Opinion ID: 3185495
Heading Depth: 1
Heading Rank: 1

Heading: Brenda Laws

Text: In sentencing Brenda Laws, the district court overruled her objection to three sentencing enhancements, which collectively raised her total offense level from 22 to 32. Based on the total offense level of 32, the court sentenced Laws to 64 months on the conspiracy count and 30 months on the false claims count, to run concurrently. 1 The indictment alleged one count of conspiracy against all four defendants (Count 1), and six separate counts of making false claims to the IRS (Counts 2–7). Brenda Laws was found guilty on Counts 1 and 7; Milton Laws was found guilty on Counts 1 and 7; Lareka Laws was found guilty on Counts 1, 2, and 5; and Jameel Laws was found guilty on Counts 1 and 4. -3- Laws appeals the application of the three enhancements, arguing that they were erroneously applied given the facts and circumstances of her offense. We review the district court’s interpretation and application of the Sentencing Guidelines de novo, and review findings of fact for clear error. United States v. Ault, 598 F.3d 1039, 1040 (8th Cir. 2010). The first sentencing enhancement Laws challenges is the 2-level sophisticated means enhancement under USSG § 2B1.1(b)(10)(C). That enhancement applies when the offense involved “especially complex or especially intricate . . . conduct.” USSG § 2B1.1(b)(10)(C), Application Note 9(B) (2013). The relative sophistication of a scheme of fraudulent conduct is “viewed in light of the fraudulent conduct and differentiated, by assessing the intricacy or planning of the conduct, from similar offenses conducted by different defendants.” United States v. Hance, 501 F.3d 900, 909 (8th Cir. 2007). Thus, for the enhancement to apply, the government must show that the offense conduct at issue was notably more complex or intricate than the garden-variety version of that offense. Id. The question is not whether the offense is generally considered a sophisticated one—for instance, securities fraud as compared to simple assault. Rather, the question is whether the particular offense conduct was more than usually sophisticated when compared to the offense in its basic form. Id. at 909–11 (holding that renting a post office box under an assumed name and using that box to carry out a fraud scheme was not distinguishable “from the multitude of other mail fraud cases”). Here, the district court concluded that the “repetitive and coordinated conduct” involved in the offense made its means sophisticated. Even if any single part of the offense was not particularly complicated, “repetitive and coordinated conduct can amount to a sophisticated scheme.” United States v. Sethi, 702 F.3d 1076, 1079 (8th Cir. 2013) (quoting United States v. Fiorito, 640 F.3d 338, 351 (8th Cir. 2011)). Importantly, however, mere repetition is not sufficient to make an offense sophisticated. Instead, the sophistication of the offense conduct is associated with the -4- means of repetition, the coordination required to carry out the repeated conduct, and the number of repetitions or length of time over which the scheme took place. See, e.g., Fiorito, 640 F.3d at 351 (scheme required coordinating sale or refinancing of multiple homes, took place over the course of three years, and involved at least 11 victims); United States v. Bistrup, 449 F.3d 873, 883 (8th Cir. 2006) (scheme required repeatedly lying to victims, was maintained by using later-acquired funds to make partial payments to earlier victims, required the use of multiple financial accounts, and took place over almost five years); United States v. Finck, 407 F.3d 908, 915 (8th Cir. 2005) (scheme to obtain vehicles required obtaining multiple false confirmations that money had been transferred and coordinating sale of multiple vehicles in different states). The government argued, in support of the enhancement, that the offense in this case involved opening and closing over 20 bank accounts for the purpose of receiving fraudulent refunds; filing tax returns without a preparer name listed; filing tax returns listing false addresses, “which made it difficult to verify information with the victims”; using P.O. boxes to receive tax refunds and correspondence; and filing over 200 fraudulent returns. See USSG § 2B1.1(b)(10)(C), Application Note 9(B); Hance, 501 F.3d at 910; Fiorito, 640 F.3d at 351; United States v. Huston, 744 F.3d 589, 592 (8th Cir. 2014). Tax fraud is generally a sophisticated offense, and any single one of the aggravating factors here may not be sufficient to elevate the offense conduct beyond the ordinary version of the offense. Moreover, we are not convinced that the mere repetitive conduct as it played out in this particular case rendered it sophisticated. But in combination, the multiple bank accounts, the use of multiple P.O. boxes, the filing of returns with no preparer listed, and the filing of returns listing false addresses demonstrates a carefully-considered attempt to conceal the nature of the scheme, to make identifying its multiple perpetrators more difficult, and to partially obscure the identity of the victims. See USSG § 2B1.1(b)(10)(C), Application Note 9(B). This, combined with the fact that at least six people were involved in executing the scheme and collectively managed to file more than 200 -5- fraudulent returns claiming over $1.7 million in refunds, makes the offense conduct in this case “notably more intricate” than the garden-variety conspiracy to defraud the United States or false claim to the IRS. See Hance, 501 F.3d at 910. Accordingly, we conclude that the district court did not err in applying the sophisticated means sentencing enhancement to Brenda Laws. The second sentencing enhancement Laws challenges is the 4-level organizer or leader enhancement under USSG § 3B1.1(a). The organizer/leader enhancement applies when the defendant was “an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive.” USSG § 3B1.1(a) (2013). In determining whether to apply the enhancement, the court should consider . . . the exercise of decision making authority, the nature of participation in the 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. USSG § 3B1.1(a), Application Note 4. Though all these factors are relevant, the primary requirement is that the defendant “directed or procured the aid of underlings” in committing the offense. United States v. Adejumo, 772 F.3d 513, 532 (8th Cir. 2014), cert. denied sub nom. Okeayainneh v. United States, 135 S. Ct. 1869 (2015) (“[W]e have always required evidence that the defendant directed or procured the aid of underlings.”) (quoting United States v. Irlmeier, 750 F.3d 759, 764 (8th Cir. 2014)). In this case, there is insufficient evidence to show that Brenda Laws was an organizer or leader. The only evidence in support of this conclusion is the fact that Laws owned the house where the IRS searched and seized relevant evidence and was the “owner and subscriber” for the internet access used to submit the fraudulent tax -6- returns. There was no evidence that Laws planned the fraudulent scheme, organized or directed her co-conspirators in carrying out the scheme, or otherwise controlled the commission of the offense. The facts that Laws’ co-conspirators were her adult children and that the offense was apparently committed in her home may give rise to a general suspicion that she was likely in control of the family’s conspiracy—but this gut feeling is insufficient to support a conclusion, by a preponderance of the evidence, that Laws was an organizer or leader of the offense for purposes of this enhancement. While the district court found that Laws “exercised decision-making authority over other participants,” neither the court nor the government identified any specific evidence to support this conclusion. The evidence in the record is simply insufficient to support a finding that Laws was an organizer or leader, and application of this sentencing enhancement was erroneous. Third and finally, Laws challenges the 4-level sentencing enhancement for an offense involving 50 or more victims, under USSG § 2B1.1(b)(2)(B) (2013). For purposes of the enhancement, a victim is defined as a person who “sustained any part of the actual loss,” and actual loss means “the reasonably foreseeable pecuniary harm that resulted from the offense.” USSG § 2B1.1(b)(2)(B), Application Notes 1, 3(A)(i) (2013). Taxpayers who have false tax returns filed in their name may be considered victims of tax fraud—rather than unindicted co-conspirators, as Laws urges2—because they will be held responsible for the fraud until they can prove their innocence and because the “adverse effect of battling the bureaucracy is a reasonably foreseeable pecuniary harm.” United States v. Quevedo, 654 F.3d 819, 825 (8th Cir. 2011). 2 Such taxpayers who benefited from the fraudulent scheme may of course be unindicted co-conspirators, rather than victims, but Laws has presented no evidence that this was the case here. -7- Here, the district court found that the government identified 245 people whose names were used to submit fraudulent tax returns. All of those 245 people were audited, many were required to spend time in interviews or filling out questionnaires to prove that they were not responsible for the fraud, and any who received money to which they were not entitled will lose future refund payments from the IRS. These facts are sufficient to support the finding that Laws’ offense involved 50 or more victims, and the district court did not err in applying the corresponding sentencing enhancement. A non-harmless procedural error in calculating the applicable Guidelines sentencing range “requires a remand for resentencing.” United States v. Spikes, 543 F.3d 1021, 1023 (8th Cir. 2008) (citing United States v. Vickers, 528 F.3d 1116, 1120 (8th Cir. 2008)). Because the district court improperly imposed the organizer/leader sentencing enhancement, increasing Brenda Laws’ total offense level by four levels, we reverse and remand for resentencing.