* After examining the briefs and appellate record, this panel has

determined unanimously that oral argument would notmaterially assist the determination of this appeal. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1.9. The cause is therefore ordered submitted without oral a rgument. 

## F I L E D United States Court of Appeals Tenth Circuit 

### DEC 31 1997 

### PATRICK FISHER Clerk PUBLISH UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

UNITED STATES OF AMERICA, Plaintiff-Appellee,

v. BENJAMIN ALEX SMITH, Defendant-Appellant. No. 96-1245

Appeal from the United States District Court

for the District of Colorado (D.C. No. 95-CR-448-S)

Submitted on the briefs. * Henry L. Solano, United States Attorney, and Gregory C. Graf, Assistant United States Attorney, Denver, Colorado, for Plaintiff-Ap pellee. Nina A. Iwashko of Canges, Iwashko & Bethke, P.C., Denver, Colorado, for Defendant-Appellant.

Before BRORBY, BARRETT and McKAY , Circuit Judges.-2-

BRORBY , Circuit Judge.

Benjamin Alex Smith was charged by indictment and c onvicted of six counts of wire fraud, and aiding and abetting in vi olation of 18 U.S.C. §§ 1343 and 2, and one count of mail fraud, and aiding and abetting, in violation of 18 U.S.C. §§ 1341 and 2. The district court sentenced him to fifty-seven months of imprisonment on each count, all counts to run concu rrently. Mr. Smith appeals both his conviction and the sentence imposed under the Sentencing Guidelines.
See U.S. Sentencing Guideline's Manual (Nov. 1995) ("U .S.S.G.").

On appeal, Mr. Smith raises three issues. First, h e alleges the evidence is insufficient to support his conviction. Second, he contends the district court erred when it increased his base level offense by two lev els pursuant to U.S.S.G. § 2F1.1(b)(3)(A). Lastly, Mr. Smith challenges the district court's imposition of a four-level upward departure pursuant to U.S.S.G. § 5K2.0 based on the district court's finding the Sentencing Commission failed to consider adequately those factors contained in 18 U.S.C. § 2326, part of the Senior Citizens Against Marketing Scams Act of 1994 (hereinafter the SCAMS Act), and its particularized finding that this case fell outside the heartland o f the guidelines. We exercise jurisdiction under 28 U.S.C. § 1291 and 18 U.S.C. § 3742. We will address each-3-

of these matters in turn.

I. Mr. Smith, charged with six counts of wire fraud an d aiding and abetting, and one count of mail fraud and aiding and abetting , was tried jointly with his codefendant Elizabeth Marjorie Robertson. Evidence i ntroduced against Mr. Smith included the testimony of three victim-witnesses; t he testimony of co-defendant Richard Steven Clark; records seized from his emplo yer and introduced through the testimony of investigating Federal Bureau of In vestigation agents; and the testimony of one agent sworn as an expert on telema rketing fraud. The following was presented to the jury at trial.

Mr. Smith was employed by Say No Now, a telemarketi ng operation or "boiler room," from January 1995 through at least O ctober 1995. He was employed as a telephone solicitor. As such, Mr. Sm ith would solicit contributions for Say No Now by making unsolicited telephone call s to potential donors. Mr. Smith would also contact individuals who had contri buted in the past, a solicitation known as a "reload."

Say No Now had obtained § 501(c)(3) status under th e Internal Revenue-4-

Code (I.R.C.) from the Internal Revenue Service bas ed on its representations to the Service. Say No Now solicitors represented the organization to potential donors as a charity devoted to helping children stay off drugs. To further entice potential donors to contribute to Say No Now, Mr. S mith and his co-defendants would tell victims they had been selected to receiv e their "fair share" of $75,000 in prizes and awards to donors. Victims were told they would receive more in prizes than the value of their donations. In actua lity, having contributed thousands of dollars, donors received only pencil s ets, board games, figurines, and savings bonds in return. Using this "pitch," S ay No Now solicitors collected over $915,000 from January 1995 through October 199 5. During this time, Say No Now made only one charitable contribution of $45 , and returned approximately $26,000 in awards to donors.

Say No Now specifically targeted elderly persons, agroup perceived as lonely, trusting and more polite, hence less likely to hang up before the telemarketer could make his pitch. Mr. Smith's vic tims included Mrs. Leona Akey, an eighty-three-year-old widow living alone, Mrs. Iola Hart, a widow since 1946, and Ms. Martha Nix, an eighty-five-year-old r etiree, living alone. All of these victims lived in Colorado. All were called b y Mr. Smith from the Say No Now offices in Las Vegas, Nevada. Victims were dir ected to note a particular-5-

claim number, actually Mr. Smith's employee number, on their checks, and to send their donations to the Say No Now office in La s Vegas immediately via United Parcel Service or other private carriers. U se of express mail both minimized the chance victims would change their min ds and facilitated expeditious payment of Mr. Smith and the other soli citors. Mr. Smith was paid on a commission basis. He was the second most success ful solicitor at Say No Now.

The jury convicted Mr. Smith of all charged counts. At sentencing, the district court calculated Mr. Smith's sentence as f ollows: Under U.S.S.G. § 2F1.1(a), the base offense level for offenses inv olving fraud or deceit is six. The district court then enhanced the base offense l evel by seven levels, pursuant to U.S.S.G. § 2F1.1(b)(1)(H), for losses of $157,52 5 attributable to Mr. Smith; by two levels pursuant to § 2F1.1(b)(2) for more than minimal planning and multiple victims; by two levels pursuant to § 3A1.1(b) for v ulnerable victims; and by two levels pursuant to § 2F1.1(b)(3)(A) for misrepresentation that he was acting on behalf of a charitable organization, thus arriving at a total offense level of nineteen. The district court then imposed a four-l evel upward departure under U.S.S.G. § 5K2.0 based on a finding that Mr. Smith' s conduct fell outside the heartland of the typical cases of fraudulent conduc t encompassed by the guidelines. The district court specifically pointe d to the congressional intent-6-

underlying the SCAMS Act as one factor providing a basis for the departure. Thus, Mr. Smith had an adjusted offense level of tw enty-three, with a guideline range of forty-six to fifty-seven months imprisonme nt. The district court sentenced Mr. Smith to fifty-seven months on each c ount, to be served concurrently.

II. Sufficiency of the Evidence Mr. Smith contends there was insufficient evidence presented at trial to support his convictions for six counts of wire frau d, in violation of 18 U.S.C. § 1343, and aiding and abetting, in violation of 18 U.S.C. § 2, and one count of mail fraud, in violation of 18 U.S.C. § 1341, and a iding and abetting, again in violation of 18 U.S.C. § 2. In evaluating a challe nge to the sufficiency of the evidence to support a jury verdict, this court revi ews the entire record de novo in the light most favorable to the government to deter mine whether a reasonable jury could find guilt beyond a reasonable doubt, based o n the direct and circumstantial evidence, together with the reasonable inferences t o be drawn therefrom. Jackson v. Virginia , 443 U.S. 307, 319 (1979); United States v. Voss , 82 F.3d 1521, 1524- 25 (10th Cir.), cert. denied, 117 S. Ct 226 (1996). "We do not use this evaluation as a chance to second-guess the jury's credibility determinations, nor do we

reassess the jury's conclusions about the weight of the evidence presen ted."2Section 1341 proscribing mail fraud provides in r elevant part: Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or prop erty by means of false or fraudulent pretenses, representations, or promises ... for the purpose of executing such scheme or artifice or att empting so to do ... deposits or causes to be deposited any matter o r thing whatever to be sent or delivered by any private or commercial i nterstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by ... such carrie r according to the direction thereon, or at the place at which it is d irected to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined under this title or imprisone d not more than five years, or both. 18 U.S.C. §1341.

-7- United States v. Johnson , 57 F.3d 968, 971 (10th Cir. 1995). However, the evidence supporting a jury's verdict must be substantial, raising more than a mere suspicion of guilt. United States v. Leos-Quijada , 107 F.3d 786, 794 (10th Cir. 1997).

To establish mail fraud, the government must prove the existence of a scheme to defraud or obtain money by means of false pretenses, representations, or promises; the specific intent to defraud; and th e use of the mails in furtherance of the scheme. 2 Pereira v. United States , 347 U.S. 1, 8 (1954); United States v. Kennedy , 64 F.3d 1465, 1475 (10th Cir. 1995). The essenti al elements of wire fraud are a scheme to defraud and use of interstate wire or radio communications3 Section 1343 proscribing fraud by wire provides i n relevant part: Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or prop erty by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire [or] r adio ... communication in interstate ... commerce, any writi ngs, signs, signals, pictures, or sounds for the purpose of exe cuting such scheme or artifice, shall be fined under this title or imp risoned not more than five years or both. 18 U.S.C. § 1343.

-8- to facilitate the scheme. 3 United States v. Galbraith , 20 F.3d 1054, 1056 (10th Cir.), cert. denied, 513 U.S. 889 (1994). To be liable as an aider an d abettor under 18 U.S.C. § 2, the evidence must establish a defendant associated himself with a criminal venture; participated in the ventur e as something he wished to bring about; sought by his actions to make the vent ure succeed; and the evidence must establish both the commission of the offense b y someone and the aiding and abetting by the defendant. United States v. Hanson , 41 F.3d 580, 582 (10th Cir. 1994).

While challenging generally the sufficiency of the evidence to sustain his convictions, Mr. Smith raises only two specific iss ues on appeal. First, he contends the government did not present sufficient evidence from which a jury could conclude he made false representations to Say No Now donors. Second,-9-

Mr. Smith claims the government failed to prove he knew Say No Now was not a legitimate charitable organization.

Mr. Smith claims the evidence did not support the m ail fraud verdict because "[e]very representation he made of a materi al nature was, in all material aspects, true." We disagree. Three of Mr. Smith's victims testified for the prosecution. The similarities across the testimonyof these witnesses indicates Mr. Smith gave the same "pitch" to potential donors . Mr. Smith represented Say No Now as a charity and told donors money sent to S ay No Now would be used on behalf of children. In fact, the evidence prese nted at trial showed Say No Now gave only a pittance to charity, one $45 contributi on from the more than $915,000 collected in the relevant ten-month period. Moreov er, Mr. Smith repeatedly told donors they would get more in return from Say No No w in the form of awards than they were contributing; they would share in $7 5,000 in cash and prizes. But while donors were sending in checks totaling thousands of dollars, the bulk of the "awards" they received in return were little more t han trinkets, e.g. , pencil sets, rulers, Frisbees, potato peelers, etc. Of the $915,000 Say No Now took in, only a little more than $26,000 was returned to donors in the form of cash awards, savings bonds, and gifts.4Richard Clark, another Say No Now solicitor, test ified against Mr. Smith

and his other co-defendant, Ms. Robertson, under th e terms of a plea agreement with the government. (Vol. 12, Tr. at 759-61.)

5 In United States v. Brown , 40 F.3d 1218, 1221-22 (11th Cir. 1994), cert. denied, 514 U.S. 1092 and 514 U.S. 1121 (1995), the Eleve nth Circuit determined the evidence was insufficient to establish Mr. Kiel meyer, one of six defendants, possessed culpable knowledge and intent regarding afraudulent insurance scheme perpetrated by a transportation service company. 4 0 F.3d at 1221-22. While he -10- The record further demonstrates Mr. Smith was fullyaware of the disparity between the value of the cash donations to Say No N ow and the value of the awards his victims were receiving in return. An ag ent of the Federal Bureau of Investigation, testifying from records seized at th e offices of Say No Now, provided evidence Mr. Smith made written notations about both the amount of contributions and the awards sent to named donors. One victim testified she complained to Mr. Smith about the useless trinkets she was receiving and asked for her money back. Mr. Smith's co-defendant 4 testified that Mr. Smith, like all the Say No Now solicitors, made misrepresentations to donors. Mr. Smith was well aware donors were not, in fact, getting more o ut of Say No Now than they were putting in, as he had promised them. We find there was ample evidence presented at trial from which a reasonable jury cou ld conclude Mr. Smith made material misrepresentations to potential donors.

Finally, arguing from a case in the Eleventh Circui t, 5 Mr. Smith contendswas on the company payroll and visited company head quarters on three to five

occasions, the court found no evidence Mr. Kielmeye r was anything other than a dupe. Id. at 1222. The record also indicated Mr. Kielmeyer severed all ties with the scheme within two weeks of learning it might be fraudulent. Id

.
-11- the government failed to prove he knew Say No Now w as not a legitimate charitable organization. See Brown , 40 F.3d at 1218. We read Mr. Smith's argument to be a claim the government did not suffi ciently show he had culpable knowledge and intent regarding Say No Now's fraudul ent scheme, an essential element of the charged offenses. In support of his contention, Mr. Smith claims he was told Say No Now was a charity, he worked fro m "an approved script," and he had "no criminally enforceable duty to investigate" his employer. Thus, Mr. Smith concludes, he lacked the requisite culpable k nowledge and intent.

While the government must prove all elements of the charged offenses, direct proof of fraudulent intent is not necessary. United States v. Curtis , 537 F.2d 1091, 1097 (10th Cir.), cert. denied, 429 U.S. 962 (1976). Intent may be inferred from a variety of circumstantial evidence, including the defendant's misrepresentations and knowledge of false statement s. United States v. Prows , 118 F.3d 686, 692 (10th Cir. 1997). Unlike the cir cumstances in Brown , there is ample evidence in the record to support an inferenc e Mr. Smith was more than the innocent employee of a wrongdoer.-12-

As we have stated, the record demonstrates Mr. Smit h knowingly made misrepresentations and false statements to donors. Business records seized from Say No Now indicated telephone solicitors like Mr. Smith freely exchanged information on the financial solvency and personal vulnerability of their victims, as well as strategies for overcoming objections by victims. Mr. Smith's codefendant testified the fraudulent nature of Say No Now boiler rooms was readily apparent to telephone solicitors. In short, we are persuaded the record provides sufficient bases from which a reasonable jury could conclude beyond a reasonable doubt Mr. Smith had the requisite guilty knowledge and intent. He willfully associated himself with a fraudulent scheme and act ed to further that scheme.

We have reviewed carefully the trial record and we hold there was substantial evidence to support the jury verdicts o n all charges. Mr. Smith, with culpable knowledge and intent, made false represent ations and promises as part of a scheme to defraud and to obtain money by means of false pretenses. The jury reasonably could find Mr. Smith misrepresented boththe extent of Say No Now's charitable endeavors and the value donors would rec eive in return for their cash contributions. We also note the record clearly sho ws Mr. Smith made interstate phone calls and used interstate carriers as part of the scheme to defraud.6Section 2F1.1(b)(3)(A) of the Sentencing Guidelin es provides a

defendant's base offense level may be increased by two levels "[i]f the offense involved ... a misrepresentation that the defendantwas acting on behalf of a charitable, educational, religious or political org anization, or a government agency."

-13-

III. Application of U.S.S.G. § 2F1.1(b)(3)(A) Mr. Smith argues the district court incorrectly app lied U.S.S.G. § 2F1.1(b)(3)(A) 6 to enhance his base offense level by two levels. Appellate review of a district court's application of a sente ncing guideline is a two-step
process. United States v. McAlpine , 32 F.3d 484, 487-88 (10th Cir.), cert. denied, 513 U.S. 1031 (1994). We review the district court 's interpretation and application of the guideline de novo. Id . After determining a guideline's scope and meaning, we review the district court's factual determinations for clear error. Id. at 488. We will not disturb the district court's factual findings "'unless the court's finding was without factual support in the record, or if after reviewing all the evidence we are left with the definite and firm conviction that a mistake has been made,'" United States v. Easterling , 921 F.2d 1073, 1077 (10th Cir. 1990) (quoting United States v. Beaulieu , 893 F.2d 1177, 1182 (10th Cir.), cert. denied, 497 U.S. 1038 (1990)), cert. denied, 500 U.S. 937 (1991).

Mr. Smith claims he did not misrepresent that he wa s "acting on behalf of a7Section 501(a) of the Internal Revenue Code provi des tax exempt status

for organizations described in § 501(c)(3). See 26 U.S.C. § 501(a). Section 501(c)(3) provides in pertinent part: Corporations, and any community chest, fund, or fou ndation, organized and operated exclusively for religious, c haritable, scientific, testing for public safety, literary, oreducational purposes, ... no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial p art of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation ... , and which does not part icipate in, or intervene in (including the publishing or distribut ing of statements), any political campaign on behalf of any candidate f or public office. 26 U.S.C. § 501(c)(3).

-14- charitable ... organization," pursuant to U.S.S.G. § 2F1.1(b)(3)(A). Relying on this court's opinion inUnited States v. Frazier , 53 F.3d 1105 (10th Cir. 1995), Mr. Smith contends because he had authority to act on behalf of Say No Now, an organization qualified for exempt status under § 50 1(c)(3) 7of the Internal Revenue Code, his conduct is outside the scope of U .S.S.G. § 2F1.1(b)(3)(A). Mr. Smith's reliance on Frazieris misplaced.

In Frazier , the president of a nonprofit corporation that acc epted grants from the United States Department of Labor was conv icted of misapplying the corporation's property and making false statements to a government agency, stemming from his misuse of grant money to make una uthorized computer8In dissent, United States Circuit Judge Baldock a rgued the majority had

focused too narrowly on whether the defendant had b een acting "as a representative of" the organization. Frazier , 53 F.3d at 1116 (Baldock, J., dissenting). Judge Baldock concluded the "Defendant misrepresented he was acting in the interest of an educational agency" when he made the unauthoriz ed computer purchase. Id . at 1118 (emphasis added).

9It was "undisputed that Defendant was president a nd chairman of the board of [National Indian Business Counsel doing bu siness as United Tribe Service Center], a non-profit corporation, which wa s funded by the United States Department of Labor to provide employment and train ing opportunities for -15- equipment purchases. Frazier , 53 F.3d at 1108-09. Mr. Frazier's base offense level was enhanced by two levels pursuant to U.S.S. G. § 2F1.1(b)(3)(A). Id . at 1109. A divided court concluded the focus of the g uideline is "exploitative conduct which induces victims to act upon their cha ritable or trusting impulses due to the defendant's misrepresentation that he ha s authority to act on behalf of a charitable, educational, religious or political org anization or a government agency." Id. at 1113. According to the majority, as president of the nonprofit corporation, Mr. Frazier used grant funds for unauthorized purposes, but did not "appeal to the generosity and charitable or trustin g impulses of his victim [the United States Government] by falsely declaring thathe had authority to act on behalf of an educational organization," 8 thus, his conduct was outside the ambit of the guideline. Id . The decision in Frazierturned on whether Mr. Frazier misrepresented his authority to act "on behalf of" the organization; the legitimacy of the educational organization he headed was not at issue. 9 Id. at 1113. TheAmerican and Alaskan Indians through the [Department of Labor] grant

program." Frazier , 53 F.3d at 1113.

-16- facts of this case present a different issue of int erpretation. Herein, the applicability of the guideline turns on whether the organization Mr. Smith represented was, in fact, a "charitable ... organiz ation" as contemplated by U.S.S.G. § 2F1.1(b)(3)(A).

To determine if the facts of this case fall within the scope of the U.S.S.G. § 2F1.1(b)(3)(A), we interpret the sentencing guide lines as if they were statutes. United States v. Gacnik, 50 F.3d 848, 852 (10th Cir. 1995). We follow the "clear, unambiguous language of the guidelines." Frazier , 53 F.3d at 1111-12. We also follow the commentary in the guidelines that interp rets or explains how a guideline is to be applied. Stinson v. United States , 508 U.S. 36, 38, 42-43 (1993). Section 2F1.1(b)(3)(A) of the guidelines p rovides a defendant's base offense level may be enhanced "if the offense invol ved ... a misrepresentation that the defendant was acting on behalf of a charitable ... organization." According to the background commentary, the guideline "enhances the sentences of defendants who take advantage of victims' ... generosity and c haritable motives," noting "defendants who exploit victims' charitable impulse s ... create particular social harm." U.S.S.G. § 2F1.1, comment. (backg'd. ¶ 4).-17-

Examples of conduct within the parameters of U.S.S. G. § 2F1.1(b)(3)(A) "would include a group of defendants who solicit co ntributions to a non-existent famine relief organization." U.S.S.G. § 2F1.1, com ment. (n. 4). We conclude soliciting donations for a bogus charity is tantamo unt to soliciting for a nonexistent charity and would support application of U .S.S.G. § 2F1.1(b)(3)(A). Affirmatively soliciting charitable contributions f rom the public, absent a legitimate charitable purpose, would "exploit victi ms' charitable impulses," precisely the aggravating circumstance the guidelin e is designed to address. U.S.S.G. § 2F1.1(b)(3)(A), comment. (backg'd. ¶ 4).

Mr. Smith contends Say No Now's exempt status underI.R.C. § 501(c)(3), standing alone, is sufficient to avoid application of U.S.S.G. § 2F1.1(b)(3)(A). We disagree. Since this issue does not come to us in the context of a tax dispute, this is not a case in which the Internal Revenue Se rvice has "primary authority." See Bob Jones University v. United States , 461 U.S. 574, 596 (1983) ("[T]his Court has long recognized the primary authority of the IRS and its predecessors in construing the Internal Revenue Code."). However, as in the context of a tax dispute, we will not use the letter of the tax code to elevate form over substance. See Gregory v. Helvering , 293 U.S. 465, 470 (1935). While tax-exempt statu s under I.R.C. § 501(c)(3) may be some evidence of the character of an10Mr. Smith does not dispute the government's claim the Internal Revenue

Service's determination was based solely on attestations made by Say No Now.

11 The government's expert witness described "mooch" as "a derogatory term used [by telemarketers] to describe the people who fall for the fraudulent pitches." -18- organization, it does not resolve the issue as a matter of law. 10 Whether or not Say No Now was organized and operated as a charity for purposes of applying U.S.S.G. § 2F1.1(b)(3)(A) was a proper question forthe district court.

The district court determined Say No Now was not a "charitable ... organization" as contemplated by U.S.S.G. § 2F1.1(b )(3)(A). The district court concluded Say No Now obtained § 501(c)(3) status "t o give an aura of legitimacy" to a scheme to defraud and lacked a "charitable purpose." The district court's conclusion is supported by the record. From January 1995 through October 1995, Say No Now took in over $915,000 while disbursing o nly one $45 charitable contribution. Individuals who sent money to Say No Now were not referred to as donors, but as "mooches," a term of derogation. 11 The district court also pointed to Mr. Smith's "[c]lear misrepresentations to the v ictims," including "misrepresentation to the victims that their donati ons would be sent to drug and alcohol abuse centers." The district court found S ay No Now was a "scheme to defraud," not a charitable organization. We agree.12Mr. Smith bases his claim solely on comments made by the district court

to his co-defendant, Ms. Robertson.

-19- Mr. Smith further contends the district court imper missibly placed the burden of proof on him at the sentencing hearing, r equiring him to prove he lacked knowledge of the true nature of Say No Now. 12 The allocation of burden of proof is a legal issue subject to de novo review. United States v. Kirk, 894 F.2d 1162, 1163 (10th Cir. 1990). Our review of th e record on appeal convinces us this argument is without merit. The district co urt did not place the burden of proof on Mr. Smith. Mr. Smith was convicted of participating in a scheme to commit mail and wire fraud. Mr. Smith had a history of working in telemarketing boiler rooms. Mr. Smith's co-defendant testified a nyone working at Say No Now for more than a few days would know it was a "scam. " The district court found the government's evidence compelling. Viewed in co ntext, the district court's observation it found "not one scintilla of evidence " to indicate Mr. Smith and his co-defendants believed the contributions they solic ited went to charity was part of one last invitation to the defendants to present re buttal evidence at the sentencing hearing, not an impermissible shifting of the burde n of proof. The district court properly placed the burden of proof on the governme nt to establish the factual elements in the presentence report. See United States v. Reid, 911 F.2d 1456, 1461 (10th Cir 1990), cert. denied, 498 U.S. 1097 (1991) (stating allocation of13 Section 5K2.0 of the Guidelines Manual sets forth the Sentencing

Commission's general policy statement on grounds fo r departure from the sentence range established by the applicable guidel ine(s). U.S.S.G. § 5K2.0.

14Section 2326 of the SCAMS Act provides: A person who is convicted of an offense under secti on 1028, 1029 1341, 1342, 1343, or 1344 in connection with the co nduct of telemarketing-- (1) may be imprisoned for a term of up to 5 years i n addition to any term of imprisonment imposed under any of those sec tions, respectively; and (2) in the case of an offense under any of those se ctions that-- -20- burden of proof at sentencing).

The record demonstrates Mr. Smith misrepresented Say No Now as a "charitable organization" as part of a scheme to exploit the charitable motives of donors. The district court correctly applied U.S.S .G. § 2F1.1(b)(3)(A). We affirm imposition of the two-level enhancement.

IV. Four-Level Upward Departure Mr. Smith challenges the district court's impositio n of a four-level upward departure pursuant to U.S.S.G. § 5K2.0. 13 Mr. Smith contends the district court erroneously relied on the Senior Citizens Against M arketing Scams Act of 1994, which enhances the penalties for individuals convic ted of any of the six enumerated telemarketing offenses if the victims we re over fifty-five, 14 as the(A) victimized ten or more persons over the age of 55; or

(B) targeted persons over the age of 55, may be imprisoned for a term of up to 10 years in a ddition to any term of imprisonment imposed under any of those sec tions, respectively. 18 U.S.C. § 2326 (enhancing penalties under 18 U.S. C. § 1028, "Fraud and related activity in connection with identification documents"; § 1029, "Fraud and related activity in connection with access devices" ; § 1341, "[Mail] Frauds and swindles"; § 1342 "Fictitious name or address [mail fraud]"; § 1343 "Fraud by wire, radio, or television"; and § 1344, "Bank frau d").

-21- basis for the upward departure. 18 U.S.C. § 2326. Mr. Smith argues the SCAMS Act does not apply to his conduct. Mr. Smith then argues, if the SCAMS Act applies, it cannot serve as the basis for an upward departure because the Act was not intended to enhance the punishment for telemark eting fraud; the Sentencing Commission determined the existing guidelines adequ ately addressed victim related adjustments for fraud offenses against the elderly; and the factors underlying the SCAMS Act are addressed fully by the enhancements for vulnerable victims and for multiple victims. U.S.S .G. §§ 3A1.1(b) and 2F1.1(b)(2)(B). The relationship between the SCAMS Act and the Sentencing Guidelines poses a question of first impression forthis Court.

As an initial matter, Mr. Smith argues his conduct did not constitute telemarketing under the SCAMS Act, therefore its pe nalty provisions are-22-

unavailable. We review the district court's findin gs de novo

. See United States v. Roberts , 898 F.2d 1465, 1468-69 (10th Cir. 1990). The Actstatutorily defines telemarketing as "a plan, program, promotion, or ca mpaign that is conducted to induce (A) purchases of goods or services; or (B) p articipation in a contest or sweepstakes, by use of 1 or more interstate telepho ne calls." 18 U.S.C. § 2325. Mr. Smith characterizes his activity as a "donation approach," denying there was either a "focus to sell goods or services" or an "i nducement" to "participate in any contest or sweepstakes." Based on "the totality of the circumstances surrounding the undertaking," the trial court concluded Mr. Sm ith's conduct "clearly falls within the statute." We agree.

However Mr. Smith might characterize his approach t o victims, the Say No Now scheme meets the statutory requirements of the SCAMS Act. First, Mr. Smith was convicted of two of the offenses, 18 U.S. C. §§ 1341 and 1343, enumerated in the Act. 18 U.S.C. § 2326. Second, Mr. Smith induced more than fifty victims over the age of fifty-five to contrib ute to the Say No Now scheme.
See 18 U.S.C. § 2326(2)(A). Third, Mr. Smith induced individuals to participate in the Say No Now scheme by use of numerous interst ate phone calls. See 18 U.S.C. § 2325. Fourth, while referred to as a "cha rity" by Mr. Smith, the Say No15 Even Mr. Smith characterizes the representations he made as "quite

similar to the 'sweepstakes notifications'" one rec eives in the mail. -23- Now scheme had the constitutive elements of a conte st or sweepstakes. 15

Sweepstakes means "any of various lotteries or cont ests for prizes." Webster's Third New International Dictionary 2309 ( 1981). A contest is "a competition in which each contestant performs witho ut direct contact with or interference from his competitors." Id . at 492. A lottery is "an event or affair whose outcome is or seems to be determined by chanc e." Id . at 1338. Victim testimony at trial and at the sentencing hearing in dicated Mr. Smith offered his victims prizes and awards such as cars, televisions and cash bonuses as inducements to participate by sending in money to S ay No Now. There also was an element of chance since individuals were not tol d the exact nature of the award. There was an element of indirect competitio n, i.e. , victims were told they needed to act fast to secure their awards. Ample e vidence in the record supports the district court's conclusion Mr. Smith was engag ed in a telemarketing scheme under 18 U.S.C. §§ 2325-26.

If the SCAMS Act applies to his conduct, and we hol d it does, Mr. Smith further contends the Act cannot support an upward d eparture. We review the-24-

district court's decision to depart from the Senten cing Guidelines under a unitary abuse of discretion standard. Koon v. United States , ___ U.S. ___, ___, 116 S. Ct. 2035, 2046-48 (1996); United States v. Collins , 122 F.3d 1297, 1303 (10th Cir. 1997). A district court must impose a sentenc e within the guidelines unless it determines "that there exists an aggravating or mit igating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines that shoul d result in a sentence different from that described." 18 U.S.C. § 3553(b ). Thus, a sentencing court may depart upward from the sentence dictated by the guidelines if an aggravating circumstance is of a kind not adequately taken into consideration or if the factor is present to an unusual degree

.

Mr. Smith contends the Act cannot support an upwarddeparture for three reasons. First, he asserts the purpose of the Act was "to enhance the penalties for telemarketing fraud on the elderly, rather than to enhance the punishment of the same under the sentencing guidelines." This claim flies in the teeth of both the text of the Act and its clear intent. Senator Hatc h, joined by several other senators, introduced S. 557, the Senior Citizens Ag ainst Marketing Scams Act, to combat telemarketing fraud. 139 Cong. Rec. S10015 (daily ed. July 30, 1993).16The Senate Judiciary Committee issued no formal r eport on S. 557, but

Senator Hatch requested that the discussion text of the draft report be printed in the Congressional Record. 139 Cong. Rec. S10016 (d aily ed. July 30, 1993).

-25- According to the committee discussion draft report on S. 557, 16 by enhancing penalties, Congress wanted to "take[] steps to ensu re that all fraud related offenses against older victims are properly punished ." Id. at S10016 (emphasis added). Hence, the Act instructed the Sentencing C ommission "to review its guidelines to ensure that fraudulent crimes againstsenior citizens receive appropriate punishment ." Id . (emphasis added); see Violent Crime Control and Law Enforcement Act of 1994, Pub. L. No. 103-322, § 250003, 108 Stat. 1796, 2085 (1994). Clearly, Congress intended to address the punishment of, as well as penalties for, telemarketing fraud.

Second, Mr. Smith asserts the Sentencing Commissionhas determined the existing guidelines adequately address victim relat ed adjustments for fraud offenses against the elderly and its determination "makes it difficult to endorse the discretionary, optional, non-guideline sentence proposed by the court" for Mr. Smith's mass victimization of the elderly. General ly, a sentencing court may not impose a sentence outside the guidelines if an aggr avating circumstance has been adequately taken into consideration by the Sentenci ng Commission in formulating-26-

the guidelines. 18 U.S.C. § 3553(b). Mr. Smith re lies on the report issued by the United States Sentencing Commission in response to a congressional directive to review the adequacy of victim related sentencing ad justments for fraud offenses against the elderly. Report to the Congress: Adeq uacy of Penalties for Fraud Offenses Involving Elderly Victims (Mar. 1995) (pre pared pursuant to § 250003 of the SCAMS Act, Pub.L. No. 103-322). In its repo rt, the Commission indicated if the review process supported the need for guidel ine amendments, the Commission intended to submit those changes to Cong ress by May 1, 1995. Id . at 12; see 28 U.S.C. § 994(p)(1993) (establishing statutory d eadline for proposed amendments). Since no guideline amendments were pr oposed, Mr. Smith interprets the Commission's inaction as endorsing the adequacy of the existing guidelines. Mr. Smith reads too much into the Comm ission's inaction.

The absence of action by the Sentencing Commission should not be read as a conclusive statement on the adequacy of the guide lines or as having a preclusive effect on discretionary departures by the district court. As the Commission noted in its report, issued a scant two months before the statutory deadline for amendments, the "[l]ack of consistently reported in formation on victim age in case files prevents a comprehensive assessment of the adequacy of guideline sentences in fraud offenses involving older victims ." Id . at 1. Moreover, when17Mr. Smith does not challenge directly the distric t court's application of

the guideline enhancements for vulnerable victim an d multiple victims. U.S.S.G. §§ 3A1.1(b) and 2F1.1(b)(2)(B).

-27- the Commission was consulted by the probation offic er during preparation of Mr. Smith's presentence report, the Commission did not issue guidance barring consideration of the mass victimization of the elde rly as grounds for an upward departure. Since there is insufficient evidence to conclude the Commission fully considered the existing guidelines and affirmativel y determined their adequacy, we cannot say the district court abused its discret ion by basing an upward departure on the SCAMS Act.

Finally, Mr. Smith specifically contends the aggrav ating aspect of the offense addressed by the SCAMS Act, mass victimizat ion of the elderly, was already taken into account by the guideline enhance ments for vulnerable victim, U.S.S.G. § 3A1.1(b), and for multiple victims, U.S. S.G. § 2F1.1(b)(2)(B), imposed by the district court. 17The vulnerable victim guideline enhancement provides for a two-level enhancement "[i]f the defe ndant knew or should have known that a victim of the offense was unusually vu lnerable due to age, physical or mental condition, or that a victim was otherwise particularly susceptible to the criminal conduct." U.S.S.G. § 3A1.1(b). Vulnerabl e victims are "those who are-28-

in need of greater societal protection." United States v. Brunson , 54 F.3d 673, 676 (10th Cir.), cert. denied, 116 S. Ct. 397 (1995). The multiple victim enhancement increases the base offense level by two if an offense involves "a scheme to defraud more than one victim." U.S.S.G. § 2F1.1(b)(2)(B). The district court concluded the two guideline enhancem ents did not adequately capture aspects of the offense uniquely associated with Mr. Smith's mass victimization of the elderly. We agree with the tr ial court's determination regarding the vulnerable victim enhancement; the de parture and the enhancement address distinct aspects of Mr. Smith's offense. H owever, we find the multiple victim enhancement necessarily overlaps with the ma ss victimization on which the departure is based in part.

The foci of the vulnerable victim enhancement and t he SCAMS Act differ on two key dimensions. The SCAMS Act is directed t oward criminal telemarketing conduct targeted at or actually victi mizing a certain class of individuals, statutorily defined as those over the age of fifty-five. 18 U.S.C. § 2326. The Act requires the offense target the el derly as a class. In contrast, the vulnerable victim enhancement does not require a fi nding the defendant targeted the victim because of his vulnerability. United States v. Hardesty , 105 F.3d 558, 560 (10th Cir. 1997). Moreover, the vulnerable vic tim enhancement cannot be-29-

based solely on the victim's membership in a certai n class; the sentencing court is required to make particularized findings of vulnera bility, focusing on the individual victim and not the class of persons to w hich the victim belonged.
Brunson , 54 F.3d at 676; United States v. Creech , 913 F.2d 780, 781-82 (10th Cir. 1990). A single vulnerable victim is sufficient to support application of the enhancement. See, e.g., United States v. Pearce , 967 F.2d 434 (10th Cir.), cert. denied, 506 U.S. 922 (1992). Thus, the focus of the SCAM S Act and that of the vulnerable victim enhancement differ in key respect s and are sufficiently distinct to avoid double counting the same offense conduct.

In attempting to distinguish the multiple victim en hancement under U.S.S.G. § 2F1.1(b)(2)(B) and the mass victimizatio n of the elderly factor encompassed by the SCAMS Act, the district court co ncluded U.S.S.G. § 2F1.1 is loss driven, while the SCAMS Act departure is victi m driven. Certainly, U.S.S.G. § 2F1.1 does increase the base offense level for a fraud offense to account for the loss caused by a defendant. U.S.S.G. § 2F1.1(b)(1) (A)-(S). However, by its terms U.S.S.G. § 2F1.1(b)(2)(B) also provides a two -level enhancement if the offense involved "a scheme to defraud more than one victim," irrespective of the18The background commentary to the multiple victim enhancement

indicates the subsection "refers to a design or pla n to obtain something of value from more than one person." U.S.S.G. § 2F1.1 comme nt. (n. 3)

.
-30- amount of loss. 18 In interpreting the guidelines, we follow "the cl ear, unambiguous language of the guidelines unless there is a manifestation of contrary intent." United States v. Florentino , 922 F.2d 1443, 1446 (10th Cir. 1990). Finding no evidence of contrary intent, we must conclude the offense characteristics addressed by the guideline include both the amount of loss and the number of victims. To the extent the upward depart ure is based on the number of victims, it is not supported by an aspect of the of fense sufficiently distinct from that supporting the multiple victim enhancement. Th e district court erred in double counting this aspect of Mr. Smith's offense behavior.

When a district court bases a departure on impropergrounds, the reviewing court must then determine if a remand is necessary. 18 U.S.C. § 3742(f). The reviewing court should remand the case unless it co ncludes, on the record as a whole, the district court "would have imposed the s ame sentence absent reliance on the invalid factors." Koon , 116 S. Ct. at 2053-54 (citing Williams v. United
States , 503 U.S. 193, 203 (1992)). Herein, the district court did not rely on the SCAMS Act as the sole basis for departure. The sentencing court also found the19As the Guidelines Manual explains:

The Commission intends the sentencing courts to tre at each guideline as carving out a "heartland," a set of typical case s embodying the conduct that each guideline describes. When a court finds an atypical case, one to which a particular guideline linguistically applies but where conduct significantly differs fro m the norm, the court may consider whether a departure is warranted

. U.S.S.G. Ch. 1, Pt. A, intro. comment. 4(b).

-31- circumstances of this case were outside the heartla nd of the offenses for which Mr. Smith was being sentenced. We review this find ing to determine if the district court's error was harmless. See Fed. R. Crim. P. 52(a).

The district court may depart from the guidelines i f an aggravating circumstance exists to a degree not adequately take n into consideration by the guidelines. 18 U.S.C. § 3553(b); U.S.S.G. § 5K2.0. A departure is permitted if aspects of the case are "found unusual enough for i t to fall outside the heartland of cases in the Guideline." 19 Koon , 116 S. Ct. at 2046. A district court's decision to depart from the guidelines based on the unusual nature of the case is due "substantial deference" because "[w]hether a given factor is present to a degree not adequately considered by the Commission ... [is ] determined in large part by comparison with the facts of other Guidelines cases . District courts have an institutional advantage over appellate courts in ma king these sorts of-32-

determinations, especially as they see so many more Guidelines cases than appellate courts do." Koon, 116 S. Ct. at 2046-47.

In reviewing a district court's decision to depart, this Court must evaluate (1) whether the factual circumstances supporting a departure are permissible departure factors; (2) whether the depa rture factors relied upon by the district court remove the defendant fro m the applicable Guideline heartland thus warranting a departure, (3 ) whether the record sufficiently supports the factual basis unde rlying the departure, and (4) whether the degree of departure is reasonable. Collins , 122 F.3d at 1303. We apply a unitary abuse of di scretion standard throughout the Collins analysis. Id .; Koon , 116 S. Ct. at 2047-48. Whether the factual circumstances of the case provide a permiss ible basis for departure is essentially a legal inquiry and our review is plena ry. Collins , 122 F.3d at 1303;
Koon , 116 S. Ct. at 2047. Whether the factual circums tances make the case atypical is a factual inquiry and our review is mos t deferential. Collins , 122 F.3d at 1302; Koon , 116 S. Ct. at 2046.

The district court departed upward from the applica ble guideline range for fraud offenses. See U.S.S.G. § 2F1.1. In departing upward, in accorda nce with U.S.S.G. § 5K2.0, the district court found this cas e "clearly is a matter which goes beyond the heartland of the typical cases of f raudulent conduct that the guideline [U.S.S.G. § 2F1.1] describes." In review ing an upward departure, we20Factors listed as not ordinarily relevant in sent encing determinations

include characteristics such as race, sex, national origin, creed, religion and socioeconomic status (U.S.S.G. § 5H1.10); prior goo d works ( id. § 5H1.11); lack of guidance as a youth ( id . § 5H1.12); drug or alcohol dependence ( id . § 5H1.4), etc.

-33- ask first whether the district court has relied on permissible departure factors. Collins , 122 F.3d at 1303. Potential departure factors "c annot, by their very nature, be comprehensively listed and analyzed in a dvance." U.S.S.G. § 5K2.0. With the exception of a short list of factors, 20 the Commission "does not intend to limit the kinds of factors, whether or not mentione d anywhere else in the guidelines, that could constitute grounds for departure in an unusual case." U.S.S.G. Ch. 1, Pt. A, intro. comment. 4(b). This Court's examination of "whether a factor can ever be an appropriate basis for departure is limited to determining whether the Commission has proscribed, as a categorical matter, consideration of the factor." Koon , 116 S. Ct. at 2051.

The district court pointed to a combination of spec ific offense characteristics in support of its conclusion Mr. Sm ith's offense was outside the heartland of fraud cases: Mr. Smith's extreme cond uct, and the personal and financial injury he inflicted on the victims. Afte r listening to the evidence adduced at trial and proffers of proof at the sente ncing hearing, including the-34-

testimony of victims, the district court found Mr. Smith's conduct was "particularly predatory." The sentencing court det ermined Mr. Smith's victims were psychologically, emotionally and financially d evastated as a result of his offense conduct.

In reviewing whether these are permissible departur e factors, we note none are among the handful of factors not ordinarily rel evant in sentencing determinations. An extra measure of criminal depravity is precisely the type of factual circumstance the departure mechanism is des igned to address. See 18 U.S.C. § 3553(b); U.S.S.G. § 5K2.0. The Sentencing Commission has explicitly recognized "[i]n cases in which the loss determined under [U.S.S.G. § 2F1.1(b)(1)] does not fully capture the harmfulne ss and seriousness of the conduct, an upward departure may be warranted." U. S.S.G. § 2F1.1, comment. (n.10). Examples of circumstances in which the los s underestimates the harm include cases where "the offense caused reasonably foreseeable, physical or psychological harm or severe emotional trauma" and where "the offense involved the knowing endangerment of the solvency of one or more victims." Id . (n.10.(c) and (f)). Therefore, after reviewing the relevant guidelines, policy statements, and official commentary of the Sentencing Commissio n, we conclude none of the factors relied on by the district court as the basi s for an upward departure is an-35-

impermissible departure factor.

We then ask whether the record supports the distric t court's conclusion the departure factors are present to an exceptional deg ree. Collins , 122 F.3d at 1303. Trial testimony indicated Mr. Smith would ingratiat e himself to victims in order to ascertain the extent of their financial resource s. Mr. Smith would then take everything he could get, going so far as to take on e victim's last dollar. When victims indicated there was no more money, Mr. Smit h continued to call, proud of the fact these people were "mooches" who could be p reyed on again and again. As a result of Mr. Smith's conduct, victims lost al l their savings. One victim, an 83 year-old widow, was forced to mow lawns and clean motel rooms to get by. Mr. Smith's victims also were psychologically and e motionally harmed, suffering from depression and loss of self-esteem. The trial court determined Mr. Smith knew his victims were being harmed by their losses and he continued to victimize them. The court found Mr. Smith's conduct "signifi cantly, massively, differs from the normal fraudulent conduct." Based on twenty ye ars experience, the sentencing court concluded "this is probably as des picable an offense in its way as any I have ever seen." As the Supreme Court indicated, the district court has special competence to make this type of refined comparative factual assessment.
Koon , 116 S. Ct. at 2046-47. The district court's find ings are well-supported by-36-

the record. We cannot say the district court abuse d its discretion in finding the circumstances of this case atypical.

The atypicality of this case removed it from the he artland of fraud cases and provided a proper basis for a departure. Based on the record before us, we are confident the district court would impose the s ame sentence on remand. Therefore, we hold the district court's error in ap plying the SCAMS Act was harmless.

Where a departure is permitted, as it is here, we s till must determine whether the degree of departure from the guidelines was reasonable. See 18 U.S.C. § 3742(e)(3); Collins , 122 F.3d at 1303. In Williams , the Supreme Court indicated "[t]he reasonableness determination looks to the amount and extent of the departure in light of the grounds for departing . In assessing reasonableness ... a court of appeals [should] examine the factors to be considered in imposing a sentence under the Guidelines, as well as the distr ict court's stated reasons for the imposition of the particular sentence." 503 U.S. at 203-04. In United States v. Jackson , we held a sentencing court must explain, inter alia , why "that specific degree of departure is reasonable." 921 F.2d 985, 989 (10th Cir. 1990). Thus, we consider the district court's articulated reasons f or the imposition of the particular-37-

sentence, as well as factors such as the seriousnes s of the offense, the need for just punishment, deterrence, and protection of the public. 18 U.S.C. §§ 3742(e)(3)(B) and 3553(a)(2).

In the instant case, the district court imposed a f our-level upward departure. As detailed supra , the district court articulated multiple reasons f or the degree of departure. The court expressly considered the fact ors outlined in 18 U.S.C. § 3553(a)(2), i.e. , seriousness of the offense, need for punishment a nd deterrence, protection of the public, and correctional treatmen t. The district court concluded Mr. Smith's was an "extremely serious offense,"and he "need[ed] to be punished." The district court wanted to protect society from " predators" like Mr. Smith and enhance the deterrent effect by showing other boile r room telemarketers such activity "will not be tolerated in a civilized soci ety."

Our review of the record establishes the degree of departure here was reasonable. We AFFIRM imposition of the four-level upward departure.

V The judgment and sentence of the district court is AFFIRMED

.