Opinion ID: 2995657
Heading Depth: 2
Heading Rank: 1

Heading: Relevant Conduct Adjustment

Text: Leonard first argues that the district court erred when it considered the tax frauds Leonard committed on behalf of others as relevant conduct under section 1B1.3(a) of the Sentencing Guidelines. This conduct was initially charged in the indictment, but dismissed pursuant to the government’s motion. At Leonard’s sentencing hearing, the district court determined that she caused a total financial loss of $46,497. This figure was based on the loss of $4,461, which resulted from the fraud to which Leonard pled guilty, plus an additional loss of $42,036, resulting from the false income tax returns filed on behalf of the five other individuals for 1995, 1996 and 1997. Leonard argues that the district court’s calculation is flawed: that the $42,036 should not have been included in the total loss she caused because it does not constitute relevant conduct under the Guidelines. She asserts that this conduct is not part of the same course of conduct or a common scheme or plan as the offense to which she pled guilty in Count Eleven. We disagree. A district court’s determination that certain behavior amounts to relevant conduct for sentencing purposes under the Guidelines is a factual finding and will only be disturbed if clearly erroneous. United States v. Nunez, 958 F.2d 196, 198 (7th Cir. 1992). Generally, we will affirm the district court’s finding of relevant conduct where the record reveals that the district court relied on the recommendations of the PSR and carefully considered the government’s theory on the relationship between the offense of conviction and the additional conduct. United States v. Patel, 131 F.3d 1195, 1204 (7th Cir. 1997). The United States Sentencing Guidelines permit a sentencing court to consider certain relevant conduct, with which the defendant has not been charged, in calculating a defendant’s base offense level for sentencing purposes. United States v. Taylor, 272 F.3d 980, 982 (7th Cir. 2001). Pursuant to section 1B1.3(a)(2) of the Guidelines, relevant conduct includes any acts or omissions that were part of the same course of conduct or common scheme or plan as the offense of conviction. Application Note 9(A) to section 1B1.3 defines common scheme or plan as two or more offenses that are substantially connected to each other by at least one common factor, such as common victims, common accomplices, common purpose, or similar modus operandi. Further, Application Note 9(B) provides that offenses that are not part of a common scheme or plan may be part of the same course of conduct if they are connected or sufficiently related to each other as to warrant the conclusion that they are part of a single episode, spree or ongoing series of offenses. Factors to be considered in this analysis include the degree of similarity of the offenses, the regularity (repetitions) of the offenses, and the time interval between the offenses. U.S. Sentencing Guidelines Manual sec. 1B1.3(a), cmt. n. 9(b). In Leonard’s case, all the financial transactions considered fall within the scope of relevant conduct as defined in section 1B1.3(a)(2). Although Leonard pled guilty to filing a single false tax return, the record clearly shows that she engaged in additional fraudulent acts that are most certainly relevant conduct to her offense of conviction. First, all the financial transactions in which Leonard was involved establish a common scheme or plan, as defined in Application Note 9(A). For example, each transaction involved the filing of false tax returns seeking a refund. The I.R.S. was a common victim in every instance. See, e.g., United States v. Brierton, 165 F.3d 1133, 1137 (7th Cir. 1999) (affirming a relevant conduct enhancement because a credit union was the common victim where defendant was fraudulently altering loans and falsifying other financial records at the credit union). Finally, Leonard’s modus operandi was the same for every transaction in that sheattached an altered or falsified W-2 Form showing false wages and withholdings to each return. Accordingly, the several common factors establish that Leonard’s offenses are substantially connected and give rise to a common scheme or plan. In addition, Leonard’s filing of her own 1997 false return and the preparation of false returns for others in previous years amounts to the same course of conduct pursuant to the standards set forth in Application Note 9(B). In considering the similarity of the conduct in question, a sentencing court must look to the identity of the participants and the nature, structure and location of the allegedly related transactions. United States v. Cedano-Rojas, 999 F.2d 1175, 1180 (7th Cir. 1993). As described above, a distinct similarity among all of Leonard’s financial transactions is evident. These offenses occurred with a degree of regularity and temporal proximity; the false tax returns were filed in consecutive years. Leonard argues that temporal proximity is not established in her case because the other illegal conduct was at least a year before the offense to which she pled guilty. The fact that the transactions were each a year apart does not affect the proximity; a tax return is only filed once a year. See, e.g., U.S. Sentencing Guidelines Manual sec. 1B1.3(a), cmt. n. 9(b) (stating a defendant’s failure to file tax returns in three consecutive years appropriately would be considered a part of the same course of conduct because such returns are only required at yearly intervals). Again, we are satisfied that the prior transactions here are sufficiently related to the offense of conviction and their consideration as relevant conduct is warranted. Leonard argues that after the first ten counts of the indictment were dismissed, all that remained was a one count indictment alleging her own fraudulent claim, a course of conduct which lasted about one day. While this is true, the guidelines permit the sentencing court to make certain adjustments based on offenses outside the four corners of the indictment. The purpose for the relevant conduct adjustment in sentencing is to allow the sentence to reflect the seriousness of an offense rather than being limited by the specific charge set out in the indictment. Taylor, 272 F.3d at 982. Accordingly, we conclude that the district court’s conclusions were based on ample evidence that Leonard’s prior illegal acts were relevant conduct to the offense of conviction.