement. U.S. v. Fermin, 32 F.3d 674 (2nd Cir. 1994), overruled on other grounds by Bailey v. U.S., 516 U.S. 137 (1995).
2nd Circuit rejects managerial role for defendant who asked wife to give package to men. (432) Defendant was engaged in a continuous operation of buying and reselling cocaine every week for a period of least one year. On one occasion only, he asked his wife to hand over two separate packages to two men who would appear at their residence and to accept whatever money they tendered. The 2nd Circuit rejected a managerial enhancement under section 3B1.1. In the usual case, obtaining the services of a participant would make one a supervisor subject to an enhanced sentence. However, this case was atypical. If defendant had been charged with drug activity on any other day during the preceding year, he would not have received an enhancement. Defendant’s sentence embraced not only the charge in the indictment but all his prior activity. Defendant’s request, against the whole background of the case, did not make him an organizer. Judge Mahoney dissented. U.S. v. McGregor, 11 F.3d 1133 (2nd Cir. 1993).
2nd Circuit remands for court to state basis for finding defendant an organizer or leader. (432) Although the PSR suggested a two level increase under section 3B1.1(c) based upon defendant’s role in the offense, the district court imposed a four level increase under section 3B1.1(a). The 2nd Circuit remanded because the court did not disclose its basis for considering defendant a leader or organizer of the organization. The court could not simply state that it had “no doubt” that defendant controlled the operation, without giving some explanation as to the evidentiary basis for its view. U.S. v. Stevens, 985 F.2d 1175 (2nd Cir. 1993).
2nd Circuit holds that evidence failed to support finding that defendant was a manager or supervisor. (432) The 2nd Circuit held that although the evidence (including taped admissions as to his involvement in with other co-defendants) supported a finding that the defendant was part of a criminal enterprise and used extortion to collect gambling debts, it did not support a finding that he was a “manager or supervisor” under § 3B1.1(b). Thus, his sentence was vacated and remanded. U.S. v. Lanese, 890 F.2d 1284 (2nd Cir. 1989).
2nd Circuit remands for failure to specifically identify the identities of the five participants whom the defendant supervised. (432) During defendant’s trial for extortion, the government presented evidence that at least three bookmakers, plus bodyguards were involved, and at least four co-conspirators were involved. The 2nd Circuit held that the record was unclear as to the actual number of participants the defendant was alleged to have supervised. Thus, an enhancement under § 3B1.1(b) for supervising five or more participants was improper. The case was vacated and remanded with instructions for the District Court to make findings. The court rejected the government’s argument that enhancement would nevertheless be warranted because the operation “was otherwise extensive.” This could not be relied upon on appeal because the District Court did not base its ruling on this ground. U.S. v. Lanese, 890 F.2d 1284 (2nd Cir. 1989).
3rd Circuit holds that recipients of false identification were not participants in scheme. (432) Defendant and her daughter, who worked at the Social Security Administration, were involved in a scheme to sell Social Security cards to a number of West African immigrants. The district court found that defendant was an organizer or leader and that her criminal activity involved five or more participants. USSG § 3B1.1(a). The Third Circuit found no clear error in the court’s finding that defendant was an organizer or leader. Defendant solicited individuals to purchase Social Security cards, received most of the profits, and exercised control over her daughter and another SSA employee, who generated the illegal cards. However, the district court erred in finding that the recipients of the unlawfully produced Social Security cards were participants. Just as the drug buyers in U.S. v. Beltiere, 971 F.2d 961 (3d Cir. 1992) were not participants in a drug conspiracy, the purchasers of the Social Security cards here were not participants in the conspiracy. Many of those who paid to obtain a Social Security card were in essentially the same situation as drug purchasers who provide money and know they are obtaining something unlawfully. Some were more deeply involved because they provided information to one conspirator and filled out SS-5 forms. These recipients fell somewhere between drugs customers and full-blown participants. U.S. v. Barrie, 267 F.3d 220 (3d Cir. 2001).
3rd Circuit holds corrupt police sergeant’s position did not make him a supervisor. (432) Defendant, a police sergeant, joined a criminal conspiracy with fellow police officers. However, he did not actively participate in the activities out of which the charges arose, but simply agreed not to report the activities and he profited from them. The district court found that defendant was a supervisor under § 3B1.1(c) by virtue of his status as sergeant. The Third Circuit reversed, holding that a supervisor must be so involved in and connected to the illegal activity of others that he actually supervises their illegal conduct. Defendant was not a supervisor under § 3B1.1(c) by virtue of his position in the police department hierarchy. Defendant’s “rank and file” participation in the criminal activity constituted mere participation. His activities mirrored those of other low level participants. The only activity that distinguished him from other participants was his silence. He fulfilled his duties as sergeant without reporting the illegal, extracurricular activities of his inferior officers. U.S. v. DeGovanni, 104 F.3d 43 (3d Cir. 1997).
3rd Circuit rejects organizer adjustment where defendants shared equal responsibility. (432) The district court imposed an organizer enhancement on two defendants under section 3B1.1(c) after finding that they each shared responsibility for creating and carrying out a wire fraud scheme. The 3rd Circuit reversed, holding that section 3B1.1 cannot be used to enhance the sentences of a duo when they bear equal responsibility for “organizing” their own commission of a crime. Defendants were “organizers” only in the sense that they were “planners” of the offense. Neither defendant directed the other, and they did not direct or organize a culpable third party. The management of the non-culpable office staff could not be considered; management of a non-culpable party does not warrant application of section 3B1.1. Judge Becker dissented, believing that the supervision of an unwitting third party should be sufficient to support the enhancement. U.S. v. Katora, 981 F.2d 1398 (3rd Cir. 1992).
3rd Circuit reverses role adjustment based on relevant conduct, despite later amendment. (432) For the first time on appeal, defendant argued that the court erred in considering relevant conduct in making a four level leadership enhancement under section 3B1.1(a). The 3rd Circuit agreed, ruling that under its decision in U.S. v. Murillo, 933 F.2d 195 (3rd Cir. 1991), consideration of relevant conduct was plain error. The error was not harmless because the district court might not have departed upward to impose the same sentence without the enhancement. The court noted that the guidelines were amended effective November 1, 1990, a few months after defendant was sentenced, to specify that relevant conduct should be considered in making role adjustments. But the court ruled that if the guideline in effect at the time of the offense is more favorable to a defendant, it must be applied. U.S. v. Pollen, 978 F.2d 78 (3rd Cir. 1992).
3rd Circuit reverses leadership enhancement for drug seller who made a unrelated sales to different buyers. (432) The district court imposed a four-level enhancement under section 3B1.1(a) based on defendant’s leadership of an extensive cocaine trafficking operation that involved five or more participants. The 3rd Circuit reversed, finding the evidence showed that defendant made a series of unrelated drug sales to different buyers, each of which constituted separate offenses for purposes of section 3B1.1(a). None of the buyers were “led” or “organized” by, nor “answerable” to, the defendant. With respect to two buyers, the evidence showed that defendant made a series of drug sales to them, but had no control over their use or resale of the cocaine. With respect to two other buyers, although defendant made the arrangement for the logistics of their communications and the drug sale, he exerted no influence over the buyers and no control over the resale of the cocaine or any further purchases. The evidence also failed to show any connection between the different buyers. U.S. v. Belletiere, 971 F.2d 961 (3rd Cir. 1992).
3rd Circuit rejects managerial enhancement in the absence of evidence that defendant directed activities of at least one other person. (432) The 3rd Circuit rejected a managerial enhancement under section 3B1.1 for a crack house manager because there was no evidence that he managed any other persons. In the context of section 3B1.1, the terms “managing or supervising” refer to the management of other people, not a building or other tangible or intangible thing. U.S. v. Fuentes, 954 F.2d 151 (3rd Cir. 1992).
3rd Circuit rules that real estate developers were not participants in bank president’s fraud scheme. (432) In his capacity as bank president, defendant approved loans to several real estate developers on condition that the developers use on their construction projects one or more electrical companies in which defendant or his family had an interest. The 3rd Circuit rejected the government’s contention that the developers were criminally responsible, and thus could be considered “participants” for purposes of imposing a leadership enhancement on defendant under guideline section 3B1.1(c). There was no evidence that the developers knew that defendant had a personal interest in any of the electrical companies or that he was concealing that interest from the bank. Thus, they did not have the criminal state of mind necessary to convict them for aiding and abetting defendant’s bank fraud or the intent to influence and reward defendant. U.S. v. Badaracco, 954 F.2d 928 (3rd Cir. 1992).
4th Circuit rejects increase where no evidence that defendant exercised authority over co-conspirators. (432) The district court applied a three-level increase because it found that defendant played an aggravated role as a manager or supervisor in a drug conspiracy. The Fourth Circuit reversed, finding the evidence insufficient to show that defendant actually managed or supervised persons involved in the conspiracy. Defendant was a mid-to-upper level member of the drug conspiracy who sold or delivered cocaine and cocaine base both to his own clientele and to other members of the conspiracy, who, in turn, sold the drugs to their clientele. Certain co-conspirators sold cocaine “for” defendant on various occasions, and an unindicted co-conspirator drove defendant to various locations to deliver cocaine base to his clients. These were the only factual findings supporting the role enhancement, and they did not justify the enhancement. There was no evidence that defendant exercised any supervisory responsibility over his co-conspirators by controlling them or directing the terms of their sales. U.S. v. Slade, 631 F.3d 185 (4th Cir. 2011).
4th Circuit says supplying counterfeit bills did not make defendant leader of conspiracy. (432) Defendant was convicted of using and producing counterfeit bills. The Fourth Circuit reversed a § 3B1.1 leadership enhancement. There was no evidence that defendant planned or organized the operation, exercised any control or authority over other participants, recruited accomplices into the operation, or claimed any share, much less a larger share – of the fruits of the criminal activity. Testimony suggested that other participants organized and led the counterfeiting operation. The fact that defendant manufactured bills for the counterfeiting operation did not give him control over the operation. Under the government’s theory, any defendant who supplies a good or service to a criminal operation would automatically qualify for the leadership enhancement because he could potentially leverage that role to control over participants. The supplying of contraband to other participants in a conspiracy and involvement in illegal transactions, without more, cannot sustain the application of a leadership enhancement. U.S. v. Cameron, 573 F.3d 179 (4th Cir. 2009).
4th Circuit holds that findings were insufficient to support role in the offense increase. (432) The district court assessed a four-level increase on defendant Smith for his aggravated role as an organizer or leader in the drug conspiracy, and a two-level increase on defendant Sayles for his lesser aggravating role. The district court’s findings in support of the increases were abbreviated. With respect to Smith, the court simply stated that he had “an elevated role in this organization, he is at the level just below Mr. Ross and Mr. James, and he shares on the same level with the absent Mr. Groom….” The PSR, which the court relied on, said only that the “evidence suggests that Mr. Smith was a leader in criminal activity involving five or more participants. The participants include [various named individuals] as sources of supply for defendant’s distribution, and [two others] as distributors for the defendant.” In Sayles’ case, the PSR recommended the increase because he “had at least three sources of supply for crack cocaine and one person stated that he sold crack for Mr. Sayles on approximately 20 occasions.” The Fourth Circuit reversed, ruling that these findings were insufficient to support the role in the offense increases. The sole justification offered for the leadership or management increases was that defendants bought and sold crack. This is insufficient to establish that a defendant has functioned as an “organizer, leader, manager or supervisor” of criminal activity. U.S. v. Sayles, 296 F.3d 219 (4th Cir. 2002).
4th Circuit denies minor role even if defendant was less culpable then most others. (432) Defendant claimed that she was entitled to a minor role reduction because she had a lesser role in a drug conspiracy than 14 other participants. The Fourth Circuit found that even if this were true, it would not entitle her to the reduction. Courts must also compare the defendant’s culpability against the elements of the offense of conviction. Here, defendant was involved in the possession, distribution and sale of crack cocaine. Two witnesses testified that they had been asked by the leaders of the drug ring to deliver drugs to defendant’s house. On one occasion, defendant wired money to one of her co-defendants to help him avoid detection by the police. U.S. v. Reavis, 48 F.3d 763 (4th Cir. 1995).
5th Circuit holds that leader of Aryan Circle was not leader of methamphetamine conspiracy. (432) Defendant was a member of a methamphetamine conspiracy. Most of the members of the conspiracy, including defendant, were also members of the Aryan Circle, a prison-based organization with a white-supremacist ideology. The Fifth Circuit rejected a § 3B1.1(a) leadership enhancement for defendant, since although defendant held a leadership position in the Aryan Circle, his role in the methamphetamine trade was minor. Defendant sold meth fronted by another Aryan Circle member for a month and a half and sold methamphetamine from another Aryan Circle member on five occasions. There was no evidence that defendant exercised authority over either man in these transactions. There was no evidence that defendant recruited accomplices or claimed a share of methamphetamine being produced or sold by other members of the Aryan Circle. There also was no evidence that defendant took part in meetings at which arrangement were made for gathering precursors and setting up cooks. The panel also rejected a § 3B1.1(c) enhancement for a second defendant, since much of the testimony cast this defendant in a subordinate role. U.S. v. Lewis, 476 F.3d 369 (5th Cir. 2007).
5th Circuit says court erred in ruling employees were participants before determining criminal responsibility. (432) Defendant, a sales manager, was convicted of participating in a price-fixing conspiracy. The district court applied a four-level increase under § 3B1.1(a) for being an organizer or leader of a criminal activity that involved five or more participants. The district court found that the involvement of two co-conspirators and three company employees satisfied the five participant requirement. The Fifth Circuit held that the district court erred in ruling that the employees were participants without first determining that each of them was criminally responsible for the offense. A finding that other persons “knew what was going on” is not a finding that these persons were criminally responsible. However, there was sufficient evidence that defendant was an organizer or leader of the conspiracy. Defendant initiated the proposal to maintain uniform prices and contacted Rhodes, the vice president of a competitor, to solicit his agreement. Defendant was actively involved in the conspiracy, regularly exchanging price sheets with his competitors, monitoring the company’s adherence to the agreement and informing Rhodes when other companies deviated from the agreed upon pricing. U.S. v. Maloof, 205 F.3d 819 (5th Cir. 2000).
5th Circuit reverses leadership increase where one participant not involved at time of offense. (432) Defendant was convicted of theft involving a federally funded program, money laundering and perjury. The Fifth Circuit reversed the theft convictions and the money laundering convictions that were tied to the theft convictions. As to the remaining money laundering count, the panel reversed a § 3B1.1(a) enhancement for being a leader of a criminal activity involving five or more participants. To reach five participants, the district court had to count Newman as one of the five. However, Newman, alleged to have deposited one of defendant’s 1995 checks, had no role in this offense occurring in 1992, and thus could not be counted as one of the five participants. U.S. v. Phillips, 210 F.3d 345 (5th Cir. 2000).
5th Circuit rules persons who “knew what was going on” were not participants. (432) The government argued that the district court should have applied a four-level increase under § 3B1.1(a), rather than a two-level increase under § 3B1.1(c), since it found that defendants were organizers or leaders of a criminal activity involving five or more participants. The Fifth Circuit ruled that the court did not find that the criminal activity involved five or more participants. Although the court found that persons in addition to defendants “knew what was going on,” this was not a finding that there were five or more participants. Under note 1, a participant is a person who is criminally responsible for the commission of the offense, but need not have been convicted. A finding that other persons “knew what was going on” is not a finding that these persons were criminally responsible for the commission of an offense. Willful participation is an essential element of the crime of conspiracy. U.S. v. Mann, 161 F.3d 840 (5th Cir. 1998).
5th Circuit approves upward departure based on management of conspiratorial assets. (432) Defendant argued for the first time on appeal that the district court failed to make specific findings in imposing a role enhancement. The Fifth Circuit agreed that it was error to increase defendant’s sentence under § 3B1.1(c) based on his role in managing the assets of the conspiracy, but noted that the district court could have validly departed upward based upon this factor. The appellate court said there was little functional difference between an enhancement and an upward departure. The difference derives from notice considerations. Here, however, defendant had notice that the increase would be considered. Therefore, there was no “plain error, because the error did not implicate the integrity of the judicial process. U.S. v. Perkins, 105 F.3d 976 (5th Cir. 1997).
5th Circuit rejects role increase for bank director who did not manage people. (432) Defendant and others were involved in an extensive check kiting scheme that lasted over a year and a half. The district court imposed a § 3B1.1(c) managerial enhancement based on defendant’s position as director of two of the banks involved in the kiting scheme. The Fifth Circuit reversed, since there was no evidence that defendant managed or supervised other people in connection with the illegal acts. Section 3B1.1(c) requires a defendant be the organizer of at least one other participant in the crime and that he assert control over at least one participant. U.S. v. Jobe, 101 F.3d 1046 (5th Cir. 1996).
5th Circuit says control of bank accounts might support departure but not managerial role. (432) Defendant, the cashier and officer of a bank, was involved in an extensive check kiting scheme. In an earlier opinion, the Fifth Circuit affirmed a managerial role enhancement under § 3B1.1 because defendant controlled the accounts as cashier and head of the wire transfer room. On rehearing, however, the Fifth Circuit struck down the enhancement because defendant did not supervise, manage or control another individual. Note 2 to § 3B1.1 provides that an upward departure might be warranted for a defendant who exercises management responsibility over the property, assets or activities of a criminal organization, but the district court did not order a departure. The court said that on remand, an upward departure for defendant’s management responsibility over the assets involved in the scheme might be warranted. U.S. v. Jobe, 101 F.3d 1046 (5th Cir. 1996).
5th Circuit rejects role increase for bank director who did not manage people in the scheme. (432) Defendant and others were involved in an extensive check kiting scheme that lasted over a year and a half. The district court imposed a § 3B1.1(c) managerial enhancement based on defendant’s position as director of two of the banks involved in the kiting scheme. The Fifth Circuit reversed, since there was no evidence that defendant managed or supervised other people in connection with the illegal acts. Section 3B1.1(c) requires a defendant be the organizer of at least one other participant in the crime and that he assert control over at least one participant. U.S. v. Jobe, 101 F.3d 1046 (5th Cir. 1996).
5th Circuit allows court to withdraw leadership finding to permit defendant to qualify for “safety valve.” (432) The district court originally found defendant was a leader of a drug conspiracy. Because the amount of drugs involved was incorrectly determined, the appellate court remanded for resentencing. By the time of resentencing, Congress had enacted the “safety valve” provision allowing a sentence below a mandatory minimum for defendants who meet five requirements. One requirement is that the defendant cannot be a leader. The district court withdrew its previous finding that defendant was a leader so he could qualify for the safety valve. The court explained that it had found defendant was a leader to establish a disparity in culpability between defendant and a co‑defendant, but it did not intend to establish a 500 percent disparity. The Fifth Circuit affirmed because the remand was a general remand, and any findings previously made were not binding. A defendant’s relative culpability is relevant to the application of the safety valve provision. U.S. v. Flanagan, 80 F.3d 143 (5th Cir. 1996).
5th Circuit refuses to apply leadership enhancement where defendant inherited corrupt system. (432) Defendant, an official with the Texas Department of Agriculture, was convicted of bribery, misapplication of state funds, and conspiracy stemming from the “award” of sham contracts to political consultants. The district court refused to apply a leadership enhancement, since defendant had inherited a system of corruption, the relatively small amount of money involved was not intended for an unlawful purpose, and defendant received only an indirect and insignificant personal benefit. The Fifth Circuit upheld the court’s refusal to apply a leadership enhancement. Defendant did not initiate the bribery scheme or participate in a more culpable manner than the other co‑conspirators. Defendant’s “inheritance” of a historically corrupt and deep rooted system was not immaterial. Moreover, the scheme’s continuation after defendant announced he would not run for office showed that the scheme was not dependent on him. U.S. v. Moeller, 80 F.3d 1053 (5th Cir. 1996).
5th Circuit says leader or organizer must control another participant, not property. (432) Defendant and his partner operated a loan brokering business. Defendant was convicted of mail fraud for pocketing advance fees without refunding them or closing the loans. The Fifth Circuit reversed a § 3B1.1(a) leadership enhancement because there was no evidence that defendant controlled his partner who was the only other participant in the scheme. Under note 2 to § 3B1.1 (added November 1, 1993), a defendant must have been the organizer or leader of at least one other participant in order to justify a §3B1.1(a) enhancement. Defendant’s control over the brokerage’s assets did not support application of the § 3B1.1(a) enhancement. There was no evidence that defendant controlled his partner. The fact that defendant was the “front” man who had the most contact with the clients did not make him the leader. The two men were equals. Defendant’s partner stayed in the background because he was not as smooth and likable as defendant. U.S. v. Ronning, 47 F.3d 710 (5th Cir. 1995)..
5th Circuit says that defendant’s alter ego corporations were not participants. (432) Acting alone, defendant used his companies to defraud sellers of computer equipment. The district court imposed a § 3B1.1(a) leadership enhancement, finding that the criminal activity was “otherwise extensive.” In the alternative, it held that if another criminally responsible person was required, that requirement was satisfied by the two corporations defendant used to defraud his victims. The 5th Circuit reversed, holding that a § 3B1.1 adjustment applies only if an offense is committed by more than one criminally responsible person. Even assuming a corporation can be a participant under § 3B1.1, the corporations here were merely alter egos of defendant. He was the sole shareholder, sole officer, and sole director of both corporations. The court could not “bootstrap” the existence of a second participant by counting defendant’s alter ego corporations when defendant was the sole agent whose acts could make the corporation vicariously liable under § 8A1.1 U.S. v. Gross, 26 F.3d 552 (5th Cir. 1994).
5th Circuit reverses supervisorial enhancement based on related conduct. (432) Defendant was convicted of two marijuana counts, which were grouped together, and an assault count, which was grouped separately. He received a supervisorial enhancement for both the marijuana group and the assault group based upon his supervisorial role in the marijuana offense. The 5th Circuit reversed the enhancement for the assault group. The guidelines do not permit characteristics of one count to be used to adjust the offense level for another count unless those counts are in the same group. U.S. v. Kleinebreil, 966 F.2d 945 (5th Cir. 1992).
5th Circuit holds that chemist did not play supervisor role in methamphetamine conspiracy. (432) Defendant and others were convicted of manufacturing methamphetamine. The 5th Circuit rejected the government’s contention that defendant, as the chemist or “cook” for the methamphetamine, should have received a supervisor role enhancement under section 3B1.1. Although defendant, as the chemist, was undoubtedly a necessary member of the conspiracy, the record supported the district court’s finding that he did not manage any part of the conspiracy. U.S. v. Sherrod, 964 F.2d 1501 (5th Cir. 1992).
5th Circuit rejects organizer enhancement based solely upon unsworn statement by Assistant U.S. Attorney. (432) The 5th Circuit reversed the district court’s determination that defendant was an organizer or supervisor of a stolen vehicle conspiracy because it was based solely upon an unsworn assertion by an Assistant United States Attorney. The unsworn assertions of the government’s attorney do not provide, by themselves, a sufficiently reliable basis on which to sentence a defendant. U.S. v. Patterson, 962 F.2d 409 (5th Cir. 1992).
6th Circuit reverses role enhancement for defendant’s management of scheme. (432) Defendant was convicted of drug conspiracy charges. The Sixth Circuit held that the district court erred by applying a § 3B1.1(c) enhancement for defendant’s aggravating role as a manager or supervisor of the conspiracy. To qualify for this enhancement, a defendant must have managed or supervised “one or more other participants,” and not merely the criminal scheme. The district court misapplied the law when it concluded that the enhancement applied to defendant because he and two-co-conspirators were “jointly the manager or supervisor of the entire operation.” Although the record arguably demonstrated that defendant was responsible for directing others in menial tasks, the court erred because it failed to make a factual finding that defendant managed or supervised other individuals involved in the conspiracy. Indeed, the district court implicitly rejected defense counsel’s argument that defendant was not eligible for the enhancement because he did not exercise control over another person, and instead based its decision on the conclusion that defendant and his two-co-conspirators created a “three-headed organization” in which they shared control of the criminal enterprise. U.S. v. Kamper, 748 F.3d 728 (6th Cir. 2014).
6th Circuit finds prison jailer was not organizer of plan to victimize inmate. (432) Defendant and his co-defendant, Freeman, were prison jailers when a prison inmate was raped in jail. Defendants and their supervisor decided to “scare” the inmate after he was arrested for a traffic violation, by placing him in a general population jail cell. The district court refused to apply a leadership enhancement to defendant, because the initial idea for the punishment of the victim did not come from the defendant. The Sixth Circuit held that the district court did not err in finding that defendant was not an organizer. Defendant exercised limited decision-making authority, did not originate the plan, did not actively participate in bringing the victim to the cell, and did not exercise control over the other jailers in ensuring that the plan was exercised. U.S. v. Lanham, 617 F.3d 873 (6th Cir. 2010).
6th Circuit holds that those subject only to civil penalties were not participants in offense. (432) Defendant pled guilty to making false statements to federal investigators in connection with his removal of child-proof safety mechanisms from disposable cigarette lighters which his company sold. About 13 to 15 employees worked full-time removing the safety devices. The district court applied a four-level enhancement under § 3B1.1(a) for being the leader of a criminal scheme involving five or more participants. The Sixth Circuit ruled that the scheme did not involve five or more participants, since only those who were criminally responsible for the offense constitute participants. The removal of safety devices under applicable law is not a criminal offense, but one to which only civil penalties attach. Thus, the extensive effort to flout federal product safety standards was irrelevant to the sentencing analysis. The question was how many participants were involved in defendant’s cover-up scheme. Although defendant’s lawyer prepared a letter to the investigator which conveyed defendant’s false statements, there was nothing to suggest that the lawyer was a knowing and willing participant in the cover-up scheme. U.S. v. Anthony, 280 F.3d 694 (6th Cir. 2002).
6th Circuit adopts “numerosity” test for determining if scheme is otherwise extensive. (432) If an offense involves fewer than five participants, a defendant may still receive a four-level leadership increase under § 3B1.1(a) if the scheme is “otherwise extensive.” A majority of circuits have found that the phrase “otherwise extensive” permits the sentencing court to consider “the totality of the circumstances, including not only the number of participants but also the width, breadth, scope, complexity and duration of the scheme.” See, e.g. U.S. v. Dietz, 950 F.2d 50 (1st Cir. 1991). Here, the Sixth Circuit adopted the minority’s “numerosity” test, which examines whether the combination of knowing participants and non-participants in the offense is the functional equivalent of an activity involving five criminally responsible participants. See U.S. v. Carrozzella, 105 F.3d 796 (2d Cir. 1997). Under this test, the court examines (i) the number of knowing participants; (ii) the number of unknowing participants whose activities were organized or led by the defendant with specific criminal intent; and (iii) the extent to which the services of the unknowing participants were peculiar and necessary to the criminal scheme. The district court here relied on impermissible factors in determining that defendant’s cover-up scheme was extensive. U.S. v. Anthony, 280 F.3d 694 (6th Cir. 2002).
6th Circuit rejects leadership role increase because no authority over other participant. (432) Tillema, one of defendant’s acquaintances, drove from Florida to Ohio to burglarize the house of defendant’s employer. Defendant informed Tillema that his employer would be out of town, and provided information regarding the location of the home, the home’s alarm system, and the location of a safe containing guns and jewelry. Tillema returned to Florida with the stolen items and stored most of the goods at his apartment. Defendant and Tillema sold about 40 of the stolen guns and two diamond rings at a gun show in Florida. The Sixth Circuit reversed a § 3B1.1(a) leadership enhancement, since defendant did not exert control over another participant in the scheme. Although defendant provided Tillema with crucial information to help Tillema burglarize the house, there was no indication that defendant either recruited Tillema or exercised any authority over him. Tillema initiated the criminal activity, exercised his own decision-making authority, and retained possession of many of the stolen items. Merely playing an essential role in the offense is not equivalent to exercising managerial control over another participant. U.S. v. Vandeberg, 201 F.3d 805 (6th Cir. 2000).
6th Circuit rules evidence did not support role in the offense enhancement. (432) The district court found that defendant was a supervisor or organizer of a drug-trafficking conspiracy. The Sixth Circuit reversed, since there was nothing in the record to support the § 3B1.1(c) enhancement. Not a single witness discussed any organizational role for defendant, either administratively or by actually directing the action. No one mentioned ever hearing defendant directing anyone to do anything. U.S. v. Walker, 160 F.3d 1078 (6th Cir. 1998).
6th Circuit holds that women’s suspicions did not make them participants in scheme. (432) Defendant used others’ credit card numbers to purchase 209 gift certificates from a casino. Each certificate entitled the bearer to a certain amount of gambling tokens and casino services. To avoid detection, defendant often asked young women she encountered at the casino to redeem the coupons for her, giving them tokens in exchange. The Sixth Circuit reversed a § 3B1.1(c) leadership enhancement, holding that the women defendant used to cash the certificates were not participants in the scheme. Although the women were aware that something was suspicious about their standing in for defendant, the district court did not find that they were involved with defendant to the extent that they would be criminally liable. A generalized suspicion would not support a conviction. U.S. v. Lewis, 68 F.3d 987 (6th Cir. 1995).
6th Circuit remands where no connection between defendant and third tier of distribution. (432) Defendant received an enhancement for being the leader of drug organization involving five or more participants. The 6th Circuit remanded because there was insufficient evidence of defendant’s leadership role. It was undisputed that the conspiracy involved more than five participants or was otherwise extensive. The evidence showed that one conspirator received cocaine from defendant, and the conspirator then distributed the cocaine to others for further distribution. However, there was no connection between defendant and the third tier of sellers. Therefore, there was insufficient evidence to show that he was a leader or organizer. U.S. v. Garcia, 19 F.3d 1123 (6th Cir. 1994).
6th Circuit says findings were insufficient to support leadership enhancement. (432) Defendant received a four level enhancement under section 3B1.1(a) for his leadership role in a drug organization involving five or more participants. The 6th Circuit remanded, finding the record insufficient to review the issue. When making a section 3B1.1 enhancement, it is essential that the court make findings on the factors mentioned in the guidelines and state its reasons. In this case, the record showed only that defendant was a highly placed middleman between the supplier and distributors in Tennessee. The court made no findings regarding the factors relevant to the leadership enhancement, and set forth no reasons for its conclusion that the enhancement should be imposed. U.S. v. Odom, 13 F.3d 949 (6th Cir. 1994).
6th Circuit requires specific findings as to identity of persons involved in criminal activity. (432) Defendant received a four-level enhancement under section 3B1.1(a) for being a leader or organizer of criminal activity involving five or more participants. The 6th Circuit remanded. In determining the applicability of section 3B1.1(a), the district court must make specific findings as to the identity of the persons involved in the criminal enterprise. Here, the court failed to make such findings. U.S. v. Stubbs, 11 F.3d 632 (6th Cir. 1993).
6th Circuit reverses planning and leadership adjustments as improper double counting. (432) Defendant argued that under U.S. v. Romano, 970 F.2d 164 (6th Cir. 1992), his enhancements under section 2F1.1(b)(2) for more than minimal planning and section 3B1.1(a) for leadership role constituted impermissible double counting. The 6th Circuit agreed. It rejected the government’s suggestion that the enhancements could be upheld since section 2F1.1(b)(2) provides an alternative basis for the enhancement based on a scheme to defraud multiple victims. The district court did not rely on the alternative basis suggested by the government. U.S. v. Carr, 5 F.3d 986 (6th Cir. 1993).
6th Circuit rejects managerial enhancement where no evidence of control. (432) The 6th Circuit reversed a managerial enhancement under section 3B1.1(b) where there was no evidence that defendants exercised any control in a cocaine conspiracy. Although one defendant provided cocaine in two of the transactions listed in the indictment, both of these sales were solicited by a co-conspirator, suggesting that the co-conspirator, rather than defendant, exercised control over their dealings. Moreover, the government failed to establish any relationship between this defendant and anyone other than this co-conspirator and the second defendant. The evidence with respect to the second defendant was similarly deficient: he did not initiate any of the transactions listed in the indictment, nor was there any evidence that he exercised control over anyone else. The fact that defendants were paid for the drugs, and the presentence report referred to defendants as “established” drug dealers was insufficient to distinguish defendants from the vast majority of everyday buyers and sellers of drugs. U.S. v. Gibson, 985 F.2d 860 (6th Cir. 1993).
6th Circuit rejects managerial enhancement for directing innocent employees in bank transaction. (432) Defendant bought a boat, paying $42,000 in cash as part of the vessel’s $67,000 sales price. As a condition of purchase, he directed two employees of the boat seller to deposit the cash in amounts of less than $10,000. The 6th Circuit reversed an enhancement under guideline section 3B1.1(c) based upon defendant’s direction of the seller’s employees. The enhancement is not triggered by the use of the services of innocent people. The district court made no finding that the employees were anything but innocent dupes. U.S. v. Kotoch, 954 F.2d 340 (6th Cir. 1992).
6th Circuit holds that failure to find how many people defendant managed requires remand. (432) A drug defendant’s offense level was enhanced by three points after the district court found him to be a manager or supervisor of a criminal activity which involved five or more participants or was otherwise extensive. In a split decision, the 6th Circuit remanded the case because there was no indication from the record of whether five or more participants were involved in this criminal activity. Circuit Judge Guy dissented, finding that the record was adequate to support the enhancement. U.S. v. Silverman, 889 F.2d 1531 (6th Cir. 1989).
7th Circuit holds that defendant did not manage or supervise his meth buyers. (432) Defendant sold methamphetamine on credit to two buyers, who paid off their debts by selling the drugs to their own customers. He challenged a three-level increase under § 3B1.1(b) for being a manager or supervisor of the conspiracy. The Seventh Circuit reversed, finding no evidence that defendant managed or supervised his buyers or any other participants. Defendant simply fronted methamphetamine to his buyers, urging them to sell it quickly and pay him. The district court deemed it significant that defendant was cautious and budged little on matters such as price, delivery point, and quantity. Indeed, defendant sometimes kept his customers waiting and even decided at times not to honor their requests for specific delivery times. But none of that made him a manager or supervisor of his customers. He did not tell his buyers what price they had to charge their customers, or impose territorial limits on their sales, or set distribution quotas. And presumably, if the buyers did not resell the product or sold it at a loss, they would nevertheless remain indebted to defendant. U.S. v. Weaver, 716 F.3d 439 (7th Cir. 2013).
7th Circuit says defendant who referred customers to corrupt official did not play aggravating role. (432) As part of an investigation into the illegal sale of resident alien cards, the government opened a travel agency that conducted no legitimate business, but served as a front where an INS official posed as a corrupt official who would accept bribes to approve applications for lawful permanent residency. Defendant initially paid the bribe to obtain permanent residency status for himself, but also began referring potential customers to the travel agency. The Seventh Circuit reversed a § 3B1.1 (a) leadership enhancement. Everyone he brought to the travel agency was his customer, not a subordinate under his control. Defendant was also not an organizer of the scheme. There was no common criminal objective; everyone whom defendant worked with had their own agenda. Each of his clients wanted immigration papers for themselves or their friends, making it impossible to say that defendant was organizing them for concerted action. Defendant’s role was the same as a broker in a drug case who is compensated for referring an addict to a dealer. U.S. v. Reneslacis, 349 F.3d 412 (7th Cir. 2003).
7th Circuit holds that tavern owner who allowed dealers to sell drugs did not have leadership role. (432) Defendant, the owner of a tavern, allowed dealers to sell drugs at the tavern, but did not supply drugs to the dealers or regularly deal himself. Occasionally, he sold drugs on behalf of the dealers, but more often he steered customers to them. The dealers controlled the terms of their own sales, essentially acting as independent contractors. They did not share profits or pay defendant for the use of the tavern, but often gave him “gratuities” of cocaine for allowing them to sell there. The Seventh Circuit reversed a § 3B1.1(a) leadership enhancement. The district court’s finding that defendant could have demanded a greater share of cocaine was mere speculation, given that all of the cooperating dealers admitted that they provided the cocaine only as a gratuity. The remaining findings were insufficient to establish defendant as an organizer or leader. Providing access to the tavern showed only that defendant exercised management responsibility over property rather than other participants. Although defendant implemented rules to avoid detection by authorities, he never actually banished anyone for breaking the rules. Moreover, the rules equally benefited the dealers, because they had the same interest in not getting caught. U.S. v. Schuh, 289 F.3d 968 (7th Cir. 2002).
7th Circuit rejects managerial role for girlfriend of leader. (432) Defendant’s boyfriend, Lanzotti, operated a gambling enterprise that leased illegal gambling machines to local bars and taverns. The Seventh Circuit reversed a § 3B1.1(b) managerial enhancement, ruling that the fact that defendant was Lanzotti’s girlfriend and a participant in the collection did not render her a manager or a supervisor. Defendant was not an employee of the company, she never received a paycheck, and only went to the office occasionally on her own. U.S. v. Lanzotti, 205 F.3d 951 (7th Cir. 2000).
7th Circuit says that leader’s trust in defendant was insufficient for managerial increase. (432) Pagan Auto Sales served as the distribution center for drugs transported to the Chicago area from Mexico. Dealers who worked for Pagan typically filled their drug orders by placing a telephone call or sending a fax to Pagan to arrange for a delivery or pick-up. However, both Pagan and defendant dealt drugs directly from the premises of the dealership. The government argued that defendant held a managerial role in the conspiracy because (1) he sold large quantities of high-quality drugs, and (2) Pagan trusted him enough to allow him to deal directly from the dealership. The Seventh Circuit found this rationale insufficient to support a managerial role enhancement. There was no evidence that defendant directed the activities of anyone else connected with the conspiracy, recruited others into the conspiracy, or received a share of the proceeds beyond the profits from his own sales. The fact that Pagan may have trusted defendant more than the other street-level dealers in his operation, standing alone, did not support the enhancement. U.S. v. Pagan, 196 F.3d 884 (7th Cir. 1999).
7th Circuit rejects role enhancement even though defendant recruited his father to help him. (432) Defendant and a co-conspirator purchased 700 pounds of marijuana from a confidential informant. The Seventh Circuit rejected the district court’s determination that defendant was a leader or organizer of the conspiracy. The co-conspirator was clearly the leader of the conspiracy. Although defendant recruited his father to help him, his directions to his father were limited to showing him where the bales of marijuana should be stacked and asking his father to accompany the informant to the motel where the informant would deal with the co-conspirator who clearly ran the operation. Although a conspiracy may have more than one leader or organizer, the district court must evaluate the salient factors in light of the purpose of the enhancement—to assign relative responsibility. The relationship here was not the sort of “real and direct influence, aimed at furthering the criminal activity” for which the enhancement was intended. U.S. v. Mankiewicz, 122 F.3d 399 (7th Cir. 1997).
7th Circuit rejects four-level leadership enhancement where no findings that employees were criminally responsible. (432) Defendant, the owner and operator of a chain of art galleries, sold numerous forgeries as originals. The district court found that defendant was the leader of criminal activity involving five or more participants under § 3B1.1(a). The Seventh Circuit remanded, since the government did not prove that defendant’s employees were criminally responsible. Although a number of defendant’s employees openly joked about the authenticity of the prints they were selling, none were prosecuted, and all but one had been assured by defendant that the works were genuine. However, it was possible that defendant’s organization was “otherwise extensive.” Defendant had over 30 galleries and hundreds of employees at his disposal to help him defraud the public. However, since the district court did not rely on the “otherwise extensive” prong of § 3B1.1(a), the case was remanded for the district court to make this finding in the first instance. U.S. v. Austin, 54 F.3d 394 (7th Cir. 1995).
7th Circuit says new note 2 requires control of at least one other for role increase. (432) Defendant was convicted of conspiracy and fraud charges. The district court found that defendant did not control any of the his co-defendants, but imposed a supervisorial enhancement under § 3B1.1(b) because he recruited others and had management responsibility over the assets of the criminal organization. The Seventh Circuit reversed, holding that note 2 to § 3B1.1, effective November 1993, requires a defendant to control at least one other participant to warrant a § 3B1.1 enhancement. Where a defendant exercises control over assets of the criminal activity, an upward departure might be warranted. Although this note conflicts with Seventh Circuit precedent, it is a clarification and not a substantive change in the guideline. Therefore, it could be considered by the district court without violating the ex post facto clause. U.S. v. Fones, 51 F.3d 663 (7th Cir. 1995).
7th Circuit rules distributorship status alone is insufficient for leadership enhancement. (432) Defendant distributed marijuana in a large-scale operation. The district court imposed a § 3B1.1(a) leadership enhancement because defendant was “at the top” of the distribution network and “exercised total decision-making authority over his marijuana purchases.” The Seventh Circuit held that these reasons were inadequate to support the leadership enhancement. By itself, being a distributor, even a large distributor, in not enough to support the enhancement. The record did not show that defendant had influence or authority over anybody to whom he distributed. The fact that defendant exercised authority over his own purchases was also insufficient. Defendant did not control any other participant, did not recruit accomplices, did not claim a large share of the profits, and did not plan or organize the offense to a greater degree than the others. U.S. v. Mustread, 42 F.3d 1097 (7th Cir. 1994).
7th Circuit says pilot smuggling aliens into country did not have managerial role. (432) Defendant piloted a plane that smuggled illegal Polish aliens into the U.S. He then drove the aliens to a pre-arranged rendezvous site where he delivered them to a co-conspirator. The Seventh Circuit reversed a supervisory or managerial role enhancement. Although defendant played an important role in the smuggling ring, there was no evidence that he controlled or coordinated any of his co-defendants’ activities. Defendant’s receipt of money for his services, his purchase of a beeper to inform confederates of flight departures and arrivals, and his upkeep and rental of the plane were “merely inherent” in defendant’s role as pilot and did not necessarily indicate that defendant managed or supervised others. Defendant’s “management” of the illegal aliens did not warrant enhancement because they were not participants in the offense. Judge Coffey issued a lengthy dissent. U.S. v. Parmelee, 42 F.3d 387 (7th Cir. 1994).
7th Circuit says otherwise extensive activity must involve more than five individuals. (432) Defendant was the leader of some extortionate activity. The district court found that the activity was “otherwise extensive” under § 3B1.1(a) because it involved three participants and the services of two outsiders who unknowingly facilitated the extortion. The 7th Circuit held that the involvement of five individuals, not all of them participants, does not, without more, make a criminal activity extensive. At the very least, § 3B1.1’s “otherwise extensive” prong demands the functional equivalent of an activity involving five participants. If a head count is the sole basis for an “otherwise extensive” finding, the heads counted must be something greater than five. U.S. v. Tai, 41 F.3d 1170 (7th Cir. 1994).
7th Circuit upholds decision not to impose leadership enhancement. (432) The government argued that the district court improperly refused to impose a four level § 3B1.1(a) enhancement after finding that defendant was a leader or organizer. The court imposed a three level § 3B1.1(b) enhancement. The 7th Circuit concluded that the district court did not make a definitive finding that defendant controlled the requisite number of participants to qualify as a leader. Rather, the statements were “a careful weighing of two competing views of the evidence.” After acknowledging that there might be sufficient evidentiary support for finding defendant was an organizer or leader, the district court chose to view the evidence in defendant’s favor. The choice between two permissible views of the evidence cannot be clearly erroneous. U.S. v. Sax, 39 F.3d 1380 (7th Cir. 1994).
7th Circuit rejects leadership enhancement because defendant did not control four participants. (432) Defendant challenged a four level leadership enhancement under § 3B1.1(a), claiming he only supplied drugs to other members of the conspiracy. The 7th Circuit reversed the enhancement, since defendant only exercised control over two other members of the conspiracy. To qualify as an organizer or leader under § 3B1.1(a), the defendant must have some control, direct or indirect, over at least four other participants in the offense. Evidence of defendant’s “front” arrangement with his co-conspirators, by itself, was insufficient to demonstrate the level of control necessary to support a leadership role. On remand, the district court could consider a three level managerial role enhancement under § 3B1.1(b). U.S. v. Guyton, 36 F.3d 655 (7th Cir. 1994).
7th Circuit says firearm possession did not establish leadership role. (432) Defendant and an associate sold crack cocaine to an undercover agent on two occasions. During one transaction, defendant carried a semi-automatic weapon. Defendant handed the gun to the associate while defendant made the sale. During the second transaction, the associate negotiated the sale. The 7th Circuit rejected a leadership enhancement under § 3B1.1(c) based on defendant’s possession of the firearm. Mere possession of a firearm during the course of criminal activity does not establish a leadership or organizational role. There was no evidence that defendant had the right to a larger share of the profits, that he exercised control over his associate, that he provided the drugs or that he exercised any greater responsibility over the activities of the organization than the associate. U.S. v. Bell, 28 F.3d 615 (7th Cir. 1994).
7th Circuit says defendant’s ability to supply cocaine and negotiate price did not make him a supervisor. (432) The district court imposed a supervisorial enhancement under § 3B1.1(b) because defendant was a source of supply for cocaine, he made “managerial” decisions on whether cocaine would be fronted, he had authority to reduce the price, and he had access to the storage facilities where the cocaine was kept. The 7th Circuit reversed. Supplying drugs and negotiating the terms of their sale do not by themselves justify a § 3B1.1 increase, for these things do not indicate a greater degree of responsibility for putting together the drug operation or a particular deal. Thus, defendant’s ability to supply cocaine, including his access to a storage facility, to sell it on credit, and to negotiate its price, did not put him in the role of manager or supervisor. U.S. v. Vargas, 16 F.3d 155 (7th Cir. 1994).
7th Circuit rejects four level increase where defendant controlled only two participants. (432) Defendant received a four level enhancement under §3B1.1(a) for being a leader or an organizer of a criminal activity that involved five or more participants, or was otherwise extensive. The Seventh Circuit reversed, since there was only evidence that he exercised control over two of his co-conspirators. There was no evidence that he controlled, either directly or indirectly, any other member of the conspiracy. U.S. v. Carson, 9 F.3d 576 (7th Cir. 1993), abrogation on other grounds recognized by U.S. v. Monroe, 73 F.3d 129 (7th Cir. 1995).
7th Circuit reverses leadership enhancement as double counting where defendant induced minor to participate. (432) Defendant was convicted of drug offenses and of persuading a minor to assist in avoiding detection of a crime. The 7th Circuit rejected a leadership enhancement under section 3B1.1(c). The enhancement can only apply when there is more than one criminally responsible participant. Although defendant had his mail, including drugs, delivered to a woman’s house, there was no evidence that she was a participant. The minor’s participation was an inappropriate basis for the enhancement for two reasons. First, the conviction already encompassed defendant’s leadership role over the minor. Therefore an enhancement for leadership role would be improper double counting. Second, there was insufficient evidence to suggest that the minor was criminally responsible. U.S. v. Stevenson, 6 F.3d 1262 (7th Cir. 1993).
7th Circuit says presence of young men at abandoned house did not show defendant’s leadership role. (432) The 7th Circuit ruled that there was insufficient evidence that defendant was the leader of criminal activity involving five or more participants. An informant told a government agent that defendant used 10 to 15 teenagers to distribute crack from an abandoned house. But the informant was not always reliable and tended to exaggerate. The informant never identified any of the teenage “distributors.” Although five teenage males were found “camping out” at the house, there was no evidence tying them to defendant. The presence of the young men, without evidence of drug activity, was “without weight” and could not be considered in evaluating the enhancement. U.S. v. Johnson, 999 F.2d 1192 (7th Cir. 1993).
7th Circuit insists on specific findings. (432) The district court imposed an upward adjustment for defendant’s role as an organizer of a criminal activity involving at least five participants or otherwise being extensive. However, the court identified neither the five participants nor the otherwise extensive activity. The 7th Circuit rejected the government’s effort to cure the defect by identifying the participants from the record, remanding for the district court to make that determination. U.S. v. Tai, 994 F.2d 1204 (7th Cir. 1993).
7th Circuit remands for district court to identify five participants in offense who were supervised by defendant. (432) The district court increased defendant’s offense level by four for being a leader of criminal activity involving five or more participants. The enhancement was based upon information that defendant assumed leadership over an organized crime group. Although it did not doubt that this group included more than five persons, the 7th Circuit remanded for resentencing so that the district court could identify five participants in the instant offense, extortion. Once such five participants were identified, the district court must also determine whether defendant exercised leadership over all of the five participants. U.S. v. Schweihs, 971 F.2d 1302 (7th Cir. 1992).
7th Circuit finds district court failed to adequately explain basis for supervisorial enhancement. (432) Although the presentence report recommended a three level enhancement for each defendant based upon their managerial role in the offense, the district court imposed only a two level enhancement because it did not believe that many of the people involved in the conspiracy had been managed by defendants. The 7th Circuit remanded because the district court failed to adequately explain the factual basis for the enhancement. The district court gave no indication which of the alleged participants each defendant had supervised. It also remarked that at least some of the conspirators could not be characterized as followers of anyone. Although there might have been an adequate basis in the record to support the conclusion that defendants each supervised at least one other participant, the district court should determine this matter in the first instance. U.S. v. Jewel, 947 F.2d 224 (7th Cir. 1991).
7th Circuit finds evidence insufficient to prove drug supplier played managerial role in conspiracy. (432) The district court gave defendant, who supplied cocaine to a drug conspiracy, a three-level enhancement under guideline section 3B1.1(b) for being a manager or supervisor of the conspiracy. The enhancement was based upon defendant’s role in setting the price the conspiracy paid for the cocaine, his role in controlling the deliveries of cash to Los Angeles, and his role in delivering the cocaine to Milwaukee. The 7th Circuit reversed, finding insufficient evidence to support a finding that defendant held a managerial role. All suppliers play some role in establishing price, so that factor alone cannot be dispositive. Although defendant was involved in the Los Angeles and Milwaukee transactions, there was little or no evidence that he controlled the couriers in any manner. The large size of the transactions also influenced the district court. Although defendant’s ability to secure a large quantity of cocaine suggested that he may have played a significant role in some drug conspiracy, it failed to show that he played a significant role in the conspiracy to which he sold the cocaine. U.S. v. Thompson, 944 F.2d 1331 (7th Cir. 1991).
7th Circuit reverses managerial enhancement based solely upon defendant’s middleman status. (432) The district court gave defendant a two-level enhancement under section 3B1.1 for being a manager because defendant was a distributor in a drug ring. Although some of his buyers bought the drug for their personal use, others resold the drugs. The 7th Circuit reversed, holding that a defendant’s middleman status alone was an insufficient basis for an enhancement under section 3B1.1. A defendant’s control over others was a more crucial factor. Here, there was no evidence that defendant played a supervisorial role in the offense. U.S. v. Brown, 944 F.2d 1377 (7th Cir. 1991).
7th Circuit reverses supervisory role enhancement where subordinate was not involved in offense of conviction. (432) Defendant was arrested in connection with drug distribution activities which took place in a duplex owned by defendant and in a house rented by defendant. Pursuant to a plea agreement, defendant pled guilty to possessing the cocaine which was found at the house, while all other charges were dropped. The 7th Circuit reversed a finding that defendant was a supervisor. The only person that defendant supervised was defendant’s tenant at the duplex. There was no evidence that the tenant participated in defendant’s activities at the house. Defendant’s supervision of the tenant in connection with distributions at the duplex could not be a predicate for an enhancement of defendant’s sentence for a different offense. A court must focus on “defendant’s role in the offense” of conviction, rather than other criminal conduct. Judge Manion, dissenting in part, would have upheld the enhancement, since there was evidence that defendant intended to distribute the cocaine through the tenant. U.S. v. Rodriguez-Nuez, 919 F.2d 461 (7th Cir. 1990).
8th Circuit holds that findings did not support managerial role increase. (432) In support of a § 3B1.1(b) supervisorial increase, the district court found that defendant’s conduct “formed an integral part of the conspiracy scheme .… Basically, Godfrey took the money to the defendant who assisted him in converting that money to cash. And as such, was an operator and did manage the transfer of the funds and did make management decisions in that regard and the part could be said the $360,000 was something less than [sic] otherwise extensive operation, it represents about 25 percent of the total amount of money that was stolen ….” This finding went to the extensiveness of the operation, but did not demonstrate that defendant was the manager or supervisor of one or more other participants. Because the district court failed to make the essential finding that defendant exercised control over one other person, the Eighth Circuit vacated the sentence and remanded for resentencing. U.S. v. Lalley, 257 F.3d 751 (8th Cir. 2001).
8th Circuit upholds only two-level increase where no finding that operation involved five participants. (432) Defendant argued that the court erred in determining that he had a leadership role in the offense, and in applying a two-level enhancement under § 3B1.1(c). The Eighth Circuit affirmed. Two co-defendants testified extensively regarding defendant’s influential role in the Oak Street Posse. The appellate court would not question the district court’s assessment of their credibility. Defendant’s only witnesses were properly discounted after they refused to submit to cross-examination. The government contended that a three-level increase under § 3B1.1(c) should have been applied because there were more than five members of the Oak Street Posse. However, because the district court did not make a finding that the criminal operation involved more than five other individuals, the court properly applied only a two-level enhancement. U.S. v. Austin, 255 F.3d 593 (8th Cir. 2001).
8th Circuit rejects leadership role enhancement for drug supplier. (432) Defendant was part of a large narcotics distribution ring that operated in numerous major cities. The Eighth Circuit rejected the district court’s finding that defendant held a leadership role in the operation. The record did not show that defendant exercised decision-making authority, claimed a right to a larger share of the fruits of the crime, participated in the planning or organization of the conspiracy, or had control or authority over others. Defendant only provided drugs to the acknowledged leader of the conspiracy. Although he provided significant amounts of drugs, his status as a supplier or distributor was already reflected in his base offense level. The leader testified at trial that defendant was a supplier and not part of his operation. The leader also testified that defendant did not have any control over what the leader did with the contraband he received. U.S. v. Jones, 160 F.3d 473 (8th Cir. 1998).
8th Circuit finds fronting drugs insufficient for manager enhancement. (432) Defendant challenged a § 3B1.1(b) enhancement, although he acknowledged that he occasionally fronted methamphetamine to others. The Eighth Circuit agreed that evidence of fronting, by itself, is not sufficient to support a finding that a defendant was a manager or a supervisor. Although a seller’s front arrangements with his customers could give him an incentive to exercise control over their activities, without evidence of control, evidence of a front arrangement does not establish the level of control necessary to support a § 3B1.1 enhancement. There was no such evidence here. The fact that two customers stopped buying from defendant because his methamphetamine was “wet,” actually showed defendant’s lack of control over them. The evidence showing a number of telephone calls between customers and defendant also did not show defendant’s control over them. U.S. v. Del Toro-Aguilera, 138 F.3d 340 (8thCir. 1998).
8th Circuit finds insufficient evidence that defendant was manager of supervisor in drug conspiracy. (432) Defendant was involved in a conspiracy to distribute heroin and methamphetamine. The Eighth Circuit court found insufficient evidence to support the district court’s finding that defendant was a manager or supervisor in the conspiracy. The only evidence with respect to anything that might be construed as a managerial or supervisory role was testimony of one witness who stated that he bought methamphetamine in one-ounce quantities from defendant every 2 or 3 days. The witness acknowledged that he would use some of it and sell some of it. Although defendant sometimes “fronted” the methamphetamine to him, the witness would only pay defendant a fixed amount. There was no agreement to share the profits. This evidence was insufficient to sustain a finding that defendant was a manager or supervisor of the witness. Status as a distributor is not sufficient by itself to justify a § 3B1.1 enhancement. U.S. v. Logan, 121 F.3d 1172 (8th Cir. 1997).
8th Circuit rejects leadership enhancement where no control over others. (432) Defendant supplied methamphetamine to drug distributors. The Eighth Circuit rejected a § 3B1.1(a) leadership enhancement because there was no evidence of control over the other participants in the conspiracy. Defendant had a buyer/seller relationship with at least two other conspirators, and he may even have “fronted” methamphetamine to them. However, there was no evidence that defendant regularly made decisions as to when drugs should be transported, hired the transporters, or directed the activity of any subordinate. U.S. v. Bryson, 110 F.3d 575 (8th Cir. 1997).
8th Circuit rejects managerial role for mid-level distributor with no evidence of subordinates. (432) Defendant was a mid-level drug distributor. The Eighth Circuit rejected a § 3B1.1(b) enhancement because there was no evidence she exercised a leadership or managerial role in the offense. Although the evidence showed defendant received such large quantities of methamphetamine that an intent to distribute could be inferred, there was no evidence about sales by defendant to subordinate dealers, or to anyone other than a government informant. Status as a distributor, standing alone, does not warrant a § 3B1.1 enhancement. U.S. v. Bryson, 110 F.3d 575 (8th Cir. 1997).
8th Circuit finds two who joined drug conspiracy after murder‑for‑hire scheme was complete were not participants. (432) Defendants were convicted of various crimes, including interstate murder‑for‑hire, arising out of a drug conspiracy and gang rivalry. The district court grouped the counts separately, and then applied a § 3B1.1(a) leadership enhancement to the murder‑for‑hire counts. The Eighth Circuit held that the four level enhancement for this group was error because the offense did not involve five or more participants. Two of the participants were not criminally responsible for defendants’ murder scheme because defendants’ federal crimes were complete before these two were recruited. U.S. v. Delpit, 94 F.3d 1134 (8th Cir. 1996).
8th Circuit rejects leadership role, finding no evidence that defendant controlled others. (432) Defendant sold large quantities of methamphetamine to drug dealers. The Eighth Circuit rejected a § 3B1.1(a) enhancement because there was no evidence that defendant controlled those to whom he sold the drugs. Although defendant sold large enough quantities to infer that he knew the drugs were being resold, defendant did not have any involvement in the resales. Controlling property does not make one an organizer or a leader. Unlike a manager, the actions of a leader or organizer must directly affect other people. U.S. v. Miller, 91 F.3d 1160 (8th Cir. 1996).
8th Circuit rejects role increase for managing drug conspiracy’s assets and activities. (432) The district court applied a § 3B1.1(b) enhancement based on defendant’s control over the assets and activities of a drug conspiracy. The court specifically found that defendant did not control five or more participants. The Eighth Circuit reversed, finding Amendment 500 to § 3B1.1’s commentary, effective November 1, 1993, precluded a § 3B1.1 enhancement based on a defendant’s management over the property, assets or activities of a criminal organization. The district court did have discretion, however, to depart upward based on defendant’s control over the conspiracy’s assets and activities. Such an upward departure need not directly correspond to the tri-partite adjustment scheme detailed in § 3B1.1. Since it was unclear whether the district court would have made a three-level departure if it had been aware of its discretion, the case was remanded. U.S. v. McFarlane, 64 F.3d 1235 (8th Cir. 1995).
8th Circuit finds contested PSR insufficient to support leadership enhancement. (432) The district court found that defendant was a leader of a group of juveniles that attacked and killed another juvenile. The Eighth Circuit held that the government failed to provide sufficient evidence to support the § 3B1.1(a) enhancement. The sentencing judge said he relied on the presentence report, but defendant objected to that portion of the report. A court may only consider disputed matters if it receives evidence and makes a finding. No supporting evidence was introduced at sentencing. Evidence introduced at trial could not support the enhancement since the sentencing judge did not preside over the trial and did not have the trial transcript. Transcripts from related evidentiary proceedings involving the other juveniles could not be considered because they were not part of the record on appeal. In addition, the application of § 3B1.1(a) was questionable since the sentencing judge characterized the offense as involving “a small mob rather than organized activity.” U.S. v. Willard Makes Room for Them, 49 F.3d 410 (8th Cir. 1995).
8th Circuit reverses organizing role enhancement based on defendant’s use of cousin’s address. (432) Defendant was convicted of drug charges for being a marijuana farmer. The district court imposed a two-level organizer enhancement under section 3B1.1(c) based on the sophistication of defendant’s farm and his use of cousin’s address to receive some growing equipment. The 8th Circuit reversed, finding the use of the cousin’s address was insufficient to justify the enhancement. The cousin only knew that defendant was using his address to receive “stuff” he wanted to hide from his wife, not what the “stuff” was. There was no evidence of any sales or of any salesmen who defendant directed or supplied or supervised. In order to be an organizer, there must be underlings or subordinates. U.S. v. Rowley, 975 F.2d 1357 (8th Cir. 1992).
8th Circuit rules that minors and adults transported for prostitution purposes cannot be participants under section 3B1.1. (432) Defendant was convicted of knowingly transporting minors and adults in interstate commerce with the intent that they engage in prostitution. The district court imposed a four level enhancement under guideline section 3B1.1 because defendant was the leader of criminal activity involving five or more participants. The 8th Circuit reversed, ruling that the minors and adult women transported by defendant were not “participants” in defendant’s offense. Application note 1 to section 3B1.1 requires a participant to be criminally responsible for the commission of the offense. Application note 4 to section 2G1.1, which applies to the transportation of adults, states that the persons transported are participants only if they assisted in the unlawful transportation of others. Although section 2G1.2, which applies to the transportation of minors, contains no such express statement, it does refer to the persons transported as “victims,” which is inconsistent with being a participant. U.S. v. Jarrett, 956 F.2d 864 (8th Cir. 1992).
9th Circuit reverses aggravating role finding. (432) Defendant pleaded guilty to conspiracy to defraud the government, in violation of 18 U.S.C. § 286. Defendant’s plea agreement stated that while in federal prison, defendant had been recruited by another inmate to file false tax returns purportedly on behalf of other inmates. The presentence report recommended a two-level increase for his role in the offense under § 3B1.1. At sentencing, the district court imposed the enhancement, stating that defendant was “complicit” in the offense even though he was not the “ring leader” and that he “facilitated the crime.” The Ninth Circuit held that the district court’s finding was insufficient to support a role-in-the-offense adjustment under §3B1.1. U.S. v. Whitney, 673 F.3d 965 (9th Cir. 2012).
9th Circuit finds defendant did not supervise five participants in telemarketing fraud. (432) Defendant participated in a telemarketing fraud aimed at the elderly. Defendant was the corporate secretary for the telemarketing firm; she also worked as a telemarketer and as a “verifier” who called customers and induced them to say that they agreed to the terms of the telemarketing sale. At sentencing, the government identified four participants besides defendant, and all of those participants had roles in the scheme different from defendant. Because the government failed to show that defendant managed or supervised any other participant in the fraud, the Ninth Circuit reversed the district court’s ruling imposing an enhancement for being a “manager or supervisor” under § 3B1.1(b). U.S. v. Woods, 335 F.3d 993 (9th Cir. 2003).
9th Circuit rejects leadership increase even though “extensive” activity involved five participants. (432) A four-level increase for leadership role under § 3B1.1(a) is appropriate if (1) the defendant was “an organizer or leader,” and (2) the activity “involved five or more participants or was otherwise extensive.” Here, the Ninth Circuit held that the district court properly found that the activity involved five or more participants and was otherwise extensive. However, the district court’s finding with respect to leadership role was inadequate, because it was based on defendant’s nephew’s deferential behavior toward him and defendant’s strong personality. The panel emphasized that “having leadership qualities, such as a strong personality, does not in itself prove that the defendant exercised them to support underlying criminal conduct.” Nor could the enhancement be “sustained by the lone fact that the laboratory was located on property that defendant leased.” The district court’s finding was clearly erroneous. U.S. v. Jordan, 291 F.3d 1091 (9th Cir. 2002).
9th Circuit finds record insufficient to support increase for organizer or leader in child pornography case. (432) Under U.S. v. Lopez-Sandoval, 146 F.3d 712, 716 (9th Cir. 1998) the district court need not make specific findings of fact to support an upward role adjustment. Nevertheless, the Ninth Circuit held that the record was insufficient to support a determination that defendant was an organizer or leader of a child pornography internet “chat room.” The government’s argument that defendant had control over the victims was insufficient because the role increase requires that defendant have organizational or decision-making authority. Accordingly, the case was remanded to the district court to reconsider whether defendant had control over his co-conspirator or had organizational or decision-making authority. U.S. v. Tank, 200 F.3d 627 (9th Cir. 2000).
9th Circuit requires identifying persons supervised, even if activity was “otherwise extensive.” (432) The district court increased defendant’s offense level by four levels under § 3B1.1(a) because his fraud was “otherwise extensive.” However, the court explicitly ruled that it did not need to identify any “participants” whom defendant oversaw or managed. The Ninth Circuit reversed, holding that § 3B1.1(a) cannot be applied unless the district court identifies a participant over whom the defendant exercised managerial or organizational control. The sentence was vacated and remanded for the district court to make further findings. U.S. v. Luca, 183 F.3d 1018 (9th Cir. 1999).
9th Circuit finds that lawyer was not the leader of the scheme to bribe judges. (432) The Ninth Circuit acknowledged that there was evidence that the lawyer was “the scheme’s central actor, having bankrolled it, profited from it, involved other participants, and exercised control over co-conspirators.” However, the Ninth Circuit found support for the district court’s assessment that the lawyer was “in no position to coerce any of the judges into rendering favorable decisions and, in fact, often played the role of errand boy.” Nor did the lawyer necessarily have a “claimed right” to a larger share of the pie. Thus, the trial judge did not err in finding that while the scheme started with the lawyer trying to ingratiate himself with the judges, the pattern developed into a corrupt enterprise with all of the parties more or less equally involved. “As the call could go either way, the district court did not abuse its discretion in finding that [the lawyer] was not an organizer or leader.” U.S. v. Frega, 179 F.3d 793 (9th Cir. 1999).
9th Circuit reverses “leader” adjustment that was improperly based on role as translator. (432) The district court increased defendant’s offense level by two levels under § 3B1.1(c) because he was the only one of the co-conspirators who could speak English, and “I don’t know what a leader would be other than that . . . . “without [defendant] it wouldn’t have happened.” On appeal, the Ninth Circuit reversed, holding that the district court applied an incorrect test in determining whether defendant was an “organizer or leader.” The fact that he was a translator did not automatically show that he was a leader of his co-conspirators. Defendant was not the sole middleman between the buyer and the suppliers. All of his co-conspirators participated in the drug transactions and all of the defendants met the informant and detectives face to face. There was no evidence that defendant located or made the connection with drug suppliers. Defendant had no authority over his co-conspirators and he did not make any more money than they did. Accordingly, the two level increase was reversed. U.S. v. Lopez-Sandoval, 146 F.3d 712 (9th Cir. 1998).
9th Circuit reverses “organizer” increase where defendant lacked decision-making authority. (432) Defendant was the go-between for the buyer and seller and he obtained and mailed samples of cocaine and negotiated a $1,000 personal fee for each kilogram of cocaine. He was the only person to meet with the undercover officer and he accepted armed assistance. The district court increased defendant’s offense level by four levels for being an organizer of the drug transaction under guideline 3B1.1. On appeal, the Ninth Circuit reversed, finding that defendant did not organize the actions of his co-defendants in delivering the drugs and did not have decision-making authority. Others not only set the price but also controlled the scope of the transaction, directing that it be changed from a single purchase of five kilograms to five separate sales. Although defendant negotiated a $1,000 fee for himself, he did not stand to profit the most from the transaction. The district court clearly erred in finding that defendant was an organizer. U.S. v. Avila, 95 F.3d 887 (9th Cir. 1996).
9th Circuit reverses three level enhancement for managerial role. (432) The Ninth Circuit found the record “devoid of evidence” that Monroy supervised or otherwise exercised control over other participants in the conspiracy. Therefore it found no basis for the district court’s three level enhancement for being a manager of the cocaine trafficking operation. The sentence was reversed. U.S. v. Ponce, 51 F.3d 820 (9th Cir. 1995).
9th Circuit reverses enhancement for “organizing the importation” because defendant did not organize others. (432) In U.S. v. Mares-Molina, 913 F.2d 770, 773 (9th Cir. 1990), the 9th Circuit adopted the 1st Circuit’s holding that the defendant “must have exercised some control over others” in order to justify an enhancement under U.S.S.G. section 3B1.1(c) for being “an organizer, leader, manager or supervisor.” Here, the district court increased defendant’s sentence by two levels because the defendant “implemented the importation and, in that, utilized organization skills.” On appeal, the 9th Circuit reversed, ruling that “[o]rganizing the importation, however, is not the same as organizing other conspirators and does not satisfy Mares-Molina.” Defendant’s sentence was reversed. U.S. v. Hoac, 990 F.2d 1099 (9th Cir. 1993).
9th Circuit reverses “organizer” enhancement that was based on defendant’s ownership of the property. (432) The district court assumed that because defendant owned the used car dealership, and knowingly permitted drug distribution to take place there, he was necessarily a leader subject to enhancement under § 3B1.1(c). In fact, defendant was found not guilty of any part in an ongoing conspiracy, and the crime of which he was convicted indicated that he was not a significant player, let alone an organizer or leader. Thus the 3B1.1(c) enhancement was not proper. U.S. v. Tamez, 941 F.2d 770 (9th Cir. 1991).
9th Circuit reverses “organizer or manager” adjustment where defendant did not exercise control over others. (432) Defendant was the owner of the trucking business which leased the warehouse in which the cocaine was off-loaded. Judges Leavy and Reinhardt held that this was insufficient to conclude that he organized or controlled his coconspirators within the meaning of guideline § 3B1.1(c). In order to be an organizer, leader, manager or supervisor one must exercise “some control over others.” Judge Rymer dissented, arguing that one may “manage” a thing such as a business or money or a warehouse as well as a person. U.S. v. Mares-Molina, 913 F.2d 770 (9th Cir. 1990).
10th Circuit says defendant’s leadership in non-criminal group did not make him leader of criminal conspiracy. (432) Defendant was convicted of charges stemming from his involvement in two racially-motivated assaults. The Tenth Circuit rejected a four-level enhancement defendant received under § 3B1.1(a) for his role as an organizer or leader. There was no evidence that defendant served as an organizer, and it did not appear that he exercised any more authority than any of the other members of the group. Although defendant held a leadership position in the local unit of the National Alliance, a white separatist group in which all of the conspirators were members, this did not mean he held a leadership position with respect to the charged criminal enterprise. Defendant’s actions the night of the assaults did not establish show leadership—it appeared that other conspirators initiated the plan. U.S. v. Egbert, 562 F.3d 1092 (10th Cir. 2009).
10th Circuit remands for more specific findings on presence of subordinates. (432) Defendants objected to the district court’s proposed assessment of a four-level increase for their role in the offense, arguing that the court had not identified any other criminally responsible persons they had organized. The Tenth Circuit agreed that the district court erred in its application of the §3B1.1(a) enhancement. Once defendants raised their objections to imposition of the enhancement, the district court was required to find that they had organized or led at least one other person who was criminally responsible. Although there was ample evidence in the record to support the four-level enhancement, appellate-fact finding cannot substitute for the district court’s duty to articulate clearly the reasons for the increase. U.S. v. Gallant, 537 F.3d 1202 (10th Cir. 2008).
10th Circuit says findings inadequate to support managerial enhancement. (432) Defendant argued that the district court did not make adequate findings to support a § 3B1.1(a) leadership enhancement. The Tenth Circuit agreed. Although the district court discussed what sources of evidence it relied on to reach its conclusion that defendant was an organizer/ leader, the court did not provide a factual basis for its conclusions. “[E]ven if the record evidence overwhelmingly supports the enhancement, appellate fact-finding cannot substitute for the district court’s duty to articulate clearly the reasons for the enhancement.” U.S. v. Spears, 197 F.3d 465 (10th Cir. 1999).
10th Circuit rejects leadership enhancement for drug supplier. (432) The Tenth Circuit found insufficient evidence to support the district court’s finding that defendant was a manager or supervisor of a drug conspiracy. Harkness testified that he sold drugs to defendant when instructed by Walton, the conspiracy’s leader. However, the government presented no evidence showing what happened to the drugs thereafter and offered no evidence of drug records kept by defendant. Defendant’s role as a supplier of drugs to others, standing alone, was not enough to establish an aggravating role. There was no evidence that other sellers worked for defendant, that he paid others for their efforts on behalf of the conspiracy, that he restricted the people to whom other conspirators could sell their drugs, that he controlled the manner of sales, set prices, or claimed the right to a larger share of the proceeds. Although defendant was involved with co-conspirators who carried money and drugs, there was no evidence showing that he recruited them or controlled their activity. Similarly, although defendant possessed large sums of money, the government did not show how the profits of the conspiracy were divided, or that defendant received a larger share of the profits than the others. U.S. v. Anderson, 189 F.3d 1201 (10th Cir. 1999).
10th Circuit says role increase may not be based solely on defendant’s important role in scheme. (432) Defendant was involved in a conspiracy to make and sell methamphetamine. The district court applied a leadership enhancement, because defendant had access to L‑ephedrine, and thus provided the means by which the methamphetamine was to be made. The Tenth Circuit reversed the § 3B1.1(a) enhancement since the evidence only showed that defendant played an important or essential role in the scheme rather than a leadership role. The § 3B1.1(a) enhancement is not for important or essential figures. Another man was clearly the leader of the scheme. Although there can be more than one leader, this was not the case here. While defendant played a critical role in obtaining ephedrine, he did not supervise others nor organize their activities. U.S. v. Albers, 93 F.3d 1469 (10th Cir. 1996).
10th Circuit requires specific factual findings for managerial enhancement. (432) Defendant challenged a § 3B1.1(b) enhancement for being a manager of a criminal activity involving five or more participants. The evidence showed that defendant fronted crack cocaine to a number of street level dealers, and that he was responsible for collecting the money they owed for the crack after they sold it. The Tenth Circuit nonetheless remanded with instructions to make specific factual findings for the enhancement. Even if the record overwhelmingly supports the enhancement, appellate fact‑finding cannot substitute for the court’s duty to articulate clearly the reasons for the enhancement. U.S. v. Ivy, 83 F.3d 1266 (10th Cir. 1996).
10th Circuit reverses where findings did not support role enhancement. (432) In justifying defendant’s § 3B1.1(b) role enhancement, the district court stated only that it had considered “defendant’s role in the offense as well as her minimal prior record.” The Tenth Circuit held that the findings did not support the § 3B1.1(b) enhancement. The court made no findings that defendant was a manager or supervisor, nor did it refer to any factors or evidence which an appellate court could use to review such findings had they been made. The court similarly failed to find that the activity specifically involving defendant had five or more participants or was “otherwise extensive.” U.S. v. Wacker, 72 F.3d 1453 (10th Cir. 1995).
10th Circuit rejects leadership enhancement for supplier who had no control over buyers. (432) Defendant supplied cocaine to his nephews on credit for four years; the nephews redistributed the cocaine to others for resale. Defendant and the nephews split the profits. The Tenth Circuit held that the mere fact that defendant supplied cocaine to his nephews did not support a leadership enhancement. Defendant’s status as an important figure who was integral to the success of the conspiracy was also insufficient. The gravamen of the enhancement is control, organization, and responsibility for the actions of other individuals. Defendant did not recruit or even encourage his nephews to sell cocaine for him. There was no evidence that defendant restricted the people to whom his nephews could sell drugs or hire to distribute drugs to their retail customers, or that he controlled the place of delivery or set retail prices. Defendant did not receive a larger share of the profits than his nephews–they split the profits equally. U.S. v. Owens, 70 F.3d 1118 (10th Cir. 1995).
10th Circuit rules that court made insufficient findings to support supervisorial enhancement. (432) The presentence report concluded that defendant was second in charge of a drug operation, based on information that a government agent received from witnesses. Defendant argued that he was not a supervisor, relying on reports of witness interviews that identified another individual as second in command and defendant as a middleman or delivery man. The district court imposed a supervisorial enhancement, finding it not “critical” to determine whether defendant was second in command only part of the time and the other conspirator part of the time. The Tenth Circuit held that the court’s findings were insufficient to support the supervisorial enhancement. The grand jury testimony introduced by the government was hearsay, and was contradicted by an undercover agent’s report that another conspirator was second in command. Although a court may use reliable hearsay, the court here did not identify what particular hearsay it was relying on or make any assessment of reliability. U.S. v. Pelliere, 57 F.3d 936 (10th Cir. 1995).
10th Circuit rejects leadership increase where no more than buyer/seller relationship was shown. (432) The district court found that defendant was a leader of a drug operation because he was “the engine that made this train run.” The Tenth Circuit reversed because there was no evidence that the relationship between defendant and the other participants was anything more than buyer/seller. There was no evidence that the other conspirators worked for defendant, or that they received any type of remuneration from him. There was no evidence that he restricted the people to whom they could sell, or that he controlled the manner or place of delivery of drugs, set the prices of drugs, recruited accomplices or claimed a larger share of the profits. In the absence of any evidence of control, the enhancement was erroneous. U.S. v. Torres, 53 F.3d 1129 (10th Cir.1995).
10th Circuit says character sketch was not specific finding supporting leadership enhancement. (432) The district court imposed a four level leadership enhancement under section 3B1.1(a), after noting that defendant was a creative, intelligent person who was the most important figure in the drug conspiracy. The 10th Circuit held that this “character sketch” did not constitute findings of fact necessary to support a section 3B1.1(a) enhancement. While the record might contain sufficient support for the enhancement, it was not the appellate court’s role to make the factual findings necessary to support a sentencing court’s calculation. U.S. v. Roberts, 14 F.3d 502 (10th Cir. 1993).
10th Circuit rejects managerial enhancement for leader’s girlfriend. (432) The district court imposed a managerial enhancement upon defendant, finding she had a “lengthy and ongoing” relationship with the leader of a drug conspiracy, and was involved in distributing, delivering and assisting in making arrangements for methamphetamine. The 10th Circuit held that these findings were not sufficient to support the enhancement, since they did not evidence defendant’s decision-making authority or control over a subordinate. By itself, a close personal relationship with the leader or organizer of a conspiracy does not prove a defendant acted as a manager or supervisor. Because the record contained no evidence of defendant’s decision-making activity or her control of anyone, the enhancement was clearly erroneous. U.S. v. Roberts, 14 F.3d 502 (10th Cir. 1993).
10th Circuit says using amended leadership guideline would violate ex post facto clause. (432) Defendant was convicted of money laundering, but he received a leadership enhancement under guideline section 3B1.1(a) based upon his role in an uncharged fraud scheme. The 10th Circuit reversed, ruling that determining defendant’s role based upon his role in relevant conduct would violate the ex post facto clause. In U.S. v. Pettit, 903 F.2d 1336 (10th Cir. 1990), it had held that the plain language of section 3B1.1 required the court to focus on the defendant’ role in the offense of conviction rather than on other criminal conduct. After Pettit, the Sentencing Commission amended the commentary to section 3B1.1 to state that a defendant’s role in the offense was to be determined on the basis of all relevant conduct. This amendment was effective November 1, 1990, after defendant committed his offense. In U.S. v. Saucedo, 950 F.2d 1508 (10th Cir. 1991), the court held that this amendment was a substantive change in the law and its application to offenses committed prior to the effective date of the amendment would violate the ex post facto clause. U.S. v. Johnson, 971 F.2d 562 (10th Cir. 1992).
10th Circuit reverses leadership enhancement for defendant’s essential role in the offense. (432) Defendant was convicted of conspiracy and fraud as a result of his involvement in an investment scheme in an alleged mining operation that defrauded investors. The district court imposed a four level leadership enhancement under section 3B1.1(a) because defendant was deeply involved in and essential to the success of the fraud. The 10th Circuit reversed, ruling that a defendant’s “essential role” in an offense was an insufficient basis for the leadership enhancement in the absence of elements of control or organization of other people. Most of the other conspirators also held important roles, but the guidelines did not intend to define an organizer or leader so broadly that nearly every member of a conspiracy qualifies. Defendant did not organize or initiate the original scheme. Although he may have recruited unwitting investors, he did not recruit accomplices. Defendant did not control the distribution of profits or take a larger share, and did not exercise decision-making authority over his co-conspirators. Although he might be termed an organizer or leader of the mining operation, that operation was not itself criminal activity. U.S. v. Litchfield, 959 F.2d 1514 (10th Cir. 1992).
10th Circuit rejects leadership role of seller who fraudulently obtained loans for his buyers. (432) On six different occasions, defendant, who constructed and sold single family homes, misrepresented to federally-insured lenders that his buyers had made specified down payments. The 10th Circuit reversed a four level enhancement under guideline section 3B1.1 based upon defendant’s leadership role in the offense because there was no connection among the various borrowers. To support enhancement, the government must show that each member of the organization is answerable to defendant and is under his continuing control. Defendant’s clients were not continually dependent on him. Also, defendant’s criminal activity did not involve five or more participants. U.S. v. Smith, 951 F.2d 1164 (10th Cir. 1991).
11th Circuit rejects use of aggravated role in drug conspiracy to increase money laundering sentence. (432) Defendant was convicted of two drug counts and one money laundering count. The PSR grouped the three convictions together. The court should have determined which of the three grouped convictions yielded the highest adjusted offense level by calculating defendant’s offense level under each guideline. Without explanation, the PSR used § 2S1.1, the money laundering guideline, to determine the base offense level, and applied a managerial role enhancement based on defendant’s role in brokering a heroin deal. However, note 2(C) to § 2S1.1 instructs courts to consider only the money laundering offense itself, and not the underlying crime that generated the money. The Eleventh Circuit held that the district court erred in using defendant’s conduct in the underlying drug conspiracy to impose a role enhancement when calculating his offense level for money laundering. Section 1B1.5(c) provides that “[i]f the offense level is determined by a reference to another guideline … the adjustments in Chapter Three (Adjustments) also are determined in respect to the referenced offense guideline, except as otherwise expressly provided.” Note 2(C) of § 2S1.1 is one of those “otherwise provided” situations. U.S. v. Salgado, 745 F.3d 1135 (11th Cir. 2014).
11th Circuit holds defendant’s admissions insufficient to support leadership increase. (432) The PSR recommended a § 3B1.1(a) leadership enhancement, stating that defendant “orchestrated” weekly shipments of marijuana from Texas to Florida, used others to mail or receive those shipments, and enlisted others to join in the scheme. Defendant objected to the PSR’s characterization of the facts. Once a defendant objects to a fact contained in the PSR, the government bears the burden of proving that disputed fact by a preponderance of the evidence, but the government presented no evidence. Defendant did admit during his plea hearing that he orchestrated drug shipments, that he was directly involved in the wire transfer of $343,729 of drug proceeds, and that he, along with his co-conspirators, “utilized other individuals” to mail and receive drug shipments. However, the Eleventh Circuit found that these facts were not enough to support the § 3B1.1(a) leadership enhancement. There was no evidence that defendant exercised decision-making authority over anyone in the conspiracy. At most, he acted in concert with his co-conspirators. U.S. v. Martinez, 584 F.3d 1022 (11th Cir. 2009).
11th Circuit rejects enhancement for management of assets of conspiracy. (432) Courts have held that a § 3B1.1 enhancement cannot be based solely on a finding that a defendant managed the assets of a conspiracy. U.S. v. Glover, 179 F.3d 1300 (11th Cir. 1999). The enhancement is unwarranted in the absence of a finding that the defendant asserted control or influence over at least one other participant in the crime. Here, the district court applied the § 3B1.1(b) increase based on defendant’s managing assets, and the government conceded that the court acted in “apparent contravention” of Glover. Because defendant preserved the issue, a remand was required unless the government could establish that the error was harmless. The Eleventh Circuit ruled that the government did not meet this burden. Although the government argued that there was evidence that would support a finding that defendant managed another participant, the panel could not “say with fair assurance that the district court would have made that finding.” U.S. v. Campa, 529 F.3d 980 (11th Cir. 2008).
11th Circuit says husband’s role did not justify role increase for defendant. (432) Defendant was the executive director of a non-profit organization that received funds from a federal agency that dispensed grants to foster volunteer and community service activities. Her husband was the chief executive officer. Defendant was convicted and her husband was acquitted of fraud and theft of federal funds in connection with the misuse of grant funds. The district court applied a two-level aggravating role adjustment but the Eleventh Circuit reversed, finding insufficient evidence that defendant’s husband was a criminally responsible participant. Although the husband’s acquittal did not preclude the court from finding that defendant was an organizer, manager or leader, the husband’s role was de minimus and insufficient to justify the § 3B1.1(c) adjustment. To accomplish her fraud, defendant directed the accounting entries to cover unauthorized expenses, which included “loan payments” to her husband. In addition, her husband would often take and use company checks without the bookkeepers’ knowledge and without justifying his expenses. However, grant rules expressly permitted the commingling of funds in the company’s account. Because defendant’s husband was the CEO of the company, he could have taken funds from the company’s account without intending to defraud the government or steal federal funds. U.S. v. Williams, 527 F.3d 1235 (11th Cir. 2008).
11th Circuit reverses managerial enhancement based on control of victim’s property and assets. (432) Defendant, an accountant employed by the Red Cross, served as Director for Project Happen, a program that provided emergency funding for individuals facing eviction. Over an 18-month period, defendant and his co-defendant misapplied over 150 checks from Project Happen accounts. The probation officer recommended a § 3B1.1(c) managerial role enhancement because defendant “exercised management responsibility over the property and assets of the victim organizations.” The Eleventh Circuit noted that this was an error, because § 3B1.1(c) requires that the defendant organize, lead, manage or supervise another participant in the criminal scheme. Control of property or assets only supports a discretionary decision to depart. Perhaps recognizing this error, the district court amended the PSR to state that it was imposing the adjustment “because [defendant] was an organizer, leader, manager or supervisor of a criminal activity involving at least three participants.” The Eleventh Circuit found that this conclusory statement did not remedy the problem because it did not indicate that defendant had the requisite control over another participant. There was no evidence in the record that defendant had any control over any of the other participants who engaged in the criminal activities. U.S. v. Harness, 180 F.3d 1232 (11th Cir. 1999).
11th Circuit rejects aggravating role enhancement for managing assets of conspiracy. (432) Defendant supplied drugs to a cocaine distribution conspiracy. The district court applied a § 3B1.1 managerial role enhancement based solely on defendant’s control over the cocaine. The Eleventh Circuit reversed, holding that a § 3B1.1 enhancement is proper only if a defendant was the organizer or leader of at least one other participant. A § 3B1.1 enhancement cannot be based solely on a finding that a defendant managed the assets of a conspiracy. A finding involving just asset management may support only an upward departure. U.S. v. Glover, 179 F.3d 1300 (11th Cir. 1999).
11th Circuit finds insufficient evidence to support managerial enhancement. (432) The district court applied a § 3B1.1 managerial role enhancement because: (1) defendant bought more cocaine from the supplier than other defendants: (2) two co-defendants worked for defendant; and (3) defendant possessed $140,000 in cash on the day of his arrest. The Eleventh Circuit reversed, finding insufficient evidence to support the role increase. Even if the quantity of drugs was large enough to infer that the defendant knew they would be resold, a role enhancement is inappropriate absent evidence defendant recruited buyers or directed their activities. While $140,000 in cash might be evidence that defendant was a large purchaser of cocaine, it did not make him a manager. A mere buyer/seller relationship is not a sufficient basis for a managerial enhancement. Finally, although the court found that two co-defendants “worked for” defendant, the only evidence was the double hearsay statement by a government agent that a co-conspirator had told him defendant called two co-defendants part of his “group.” While this might imply defendant resold his drugs to these co-defendants, it did not support a finding that defendant supervised or managed them. U.S. v. Glinton, 154 F.3d 1245 (11th Cir. 1998).
11th Circuit rejects leadership increase where no more than buyer-seller relationship. (432) Defendant and his ex-wife engaged in an extensive marijuana distribution conspiracy, the object of which was the bring large quantities of marijuana into Holmes County, Florida for distribution and sale. The Eleventh Circuit rejected a § 3B1.1(a) leadership enhancement because the evidence showed that defendant only had a buyer/seller relationship with his co-conspirators. Although defendant sold marijuana to a number of individuals, there was little indication that he actively recruited buyers or directed their activities. Two buyers testified that they initiated contact with defendant, and one said that he bought a relatively small portion of his marijuana from defendant. Several others testified that they purchased marijuana from defendant only after he had purchased marijuana from them. These defendants also bought most of their marijuana from another source and were in business for themselves. The only slight evidence to the contrary was testimony from three witnesses who said that defendant “fronted” the marijuana to them. U.S. v. Alred, 144 F.3d 1405 (11th Cir. 1998).
11th Circuit rejects role increase, even though defendant financed importing drugs. (432) The Eleventh Circuit rejected a § 3B1.1 role enhancement, finding no evidence that defendant supervised or controlled anyone, or that he exercised management responsibilities over the property, assets or activities of the organization. Defendant’s role in the organization was limited to a period of three days. At best, the evidence showed he was buyer of 10 kilograms of cocaine. Judge Cox dissented because defendant was to purchase one‑half of a 20-kilogram shipment of cocaine smuggled into the U.S., he financed the transportation fee that had to be paid to obtain delivery of the cocaine, and supplied the driver of the truck used to take delivery. U.S. v. Lozano-Hernandez, 89 F.3d 785 (11th Cir. 1996).
11th Circuit says status as eldest son did not make defendant supervisor of family conspiracy. (432) Defendant and members of his extended family ran a marijuana distribution business. The Eleventh Circuit held that the evidence did not support defendant’s managerial enhancement. Defendant was a knowledgeable participant in the enterprise, and witnessed both tending marijuana plants and weighing and bagging harvested marijuana. However, there was nothing in the record to indicate that defendant exercised any control or supervisory powers over the operation as a whole or over any of its individual members. The mere fact that defendant was the eldest son was not relevant. The court refused to assume that the oldest male is the natural heir of his father’s business. U.S. v. Young, 39 F.3d 1561 (11th Cir. 1994).
11th Circuit rejects leadership role based on buyer/seller relationship. (432) Defendant conspired to distribute dilaudid and made a single sale of cocaine to a confidential informant. The 11th Circuit held that a leadership role enhancement under § 3B1.1(a) was inappropriate because there was no evidence of anything other than a buyer/seller relationship between defendant and the informant. The informant had a similar relationship with another supplier, and in U.S. v. Yates, 990 F.2d 1179 (11th Cir. 1993), the court found that a buyer/seller relationship was insufficient to warrant the enhancement. U.S. v. Maxwell, 34 F.3d 1006 (11th Cir. 1994).
11th Circuit rejects managerial enhancement for “mere street seller.” (432) The 11th Circuit rejected the district court’s conclusion that defendant was a manager or supervisor of a drug distribution ring. One co-defendant testified that defendant sold crack on the street around the corner from the property where the ring sold its crack. This evidence indicated that, at least at times, defendant acted as a mere street seller. Although a confidential informant told a DEA agent that defendant was supplying drugs to three individuals, there was no evidence of the nature of defendant’s relationship with them, that these individuals were distributors rather than mere users, or of the degree of control, if any, that he exercised over them. U.S. v. Beasley, 2 F.3d 1551 (11th Cir. 1993).
11th Circuit says wholesaler of drugs was not “leader” of retail network. (432) Over an extended period of time, defendant sold large quantities of drugs to a buyer, who distributed the drugs through an organization. The 11th Circuit reversed the district court’s four-level enhancement of defendant’s offense level for being a “leader or organizer” of the group. The evidence merely showed that defendant was engaged in a long-term seller-buyer relationship with the head of the distribution ring. Defendant had no control over the distribution ring and any lacked other indication of being a leader or organizer. U.S. v. Yates, 990 F.2d 1179 (11th Cir. 1993).
11th Circuit vacates leadership enhancement where there was no evidence that defendant was involved with five or more participants. (432) Defendant received a four level enhancement under guideline section 3B1.1(a) based upon his leadership role in criminal activity involving five or more participants. The 5th Circuit vacated the enhancement, since there was no evidence in the record to prove that defendant was involved with five or more participants. U.S. v. Baggett, 954 F.2d 674 (11th Cir. 1992).
11th Circuit finds codefendant not a leader where defendant’s conviction was reversed. (432) Defendant and codefendant were convicted of attempted exportation of various firearms. Defendant’s conviction was reversed because the warnings he had been given by government agents as to illegality of transaction had been given in English, and defendant did not speak English. Since defendant lacked the necessary intent to commit the offense, there was no other participant to “organize, lead, manage or supervise.” Therefore, the 11th Circuit found that codefendant could not receive a two level increase for being a manager or leader. U.S. v. Markovic, 911 F.2d 613 (11th Cir. 1990).
D.C. Circuit holds that “otherwise extensive” finding looks primarily to number of persons involved. (432) The district court found defendant’s fraud was “otherwise extensive” under § 3B1.1(a) because it “was a many layered scheme that was … extraordinarily extensive ….” The D.C. Circuit rejected this concept of “otherwise extensive,” instead adopting the Second Circuit’s test in U.S. v. Carrozzella, 105 F.3d 796 (D.C. Cir. 1997): the “otherwise extensive” finding must be based primarily on the number of persons involved in the criminal activity, criminally or noncriminally. Although some circuits will conduct an open-ended examination of the “totality of the circumstances,” see, e.g. U.S. v. Dietz, 950 F.2d 50 (1st Cir. 1991), the panel felt that Carrozzella provided a better standard. The commentary to § 3B1.1 focuses on the role of unknowing actors. References in the commentary to the scope, planning and preparation do not define whether an activity is extensive, but “are relevant to decide the entirely separate question of degree of responsibility.” Further, at a minimum, § 3B1.1(a)’s “otherwise extensive” prong “demands a showing that an activity is the functional equivalent of an activity involving five or more participants. Defendant’s scheme did not satisfy the Carrozzella test. The unnamed bank employees who changed account addresses and issued credit cards on defendant’s fraudulent instructions were merely performing their jobs for the victim banks and could not be counted as part of the scheme. U.S. v. Wilson, 240 F.3d 39 (D.C. Cir. 2001).
D.C. Circuit says junior conspirators did not make defendant manager. (432) Defendant was a member of a street gang that engaged in drug-related activity. The D.C. Circuit reversed a three-level § 3B1.1(b) managerial enhancement that was not supported by sufficient evidence. The district court concluded that defendant was a “lieutenant” in the gang based solely on one witness’s testimony that defendant was “sometimes” a lieutenant. However, nothing in the testimony explained how defendant acted as a lieutenant. The court also termed defendant a “block overseer” because he directed potential drugs buyers to fellow conspirators selling drugs. This title inflated defendant’s position because all he did was point customers to people carrying drugs. The mere act of directing buyers to sellers does not constitute management or supervision warranting enhancement. Finally, the court relied on the fact that defendant was not at the bottom rung of the conspiracy. The bottom rung was occupied by runners and “pipeheads” who assisted in the day-to-day operations of the conspiracy. However, the mere fact that defendant was not the junior-most person in the gang did not make him a manager. A person receiving a §3B1.1 enhancement must exercise some control over others. U.S. v. Graham, 162 F.3d 1180 (D.C. Cir. 1998).
D.C. Circuit says failure to consider role reduction was plain error. (432) Defendant argued for the first time on appeal that the district court erred in not giving him a minor or minimal participant reduction. The D.C. Circuit held that the court’s failure to consider defendant’s eligibility for the reduction was plain error, because it found that defendant was less culpable than his co-conspirators. A minor participant is defined as any participant who is less culpable than most other participants. The guidelines unequivocally direct a court to decrease an offense level by two levels if the defendant was a minor participant. U.S. v. Mitchell, 49 F.3d 769 (D.C. Cir. 1995).