Source: https://law.justia.com/cases/federal/appellate-courts/F3/155/969/523560/
Timestamp: 2017-11-19 00:58:06
Document Index: 410452722

Matched Legal Cases: ['§ 1341', '§ 2314', '§ 1957', '§ 1956', '§ 982', '§ 1957', '§ 1341', '§ 2', '§ 1957', '§ 2', '§ 2', '§ 3', '§ 3', 'art 3', '§ 3', 'art 3', '§ 3', '§ 1956', '§ 1957', '§ 3', '§ 3', '§ 3', '§ 3', '§ 3', '§ 3', '§ 1956', '§ 2']

United States of America, Appellant, v. Terry O'kane, Appellee, 155 F.3d 969 (8th Cir. 1998) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Eighth Circuit › 1998 › United States of America, Appellant, v. Terry O'kane, Appellee
United States of America, Appellant, v. Terry O'kane, Appellee, 155 F.3d 969 (8th Cir. 1998)
U.S. Court of Appeals for the Eighth Circuit - 155 F.3d 969 (8th Cir. 1998)
Submitted Feb. 12, 1998. Decided Sept. 9, 1998
Before WOLLMAN and HANSEN, Circuit Judges, and DAVIS1 , District Judge.
When his scheme came to light in January 1996, O'Kane immediately confessed his crime to store investigators and again to police. A federal grand jury returned a 24-count indictment against him on May 22, 1996, charging 18 counts of mail fraud, in violation of 18 U.S.C. § 1341; one count of interstate shipment of stolen goods, in violation of 18 U.S.C. § 2314; three counts of money laundering by engaging in monetary transactions involving criminally derived property of a value in excess of $10,000, in violation of 18 U.S.C. § 1957; one count of money laundering with the intent to carry on a specified unlawful activity, in violation of 18 U.S.C. § 1956(a) (1) (A) (i); and with the forfeiture of personal property pursuant to 18 U.S.C. § 982. On February 28, 1997, O'Kane entered into a plea agreement with the government, in which he agreed to plead guilty to one count of mail fraud and to a one-count information charging money laundering in the purchase of a pickup truck, of a value greater than $10,000, in violation of 18 U.S.C. § 1957, which information the government then filed on April 10, 1997. As part of the plea agreement, he agreed to forfeit all the sports cards still in his possession, money gained from selling the cards, and other personal property (some of which he had acquired with proceeds from the fraud), as well as a large portion of an employee retirement account he had through the grocery. As a result, by the time he entered his plea of guilty, he had made complete restitution to his former employer for his crime.
At sentencing, the district court first determined the base offense levels for O'Kane's two offenses of conviction according to the United States Sentencing Guidelines. Mail fraud, 18 U.S.C. § 1341, has a base offense level of 6, which increases according to the value of the fraud. O'Kane's total fraud, $304,667, added 8 levels, and the court added two more for more than minimal planning, resulting in a level 16 for the mail fraud count. See U.S. Sentencing Guidelines Manual § 2F1.1 (1995). Money laundering under 18 U.S.C. § 1957, has a base offense level of 17, to be increased by two for knowledge that the funds were derived from a specified unlawful activity. See USSG § 2S1.2(b) (1) (B). The Guidelines provide for no dollar adjustment if the laundering is for an amount less than $100,000. Since the government had charged O'Kane with laundering $73,562.50, his money laundering offense level remained 19. See USSG § 2S1.2. The court grouped the fraud and money laundering counts together to arrive at a single group with a base offense level of 19, see USSG § 3D1.2(b), then reduced the base offense level three levels to 16 for O'Kane's acceptance of responsibility. See USSG § 3E1.1. The court then departed downward an additional four levels for unusual acceptance of responsibility, resulting in a final offense level of 12 and a sentencing range of 10 to 16 months. O'Kane had no prior criminal history. The court sentenced O'Kane on each of the two counts to five months' imprisonment with a work release recommendation, followed by five months' home confinement. The sentences were to be served concurrently. The government raised timely objections to both the grouping and departure decisions, and now appeals both.
"We review findings of fact at the sentencing hearing for clear error and give due deference to the district court's application of the guidelines to the facts." United States v. Brelsford, 982 F.2d 269, 271 (8th Cir. 1992). But "we review ... the district court's application and construction of the guidelines de novo," United States v. Wells, 127 F.3d 739, 744 (8th Cir. 1997), and " [w]e review a district court's decision to depart from the Guidelines for an abuse of discretion." United States v. McNeil, 90 F.3d 298, 300 (8th Cir. 1996), cert. denied, --- U.S. ----, 117 S. Ct. 596, 136 L. Ed. 2d 524 (1996).
After determining the base offense level appropriate for each individual count pursuant to Chapter 2 of the Guidelines, the sentencing court then determines whether to adjust the base levels to reflect the presence of multiple counts. This exercise "seek [s] to provide incremental punishment for significant additional criminal conduct." USSG Ch. 3, Pt. D, intro. comment. First, the court must group closely related counts according to Section 3D1.2; then determine the offense level for each group according to Section 3D1.3; and then find a combined offense level according to Section 3D1.4. A "group" in Part 3D may consist of only one count, if no counts relate so closely to one another as to justify grouping them together under Section 3D1.2. Or, all counts of conviction may fall into a single "group," eliminating the need to "combine" groups under Section 3D1.4. See USSG § 3D1.2, comment. (n.7).
To group the two counts under Section 3D1.2(b) properly, the court must determine that the same person or entity was the victim of both crimes. Clearly, O'Kane's employer was the victim of his fraud, but it is not as immediately clear who suffered as a result of his money laundering. Several courts have found money laundering to have as its specific victim the same victim as the underlying fraud. See, e.g., United States v. Leonard, 61 F.3d 1181, 1186 (5th Cir. 1995) (holding fraud and money laundering constituted "a single, integrated scheme to obtain money from the elderly victims and to use that money to facilitate the continuance of the scam."); United States v. Mullens, 65 F.3d 1560, 1564 (11th Cir. 1995) ("the fraud and the money laundering were integral cogs in continuing the scheme."); United States v. Cusumano, 943 F.2d 305, 313 (3d Cir. 1991) (grouping proper under (b) because money laundering and fraud "were all part of one overall scheme" against a single victim.).
However, the government has support for its assertion that societal interests, rather than specific victims, are harmed by money laundering; and, therefore, that O'Kane's crimes should not be grouped under Section 3D1.2(b). In a First Circuit case in which a defendant was sentenced under the same guidelines as O'Kane, the court held that "for the purposes of these subsections, the victim of fraud is the insurance company and the victim of money laundering is society." United States v. Lombardi, 5 F.3d 568, 570 (1st Cir. 1993). See also United States v. Harper, 972 F.2d 321, 322 (11th Cir. 1992) (per curiam) (remarking that money laundering invades societal interests); United States v. Lopez, 104 F.3d 1149, 1150 (9th Cir. 1997) (per curiam) (holding that money laundering harms society generally).
The Guidelines also indicate those concerns which should drive our inquiry. The Sentencing Commission intended the grouping rules to "limit the significance of the formal charging decision and to prevent multiple punishment for substantially identical offense conduct." USSG Ch. 3, Pt. D, intro. comment. Defrauding one's employer is not offense conduct substantially identical to laundering part of the proceeds of that fraud, and the court moved far beyond "limit [ing] the significance of the ... charg [e]" by grouping the counts in a manner which punishes O'Kane solely for his money laundering, with no additional punishment for his fraud. The district court's grouping defeats the express purpose of Part 3D, "to provide incremental punishment for significant additional criminal conduct." Id.
The Guidelines instruct the sentencing court first to calculate all individual sentences according to Chapter 2, then, " [w]hen offenses are closely interrelated, group them together for purposes of the multiple-count rules." Id. (emphasis added). O'Kane's fraud and money laundering are not closely interrelated. Again, we do not simply squint at shadows on a dark wall; the Guidelines provide clear examples of the types of counts which should be grouped under Section 3D1.2(b). A count of conspiracy to commit extortion and the substantive extortion count should be grouped; multiple counts of mail and wire fraud directed at the same victim should be grouped; and multiple counts of delivery of a controlled substance can be grouped, all under Section 3D1.2(b). USSG § 3D1.2 comment. (n.4). These examples make clear that, had O'Kane pled guilty to multiple counts of fraud, those counts would properly have been grouped. But O'Kane's separate offenses of fraud and money laundering are not so closely interrelated as to justify grouping under (b). The offenses entail different kinds of proscribed conduct, punishable on different scales, which harm distinct and different victims.
Further, O'Kane did not plead guilty to money laundering under 18 U.S.C. § 1956, although he was originally charged with one count under that more serious "reinvestment" money laundering statute. Section 1956(a) (1) (A) (i) proscribes money laundering done "with the intent to promote the carrying on of specified unlawful activity" and carries a base offense level of 23. The terms of O'Kane's plea agreement permitted him to plead guilty only to a violation of 18 U.S.C. § 1957, which does not require that the laundering conduct promote the underlying crime, and it likewise has a significantly lower base offense level, 17. O'Kane cannot have his cake and eat it, too. His plea agreement with the government reduced his offense level by six from what it would have been had he gone to trial and been convicted. Part of that reduction comes from him not pleading guilty to reinvesting his laundered funds into his ongoing criminal enterprise. Having pled guilty to the less serious form of money laundering under Section 1957, he should not be allowed to further reduce his offense level by arguing that he harmed the same victim by both crimes because his illegal laundering truly was of the more serious Section 1956(a) (1) (A) (i) "reinvestment" kind.
The government's argument is foreclosed by the recent decision of this court "that fraud and money laundering are not so closely related as to allow loss and value grouping under § 3D1.2(d)." United States v. Hildebrand, 152 F.3d 756, 763 (8th Cir. 1998). The final offense level determination is made differently when counts are grouped under Section 3D1.2(d) than when they are grouped under (a) through (c). When multiple counts covered by different Guidelines are grouped under (d), the aggregate quantity of harm from all counts is used to increase the base offense level of the most serious count in the group determined by the applicable Guidelines rules from Chapter 2. So, while O'Kane was charged with defrauding his employer of $304,667 but laundering only $73,562.50 of the fraudulently obtained monies, if the counts were grouped under Section 3D1.2(d), he would be punished for laundering the total sum of $378,229.50, thereby increasing his offense level to 22.2 See USSG § 3D1.3(b). " [B]ecause the base offense levels for money laundering are much higher than the base offense level for fraud, ... it is wrong to assume that the Sentencing Commission intended to equate the amount of fraud loss with the value of money laundered for every fraudulent scheme that includes some form of money laundering." Hildebrand, 152 F.3d at 763.3
While it is clear that several separate money laundering counts could properly be grouped together under (d), as could several fraud counts, it is not clear that counts of those separate offenses necessarily "otherwise meet the criteria for grouping under this subsection [d]." USSG § 3D1.2, comment. (n.6). One of the criteria is that the offense level be "largely determined" by "the amount of harm or loss." Section 3D1.2(d). Here, there is no question that the fraud offense level was largely determined (and increased) by the aggregate amount involved. The money laundering count, on the other hand, did not increase because of amount, but rather did increase by two levels for O'Kane's knowledge that the funds came from a specified unlawful activity, and ended up at 19. Laundering any amounts less than $100,000 (as O'Kane did here) has no effect at all on the offense level for money laundering. On the facts before us, the offense level for money laundering is not "determined largely on the basis of the total amount of harm or loss;" rather it is determined largely by the eleven level higher starting base offense level. Therefore, grouping under Section 3D1.2(d), as argued for by the government, is not appropriate. See, e.g., United States v. Kneeland, 148 F.3d 6, 15-16 (1st Cir. 1998).
Since none of the grouping rules properly apply to O'Kane's two counts of conviction, those counts must remain in separate, one-count "groups" for the purpose of "combining" under Section 3D1.4. After separately computing the offense levels for each group, the Guidelines instruct the court to " [c]ount as one Unit the Group with the highest offense level. Count one additional Unit for each Group that is equally serious or from 1 to 4 levels less serious." USSG § 3D1.4(a). O'Kane's money laundering offense (level 19) counts as one Unit; his fraud offense (level 16) counts as an additional Unit because it is not more than 4 levels less serious. For two Units, Section 3D1.4 instructs the sentencing court to add two levels to the higher offense group, which in O'Kane's case yields an offense level 21 before any reduction for acceptance of responsibility.
The government also challenges the district court's departure which was based on unusual acceptance of responsibility. After grouping the two counts and arriving at a base offense level of 19, the court decreased O'Kane's offense level by two levels pursuant to USSG § 3E1.1(a), finding that he had "clearly demonstrate [d] acceptance of responsibility for his offense." The court further reduced O'Kane's offense level by one additional level pursuant to USSG § 3E1.1(b), finding that he had "timely provided complete information to the government concerning his own involvement in the offense; or timely notified authorities of his intention to enter a plea of guilty." Id. The court continued, however, finding "that a downward departure of 4 additional levels [was] warranted based on [O'Kane's] extraordinary acceptance of responsibility. With the 4-level reduction, [O'Kane's] total offense level [was] 12. And with [his] criminal history category of I, the guideline range [was] 10 to 16 months." (Sent. Tr. at 82-83.) The court then sentenced O'Kane to five months' imprisonment with a work-release recommendation, followed by five months' home confinement, concurrent on each of the two counts.
"The appellate court should not review the departure decision de novo, but instead should ask whether the sentencing court abused its discretion." Koon v. United States, 518 U.S. 81, 91, 116 S. Ct. 2035, 135 L. Ed. 2d 392 (1996). But even reviewing under this deferential standard, we conclude that the district court erred in departing from the Guidelines based on O'Kane's supposed exceptional acceptance of responsibility. To justify departure, a "case must be found unusual enough for it to fall outside the heartland of cases in the Guideline." Id. at 98, 116 S. Ct. 2035. This case clearly does not. The district court departed four levels based on O'Kane's acceptance of responsibility as demonstrated by his restitution to his employer of the full value of his fraud prior to adjudication; his immediate admission of his conduct to authorities; and his continued cooperation during the investigation. (Appellant's Adden. at 7.) Our authorities, as well as the Guidelines themselves, make clear that this is an insufficient basis for departure.
This court has recognized that voluntary restitution can be made under circumstances which warrant the district court's consideration of a departure. In United States v. Garlich, 951 F.2d 161 (8th Cir. 1991), the defendant had repaid the victims of his fraud over $1.4 million even before he was indicted. Upon entering a plea of guilty, the sentencing court determined that the total harm caused by Garlich's crime was only $253,000. In remanding for resentencing we said, "Although the district court gave Garlich this reduction [for acceptance of responsibility], we conclude the district court should consider whether the extent and timing of Garlich's restitution are sufficiently unusual to warrant a downward departure." Id. at 163. In this circuit, after Garlich, a six-fold repayment of harm, made over the objection of one's own counsel, a full year before indictment, may be sufficiently outside the heartland of cases to warrant the district court's consideration of departure.
The government's brief does not correctly account for the increase due to aggregate quantity. It contends that the offense level under Section 3D1.2(d) would be 21, due to a two level increase for a quantity between $200,000 and $350,000. But O'Kane's unobjected-to relevant offense conduct contained in the PSIR includes $304,667 of fraud and $73,562.50 of money laundering under 18 U.S.C. §§ 1956 and 1957. The total, $378,229.50, requires a three level increase. See USSG § 2S1.2(b) (2)