Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-03-03407/USCOURTS-ca8-03-03407-0/pdf.json

Parties Involved:
James Lester Killgo III
Appellant
United States of America
Appellee

Document Text:

1

The Honorable James E. Gritzner, United States District Judge for the

Southern District of Iowa.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 03-3407

___________

United States of America, * 

* 

Appellee, * 

* Appeal from the United States

v. * District Court for the 

* Southern District of Iowa.

James Lester Killgo III, * 

* 

Appellant. *

___________

Submitted: November 16, 2004

Filed: February 9, 2005

___________

Before SMITH, BEAM, and BENTON, Circuit Judges.

___________

SMITH, Circuit Judge.

James L. Killgo III pleaded guilty to wire fraud and money laundering arising

out of a single dealing with Access Air, an Iowa-based airline. Over Killgo's

objection, the district court1

 considered Killgo's prior relationships with other aviation

companies seeking to lease aircraft as relevant conduct under United States

Sentencing Guideline § 1B1.3. Killgo now appeals his sentence arguing that the

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Killgo also argues that the United States Supreme Court decision in Blakely

v. Washington ,124 S.Ct. 2531 (June 24, 2004), requires reversal of his sentence. The

reasoning in Blakely was recently extended to the Federal Sentencing Guidelines. See

United States v. Booker, ___ U.S. ___, Nos. 04-104, 04-105 (U.S. Jan. 12, 2005)

(Stevens, J.). Nonetheless, in his plea agreement, Killgo waived his right to appeal

"any sentence imposed" except "any issues solely involving a matter of law brought

to the court's attention at the time of sentencing at which the court agrees further

review is needed." Killgo did not bring any issue akin to Blakely or Booker to the

district court's attention. The fact that Killgo did not anticipate the Blakely or Booker

rulings does not place the issue outside the scope of his waiver. See, e.g., United

States v. Johnson, 67 F.3d 200 (9th Cir. 1995); see also United States v. Rutan, 956

F.2d 827 (8th Cir. 1992) (explaining that an appeal waiver can waive a right unknown

to the defendant), overruled in part by United States v. Andis, 333 F.3d. 886, 892 n.6

(8th Cir. 2003) (en banc); United States v. Rubbo, No. 04-10874 (11th Cir. Jan. 21,

2005) (holding that argument made under Booker fell within scope of appeal waiver).

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district court erred in considering his prior dealings as relevant conduct.2

 We find no

error and affirm.

In 1991, Killgo and Irving Oestreich started an aircraft leasing company in

Florida called Interjet. In December 1997, Interjet negotiated a contract with Access

Air to secure leases on two aircraft. Access Air wired Interjet a $400,000 deposit for

leases on two Boeing 737 aircraft. After Interjet received the wire, Killgo and

Oestreich withdrew the money and deposited the funds into separate overseas bank

accounts. Interjet never delivered the two 737s to Access Air and never refunded the

$400,000. On the same day that the aircraft were scheduled to be delivered to Access

Air, Interjet filed for bankruptcy. It was later revealed that during its seven years of

operation, Interjet never actually leased any aircraft. The corporation had a

checkbook, but no accounting service, no general ledger, no financial records, and no

tax returns.

On March 27, 2002, Killgo and Oestreich were jointly indicted in the Southern

District of Iowa for fraud arising out of their dealings with Access Air through

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Interjet. Killgo pleaded guilty to wire fraud in violation of 18 U.S.C. § 1343 and

money laundering in violation of 18 U.S.C. § 1956(a)(1)(B)(i) for his actions in

dealing with Interjet. The wire fraud resulted in a $400,000 loss to Access Air.

After the plea, a pre-sentence report (PSR) was prepared for Killgo. The PSR

recommended a two-level increase for relevant conduct under U.S.S.G. § 1B1.3. The

PSR explained that discovery revealed Interjet had defrauded thirteen different

persons/entities for a total of $1,959,192.95. However, according to the PSR, the

government stated that it was only able to prove the losses of Access Air at $400,000,

Falcon Air at $190,000 in July 1997, Lineas Aereas Allegro at $295,000 in July 1997,

and Southend Cargo at $350,000 in October 1997. Accordingly, the PSR

recommended that Killgo's sentencing range be based on a total loss of $1,235,000.

Killgo objected to the loss calculation of $1,235,000 and argued that it should

be calculated solely on the $400,000 loss suffered by Access Air. The district court

conducted a hearing on relevant conduct in assessing Killgo's sentencing range. At

the hearing, Killgo argued that the contracts between the other air carriers were not

relevant conduct as contemplated by the Guidelines. He indicated that some contracts

involved federal drug and arms investigations in which he cooperated with the United

States Government. In addition, he argued that the other air carriers had breached

their leases, and, thus, his actions were not fraudulent.

The district court concluded that the unfulfilled leases with the other air

carriers constituted relevant conduct under U.S.S.G. § 1B1.3. Consequently, Killgo's

sentencing range was between thirty-three and forty-one months' imprisonment. The

district court sentenced him at the lower end of the range–thirty-three months. Killgo

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The guideline provision applicable to fraud cases provides for a graduated

increase in the base offense level depending on the amount of loss resulting from

conduct relevant to the count of conviction. U.S.S.G. § 2F1.1 (deleted by

consolidation with U.S.S.G. § 2B1.1, Nov. 1, 2001). Under the Sentencing

Guidelines, the base offense level for fraud is adjusted upward if the loss resulting

from the fraud exceeded $2,000. See U.S.S.G. § 2F1.1(b). Where the loss is greater

than $800,000 but not more than $1,500,000, eleven points are added. U.S.S.G. §

2F1.1(b)(1)(L). If the loss were calculated at $400,000 as Killgo suggests, only nine

points are added. U.S.S.G. § 2F1.1(b)(1)(J). 

4

Prior to the United States Supreme Court's ruling in Booker, we reviewed the

application of sentencing guidelines de novo. United States v. Red Elk, 368 F.3d

1047, 1051 (8th Cir. 2004). The Supreme Court has directed Circuit Courts to apply

its holdings in Booker to all cases on direct review. United States v. Booker, ___ U.S.

___, Nos. 04-104, 04-105 (U.S. Jan. 12, 2005) (Breyer, J.) (citing Griffith v.

Kentucky, 479 U.S. 314, 328 (1987)). While Killgo's appeal waiver is sufficient to bar

his Sixth Amendment claim, we recognize that it did not waive the application of a

constitutional standard of review on appeal. 

5

Relevant conduct also relates to the "history and characteristics of the

defendant," § 3553(a)(1), as well as the need to "protect the public from further

crimes of the defendant," § 3553(a)(2)(C). Using relevant conduct in sentencing a

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then filed this appeal, maintaining that the losses of the three separate air carriers

should not be considered relevant conduct.3

We review the sentence imposed for unreasonableness, judging it with regard

to the factors in 18 U.S.C. § 3553(a). United States v. Booker, ___ U.S. ___, Nos. 04-

104, 04-105 (U.S. Jan. 12, 2005) (Breyer, J.).4

 Killgo's appeal relates directly to §

3553(a)(4)(A); that is, he essentially claims that the reasonableness of his sentence

is directly linked to the district court's misapplication of a relevant Guideline. Stated

another way, Killgo's argument on appeal is that the district court erred in

determining relevant conduct under the Guidelines thus rendering his sentence of

thirty-three months' imprisonment unreasonable.5

 Whether an act or omission

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defendant also aids in the "need to avoid unwarranted sentence disparities." 18 U.S.C.

§ 3553(a)(6). 

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constitutes relevant conduct, under the Sentencing Guidelines, is a factual

determination, which we review for clear error. United States v. Regenwether, 300

F.3d 967 (8th Cir. 2002). 

The Guidelines generally provide that specific offense characteristics, such as

the calculation of fraud losses, are determined on the basis of "relevant conduct," not

the acts underlying the offense of conviction. See U.S.S.G. § 1B1.3(a). Relevant

conduct under the Guidelines includes, "solely with respect to offenses of a character

for which § 3D1.2(d) would require grouping of multiple counts, all acts and

omissions . . . that were part of the same course of conduct or common scheme or plan

as the offense of conviction." U.S.S.G. § 1B1.3(a)(2). Multiple fraud offenses are

grouped under § 3D1.2(d), so relevant conduct for purposes of sentencing Killgo

includes all fraudulent acts or omissions "that were part of the same course of conduct

or common scheme or plan" as his offense of conviction.

Section 1B1.3(a)(2) allows the district court to consider all acts and omissions

by Killgo that constituted "the same . . . common scheme or plan as the offense of

conviction." Under this guideline, a district court should consider the "'similarity,

regularity, and temporal proximity' of the conduct in determining whether it is part

of the same course of conduct or common scheme or plan." United States v.

Anderson, 243 F.3d 478, 485 (8th Cir. 2001) (citations omitted). "Common scheme

or plan" as used in § 1B1.3(a)(2) is construed broadly in determining relevant conduct

for sentencing purposes. United States v. Berry, 212 F.3d 391, 393 (8th Cir. 2000).

"For two or more offenses to constitute part of a common scheme or plan, they must

be substantially connected to each other by at least one common factor, such as

common victims, common accomplices, common purpose, or similar modus

operandi." U.S.S.G. § 1B1.3 comment. (n.9). 

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In United States v. Bush, 252 F.3d 959 (8th Cir. 2001), Bush was convicted

of diverting money from the sale of unregistered promissory notes issued by his

company. In calculating total losses, the district court considered instances where

Bush diverted borrowed funds that he promised would be used to further his

company. Id. Bush argued that only losses attributable to the sale of unregistered

promissory notes could be used to calculate total losses, and that the district court

erred in aggregating the losses from the borrowed funds. Id. We affirmed the district

court's application of § 1B1.3 reasoning that Bush's dealings bore a strong

resemblance, and, thus, were part of "the same . . . common scheme or plan," which

constituted relevant conduct. Id.

Similarly, in United States v. Howard, 235 F.3d 366 (8th Cir. 2000), Howard

and Robinson were indicted for a scheme involving the sale and trade of annuities.

Howard and Robinson told investors that they could pool money to trigger a

leveraged line of credit and receive a profit from the resale of the annuities. Id. In a

separate instance, Robinson told a different set of investors in Iowa that they could

pool their money to "trigger a line of credit" to purchase annuities, which would then

be resold at a profit. Id. We held that Robinson's actions in Iowa "were part of the

same course of conduct or common scheme or plan as the offense of conviction." Id.

at 373. Specifically, Robinson's statements to the Iowa investors were identical to the

ones made by him to the investors involved in the indicted offenses. Id. We

concluded that the criminal activity in Iowa and the criminal activity in the indictment

involved the same modus operandi, and, thus, constituted "relevant conduct" for

sentencing purposes. Id.

Likewise, in United States v. Heath, 122 F.3d 682 (8th Cir. 1997), we held that

a defendant's fraudulent activity connected with medical facilities involved a common

scheme and modus operandi for purposes of U.S.S.G § 1B1.3. In that case, Heath

pleaded guilty to submitting false insurance claims after staging a "slip and fall" and

gaining admission to hospitals. Id. Heath also gained admission to hospitals

throughout the country by falsely complaining of other medical problems in an effort

to fraudulently procure controlled substances. Id. Heath argued that the hospital and

medical services not predicated on a slip and fall insurance claim were not relevant

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The district court's determination of Killgo's relevant conduct is entirely

consistent with our holdings in similar cases.6

 In this case, Killgo used Interjet as the

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conduct to the offense of wire fraud. Id. We rejected that argument explaining that all

of Heath's activity involved gaining admission to hospitals by falsely complaining of

pain. Id.

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common business front from which to solicit his victims. Each case was premised on

Interjet securing a lease for a transport grade aircraft. Furthermore, Killgo executed

substantially similar documents in setting up each separate fraudulent transaction.

The four acts occurred within months of each other. In addition, Killgo operated the

scheme with the same accomplice. We hold that Killgo's dealings are part of the same

common scheme or plan. Accordingly, the district court properly considered the three

dealings with Lineas Aereas Allegro, Southend Cargo, and Falcon Air as relevant

conduct under § 1B1.3. Based on the relevant consideration, we cannot say that

Killgo's thirty-three month sentence is unreasonable or that the district court erred.

The judgment of the district court is affirmed. 

______________________________

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