Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-09-03298/USCOURTS-ca8-09-03298-0/pdf.json

Parties Involved:
Jack Straw
Appellant
United States of America
Appellee

Document Text:

1

The Honorable Linda R. Reade, Chief Judge, United States District Court for

the Northern District of Iowa.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 09-3298

___________

United States of America, *

*

Appellee, *

* Appeal from the United States

v. * District Court for the

* Northern District of Iowa.

Jack Straw, *

*

Appellant. *

___________

Submitted: April 15, 2010

Filed: August 5, 2010

___________

Before BYE, JOHN R. GIBSON, and GRUENDER, Circuit Judges.

___________

BYE, Circuit Judge.

Jack Straw appeals the 180-month sentence imposed following conviction for

four counts of wire fraud in violation of 18 U.S.C. § 1343, one count of mail fraud in

violation of 18 U.S.C. § 1341, one count of making, possessing, and uttering a forged

security in violation of 18 U.S.C. § 513(a), and one count of money laundering in

violation of 18 U.S.C. § 1957. Straw contends the district court1

 improperly heard

testimony by a non-victim at sentencing, erroneously enhanced Straw’s sentence on

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the basis that his crime involved fifty or more victims, and unreasonably varied

upward from the Guidelines in imposing Straw’s sentence. We affirm.

I

Jack Straw owned and operated an insurance business in which he acted as a

financial advisor, maintained trust accounts, and sold annuities and insurance policies

to his clients. Straw operated several fraudulent schemes in conjunction with his

business. During the relevant period: (1) Straw took more than $180,000 in client

funds which he claimed to invest in stocks, but which he actually used for his own

purposes or to pay prior victims in order to conceal his fraud; (2) Straw sold real

property that he did not have permission from the owners to sell and kept the

$399,932.54 in purchase money; (3) Straw forged client signatures on checks; (4)

Straw used a client’s bank account to make automatic payments of sixteen dollars per

month on a life insurance policy for his son-in-law (on which his daughter was named

beneficiary); and (5) Straw held a financial planning seminar in which he offered to

prepare wills for participants for a fee of $50 per will. He collected money but never

prepared the wills. Straw defrauded a couple from that seminar of approximately

$60,000 in his annuities scheme. Most of the money given to Straw by his clients

remains unaccounted for.

On December 2, 2008, Straw was charged in a seven-count information: four

counts of wire fraud in violation of 18 U.S.C. § 1343, one count of mail fraud in

violation of 18 U.S.C. § 1341, one count of making, possessing, and uttering a forged

security, in violation of 18 U.S.C. § 513(a), and one count of money laundering, in

violation of 18 U.S.C. § 1957. Straw pleaded guilty to all charges. The district court

found Straw’s base offense level under the United States Sentencing Guidelines

Manual (U.S.S.G.) to be seven and imposed an eighteen-level increase for an intended

loss of $3,041,805.68, a four-level increase because the offenses involved more than

fifty victims, a two-level increase because one or more of the victims were vulnerable

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victims, and a two-level increase for abusing a position of trust. Straw was awarded

a three-level reduction for acceptance of responsibility. The district court found

Straw’s criminal history category to be I, and, using an offense level of thirty,

calculated an advisory guidelines range of 97-121 months. After considering Straw’s

request for a downward variance and all the 18 U.S.C. § 3553(a) sentencing factors,

the district court varied upward and imposed a sentence of 180 months’ imprisonment

followed by three years of supervised release and $700 in mandatory special

assessments. This timely appeal followed.

II

Straw first challenges the district court’s decision to hear the testimony of

Straw’s cousin at the sentencing hearing. Several victims testified at Straw’s

sentencing hearing; in the midst of the testimony, Straw’s cousin Jodie Hansen gave

a brief statement indicating Straw had defrauded their 91-year-old grandmother and

had not come to see their grandmother the day she died. Straw was charged with

intentionally misappropriating the grandmother’s property in 2002 but the district

attorney dropped the charges.

Because Straw failed to object to Hansen’s testimony at the sentencing hearing,

we review under the plain error standard. See United States v. Shepard, 462 F.3d

847, 870 (8th Cir. 2006); United States v. Montayne, 996 F.2d 190, 192 (8th Cir.

1993) (en banc). Straw argues his cousin should not have been permitted to testify

because she is not a “crime victim” entitled to a right to be heard at public proceedings

under the Crime Victim’s Rights Act. 18 U.S.C. § 3771(e). This provision defines a

“crime victim” as “a person directly and proximately harmed as the result of the

commission of a federal offense.” Id. Even though 18 U.S.C. § 3771(a) grants a

crime victim the right to be heard at public proceedings, the statute does not operate

to exclude others from being heard at such proceedings. Congress has provided that

“[n]o limitation shall be placed on the information concerning the background,

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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. Furthermore, in sentencing, “a judge may appropriately conduct

an inquiry broad in scope, largely unlimited either as to the kind of information he

may consider, or the source from which it may come. . . .” United States v. M.R.M.,

513 F.3d 866, 870 (8th Cir. 2008) (quoting United States v. Tucker, 404 U.S. 446

(1972)) (emphasis added). Therefore it was not plain error for the district court to

hear Hansen’s statement because the statement concerned Straw’s background,

character, and conduct.

Straw further contends the district court improperly considered Hansen’s

testimony as a victim impact statement. While the court and the prosecutor did refer

to the cousin as a “victim” in passing, it is clear all parties were aware of who she was

and who she represented. The district court spoke at length to explain the sentence

and did not mention the prior conduct related to Straw’s grandmother. We conclude

the district court did not erroneously consider the cousin’s statement as victim impact

testimony.

III

Straw next challenges the district court’s enhancement of his offense level by

four levels because his offense involved fifty or more victims. He contends the

district court erred by counting the victims of his uncharged wills-and-estate-planning

scheme and by counting each married couple as two victims. “We review the district

court’s interpretation and application of the guidelines de novo and its finding of fact

for clear error.” United States v. Icaza, 492 F.3d 967, 969 (8th Cir. 2007). Section

2B1.1(b)(2) of the sentencing guidelines provides: “If the offense . . . (B) involved 50

or more victims, increase by 4 levels . . . .” Section 2B1.1, Application Note 1,

defines “victim” as “any person who sustained any part of the actual loss determined

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under subsection (b)(1) . . . ‘Person’ includes individuals, corporations, companies,

associations, firms, partnerships, societies, and joint stock companies.”

Straw contends the district court incorrectly counted as victims the twenty

people he defrauded in his wills-and-estate-planning scheme for the purposes of the

U.S.S.G. § 2B1.1(b)(2) enhancement because the nature of the offense against those

victims was different and because many of his egregious behaviors did not apply to

those victims. U.S.S.G. § 1B1.3(a)(2) provides “all acts or omissions . . . that were

part of the same course of conduct or common scheme or plan as the offense of

conviction” may be considered as factors that determine the Guidelines range.

“Offenses . . . may . . . qualify as part of the same course of conduct if they are

sufficiently connected or related to each other as to warrant the conclusion that they

are part of a single episode, spree, or ongoing series of offenses.” U.S.S.G. § 1B1.3,

Application n. 9. In United States v. Lewis, 557 F.3d 601, 614 (8th Cir. 2009)

(quoting United States v. DeRosier, 501 F.3d 888, 896 (8th Cir. 2007)), we stated that

“we take a broad view of what conduct and related loss amounts can be included in

calculating loss,” and we applied the same reasoning to a calculation of victims,

rejecting a defendant’s contention that only victims named in the indictment should

be counted for the purposes of U.S.S.G. § 2B1.1(b)(2)(B). See also United States v.

Branch, 591 F.3d 602, 612 (8th Cir. 2009) (considering testimony from victims of

several of the defendant’s fraudulent schemes for the purposes of a U.S.S.G.

§ 2B1.1(b)(2)(B) enhancement).

Straw routinely used his financial seminars to meet and develop relationships

with potential victims and to determine whether they possessed assets he could steal.

Once he found the assets, Straw used one or more of his schemes to defraud his new

clients. Straw operated according to this pattern in 2006, when he met twenty new

potential victims at one of his financial planning seminars. Straw falsely promised

these individuals and couples he would provide wills for $50. Straw collected their

money and never provided wills, and he proceeded to defraud one of these couples out

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of nearly $60,000 using his annuity scheme. Given the fact that the victims of Straw’s

wills-and-estate-planning scheme overlapped with the victims of other schemes, and

that Straw used those seminars to find new victims for his other crimes and assess

their financial situations, it was not clearly erroneous for the district court to determine

they were part of the same course of conduct. Therefore, the district court properly

counted the twenty wills-and-estate-planning victims when it applied U.S.S.G.

§ 2B1.1(b)(2).

Straw also challenges the district court’s decision to count each member of the

married couples as a separate victim. Straw contends each of the thirteen married

couples should have been counted as a single victim, and that the government did not

prove that the funds invested in his schemes were jointly held or invested on behalf

of both members of each couple. The Presentence Investigation Report (PSR) stated

that Straw stole funds from thirteen married couples. Although the PSR determined

each married couple constituted a partnership (and therefore a single victim), the

district court found that the PSR incorrectly counted each married couple as only one

victim and recounted the thirteen married couples as twenty-six separate victims. This

put Straw over the fifty victims necessary for enhancement under U.S.S.G.

§ 2B1.1(b)(2)(B).

In United States v. Densmore, 210 Fed. Appx. 965 (11th Cir. 2006)

(unpublished) (cited with approval in United States v. Ellisor, 522 F.3d 1255 (11th

Cir. 2008)), the Eleventh Circuit found it was appropriate to count each member of the

married couples who had invested in a defendant’s fraudulent schemes as a separate

victim. The Densmore court relied on the language defining a victim as “any person

who sustained any part of the actual loss” in U.S.S.G. § 2B1.1, Application Note 1,

to find that both persons in a marriage suffered loss when jointly held money was

taken or when the investment was made on behalf of both persons. Densmore, 210

Fed. Appx. at 971. We do not need to decide whether the district court erred by

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counting each married person individually because the record demonstrates any error

in application of the enhancement would be harmless.

Incorrect application of the Guidelines is harmless error where the district court

specifies the resolution of a particular issue did not affect the ultimate determination

of a sentence. United States v. Vickers, 528 F.3d 1116, 1121 (8th Cir. 2008). Where

“the record clearly . . . show[s] not only that the district court intended to provide an

alternative sentence, but also that the alternative sentence is based on an identifiable,

correctly calculated guidelines range,” United States v. Johnston, 533 F.3d 972, 978

(8th Cir. 2008)(quoting United States v. Icaza, 492 F.3d 967, 971 (8th Cir. 2007)), any

error in applying an enhancement for number of victims is harmless. Here, the district

court stated:

So I will score Paragraphs 114 and 115 as a four-point increase as

opposed to a two-point increase [for number of victims]. Alternatively,

if the Court is incorrect in its interpretation of the guidelines, the Court

would depart under United States sentencing guidelines. I would depart

upward two levels because, in light of the unusual circumstances, the

weight attached to the number of victims under the guidelines would be

inadequate if there were only a two-level increase for the number of

victims.

Straw has not argued the district court could not have departed upward under these

circumstances. Since the district court clearly stated that it intended to provide an

alternative sentence that was based upon a correctly calculated Guidelines range, any

error in applying an enhancement for number of victims is harmless.

IV

Finally, Straw contends the district court’s upward variance constituted an

abuse of discretion. We review the district court’s sentencing, whether inside or

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outside the guidelines range, for an abuse of discretion. Gall v. United States, 552

U.S. 38, 51 (2007). We first review for procedural error, “such as failing to calculate

(or improperly calculating) the Guidelines range, treating the Guidelines as

mandatory, failing to consider the § 3553(a) factors, selecting a sentence based on

clearly erroneous facts, or failing to adequately explain the chosen sentence–including

an explanation for any deviation from the Guidelines range.” Id. If no procedural

error has been committed, we review the sentence for substantive reasonableness

under an abuse of discretion standard. United States v. Feemster, 572 F.3d 455, 461

(8th Cir. 2009)(en banc). The burden is on the appellant to show that his sentence

should have been lower considering the factors enumerated in 18 U.S.C. § 3553(a).

United States v. Milk, 447 F.3d 593, 603 (8th Cir. 2006).

Straw first contends the district court committed procedural error by failing to

take his mental condition and acceptance of responsibility into account at sentencing.

The PSR contains extensive information about Straw’s mental health history,

including his diagnosis of Bipolar Disorder and Adult Antisocial Behavior, and the

time he spent near the time of his arrest in a mental health facility into which he

checked himself voluntarily just as his crimes were discovered. The sentencing record

reflects his history of depression, and includes letters written by his wife and children

describing his history and requesting leniency. Even though the district court did not

mention Straw’s mental health issues when it discussed the upward variance, it stated

that it would not remand Straw to a mental health facility because the prison system

was equipped to treat his conditions adequately. In United States v. Wood, 587 F.3d

882, 884 (8th Cir. 2009) we considered a sentence where the district court did not

address the defendant’s mental health issues on record during sentencing, although

there had been argument on the issue and the district court specified it had reviewed

all submitted materials, including a competency examination. The district court is not

required to address on record every reasonable argument set forth by a defendant, and

we presume the district court considered relevant § 3553(a) factors at sentencing. See

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id. The record shows the district court was aware of Straw’s mental health issues and

there is no evidence it disregarded them in varying upward.

Straw next challenges the reasonableness of his sentence, arguing the district

court did not have justification for an upward variance because Straw’s crimes were

not out of the ordinary and the Guidelines contemplated all the aggravating factors.

We have consistently rejected this type of argument. See United States v. Chase, 560

F.3d 828, 831 (8th Cir. 2009) (“[F]actors that have already been taken into account

in calculating the advisory guideline range . . . can nevertheless form the basis of a

variance.”); United States v. Ruvalcava-Perez, 561 F.3d 883, 887 (8th Cir. 2009)

(rejecting claim of unreasonable variance where the district court varied upward based

on a defendant’s domestic violence convictions, which were already accounted for by

the Guidelines.). The district court repeatedly emphasized issues accounted for by the

Guidelines and specified which portions of the criminal conduct were not adequately

addressed by the Guidelines. The district court acknowledged that the Guidelines

accounted for the amount of the fraud, the number of victims, and the vulnerability of

the victims (many of whom were elderly). However, the district court stated the

Guidelines failed to take into account: (1) the fact Straw targeted the victims close to

retirement and targeted their retirement assets knowing they would have little or no

opportunity to replace those assets before their intended retirement dates; (2) the

serious impact of Straw’s fraudulent schemes on the victims of the crimes; (3) the fact

that Straw used a variety of methods to defraud his victims and each scheme

separately required significant premeditation and careful planning; and (4) Straw’s

production of false documents to lull his victims and his lack of intent to ever invest

the funds he received.

Straw points to United States v. Finn, 206 Fed. Appx. 631 (8th Cir. 2006)

(unpublished) and United States v. Tonks, 574 F.3d 628 (8th Cir. 2009), as evidence

he was improperly sentenced. In Finn, the defendant was sentenced at the top of the

Guidelines range to 135 months’ imprisonment for fraudulently receiving more than

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$3.7 million from over 100 investors. The difference between a sentence of 135

months at the top of the Guidelines range and a variance upward to 180 months does

not constitute the kind of disparity that would render Straw’s higher sentence

unreasonable. This difference is supported by the aggravating factors set forth by the

district court, including the significant impact that Straw’s fraud had upon his elderly

victims, the fact that he specifically targeted victims close to retirement age, and the

wide variety of schemes Straw employed to defraud his victims. In Tonks the

defendant was sentenced to 78 months’ imprisonment for cheating a single elderly

victim out of over $200,000. Tonks, 574 F.3d at 630. Tonks’ sentence of seventyeight months for stealing $200,000 from a single victim does not demonstrate Straw’s

sentence for stealing more that $3 million from multiple victims in multiple schemes

created unwarranted disparity.

The district court adequately justified the upward variance and we cannot

conclude the district court abused its discretion in doing so. Straw has failed in his

burden to show his sentence should have been lower considering the factors

enumerated in 18 U.S.C. § 3553(a).

V

Accordingly, we affirm the judgment of the district court.

______________________________

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