Sentencing Partners - March 2014 (Part I)

Posted by Chris Morales on Mon, Mar 31, 2014 @ 09:05 AM

Sentencing Partners - March 2014

Three Decisions on Child Pornography Distribution Enhancement and Use of Peer-to-Peer Programs . . . Two Different Results

Three circuit courts recently dealt with the issue using peer-to-peer (“P2P”) programs and the distribution enhancement under §2G2.2(b)(3)(F). The issue in all three cases was whether the mere use of a P2P program was sufficient to support the distribution enhancement. In United States v. Baldwin, 2014 WL 657949 (2nd Cir. 2014), the Second Circuit held that using the program did not automatically support the enhancement. In reversing the enhancement, the court held that a defendant’s intent was irrelevant, but “a district court must find that a defendant knew that his use of P2P software would make child-pornography files accessible to other users. This requirement is consistent with our previous admonition that §2G2.2 ‘is
fundamentally different from most [Guideline provisions] and that, unless applied with great care, [it] can lead to unreasonable sentences that are inconsistent with what [the sentencing factors in 18 U.S.C.] §3553 require.’” 

Reaching the opposite conclusion was that Fifth Circuit in United States v. Baker, 2014 WL 552753 (5th Cir. 2014) and the Ninth Circuit in United States v. Vallejos, 2014 WL 503537 (9th Cir. 2014). In both of these cases, the defendants used P2P software to download and share child pornography and both received the distribution enhancement under §2G2.2(b)(3)(F). In Baker, the defendant claimed that he did not know his use of P2P software would allow others access to his files. The district court rejected a five-level increase under §2G2.2(b)(3)(B) because the defendant could not expect to receive a thing of value if he did not know he was sharing child pornography through his use of the P2P. The Fifth Circuit approved the district court’s holding on this issue. However, the district imposed the distribution enhancement and the Fifth Circuit affirmed, holding that “imposition of a two-level enhancement under §2G2.2(b)(3)(F) does not require scienter.”

The Ninth Circuit also held that mere use of a file-sharing program was enough to warrant the two-level distribution enhancement. “We hold that the knowing use of a file-sharing program to download child pornography involves not merely the receipt of illicit material, but also the reciprocal distribution of it [and] conclude that the district court properly applied a twolevel distribution enhancement under §2G2.2(b)(3)(F) to [the defendant], who used a file-sharing program to download child pornography that, whether knowingly or unknowingly, allowed others access to those files.” 

A couple of closing notes: (1) all three of these cases acknowledge the circuit split that exists and each contains an extensive list of the conflicting cases; and (2) in Baker and Vallejos the district court imposed sentences below the recommended sentencing range. In Baker, the range was 151 to 188 months, and the sentence was 80 months. In Vallejos, the PSR recommended a sentence of 235 months; the sentence was 180 months. Baldwin received a sentence of 87 months, the bottom of his range.

Case Summaries

Offense Conduct

Chapter 2 

United States v. Williams
2014 WL 486244 (7th Cir. 2014)
Ex post facto violation

The defendant pled guilty to crimes related to identity theft. Using the guidelines in effect at the time of sentencing to calculate the sentencing range, the district court imposed a sentence of 56 months, plus 24 consecutive months for aggravated identity theft, pursuant to 18 U.S.C. §1028A(a)(1). The sentence included an upward adjustment under §2B1.1(b)(2)(A) because the crimes involved more than 10 victims. Had the district court used the
guidelines in effect when the defendant committed his crimes, he would not have received this upward adjustment. At the time, this posed no constitutional problem under circuit precedent. However, while the case was on appeal, the Supreme Court held that applying the guidelines in effect at sentencing violated the ex post facto clause if it raised the defendant’s imprisonment range. See Peugh v. United States, --- U.S. ----, 133 S. Ct. 2072, 2078 (2013). Reviewing for plain error, the Seventh Circuit reversed and remanded, holding that the
district judge “did not say that he would have given the same sentence if the range had been lower. Nor does the record permit us to draw that conclusion.” “Our normal practice is to presume that the improperly calculated guidelines range influenced the choice of sentence unless the judge said otherwise at sentencing. We continue to follow that approach here and therefore will direct a remand for resentencing so the district court can sentence [the defendant] based on the guidelines range of 30 to 37 months.”

United States v. Popov
2014 WL 521029 (9th Cir. 2014)
Record unclear as to whether district court properly calculated loss amount

The defendant and co-defendant were convicted by a jury of one count of conspiracy to commit health care fraud and three counts of health care fraud, in connection with their ownership and operation of three medical clinics in Northern California. They submitted fraudulent bills to Medicare for more than $5 million. The nine other co-defendants pled guilty prior to the trial. The clinics paid “cappers” to recruit patients and drive them to the clinics. Patients arrived in groups consisting primarily of non-English speaking, elderly or disabled individuals and they stayed less than two hours. During those two hours, each new patient had an electrocardiogram and all patients underwent ultrasounds and had blood drawn. The doctors at the clinics did not see all of the patients, and clinic staff did not perform all of the tests on all of the patients, but Medicare was bill as though they did. The PSR calculated an intended loss amount of $2,236,332.88, the total amount of claims submitted to Medicare, which resulted in a 16-level enhancement under §2B1.1.3. On appeal, the defendants argued that the loss amount should have been the amount Medicare actually paid, which in this case, was $586,430.72. They contended that the total amount billed overstated the intended loss because they could not have expected to receive that amount, given that Medicare caps the amount of payment for each service performed and routinely pays much less than the billed amount. On appeal, the Ninth Circuit explained that 2011 amendments altered Application Note 3(F)(viii) to §2B1.1, which now instructs districts courts that in health care fraud cases involving a government health care program, “the aggregate dollar amount of fraudulent bills submitted to the Government health care program shall constitute prima facie evidence of the amount of the intended loss.” In light of the express instructions, the court held: “In health care fraud cases, the amount billed to an insurer shall constitute prima facie evidence of intended loss for sentencing purposes. If not rebutted, this evidence shall constitute sufficient evidence to establish the intended loss by a preponderance of evidence. However, the parties may introduce additional evidence to support arguments that the amount billed overestimates or understates the defendant’s intent.” Based on the record, the appeals court was “uncertain as to what the district court understood the law to be with respect to calculating intended loss for sentencing purposes and there is evidence suggesting that [the defendants] may have been aware that Medicare only pays a fixed amount.” Therefore the court vacated the sentences and “remanded for resentencing on this issue consistent with the standard set forth above. The court may utilize all evidence presented at trial and sentencing. The parties may present additional evidence for resentencing on the issue of intended loss.”

United States v. Johnson
2014 WL 538666 (7th Cir. 2014)
No force or threat of force, thus §2A3.5(b)(1)(A) enhancement did not apply

The defendant was convicted in Nebraska state court of third degree sexual assault of a child. His conviction required him to register as a sex offender under the Sex Offender Registration and Notification Act (SORNA). He failed to register or report his new address in Chicago after his release from prison and a warrant for his arrest was issued. Later, Chicago Police responded to a call of an alleged sexual assault by the defendant against S.W., the defendant’s former girlfriend and the mother of several of his children. She told a responding officer that the defendant dragged her to a bedroom and started taking her clothes off even though she said she did not want to have sex. She also told the officer that the defendant performed oral sex on her. She did not press charges and no charges were filed. Two months later, S.W. signed a notarized affidavit  stating that the report she made of the alleged sexual assault was untrue. The defendant pled guilty to failure to register as a sex offender. The PSR recommended against a six level enhancement for committing a sexual offense against someone other than a minor while in a failure to register status under §2A3.5(b)(1)(A), because there was insufficient evidence that the assault against S.W. had actually occurred. At the sentencing hearing, although neither party intended to call her as a witness, S.W. appeared and expressed her desire to testify. S.W. testified that she made a false report to the police, that the defendant did not rape her, that he had performed oral sex on her, but had not used physical force. Despite this testimony, the government moved for the six-level enhancement and the district court applied the enhancement, sentencing the defendant to 120 months. On appeal, the defendant argued that the six-level enhancement was error because there was no evidence of force. The Seventh Circuit reversed, holding that under Illinois law, there had to be a showing that the defendant “used force or the threat of force in order to have committed criminal sexual assault or abuse against S.W.” The district court imposed the enhancement based strictly on S.W.’s testimony at sentencing, but her testimony did not support a finding that the defendant used force or threatened force against S.W. “While S.W. may not have wanted [the defendant] to perform oral sex on her, her testimony at the hearing would not support a finding that he used any force or threat of force in doing so. In fact, she specifically stated in two different parts of her testimony that he did not use force.” “Because S.W.’s testimony does not support the requisite force or threat of force necessary to find that [the defendant] committed criminal sexual assault or abuse under Illinois law, the §2A3.5(b)(1)(A) enhancement was improper.”

Sentence Adjustments
(Chapter 3)

United States v. Dachman
2014 WL 608373 (7th Cir. 2014)
Defendant not entitled to acceptance of responsibility reduction

The defendant promoted and participated in scheme to defraud investors by operating three sleeprelate illness-treatment companies and selling shares of these companies to the public. Through his efforts, he raised over $4 million from fifty-one investors. Instead of using the funds to operate the companies, the defendant used most of it for personal expenditures including personal stock trading, a tattoo parlor, family vacations, and checks payable to himself and his wife. He was indicted on eleven counts of wire fraud for stealing funds from elderly individuals who had invested in his companies. He pled guilty to all eleven counts. Along with his plea, he submitted a plea declaration whereby he admitted that he was “guilty of taking approximately $700,000 dollars in bonuses and fees above reasonable salary;

that he was guilty of making personal guarantees or returns on investments without sufficient means to support them; and that he was guilty of failing to make clear to investors [his] educational and graduate credentials.” At sentencing, the defendant objected to the PSR’s omission of a reduction under §3E1.1(a) for acceptance of responsibility. However, in his allocution, he claimed that he was not the one who asked investors for money, that the business was a success, and that his partner was responsible for raising money and communicating with investors. The district court found that he did not fully accept responsibility for the damage he did or for his base motives in doing it. On appeal, the Seventh Circuit found that the evidence was more than sufficient to show that the defendant did not qualify for acceptance. “[The defendant’s] affirmative representations in both his written statement submitted to the district court prior to sentencing and his allocution to the district court at sentencing demonstrated that he failed to accept responsibility  for his fraudulent conduct.” While the defendant accepted responsibility for the failure of the business, his admission of guilt was the bare minimum needed for the district court to accept it and he blamed his partner because the partner was the one who raised money and communicated with investors. “Given these facts, the district court’s decision to withhold the two-level reduction for acceptance of responsibility is well-supported by our precedent.” See United States v. Ali, 619 F.3d 713 (7th Cir. 2010) (blaming someone else for one’s own actions or minimizing one’s involvement in the offense is not the sort of genuine contrition the acceptance of responsibility reduction seeks to reward).

Published By Joaquin & Duncan, L.L.C.;
A Law Firm of Federal Sentencing Attorneys 

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We would like to thank our friends Joaquin & Duncan, L.L.C for sharing this information with us. 

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