Opinion ID: 4529972
Heading Depth: 2
Heading Rank: 1

Heading: The Loss Attributable to Conner’s Fraud

Text: 9 Conner first contends that we should vacate his sentence because the District Court erred by failing to give credit for the $90,708.15 that he returned to Fauntleroy. This amount consisted of $23,000 in deposits made before Fauntleroy became privy to his fraud and the $67,708.15 cashier’s check that he mailed Fauntleroy after his fraud had come to light. For the following reasons, we find that this argument has merit only as to the $23,000 in deposits. The Sentencing Guidelines provide for an eight-level increase to the base offense level in cases where the intended loss attributable to the defendant’s crime is more than $95,000 and less than $150,000. U.S.S.G. § 2B1.1(b)(1)(E). Because the District Court calculated the intended loss attributable to Conner’s fraud as $105,632.01, it applied the eight-level increase to Conner’s sentence. Importantly, the notes to the Sentencing Guidelines state that, in calculating the total intended loss attributable to an offense, the “[l]oss shall be reduced by . . . money returned, and the fair market value of the property returned and the services rendered, by the defendant or other persons acting jointly with the defendant, to the victim before the offense was detected.” U.S.S.G. § 2B1.1 app. note 3(E), (i). The notes define the “[t]he time of detection of the offense” as “the earlier of (I) the time the offense was discovered by a victim or government agency; or (II) the time the defendant knew or reasonably should have known that the offense was detected or about to be detected by a victim or government agency.” Id. 10 Based on the plain text of the Sentencing Guidelines, the District Court should have reduced the loss attributable to Conner’s $23,000 in deposits before his fraud was detected but correctly denied Conner credit for the $67,708.15 cashier’s check that he sent afterward. As to the $23,000, the Government argues that Conner only deposited that money into Fauntleroy’s accounts to ensure that the accounts had sufficient cash to continue funding his gambling addiction. Nonetheless, the Government concedes that the District Court should have credited this amount against the loss attributable to his fraud. We believe the $23,000 credit is appropriate for two reasons. First, the Sentencing Guidelines do not consider the motivation behind the defendant’s decision to return the funds, so long as the return occurred before detection of the crime. Second, but for the fact that Conner deposited the $23,000 back into Fauntleroy’s accounts, Conner could not have taken $105,632.01 total from those accounts for his personal use.1 Accordingly, we find that the District Court’s failure to credit this $23,000 against the loss attributable to Conner’s crime was an obvious error that affected Conner’s substantial rights and “seriously affect[ed] the fairness, integrity or public reputation of judicial proceedings.” Olano, 507 U.S. at 732. We agree with the District Court that Conner is not entitled to credit for the $67,708.15 cashier’s check that he sent to Fauntleroy on May 1, 2017. The key question 1 Fauntleroy does not challenge the District Court’s loss calculation as to the remaining $14,923.86. 11 here is whether Conner sent this check after either Fauntleroy or the FBI had detected his fraud or Conner knew or reasonably should have known that Fauntleroy or the FBI had detected his fraud. Conner argues that this fact was not considered at sentencing and that the District Court entered no findings of fact on this point. Conner’s argument is meritless. The District Court clearly stated that it was adopting the facts set out in the PSR. These facts included that (1) Fauntleroy removed Conner as her power of attorney on April 28, 2017; (2) upon learning of Fauntleroy’s decision, Conner tried to contact Fauntleroy, her caretaker, and her brother, but was rebuffed in each instance; (3) only after each of these actions, did Conner mail the check to Fauntleroy. Conner failed to object to these findings of fact, and our precedent permits “a sentencing court [to] rely on the facts set forth in the presentence report when their accuracy is not challenged by the defendant.” United States v. Foster, 891 F.3d 93, 113– 14 (3d Cir. 2018). These facts clearly support a finding that Fauntleroy had detected Conner’s fraud by May 1, 2017 or, at the very least, that Conner “knew or reasonably should have known that the offense was detected or about to be detected by” Fauntleroy. U.S.S.G. § 2B1.1 app. note 3(E)(i)(II). We therefore decline to find that the District Court committed error, let alone plain error, in deciding not to reduce the loss attributable to Conner’s fraud by the $67,708.15 cashier’s check he sent to Fauntleroy. 12 Accordingly, we will remand the case back to the District Court for resentencing with instructions to credit $23,000 against the loss attributable to Conner’s fraud. The total loss, therefore, should be entered as $82,632.01. We leave the Guidelines calculation to the District Court, consistent with our findings here. B. The Admission of Ms. Fauntleroy’s Prior Testimony Conner next contends that the District Court erred in admitting at trial Fauntleroy’s prior sworn testimony before the ODC. Neither party disputes that Fauntleroy was unavailable to testify at trial. Instead, Conner contends that the District Court abused its discretion in admitting Fauntleroy’s testimony under Federal Rule of Evidence 804(b)(1) because he did have an opportunity, and similar motive, to develop Fauntleroy’s testimony at the ODC hearing by cross examination. In addition, he argues that even if the District Court did not abuse its discretion under Rule 804(b)(1), his Sixth Amendment right to confront a witness against him was violated because Fauntleroy’s testimony “lacked any indicia of reliability.” Appellant Br. at 28–32. Each of Conner’s arguments is easily dispatched. First, as to Rule 804(b)(1), Conner urges us to find that his motive in developing Fauntleroy’s testimony at the ODC hearing was not similar to the motive he would have had in developing her testimony at trial. Specifically, Conner contends that at the ODC hearing his motive “was to develop testimony to establish that he did not violate his fiduciary duties under the power of attorney and that he did not violate his fiduciary 13 duties under the power of attorney and that [Fauntleroy] authorized all transactions, including his personal use of her funds.” Appellant Br. at 25. That motive, Conner contends, contrasts with his motive at trial, which was “to develop evidence that would establish that he did not devise or participate in a wire fraud scheme to steal her funds.” Id. at 25–26. Conner conveniently skirts over the fact that the Government’s theory for how Conner perpetrated this wire fraud against Fauntleroy was precisely through the abuse of his fiduciary relationship with Fauntleroy. That relationship, Conner acknowledges, was a subject he had motive to explore through examination at the ODC hearing. Accordingly, during his extensive cross-examination of Fauntleroy, Conner had the incentive to attack Fauntleroy’s credibility and to cast doubt on her testimony that she never authorized Conner to use her money to fund his gambling habit, that he never requested such authorization, and that she would not have granted it had he done so. That is all our precedent requires. See Kirk v. Raymark Indus., Inc., 61 F.3d 147, 166 (3d Cir. 1995) (“The similarity of motive requirement assures that the earlier treatment of the witness is the rough equivalent of what the party against whom the statement is offered would do at trial if the witness were available to be examined by that party.” (internal quotation marks and citations omitted)). Second, Conner also argues that the District Court erred in applying Rule 804(b)(1) because he did not have an opportunity to cross-examine Fauntleroy at the ODC hearing. That is so, he argues, because he did not receive a copy of Fauntleroy’s 14 complaint against him or her prior statements until 15 minutes before the hearing began. Id. This argument fails, however, for several reasons, including that (1) Conner does not point to any inconsistent statement or allegation in the complaint that he did not attempt to develop through cross-examination; (2) even if he had done so, “prior opportunity” to develop a witness’s testimony does not mean that the defendant had to have access to all potentially useful evidence during the witness’s earlier testimony; and (3) here, Conner did have access to Fauntleroy’s complaint, even if only for a short time before the hearing. Contrary to Conner’s arguments, the record reflects that Conner conducted a thorough cross-examination of Fauntleroy that touched on the same subject matter covered by his criminal case. This opportunity to cross-examine Fauntleroy, despite the different type of hearing, is sufficient to satisfy that requirement under Rule 804(b)(1). See Kirk, 61 F.3d at 164 (“[T]estimony must be taken at a hearing, deposition, or civil action or proceeding.”). Third, Conner lastly contends that admitting Fauntleroy’s prior testimony also violated his Sixth Amendment rights because her testimony was unreliable. This argument is also unavailing. At the outset, we note that because Conner did not raise this argument below, we review for plain error. A careful review of the record reveals no such error here. Conner fails to cite any case law that testimony admissible under Rule 804(b)(1) may nonetheless violate the Sixth Amendment if the defendant can show that it is unreliable. To the contrary, the admissibility of former testimony does not hinge on 15 indicia of reliability. See Crawford v. Washington, 541 U.S. 36, 68–69 (2004). Even if he had cited such case law, he could not show that “the error is clear or obvious, rather than subject to reasonable dispute.” Lee, 612 F.3d at 178 n.6 (internal quotation marks and citations omitted). Indeed, Conner’s repeatedly urged the jury to find Fauntleroy’s testimony unreliable. See App. 1117–19, 1134–39. Despite those arguments and Conner’s own testimony, the jury, in voting to convict on all 20 counts, apparently did not find Fauntleroy’s testimony unreliable such that we can find clear or obvious error here. Accordingly, we find that the District Court neither abused its discretion under Rule 804(b)(1) nor committed plain error when it admitted the prior sworn testimony of Fauntleroy. We therefore reject Conner’s arguments that his judgment of conviction should be overturned.