Opinion ID: 695554
Heading Depth: 2
Heading Rank: 1

Heading: Enhancement Under U.S.S.G. Sec. 2F1.1(b)(2)

Text: 11 Mr. Michalek argues that the district court erred in enhancing his sentence for more than minimal planning because he did not engage in more planning than is typical for the commission of this crime. Similarly, he contends that the multiple victim enhancement was inappropriate because bankruptcy fraud typically involves multiple victims. Therefore, he concludes, this aspect of the offense already must be accounted for in Sec. 2F1.1's base offense level. The government responds that the enhancement was appropriate in light of Mr. Michalek's complex scheme which defrauded multiple victims.
12 We review a district court's enhancement for more than minimal planning only for clear error. United States v. Mau, 45 F.3d 212, 214 (7th Cir.1995); United States v. Harrison, 42 F.3d 427, 430 (7th Cir.1994). Guideline Sec. 2F1.1(b)(2)(A) authorizes a two-level enhancement if the defendant's fraud involved more than minimal planning. The Sentencing Commission noted that more than minimal planning may exist: (1) when there has been more planning than is typical for commission of the offense in a simple form; (2) when significant affirmative steps were taken to conceal the offense, other than conduct to which Sec. 3C1.1 ... applies; or (3) when there have been repeated acts over a period of time, unless it is clear that each instance was purely opportune. U.S.S.G. Sec. 1B1.1, comment. (n. 1(f)); see also U.S.S.G. Sec. 2F1.1, comment. (n. 2) (referencing the definition). The transcript of the sentencing hearing indicates that the district court focused upon the first factor to justify the enhancement. It also commented on Mr. Michalek's steps to conceal the crime. The court described the fraudulent scheme as complex and specifically noted that Mr. Michalek's concealment of artwork, sales of artwork, and receipt and use of the sales proceeds involved more than the typical planning that was necessary for such a crime. R. 45 at 2-3. 13 After reviewing the record, we cannot say that the district court's finding is clearly erroneous. Mr. Michalek engaged in a protracted course of conduct which served to conceal assets from both the bankruptcy trustee and his creditors for over four years. Cf. United States v. Brown, 47 F.3d 198, 205 (7th Cir.1995) (indicating that duration and nature of fraudulent scheme were factors relevant to determination that it involved careful planning); United States v. Lindholm, 24 F.3d 1078, 1086 (9th Cir.1994) (noting, in bankruptcy fraud case, that [t]he fact that defendant's behavior was repeated and involved an extended period of time implicates appellant's scheme as involving more than minimal planning); United States v. Loscalzo, 18 F.3d 374, 388 (7th Cir.1994) (indicating that duration of fraudulent scheme was relevant factor). When Mr. Michalek sold these concealed assets, he planned the transactions to avoid detection. One purchaser paid him $22,000 in cash. Others provided personal checks made out to Barbara Kadlec. These checks were then distributed across Michalek's personal and business accounts. The record also indicates that Mr. Michalek carefully monitored the cash level of the video store's account and that he siphoned proceeds whenever he felt the account balance was too high. Finally, the record establishes that Mr. Michalek engaged in detailed planning to deceive the trustee about the value of the Tiffany-style lamp. Mr. Michalek presented two false documents to the trustee, one of which was a phony appraisal written on an appraisal company's stationery. These facts support the district court's finding that Mr. Michalek's offense involved planning beyond what is typical for the commission of bankruptcy fraud, or other fraud, in its simple form. See United States v. Bean, 18 F.3d 1367, 1370 (7th Cir.1994) (indicating that relevant inquiry is the crime of which the defendant has been convicted, not ... the particular way in which he committed it); cf. United States v. Beard, 913 F.2d 193, 199 (5th Cir.1990) (holding that district court did not err in finding more than minimal planning where evidence established that defendant had engaged in systematic scheme, involving multiple banks and individuals, designed to disperse funds defendant had concealed from the bankruptcy court).
14 Moreover, even if the district court erred in ordering the more than minimal planning enhancement under Sec. 2F1.1(b)(2)(A), the Sec. 2F1.1(b)(2) enhancement nevertheless was proper under Sec. 2F1.1(b)(2)(B) because Mr. Michalek engaged in a scheme to defraud more than one victim. The guideline commentary provides that a  '[s]cheme to defraud more than one victim' ... refers to a design or plan to obtain something of value from more than one person. In this context, 'victim' refers to the person or entity from which the funds are to come directly. U.S.S.G. Sec. 2F1.1, comment. (n. 3). When assessed in the context of this commentary, the record, considered as a whole, supports the district court's finding. Mr. Michalek deceived the bankruptcy trustee by failing to report his ownership of artwork and other assets. He also failed to report his subsequent sales of certain artwork, and he concealed the sales proceeds. These actions harmed not only the trustee, but also each of Mr. Michalek's creditors. Mr. Michalek's scheme 15 was intended to result in an undervaluation of the estate in bankruptcy and the availability of less money to satisfy the demands of the creditors. Thus, [Michalek] would have obtained something of value from more than one person, that being whatever portion of the estate to which they as creditors were entitled but which was hidden[.] 16 United States v. Nazifpour, 944 F.2d 472, 474 (9th Cir.1991) (per curiam) (quotation omitted); see also United States v. Walker, 29 F.3d 908, 913 n. 3 (4th Cir.1994) (noting, in bankruptcy fraud case, that defendant's challenge to multiple victim enhancement was patently without merit). Thus, the district court did not err in ordering Mr. Michalek's sentence enhancement on this alternate basis. 9