FISHER, Circuit Judge:
We must decide when mailings sent to avoid detection or responsibility for a fraudulent scheme are sent "for the purpose of executing such scheme." 18 U.S.C. § 1341. We hold that such mailings fall within the mail fraud statute when they are sent prior to the scheme's completion and that, to determine when a scheme is completed, we look to the scope of the scheme as devised by the perpetrator. Because a reasonable jury could have found that defendant Thomas Tanke's September 16, 2004 letter was sent before the completion of the embezzlement scheme he devised, we affirm his mail fraud conviction on count 2 of the indictment. We also hold that the district court properly applied sentencing enhancements under United States Sentencing Guidelines Manual § 2B1.1(b)(9)(B) and (b)(10)(C).
Rafael Martin and his family operated two construction businesses, Azteca Construction Company and Construction Equipment Rental and Service (CERS). Defendant Thomas Tanke worked for Azteca between 1999 and 2004, serving as vice president of operations between 2000 and July 2004, with authority to approve or issue checks from Azteca accounts. He was not employed by CERS and had no authority to receive CERS income or pay CERS's obligations. Tanke also maintained his own consulting business, Cedar Creek Associates.
Over a 20-month period, Tanke embezzled more than $192,000 from Azteca and CERS. From November 2002 through February 2004, Tanke caused the issuance of 21 Azteca checks, totaling $74,762.82, for his personal expenses. The Azteca checks, most signed by Tanke, were paid to his creditors or businesses he patronized, including General Motors Acceptance Corporation (for an auto lease), Audi Financial Services (financing for an Audi A4 Quattro), Capital One Services (for a credit card), Household Credit Services and HSBC Card Services, Inc. (for a credit card), Providian National Bank (for a credit card), Onyx Acceptance Corporation (financing for a BMW), Steve Larsen's Wheel Works (a retail bicycle shop) and Kenny G. and Company (a jeweler). Tanke was never authorized to use Azteca checks to pay personal obligations or to pay these specific creditors or businesses.
Tanke falsified records to conceal these payments. He used at least six false invoices to make it appear that the checks were issued for legitimate business expenses. For example, a false invoice from "Onyx Corporation," ostensibly for "[p]igging of lines and testing of all pipe," was actually a $10,027.92 payment for a BMW Z4. Tanke also falsified carbon copies of checks in Azteca's check register on at least 10 occasions, also to conceal the true nature of the payments. For example, a check made payable to "Providian" (to pay Tanke's personal Providian Visa card) contained no memo notation, whereas the carbon copy falsely stated that the check was paid to "Providian Products" and referenced "02420-0046-M," an existing Azteca job number and cost code.
Tanke left Azteca in July 2004. It appears that Martin at least suspected Tanke's embezzlement a short time later. In an August 5, 2004 email, Martin asked Tanke about a missing April 2004 check, in the amount of $39,330, from Southern Quality Trucks to CERS. Tanke responded by email that he did "not have any check from Southern Quality Trucks" and that all checks he had received had been turned over to accounting or used to pay outstanding vendors and debts. In fact, Tanke had long since deposited the check into his Cedar Creek account.
In an August 6 email, Martin told Tanke that he knew the check had been deposited into the Cedar Creek account. In an email response that day, Tanke acknowledged that he had diverted the money into his account, but told Martin that this and similar diversions were legitimate transactions to compensate him for consulting work Cedar Creek had allegedly performed for Azteca and CERS. Tanke's email attached what he claimed were three "very old invoices" from Cedar Creek and asserted that his actions had "ensured that Cedar Creek was paid for these long overdue invoices." In addition to casting the diversions as legitimate payments to Cedar Creek, Tanke's email also used thinly veiled threats to discourage Martin from reporting the matter to authorities. Tanke wrote that this was "purely a `business issue'" and that he "hope[d Martin would] not try to expand it to anything else." Tanke warned that, if Martin pursued the matter further, he would report Martin to federal and state agencies, writing: "You do not want to see this happen, as it could involve you personally in criminal or civil action that could put you in prison or forfeit all of your personal holdings."
On August 17, Tanke emailed Martin that he should have received invoices by mail showing that over $98,000 was due to Cedar Creek for consulting fees. Tanke noted that Martin had filed documents leading to a hold on the Cedar Creek account and that, if Martin did not lift that hold, he would report Martin's "numerous frauds and false claims" to authorities. Tanke concluded the email by writing: "I just want what has been and is due to me and we can part friends. Please do not force me to take action that will cause you harm."
Martin replied by email on August 18 that the invoices were "not real," that Tanke was a salaried employee who received wages and that Azteca did not owe Tanke or Cedar Creek any consulting fees. Martin added, "[i]n response to your threats, if you ha[d] knowledge of any wrongdoing by Azteca ..., you should have reported it."
On September 16, Tanke caused a letter to be sent from Cedar Creek to Martin by U.S. mail. This mailing, charged as count 2 of the indictment, stated that Azteca and CERS had previously paid some invoices due to Cedar Creek (again, an apparent reference to Tanke's diversion of checks
In a letter dated September 23, Martin rejected the new invoice and stated that Azteca had never paid any of the previous fictitious invoices either. Martin later testified at trial that Cedar Creek did not perform any of the claimed services reflected on the September 16 Cedar Creek invoice. He also testified that neither Tanke nor Cedar Creek had ever consulted for CERS.
In 2009, a grand jury indicted Tanke on five counts of bank fraud, for violation of 18 U.S.C. § 1344, and two counts of mail fraud, for violation of 18 U.S.C. § 1341. The first mail fraud count, charged as count 1 of the indictment, was for a July 22, 2004 check from Industrial Tractor Co. to CERS for approximately $33,000, delivered via Federal Express from South Carolina to California. Tanke does not challenge his conviction on count 1. The second mail fraud count, charged as count 2 of the indictment, was for the September 16, 2004 mailing.
A jury found Tanke guilty on all counts, and the district court sentenced him to 70 months' imprisonment, 60 months' supervised release and $243,403.96 in restitution. The Sentencing Guidelines range of 70-87 months reflected a 2-level enhancement for use of sophisticated means and another 2-level enhancement for misrepresentation or fraud during the course of a bankruptcy proceeding.
Tanke raises five issues on appeal. He contends that (1) there was insufficient evidence to support his mail fraud conviction on count 2 of the indictment; (2) the district court erred by imposing a 2-level enhancement for making a misrepresentation during a bankruptcy proceeding; (3) the district court erred by imposing a 2-level enhancement for sophisticated means; (4) the district court erred by including $44,715.21 in restitution for credit card charges that were not part of the offenses of conviction; and (5) the judgment should be amended to show that interest on the restitution award was waived. The government concedes error on the fourth and fifth issues but urges us to affirm on the first three issues, which we address in turn. We have jurisdiction under 28 U.S.C. § 1291.
Tanke argues that the evidence is insufficient to sustain his conviction on count 2. He argues that the September 16, 2004 letter was not "for the purpose of executing" his fraudulent scheme, as 18 U.S.C. § 1341 requires, because it was mailed after he had received all of the money from the embezzlement scheme, Martin had uncovered the fraud and the scheme had been completed. We review claims of insufficient evidence under Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979). Such a challenge can succeed only if, viewing the evidence in the light most favorable to the prosecution, no rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. See Flyer, 633 F.3d at 917.
When do mailings sent to facilitate concealment of a fraudulent scheme — to
18 U.S.C. § 1341 (emphasis added). Accordingly, we have held that mail fraud includes two elements: "first, the government must prove that a defendant devised or intended to devise a scheme to defraud a victim of his money or property; second, it must prove that in executing the scheme, the defendant made use of or caused the use of the mails." Lo, 231 F.3d at 475.
In deciding when mailings designed to avoid detection or responsibility for a fraudulent scheme fall within the mail fraud statute, we begin with the general principle that the mailing must be sent "prior to the scheme's completion." United States v. Lane, 474 U.S. 438, 453, 106 S.Ct. 725, 88 L.Ed.2d 814 (1986) (emphasis in original). But when is a scheme complete?
A partial answer is that it plainly does not end before the perpetrator has obtained money or property from the victims. Thus, before proceeds of the fraud have been obtained, a mailing need only in some way further the scheme, as mailings designed to avoid detection or responsibility clearly do.
Once proceeds of the fraud have been obtained, it is harder to say when a scheme ends. The only easy case is that of an ongoing scheme, in which the perpetrator has received some of the proceeds of the fraud but expects to receive additional proceeds of the fraud in the future. It is well settled that mailings sent in the midst of such a scheme, including those designed to avoid detection or responsibility, fall within the statute. See Schmuck v. United States, 489 U.S. 705, 711-12, 714, 109 S.Ct. 1443,
The more difficult cases are those in which all the intended proceeds of the scheme have been obtained, but the perpetrator uses the mails to avoid detection or responsibility for the scheme. To determine whether such mailings occurred before or after the scheme's completion, we have to establish when the scheme ended. To do so, we have to look to the scope of the scheme as devised by the perpetrator.
In United States v. Sampson, 371 U.S. 75, 83 S.Ct. 173, 9 L.Ed.2d 136 (1962), for example, the defendants were charged with mail fraud based on letters they sent to their victims after they obtained the victims' money. See id. at 78-79, 83 S.Ct. 173. The letters were designed to lull the victims into a false sense of security in order to postpone their ultimate complaint to authorities. See id. at 78, 83 S.Ct. 173. The district court said there could be no liability because the letters were sent after the money was received, but the Supreme Court disagreed. See id. at 79, 83 S.Ct. 173. The Court explained that the question was not whether the money had been obtained but whether the defendants' plan had been fully executed. See id. at 80, 83 S.Ct. 173. The Court held that the defendants' scheme had not been fully executed at the time the letters were sent because the scheme had contemplated lulling activities from the start:
Id. at 80-81, 83 S.Ct. 173 (emphasis added).
We applied the same principle in United States v. Lazarenko, 564 F.3d 1026 (9th Cir.2009). The defendant, a Ukranian politician, engaged in a series of fraudulent business transactions that netted him millions of dollars. See id. at 1029. By 1994, the defendant had obtained the proceeds from the scheme and concealed them in bank accounts in Switzerland and the Bahamas. See id. at 1036. Some years later, in 1997 and 1998, the defendant transferred the money to banks in California to hide his fraudulent activity as he sought political office. See id. We held that the 1997 and 1998 transfers fell outside the wire fraud statute because, in the absence of any evidence that subsequent transfers were part of the scheme as it was originally conceived, the scheme had been completed in 1994:
Id. at 1037.
These cases teach that mailings designed to avoid detection or responsibility for a fraudulent scheme fall within the mail fraud statute when they are sent prior to the scheme's completion and that the scope of the scheme as devised by the perpetrator determines when that scheme is completed. If the scheme, as conceived by the perpetrator, has been fully executed, then the mailing, even if sent to facilitate concealment of the scheme, falls outside the statute.
We recognize that some would extend liability further, as the government urges us to do here. Some courts appear to require only that the mails are used to avoid detection or responsibility for the fraud, irrespective of whether the mailings postdate completion of the scheme. See United States v. Lopez, 71 F.3d 954, 961-62 (1st Cir.1995), abrogated on other grounds by United States v. Wells, 519 U.S. 482, 117 S.Ct. 921, 137 L.Ed.2d 107 (1997); United States v. Young, 955 F.2d 99, 108 (1st Cir.1992). Because such a rule would be inconsistent with Sampson and Lazarenko, and contrary to Lane's requirement that the use of the mails take place "prior to the scheme's completion," 474 U.S. at 453, 106 S.Ct. 725 (emphasis in original), we decline to follow that approach.
Other courts, relying on "the self-evident proposition that the aim of virtually all criminal actors, including those who commit mail fraud, is not only to accomplish their criminal goals, but also to escape detection and liability for these misdeeds," would appear to make avoiding detection and prosecution an implicit component of every scheme to defraud. United States v. Hoffman, 229 Fed.Appx. 157, 158 (3d Cir.2007) (unpublished). Hoffman's suggestion, that every scheme to defraud inherently includes taking any necessary step to avoid detection and prosecution, has intuitive appeal. But it is in tension with Sampson, which required an actual and specific plan to conceal, not a generalized one that could be inferred from the mere existence of a fraudulent scheme. See 371 U.S. at 80-81, 83 S.Ct. 173. Nor do we see how that approach could be reconciled with the outcome in Lazarenko. Under Sampson and Lazarenko, it cannot be enough that the scheme included a general desire not to get caught; the government must be required to prove, at a minimum, that the already conceived scheme included a specific plan for evading detection.
Under Hoffman, moreover, no scheme to defraud would ever end so long as the perpetrator could take some action to avoid detection, prosecution or conviction because any such action would be treated
564 F.3d at 1037. As the Supreme Court cautioned in Grunewald v. United States, 353 U.S. 391, 77 S.Ct. 963, 1 L.Ed.2d 931 (1957), albeit in the conspiracy context:
Id. at 401-02, 405, 77 S.Ct. 963; see also Lutwak v. United States, 344 U.S. 604, 616, 73 S.Ct. 481, 97 L.Ed. 593 (1953) (distinguishing between an actual "agreement to conceal" and "an afterthought by the conspirator for the purpose of covering up").
Because the government's theory here would authorize new charges, rather than merely belated charges, it is arguably even more troubling than the theory proposed by the government in Grunewald. In the conspiracy context, recognizing an implied agreement to conceal would only extend the limitations period; the same charges could be brought, albeit later. In the mail fraud context, however, recognizing an implied scheme to conceal would not only extend the limitations period but also give rise to an additional crime every time the mails were used to execute that scheme. That is, because the "scheme" would be said to continue after the embezzlement was completed, the period during which additional substantive crimes could be committed would also be indefinitely extended.
In sum, we hold that mailings designed to avoid detection or responsibility for a fraudulent scheme fall within the mail fraud statute when they are sent before the scheme is completed. To determine when a scheme ends, we look to the scope of the scheme as devised by the perpetrator.
A scheme may be devised over time, however. Not every perpetrator "deliberately plan[s] and devise[s] a well-integrated, long-range, and effective scheme" from the outset. Sampson, 371 U.S. at 77, 83 S.Ct. 173. Allowance must be made for the reality that embezzlements and other schemes to defraud are often open-ended, opportunistic enterprises. They may evolve over time, contemplate no fixed end date or adapt to changed circumstances. Just as Lopez, Young and Hoffman suggest too expansive a reading of the mail fraud statute by covering any acts of concealment regardless of when they occur, it would be overly restrictive to look only at the scope of the plan as it was originally conceived. Lines will have to be drawn between cases in which acts of concealment can fairly be seen as part of the perpetrator's evolving plan devised during the life of the scheme and acts of concealment that must be viewed as an after-the-fact event, as in Lazarenko. Cf. Grunewald, 353 U.S. at 405, 77 S.Ct. 963 (making "a vital distinction ... between acts of concealment done in furtherance of the main criminal objectives of the conspiracy, and acts of concealment done after the central objectives have been attained, for the purpose only of covering up after the crime").
Applying these principles here, we conclude that a reasonable jury could have found that Tanke sent the September 16 letter prior to the scheme's completion. To be sure, one reasonable inference from the facts is that the fraudulent scheme, as Tanke conceived it, was fully executed by July 2004, when he obtained the last of the proceeds of his embezzlement and terminated his employment with Azteca. A jury could have found that the scheme ended at that time, and that the efforts Tanke later made to intimidate Martin and portray the diversions as legitimate payments for Cedar Creek's services were simply an after-the-fact coverup Tanke conceived only after Martin discovered the embezzlement and confronted Tanke in early August.
It is also plausible, however, that a reasonable jury could have found that the Cedar Creek cover story was part of Tanke's embezzlement scheme from the outset or as it evolved over time — just another misrepresentation to facilitate diversion of Azteca's and CERS's funds into Tanke's bank accounts. Lazarenko held that no reasonable jury could find that 1997 and 1998 wire transfers were part of a scheme whose central objectives had been achieved three years earlier. See Lazarenko, 564 F.3d at 1037. Grunewald involved a similar three- to four-year time gap. See Grunewald, 353 U.S. at 395-96, 77 S.Ct. 963. Here, by contrast, there was no such gap, and the September 16 letter was just the tail end of a series of false and misleading financial transactions and statements that comprised the embezzlement scheme. Under the totality of the circumstances, a reasonable jury could have found that the Cedar Creek cover story was a link in the fraudulent chain rather than a post-completion coverup. Cf. Lazarenko, 564 F.3d at 1037.
We note that different jury instructions would have been helpful. The district
We also reject Tanke's alternative argument that the September 16 letter cannot support a conviction for mail fraud because it was sent after Martin had uncovered the fraud. First, as a factual matter, it is not clear that Martin had uncovered the full extent of the fraud when the letter was sent. Second, even if the fraud had been fully exposed, we are not aware of any authority supporting the proposition that a mailing cannot further a fraudulent scheme merely because the scheme has already been uncovered. To be sure, mailings that serve only to make detection more likely do not further the scheme. See Lo, 231 F.3d at 479; United States v. Manarite, 44 F.3d 1407, 1413 (9th Cir.1995). But we have never laid down a categorical rule that post-detection mailings, if sent before the scheme's completion, fall outside the statute. Such mailings can further the scheme by, for example, persuading the victim that the fraud did not in fact occur, confusing the issues, discouraging the victim from going to the authorities or establishing a cover story that might be helpful at trial.
For the above reasons, we hold that sufficient evidence supported Tanke's mail fraud conviction on count 2 of the indictment, and we affirm the conviction.
Tanke challenges the district court's application of a 2-level sentencing enhancement for making a misrepresentation during the course of a bankruptcy proceeding. We review the district court's interpretation of the Sentencing Guidelines de novo and its factual findings for clear error. United States v. Swank, 676 F.3d 919, 921 (9th Cir.2012). There is an intracircuit split as to whether the standard of review for application of the Guidelines to the facts is de novo or abuse of discretion. See id. at 921-22. There is no need to resolve this split where, as here, the choice of the standard does not affect the outcome of the case. See id. at 922.
The United States Sentencing Guidelines Manual (U.S.S.G.) provides: "If the offense involved ... a misrepresentation or other fraudulent action during the course of a bankruptcy proceeding..., increase by 2 levels." U.S.S.G. § 2B1.1(b)(9)(B). Tanke argues that his offense did not "involve" a misrepresentation because his fraudulent scheme was completed in 2004, four years before he gave false testimony in a bankruptcy proceeding.
We also reject Tanke's argument that the district court erred by imposing a 2-level enhancement for using sophisticated means. Under U.S.S.G. § 2B1.1, "[i]f... the offense ... involved sophisticated means, increase by 2 levels." Id. § 2B1.1(b)(10)(C). The commentary describes sophisticated means as:
Id. § 2B1.1 cmt. n.9(B). The district court found that this enhancement applied because "the trial testimony clearly showed a high level of planning and concealment of defendant's theft, much more than simply diverting business checks into the defendant's company's bank accounts for his personal use as the defendant argues." The court found that Tanke, "as vice president of Azteca, carefully engaged in dozens of various acts over a period of over 16 months to execute and conceal three separate types of fraud on the victim and his two business entities."
Although Tanke did not use "fictitious entities, corporate shells, or offshore financial accounts," as the Sentencing Commission's commentary contemplates, he created at least six false invoices and falsified carbon copies of checks in Azteca's check register on at least 10 occasions to conceal the payments. These means as a whole were sufficiently sophisticated to support the district court's decision. See United States v. Horob, 735 F.3d 866, 872 (9th Cir.2013) (per curiam) (affirming the application of the sophisticated means enhancement because, among other things, the defendant "fabricated numerous documents" and "the complicated and fabricated paper trail made discovery of his fraud difficult"); cf. United States v. Jennings, 711 F.3d 1144, 1145 (9th Cir.2013) (applying
We affirm Tanke's conviction on count 2 of the indictment. We hold that the district court did not err by imposing sentencing enhancements under U.S.S.G. § 2B1.1(b)(9)(B) and (b)(10)(C). We hold, in accord with the government's concession, that the district court plainly erred by including $44,715.21 in restitution for fraudulent credit card charges and $1,851.38 in restitution for wage overpayments that were not part of the offenses of conviction and by failing to note the waiver of interest on restitution on the judgment. The case is remanded to the district court for appropriate proceedings.
WALLACE, Circuit Judge, concurring:
I concur in the majority's judgment, but write separately to point out the opinion's limited holding and unnecessary reasoning. First, though the majority uses the term "totality of the circumstances" as the test to determine whether a reasonable jury could conclude that a "lulling letter" was part of the fraud, the opinion actually affirms Tanke's conviction based on just one circumstance, the limited period of time between the completed fraud and the September 16, 2004 lulling letter. That narrow focus wrongly implies a "statute of limitations" approach to mail fraud liability. Second, the majority incorrectly dismisses the weight of precedent from our sister circuits. The reasoning of those courts is more persuasive than that of the majority, and regardless, rejecting that reasoning is dicta.
The precise question before us is whether the letter Tanke sent on September 16, 2004 to conceal his check diversion scheme violated the federal mail fraud statute. In Section II.A.1, the majority states that "mailings designed to avoid detection or responsibility for a fraudulent scheme fall within the mail fraud statute when they are sent before the scheme is completed." Infra at 1305. To determine when a scheme is completed, the majority "look[s] to the scope of the scheme as devised by the perpetrator." Id. The majority rejects out-of-circuit decisions that the opinion says "extend liability further." Id. at 1303. The majority concludes that the September 16, 2004 letter was part of the scheme "as devised by" Tanke because under the "totality of the circumstances" a reasonable jury could plausibly conclude that the letter "was a link in the fraudulent chain" of Tanke's scheme. Id. at 1305.
Although the majority uses the term totality of the circumstances, plural, the opinion cites just one circumstance to support its conclusion that the September 16, 2004 letter was "the tail end" of Tanke's fraud: "there was no such [three- to four-year] gap" between the letter and the achievement of the central objectives of scheme when Tanke diverted the last check. Id. The majority affirms Tanke's conviction because only a few months passed between the last diversion of checks in July 2004 and the September 16, 2004 letter.
I concur with the majority that a lulling letter, sent to conceal a completed fraud, is mail fraud when under the totality of the circumstances a reasonable jury could plausibly conclude the letter was part of the scheme that a defendant devised.
Second, the weight of out-of-circuit precedent may well "extend liability further" than the majority would in certain cases, because the out-of-circuit cases properly apply the totality of the circumstances test. See United States v. Hoffman, 229 Fed.Appx. 157, 158 (3d Cir.2007) (unpub.); United States v. Lopez, 71 F.3d 954, 961-62 (1st Cir.1995) (affirming wire fraud conviction for deceptive faxes sent within two years of the fraud), abrogated on other grounds by United States v. Wells, 519 U.S. 482, 117 S.Ct. 921, 137 L.Ed.2d 107 (1997); United States v. Young, 955 F.2d 99, 108 (1st Cir.1992) (affirming mail fraud conviction for a deceptive letter sent about one year after the fraud); United States v. Tocco, 135 F.3d 116, 126 (2d Cir.1998) (affirming mail fraud conviction for a deceptive letter sent about four months after the fraud because "[a] factfinder could reasonably conclude that the [] letter was designed to ... defer any complaint to the authorities about the defendant ... thus making his apprehension less likely"); United States v. Bavers, 787 F.2d 1022, 1027 (6th Cir.1985) (affirming mail fraud conviction for letters sent about seven months after the fraud); cf. United States v. Evans, 473 F.3d 1115, 1121 (11th Cir. 2006) (affirming a wire fraud conviction based on a misleading fax where defendant's "motivation [was] to escape the legal consequences of [his] past frauds"). Regardless, the majority's rejection of those cases is dicta given the actual holding of the opinion.
There are sufficient facts in the record to affirm Tanke's conviction under an actual totality of the circumstances approach. Tanke used "sophisticated means" to conceal
