United States Court of Appeals

For the Eighth Circuit

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No. 16-1373

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United States of America

lllllllllllllllllllll Plaintiff - Appellee

v.

James Clayton Bailey

lllllllllllllllllllll Defendant - Appellant

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Appeal from United States District Court 

for the Southern District of Iowa - Davenport

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 Submitted: September 19, 2016

Filed: September 26, 2016

[Unpublished]

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Before LOKEN, BEAM, and GRUENDER, Circuit Judges.

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PER CURIAM.

James Clayton Bailey appeals the district court's application of United States 1

Sentencing Guidelines (U.S.S.G.) § 3C1.1, the obstruction of justice enhancement,

The Honorable Stephanie M. Rose, United States District Judge for the

1

Southern District of Iowa.
when calculating his sentence of fifteen months' imprisonment for theft of

government funds. For the reasons discussed below, we affirm.

I. BACKGROUND

In December 2003, Bailey began receiving Social Security Disability (SSD)

benefits. The letter accompanying his award of SSD benefits specifically stated that

he was to inform the Social Security Administration (SSA) if he were ever convicted

of a crime, as incarcerated individuals are not entitled to SSD benefits. In October

2009, Bailey was convicted ofsexual abuse and sentenced to a term of imprisonment

not to exceed ten years. He was released in May 2014. During his time of

incarceration, Bailey continued receiving SSD benefits. The SSA had no record of

his conviction and incarceration and thus continued depositing funds into his account

at Deere Harvester Credit Union. As a result, the SSA overpaid Bailey a total of

$53,755.80. 

In July 2014, the SSA contacted Bailey after receiving a Prisoner Update Alert

stating that Bailey had been incarcerated from October 2009 to May 2014. When

Bailey confirmed that he had been incarcerated, the SSA began an investigation and

issued a Notice of Change in Benefits indicating that he was overpaid $53,755.80.2

In September 2014, Bailey filed a Request for Waiver of Overpayment Recovery (the

form) stating that he was unable to repay the amount requested. In the form, which

contained a penalty of perjury clause, Bailey stated that he was not responsible for the

overpayment because "[he] did not accept the overpayment. [He] was locked up at

the time. [His] power of attorney got the money. She was supposed to stop [his]

checks." He further stated that "[he] didn't realize that she did not stop [his] checks

until [he] was released from jail." 

The SSA was able to withhold disbursements in the amount of $1,314.60. 2

Thus, Bailey was overpaid $52,441.20.

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Prison phone records and testimony fromLana Luedtke, Bailey's girlfriend and

power of attorney, show that each month Bailey generally instructed Luedtke to use

the SSD benefit funds to make Bailey's loan payment for his motorcycle and send him

$200 in prison. Luedtke was then allowed to use the remaining money for whatever

she needed. Between October 2009 and January 2014, Luedtke withdrew more than

$38,000 from the account and wired approximately $10,000 to Bailey in prison.

During an April 2015 interview, Bailey admitted to law enforcement officers that he

knew he needed to report his incarceration to the SSA, that he continued to receive

SSD benefits while incarcerated, and that Luedtke distributed the monthly checks as

indicated.

In June 2015, Bailey was charged with theft of government property, in

violation of 18 U.S.C. § 641, and failure to disclose information to the SSA, in

violation of 42 U.S.C. § 408(a)(4). On October 26, 2015, he pled guilty to theft of

government property and was sentenced on January 29, 2016. The Presentence

Investigation Report (PSR) increased the base level of six by six levels pursuant to

U.S.S.G. § 2B1.1(b)(1)(D) because the loss exceeded $40,000, decreased the offense

level by two levels pursuant to U.S.S.G. § 3E1.1(a) because Bailey accepted

responsibility, and added a two-level enhancement pursuant to U.S.S.G. § 3C1.1 for

obstruction of justice. According to the PSR, by making false statements on the

September 2014 form, Bailey "produc[ed] or attempt[ed] to produce a false, altered,

or counterfeit document or record during an official investigation," which made him

eligible for the obstruction of justice enhancement. U.S.S.G. § 3C1.1, cmt. n.4(C). 

At sentencing, Bailey objected to the two-level enhancement for obstruction of

justice, arguing that the statements on the form, which was provided by the SSA, did

"not rise to the level of willfully obstructing or attempting to obstruct or impede the

administration of justice." 

The district court concluded that the § 3C1.1 enhancement for obstruction of

justice applied because Bailey made an "unquestionably false statement . . . . under

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penalty of perjury" with the specific intent of "prevent[ing] the [SSA] from detecting

what happened and from collecting money from him that he falsely and under

fraudulent circumstances took." With a total offense level of twelve and a criminal

history category of III, Bailey's Guidelines range was fifteen to twenty-one months.

The district court sentenced himto fifteen months' imprisonment. Bailey now appeals

arguing that the district court erred by enhancing his Guidelines range for obstruction

of justice based on his statements in the SSA form because (1) he did not intend to

obstruct the investigation, (2) there is no evidence his statements were likely to thwart

the investigation into his criminal offense, and (3) his conduct was not akin to the

conduct described in Note 4(C) of § 3C1.1.

 

II. DISCUSSION

We review legal conclusions in applying a Guidelines enhancement de novo

and the underlying factual support for the enhancement for clear error. United States

v. Collins, 754 F.3d 626, 629 (8th Cir. 2014). U.S.S.G. § 3C1.1 increases the offense

level by two where "the defendant willfully obstructed or impeded, or attempted to

obstruct or impede, the administration of justice with respect to the investigation,

prosecution, or sentencing of the instant offense of conviction." Conduct by the

defendant that occurred prior to the start of an official investigation fits within the

enhancement "if the conduct was purposefully calculated, and likely, to thwart the

investigation or prosecution of the offense." U.S.S.G. § 3C1.1 cmt. n.1. 

First, there is sufficient evidence to conclude that Bailey "consciously act[ed]

with the purpose of obstructing justice." United States v. Watts, 940 F.2d 332, 332-

33 (8th Cir. 1991) (quoting United States v. Stroud, 893 F.2d 504, 507 (2d Cir.

1990)). He clearly intended to obstruct the SSA's investigation so that he would not

have to repay the money that he illegally collected. Bailey argues that he did not

know he would be criminally liable for his false statements because the form stated

that the SSA rarely uses such information for any purpose other than assessing

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repayment waivers. This argument, however, does not change the fact that his

purpose for making false statements was to interfere with the investigation into his

criminal activity. 

Second, the record shows that Bailey's actions were "likely" to thwart the

investigation into his criminal offense, U.S.S.G. § 3C1.1 cmt. n.1, and the false

statements on the form did in fact "significantly obstruct[] or impede[] the official

investigation," id. § 3C1.1 cmt. n.4(G). In United States v. McKanry, 628 F.3d 1010,

1014-15 (8th Cir. 2011), McKanry assisted with the fraudulent sale and financing of

residential properties and then denied involvement in the transaction when

interviewed by a United States Postal Inspector. During sentencing, the district court

applied the obstruction of justice enhancement. Id. at 1015-16. On appeal, McKanry

challenged the enhancement, arguing that the investigation wasin no way obstructed

or impeded by his false statements. Id. at 1021. This court upheld the obstruction of

justice enhancement stating that "[h]ad McKanry told InspectorWalterthe truth about

the down payments during their meeting, the investigation and prosecution

reasonably would have proceeded more quickly and required less effort." Id. 

Similarly, had Bailey told the truth on the form, the SSA investigators would not have

had to sift through years of bank records and listen to hours of telephone calls to

determine whether Bailey had knowledge of the continued SSD benefit payments.

Thus, Bailey's false statements on the SSA form obstructed or impeded the

investigation.

Third, Note 4 of § 3C1.1 provides a non-exhaustive list of conduct covered by

the enhancement, and Note 5 provides a non-exhaustive list of conduct not generally

covered by the enhancement. Bailey argues that his conduct was more similar to the

conduct in Note 5, not Note 4, which the district court relied on when applying the

enhancement. However, even conduct listed in Note 5 fits within the obstruction of

justice enhancement if the conduct significantly obstructed the investigation. See

U.S.S.G. § 3C1.1 cmt. n.5 & cmt. n.4(G). As discussed above, Bailey's false

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statements on the form obstructed or impeded the investigation. Thus, because the

statementsBaileymade on the formwere clearly false, made under penalty of perjury,

made with intent to, and did in fact, significantly obstruct the SSA's investigation,

Bailey's conduct comes within the purview of the obstruction ofjustice enhancement. 

III. CONCLUSION

The judgment of the district court is affirmed. 

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