USCA1 Opinion
UNITED STATES COURT OF APPEALS
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT
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No. 94-1922
UNITED STATES OF AMERICA,
Appellee,
v.
LONDON EGEMONYE,
Defendant, Appellant.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Joseph L. Tauro, U.S. District Judge]
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Before
Cyr, Circuit Judge,
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Bownes, Senior Circuit Judge,
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and Boudin, Circuit Judge.
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Joan M. Griffin, by Appointment of the Court, with whom Casner &
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Edwards was on brief for appellant.
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James F. Lang, Assistant United States Attorney, with whom
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Donald K. Stern, United States Attorney, was on brief for the United
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States.
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August 3, 1995
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BOUDIN, Circuit Judge. London Egemonye was indicted in
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1993 under a multi-count indictment charging him and others
with conspiracy and other offenses relating to the possession
and use of other people's credit cards. 18 U.S.C.
1029(a)(2)(trafficking, fraud and use), 1029(a)(3)
(possession with intent to defraud), 1029(b)(2) (conspiracy).
On June 10, 1994, Egemonye entered guilty pleas to all
counts, and he now appeals from his sentence arguing that it
is flawed by the government's manipulation of sentencing
factors and by an improper computation of loss.
Because there was no trial, we derive the facts
primarily from the recitations at the plea hearing, from the
presentence report, and from submissions at the sentencing
hearing. United States v. Connell, 960 F.2d 191, 192-93 (1st
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Cir. 1992). The case arose out of a sting operation
conducted by a joint federal-state task force investigating
credit card and other financial fraud in Massachusetts. The
critical events took place in January and February 1993.
Robert Leslie, who was cooperating with authorities,
introduced Egemonye to an undercover state trooper known to
both only as "Kathy." On January 21, 1993, Kathy supplied
Egemonye with two BayBank MasterCard credit cards and one
BayBank Visa credit card with an aggregate credit limit of
$7,450 for all three cards. Egemonye then created false
driver's licenses in the credit-card names, each license
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bearing Leslie's photograph, and drove Leslie to three
different banks to obtain cash advances of $6,900.
Egemonye purchased four more credit cards from Kathy on
January 29, 1993, and four more on February 2, 1993. The
aggregate limits on the cards in the two transactions were
$21,000 and $14,000, respectively. In between these
transactions, several of the cards were used to obtain
advances from banks, and Egemonye and others in the
conspiracy engineered deposits of some stolen checks into
accounts of individual card holders to boost the depleted
credit available for those cards.
Until the fourth transaction, Kathy made the "sales" in
exchange for a share of the proceeds, but on February 5 she
proposed that she be paid a flat $200 per card. Egemonye
said, "I'm not going to buy one card for two hundred. . . .
It has to be like ten." On February 10, Kathy told Egemonye
that she expected to receive a number of cards that day, that
Egemonye should bring $2,000 for 10 cards, and that she would
"front" (finance) any additional cards and accept payment for
them later. Egemonye agreed, subject to his examination of
the cards.
When Kathy and Egemonye met later that day, Kathy said
that she had a bag full of cards and asked Egemonye whether
he knew of another buyer if he did not want them all. He
said, "I probably can handle them," and proceeded to give
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Kathy $2,000 down, and a promise of $6,000 more later, for 40
Household Bank Visa and MasterCard credit cards with an
aggregate limit of $200,000. Egemonye was arrested
immediately thereafter, followed by the indictment and plea
already described.
At sentencing, the district court increased the base
offense level of 6 by 8 additional levels because the "loss"
attributed by the court to Egemonye was over $200,000.
U.S.S.G. 2F1.1(a), (b)(1)(H). The court computed the loss
at $242,950, representing the aggregate credit limit of the
51 credit cards purchased from Kathy in the four
transactions. The offense level was then adjusted in other
respects, not here in dispute, and Egemonye was sentenced
within the guideline range to 37 months' imprisonment.
1. On appeal, Egemonye's first claim is directed at the
40 cards supplied to him in the final transaction. Egemonye
contends that including these 40 cards in the loss
calculation condones "blatant sentencing factor manipulation
engaged in by the investigating agents" and is a violation of
constitutional due process. He relies on several decisions,
including United States v. Connell, 960 F.2d 191, 196 (1st
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Cir. 1992).
We have recently had occasion to discuss Connell and the
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other decisions in this circuit that have addressed
sentencing factor manipulation. United States v. Montoya,
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No. 94-1666, et al., (1st Cir. July 27, 1995). Summarizing
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the prior cases, we said that "where government agents have
improperly enlarged the scope or scale of the crime," the
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sentencing court has power to exclude "the tainted
transaction" from the guideline computations and for purposes
of any mandatory minimum statute. Montoya, slip op. 6-7
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(quoting in part Connell, 960 F.2d at 195).
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However, recognizing the broad latitude allowed to the
government in investigating and suppressing crime, we
stressed that it was only "extraordinary misconduct" by
agents that could give rise to such an exclusion, which would
occur in the teeth of a statute or guideline approved by
Congress. Montoya, slip op. at 7-8, (quoting in part United
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States v. Gibbens, 25 F.3d 28, 31 (1st Cir. 1994)). While
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something less than a constitutional violation might suffice,
as extraordinary misconduct, Egemonye's reference to due
process concepts is certainly in the ballpark.
In Montoya, as in previous cases, we refused to lay down
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fixed rules to define sentence factor manipulation, but said
that the focus is normally upon the conduct of the government
rather than the defendant. Slip op. at 8. Indeed, Egemonye
does not claim that his will was overborne or deny that he
was predisposed to the offense. What Egemonye claims is that
the fourth transaction had no legitimate law enforcement
purpose and was designed solely to boost his federal sentence
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because government agents were unhappy with lenient treatment
that Egemonye earlier received in state court.
There is some basis for the suggestion that task force
agents were unhappy with Egemonye's prior record and
believed, in the words of one of the agents, "that he
[earlier] got off lightly for his criminal activity." That
criminal record, according to the agent just quoted, involved
a history of credit card fraud by Egemonye that could be
traced back to 1990 and involved a number of transactions.
On this appeal, the government is prepared to assume arguendo
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that the background facts, "viewed collectively, could call
the government's motives into question to some extent."
Nonetheless, the government says that multiple sales
were clearly appropriate in order to identify Egemonye's co-
conspirators, which they did. As to the final sale of 40
cards, the government insists that it too "had a valid
investigatory purpose" which was "to explore the parameters
of the defendant's criminality." Egemonye's counsel replies
that this "parameters" explanation has no real substance and
could be used to enlarge a defendant's sentence to virtually
any height whatever. We think that Egemonye's reply has some
force but overstates the matter.
There is, it should be stressed, no indication that
Egemonye was coerced or pressured to achieve a new level of
crime. True, the fourth sale was much larger than the
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earlier ones; but agent Kathy did not force the 40 cards on
Egemonye. On the contrary, he had insisted on at least 10
cards for the new $200 per card payment ("I'm not going to
buy one card for two hundred. . . . It has to be like ten.")
And when offered a bag full of cards--with the request that
he recommend another buyer for those he did not want--he
responded, "I probably can handle them," and took them all.
Government agents are not limited to replicating a
suspect's largest unsolicited crime. In this case, the full
contours of the criminal operation--its size, techniques,
personnel--were, like an iceberg, largely submerged; and the
means of exploration were additional and larger transactions.
The first three transactions clearly served this purpose and
the fourth, even though followed immediately by the arrest,
provided air-tight evidence for trial that Egemonye was a
significant dealer and not a petty swindler. While the sting
could not be endlessly prolonged and enlarged, nothing in the
objective facts suggests "misconduct" at all, let alone
"extraordinary misconduct."
The question, then, is whether the fourth transaction is
tainted by the agents' subjective motives. The pallet in
such matters contains not blacks and whites but shades of
gray. Motives may be mixed; good and bad motives are often
matters of degree; and there can be multiple actors. Whether
to consider subjective motive at all presents a problem of
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policy. Compare Harlow v. Fitzgerald, 457 U.S. 800 (1982)
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(refusing to do so in the qualified immunity context).
Still, we would be greatly concerned if evidence otherwise
available showed that a plainly improper subjective motive--
say, racial hostility or personal animus--had enlarged or
prolonged the sting.
But this is not such a case. About the most that can be
derived from the record, drawing all reasonable inferences in
favor of Egemonye, is that the agents thought that Egemonye
was an established and unrepentant defrauder who had escaped
serious punishment for a series of past, similar frauds.
With this in mind, they conducted a sting operation that
involved no pressure whatever on Egemonye, lasted for only
four transactions, and garnered several other defendants.
The first three transactions involved 11 cards; the last one,
40. This is a sizeable jump but hardly extraordinary.
That agents considered Egemonye's past record in
selecting him for overtures by the task force is a
commonplace of law enforcement. Undercover operations
frequently target those who are suspected of crime, and the
recent history of fraudulent activities gave the agents some
reason to think that Egemonye was not only predisposed but
actively engaged. Fed. R. Evid. 404(a), restricting
character evidence to show propensity, is a rule for trials
and not the conduct of police investigations. At worst, the
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agents went too far if and to the extent that they thought
themselves entitled to make up for any shortfall in prior
punishments. But the line is thin and blurred between such a
dubious motive and a simple desire to be sure that a
committed criminal is caught and tried for a substantial
offense based on unshakeable evidence. And, as we have
already held, Egemonye was legitimately targeted and the
sting objectively reasonable in extent. Under these
circumstances, even assuming that the agents' motives were
mixed and not of crystalline purity, we see nothing that
would require a curtailment of the sentence.
2. Egemonye's second challenge to his sentence concerns
the district court's computation of loss. As already noted,
the governing guideline keys the offense level primarily to
"the loss" caused by the offense, U.S.S.G. 2F1.1(b)(1)(loss
table), but goes on to provide (id., comment (n.7)) that
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intended loss should be used if it is greater than actual
loss:
Consistent with the provisions of 2X1.1 (Attempt,
Solicitation or Conspiracy), if an intended loss
that the defendant was attempting to inflict can be
determined, this figure will be used if it is
greater than the actual loss. . . . For example,
if the fraud consisted of selling or attempting to
sell $40,000 in worthless securities . . . . the
loss would be $40,000.
In accord with the presentence report, the district
court in this case attributed to Egemonye an intended loss
equal to the aggregate limits of the purchased credit cards.
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A reading of the transcript indicates that the judge found
that Egemonye was capable of and intended to use the cards to
secure amounts at or virtually at their aggregate limits. We
review such a factual determination only for clear error,
United States v. Pavao, 948 F.2d 74, 77 (1st Cir. 1991),
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reserving for closer scrutiny a buried legal issue shortly to
be described.
On the factual issue of intended use and capability, the
government bears the burden of proof because an increase in
the offense level was sought, see United States v. Sklar, 920
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F.2d 107, 112 (1st Cir. 1990), but the guideline itself
cautions that a reasonable estimate of loss will suffice.
U.S.S.G. 2F1.1 comment. (n.8). Egemonye begins by pointing
out that he realized only about 53 percent of the aggregate
card limits from the cards involved in the first three
transactions and nothing at all from the final bagful of
cards since he was apprehended almost immediately. He argues
that to predict a 100 percent recovery is simply unrealistic.
Unfortunately for Egemonye, there was affirmative
evidence that he instructed his runners at the outset to
procure cash
from the banks at or virtually at the card limits. In
addition, he arranged for the deposit of stolen checks into
some of the accounts, in order to refresh their limits. By
this means, some of the accounts could have been milked for
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amounts in excess of their aggregate limits. The 53 percent
figure represented only the amount that Egemonye had secured
at the time his scheme was interrupted by arrest. See United
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States v. Strozier, 981 F.2d 281, 284 (7th Cir. 1992).
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In sum, taking the issue purely as a factual one of
intent and capability, we do not think that on this record
the use of the aggregate card limits as a measure of intended
and potential loss was clearly erroneous. Where there is
good evidence of actual intent and some prospect of success,
we do not think that a court needs to engage in more refined
forecasts of just how successful the scheme was likely to be.
See United States v. Lorenzo, 995 F.2d 1448, 1460 (9th Cir.),
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cert. denied, 114 S. Ct. 225 (1993). The situation may be
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quite difficult where intent must be inferred solely from the
likely effects of the scheme. See United States v. Stern, 13
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F.2d 489 (1st Cir. 1994).
But there is a wrinkle. There is a cross-reference in
U.S.S.G. 2F1.1's application note 7 (quoted above in
pertinent part) to U.S.S.G. 2X1.1; and there is a second
such cross-reference in application note 9, which reads (in
pertinent part):
"In the case of a partially completed offense
(e.g., an offense involving a completed fraud that
is part of a larger, attempted fraud), the offense
level is to be determined in accordance with the
provisions of 2X1.1 . . . whether the conviction
is for the substantive offense, the inchoate
offense . . ., or both."
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Egemonye's counsel argues that section 2X1.1, and the
discount it makes available, apply in this case.
U.S.S.G. 2X1.1 is concerned with determining the
offense level for an attempt or conspiracy; and this it sets
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at three levels less than the offense level for the
substantive offense--unless the defendant (or his co-
conspirators) have completed all of the acts believed
necessary for the substantive offense or were "about to
complete all such acts" when apprehended. For cases within
the "unless" clause--which the background comment says
represent "most" cases--there is no such discount.
Effectively, the guideline gives the defendant a three-level
discount if he is some distance from completing the
substantive crime.
Read literally, section 2X1.1 is not relevant to the
present case because 14 of the 15 counts against Egemonye
involved completed substantive offenses, ranging from
trafficking in unauthorized credit cards to producing false
driver's licenses, and the conspiracy thus embraced fully
completed crimes. On the other hand, the cross-reference to
section 2X1.1 in section 2F1.1 arguably connects the intended
loss concept to the attempt guideline, and section 2X1.1
blurs the matter further with the following application note
(comment. (n.4)), providing (in pertinent part):
In certain cases, the participants may have
completed . . . . all of the acts necessary for the
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successful completion of part, but not all, of the
intended offense. In such cases, the offense level
for the count (or group of closely related multiple
counts) is whichever of the following is greater:
the offense level for the intended offense minus 3
levels . . . or the offense level for the part of
the offense for which the necessary acts were
completed . . . . For example, where the intended
offense was the theft of $800,000 but the
participants completed . . . only the acts
necessary to steal $30,000, the offense level is
the offense level for the theft of $800,000 minus 3
levels, or the offense level for the theft of
$30,000, whichever is greater.
Interpreting these provisions is a matter of some
difficulty, and the only cases in point are in conflict.
Compare United States v. Watkins, 994 F.2d 1192 (6th Cir.
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1993) with United States v. Strozier, 981 F.2d 281 (7th Cir.
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1992) The problem, in a nutshell, is that section 2X1.1 has
on its face nothing to do with a completed substantive
offense or a conspiracy that has been carried to completion.
On the other hand, the notion of a discount could be extended
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from the case of an incomplete offense to that of a completed
offense where intended harm is part of the calculus and the
harm is only partly completed.
Recognizing the question to be close, we are inclined to
stand by the literal language of the guidelines that directs
section 2X1.1 to cases where the substantive offense has not
been completed. E.g., United States v. Sung, 51 F.3d 92 (7th
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Cir. 1995). The argument for a discount for inchoate crimes
is obvious; the defendant has started down the road toward
the substantive crime but has not gotten there yet and,
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whatever his intention, might still turn back before crossing
the line. By contrast, Egemonye did cross the line and
commit the substantive crime by acquiring the cards and
making the false documents, so the basic purpose of the
section 2X1.1 discount has nothing to do with him.
Where a completed offense is involved, it is surely
rational to measure culpability in part by the intended harm
and to refuse a discount where the offense is complete even
though the intended harm has not yet been fully realized.
From the standpoint of moral guilt, and dangerousness, there
is little to distinguish such a defendant from one who has
actually inflicted the same amount of harm. And we are
influenced in part by the fact that the case law calculating
sentences based on intended harm, most of it admittedly
without making reference to section 2X1.1, is consistent with
this view. E.g., United States v. Guyon, 27 F.3d 723 (1st
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Cir. 1994); United States v. Resurreccion, 978 F.2d 759 (1st
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Cir. 1992).
Of course, there would be nothing irrational in deciding
that actual harm is worse than intended harm and providing a
three-level discount wherever the sentence for a completed
offense is measured in part by intended harm. But this is
not in general the philosophy of the guidelines; if it were,
possession of drugs with intent to distribute would be
punished less harshly than the actual sale of an equivalent
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amount. The wrinkle of section 2X1.1 cannot be ironed
completely smooth, but the pertinent language already quoted
can in fact be squared with our result.
Thus, the cross-references in section 2F1.1 are easily
explained; they do invoke the discount, or the possibility of
a discount, where the underlying crime is merely an attempt
or conspiracy. Application note 4 in section 2X1.1 is less
easily reconciled; but we think the difference is that in the
theft case, there is no completed crime as to the larger
amount but only (in substance) an attempt. Here, by
contrast, all 51 of the cards were the subject of completed
crimes.
Egemonye's remaining claim as to loss is to argue that
no consideration should be given to the 40 cards in the
fourth transaction, or at least to the unexpected 30 cards
(over and above the ten cards Egemonye requested). This is
largely a restatement of the claim that sentencing factor
manipulation occurred. Having rejected that claim, we think
that--from the standpoint of intended loss--Egemonye can
fairly be charged with intending to inflict loss as to all of
the cards.
Both issues in this case are difficult and important.
We are thus especially indebted to counsel for the able
briefing and argument presented on both sides. The
Sentencing Commission's attention will be drawn to the
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arguable lack of clarity in the interplay between section
2F1.1 and section 2X1.1.
Affirmed.
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