Opinion ID: 205320
Heading Depth: 2
Heading Rank: 3

Heading: The Role Adjustment

Text: The Guidelines provide for a four-step increase in offense level if the defendant was an organizer or leader of a criminal activity that either involved five or more participants or was otherwise extensive. Guidelines § 3B1.1(a) (emphasis added). Organizers or leaders of non-extensive criminal activities are subject only to the two-level enhancement of Guidelines § 3B1.1(c). United States v. Carrozzella, 105 F.3d 796, 802 (2d Cir.1997) ( Carrozzella ), abrogated in part on other grounds by United States v. Kennedy, 233 F.3d 157, 160-61 (2d Cir.2000). For any part of § 3B1.1 to apply there must have been more than one participant. Guidelines Chapter 3, Part BRole in the Offense, Introductory Commentary; see, e.g., id. § 3B1.1 Application Note 2 (To qualify for an adjustment under this section, the defendant must have supervised or led at least one other participant[].); United States v. Garcia, 413 F.3d 201, 223-24 (2d Cir.2005) (discussing § 3B1.1(c)), cert. denied, 552 U.S. 1154, 128 S.Ct. 1098, 169 L.Ed.2d 831 (2008); United States v. Zichettello, 208 F.3d 72, 107 (2d Cir.2000) (discussing § 3B1.1(a)), cert. denied, 531 U.S. 1143, 121 S.Ct. 1077, 148 L.Ed.2d 954 (2001). A participant, for purposes of § 3B1.1, is a person who is criminally responsible for the commission of the offense, but need not have been convicted. Guidelines § 3B1.1 Application Note 1; see, e.g., Ware, 577 F.3d at 453. In the present case, the district court applied only the otherwise extensive branch of § 3B1.1(a), stating that this Court finds that this was an extensive scheme (S.Tr. 21; see also id. at 9-10 (Skys really didn't need five or more people. He had Ms. Cunningham and then he had the unwitting participation of other people at these various financial institutions.)). Skys contends that § 3B1.1 is not applicable at all, arguing that the district court did not find that there was any criminally responsible participant other than Skys himself (Skys brief on appeal at 30-31); and he contends that the court gave no adequate explanation for its determination that Skys's activity was extensive within the meaning of subsection (a) ( id. at 31-33). We agree that the district court's findings and explanation were inadequate. Before imposing a role adjustment, the sentencing court must make specific findings as to why a particular subsection of [the] § 3B1.1 adjustment applies. Ware, 577 F.3d at 451; see, e.g., United States v. Espinoza, 514 F.3d 209, 212 (2d Cir.) (Our precedents are uniform in requiring a district court to make specific factual findings to support a sentence enhancement under [Guidelines] § 3B1.1. (internal quotation marks omitted)), cert. denied, 553 U.S. 1045, 128 S.Ct. 2458, 171 L.Ed.2d 253 (2008); United States v. Patasnik, 89 F.3d 63, 69 (2d Cir.1996) ([A]n implicit finding is not enough.); Carter, 489 F.3d at 538 (Although this requirement of making specific factual findings may interfere with the smooth operation of the sentencing hearing, we require specific factual findings to permit meaningful appellate review, (internal quotation marks omitted)). To be sufficiently specific to permit meaningful appellate review[, i]t is not enough for the court merely to repeat or paraphrase the language of the guideline and say conclusorily that the defendant meets those criteria. Ware, 577 F.3d at 452. And although a sentencing court may sometimes satisfy its obligation to make findings by adopting the factual statements in the defendant's presentence report . . ., adoption of the PSR does not suffice if the PSR itself does not state enough facts to permit meaningful appellate review. Id. ; see, e.g., Carter, 489 F.3d at 538-39. With respect to the extensiveness branch of § 3B1.1(a), the Guidelines commentary states that [i]n assessing whether an organization is `otherwise extensive,' all persons involved during the course of the entire offense are to be considered. Thus, a fraud that involved only three participants but used the unknowing services of many outsiders could be considered extensive. Guidelines § 3B1.1 Application Note 3 (emphases added). Further, as noted in Carrozzella, the background commentary states that the adjustments in Guidelines § 3B1.1 are based upon the size of a criminal organization ( i.e., the number of participants in the offense) and the degree to which the defendant was responsible for committing the offense. Guidelines § 3B1.1 Background. This commentary and our decision in [ United States v. ] Liebman, [40 F.3d 544 (2d Cir.1994)] indicate that an adjustment under Guidelines § 3B1.1 is based primarily on the number of people involved, criminally and noncriminally, rather than on other possible indices of the extensiveness of the activity. . . . . . . . . . . . At the very least, Section 3B1.1's `otherwise extensive' prong demands a showing that an activity is the functional equivalent of an activity involving five or more participants. Carrozzella, 105 F.3d at 802, 803 (first emphasis ours, second emphasis in original) (other internal quotation marks omitted). Thus, this branch of § 3B1.1(a) is not so much about extensiveness in a colloquial sense as about the size of the organization in terms of persons involved that a defendant `organize[d]' or `le[d].' Carrozzella, 105 F.3d at 803. Accordingly, we have stated that [t]hree factors determine whether an activity [wa]s otherwise extensive: (i) the number of knowing participants; (ii) the number of unknowing participants whose activities were organized or led by the defendant with specific criminal intent; [and] (iii) the extent to which the services of the unknowing participants were peculiar and necessary to the criminal scheme.  Rubenstein, 403 F.3d at 99 (quoting Carrozzella, 105 F.3d at 803-04 (emphases ours)). The role-adjustment findings made in the present case do not meet the above standards. First, in order for either branch of § 3B1.1(a) to be applicable, there must have been, as discussed above, at least one person, in addition to Skys, who was a participant, i.e., a person who, although perhaps not convicted, is criminally responsible for the commission of the offense. The district court stated that [Skys] had Ms. Cunningham and then he had the unwitting participation of other people at these various financial institutions (S.Tr.10); but while the statement that Skys had Cunningham is sufficient to indicate that Cunningham provided Skys with services, it is not a finding that Cunningham acted with knowledge that her conduct was criminal. Nor did the court make such a finding as to any other individual. The court's reference to the persons at the various financial institutions as unwitting ( id. ) tends to negative any implication that any of those persons could properly be deemed criminally responsible. Without a finding identifying at least one person other than Skys who was criminally responsible, the § 3B1.1(a) role adjustment was inappropriate. Given that, as to wire and bank fraud, Skys was convicted not only under 18 U.S.C. §§ 1343 and 1344 but also under 18 U.S.C. § 2, it would be surprising if there were not another criminally responsible person. But without an informative finding by the district court, no meaningful review is possible. Second, the court gave no objectively reviewable explanation for its characterization of Skys's criminal activity as extensive, Although the government, as described in Part I.C. above, had named four individuals (other than Skys) whom it viewed as criminally responsible participants, the district court made no finding as to any of those individuals, nor any finding that there was a significant number of persons who were culpable. And although the government contended that the number of Backspace2 investors plus the Florida dentist and the financial institutions totaled nearly 50 victims targeted by Skys, the court made no finding as to that contention eithereven assuming that such a finding would not constitute an impermissible overlap with an appropriate number-of-victims enhancement, see Carrozzella, 105 F.3d at 802-03. Nor did the court make a finding, as contemplated by § 3B1.1 Application Note 3, that quantified the persons who were involved during the course of Skys's offense, or a finding that many peopleor indeed anyone other than Cunninghamhad provided Skys with services. Instead, the court found that Mr. Skys led a life that was entirely a life of fraud, and whenever he needed to offer another artifice, he did it, whether it was a forged stock certificate, a bogus account statement, a manipulation of e-mails. Whatever it took, the defendant rose to the occasion. It was not a momentary lapse. It was extensive. And Mr. Skys was constantly moving on to new targets of opportunity. And so a four-level enhancement is warranted in this case. (S.Tr. 21-22 (emphases added).) Statements that Skys led entirely a life of fraud and was constantly seeking new victims indicate repeated criminal conduct, but do not constitute findings of extensiveness except in a temporal or a colloquial sense. And those statements, like the statements that Skys did [w]hatever was required whenever a fabrication was needed, are not findings of fact that are susceptible to any meaningful appellate review. They are conclusory observations based on premises that the court did not articulate. Accordingly, we remand to permit the district court to supplement the record with appropriate factual findings as to why the criteria for application of the extensiveness branch of § 3B1.1(a) are met. In so remanding, we do not mean to preclude the court from making factual findings, if the record warrants, as to the involvement of four persons in addition to Skys who were criminally responsible, at least one of whom was organized or led by Skys, and therefore applying the other branch of § 3B1.1(a). If the court concludes that the criteria for neither branch are met, it must recalculate Skys's Guidelines-recommended range of imprisonment without an adjustment under that subsection, but with an adjustment under subsection (c) of § 3B1.1 if appropriate.