Opinion ID: 65776
Heading Depth: 2
Heading Rank: 4

Heading: Deborah Setser's Sentence

Text: The one alleged error by Deborah Setser concerns her sentence. She argues that the district court erred in calculating the amount of loss attributable to her, determining the length of time she was part of the conspiracy, [1] and determining that the losses attributed to her were reasonably foreseeable even for those time periods during which she was part of the conspiracy. See U.S.S.G. § 1B1.3 cmt. 2 (elaborating on reasonably foreseeable standard); United States v. Carreon, 11 F.3d 1225 (5th Cir.1994). Calculation of the loss amount and other factual determinations are reviewed for clear error; legal questions about the interpretation of the Guidelines are reviewed de novo. United States v. Tedder, 81 F.3d 549, 550 (5th Cir.1996). The question at the core of the loss-calculation dispute is whether it was appropriate to consider as new losses the funds from existing investors that were reported or returned to them as profits and then reinvested in the scheme. For those situations in which the original investments occurred before Deborah Setser's involvement, but the reinvestments occurred during her involvement, the effect of including the reinvestments was to increase the loss amount and number of victims attributed to her. Using this methodology, with credit given for money returned to original investors (but not profits received by investors), the district court concluded that the loss amount attributable to Setser was $61,601,032. The principal issue presented concerns the present applicability of one of our precedents. See United States v. Deavours, 219 F.3d 400, 403 (5th Cir.2000). There, this court had addressed the issue of loss calculation in a Ponzi scheme. We concluded that no credit should be given for money returned to investors, because money in a Ponzi scheme is returned not to compensate the victims for their losses, but to extend [the defendants'] criminal activities and the profitability thereof by prolonging the life of the scheme. Id. In fact, repayment of invested funds in a Ponzi scheme serves to increase the total returns from [the] criminal activity, and endanger yet more victims. Id. at 404. Though Deavours has the effect of increasing the responsibility for losses on long-term conspirators, Deborah Sester argues that its reasoning prevents a late-arriving conspirator from being made responsible for losses that occurred from money invested before joining the scheme. Just as a defendant cannot receive credit for returning money to an investor, she cannot be subject to double counting when an investor chooses to reinvest profits in the scheme. The government argues that Deavours has been superseded by a 2001 amendment to the sentencing guidelines. See U.S.S.G. § 2B1.1 cmt. 3(E)(i) (explaining that [l]oss shall be reduced by the ... money returned ... by the defendant, to the victim before the offense was detected); U.S.S.G., 2002 Supp. to App'x C, amend. 617, at 184-85 (effective Nov. 1, 2001). In its explanation of the change to the application note, the Sentencing Commission contrasted Deavours with cases from other circuits that had permitted offsetting of payments to investors up to the amount they had invested. It stated explicitly that the amendment adopt[ed] the approach of the Eleventh Circuit in order to resolve[] a circuit split. Supp. to App'x C at 184-85. While no precedent has discussed the effect of the 2001 amendment on Deavours, we hold that Deavours has been superseded. Therefore, the district court's method of loss calculation was correct. Deborah Setser was given credit for money that was returned to investors, but such credits were offset when the money was reinvested into the scheme. Because it treated such reinvested money as new losses, this had the effect of increasing the amount for which she was responsible. Indeed, the scheme had such rapid investment turnaround that Setser was, under this approach, liable for the entirety of the losses attributed to the conspiracy. Net losses were suffered only by those investors who remained in the scheme at the time of its fall in 2003. Under this loss calculation method, it also was reasonable to conclude that investors became victims again when they reinvested, thus explaining the district court's conclusion about the number of victims for whom Deborah Setser was responsible. In one case that Setser cites to us, we held that the defendant could not be held responsible at sentencing for acts of child sexual abuse perpetuated before his involvement in a conspiracy, when he had been convicted only of distributing videotapes recording the sexual abuse. United States v. Reinhart, 357 F.3d 521, 527-28 (5th Cir.2004). The underlying offense had been entirely completed before the defendant became involved in the conspiracy, and thus he could not have reasonably foreseen them in a prospective only sense. Id. at 528. But here, the rationale for counting the victims a second time is that a new offense occurred when the investors' money was plowed back into the conspiracy, justifying the different outcome. Setser's ability to foresee the losses is the critical point. While she quotes the district court's observation that she had less involvement than did her brother Gregory Setser, she makes no meaningful argument of error in the district court's ultimate conclusion that she could have reasonably foreseen the losses caused by the conspiracy during the time of her participation. While Deborah Setser was primarily involved in the HRN real estate fraud, the government introduced evidence that she had involvement in IPIC operations. Deborah Setser also raises an as applied Sixth Amendment challenge to the district court's calculation of loss amount and number of victims at her sentencing, and a Fifth Amendment challenge with regard to acquitted conduct for which she claims she was held responsible at sentencing. It is settled in this circuit that a sentencing judge is entitled to find by a preponderance of the evidence all the facts relevant to the determination of a Guidelines sentencing range. United States v. Lewis, 476 F.3d 369, 389 (5th Cir.2007). Setser was sentenced well below both the statutory maximum range (65 years) and the guidelines range (life) for her offenses. The case law does not support a Sixth Amendment challenge in such circumstances. Her Fifth Amendment argument is also foreclosed by circuit precedent. United States v. Pineiro, 470 F.3d 200, 206 (5th Cir.2006). The convictions and sentences of both defendants are AFFIRMED.