1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

4-13-1995

United States v Hunter

Precedential or Non-Precedential:

Docket 94-5461

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Recommended Citation

"United States v Hunter" (1995). 1995 Decisions. Paper 92.

http://digitalcommons.law.villanova.edu/thirdcircuit_1995/92
 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 

 Nos. 94-5461 and 94-5462 

 

 UNITED STATES OF AMERICA 

v. 

 VANESSA HUNTER, 

 Appellant 

 

 On Appeal from the United States District Court 

 for the District of New Jersey 

 (D.C. Nos. 94-cr-00016 and 94-cr-00139) 

 

 Argued February 16, 1995 

 BEFORE: STAPLETON and COWEN, Circuit Judges

 HUYETT, District Judge*

 (Filed April 13, 1995) 

Victor Ashrafi (argued) 

Office of United States Attorney 

970 Broad Street 

Room 502 

Newark, New Jersey 07102 

Paul H. Zoubek 

Room 2070 

Office of United States Attorney 

4th & Cooper Streets 

Mitchell H. Cohen Courthouse 

One John F. Gerry Plaza 

Camden, New Jersey 08101 

 COUNSEL FOR APPELLEE 

 UNITED STATES OF AMERICA 

 
*Honorable Daniel H. Huyett 3rd, United States District Judge for 

the Eastern District of Pennsylvania, sitting by designation. 

John M. Holliday (argued) 

Paglione & Massi 

2662 Nottingham Way 

Trenton, New Jersey 08619 

 COUNSEL FOR APPELLANT 

 VANESSA HUNTER 

 

OPINION 

 

COWEN, Circuit Judge. 

 Vanessa Hunter appeals from final orders of the United 

States District Court for the District of New Jersey, which 

imposed: (1) two concurrent terms of imprisonment of eighteen 

months each, and a three year period of supervised release; and 

(2) restitution in an aggregate amount of $75,000 as a condition 

of supervised release. Because the district court properly 

applied Guideline Section 3B1.1 in finding that Hunter was a 

manager of a criminal conspiracy and subject to a two level 

enhancement pursuant to Section 3B1.1(c), we will affirm those 

portions of the orders of the district court. On Hunter's claim 

that the district court failed to make the required factual 

findings to support its restitution orders, however, we will 

reverse and remand. 

I. 
 Nu Skin International of Provo, Utah, markets Nu Skin 

skin-care products through a multi-level network of independent 

distributors, buying wholesale and selling at a markup. To 

expand its distributor network, the company encourages 

sponsorship of new distributors; as new distributors are 

recruited, sponsors are promoted to "executive" or "upline" 

distributors of the new "downline" distributor. Nu Skin pays 

monthly commissions to upline executives whose downline 

distributors attain a target sales volume. 

 Hunter began selling Nu Skin in the summer of 1990, and 

she signed as a downline distributor of Joseph Fanelli. Hunter 

contends that Fanelli assumed total control over Hunter's daily 

affairs, including controlling her business matters and personal 

checking account. She maintains that her tolerance of Fanelli's 

control was based on her dependent nature and the promise that 

Fanelli would make Hunter a successful upline distributor. 

 Fanelli urged Hunter to locate sources of credit card 

account numbers. Fanelli and Hunter planned to use these account 

numbers to purchase Nu Skin products, which they would then sell 

on consignment in health centers and hair salons. Thereafter, in 

the late summer or early fall of 1990, Hunter telephoned a 

friend, Martin Guzman. After Guzman said he did not have access 

to credit card data, Hunter urged him to recruit as her source 

Roel "Roy" Trevino, an employee of the St. Anthony Hotel in San 

Antonio, Texas. Over the following few weeks, Hunter discussed 

the matter several times with both Guzman and Trevino, and 
offered to pay Trevino for every stolen credit card account 

number. 

 Hunter maintains that she initially believed that 

Fanelli would repay Nu Skin as a "loan." She also contends that 

she feared that Fanelli would physically harm her or her family 

if she were to disobey him. According to Hunter, Fanelli even 

boasted of his "ties to the mob" as a means of intimidating her. 

 Throughout the month of October 1990, Trevino 

periodically stole credit card data from the St. Anthony Hotel 

and read it over the telephone to Hunter. Ultimately he 

compromised the accounts of more than 200 patrons. Hunter paid 

Trevino by arranging for money to be wired to him in San Antonio. 

Between October 1990 and December 1991, Hunter, Fanelli, and 

others working at their direction, used Visa and Mastercard 

account numbers supplied by Trevino and other sources to place 

orders for Nu Skin at a total cost in excess of $293,000. Hunter 

and Fanelli caused orders to be shipped to persons who were 

willing to hold the shipments until they or any of several 

accomplices could pick up the shipments. In addition, Hunter and 

Fanelli caused all fraudulent orders to be made by "distributors" 

they sponsored, sometimes creating fictitious distributors by 

executing new distributor agreements using aliases. By placing 

orders in the names of distributors purportedly sponsored by 

Hunter and Fanelli, they also caused Nu Skin to issue them checks 

totalling more than $28,000 for commissions earned on the 

fraudulent orders. 
 Fanelli reaped most of the profits from the scheme. 

Hunter became financially dependent on her sister and eventually 

was supported by food stamps. She later declared bankruptcy. 

Since November of 1993, however, Hunter has acquired a job at 

Fitch Investors in New York where she has continued to work. 

 The United States filed an information in the District 

of New Jersey alleging credit card fraud, contrary to 18 U.S.C. § 

1029(a)(2), and filed a superseding information in the Western 

District of Texas, alleging conspiracy to traffic in and use 

unauthorized access devices, contrary to 18 U.S.C. §§ 1029(a)(2) 

and (b)(2). Pursuant to Rule 20 of the Federal Rules of Criminal 

Procedure, the superseding information from the Western District 

of Texas was transferred to the District of New Jersey. 

 Hunter and the Government reached a negotiated plea 

agreement, and she entered her pleas of guilty. When Hunter reappeared before the district court for sentencing, the district 

court imposed two concurrent terms of imprisonment, each of 

eighteen months, and a three-year period of supervised release. 

Restitution was also ordered in the aggregate amount of $75,000 

as a condition of the supervised release. This appeal followed. 

II. 

 Hunter argues that the district court improperly 

increased the base offense level by two points upon the erroneous 

finding that Hunter was a "manager" or "supervisor," pursuant to 

U.S.S.G. § 3B1.1(c). The determination of Hunter's aggravating 

role in the offense is essentially factual in nature and, 
therefore, we will reverse the findings of the district court 

only for clear error. See United States v. Ortiz, 878 F.2d 125, 

126-27 (3d Cir. 1989). 

 Hunter's base offense level was enhanced two levels by 

the district court under § 3B1.1(c) of the Sentencing Guidelines 

in order to reflect Hunter's role as a manager/supervisor in the 

credit card conspiracy. Section 3B1.1 provides: 

 Based on the defendant's role in the offense, 

increase the offense level as follows: 

 

 (a) If the defendant was an organizer or 

leader of a criminal activity that involved 

five or more participants or was otherwise 

extensive, increase by 4 levels. 

 (b) If the defendant was a manager or 

supervisor (but not an organizer or leader) 

and the criminal activity involved five or 

more participants or was otherwise extensive, 

increase by 3 levels. 

 (c) If the defendant was an organizer, 

leader, manager, or supervisor in any 

criminal activity other than described in (a) 

or (b), increase by 2 levels. 

U.S.S.G. § 3B1.1. 

 The guideline commentary lists factors that should be 

considered by the sentencing court in determining whether to 

apply the "aggravating role enhancement": (1) the exercise of 

decision making authority; (2) the nature of participation in the 

commission of the offense; (3) the recruitment of accomplices; 

(4) the claimed right to a larger share of the fruits of the 

crime; (5) the degree of participation in planning or organizing 

the offense; (6) the nature and scope of the illegal activity; 
and (7) the degree of control and authority exercised over 

others. U.S.S.G. § 3B1.1, commentary, n.4. The commentary also 

acknowledges that more than one person can qualify as a leader of 

a criminal conspiracy, and emphasizes that the aggravating role 

enhancement "is included primarily because of concerns about 

relative responsibility." Id. & background. 

 It is stipulated that the entire loss incurred as a 

result of the scheme totalled approximately $321,000. The 

Government does not contest Hunter's assertion that she never 

possessed a substantial portion of these sums. Hunter argues 

that the fact that she led a low-income lifestyle is the most 

compelling and objective evidence that she was not a 

"supervisor." 

 While it may be true that Hunter's low-income lifestyle 

weighs against the "claimed right to a larger share of the fruits 

of the crime" factor, we do not believe that considering the 

record as a whole, the district court was clearly erroneous in 

its decision to give an enhancement. 

 The district court imposed on Hunter two points, the 

lowest enhancement under § 3B1.1. The district court stated: 

 Because if you look at the record, if you 

look at the presentence report, she is up to 

her eyeballs here. She recruited Guzman, 

Tr[e]vino, she received credit card 

information from them and others; she used 

credit card data to place orders for N[u] 

Skin; she created fictitious distributors; 

she signed fraudulent credit card slips 

herself . . . . 

 Because these are all managerial type things, 

or at least her role here was clearly 

managerial. I mean I suggest that when and 
if Mr. Fanelli is convicted, he will get more 

than a two point enhancement. He will get at 

least a three. Because his role was greater 

than hers. But that is not inconsistent with 

saying that she too was a manager and 

supervisor of Guzman, of Tr[e]vino, for 

starters. 

App. at 42-43. The district court also recognized Hunter's 

argument that her sentence should not be enhanced because she did 

not profit as much as Fanelli, yet nevertheless was persuaded 

that based on the facts in the record as a whole, there was 

sufficient basis for the two point enhancement. App. at 48. 

 We conclude that there was ample support in the record 

for the district court's enhancement determination. As the 

district court found, the fact that Hunter did not receive the 

bulk of the profits or live a lavish lifestyle as a result of the 

crime does not change the analysis of her relative individual 

conduct and culpability. The district court was not clearly 

erroneous in concluding that Hunter was a manager or supervisor. 

We will affirm the order enhancing Hunter's sentence by two 

points. 

III. 

 Hunter also argues that the district court erred in 

imposing restitution in the amount of $75,000 by not considering 

Hunter's financial resources and ability to pay. Our review over 

whether the district court incorrectly imposed an order of 

restitution is bifurcated; plenary review is exercised over 

whether the law permits the award, but the particular award is 
reviewed for abuse of discretion. United States v. Furst, 918 

F.2d 400, 408 (3d Cir. 1990) (citing United States v. Pollak, 844 

F.2d 145, 152 (3d Cir. 1988); United States v. Palma, 760 F.2d 

475, 480 (3d Cir. 1985)). 

 Title 18, Section 3664(a) of the United States Code 

provides: 

 The court, in determining whether to order 

restitution under section 3663 of this title 

and the amount of such restitution, shall 

consider the amount of the loss sustained by 

any victim as a result of the offense, the 

financial resources of the defendant, the 

financial needs and earning ability of the 

defendant and the defendant's dependents, and 

such other factors as the court deems 

appropriate. 

18 U.S.C. § 3664(a) (1988 & Supp. IV 1990). In this regard, the 

district court stated at sentencing: 

 I will impose an order of restitution 

consistent with what I believe, from the 

records, will be Miss Hunter's future ability 

to pay restitution. I recognize she has an 

$18,000 restitution judgment that's in 

default now with the state, I recognize she's 

defaulted on her student loan, I recognize 

she's been in bankruptcy. I recognize as 

well though that she has the ability to work. 

In fact, she is working now and that in the 

future, at least over the period of 

supervised release, she'll be able to pay 

some portion of the restitutionary obligation 

that would be due here. 

App. at 38-39. 

 The district court subsequently ordered restitution in 

the amount of $75,000 to be paid during the period of supervised 

release in installment payments. The court stated, "[t]his 
restitutionary obligation is jointly and severally with those of 

her co-defendants." App. at 59. 

 We believe that these findings are insufficient for 

purposes of determining Hunter's ability to pay restitution. We 

note that a defendant's current indigency is not determinative in 

calculating a restitution order. Congress recognized that 

indigency may be temporary and, if necessary, even an indigent 

offender may be compelled to pay restitution. United States v. 

Carrara, No. 94-5204, 1995 WL 75853, at *4 (3d Cir. Feb. 27, 

1995) (citing 18 U.S.C. § 3572(d)). However, the district court 

failed to make the necessary factual findings on all factors 

bearing on Hunter's current and future ability to pay $75,000 in 

restitution. Based on the admittedly limited record on appeal 

before us, we can perceive no reasonable basis for believing that 

Hunter will be able to discharge the obligation of restitution 

that the district court has ordered. 

 We recently discussed the purposes of restitution in 

Carrara: 

 Restitution has customarily been awarded to 

answer various penological concerns. It is 

primarily restorative and is supposed, at 

least partially, to replace victims in the 

financial position they occupied before the 

offense was committed against them. See

generally S.Rep No. 532, 97th Cong.2d Sess. 

30, reprinted in 1982 U.S.C.C.A.N. 2515, 

2536-39. In that sense, restitution is also 

remonstrative, and, where indicated, will 

require that offenders disgorge their 

illgotten gains. United States v. Woods, 986 

F.2d 669, 678-81 (3d Cir. 1993). Then too, 

restitution is rehabilitative because it 

permits or indeed requires that offenders 

personally face what they have done and, at 
least partially, atone for their legal 

transgressions by direct action in the form 

of a positive personal performance. Congress 

requires, however, that when restitution is 

indicated the district court consider both 

the loss sustained by the victim and the 

offender's financial resources, financial 

needs, and present and potential earning 

ability. 18 U.S.C. § 3664(a). 

1995 WL 75853, at *3 (footnotes omitted). 

 We have consistently required district courts "`to make 

specific findings as to the factual issues that are relevant to 

the application of the restitution provisions of the [Victim and 

Witness Protection Act, 18 U.S.C. §§ 3579-3580 (1982)].'" United 

States v. Logar, 975 F.2d 958, 961 (3d Cir. 1992) (quoting Palma, 

760 F.2d at 480). While it is certainly appropriate for a 

district court to consider a defendant's ability to earn income 

in the future, restitution is only appropriate in an amount that 

the defendant can realistically be expected to pay. Logar, 975 

F.2d at 964. 

 The district court erred by relying solely on its 

conclusory statement that, "she is working now and that in the 

future, at least over the period of supervised release, she'll be 

able to pay some portion of the restitutionary obligation that 

would be due her." App. at 39. This finding does not adequately 

support the restitution order. We can foresee no possibility on 

the facts in the record that Hunter will be able to make the 

$75,000 restitution payments during the three years of supervised 

release, given Hunter's salary and reasonable expenses.1 While 

 

1. The presentence investigation report provides a summary of 

Hunter's financial condition. The district court adopted the 
it is true, as the Government argues, that a district court may 

"aim high" in calculating a restitution order, the amount of 

$75,000 appears to be unfounded in light of Hunter's limited 

resources and future ability to pay.2 

 We next discuss the significance of the district 

court's statement that "[t]his restitutionary obligation is 

jointly and severally with those of her co-defendants." App. at 

59. It is not clear from the record whether the district court 

intended for Hunter to be individually responsible for the 

$75,000 restitution, or whether Hunter was jointly and severally 

liable with the other defendants. We note that Guzman had been 

(..continued) 

factual findings in the presentence report. App. at 66, 72. The 

report states that on April 9, 1994, Hunter provided the 

probation office with a personal financial statement that 

reflects that she has no assets other than personal furniture and 

clothing. Her debts include a delinquent college loan amounting 

to $3,125 and restitution of $18,000 ordered by the Middlesex 

County Superior Court. A review of Hunter's credit report by the 

probation office verified the delinquent student loan. Hunter 

does not have any other history of credit cards, lines of credit 

or financial history because all of her previous debts were 

cleared by a bankruptcy order. Hunter filed for personal 

voluntary bankruptcy under Chapter Seven of the Bankruptcy Code. 

The debt listed on the bankruptcy application amounted to 

approximately $15,000. Hunter's net salary per month is $1,806. 

Her necessary monthly living expenses for rent, food, utilities, 

telephone and restitution amount to $1,210. The report concludes 

that Hunter has a positive monthly cash flow of approximately 

$600. Nothing in this record would indicate that she has 

additional resources or other ability to discharge the obligation 

of restitution. 

2. We do not mean to suggest that a district court must conduct 

a full-blown evidentiary hearing and make such precise findings 

regarding a defendant's income and expenses as often occurs in 

matrimonial litigation. However, we must insist that in crafting 

the ultimate restitution order, the district court consider the 

reasonable expectation of payment. 
sentenced to $7,000 in restitution, and we cannot comprehend on 

this record joint and several liability where the amount of 

restitution ordered for each defendant is different. We do not 

mean to imply that joint and several liability is improper as a 

matter of law or inappropriate under the facts of this case.3 We 

agree with well-settled law that the state's interests in justice 

and rehabilitation should allow a district court the discretion 

to impose joint and several liability on multiple defendants. 

See, e.g., United States v. Harris, 7 F.3d 1537, 1540 (10th Cir. 

1993); United States v. Chaney, 964 F.2d 437, 453-54 (5th Cir. 

1992); United States v. Van Cauwenberghe, 827 F.2d 424, 435 (9th 

Cir. 1987), cert. denied, 484 U.S. 1042, 108 S. Ct. 773 (1988); 

United States v. Tzakis, 736 F.2d 867, 871 (2d Cir. 1984). Nor 

does the joint and several liability necessarily have to mirror 

the precise culpability of each co-defendant when imposing 

restitution. See, e.g., United States v. Hand, 863 F.2d 1100, 

1106 (3d Cir. 1988) (in ordering restitution, the fact that 

burden of restitution laid entirely on one co-defendant where two 

co-defendants were equally culpable did not offend the 

Constitution and "certainly, did not constitute an abuse of 

discretion"). 

 

3. We do not foreclose that in fine-tuning orders of restitution 

among co-defendants with varying degrees of culpability in 

criminal conduct, a resourceful district court could fashion an 

order of restitution based on credit to be given to one defendant 

for the restitution paid by co-defendant, and other similar 

refinements. If a complicated case calls for an imaginative 

restitution scheme, we merely observe that the discretion of a 

district court in these matters is broad, so long as the district 

court comports with 18 U.S.C. § 3664(a) and the principles 

announced by this Court. 
 However, even if the restitution order were joint and 

several, the district court must nevertheless make specific 

findings on whether Hunter will realistically be able to pay the 

full restitution amount. Accordingly, we will remand this matter 

to the district court to take evidence and make findings as to 

the amount of restitution that Hunter can realistically be 

expected to pay. 

 CONCLUSION 

 For the foregoing reasons, the order of the district 

court enhancing Hunter's sentence by two points as a 

manager/supervisor will be affirmed. However, because the record 

does not adequately support the order of the district court 

setting restitution in the amount of $75,000, we will reverse and 

remand with instructions to hear evidence, make factual findings, 

and enter a new order in an amount appropriate and consistent 

with this opinion.