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w . v i l l a no v a . e du/thir dc ir c uit_2013/227NO T PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

________ No. 12

- 4222, 12

- 4223, 13

- 1141

_________
UNITED STATES OF AMERICA

v. DONALD M. HELLINGER,

Appellant in 12

- 4222 RONALD HELLINGER, Appellant in 12

- 4223
MICHAEL WEISBER G , Appellant in 13

- 1141

________ On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 2

- 11

- cr - 00 083 ) District Judge: Honorable R. Barclay Surrick

_______
Submitted Under Third Circuit LAR 34.1(a)

Se ptember 12, 2013

Before: MCKEE, SMITH, and SLOVITER , Circuit Judges

(Filed: September 13, 2013 )

_______________ O P I N I O N

_______________2

SLOVITER, Circuit Judge. Donald Hellinger, Ronald Hellinger, and Michael Weisberg (“Appellants”) each
appea l the sentences imposed on them following their guilty pleas to operati ng an illegal
money - transmitting business. For the following reasons, we will affirm. 1
I. In 2011, a grand jury returned a fourteen

- count indictment charging Appellants and three ot hers

– Jami Pearlman, Michele Quigley, and Randy Trost

– in all counts. Appellants pled guilty to Count Two of the indictment, which alleged that between January 2005 and February 2006, they and their codefendants operated a money

transmitting business wi thout comply ing with f ederal registration requirements, thereby violating 18 U.S.C. § 1960

. Appellants were owners and managers of Payment Processing Center, Inc. (“PPC”). They stipulated that PPC processed payments on behalf of offshore internet
ga mbling companies. Appellants set up bank account s through which PPC would receive wire transfers from these gambling companies. The gambling companies would then email to PPC the amount of money owed to certain bettors, and PPC would prepare and deliver checks from its accounts to the bettors. PPC would also prepare and deliver checks to local vendors of the gambling companies. PPC did not participate in the gambling business except for its transmission of money from the gambling companies to

1 The District Court had jurisdiction pursuant to 18 U.S.C. § 3231 and this court has jurisdiction pursua nt to 18 U.S.C. § 3742(a) and 28 U.S.C. § 1291.3

the bettor s and vendors. PPC did not register with the United S t ates Depart ment of the Treasury as a money

- transmitting business, as required by 31 U.S.C. § 5330

. After Appellants pled guilty, the District Court determined that U.S.S.G. § 2S1.3 was the approp riate offense guideline

. The Court also applied a sentencing enhancement pursuant to U.S.S.G. § 3B1.1(a) for all three Appellants. 2 It sentenced Donald Hellinger
to thirty six months imprisonment and ordered him to pay a $10,000 fine; sentenced Ronald Hel linger to twenty seven months imprisonment ; and sentenced Weisberg to twenty two months imprisonment

. II A. Offense Guideline Appellants argue that the District Court erred in identifying § 2S1.3 rather than § 2S1.1(a)(1) as the applicable offense guid eline. We review an “application of the Guidelines to the facts for abuse of discretion

. ” United States v. Blackmon , 557 F.3d 113, 118 (3d Cir. 2009)

. 3 Appendix A of the Sentencing Guidelines lists both § 2S1.3 and § 2S1.1 as applicable offense guidel ines for violation s of 18 U.S.C. § 1960. See U.S.S.G. app. A. “If more than one guideline section is referenced for the particular statute,” Appendix A

2 Although the District Court did not explicitly state that it was applying the § 3B1.1(a) enhancement, the Court adopted the Present ence Investigation Reports (“PSR s”) which applied the e nhancement for each Appellant. Neither Appellants nor the Government dispute that the Court applied this enhancement

. 3 Appellants contend that we should apply de novo review. However, the interpretation of a guideline provision is not at issue here. Rather, the issue is which offense guideline better fits the facts in this case .4

instructs courts to “use the guideline most appropriate for the offense conduct charged in
the count o f which the defendant was convicted.” Id. Section 2S1.3 applies to the operation of a money - transmitting business without complying with state and federal registration requirements in violation of 18 U.S.C. §§ 1960(b)(1)(A) and (B)

. See id. §2S1.3 cmt. Section 2S1.1, on the other hand, applies to money laundering in violation of 18 U.S.C. § 1960(b)(1)(C). See i d. at § 2S1.1 cmt.; see also § 1960 (b)(1)(C) (referring to “the transportation or transmission of funds that are known to the defendant to hav e been derived from a criminal offense or are intended to be used to promo te or support unlawful activity ” ). Appellants argue that § 2S1.1 (a)(1) is the applicable offense guideline because it more closely tracks the offense conduct charged against them. Although Appellants admit that the o peration of an unlicensed
money - transmitting business “is certainly a central allegation of Count Two,” they
maintain that “the overwhelming weight of the al leged conduct describes service as the money laundering arm of illegal internet gambling businesses, through collection of bets and payment of winners, and through payment of invoices to vendors.” Appellants’ Br.
at 37. Appellants’ offense conduct involved both th e operation of an unlicensed money transmitting busi ness and money laundering. The District Court relied on the formal charging language of Count Two of the Indictment and Appellants’ conduct in determining which offense guideline was more applicable. The language of Count Two

–

“ knowingly conducted, cont rolled, managed, supervised, directed, and owned all or part of a money transmitting business . . . while failing to comply with the money transmitting5

business registration requirements under Title 31, United States Code, Section 5330”

– charges a violati on of § 1960(b)(1)(B) , which corresponds with offense guideline § 2S1.3

. App. at 94. The Court’s reliance on the charging language was proper. Thus, the District Court did not abuse its discretion in choosing § 2S1.3 as the more a ppropriate offense guid eline. B. Sentencing Enhancement Appellants allege that the District Court erred in increasing the offense levels of Ronald Hellinger and Weisberg by four level s pursuant to U

. S

. S

. G

. § 3B1.1(a)

. 4 We have held that because “ the question of a defendant's aggravating role . . . is ‘essentially factual,’ we will reverse the district court

. . . only if its conclusion is clearly erroneous.” United States v. Ortiz , 878 F.2d 125, 127 (3d Cir. 1989). Here, the Court did not make independent factual findings, b ut instead adopted the findings in Appellants’ PSRs. 5 In such a case, we also apply the clear error standard of review. See United States v. Belletiere , 971 F.2d 961, 969 (3d Cir. 1992) . The application of the enhancement is clearly erroneous “if, after reviewing all of the evidence, we are left with a firm conviction that a mistake has been made.” Id.

4 The four

- level enhancement was also applied to Donald Hellinger’s sentence, but he does not appeal his sentence on this issue. 5 Appellants allege that because the Court did not make findings of fact on a contested issue , we must remand . However, failure to make findings on a contested issue does not require remand where the findings of fa ct “are implicit in the record.” United States v. Gricco , 277 F.3d 339, 362 (3d Cir. 2002) overruled on other grounds as stated in United States v. Cesare , 581 F.3d 206, 208 n.3 (3d Cir. 2009). Appellants do not dispute that the District Court adopted t he findings from Appellants’ PSR s.6

Under § 3B1.1(a) , a defendant’s offense level is increased by four levels if a court finds that the defendant “was an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive.” U.S.S.G. § 3B1.1(a). If the defendant “ was a manager or supervisor ” of such a criminal activity, the offense level is increased by three levels. Id. § 3B1.1(b )

. The commenta ry to this section further requires the defendant to whom an enhancement under § 3B1.1 applies to “have been the organizer, leader, manager, or supervisor of one or more other participants.” Id. § 3B1.1(a) cmt. n.2. Appellants do not dispute that the cr iminal activity involved five or more participants or was otherwise extensive. Instead , they argue that there is no evidence on the record of Weisberg or Ronald Hellinger exercising c ontrol over another participant

. We disagree. According to the PSR s, J ami Pearlman, one of the Appellants’ co

defendants “informed the attorney who PPC hired to research the legality of their gambling payout business that PPC decided not to comply with the legal requirements for money transmitting businesses” and she did so “on behalf of Donald Hellinger, Ronald Hellinger, and Michael Weisberg.” Weisberg PSR ¶ 33; R onald Hellinger PSR ¶ 33. Appellants a lternatively argue that even if an enhancement under § 3B1.1 applies to Weisberg and Ronald Hellinger, it should be the th ree - level enhancement for managers and supervisors under § 3B1.1(b). The commentary to § 3B1.1 states : In distinguishing a leadership and organizational role from one of mere management or supervision . . . [f]actors the court should consider include
t he exercise of decision making authority, the nature of participation in the7

commission of the offense, the recruitment of accomplices, the claimed right to a larger share of the fruits of the crime, the degree of participation in planning or organizing the offense, the nature and scope of the illegal activity, and the degree of control and authority exercised over others.

§ 3B1.1 cmt. n.4.
T he extensive involvement of Weisberg and Ronald Hellinger in PPC ’s activities supports the four

- level enhancement. We isberg and Ronald Hellinger each owned 22.5% of PPC. Both were PPC account representatives for client companies and recei ved commissions from the activity on these accounts. According to his PSR , Ronald Hellinger “negotiated an agreement between PPC and a trade association for foreign internet gambling companies . . . so that PPC could be introduced to the companies and offer them payment services in the U.S.” Ronald Hellinger PSR ¶ 30. Weisberg signed the agreement between PPC and the trade associatio n. Weisberg formed PPC. He, along with a co

- defendant, opened several bank account s into which offshore gambling companies could make deposits and was a signatory on th ose account s . He established business agreements and controlled bank accounts into wh ich proceeds of PPC’s activities were deposited. On these facts, the District Court did not clearly err in applying the four

- level enhancement.
III. The District Court did not err in determining that U.S.S.G. § 2S1.3 was the appropriate offense guidelin e and in applying the leadership enhancement to determine8

the sentences of Ronald Hellinger and Weisberg. W e will affirm the judgments of
sentence

.