JAMES O. BROWNING, District Judge.
From approximately November, 2006, to September, 2007, Courtney and Co-Defendant Jason Johns operated an elaborate scheme to fraudulently obtain money from mortgage lending institutions. See Second Amended Presentence Investigation Report ¶ 32, at 12 (disclosed August 28, 2013)("PSR"). Courtney was part-owner of construction and mortgage/lending companies, and Johns was one of Courtney's loan officers. See PSR ¶ 32, at 12. The scheme involved using straw buyers to purchase two houses that Courtney had built and that Courtney's mother owned; Johns used his knowledge as a loan officer to generate the loan applications, secure no-document loans, obtain the straw buyers' signatures, and submit the applications to prospective lenders. See PSR ¶ 32, at 12. Courtney used his knowledge as the part-owner of the businesses and made the transactions possible by acting as the real estate broker for the buyers, signing the closing documents on behalf of his mother under a power of attorney. See PSR ¶ 32, at 12. Courtney also promised
Courtney and Johns solicited a total of $1,601,825.80 in fraudulent loans, of which $772,265.17 they never repaid. See PSR ¶ 33, at 12. Courtney appears to have intended to pay off all the loans, but his businesses went south and, on September 11, 2008, Courtney declared Chapter 13 bankruptcy.
A jury convicted Courtney of Wire Fraud and Aiding and Abetting under 18 U.S.C. § 1343 and 18 U.S.C. § 2. See Indictment, filed November 9, 2011 (Doc. 2); Verdict, filed March 27, 2013 (Doc. 109). The United States Probation Office ("USPO") disclosed the PSR on August 28, 2013.
In his Objections, Courtney objects to the PSR's statements that he was a real estate broker for the buyers, arguing that he was a broker only for his mother, the seller. See Objections at 2. Further, Courtney objects to the PSR's special-skills enhancement, arguing that he did not use any special skills as a real estate
Courtney also objects to the PSR's application of the aggravating role enhancement. See Objections at 18-22. Courtney first points out that the PSR does not specify which of the four aggravating roles listed in U.S.S.G. § 3B1.1 he played and suggests that that alone should cause the Court to deny the enhancement, citing no authority for that proposition. See Objections at 19. To the substance of the enhancement, Courtney argues that the Tenth Circuit has interpreted "leader" in U.S.S.G. § 3B1.1 to require a degree of control over others. Objections at 18-19. In Courtney's view, there is no evidence that he exercised the degree of control required, and, further, he points to Johns' role in "recruiting the borrowers; preparing and submitting loan applications, and closing the loans," and argues that Courtney's conduct was less significant than Johns'. Objections at 19-21. Further, Courtney argues that, even assuming the PSR's characterization of Courtney's involvement, "[t]here simply is no evidence that Mr. Courtney did anything extraordinary beyond his actions to `facilitate' the mortgage transactions." Objections at 22. He submits that, "[c]omparing the evidence regarding John's actions in the mortgage transactions with the evidence regarding Mr. Courtney's makes clear that Mr. Courtney did not act as a leader or organizer." Objections at 22.
The United States responded to each of these arguments. See United States' Response to Defendant's Objections to August 28, 2013, Redisclosed Presentence Report (Doc. 151), filed October 8, 2013 (Doc. 154)("U.S. Response to Objections"). With respect to the sophisticated means enhancement, the United States argues that Courtney, along with Johns, used fraudulent no-documentation loans to mislead mortgage lenders, misrepresenting to them that the straw buyers were buying the houses as primary residences — and that he did this to pay off existing loans in his mother's name. See U.S. Response to Objections at 5-6. Further, he concealed that he was the true source of the mortgage payments using a wire transfer and a cashier's check. See U.S. Response to Objections at 6. The United States concedes that, when Courtney became unable to
U.S. Response to Objections at 8.
With respect to the aggravating role enhancement, the United States first argues that, as the background to § 3B1.1 says,
U.S. Response to Objections at 11 (quoting U.S.S.G. § 3B1.1). The United States clarifies that it seeks the enhancement, because Courtney was an organizer, rather than a leader. See U.S. Response to Objections at 11-12. The United States argues that, under Tenth Circuit law, it does not need to prove that Courtney controlled others: "Rather, to qualify as an organizer, a defendant `need only devise a criminal scheme providing the wherewithal to accomplish the criminal objective, and coordinate and oversee the implementation of the conspiracy, even though the defendant may not have any hierarchical control over the other participants.'" U.S. Response to Objections at 12 (quoting United States v. Wardell, 591 F.3d 1279 (10th Cir.2009) (internal quotation omitted)). Citing the factors listed in U.S.S.G. § 3B1.1 cmt. 4, the United States alleges that Courtney held a fifty-percent ownership interest in all three companies involved, while Johns was only an employee.
With respect to acceptance of responsibility, the United States contends that Courtney bears the burden to prove by a preponderance of the evidence that he is entitled to the acceptance-of-responsibility reduction and that he has not met that burden. See U.S. Response to Objections at 13-15. The United States concedes that, by going to trial, the law does not absolutely bar Courtney from arguing that he accepted responsibility. See U.S. Response to Objections at 13-14. The United States argues, however, that, by denying that he had the intent to defraud, he challenged a necessary, factual element of proof, and that he has not, therefore, clearly demonstrated that he accepts responsibility for his conduct. See U.S. Response to Objections at 14-15. The United States argues that, under the Guidelines, this argument "does not comprise one of the rare situations in which the [acceptance-of-responsibility] reduction may be available" when a defendant goes to trial. U.S. Response to Objections at 15. Therefore, the United States contends, "Courtney simply has not demonstrated any acceptance of guilt or responsibility, and is not eligible for a two-level reduction for acceptance of responsibility." U.S. Response to Objections at 15. Last, the United States presents argument supporting the special-skills enhancement, but argues that the Court should not apply both the special-skills enhancement and the aggravating role enhancement. See U.S. Response to Objections at 8-11. The Court's decision, explained below, to apply the aggravating role enhancement renders these arguments moot.
The USPO responded to Courtney's Objections and the U.S. Response to Objections by conceding that the special-skill enhancement cannot be applied along with the aggravating role enhancement, but otherwise defending the PSR's conclusions and recommendations. See Addendum to the Second Redisclosed Presentence Report at 1, disclosed October 7, 2013 ("PSR Addendum"). This amendment results in a total offense level of 25, instead of 27, and thus indicates a Guidelines sentencing range of 57-71 months. The USPO also amends PSR ¶¶ 10, 32, and 49, to reflect that Courtney acted as real estate broker only for his mother. See PSR Addendum at 1.
A day after filing the Objections, Courtney filed the Sentencing Memo. While the Objections focus on Guidelines arguments — specifically, arguing against the PSR's recommendations — the Sentencing Memo. primarily advances extra-Guidelines
In addition to its general assertion that Courtney's exemplary character merits consideration under § 3553(a), the Sentencing Memo. advances three more specific arguments that the Court should vary on the basis of Courtney's character. See Sentencing Memo. at 35-36. First, Courtney argues that this crime was first-time, atypical conduct, and that, "[w]hile repetitious or planned behavior does not qualify for an aberrant conduct downward departure under the Guidelines regime, the Court is free to reject this Guidelines restriction and consider the atypical nature of Mike's conduct when deciding whether to downwardly vary." Sentencing Memo. at 35. Second, Courtney argues that the Court should vary downward on the
Courtney also attaches a table of cases in which district courts have imposed sentences significantly below the Guidelines range on defendants convicted of fraud.
The United States responded to the Sentencing Memo. separately from its response to the Objections. See United States' Response to Sentencing Memorandum of Keith Michael Courtney (Doc. 152) at 1-6, filed October 8, 2013 (Doc. 155)("U.S. Response to Memo."). The United States clarifies that it opposes a probation-only sentence, see U.S. Response to Memo. at 1, and attempts to rebut several of the mitigating factors that the Sentencing Memo. raises, see U.S. Response to Memo. at 2-6. First, however, they argue that the Court should not view Courtney's mortgage payments on behalf of the straw buyers, and his subsequent letter to the lenders when he was no longer able to make payments, as acceptance of responsibility for Guidelines purposes. See U.S. Response to Memo. at 3. The United States says that these actions were "the only way he could delay detection of the fraud." U.S. Response to Memo. at 3. The United States next acknowledges the ream of letters written on Courtney's behalf and attached to the Sentencing Memo., but asks the Court to remember the victims:
U.S. Response to Memo. at 4. The United States also attempts to distinguish this case from the many that Courtney cites in which the sentencing courts imposed a sentence well below the Guidelines range. See U.S. Response to Memo. at 4. According to the United States, "in each of these cases, the defendants had pleaded guilty." U.S. Response to Memo. at 4. Last, the United States contends that the amount of the loss in this case is so great that a probation-only sentence could never satisfy the § 3553(a) considerations. See U.S. Response to Memo. at 5.
On the day of the sentencing hearing, Courtney sent the Court a letter explaining his actions. See Courtney Letter at 1-2. Courtney states that, although he exercised his right to a jury trial and wishes to preserve his appellate rights, he is deeply sorry for the economic harm he has inflicted upon the victims in this case. See Courtney Letter at 1. He expresses a desire to pay them back in full at the earliest possible opportunity and relates to the Court how he feels he went down the path that led him to commit these crimes. See Courtney Letter at 1-2. Essentially, he tells the Court that he got caught up in a successful, "win-win" pattern of real estate investments that, before his downfall, made both Courtney and those with whom he associated very wealthy. See Courtney Letter at 1-2. He expresses gratitude for his loving and supportive family, and asks the Court for a sentence of probation, so that he "can continue to contribute to [his] community and begin paying for the losses in this case." Courtney Letter at 2. He states that his mother is retired and that his sister is stricken with mental illness, and that he is worried about their ability to cope with him receiving a prison term. See Courtney Letter at 2.
The parties next discussed the aggravating role enhancement. See Tr. at 25:18-46:17 (Court, Higgins, Wisenberg). Courtney argued that the trial "testimony is overwhelming that Jason Johns had the primary leadership role." Tr. at 25:21-22 (Wisenberg). He asserted that Johns was the one who approached Rhonda Smith, one of the straw buyers, to recruit her as an unwitting participant and that Johns had signed both loan applications. See Tr. at 25:22-26:11 (Wisenberg). He states that Johns had testified at trial that Courtney was "not on the real estate side" and "not involved in any finances." Tr. at 27:12-15 (Wisenberg). Courtney further asserts that Johns put roughly $100,000.00 of his in-laws' money into the scheme and that Johns was an investor in the company himself. See Tr. at 27:16-28:4 (Wisenberg). Last, Courtney noted that the original PSR had not assigned Courtney any role adjustment. See Tr. at 36:16-37:8 (Wisenberg). The Court checked with the USPO about that omission, which had been rectified before the issuance of the amended PSR even without the United States objecting, and the USPO stated that it had
The United States rebutted Courtney's arguments with three of its own. First, it said, "Johns had no ownership interest" in the business; he was an independent contractor, and he "worked under Mr. Courtney." Tr. at 32:15-19 (Higgins). Second, the United States stated that Courtney was "the de facto manager of Black Diamond," and that Courtney was the one responsible for building the houses and obtaining the construction loans. Tr. at 32:2-33:6 (Higgins). Third, the United States argued that the most important factor was that Johns did everything he did "on behalf of Mr. Courtney" — "Johns didn't own these houses," nor did he "have the authority or the permission ... to sell the houses. Only Mr. Courtney did." Tr. at 33:7-14 (Higgins). The United States conceded that Johns did much of the "scut work," but that this fact has no bearing on the determination that Courtney is the leader of the two men. Tr. at 34:1-2 (Higgins). Last, the United States notes that Johns never had possession of any funds, and that all loans and sales proceeds went into Courtney's bank accounts. See Tr. at 34:13-22 (Higgins). The United States concluded that Johns was "more of a messenger boy for Mr. Courtney" and that, while the crime could have been committed without Johns, "none of this would work unless Mr. Courtney was completely involved." Tr. at 35:10-24 (Higgins).
The Court stated that it was inclined to apply the aggravating role enhancement under U.S.S.G. § 3B1.1(c), noting that the enhancement is appropriate when the defendant "leads or organizes even one participant." Tr. at 43:14 (Court). The Court noted that "no control is necessary" to qualify for the enhancement under subsection (c), and that devising the scheme, alone, even without hierarchal control, is sufficient to warrant the enhancement. Tr. at 44:6-19 (Court). The Court stated that, by devising the scheme and acting as the straw buyers' point of contact, Courtney exercised decision-making authority and participated in planning and organizing the offense. See Tr. at 44:20-45:12 (Court).
The Court next quickly disposed of the special-skills enhancement, with the United States agreeing that it cannot be imposed on top of an aggravating role enhancement. See Tr. at 46:1118 (Court, Higgins). The parties next addressed the acceptance-of-responsibility reduction, with the parties standing by their briefing on the issue. See Tr. at 47:23-52:4 (Court, Higgins, Wisenberg). The Court stated that it would not apply the reduction, noting that Courtney had not acknowledged the criminality of his actions and that "acceptance of responsibility adjustments after trial are very rare." Tr. at 49:22-24 (Court).
The Court confirmed with the parties that, given its inclinations on the objections, Courtney's Guidelines offense level is 25, see Tr. at 64:12-18 (Court, Wisenberg), and then addressed Courtney's arguments for a variance, see Tr. at 64:19-107:6 (Court, Wisenberg, Higgins). Courtney indicated an intent to stand on his briefing, and the Court asked a few questions about the NCIA Report that Courtney was largely unable to answer. See Tr. at 65:2-67:21 (Court, Wisenberg). Courtney clarified, however, the difference between the two reports, which is that the second report included defendants who received § 5K1.1 departures for substantially
Courtney personally addressed the Court and expressed contrition before the imposition of sentence. See Tr. at 75:6-79:7 (Courtney, Court). The Court asked Courtney about Landmark Worldwide, and Courtney described it as follows:
Tr. at 77:21-79:7 (Courtney, Court).
The Court outlined a number of factors that apply downward and upward pressure on the sentence, which it will explain in greater detail below. See Tr. at 94:18-105:6 (Court). The Court decided to vary Courtney's sentence downward by eight offense levels, to a working offense level of 17, which indicates a sentencing range of 24-30 months. See Tr. at 104:25-105:4 (Court). The Court imposed a sentence of 24-months imprisonment and three-years supervised release — on both counts, with both to run concurrently — with the following mandatory and special conditions:
Tr. at 107:13-109:24 (Court). The parties did not object to the mandatory or special conditions. See Tr. at 109:25-110:14 (Court, Higgins, Wisenberg).
In United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), the Supreme Court of the United States severed the mandatory provisions from the Sentencing Reform Act, Pub.L. No. 98-473, 98 Stat.1976, thus making Guidelines sentencing ranges effectively advisory. In excising the two sections, the Supreme Court left the remainder of the Act intact, including 18 U.S.C. § 3553: "Section 3553(a) remains in effect, and sets forth numerous factors that guide sentencing. Those factors in turn will guide appellate courts, as they have in the past, in determining whether a sentence is unreasonable." United States v. Booker, 543 U.S. at 261, 125 S.Ct. 738.
Congress has directed sentencing courts to impose a sentence "sufficient, but not greater than necessary" to comply with four statutorily defined purposes enumerated in 18 U.S.C. § 3553(a)(2):
18 U.S.C. § 3553(a)(2)(A)-(D).
18 U.S.C. § 3551. To achieve these purposes, 18 U.S.C. § 3553(a) directs sentencing courts to consider: (i) the Guidelines; (ii) the nature of the offense and the defendant's character; (iii) the available sentences; (iv) a policy favoring uniformity in sentences for defendants who commit similar crimes; and (v) the need to provide restitution to victims. See 18 U.S.C. § 3553(a)(1), (3)-(7).
Although the Guidelines are no longer mandatory, both the Supreme Court and the United States Court of Appeals for the Tenth Circuit have clarified that, while the Guidelines are one of several factors enumerated in 18 U.S.C. § 3553(a), they are entitled to considerable deference. See Rita v. United States, 551 U.S. 338, 349, 127 S.Ct. 2456, 168 L.Ed.2d 203 (2007) ("The Guidelines as written reflect the fact that the Sentencing Commission examined tens of thousands of sentences and worked with the help of many others in the law enforcement community over a long period of time in an effort to fulfill [its] statutory mandate."); United States v. Cage, 451 F.3d 585, 593 (10th Cir.2006) (describing the Guidelines as more than "just one factor among many"). They are significant, because "the Guidelines are an expression of popular political will about sentencing that is entitled to due consideration ... [and] represent at this point eighteen years' worth of careful consideration of the proper sentence for federal offenses." United States v. Cage, 451 F.3d at 593 (internal quotation marks omitted). A reasonable sentence is one that also "avoid[s] unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct." 18 U.S.C. § 3553(a). See United States v. Booker, 543 U.S. at 261-62, 125 S.Ct. 738.
The Tenth Circuit has "joined a number of other circuits in holding that a sentence within the applicable Guidelines range is presumptively reasonable." United States v. Terrell, 445 F.3d 1261, 1264 (10th Cir.2006). This presumption, however, is an appellate presumption and not one that the trial court can or should apply. See Rita v. United States, 551 U.S. at 351, 127 S.Ct. 2456; Gall v. United States, 552 U.S. 38, 46-47, 128 S.Ct. 586, 169 L.Ed.2d 445 (2007); Kimbrough v. United States, 552 U.S. 85, 90-91, 128 S.Ct. 558, 169 L.Ed.2d 481 (2007). Instead, the trial court must undertake the § 3553(a) balancing of factors without any presumption in favor of the advisory guideline sentence. See Rita v. United States, 551 U.S. at 351, 127 S.Ct. 2456; Gall v. United States, 552 U.S. at 46-47, 128 S.Ct. 586; Kimbrough v. United States, 552 U.S. at 90-91, 128 S.Ct. 558.
United States v. Apodaca-Leyva, No. CR 07-1479 JB, 2008 WL 2229550, at *6 (D.N.M. Feb. 13, 2008) (Browning, J.).
In calculating an appropriate sentence, the Guidelines consider a defendant's "offense of conviction and all relevant conduct under [U.S.S.G.] § 1B1.3 (Relevant Conduct) unless a different meaning is specified or is otherwise clear from the context." U.S.S.G. § 1B1.1, cmt. 1(H). In United States v. Booker, the Supreme Court noted:
543 U.S. at 250-51, 125 S.Ct. 738 (emphasis in original)(quoting 18 U.S.C. § 1951(a)). The Supreme Court's reasoning in United States v. Booker suggests that the consideration of real conduct is necessary to effectuate Congress' purpose in enacting the guidelines.
Section 1B1.3 provides that the base offense level under the guidelines "shall be determined" based on the following:
U.S.S.G. § 1B1.3(a)(1)-(4). The court may consider, as relevant conduct, actions that have not resulted in a conviction. Pursuant to the commentary to U.S.S.G.
Supreme Court precedent on relevant conduct comes primarily from two cases: Witte v. United States, 515 U.S. 389, 115 S.Ct. 2199, 132 L.Ed.2d 351 (1995), and United States v. Watts, 519 U.S. 148, 117 S.Ct. 633, 136 L.Ed.2d 554 (1997). In Witte v. United States, the Supreme Court upheld the use of uncharged conduct at sentencing against a double-jeopardy challenge. The defendant in Witte v. United States had been involved in an unsuccessful 1990 attempt to import marijuana and cocaine into the United States, and in a 1991 attempt to import marijuana. See 515 U.S. at 392-93, 115 S.Ct. 2199. In March 1991, a federal grand jury indicted the defendant for attempting to possess marijuana with intent to distribute in association with the defendant's latter attempt to import narcotics. See 515 U.S. at 392-93, 115 S.Ct. 2199. At sentencing, the district court concluded that, because the 1990 attempt was part of the continuing conspiracy, it was relevant conduct under U.S.S.G. § 1B1.3, and therefore calculated the defendant's base offense level based on the aggregate amount of drugs involved in both the 1990 and 1991 episodes. See 515 U.S. at 394, 115 S.Ct. 2199.
In September, 1992, a second federal grand jury indicted the defendant for conspiring and attempting to import cocaine in association with the 1990 activities. See 515 U.S. at 392-93, 115 S.Ct. 2199. The defendant moved to dismiss the indictment, arguing that he had already been punished for the cocaine offenses, because the district court had considered those offenses relevant conduct at the sentencing for the 1991 marijuana offense. See 515 U.S. at 395, 115 S.Ct. 2199. The district court agreed and dismissed the indictment, holding that punishment for the cocaine offenses would violate the prohibition against multiple punishments, which the
The Supreme Court granted certiorari to resolve the conflict between the circuits and affirmed the Fifth Circuit. See 515 U.S. at 395, 115 S.Ct. 2199. In finding that the district court's consideration of the defendant's relevant conduct did not punish the defendant for that conduct, the Supreme Court concluded that "consideration of information about the defendant's character and conduct at sentencing does not result in `punishment' for any offense other than the one of which the defendant was convicted." 515 U.S. at 401, 115 S.Ct. 2199. The Supreme Court reasoned that sentencing courts had always considered relevant conduct and "the fact that the sentencing process has become more transparent under the Guidelines ... does not mean that the defendant is now being punished for uncharged relevant conduct as though it were a distinct criminal offense." 515 U.S. at 402, 115 S.Ct. 2199. Sentencing enhancements do not punish a defendant for uncharged offenses; rather, they reflect Congress' policy judgment "that a particular offense should receive a more serious sentence within the authorized range if it was either accompanied by or preceded by additional criminal activity." 515 U.S. at 403, 115 S.Ct. 2199.
In United States v. Watts, the Supreme Court, in a per curiam opinion, relied upon Witte v. United States' holding and upheld, against a double-jeopardy challenge, a sentencing judge's use of conduct for which the defendant had been acquitted. In reaching its result in United States v. Watts, the Supreme Court noted that its conclusion was in accord with every United States Court of Appeals — other than the United States Court of Appeals for the Ninth Circuit — and that each had previously held that a sentencing court may consider conduct for which the defendant had been acquitted, if the government establishes that conduct by a preponderance of the evidence. See 519 U.S. at 149, 117 S.Ct. 633 (citing, e.g., United States v. Coleman, 947 F.2d 1424, 1428-29 (10th Cir.1991)). The Supreme Court began its analysis in United States v. Watts with 18 U.S.C. § 3661: "No limitation shall be placed on the information concerning the background, character, and conduct of a person convicted of an offense which a court of the United States may receive and consider for the purpose of imposing an appropriate sentence." 18 U.S.C. § 3661. See United States v. Watts, 519 U.S. at 151, 117 S.Ct. 633. According to the Supreme Court, 18 U.S.C. § 3661 embodies the codification of "the longstanding principle that sentencing courts have broad discretion to consider various kinds of information" and that "the Guidelines did not alter this aspect of the sentencing court's discretion." United States v. Watts, 519 U.S. at 151-52, 117 S.Ct. 633.
Tenth Circuit case law adheres closely to the Supreme Court's results in Witte v. United States and United States v. Watts. See United States v. Andrews, 447 F.3d 806, 810 (10th Cir.2006) (applying Witte v. United States' holding to affirm that a
In United States v. Coleman, the defendant, Troy Coleman, appealed the district court's enhancement of his sentence for firearms possession after he was convicted of conspiracy to possess and possession of a controlled substance with intent to distribute, but was acquitted of using or carrying a firearm during and in relation to a drug trafficking crime. See 947 F.2d at 1428. The Tenth Circuit acknowledged that courts had taken various positions on whether a sentence may be enhanced for firearms possession despite a defendant's acquittal of firearms charges. See United States v. Coleman, 947 F.2d at 1428-29 (citing United States v. Duncan, 918 F.2d 647, 652 (6th Cir.1990) ("[A]n acquittal on a firearms carrying charge leaves ample room for a district court to find by the preponderance of the evidence that the weapon was possessed during the drug offense."); United States v. Rodriguez, 741 F.Supp. 12, 13-14 (D.D.C.1990) (refusing to apply 2-level enhancement for firearms possession, because "[t]o add at least 27 months to the sentence for a charge of which the defendant was found not guilty violates the constitutional principle of due process and the ban against double jeopardy")).
Without discussion related to the standard of proof a sentencing court should use to make factual findings, the Tenth Circuit held that the district court did not err in enhancing Coleman's sentence for possession of a firearm. See United States v. Coleman, 947 F.2d at 1429. The Tenth Circuit based its conclusion on evidence that: (i) individuals at the arrest scene handled the weapons at will; (ii) the weapons were handled at will by individuals who lived at the house; and (iii) the weapons were kept for the protection of conspiracy participants and the narcotics involved. See 947 F.2d at 1429. The Tenth Circuit summarized that, in reviewing federal case law, it found "persuasive the decisions that have allowed a sentencing court to consider trial evidence that was applicable to a charge upon which the defendant was acquitted." 947 F.2d at 1429.
In United States v. Washington, 11 F.3d 1510 (10th Cir.1993), the defendant, Patrick Washington, argued that the United States should prove drug quantities used as relevant conduct to establish a defendant's offense level by clear-and-convincing evidence rather than by a preponderance of the evidence. See 11 F.3d at 1512. The defendant objected to his sentencing, because the drug quantity that the district court considered as relevant conduct, and which the court found by a preponderance of the evidence, increased his Guidelines sentencing range from 210-262 months to life. See 11 F.3d at 1515. The defendant argued "that because the additional drug quantities effectively resulted in a life sentence a higher standard of proof should be required." 11 F.3d at 1515. Although the Tenth Circuit in United States v. Washington "recognize[d] the strong arguments that relevant conduct causing a dramatic
Section 3B1.1 of the Sentencing Guidelines provides for enhancements to a defendant's offense level based on a defendant having played an aggravating role in the offense. Section 3B1.1 of the Guidelines provides:
Based on the defendant's role in the offense, increase the offense level as follows:
U.S.S.G. § 3B1.1. "A `participant' is a person who is criminally responsible for the commission of the offense, but need not have been convicted." U.S.S.G. § 3B1.1 cmt. 1.
Among the factors a sentencing court should consider when weighing an aggravating role enhancement are:
U.S.S.G. § 3B1.1, cmt. 4. The Tenth Circuit has "elaborated that `[i]n considering these factors, the sentencing court should remain conscious of the fact that the gravamen of this enhancement is control, organization, and responsibility for the actions of other individuals because § 3B1.1(a) is an enhancement for organizers or leaders, not for important or essential figures.'" United States v. Sallis, 533 F.3d 1218, 1223 (10th Cir.2008) (quoting United States v. Torres, 53 F.3d 1129, 1142 (10th Cir.1995)). "[A] defendant's participation in illegal but lower-level activities," however, "will not support application of the enhancement." United States v. Sallis, 533 F.3d at 1223. Nevertheless, "[a] defendant may be eligible for the leader or organizer enhancement if he leads or organizes even one other participant." United States v. Damato, 672 F.3d 832, 847 (10th Cir.2012).
"A two-level adjustment under § 3B1.1(c) applies whenever `the defendant was an organizer, leader, manager, or supervisor in any criminal activity [involving less than five participants and that is not otherwise extensive].'" United States v. Wardell, 591 F.3d 1279, 1304 (10th Cir. 2009) (alterations in original) (quoting U.S.S.G. § 3B1.1(c)). See United States v. Tilga, 824 F.Supp.2d 1295, 1319 n. 12 (D.N.M.2011) (Browning, J.)("Section 3B1.1(c) applies to leaders, organizers, managers, or supervisors of organizations with less than five persons. The only relevant difference between an organizer under § 3B1.1(a) and an organizer under § 3B1.1(c), it seems, is the size of the organization."). "In assessing whether an organization is `otherwise extensive,' all persons involved during the course of the entire offense are to be considered." U.S.S.G. § 3B1.1 cmt. 3. "The Commission's intent is that this adjustment should increase with both the size of the organization and the degree of the defendant's responsibility." U.S.S.G. § 3B1.1, background.
While there is overlap between the activities that would make a defendant a leader and those that would make a defendant an organizer, the two are distinct. "Functioning as a leader requires an element of control over underlings, particularly in the form of recruitment and direction. To qualify as an organizer, however, no control is necessary." United States v. Wardell, 591 F.3d at 1304 (citations omitted) (citing United States v. Cruz Camacho, 137 F.3d 1220, 1224-25 (10th Cir.1998); United States v. Egbert, 562 F.3d 1092, 1103 (10th Cir.2009)). The Tenth Circuit has recognized that, as a result of the Commission's inclusion of managers or supervisors along with organizers in § 3B1.1(c), "a defendant may be punished as an organizer under § 3B1.1(c)
In addition to the aggravating role enhancements provided in subsections (a), (b), and (c), § 3B1.1 also sets forth a closely related departure provision. Application note 2 to § 3B1.1 provides:
U.S.S.G. § 3B1.1 cmt. 2. The second sentence contemplates increases to a defendant's sentence even if the defendant did not lead, manage, supervise, or organize any other single participant, provided he exercised managerial responsibility in the criminal organization. This provision, however, sets forth conditions for a departure — not an adjustment, like the rest of § 3B1.1 — and, thus, to apply, the defendant's level of managerial authority must be outside the heartland of cases that the substantive guideline contemplates. See United States v. Cervantes-Chavez, 59 F.Supp.3d at 1325-30, 2014 WL 6065657, at *23-28. In United States v. Cervantes-Chavez, the Court considered whether to depart on managerial-authority grounds where a defendant was discovered hiding 175 pounds of marijuana and $19,625.00 in cash at his house — almost certainly a drug organizations "property [and] assets." U.S.S.G. § 3B1.1 cmt. 2. See United States v. Cervantes-Chavez, 59 F.Supp.3d at 1299, 2014 WL 6065657, at *2. The Court declined to apply an aggravating role enhancement, because — although the defendant appeared to be a middle-man in the drug trade based on the amount of drugs he was holding — the United States could not point to any individual over which the defendant had leadership or managerial control; the defendant was the only member of the drug organization that the United States could find. See 59 F.Supp.3d at 1323, 2014 WL 6065657, at *22. The Court also declined to depart on the managerial-responsibility grounds outlined in the second sentence of § 3B1.1 comment 2, concluding that, although the defendant exercised some managerial responsibility over a drug organization's assets, the defendant had already been sentenced under the guideline for possessing 80-100 kilograms of marijuana with intent to sell it, and the defendant's level of managerial responsibility did not fall outside the heartland of cases that the substantive-offense guideline contemplated. See 59 F.Supp.3d at 1330, 2014 WL 6065657, at *28. The Court found most offenders guilty of possessing that quantity of marijuana have some level of managerial responsibility over a drug organization's assets — it is unlikely that a individual unaffiliated with a drug organization would come into possession of that much marijuana — and thus the case was not "outside the heartland of cases that § 2D1.1(c)(8) [the guidelines for possessing 80-100 kilograms of marijuana] contemplates."
U.S.S.G. § 2B1.1(b)(10)(C) provides that, "[i]f the offense involves sophisticated means, increase by 2 levels. If the resulting offense is less than level 12, increase to level 12." U.S.S.G. § 2B1.1(b)(10)(C). Application note 9 provides, "[f]or the purposes of subsection (b)(10)(c), `sophisticated means' means especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense.... Conduct such as hiding assets or transactions, or both, through the use of fictitious entities, corporate shells, or offshore financial accounts ordinarily indicates sophisticated means." U.S.S.G. § 2B1.1 cmt. 9(B).
"The possession of false document-making implements may constitute sophisticated means, as may creation of numerous false documents, even if the documents were easily generated and contained only simple falsehoods." Guidelines Handbook § 27, at 390. The Tenth Circuit first addressed the enhancement for sophisticated means in the commission of tax evasion in United States v. Rice, 52 F.3d 843 (10th Cir.1995).
The Tenth Circuit has upheld the application of a sophisticated means enhancement
In United States v. Snow, 663 F.3d 1156 (10th Cir.2011), the Tenth Circuit held that a district court properly applied an enhancement for the use of sophisticated means under U.S.S.G. § 2B1.1, where the defendant "did not undertake to execute or conceal merely a single fraudulent transaction using false documentation but orchestrated a vast and complex fraud scheme in which he participated in over forty fraudulent mortgage-related transactions to defraud at least twelve different financial institutions." 663 F.3d at 1163. The Tenth Circuit determined that the defendant's fraudulent scheme was complex, because of the lengths which the defendant took to execute the fraud, and also because the defendant successfully deceived numerous financial institutions and title companies, indicating that he necessarily used sophisticated mean to "fool trained and experienced bank and closing personnel." 663 F.3d at 1163. That the defendant provided, and directed others to provide, fraudulent documentation and information sufficient to deceive the personnel reviewing it, procured and instructed others to procure cashiers' checks to disguise the true source of his income, and circulated and instructed others to circulate funds through different bank accounts to avoid detection indicated that he used sophisticated means. See 663 F.3d at 1163. With these facts, the Tenth Circuit determined that the district court properly applied a sophisticated means enhancement to the defendant's sentence under U.S.S.G § 2B1.1. Similarly, in United States v. Tilga, the Court found that an enhancement for the defendant's use of sophisticated means was warranted where the defendant used offshore accounts and shell companies to evade taxes by hiding the amount of money she earned. See 824 F.Supp.2d at 1330-34. The Court explained that the commentary to the sentencing guidelines regarding the use of sophisticated means recognizes that the enhancement applies because of the inherent complexity of the entities a defendant uses, and not because a defendant used the entities "in an especially complex or novel manner." 824 F.Supp.2d at 1330-31. Moreover, the Court explained that the case law addressing the use of sophisticated means does not require that a defendant create the sophisticated means, but rather, "[t]here is nothing in the comments or the case law to suggest that a person must create the sophisticated means to qualify for the enhancement." 824 F.Supp.2d at 1332.
Additionally, the United States Court of Appeals for the Sixth Circuit has upheld the imposition of a sophisticated means enhancement where the defendant created and used fictitious trusts to hide assets from the Internal Revenue Service, even though the defendant was not a sophisticated businessman and no offshore trusts were involved. See United States v. Schwartz, 408 Fed.Appx. 868, 870 (6th Cir.2010)(unpublished). The United States Court of Appeals for the Seventh Circuit, in United States v. Minneman, 143 F.3d 274 (7th Cir.1998), held that the use of multiple corporate names and the
A defendant is entitled to a 2-level reduction in his offense level "[i]f the defendant clearly demonstrates acceptance of responsibility for his offense." U.S.S.G. § 3E1.1(a). Upon the United States' motion, a defendant may be entitled to an additional 1-level reduction if the United States asserts that the defendant has assisted authorities in its investigation or prosecution "by timely notifying the authorities of his intention to enter a plea of guilty, thereby permitting the government to avoid preparing for trial and permitting the government and the court to allocate their resources efficiently." U.S.S.G. § 3E1.1(b). The reduction for acceptance of responsibility "is not intended to apply to a defendant who puts the government to its burden of proof at trial by denying the essential factual elements of guilt, is convicted, and only then admits guilt and expresses remorse." U.S.S.G. § 3E1.1 cmt. 2.
U.S.S.G. § 3E1.1 cmt. 1.
A defendant who exercises his right to trial and is convicted is not automatically precluded from receiving an acceptance-of-responsibility adjustment. See U.S.S.G. § 3E1.1 cmt. 2; United States v. Wooten, 377 F.3d 1134, 1146 (10th Cir. 2004). When a defendant goes to trial to litigate and preserve issues not related to factual guilt, such as the constitutionality of a criminal statute or the applicability of a particular statute to the defendant's conduct, he may still be eligible for an adjustment
A district court's decision to deny an adjustment for acceptance of responsibility to a defendant is reviewed for clear error. See United States v. Sarracino, 340 F.3d 1148, 1173 (10th Cir.2003). The Guidelines recognize that the sentencing court "is in a unique position to evaluate a defendant's acceptance of responsibility," and, therefore, the district court's determination that a defendant is not entitled to an adjustment for acceptance of responsibility "is entitled to great deference on review." U.S.S.G. § 3E1.1 cmt. 5. See United States v. Loza, 184 Fed.Appx. 772, 775 (10th Cir.2006)("We give `great deference' to the district court's determination whether a defendant accepted responsibility.").
"While it is certainly possible for a defendant to accept responsibility and go to trial, these circumstances are rare." United States v. Foghorn, No. CR 03-2365 JB, 2007 WL 1302649, at *2-3 (D.N.M. Feb. 21, 2007)(Browning, J.). The Court has found that a defendant who "conceded all material facts, but ... his defense at trial was that his actions did not cause the death of [the victim]," was not entitled to a reduction for his acceptance of responsibility. United States v. Foghorn, 2007 WL 1302649, at *4. The defendant in United States v. Foghorn was convicted of second-degree murder and kidnaping. See 2007 WL 1302649, at *2. Regarding his conviction for kidnaping, Foghorn, at trial, "admitted many of his actions regarding seizing and moving [the victim], [but] he argued at trial that he ... did not kidnap [the victim] for an improper purpose." 2007 WL 1302649, at *5. Because Foghorn asserted that the United States had failed to establish beyond a reasonable doubt that he had kidnapped the victim for some purpose or benefit, and thus required the United States to prove his factual guilt at trial, the Court found that he was not entitled to a reduction for his acceptance of responsibility regarding the kidnaping charge. See 2007 WL 1302649, at *5.
With respect to his conviction for second-degree murder, Foghorn did not "contest the United States' facts regarding the brutal treatment of [the victim] at his hands," but contested whether his actions resulted in the death of the victim. 2007 WL 1302649, at *5. The Court found that Foghorn's testimony at trial was not "sufficiently comprehensive to cover all the elements of the crimes with which he was charged." 2007 WL 1302649, at *6. Further, Foghorn's admission came late in the prosecutorial process, and Foghorn continued to assert that his actions did not cause the victim's death — a "factual element that the United States must establish to convict a defendant for murder." 2007 WL 1302649, at *6. Foghorn continued to assert, through post-trial motions, that his actions did not cause the victim's death. The Court found that Foghorn's actions "required the United States to prove his factual guilt and refused to take full responsibility for the offense of which he was convicted," and was thus not entitled to a reduction in his offense level for acceptance
The Tenth Circuit has found that a district court did not clearly err by denying a defendant a reduction for acceptance of responsibility, where the defendant pled not guilty to charges, even though the defendant confessed pretrial and did not attempt to retract his confession. See United States v. Portillo-Valenzuela, 20 F.3d 393, 394 (10th Cir.1994). The Tenth Circuit noted that the defendant, Portillo-Valenzuela, had formally pled not guilty, and thereby, "forced the government to prove his factual guilt at trial." 20 F.3d at 394 ("Portillo-Valenzuela's plea and insistence on trial `brought into question whether he manifested a true remorse for his criminal conduct.'" (quoting United States v. Ochoa-Fabian, 935 F.2d 1139, 1143 (10th Cir.1991))). The Tenth Circuit, in making its decision, looked to precedent from the United States Court of Appeals for the Eighth Circuit, in United States v. Davila, 964 F.2d 778, 784 (8th Cir.1992), where the Eighth Circuit upheld a district court's denial of the reduction, because the defendant had pled not guilty on all counts, and thus forced the government to prove his guilt, even though the defendant confessed pretrial and offered to cooperate. See 20 F.3d at 394.
The Tenth Circuit explained that the question to answer, when determining whether to grant a defendant a reduction for his or her acceptance of responsibility after the defendant has proceeded to trial, "is not whether he actively asserted his innocence, but whether he `clearly demonstrate[d]' acceptance of his guilt." United States v. Portillo-Valenzuela, 20 F.3d at 394, (quoting U.S.S.G. § 3E1.1(a)). "Pleading not guilty and requiring the government to prove guilt at trial demonstrate denial of responsibility, regardless of how easily the government can prove guilt." 20 F.3d at 394-95. The Tenth Circuit noted that U.S.S.G. § 3E1.1 cmt. 2 does not preclude a defendant who proceeds to trial from receiving the reduction, but also noted that a defendant's choice to plea not guilty is a factor which may be considered in determining whether he or she accepted responsibility. See 20 F.3d at 395 (stating that application note 2 "does not suggest that in some or all cases the court may not consider whether the defendant pleaded not guilty and went to trial"). The Tenth Circuit determined that denying Portillo-Valenzuela the reduction was thus not clear error, because he pled not guilty and proceeded to trial, regardless of the weight of evidence presented against Portillo-Valenzuela. See 20 F.3d at 395 ("We therefore do not need to consider the extent of the government's evidence at trial.").
The Tenth Circuit upheld a district court's grant of a reduction for acceptance of responsibility in United States v. Gauvin, 173 F.3d 798 (10th Cir.1999). In that case, the Tenth Circuit found that a district court did not err in granting the reduction where the defendant, Gauvin, "admitted all of the conduct with which he was charged [and] ... simply disputed whether his acknowledged factual state of mind met the legal criteria of intent to harm or cause apprehension" 173 F.3d at 806. Gauvin was convicted, by a jury, on charges of assault with a dangerous weapon and assault on a federal officer. See 173 F.3d at 801. Gauvin's argument at trial was based on his theory that "he did not intend, while drunk and scared, to cause injury to others." 173 F.3d at 806. Gauvin also "contended that his drunkenness rendered him incapable of forming the requisite mens rea." 173 F.3d at 806. The district court stated, in granting the reduction, that Gauvin was "entitled to pursue the theory that he did all these things on which the charges were based, but the one thing he didn't do is try to use
The Tenth Circuit has since limited its holding in United States v. Gauvin by clarifying the court's rationale in upholding the reduction. In United States v. Collins, the Tenth Circuit noted that a defendant was correct in stating that "Gauvin stands for the proposition that a defendant's admission of guilt at trial up to the point of the asserted defense can earn the offense level reduction," but also noted that United States v. Gauvin "does not establish that the district court must grant an offense level reduction under these circumstances." 511 F.3d at 1280 (emphasis in original)(internal citations omitted). The Tenth Circuit qualified its decision in United States v. Gauvin by pointing out that "on appeal, the government had to establish that the district court committed clear error in granting the adjustment .... And we must always bear in mind that `the sentencing judge is in a unique position to evaluate a defendant's acceptance of responsibility' and is entitled to `great deference on review.'" United States v. Collins, 511 F.3d at 1281 (quoting United States v. Hamilton, 413 F.3d 1138, 1145 (10th Cir.2005))(alterations omitted).
The Tenth Circuit has recently discussed the limitation of United States v. Gauvin's holding:
United States v. McGehee, 672 F.3d 860, 877 (10th Cir.2012)(quoting United States v. Gauvin, 173 F.3d at 806). The Tenth Circuit further explained: "[I]n Gauvin, we emphasized that the defendant had `admitted to all the conduct with which he was charged' ... we stated that his argument was essentially a challenge to the applicability of the statute in question to his conduct." United States v. McGehee, 672 F.3d at 878. Similarly, the Tenth Circuit has emphasized that, in United States v. Gauvin, Gauvin went to trial to dispute whether his acknowledged factual state of mind, while "drunk and scared," made him culpable of the charged offense — assault — which requires an "intent to harm or cause apprehension." United States v. Salazar-Samaniega, 361 F.3d 1271, 1280-81 (10th Cir.2004).
In United States v. McGehee, the Tenth Circuit noted that the defendant, McGehee, "did not admit to all of the
672 F.3d at 878. Thus, a defendant who goes "to trial not to preserve a legal issue but to test the government's evidence" is not entitled to a reduction for his or her acceptance of responsibility. United States v. Allen, 129 F.3d 1159, 1167 (10th Cir.1997). See United States v. Manzanares-Sanabria, 814 F.Supp.2d 1155, 1170-74 (D.N.M.2011) (Browning, J.)(declining to grant an acceptance-of-responsibility reduction where the defendant pleaded guilty on the morning of trial).
After United States v. Booker, the sentencing guideline ranges are now advisory
Congress has directed sentencing courts to impose a sentence "sufficient, but not greater than necessary" to comply with four statutorily defined purposes enumerated in 18 U.S.C. § 3553(a)(2):
18 U.S.C. § 3553(a)(2)(A)-(D). Section 3553(a) also directs sentencing courts to consider: (i) the nature of the offense and the defendant's character; (ii) the available sentences; (iii) the sentencing guidelines and policy statements that the United States Sentencing Commission has promulgated; (iv) a policy favoring uniformity in sentences for defendants who commit similar crimes; and (v) the need to provide restitution to victims. See 18 U.S.C. § 3553(a)(1), (3)-(7).
In Kimbrough v. United States, the Supreme Court stated that, in the ordinary case, "the Commission's recommendation of a sentencing range will `reflect a rough approximation of sentences that might achieve § 3553(a)'s objectives.'" 552 U.S. at 89, 128 S.Ct. 558 (quoting Rita v. United States, 551 U.S. at 350, 127 S.Ct. 2456). The Supreme Court recognized, however, that the sentencing judge is "in a superior position to find facts and judge their import under § 3553(a) in each particular case." 552 U.S. at 89, 128 S.Ct. 558. Applying § 3553(a)'s factors, the Court has found that the case of an illegal immigrant who re-enters the United States so as to be able to provide for his two children and two siblings was not materially differentiated from other re-entry cases, and thus, no variance from the guidelines sentence was warranted. See United States v. Almendares-Soto, No. CR 10-1922 JB, 2010 WL 5476767, at *12 (D.N.M. Dec. 14, 2010) (Browning, J.). On the other hand, in United States v. Jager, No. CR 10-1531 JB, 2011 WL 831279 (D.N.M. Feb. 17, 2011) (Browning, J.), although Jager's military service was not present to an unusual degree and thus did not warrant a departure, the Court found that a variance was appropriate, because Jager's military service was "superior and uniformly outstanding," as Jager appeared to have been "trustworthy[] and dedicated, and he served with distinction." 2011 WL 831279, at *14.
The Court will apply enhancements for aggravating role and use of sophisticated means, decline to apply an enhancement for use of a special skill, and decline to apply a reduction for acceptance of responsibility. These conclusions result in a total offense level of 25, which, when matched with Courtney's criminal history category of I, indicate a Guidelines sentencing range of 57-71 months. The Court will vary downward, however, and sentence Courtney to a 24-month term of imprisonment.
The Court will accept the USPO's recommendation and the United States' argument that it apply a 2-level enhancement for being "an organizer, leader, manager, or supervisor in any criminal activity." U.S.S.G. § 3B1.1(c). Unlike subsections (a) and (b), an aggravating role enhancement under subsection (c) requires no minimum number of criminal participants — control over a single criminal collaborator will do. Here, Courtney exercised control over Johns. See PSR ¶ 48, at 15; id. ¶¶ 5-31, at 4-12. By developing the scheme and acting as the straw purchasers' point of contact, Courtney exercised decision-making authority, and participated in planning and organizing the offense. Courtney owned a fifty-percent interest in all three companies, while Johns was merely a contractor of
Triggering an enhancement under subsection (c) is not an especially high bar. In addition to there being no minimum size for the criminal enterprise, the enhancement is not limited to "organizer[s] and leader[s]," but, rather, applies to "manager[s]" and "supervisor[s]," as well. U.S.S.G. § 3B1.1(a), (c). "Functioning as a leader requires an element of control over underlings, particularly in the form of recruitment and direction. To qualify as an organizer, however, no control is necessary." United States v. Wardell, 591 F.3d at 1304 (citations omitted)(citing United States v. Cruz Camacho, 137 F.3d 1220, 1224-25 (10th Cir.1998); United States v. Egbert, 562 F.3d 1092, 1103 (10th Cir. 2009)). The Tenth Circuit has recognized that, as a result of the Commission's inclusion of managers or supervisors along with organizers in § 3B1.1(c), "a defendant may be punished as an organizer under § 3B1.1(c) for devising a criminal scheme, providing the wherewithal to accomplish the criminal objective, and coordinating and overseeing the implementation of the conspiracy even though the defendant may not have any hierarchical control over the other participants." United States v. Valdez-Arieta, 127 F.3d 1267, 1272 (10th Cir. 1997). Thus, "`[t]he key to determining whether a defendant qualifies as an organizer is not direct control but relative responsibility.'" United States v. Wardell, 591 F.3d at 1304 (quoting United States v. Tejada-Beltran, 50 F.3d 105, 112 (1st Cir. 1995)).
The Court must consider
U.S.S.G. § 3B1.1 cmt. 4. Analyzing the first factor, Courtney was, by all appearances, both the initiator and the final word when it came to decision-making. On the second factor, Courtney recruited Johns to join his criminal scheme. Additionally, Courtney is ultimately responsible for recruiting the straw buyers and his mother into his scheme, exposing them to substantial risk — both financial risk and risk of criminal prosecution. The straw buyers and the mother might not be "participants" under § 3B1.1, because they may not be individually criminally culpable for their actions, but recruiting them was nonetheless an act of organization or management. As to the third factor, Courtney, as the business owner, reaped a far greater potential reward from the scheme than Johns did; the two men would not equally share any profits from the scheme. Fourth, as mentioned in regard to the first factor, Courtney appeared to be the primary planner and decision-maker in this scheme. Fifth, although this scheme technically involved only two criminal participants, it involved several other unknowing participants, and it bilked the victims out of almost a million dollars. Sixth, it is difficult to ascertain how much control Courtney exercised over Johns, but this factor is only necessary for the leadership or organizer enhancements, not the manager or supervisor enhancements.
It is true, as Courtney argues, that Johns was involved in many facets of the scheme, including, for example, his own
The Court cannot apply a special-skill enhancement in conjunction with an aggravating role enhancement, and the Guidelines suggest that, if both enhancements factually apply, the Court should apply the aggravating role enhancement and not the special-skills enhancement.
U.S.S.G. § 3B1.3 (emphasis added). The United States concurs with the Court's conclusion. See Tr. at 46:11-18 (Court, Higgins). The Court will thus apply the aggravating role enhancement but not the special-skill enhancement.
The Court concludes that Courtney's conduct warrants a 2-level sophisticated means enhancement pursuant to U.S.S.G. § 2B1.1(b)(10)(C). Courtney argues that the means by which he carried out his scheme were less sophisticated than those in other select cases in which courts have imposed the enhancement. Although that may be true, that the means Courtney used to carry out this scheme are less sophisticated than some does not mean that they are unsophisticated. As the United States maintains:
U.S. Response to Objections at 8. The Court agrees, and will, therefore, impose the sophisticated means enhancement. The Guidelines commentary describes the enhancement as follows:
U.S.S.G. § 3B1.1 cmt. 9(b). Courtney specifically sought no-documentation loans to minimize the front-end scrutiny to which his scheme would be subjected, used "blind" straw buyers to effectuate the fraudulent transactions, and paid their mortgage payments with cashier's checks to conceal the source of the payments and thus avoid arousing suspicion. These means are sophisticated in the ordinary use of the word, and it is by no means the case that all mortgage fraud cases would trigger the enhancement under this rationale. See United States v. Rice, 52 F.3d at 849 (holding that a tax-evasion scheme was not sophisticated, because, under the district court's rationale, "every fraudulent tax return will fall within that enhancement's rubric").
Courtney's use of cashier's checks is similar to the defendant's fraud in United States v. Guidry, whose scheme was sophisticated, because she solicited payment made out to a bank, rather than to herself, in small amounts, and never withdrew more than $10,000.00 in one day. See 199 F.3d at 1158. Just as Guidry's behavior involved the sophisticated use of otherwise common banking tools — checks made payable to a bank and ordinary bank withdrawals — Courtney used his specialized knowledge to obtain the mortgage he needed to minimize his risk of detection and employed cashier's checks for their relative difficulty to trace. The Court will apply the 2-level sophisticated means enhancement.
The Court concludes that Courtney's conduct does not warrant a 2-level acceptance-of-responsibility reduction under U.S.S.G. § 3E1.1(a). A defendant is not automatically precluded from receiving an acceptance-of-responsibility reduction when he or she goes to trial, but the Tenth Circuit has held that such "adjustments after trial are very rare." United States v. Sims, 428 F.3d at 961. Section 3E1.1's commentary sets forth the circumstances in which a post-trial reduction might be appropriate:
U.S.S.G. § 3E1.1 cmt. 2.
According to Courtney, he is entitled to the acceptance-of-responsibility reduction for two basic reasons: first, he "deeply regrets, and has always deeply regretted, any losses or hardships caused by his actions"; and, second, he never argued that he executed the transactions "perfectly, or even appropriately in all respects .... [He] has simply denied that he intentionally schemed to defraud." Keith Michael Courtney's Objections and Comments to the Presentence Report at 5, filed October 2, 2013 (Doc. 151-1). With respect to the first argument, the Court does not believe that Courtney's expression of regret for the consequences of his actions clearly demonstrates that he has accepted responsibility for the criminality of his actions. Courtney's second argument amounts to an assertion of his factual innocence, i.e., that he lacked the requisite mens rea to be properly convicted — an argument that the jury rejected. This argument is not the sort of legal challenge to a statute that U.S.S.G. § 3E1.1 cmt. 2 contemplates. The Court will not, therefore, apply an acceptance-of-responsibility reduction.
Courtney's total offense level under the Guidelines is 25, his criminal history category is I, and his sentencing range, therefore, is 57-71 months. The Court will, however, vary from the Guidelines range to fashion a sentence that is sufficient, but not greater than necessary, to comply with the [following] purposes":
18 U.S.C. § 3553(a)(2). In tailoring a sentence to meet these ends, the Court must consider "the nature and circumstances of the offense and the history and characteristics of the defendant." 18 U.S.C. § 3553(a)(1).
The Court has identified twelve factors that put downward pressure on Courtney's sentence, and four factors that put upward pressure on it. First, the Court has read the numerous letters sent to it on Courtney's behalf and considered Courtney's volunteer work, and it concludes that Courtney is a man of generally decent character and integrity. Second, the temporal spacing between the two criminal transactions suggests to the Court that these criminal incidents represent aberrant behavior in Courtney's life — not the extent of warranting a departure, because they involved planning, but enough to apply downward pressure on the sentence. Third, the Court concludes that Courtney can be an asset to the community if rehabilitated — he is intelligent, entrepreneurial, of generally high character, and has
Fifth, Courtney's youth and his inexperience in his professional field at least partially contributed to this crime. A similar ethical lapse is less likely to occur again and that it occurred this time is more excusable for someone in Courtney's position than it would be for someone with decades of experience in the field. Sixth, the Court has read the Courtney Letter, and — although the Court has concluded that Courtney does not merit an acceptance-of-responsibility reduction — the Court concludes that Courtney is genuinely remorseful for his actions and the impact they have had on the victims in this case. Courtney's remorse is probably more genuine than many defendants who received the reduction, and this remorse puts downward pressure on the sentence. Seventh, Courtney is a first-time offender, and was, before this crime, an upstanding member of the community with a strong, budding business reputation. This conviction, thus, inflicts a punishment on Courtney that it might not inflict even on other first-time offenders, let alone recidivists. Courtney's standing in his business and professional community has been deleteriously impacted — every letter the Court received reflects an individual who knows of Courtney's convictions, and there are likely many others who did not write to the Court. That Courtney has already been seriously reputationally punished reduces the need for the Court to impose further punishment and puts downward pressure on the sentence. Eighth, for the reasons already stated, the Court believes that Courtney's chances of rehabilitation are very strong, and his odds of recidivism relatively low. The Court is thus almost entirely concerned with imposing punishment and deterrence, rather than incapacitating Courtney to protect the public.
Ninth, after reviewing the NCIA Report in detail, the Court concludes that most similar defendants sentenced for similar crimes are sentenced to terms of imprisonment well below the 57-71 months the Guidelines now indicate. See NCIA Report at 6 & n. 2 (indicating an average sentence of 26.1 months when probation-only sentences are excluded and a sentence of 24.4 months when probation-only sentences are counted as a zero-month sentence). Although these sentences were individually tailored for the defendants to whom they were given, and, thus, the Court will not mirror them in this case, it does appear that sentencing Courtney within the Guidelines would be inconsistent with what other courts are doing. Tenth, the Court is particularly swayed by the similarities between this case and its own previous case, United States v. Ward, No. CR 10-2318 JB, 2011 WL 3503273 (D.N.M. Aug. 5, 2011) (Browning, J.), in which the defendant was sentenced to 21-months imprisonment for using his special skills as an attorney to defraud a victim out of $500,000.00. See 2011 WL 3503273, at *1. That case was resolved via a plea agreement, the defendant accepted responsibility, and the loss amount was lower than in this case. See 2011 WL 3503273, at *1-2. Nonetheless, the similarities are striking, and the inconsistencies that would result if the Court were to sentence Courtney within his Guidelines sentence put downward pressure on the sentence. Eleventh, this crime is not nearly as serious as many that the Court sees; fraud is a nonviolent property crime, and the scope of damages here is limited to two intuitional lenders. Although this crime is still undoubtedly serious, the limited number of victims and
The Court has carefully considered Courtney's request for a probation-only sentence. As is implicit in the Court's above analysis, while the mitigating factors push Courtney's sentence down, they do
United States v. Austin, 426 F.3d 1266, 1274 (10th Cir.2005). The Court finds that United States v. Schmidt, United States v. Banda, 168 Fed.Appx. 284 (10th Cir.2006) (unpublished), and United States v. Leroy, 298 Fed.Appx. 711 (10th Cir.2008) (unpublished), all have persuasive value with respect to a material issue, and will assist the Court in its disposition of this Memorandum Opinion and Order.
United States v. Nolf, 30 F.Supp.3d 1200, 1222-23, 2014 WL 3377695, at *20-21 (D.N.M.2014) (Browning, J.)(emphasis in original).
Daniel S. Nagin, Deterrence: A Review of the Evidence by a Criminologist for Economics, 2013 Annual Rev. Econ. 5:83, 84. Both specific deterrence and incapacitation are, of course, valid considerations in sentencing, and the difference between the two may be more important to academics than to courts. Courts are bound to impose sentences consistent with 18 U.S.C. § 3553(a), and both considerations — specific deterrence and incapacitation — are reflected in the same two § 3553(a) factors: (a)(2)(B)'s mandate "to afford adequate deterrence to criminal conduct" and (a)(2)(C)'s mandate "to protect the public from further crimes of the defendant." The Court concludes that specific deterrence is embodied more by (a)(2)(B) than (a)(2)(C), while incapacitation is embodied more by (a)(2)(C) than (a)(2)(B), but both statutory provisions support both considerations, and if Congress did not care to separate them, the Court must address them both when sentencing a defendant. Thus, the Court must still consider specific deterrence when sentencing, because Congress demands it; prevailing research simply indicates that alternatives to incarceration are generally more effective on this front.
There is, however, comparatively more support for incarceration's general-deterrence value. An economic model of crime would have individuals committing crimes only when the benefit to the individual of committing the crime (f, for "fruits") outweighs the product of the likelihood of getting caught and brought to justice (c, for "certainty") multiplied by the detrimental impact of the punishment on the individual (s, for "severity"). If f > c • s, the individual will commit the crime, and if f C c • s, the individual will not commit the crime. The Court notes that this theory is not fully workable as written; several factors — many of which would vary from person to person — would need to be established. For example, s and f would have to be put into the same units. Commonly, s, the punishment for a crime, starts out in units of months of incarceration; f, the crime's benefit to the criminal, often starts out in units of dollars. A conversion factor would have to be established that essentially asks how much an individual would have to be paid to spend a month in prison. This conversion factor would likely vary from person to person, both on the basis of idiosyncratic personal preferences and for rational, predictable reasons, e.g., an 80-year-old man with millions of dollars might be less apt to trade prison time for money than a 30-year-old without a cent to his name. Even a single person likely has more than one conversion factor, which marginally fluctuates over the number of months of incarceration involved; for example, there are often immense social and reputational costs to a person for serving his or her first month in prison — i.e., for being convicted and incarcerated at all — but these costs are for the most part one-time-only, and do not double or triple upon serving two or three months in prison. The model would also have to account for: (i) the possibility of being arrested but not convicted, which might entail social and reputational costs, and even some jail time; (ii) the possibility of being suspected but not arrested, which may entail social and reputation costs; and (iii) the uncertainty, at the time the crime is committed, of what the exact punishment will be if convicted. These "intermediate" outcomes — between the polar outcomes of being convicted, on one hand, and getting away scot free, on the other — necessitate transforming the right-hand side of the model formula into an integral, in which the various possible outcomes are assigned a probability, their detrimental impact multiplied by that probability, and each possible outcome's consequent product added together to obtain a final sum, which represents c • s. Analogous issues exist on the left-hand side of the formula — the expected value of committing the crime. It is often not clear before committing the crime how much money — or other non-monetary benefit, which can then be assigned a monetary equivalent — will be earned by committing the crime, and, thus, the various possibilities and their corresponding likelihoods must be integrated.
None of these snags is fatal to the economic model; they just make the model's inputs difficult to obtain, and, in some cases, practically unknowable. The model is theoretically sound, and accurately describes how an informed, rational actor would treat the decision whether to commit a crime. Even though most criminals are not, themselves, "informed, rational actors," one would expect that their behavior would, on average, reflect the rational pursuit of incentives, i.e., individuals who should not rationally commit crimes will commit them at roughly the same rate that individuals who "should" rationally commit crimes refrain from committing them, and thus the irrationalities in both directions cancel out, resulting in net rational behavior. Thus, under the economic model, all Congress has to do to root out crime is to ensure that the crime's punishment and detection rate are sufficiently high to greatly outweigh the average fruits of the crime. This end can be effectuated equally well with either severity of punishment or certainty of detection, as a proportional increase to either has the same effect on the right side of the equation.
The model, however, does not work in the real world; it has been falsified by empirical research. The model is dead, and facts, not theory, killed it. If the model held true in the real world, doubling the punishment severity of a crime would deter the same portion of potential criminals as doubling the certainty of detection, and halving a crime's punishment would galvanize the same number of new criminals and halving the detection rate. For example, consider a crime with a certainty of 20% and a severity of 10 years, and assume that 100 people commit this crime. Now assume that the certainty was raised — by way of increased resources devoted to police, investigation, prosecution, etc. — to 40%. The number of people who commit the crime would go down from 100 to x. This figure, x, is not a predictable number, i.e., it is not necessarily 50, because to determine x's value one would have to know more about f, and where c • s stood in relation to it both before and after the certainty modification. Now assume, instead, that the certainty was left at 20% but the punishment was raised from 10 years to 20 years. The number of people who commit the crime would again go down from 100 to x, and, although x would still be an unpredictable number, it would be the same number as the number of people who committed the crime when the detection rate was doubled.
An avalanche of criminological studies have determined that this theoretical symmetry between severity of punishment and certainty of detection does not exist in the real world. See Isaac Ehrlich, Participation in Illegitimate Activities: A Theoretical and Empirical Investigation, 81 J. Pol. Econ. 521, 544-47 (1973)(finding that the certainty of punishment was a more important indicator than severity in deterring murder, rape, and robbery); Harold G. Grasmick & George J. Bryjak, The Deterrent Effect of Perceived Severity of Punishment, 59 Soc. Forces 471, 472 (1980)(reviewing twelve deterrence studies and explaining that "nearly all these researchers conclude that perceived certainty of legal sanctions is a deterrent, [while] only one (Kraut) concludes that perceptions of the severity of punishment are part of the social control process"); Jeffrey Grogger, Certainty v. Severity of Punishment, 29 Econ. Inquiry 297, 304 (1991)(studying California arrestees and concluding that "increased certainty of punishment provides a much more effective deterrent than increased severity" and that a "six percentage point increase in average conviction rates would deter as many arrests as a 3.6 month increase in average prison sentences"); Steven Klepper & Daniel Nagin, The Deterrent Effect of Perceived Certainty and Severity of Punishment Revisited, 27 Criminology 721, 741 (1989)(surveying graduate students about tax evasion scenarios and finding that certainty of punishment is an effective deterrent); Daniel S. Nagin, Criminal Deterrence Research at the Outset of the Twenty-First Century, 23 Crime & Just. 1, 13 (1998)(reviewing the literature and concluding that "cross-sectional and scenario-based studies have consistently found that perceptions of the risk of detection and punishment have negative, deterrent-like associations with self-reported offending or intentions to offend"); Daniel S. Nagin & Greg Pogarsky, An Experimental Investigation of Deterrence: Cheating, Self-Serving Bias, and Impulsivity, 41 Criminology 167 (2003)(testing whether students would cheat on a trivia quiz to earn a cash bonus and finding that cheating decreased when the certainty of detection was higher but not when the perceived severity of punishment increased); Ann Dryden Witte, Estimating the Economic Model of Crime with Individual Data, 94 Q.J. Econ. 57, 79 (1980)(studying men released from the North Carolina prison system and demonstrating that "a percentage increase in the probability of being punished has a relatively larger effect on the number of arrests or convictions than does a percentage increase in the expected sentence"); Andrew von Hirsch et al., Criminal Deterrence and Sentence Severity: An Analysis of Recent Research 47 (1999); Robert Apel & Daniel S. Nagin, General Deterrence: A Review of Recent Evidence, in Handbook on Crime and Criminal Justice (Michael Tonry ed.)(2011); Alfred Blumstein & Daniel Nagin, The Deterrent Effect of Legal Sanctions on Draft Evasion, 29 Stan. L.Rev. 241, 269 (1977)(studying draft evasion and finding a significant negative association between the probability of conviction and the draft evasion rate, leading the authors to conclude that their "findings are consistent with the work of other investigators who have argued that the certainty of punishment has a stronger deterrent effect on crime than the severity of punishment"); Aaron Chalfin & Justin McCrary, Criminal Deterrence: A Review of the Literature, J. Econ. Literature (forthcoming). Studies universally find that certainty of punishment has a far greater deterrent effect than severity of punishment. It is difficult to pin down the extent to which real-world (empirical) findings deviate from the one-to-one rate predicted by the economic model — i.e., whether certainty is twice as important, three times as important, or ten times as important — as it appears to differ in different contexts. Interestingly, studies also agree that another factor, which is entirely absent from the economic model, works to determine deterrence: the immediacy, or celerity, with which the crime is detected and the punishment meted out. The above studies generally find that both certainty and celerity have a greater impact on deterrence than severity.
It is not clear why certainty is so much more effective than severity at deterring criminal behavior; as is the case in many contexts, empirical studies can identify the "what" but not the "why." It is even less clear why celerity plays any role in a potential criminal's decision. The Court suspects that the average street-level potential criminal is more well-informed about the likelihood of getting caught, and the quickness with which he will be caught, than he is about the sentence he will receive. From there, the potential criminal uses the information he has on hand to make his decision, and largely disregards the impact of severity, rather than trying to seek out specific information. Drug trafficking defendants, aliens returning after being deported, and Indians off the reservation are often shocked at the severity of federal sentences as compared to prior sentences they may have received in state and tribal systems; in the Court's experience, most federal defendants have no idea how harsh federal sentences are, which would obviously prevent them from acting as an effective deterrent.
What is clear, however, is that severity of punishment continues to have some deterrent effect — albeit less than it would were the universe of potential criminals an overall rational bunch. See, e.g., Daniel S. Nagin, Deterrence: A Review of the Evidence by a Criminologist for Economists, 2013 Annual Rev. Econ. 5:83, 86-88, 97-98 (2013). It also seems likely that the behavior of sophisticated potential criminals would hew more closely to the economic model than that of unsophisticated, street — level criminals. Thus, general deterrence remains an important consideration in cases like this one, in which the perpetrators are relatively sophisticated and the certainty of detection relatively low — and the celerity even lower.
Those in the community who know Courtney might be less apt to commit mortgage fraud themselves when they see Courtney sentenced to prison rather than probation. That they were more deterred by seeing Courtney's crimes detected and punished in the first place does not change this conclusion. Moreover, a proper sentence reflects more than just specific — and general-deterrence considerations. This sentence may deter no one, and Courtney may be on the straight and narrow from here on out regardless of the sentence that the Court imposes, but the Court's sentence must still "provide just punishment for the offense" and comply with the factors enumerated in § 3553(a). 18 U.S.C. § 3553(a)(2)(1).
