FI L ED

U.S. COURT OF APPEAL S

EL EVENTH CI RCUI T MARCH 16, 2010

J OHN L EY

CL ERK [PUBLIS H]

IN THE UN ITED STATES COURT OF APPEALS

FOR THE ELE VENTH CIRCUIT

No. 0 8- 13 43 4

DC Doc ke t No . 07 -0 00 90 -CR- J- 33 -HTS

UNITED STAT ES OF AMERIC A,

Pl ai nt iff -Ap pe ll ee,

ve rs us

ROBERT J . JENNINGS,

Defen da nt

,

DONALD E. TOU CHET,

RICHAR D E. STAN DRIDGE,

Defen da nt s- App el la nt s.

App eal s fr om

th e Uni te d S ta te s Di st ric t Co ur t
fo r th e Mi dd le Dis tri ct of F lo rid a

(Ma rch 16 , 20 10 )

Befo re BLACK, MAR CUS an d HIGGINB OTHAM, Cir cu it Ju dg es

. *

Honora ble Patrick E. Hig g inbotham, United States Circuit J udg e for the Fif th Circuit, *

sitti ng by desig nation.HIGGINBOTHAM, Cir cu it Ju dg e:

Ri ch ar d E. St an dr id ge an d Don al d E. Tou ch et were in di ct ed on nu m ero us 1

co un ts of co ns pi racy, m ai l an d wire frau d, an d mo n e y la un de rin g, ch arg in g 2 3 4

pa rti ci pa ti on in a sc he m e to se ll frau du le nt wor ke rs ’ co m pe ns at io n in su ran ce. A jury

co nv ic te d on al l co un ts an d th e di st ric t co ur t se nt en ced St an dr id ge to 21 6 an d

Tou ch et to 26 4 m on th s’ im pr is on m en t. Bo th ap pe al th ei r co nv ic ti on s an d se nt en ces

on m ul ti pl e g ro un ds . W e fi nd no erro r an d a ffi rm

.

I

Gov ern m en t wit ne ss es de sc rib ed th e wor ki ng s of th e in du st ry in whi ch th e

al le ge d of

fen se s oc cu rred

. It is us efu l to be gi n th ere. W or k e rs ’ co m pe ns at io n

in su ran ce pr ov id es wag e lo ss an d m ed ic al ex pe ns e re i mb u r se m en t to in di vi du al s

in jure d whi le wor ki ng

. Mo st em pl oyers carr y wor ke rs ’ co m pe ns at io n in su ran ce fo r

th ei r em pl oyees an d st at es req ui re em pl oyers to ob ta in a cert ifi cat e of in su ran ce fro m

Robert J . J enning s, died in prison on Dec ember 4, 2009. Acc ording ly , his appea l was 1

dismiss ed as moot and his ca se wa s remande d to the district court to vac ate the judg ment and
dismiss the indictment. United States v. J ennings , No. 08-13434 (11th Cir. Jan. 5, 2010) (orde r dismiss ing a

ppeal a s moot and remanding case to vaca te the judg ment and dismiss the indictment); see also United States v . Romano , 755 F.2d 1401 ( 11th Cir. 1985).

18 U.S.C. § 371. 2

18 U.S.C. §§ 1341, 1343, & 2. 3

18 U.S.C. §§ 1956(a)(1) (A)( i) & 2. 4

2th e in su ran ce co m pa ny de m on st rat in g th ey are co ve red or ha ve ot he rwis e as su red

pr ot ect io n fo r t he ir em pl oyees. Co m

pa ni es th at se ll wor ke rs co m pe ns at io n

in su ran ce— te rm ed carr ie rs —ar e he av il y reg ul at ed by th e st at es

. Eve ry st at e req ui res

carr ie rs to be “ ad mi t te d” be fo re op erat in g wit hi n th e st at e: Carr ie rs m us t sa ti sf y

va rio us fin an ci al an d ad m in is tra ti ve req ui rem en ts an d pa y in to “ gu aran ty” fu nd s us ed

to pa y cl ai m s whe n a n a d mi t t ed carr ie r is un ab le to do so

. Tha t a carr ie r m us t be

ad m it te d in or de r to in su re emp l o yees wit hi n a st at e is co m m on to th e wor ke rs ’

co m pe ns at io n i nd us try.

Man y em pl oyers ou ts ou rce th ei r hu m an res ou rce de pa rtment to a pr of es si on al

em pl oyer or ga ni zat io n. PEOs op erat e by hi rin g th e cl ie nt em pl oyer’s em

pl oyees an d

th en le as in g th em ba ck to th e cl ie n t

— s o t h a t th e cl ie nt ’s em pl oyees be co m e th e

em pl oyees of th e PEO. Th e cl ie nt pa y s th e PEO th e co st s of pa y ro ll pl us a fee fo r

se rv ic es

. PEOs al so m

us t b e li cen se d b y

th e st at e an d h av e p ro of

of v al id wor ke rs ’

co m pe ns at io n in su ran ce. A PEO fai li ng to m eet st at e re g u l at or y req ui rem en ts wil l

face a st op -wo rk or de r fro m th e st at e req ui rin g th e PEO to ceas e al l op erat io ns in th e

st at e.

The fin al ge ar in th e wor ke rs ’ co m pe ns at io n m ach in e is t h e t h i r d pa rty

ad m in is tra to r. Thi rd pa rty ad m in is tr a t o r s wor k fo r bo th th e carr ie r an d th e PEO in

ad m in is te rin g t he act ua l cl ai m s— in effe ct act in g as an ins ur an ce com pa ny’ s cl ai m s

3de pa rtment. The ad m in is tra to r ev al ua te s th e m eri ts of an em pl oyee’s cl ai m s an d pa y s

th e bi ll s fo r va li d cl ai m s un de r th e po li cy

. It of te n ha s th e m os t da y -to -d ay co nt a c t

wit h th e cl ie nt co m

pa ni es an d th ei r em

pl oyees. Lik e th e ot he r pa rti ci pa nt s, th ird pa rty

ad m in is tra to rs are reg ul at ed by th e st at es whi ch se ek to en su re cl ai m s are pa i d in a

ti m el y m an ne r.

II

The go ve rn m en t ar gu ed at t ria l t ha t To uc he t an d S ta nd rid ge pa rti ci pa te d i n a

wid e-re ach in g sc he m e to de frau d em pl oyers an d th ei r em

pl oyees th ro ug h th e sa le of

sh am wor ke rs ’ co m

pe ns at io n in su ran ce, th at to ge th er wit h th ei r co co ns pi rat or s, th ey

ut il iz ed pr of

es si on al em

pl oye r o r g a ni zat io ns to se ll frau du le nt in su ran ce to cl ie nt

co m pa ni es , th at th e frau d le ft th e em pl oyees wit ho ut wor ke rs ’ co m pe n s a t i o n

in su ran ce, an d th at m an y in jure d an d di sa bl ed e m

pl oyees, un ab le to co ll ect

co m pe ns at io n, wer e ab an do ne d wi th ou t fi na nc ia l re co ur se

.

Gov ern m en t wit ne ss es of fere d th e fo ll owi ng acco un t of rel ev an t ev en ts : The

f r a u d b eg an in la te 20 00 whe n TTC, a PEO, be ga n to se arch fo r a ne w s o u r c e o f

wor ke rs ’ co m

pe ns at io n in su ran ce aft er it s pr eviou s ca rr ie r be ca m e ins olv en t. T ouchet

an d h is bu si ne ss as so ci at e, Tho m as Bro wn, ha d be en do in g b us in es s wi th TTC and

le arn ed it ne ed ed wor ke rs ’ co m pe ns at io n in su ran ce. Tou ch et co nt act ed Je rry Brewe r

4at Uni te d In su ran ce ab ou t p ot en ti al av ai la bl e in su ran ce who to ld hi m co ve rag e was

av ai la bl e th ro ug h hi s Reg en cy In su ran ce of W es t In di es , Lim it ed

. Bro wn pr op os ed

Reg en cy bu t TTC de cl in ed

, aware th at Reg en cy was no na dm it te d an d co ul d no t

l e g a l ly be en ga ge d. Afte r a nu m be r of at te m

pt s to fin d le gi ti m at e wo r k e r s ’

c o m pe ns at io n in su ran ce fai le d, in cl ud in g an at te m pt to se cu re in su ran ce th ro u g h

Bro wn’s br ot he r’s co m

pa ny, TTC be cam e de sp erat e—f earf ul th at wit ho ut wor ke rs ’

co m pe ns at io n in su ran ce it wou l d be sh ut do wn. TTC fin al ly ag reed to Bro wn an d

Tou ch et ’s pr op os al an d in Feb ruar y 2001 pur ch as ed w or

ke rs ’ co m pe nsa tio n ins ur an ce

fro m Reg en cy at t he co st of $ 1.8 m il li on a m on th

.

Tou ch et pr ep ared a po li cy fo r TTC—t ak in g a sa m pl e wor ke rs ’ co m

pe ns at io n

po li cy fro m an ot he r carr ie r, co pyin g it wit h Reg en cy ’s na m e, an d m ak in g up a po li cy

nu m be r. W hi le th e po li cy it se lf reci te d th at Reg en cy was a no na dm it te d carr ie r,

Tou ch et pr ov id ed TTC wit h cert ifi cat es of in su ran ce wit ho ut th is cri ti cal di sc lo su re

to be fur ni sh ed to TTC’ s cl ie nt s.

T T C’ s thi rd pa

rt y ad m in is tra to r refu se d to co nt in ue wit h a no na dm it te d ins ur er

.

Earl ie r St a nd rid ge ha d co nt act ed Bro wn an d Tou ch et reg ard in g th e po ss ib il it y of

be co m in g th e th ird pa rty ad m in is tra to r fo r TTC’ s wor ke rs ’ co m pe ns at io n in su ran ce.

St a n d r i d ge own ed an d op erat ed a he al th care th ird pa rty ad m in is tra to r, Glo ba l

Heal th care Co rp ., an d arg ue d he co ul d ke ep in su ran ce co st s do wn by ag gr es si ve ly

5m an ag in g th e cl ai m s. He al so cl ai m ed to Bro wn th at he co ul d ru n “ ro ug hs ho d” ov er

st at e reg ul at or s con cern ed ab ou t Rege nc y

. Now need in g a ne w ad m in is tra to r, TTC

tu rn ed to Glo ba l Hea lt hc are.

Alm os t im m ed ia te ly th e pr ob le m s be ga n. In Mar ch 20 01

, TTC refu se d to pa y

th e Mar ch pr em iu m , co m

pl ai ni ng to St an dr id ge th at cl ai m s ha d no t be en pa id an d th at

st at es were reject in g Reg en cy as a no na dm it te d carr ie r. St an dr id ge as su red TTC th at

he wou ld de al wit h th e reg ul at or s bu t at th e m om en t he co ul d no t pa y cl ai m s be cau se

Bro wn h ad no t re m it te d m on ey fro m TTC’ s p rem iu m

.

On Apr il 12 th

, 20 01

, Bro wn, St an dr id ge , Tou ch et

, an d Je nn in gs —wh o was th e

ad m in is tra to r fo r so m e of TTC’ s he al th in su ran ce— m et wit h TTC at th ei r of fic es in

Kan ka ke e Ill in oi s. A he at ed arg um en t en su ed ov er Reg en cy ’s fai lu re to pa y cl ai m s,

TTC’ s fai lu re to pa y pr em iu m s, an d st at es ’ refu sa l t o acce pt Reg en cy

. Bro wn,

Tou ch et

, an d St an dr id ge ag reed TTC co ul d us e Reg en cy un ti l va li d in su ran ce co ul d

be ob ta in ed wit ho ut reg ul at or s in te rfer in g. St andr idg e ac te d as a m ed iato r, su gg es ti ng

th at reg ul at or s wou ld be pl acat ed if cla im s were pa id an d he had di rect co nt ro l ov er

TTC’ s pr em iu m s. It was ev en tu al ly res ol ve d th at TTC wou l d p a y t h e pr em iu m s

di rect ly to St an dr id ge an d th at St an dr id ge wou ld sm oo th th e is su es ov er wit h th e st at e

re g u la to rs

. Afte r th e m eet in g, TTC wire d $1 .8 m il li on do ll ars fo r th e Mar ch

pr em iu m

. Aro un d th is ti m e St an dr id ge m erg ed Glo ba l Heal th in to EOS Heal th

, a ne w

6co m

pa ny. In an ap pa ren t att em pt to li m it hi s lia bi li ty fo r un pa id cl ai m s, St an dr id ge

req ue st ed th at th e EOS em pl oyees be “ hi red ” by St at -Car e, a th ird pa rty ad m in is tra to r

co nt ro ll ed by T ou ch et , alt ho ug h EOS wo ul d c on ti nu e to su pe rv is e th em

.

The pr ob le m s co nt in ue d an d in May 20 01

, TTC ag ai n refu se d to pa y th e

m on th ly pr em iu m be cau se cl ai m s ha d no t be en pa id

. Afte r ba dg eri ng by Bro wn, TTC

pa id th e pr em iu m , bu t it d i d n o t co ve r al l th e cl ai m s an d by Ju ne 20 01 un pa id

wor ke rs ’ co m

pe ns at io n cl ai m s ex ceed ed $1 0 m il li on

. St an dr id ge cl ai m ed to ha ve no

m on ey to pa y th e cl ai m s— m uc h of th e m on ey g i v e n by TTC to Bro wn an d

S t a n d r i d g e ha d be en us ed to pa y th e op erat in g ex pe ns es an d sa la rie s of Bro wn ,

Tou ch et

, an d Stan dr id ge , an d for no n- TTC in ve st m en ts by St an dr id ge an d Bro wn.

The m on ey le ft was woe fu ll y in su ffi ci en t. Fi na ll y , in Ju ly 20 01

, Fl or id a is su ed a

st op -wo rk o r d e r t o TTC fo r fai lu re to ha ve le gi ti m at e wor ke rs ’ co m pe ns at io n

in su ran ce. TTC’ s cl ie nt s de m an de d pa y m en t on th e ex is ti ng cl ai m s an d in fo rm at io n

on ho w to co nt act Reg en cy

. Tou ch et an d Bro wn pr ov id ed EOS em pl oyees wit h th e

ad dr es s of an ex pi red po st of fic e bo x to gi ve to th e an gr y cl ai m an ts an d EOS

em pl oyees t ol d t he cla im an ts th at th e fai lu re t o p ay cla im s was th e fau lt of TTC.

Und et erre d by th e fai lu re of th ei r effo rts wit h TTC, St an dr id ge , Tou ch et

, an d

Bro wn so ug h t to cap tu re TTC’ s fo rm er cl ie nt s by st art in g a PEO of th ei r own

. In

Aug us t 20 01

, th ey pu rch as ed a sh el l co m pa ny an d f

o r med M R IK. St an dr id ge was

7m ad e a fif

ty-on e pe rcen t sh areh ol de r as he ha d recen tl y pa ss ed a ba ck gr ou nd ch eck

an d cou ld be li cen se d by th e st at e in th e sh or te st ti m e. The y hi red Lawren ce J on es ,

th e fo rm er m an ag er of TTC’ s Tam pa of fic e, to m an ag e MRI K. Onc e ag ai n, Tou ch et

,

Bro wn, a n d St an dr id ge wit ho ut su cces s so ug ht va li d wor ke rs ’ co m pe ns at io n

in su ran ce. The y th en tu rn ed ag ai n t o R eg en cy as a “ te m po rary” fix . As wit h TTC,

Tou ch et pr ov id ed cert ifi cat es of in su ran ce th at fai le d to di sc lo se to th e cl ie nt

co m pa ni es th at Reg en cy was no na dm it te d. Jo ne s qu es ti on ed whe th er Reg en cy was

ad m it te d bu t St an dr id ge or de red hi m t o u s e t h e pr ov id ed cert ifi cat es of in su ran ce.

Si m il ar re su lt s fo ll owe d. Fl or id a is su ed MRIK a st op -wo rk ord er i n J ul y

20 02

.

Rea li zi ng th at Reg en cy no lo ng er of fere d co ve r, Brewe r, Tou ch et

, an d Bro wn

fo rm ed an ot he r in su ran ce co m pa ny, g r a nd io se ly na m ed Tran sP aci fic In te rn at io na l

In su ran ce C o m

pa ny Lim it ed

. Tran sP aci fic was or ig in al ly in co rp or at ed in New

Zeal an d, th ou gh in an effo rt to li cen se th e co mpan y in th e U.S. St an dr id ge

un su cces sf

ul ly at te m

pt ed to m ov e it s d om ic il e to Arka ns as . It la ck ed res erv es , h ad

no em pl oyees, an d ha d no of

fic e in si de th e Uni te d St at es

. Lik e Reg en cy , it was jus t

pa pe r.

Wi t h th e st op -wo rk or de r fo r it s us e of Reg en cy , MRI K swi tc he d to

Tran sP aci fic

. Onc e ag ai n, Tou ch et

, th ro ug h St at -Car e, is su ed cert ifi cat es of

in su ran ce to MRI K st at in g MRI K ha d va li d wor ke rs ’ co m pe ns at io n in su ran ce fo r

8MRI K’ s cl ie nt s. J on es tes ti fie d h e o bjec te d t o t he us e o f a no na dm it te d c arri er, b ut

th e st a te au th or it ie s pe rm it te d MRI K to op erat e whi le Tran sP aci fic ’s va li di ty was

ve rif ie d. In Aug us t 2 00 2, Fl or id a ag ai n i ss ue d a st op -wo rk ord er.

In ad di ti on to fo r mi n g th ei r own PEO, Bro wn, Tou ch et an d St an dr id ge

recr ui te d ot h e r PEO cl ie nt s faci ng pr ob le m s wit h th ei r wor ke rs ’ co m pe ns at io n

in su ran ce si m il ar to th os e of TTC. The pa tt ern was co ns is te nt

. Fro m 20 01 to 20 04

,

Bro wn, Tou ch et

, an d St an dr id ge co nt in ue d to se ll Reg en cy an d Tran sP aci fic po li ci es

th ro ug h va rio us PEOs de sp erat e fo r w or ke rs ’ co m pe ns at io n co ve rag e. Tou ch et wro te

th e wor ke rs ’ co m

pe ns at io n in su ran ce po li ci es di sc lo si ng Reg en cy an d Trans pa ci fic

were no na dm it te d. He al so craf te d cert ifi cat es of in su ran ce th at di d no t rev eal th e

st at us o f Reg en cy an d Tran sP aci fic fo r th e PEOs to pr ov id e to th ei r cl ie nt s.

St an dr id ge act ed as ad m in is tra to r fo r m an y of th e PEOs. As th e m on ey ran o u t

, he

an d hi s em

pl oyees de ve lo pe d sc rip ts in or de r to m ol li fy an gr y cl ai m an ts an d in qu iri ng

reg ul at or s. Man y of th es e PEOs ev en co nt in ue d to us e Reg en cy an d Tran sP aci fic in

so m e st at es aft er re gu la to rs in ot he r st at es is su ed st op -wo rk ord ers

.

In 20 04 in ve st ig at or s cl os ed in an d th e ho us e of card s c o l la ps ed

. Sev eral

in di ct ed co co ns pi rat or s pl ed gu il ty, in cl ud in g Bro wn an d th e CEOs of se ve ral of th e

PEOs. Bro wn, Jo ne s, an d o t he r co ns pi rat or s te st ifi ed at tri al ag ai ns t Tou ch et an d

St an dr id ge , d et ai li ng th e sc he m e. The go ve rn m en t a l s o p res en te d th e te st im on y of

9Ly

nn Szym on ia k, an ex pe rt on th e wor ke rs ’ co m pe ns at io n in du st ry , who te st ifi ed th at

th e li cen si ng an d reg ul at or y req ui rem en ts Tou ch et an d St an dr id ge vi ol at ed were well

kn own by th os e in th e wor ke rs ’ co m pe ns at io n i n d us try. The go ve rn m en t al so

pr es en te d Tou ch et ’s gr an d jury te st im on y , as well as th e te st im on y of em pl oyees of

thi rd pa rt y ad m ini st rat or s an d PEOs, an d so m e of Tou ch et ’s an d St an dr id ge’ s vic tim s.

The go ve rn m en t co rro bo ra te d th e te st im on y wit h de ta il ed fin an ci al reco rd s an d

em ai ls

.

III

Bo th Tou ch et an d St an dr id ge arg ue th e di st ric t co ur t erre d in a d mi t t i n g th e

ex pe rt te st im on y of Ly

nn Szym on ia k reg ard in g in fo rm at io n ge ne ral ly kn own by th ird

pa rty ad m in is tra to rs an d p ers on s wh o o wn an d o pe rat e PEOs. W e rev ie w a di st ric t

co ur t’s de te rm in at io n th at a wit ne ss is a qu al ifi ed ex p e r t fo r ab us e of di sc ret io n. 5

“ Und er Ru le 70 2, a d i s t ric t co ur t m us t de te rm in e th at pr of

fere d ex pe rt te st im on y is

bo th rel ia bl e an d rel ev an t.

. . . Fo r no n- sc ie nt ifi c ex pe rt t e s t i mon y , th e tri al jud ge

mu s t h a v e co ns id erab le le eway in de ci di ng in a pa rti cu la r cas e ho w to go ab ou t

d e t e r m in in g whe th er pa rti cu la r ex pe rt te st im on y is rel ia bl e. A di st ric t co ur t may

American G en. Life Ins. Co. v. Schoe nthal Family, LL C , 555 F.3d 1331, 1339 ( 11th Cir. 5 2009).

10de ci de th at no n- sc ie nt ifi c ex pe rt te st im on y is rel ia bl e ba se d up on pe rs on al kn owl ed ge

or ex pe rie nc e.” 6

Szym on ia k te st ifi ed t o , am on g ot he r th in gs , th e su bs ta nt iv e req ui rem en ts of

st at e wor ke rs ’ co m

pe ns at io n la w an d th e ge ne ral kn owl ed ge in th e in du st ry of th os e

req ui rem en ts

. The co ur t fo un d Szym on ia k to b e q u a l i fie d ba se d on ex te ns iv e

te st im on y as to he r ba ck gr ou nd : Szym on ia k ha d a la w de gr ee fro m Vil la no va , ta ug ht

cl in ic al pr og ram s an d em pl oym en t di sc riminat io n, wor ke d fo r th ree y ears fo r th e

Nati on al Co un ci l on Co m pe ns at io n In su ran ce— th e rat e-m ak in g or ga ni zat io n fo r th e

wor ke rs ’ co m

pe ns at io n in du st ry , was th e ed it or of a le ga l m ag azi ne whi ch pu bl is he d

rev ie ws of si gn ifi can t ch an ge s in wor ke rs ’ co m pe n s a t i on in th e fif

ty st at es , was a

m em be r, an d at on e po in t he ad

, of th e ABA to rt in su ran ce pr act ic e se ct io n, wor ke rs ’

co m pe ns at io n se ct io n, was a pa r t n e r o f a fir m an d he ad of th e pr act ic e gr ou p

s p e c i al iz in g in wor ke rs ’ co m pe ns at io n frau d an d cu rren tl y ha s he r own fir m do in g

si m il ar wo rk , pu bl is he d e le ve n a rti cl es an d edi ts an on li ne m ag azi ne , Frau d Di ge st

,

was a fo un di ng m em

be r of t h e Fl or id a Task Fo rce on wor ke rs ’ co m pe ns at io n, an d

la st ly was in vo lv ed in th e ru le m ak in g pr oc es s co nc ern in g P EOs an d wor ke rs ’

co m pe ns at io n a s wel l as th ird pa rty adm in is tra to rs

.

Id. 6

11Szym on ia k te st ifi ed on th e ba si s of th is ex pe rie nc e an d co nv ers at io ns ov er he r

care er w i th wor ke rs ’ co m pe ns at io n pr of

es si on al s. Rel y in g on Uni te d St at es v.

Sc ri ma , Tou ch et an d St an dr id ge cl ai m th e te st im on y was he ars a y. I n S cr ima

, th e 7

co ur t sta te d “ [a]lt ho ug h e xp ert s are som et im es al lo wed to refe r to he ars ay ev id en ce

as a ba si s for th ei r te st im on y , su ch he ars ay m us t be the type of ev id en ce reas on ab ly

rel ie d up on by ex pe rts in th e pa rti cu la r fie ld in fo rm in g op in io ns or in fere nc es on th e

s u b je ct .” Bu t in Sc ri ma th e ex pe rt te st im on y was by an acco un ta nt who ba se d hi s

8

co nc lu si o n s o n cal cu la ti on s of ne t wor th on “ st at em en ts to cas ua l bu si ne ss

acq ua in ta nc es .” The co ur t fo un d qu al ifi ed ex pe rt acco un ta nt s wou ld no t us e su ch 9

ev id en ce. Thi s co nt ras ts wit h Uni te d St a t es v. St eed

, al lo win g a po li ce of fic er to

te st ify reg ard in g st an da rd po li ce ta ct ic s at tra ffi c st op s ba se d on “ di sc us si on s [th e

of fic er] ha d wit h ot he r la w en fo rcem en t of fic ers ov er t h e co ur se of hi s care er, an d

li te rat ur e wit h res pe ct to tre nd s in dr ug tra ffi ck in g.” As in St eed

, Szym on ia k 1 0

Touche t and Standridg e also see k to exclude the testimony on the g rounds that it 7

constitutes an informal surve y which fa ils the scientific method. Howe ver, “ [w] here experience -base d studies are g ener ally acc epted in the industry , a cour t cannot pena liz e a litig ant
for the la ck of sc ientific or a cade mic studies and public re ports on the topic. . . . .” United States

v. Frazier , 387 F.3d 1244, 1299–1300 ( 11th Cir. 2004) (interna l quotations and citations omitted)).

819 F.2d 996, 1002 ( 11th Cir. 1987). 8

Id. 9

548 F.3d 961, 965 ( 11th Cir. 2008). 1 0

12te st ifi ed reg ard in g ge ne ral pr act ic e in a fie ld —t hi rd pa rty ad m in is tra to rs ’ kn owl ed ge

of ap pr op ria te an d le gi ti m at e bu si ne ss pr act ic es

. Thi s was te st im on y by th e wit ne ss

ab ou t he r wor k an d he r fam il ia rit y wit h th e reg ul at or y en vi ro nm en t. It was ev id en ce

in su pp or t of he r co m

pe te nc e to ex pr es s an op in io n reg ard in g th e aware ne ss of cert ai n

in du st ry req ui rem en ts —t ha t kn owl ed ge of th e s e r eq ui rem en ts was es se nt ia l to

pe rs on s in th is fie ld

. It was no t an effo rt to pr ov e wha t th e reg ul at io ns were fro m th e

st at em en ts of ot he rs

. Kno wled ge of an in du st ry ’s bu si ne ss pr act ic es —u nl ik e

te ch ni cal acco un ti ng va lu at io ns —i s gl ean ed fro m y ears of wor ki ng wit hi n th e

in du st ry an d wit h it s pr o f e s s i o n a l s. It is no t a reco un ti ng of ou t of co ur t st at em en ts

of ot he rs

. W e fin d no ab us e of di sc ret io n by th e di st ric t co ur t in ad m it ti ng

Szym on ia k’s t es ti m on y

.

IV

Tou ch et arg ue s th at th e co ur t erre d in de nyin g a mi s t r ia l on th e gr ou nd th at

Bro wn m ad e refe ren ce be fo re th e jury of ci vi l li ti ga ti on in whi ch he an d Tou ch et were

cu rren tl y in vo lv ed

. The de ci si on no t to gr an t a m is t r i a l is rev ie wed fo r ab us e of

di sc ret io n. Tou ch et m

us t de m on st rat e th at h i s s u bs ta nt ia l rig ht s are pr ejud ic ia ll y 1 1

affe ct ed

. Tha t is

, whe n th ere is a reas on ab le pr ob ab il it y th at

, bu t fo r th e rem ark s, th e

United States v. Emm anuel , 565 F.3d 1324, 1334 ( 11th Cir. 2009). 1 1

13ou tc om e of th e tri al wou ld ha ve be en di ffer en t. “ [W] he r e t h e c o mm en t is br ie f, 1 2

un el ic it ed

, an d un res po ns iv e, ad di ng no th in g to th e go ve rn m en t’s cas e, th e de ni al of

a m is tri al is pro pe r.” 1 3

The co nt es te d t es ti m on y

is as f ol lo ws:

Q: Is th ere on e of th os e t h r e e [Tou ch et

, St an dr id ge or Je nn in gs ],
th ou gh , th at y ou co ns id er a fr ie nd ?

A: I do

. Q: W hi ch on e?

A: Don Tou ch et

. Q: W hy?

A: W e’ve kn own each o t h e r t h e lo ng es t; be en in vo lv ed in a lo t of

pr ob le m s; wor ki ng th ro ug h pr ob le m s; we’ve be en su ed m ul ti pl e ti m es ; we co nt in ue wit h— I be li ev e we’re st il l act iv el y in vo lv ed

in th ree c iv il li ti ga ti on

—

At th is po in t th e d efen se ob jecte d a nd th e p ro se cu ti on ag reed no t to pu rs ue th e li ne

of qu es ti on in g.

Thi s cas e fit s sq ua rel y wit hi n Uni te d St at es v. Emman ue l

. The re th e co ur t

fo un d a go ve rn m en t wit ne ss ’s fle et in g, un so li ci te d, refe ren ce th at th e de fen da nt ha d

be en ou t on ba il in su ffi ci en t gr ou nd s fo r a m is tri al

. Here, th e te st im on y was arg ua bl y 1 4

le ss pr ejud ic ia l th an th at in Emman ue l

. Ci vi l li ti ga ti on is a co m m on oc cu rren ce. No

de ta il s of th e li ti ga ti on were di sc lo se d an d th e go ve rn m en t di d no t pu rs ue th e m at te r.

Id. 1 2

Id. 1 3

Id. 1 4

14Mo reo ve r, th e co ur t of fere d to pr ov id e a cu rat iv e in st ru ct io n to th e jury, bu t Tou ch et

de cl in e d

. I n li gh t of th e su bs ta nt ia l ev id en ce to co nv ic t Tou ch et

, th e m in or

si gn ifi can ce of Bro wn’s co m m en ts

, an d Tou ch et ’s refu sa l of an in st ru ct io n, th e de ni al

of a m is tri al was p ro pe r an d was no t an ab us e o f di sc ret io n.

V

St an dr id ge arg ue s th ere was in su ffi ci en t ev id en ce to co nv ic t hi m of an y ch ar ge

.

The re are two se ts of ch arg es : (1 ) co un ts on e th ro ug h si x an d se ve nt een th ro ug h

ni ne te en ch arg e d S t a n dr id ge wit h m ai l an d wire frau d an d co ns pi racy fo r hi s

pa rti ci pa ti on in th e sa le o f R e g e n cy an d Tran sP aci fic in su ran ce th ro ug h hi s PEO

MRI K an d to va rio us ot he r PEOs; an d (2 ) co un ts twen ty an d tw e n t y- o n e c ha rg ed

St an dr id ge wit h m on ey la un de rin g. St an dr id ge arg ue s th at

, wit h res pe ct to th e frau d

an d c on sp ira cy

co un ts , th e g ov ern m en t fa il ed to pro ve he kn ew th e us e of Reg en cy

an d Tran sP aci fic was il le ga l an d th at he be li ev ed th e us e of Reg en cy an d Tran sP aci fic

was acce pt ab le in li m it e d i n st an ces

. W it h res pe ct to th e m on ey la un de rin g co un ts

,

St an dr id ge arg ue s th e go ve rn m en t fai le d to pr ov e th e pr op ert y in vo lv ed was “ pr of it s”

fro m un la wfu l act iv it y as req ui red by th e Su pr em e Co ur t’s de ci si on in Uni te d St at es

v. Sa nt os

. W e rev ie w a ch al le ng e to th e su ffi ci en cy of th e ev id en ce de no vo , vi ewin g

15th e ev id en ce “ in th e li gh t m os t fav or ab le to th e go ve rn m en t, wit h al l re a s o n ab le

in fere nc es an d c red ib il it y ch oi ces m ad e in th e g ov ern m en t’s fa vo r.” 1 5

A

W e fir st tu r n to th e frau d an d co ns pi racy co un ts

. Co nv ic ti on un de r th e m ai l

an d wire frau d st at ut es req ui res pr oo f th at St an dr id ge in te nt io na ll y pa rti ci pa te d in a

sc he m e to de frau d an d us ed th e m ai ls or wire co m m un ic at io ns to fu rth er th e sc he m e. 1 6

Eit he r m ay be pr ov ed th ro ug h ci rcu m st an ti al ev id en ce. Co ns pi racy de m an ds pr oo f 1 7

of : “ (1 )

. . . an ag reem en t to ach ie ve an un la wfu l ob jecti ve ; (2 )

. . . kn owi ng an d

vo lu nt ary pa rti ci pa ti on in th e ag reem en t; a nd (3 )

. . . an act in fu rth eran ce of th e

ag reem en t.” The go ve rn m en t arg ue s th at St an dr id ge pa rti ci pa te d in th e sc he m e to

1 8

de frau d by hi s pa rti ci pa ti on in hi s PEO MRI K a n d t h r o ug h act in g as a th ird pa rty

ad m in is tra to r fo r ot he r PEOs us in g Reg en cy an d Tran sP aci fic

. St an dr id ge ’s de fen se

i s , i n sh or t, th at he was un aware of th e frau du le nt na tu re of th e bu si ne ss : H e

m ai nt ai ns th at at no po in t di d he kn ow of th e il le ga li ty of th e us e of Reg en cy or ta ke

United States v. Ortiz , 318 F.3d 1030, 1036 ( 11th Cir. 2003) (interna l quotation marks 1 5 omitted).

18 U.S.C. §§ 1341 & 1343; United States v. Brown , 40 F.3d 1218, 1221 ( 11th Cir.

1 6 1994). Standridg e wa s also char g ed under the aiding and abe tting statute. 18 U.S.C. § 2.

United States v. Robe rtson , 493 F.3d 1322, 1330–31 ( 11th Cir. 2007). 1 7

United States v. Adk

inson , 158 F.3d 1147, 1153 ( 11th Cir. 1998); 18 U.S.C. § 371. 1 8

16pa rt in th e us e of Reg en cy as a wor ke rs ’ co m pe ns at io n in su ran ce carr ie r an d th at th e

go ve rn m en t fa il ed to pre se nt su ffi ci en t ev id en ce t o p ro ve ot he rwis e.

S t a n dr id ge ’s d efen se is es se nt ia ll y hi s wor d ov er th at of hi s co nf ed erat e s

— a

cred ib il it y cal l b el on gi ng to th e jury. Bro wn t es ti fie d t ha t St an dr id ge was a ware o f

th e il le ga li ty of Reg en cy at le as t by th e Apr il 12

, 20 01 m eet in g wit h TTC. St an dr id ge

st oo d to m ak e m on ey act in g as th e ad m in is tra to r fo r TTC an d he ha d a st ro ng in te res t

in m ai nt ai ni ng th e bu si ne ss rel at io n s h i p w it h TTC. The te st im on y in di cat ed th at

St an dr id ge as si st ed in co nv in ci ng TT C to ag ree to th e us e of Reg en cy

. Bro wn

te st ifi ed th at St an dr id ge kn ew of th e co nt en ts of th e po li cy an d of the di sc rep an ci es

in th e cert ifi cat es of in su ran ce (b et ween th at pr ov id ed to TTC an d th at pr ov id ed to

TTC’ s cl ie nt co m

pa ni es ). In ad di ti on , th ou gh St an dr id ge kn ew ot he r ad m in is tra to rs

wou ld no t wor k wit h Reg en cy , St an dr id ge as se rte d he co ul d sm oo th ou t an y pr ob le m s

w i t h reg ul at or s ari si ng fro m th e us e of Reg en cy —i m pl y in g he wou ld be ab le to

pr ev en t s an ct io ns th ro ug h t he us e of hi s p ers on al co nt act s at th e v ari ou s ag en ci es

.

Bo th Bro wn an d t he CEO of TTC t es ti fie d S ta nd rid ge was i nt eg ral to res ol vi ng th e

pr ob le m s b et ween Bro wn an d TTC t o k eep th e sc he m e al iv e.

Mo reo ve r, ev id en ce at tri al rev eal ed St an dr id ge ’s in vo lv em en t co nt in ue d

si gn ifi can tl y pa st an y po in t whe re he co ul d co nv in ci ng ly cl ai m ig no ran ce. The re was

te st im on y th at St an dr id ge as ke d to st ru ct ur e EOS so th a t it s em pl oyees were

17te ch ni cal ly em pl oyed by Tou ch et ’s St at -Car e in an at te m pt to li m it hi s li ab il it y ari si ng

fro m th e us e of Reg en cy

. Bu t ev en aft er th e res tru ct ur in g, St an dr id ge was in ti m at el y

in vo lv ed in it s bu si ne ss —a n d k n e w hi s em pl oyees were us in g a sc rip t to m is le ad

reg ul at or s as th e sc he m e wit h TTC be ga n t o un rav el

. Eve n aft er TTC rece iv ed a

st op -wo rk or de r, St an dr id ge co nt in ue d to act as th e ad m in is tra to r fo r ot he r PEOs

us in g Reg en cy an d Tran sP aci fic

. Last ly, th ere was te st im on y th at St an dr id ge was

in vo lv ed in di ve rti ng so m e of th e PEOs’ pr em iu m do ll ars to un au th or iz ed pu rp os es

.

The go ve rn m en t al so pr ov id ed su ffi ci en t ev id en ce to c o n v ic t St an dr id ge of

frau d fo r hi s pa rti ci pa ti on in MRI K. St an dr id ge arg ue s he be li ev ed MRI K wou ld no t

be pr ov id in g wor ke rs ’ co m pe ns at io n in su ran ce—

bu t rat h e r on ly he al th

in su ran ce— an d th at Lawren ce Jo ne s w e n t b eh in d hi s ba ck to frau du le nt ly pr ov id e

Reg en cy an d Tran sP aci fic in su ran ce to MRI K’ s cl ie nt co m pa ni es

. The go ve rn m en t

co un te red wit h ev id en ce th at St an dr id ge was a kn owi ng an d wil li ng pa rti ci pa nt in th e

sc he m e: St an dr id ge own ed fif ty-on e pe rcen t of MRI K’ s st oc k an d was it s co nt ro ll in g

pe rs on an d a s B ro wn’s te st im on y m ad e cl ear, he an d St an dr id ge est ab li sh ed MRIK

to ab so rb TTC’ s fo rm er cl ie nt s. W hi l e h e s t a t e d th e or ig in al pl an was no t to us e

Reg en cy , th e co ns pi rat or s qu ic k l y t u r ne d to Reg en cy whe n ot he r op ti on s fel l

th ro ug h— ev en aft er it s us e ha d do om ed TTC. Jo ne s al so te st ifi ed ex te ns iv el y ag ai ns t

St an dr id ge

. He st at ed th at St an dr id ge was hi s im m ed ia te bo ss an d th at St an dr id ge

18in st ru ct ed hi m to us e th e m is le ad in g cert ifi cat es of in su ran ce id en tifying Reg en cy an d

Tran sP a c i f

i c as th e cl ie nt s’ wo rk ers ’ co m pe ns at io n carr ie r. Bo th Jo ne s an d Bro wn

te st ifi ed Sta nd rid ge was aware of Reg en cy ’s an d Trans Paci fic ’s no na dm it te d s ta tu s

an d th at St an dr id ge sa id he wou ld ta ke care of th e li cen si ng is su es r a i s e d by th e

st at es

. Bro wn an d Jo ne s’s t e s t i mo n y ev id en ced a frau d in whi ch St an dr id ge was

in ti m at el y

in vo lv ed . The ev id en ce was su ffi ci en t t o u ph ol d t he co nv ic ti on s.

B

St an dr id ge arg ue s th at th e co nv ic ti on s fo r m on e y la un de rin g m us t be

ov ert ur ne d un de r Uni te d St at es v. Sa nt os , as th e go ve rn m en t can no t pr ov e th e m on ey

at is su e was th e pr of

it s of ill eg al act iv it y as op po se d to rece ip ts

. Mo ne y la un de rin g

req ui res pr oo f th at t he de fen da nt co nd uc te d or at te m pt ed to co nd uc t a fin an ci al

tra ns act io n, k ne w th e p ro pe rty inv ol ve d i n t he tra ns act io n re pr es en te d t he pr oc eed s

of un la wfu l acti vi ty, th e pr op ert y in vo lv ed was i n fa ct th e p ro ceed s of the sp eci fie d

un la w f u l act iv it y , an d th e de fen da nt co nd uc te d th e fin an ci al tra ns act io n wit h th e

in te nt to pr om ot e th e carr y in g on of th e sp eci fie d un la wfu l act iv it y

. In Sa nt os , th e 1 9

Su pr em e Co ur t in a pl ur al it y op in io n hel d th at in th e co nt ex t of gam bl in g pro ceed s,

United States v. W

illiamson , 339 F.3d 1295, 1301 ( 11th Cir. 2003). 1 9

19pr oc eed s m ean t “ pr of it s” as op po se d to “ rece ip ts .” As th is ob jecti on was no t rai se d 2 0

at tri al , we rev ie w for pl ai n e rro r. 2 1

Thi s co ur t rece nt ly ad dr es se d th e Sa nt os op in io n in U n it ed St at es v.

Demar es t : 2 2

Sa nt os ha s li m it ed pr eced en ti al va lu e. Thre e pa rts of Ju st ic e

Scal ia ’s fo ur -p art op in io n are fo r a pl ur al it y of jus ti ces , an d th os e

pa rts do no t s ta te a ru le fo r th is cas e. W he n a frag m en te d C ou rt
de ci de s a cas e an d no si ng le rat io na le ex pl ai ni ng th e res ul t en joy s th e as se nt of fiv e Ju st ic es , th e ho l d i n g of th e Co ur t m ay be
vi ewed as th at po si ti on ta ke n by t ho se Mem be rs who co n cu rred

in th e jud gm en ts on th e na rro wes t gr ou nd s. The na rro w ho ld in g in Sa nt os , at m os t, was t h a t th e gr os s rece ip ts of an un li cen se d

ga m bl in g o pe rat io n wer e n ot ‘ pr oc eed s’ un de r se ct io n 1 95 6. 2 3

Th is co ur t th eref

or e tre at s Ju st ic e St ev en s’s op in io n as co nt ro ll in g in it s na rro we s t

fo rm

. As in Demar es t , h ere th e m on ey la un d eri ng ch arg es di d no t in vo lv e rece ip ts

fro m an un li cen se d ga m

bl in g op erat io n. Thi s co ur t ha s pr ev io us ly de fin ed pr oc eed s

as “ wha t is pro du ced by or de riv ed fro m so m et hi ng

. . . by way of to ta l reve nu e; th e

128 S.Ct . at 2034 (Stevens, J., concurr ing)

. 2 0

United States v. Cotton , 535 U.S. 625, 628–31 (2002); United States v. De marest , 570 2 1 F.3d 1232, 1241 ( 11th Cir. 2009).

570 F.3d 1232. 2 2

Id. at 1242 (interna l quotations and citations omitt ed). Justi ce Steve ns, in his 2 3

concur renc e, stated “ this Court need not pick a sing le def inition of ‘proce eds’ a

pplicable to eve ry unlawful a ctivity , no matter how inc ong ruous some applica tions may be.” Santos , 128 S.Ct . at 2031 (Stevens, J., concurring ).

20to ta l am ou nt br ou gh t in .” Thi s de fin it io n in cl ud es rece ip ts as well as pr of it s. Thi s 2 4

de fin it io n bi nd s th e co ur t, an d th eref or e th e r e was no erro r—c ert ai nl y no pl ai n

erro r—i n t he refu sa l t o g ran t a ju dg m en t o f acq ui tt al on th is po in t.

VI

Tou ch et arg ue s th at th e di st ric t co ur t erre d in fai li ng ov er ob jecti on to in st ru ct

th e jury th at in or de r to co nv ic t hi m of m ai l or wire frau d it m us t fin d th at th e sc he m e

an d art ifi ce was “ reas on ab ly cal cu la te d to de cei ve pe rs on s of or di na ry pr ud en ce an d

co m pr eh en si on .” Tou ch et rel ie s on th e co ur t’s de ci si on in Uni te d St at es v. Bro wn

. 2 5

Bro wn was ov erru le d by th e co ur t’s en ba nc op in io n in Uni te d St at es v. S v e t e ,

ex pl ai ni ng t h a t “we o ve rru le ou r ho ld in g in Bro wn th at th e of fen se of m ai l frau d

req ui res pr oo f of a sc he m e cal cu la te d to de cei ve a pe r so n of or di na ry pr ud en ce.” 2 6

Tou ch et ’s arg um en t i s fo recl os ed

.

United States v. Silve

stri , 409 F.3d 1311, 1333 ( 11th Cir. 2005) (quoting W E B S T E R ’ S 2 4

T H I R D N E W I

N T E R N A T I O N A L D I C T I O N A R Y 1807 (3d ed 1961) ); United States v. Khanani , 502 F.3d 1281, 1297 n.6 ( 11th Cir. 2007).

79 F.3d 1550, 1557 ( 11th Cir. 1996) (“[I ]n t his circuit . . . the g overnme nt must show 2 5

the def endant intende d to cre ate a scheme rea sonably

calc ulated to dec eive pe rsons of ordina ry prudenc e and c omprehe nsion.” (interna l quotations and citations removed) ) revs’ d by United

States v. Sve te , 556 F.3d 1157 ( 11th Cir. 2009) (en ba nc).

Svete , 556 F.3d a t 1167. 2 6

21VII

Tou ch e t a r gu es th at hi s se nt en ce was pr oc ed ur al ly an d su bs ta nt iv el y

un reas on ab le

. At se nt en ci ng , th e co ur t ad op te d th e fact ua l fin di ng s of th e

pr es en te nc e in ve st ig at io n rep or t, fin di n g a gu id el in es ran ge of 36 0 m on th s to a

s t a tu to ry m ax im

um of 21 5 y ears ’ im

pr is on m en t. The di st ric t co ur t de pa rte d

do wnwar ds an d se nt en ced Tou ch et to 26 4 m on th s’ im pr is on m en t

. To uc he t arg ue s

(1 ) he di d no t qu al ify fo r a th ree le ve l en ha nc em en t as a “ m an ag er or su pe rv is or ”; (2 )

he di d n ot qu al ify for a t wo l ev el en ha nc em en t fo r ob st ru ct io n of jus ti ce; (3) he di d

no t qu al ify fo r a two le ve l en ha nc em en t fo r so ph is ti cat ed m ean s; an d (4 ) th e se nt en ce

was su bs ta nt iv el y un reas on ab le as th e co ur t di d no t pr op erl y ad dr es s th e se ct io n 35 53

fact or s. We add res s ea ch in tu rn

.

1

The di st ric t co ur t ap pl i e d a th ree le ve l en ha nc em en t aft er fin di ng Tou ch et

qu al ifi ed as a m an ag er or su pe rv is or

. “ Thi s co ur t r e v i e w s a s en te nc in g co ur t’s

de te rm in at io n of a de fen da nt ’s ro le in th e cri m e fo r cl ear erro r.” Sect io n 3B 1.1 of th e

Sen te nc in g Gui de li ne s pr ov id es fo r a th ree le ve l en ha nc em en t “ [i]f th e de fen da nt was

a m an ag er or su pe rv is or (b ut no t an or ga ni zer or le ad er) an d th e cri m in al act iv it y

22in vo lv ed fiv e or m or e pa rti ci pa nt s or was ot he rwis e ex te ns iv e.” W e ev al ua te se ve ral 2 7

fact or s i n o ur de te rm in at io n:

(1 ) th e ex erci se of de ci si on m ak in g au th or it y , (2 ) t h e n a tu re of

pa rti ci pa ti on in th e co m

m is si on of th e of

fen se , (3 ) th e recr ui tm en t
of acco m pl ic es , (4 ) th e cl ai m ed rig ht to a la rg er sh are of th e fru it s of th e cri me, (5 ) th e de gr ee of pa rti ci pa ti on in pl an ni ng or

or ga ni z i n g t h e of

fen se , (6 ) th e na tu re an d sc op e of th e il le ga l

act iv it y , an d (7 ) th e de gr ee of co nt ro l an d au th or it y ex erci se d ov er

ot he rs

. 2 8

It is cl ear th at co nt ro l ov er as se ts al on e is in su ffi ci en t, th e in di vi du al m us t hav e ha d

co nt ro l o ve r at lea st on e o th er p art ic ip an t i n t he cri m in al act iv it y

. 2 9

Tou ch et was si tu at ed ne ar th e to p of th e hi erar ch y of th e ov eral l sc he m e. He

was th e bu si ne ss pa rtn er of Tho m as Bro wn an d was th e co nn ect io n to Je rry Brewe r,

th e own er of Reg en cy

. Tou ch et pa r t i c i p a t e d in th e ne go ti at io ns wit h th e PEOs,

in cl ud in g at th e Apr il 12 th m eet in g wit h TTC in whi ch th e frau d was de ve lo pe d, an d

su bs eq ue nt ly is su ed th e po li ci es an d m is le ad in g cert ifi cat es of in su ran ce to th e PEOs

to pa ss al on g to th ei r cl ie nt s. Mo reo ve r, as th e own er of Tran sP aci fic an d St at e-Ca re,

he in flu en ced th e o th er coco ns pi rat or s, inc lu di ng EOS Heal th

, whi ch us ed th e St at

C are em pl oyees, an d th e PEOs, whi ch us ed th e cert ifi cat es of in su ran ce th at he

U.S.S.G. § 3B1.1(b)

. 2 7

United States v. Gupta , 463 F.3d 1182, 1198 ( quoting U.S.S.G. § 3B 1.1, comment 2 8 (n.4))

.

United States v. Glov er , 179 F.3d 1300, 1302–03 ( 11th Cir. 1999).

2 9

23pr od uc ed

. Bas ed on Tou ch et ’s ex t en si ve in vo lv em en t in th e de ve lo pm en t an d

op erat io n o f th e sc he m e, th e co ur t d id no t cl earl y err.

2

Th e d i s tri ct co ur t al so ap pl ie d a two le ve l en ha nc em en t fo r ob st ru ct io n of

jus ti ce. The co ur t rev ie ws a di st ric t co ur t’s de te rm in at io n th at a de fen da nt ob st ru ct ed

jus ti ce fo r cl ear erro r whe n cred ib il it y is at is su e. Und e r Sen te nc in g Gui de li ne s 3 0

se ct io n 3C 1.1 a di st ric t co ur t m ay im po se a two le ve l en ha nc em en t if it fin ds th at th e

de fen da nt ob st ru ct ed jus ti ce, in cl ud in g co m m it ti ng pe rjury on a m at eri al m at te r at hi s

own tri al

. Tou ch et ’s tri al te st im on y di rect ly co nt rad ic te d hi s gr an d jury te st im on y

3 1

on a m at eri al m at te r: W hi le h e t e s t i f i e d at th e gr an d jury th at he kn ew wha t he was

do in g was il le ga l, he late r te st ifi ed he on ly fo un d ou t what he was do in g was il le ga l

aft er th e fact an d th at th e pr os ecu to r ha d in flu en ced hi m to fal se ly ad m it cri m in al

act iv it y . There was n o c le ar er ro r.

3

United States v. Bank

s , 347 F.3d 1266, 1269 ( 11th Cir. 2003). 3 0

United States v. Dunnigan , 507 U.S. 87, 88–89 (1993). 3 1

24Tou ch et ne xt ob jects to th e d is tri ct co ur t’s d et erm in at io n t ha t h e is su bjec t to

a two le ve l in crea se be cau se hi s frau d de pl oyed so ph is ti cat ed m ean s, a de te rm in at io n

we rev ie w fo r cl ear erro r. The co m m en ta ry to s e c t io n 2B 1.1 (b )(9 )(C) st at es 3 2

“ ‘sop hi st ic at ed m ean s’ m ean s es pe ci al ly c o mp l e x or es pe ci al ly in tri cat e of fen se

co nd uc t pe rta in in g to th e ex ecu ti on or co nc eal m en t of an of fen se

. . . . Co nd uc t su ch

as hi di ng as se ts o r t r a ns act io ns , or bo th

, th ro ug h th e us e of fic ti ti ou s en ti ti es ,

co rp or at e sh el ls

, or of

fs ho re fin an ci al acco un ts al so or di na ril y in di cat es so ph is ti cat ed

m ean s.” Here th e frau d rev ol ve d aro un d Reg en cy a n d Tr a n s Paci fic

, sh el l

3 3

c or po rat io ns whi ch Tou ch et an d th e ot he rs us ed to is su e il le gi ti m at e wor ke rs ’

co m pe ns at io n in su ran ce. I n a d d i ti on , by us in g EOS an d St at -Car e as th ird pa rty

ad m in is tra to rs to sh ie ld Reg en cy an d Tran sP aci fic fro m cl ai m an ts an d reg ul at or s, an d

by su bm it ti ng m is le ad i n g c e r ti fic at es of in su ran ce to th e PEOs to pr ov id e to th ei r

cl ie nt s, th ey at te m

pt ed to hi de th e il le ga li ty of th ei r act io ns

. The re was no cl ear erro r.

4

Last ly, Tou ch et arg ue s th at th e di st ric t co ur t fai le d to pr op erl y ad d r es s th e

se ct io n 35 53 fact or s by no t c o n s id eri ng th at he is fif ty-fou r y ears ol d, ha s ad op te d

United States v. Clarke , 562 F.3d 1158, 1165 ( 11th Cir. 2009). 3 2

U.S.S.G. § 2B1.1 comment (n.8( b)). 3 3

25ch il dr en , so m e of who m were abu se d and ab an do ne d, has a hi st or y of se rv ic e to th e

ch ur ch an d Bo y Sco ut s, ha s be en a go od fri en d, an d ha s no pr io r cri m in al reco rd

. In

ad di ti on , th e co ur t recei ve d ov er ei gh ty le tt ers on hi s be ha lf. Thi s cou rt has st at ed :

Und er Gal l

, we m

us t en ga ge in a two -s te p pr oc es s of se nt en ci ng

rev ie w. Fi rs t, we m

us t en su re th at th e di st ric t co ur t co m m it te d no si gn ifi can t pr oc ed ur al erro r, su ch as fai li ng to cal cu la te (o r im pr op erl y cal cu la ti ng ) th e Gui d e li ne s ran ge , tre at in g th e Gui de li ne s as m an da to ry , fa ili ng to co ns id er th e § 35 53 (a) fact or s,

se le ct in g a se nt en ce ba se d on cl earl y erro ne ou s fact s, or fai li ng to
ad eq ua te ly ex pl ai n th e ch os en se nt en ce-i nc lu di ng an ex pl an at io n f or an y de vi at io n fro m th e Gui de li ne s ran ge

. Seco nd

, w e mu s t

co ns id er th e su bs ta nt iv e reas on ab le ne ss of th e se nt en ce im po se d,

un de r an ab us e-o f-d is cret io n st an da rd

, ta ki ng in to acco un t th e

to ta li ty of th e ci rcu m st an ces

. 3 4

Fi rs t, th e se nt en ce is pr oc ed ur al ly reas on ab le as th e co ur t cl earl y art ic ul at ed th e

se ct io n 35 53 fact or s, no te d th e g ui de li ne s wer e ad vi so ry an d art ic ul at ed it s reas on s

fo r im po si ng th e se nt en ce. Seco nd

, th e se nt en ce is su bs ta nt iv el y reas on ab le

. Tou ch et

hi gh li gh ts m it ig at in g fact or s, bu t th e di st ric t co ur t de pa rte d do wnwar d fro m th e

reco m m en de d gu id el in es ran ge whi le em ph as iz in g th e fact th at Tou ch et ha d

de frau de d t ho us an ds of i nd iv id ua ls of wo rk ers ’ co m pe ns at io n c ov erag e.

VIII

United States v. Livesay , 525 F.3d 1081, 1091 ( 11th Cir. 2008). 3 4

26St an dr id ge al so arg ue s th at hi s se nt en ce was un reas on ab le

. The co ur t ad op te d

th e fact ua l fin di ng s se t fo rth in t h e p r e s en te nc e in ve st ig at io n rep or t, fin di ng th at

S t a n dr id ge ’s gu id el in e ran ge was 29 2 to 36 5 m on th s’ im pr is on m en t. The c o u r t

de pa rte d do wnwar d an d se nt en ced St an dr id ge t o 21 6 m on th s’ im pr is on m en t. The

se nt en ce is pro ced ur al ly reas on ab le as th e co ur t clea rly art ic ul at ed th e se ct io n 35 53

fact or s, n ot ed th e gu id el in es were ad vi so ry an d a rti cu la te d i ts reas on s fo r im po si ng

th e se nt en ce. St an dr id ge arg ue s th at th e se nt en ce is no t su bs ta nt iv el y reas on ab le as

he was a fir st of

fen de r an d li ve d an ex em pl ary li fe in cl ud in g pr ov id in g p r o b o no

m ed ic al care

. St an dr id ge al so arg ue s th at th e di st ric t co ur t fo cu se d to o he av il y on on e

fact or —t ha t St an dr id ge refu se d to co op erat e. W e do no t fin d th es e arg u men ts 3 5

pe rs ua si ve

. The di st ric t co ur t em ph as iz ed St an dr id ge de frau de d hi s vi ct im s of th ei r

rig ht fu l ben efi ts ou t of she er gree d and in do in g so cau se d gr eat su ffer in g. W e fin d

no cle ar er ro r.

IX

United States v. Crisp , 454 F.3d 1285, 1292 ( 11th Cir. 2006) (“a district court' s 3 5 ‘unjustified relianc e upon any one [§ 3553(a)] fac tor is a sy mptom of an unrea sonable

sentenc e.’” ).

27At th e a b l e h a n d o f a fed eral di st ric t jud ge an d faci ng a jury o f twel ve , t he se

de fen da nt s rece iv ed th e fai r tri al th ey were du e. W e fin d no erro r. The jud gm en ts of

co nv ic ti on an d s en te nc es are AFF IRM ED.

28