Opinion ID: 774104
Heading Depth: 2
Heading Rank: 4

Heading: Challenges to the Imposition of Sentence

Text: 40 King challenges his sentence on a number of grounds. We address each in turn.
41 King contends the district court erred in imposing a fourlevel enhancement of his offense level for being the organizer or leader of a criminal enterprise. See U.S.S.G. § 3B1.1(a) (If the defendant was an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive, increase [the offense level] by 4 levels.). We review interpretation of the Sentencing Guidelines de novo, United States v. Smith, 175 F.3d 1147, 1148 (9th Cir. 1999), but review application of the Guidelines to the facts for abuse of discretion, Koon v. United States, 518 U.S. 81, 91 (1996). We examine a factual finding that a defendant was an organizer or leader for clear error. United States v. Avila, 95 F.3d 887, 889 (9th Cir. 1996). Organizer or leader status must be shown by a preponderance of the evidence. Id. 42 King claims the others working in his operation were innocent clerical workers and, therefore, do not qualify as participants under the Guidelines. He took the position at sentencing that all of his employees were basically very young people who came in and did clerical work for[King] and did errands, and demonstrated no criminal culpability. The government did not dispute this characterization. According to note 1 of § 3B1.1 of the Sentencing Guidelines, [a] `participant' is a person who is criminally responsible for the commission of the offense, but need not have been convicted. A person who is not criminally responsible for the commission of the offense . . . is not a participant. Thus, absent proof that King's employees were participants in the Final Notice scheme as defined in the Guidelines, enhancement based on the five or more prong of § 3B1.1(a) was improper. 43 King also argues he was the only person involved in the Final Notice scheme. Because the otherwise extensive prong of the Guideline requires at least one other criminally culpable participant, he reasons, the enhancement should not apply to his crime. See U.S.S.G. § 3B1.1, cmt. n.2 (To qualify for an adjustment under this section, the defendant must have been the organizer, leader, manager, or supervisor of one or more other participants.); United States v. Mares-Molina, 913 F.2d 770, 773 (9th Cir. 1990). The government counters that the Presentence Report, the findings of which the court adopted, could be read to include King's ex-wife as a criminally responsible participant in the Final Notice scheme. 44 The district court made no findings on either issue, erroneously concluding that the otherwise extensive clause permitted the enhancement even in the absence of other culpable participants. Therefore, we remand to the district court for further factfinding and a reconsideration of its decision to apply the enhancement in light of the preceding discussion.
45 King contends the district court's calculation of the total amount of loss as being in the range of $200,000 to $350,000 was unsubstantiated. We review estimates of loss for clear error. United States v. Barnes, 125 F.3d 1287, 1290 (9th Cir. 1997). 46 King disputes the government's method of estimating the loss figure, and argues that the court's decision was clearly erroneous to the extent it relied on the government's figures in deriving its own estimate. The government responds that the estimate was based in large part on the amount proposed by King's counsel at sentencing; 4 thus, even if the court finds the estimate unreasonable, King has waived the right to appeal it. 47 The government based its loss estimate on several sources. It cited $426,824 worth of checks in small denominations deposited in King's Las Vegas bank accounts between July 1991 and April 1995, as well as the $272,999 received from 900 number calls. King argues that many of the checks were in denominations that could not be attributed to the Final Notice scheme. Moreover, he contends the payments from the 900 numbers cannot be traced directly to the charged time period. 48 To determine the loss from the counterfeit postal meter stamp, prosecutors provided two estimates of the number of postcards shipped with counterfeit stamps. The first, based on an extrapolation of estimates of the number of postcards that fit in a postal tray, the average weight of each postcard and the number of trays King shipped by Federal Express to the United States, came to 1.7 million. The prosecution used records of the number of postcards King had printed in Canada to arrive at its second estimate, 1.79 million. Using the 1.7 million figure, the government estimated King had used his counterfeit stamps to cause a loss in excess of $302,000. King responds that the prosecution's records do not show the contents of his Federal Express shipments to the United States, and complains that the government never produced any Canadian printing records to defense counsel or to the court. 49 The Sentencing Guidelines provide a base offense level for fraud. Based on the amount of monetary loss the fraud caused, the level increases incrementally. U.S.S.G. § 2F1.1(a), (b)(1). For the purposes of subsection (b)(1), the loss need not be determined with precision. The court need only make a reasonable estimate of the loss, given the available information . . . . The offender's gain from committing the fraud is an alternative estimate that ordinarily will underestimate the loss. U.S.S.G. § 2F1.1, cmt. n.9; see also United States v. Lawrence, 189 F.3d 838, 846 (9th Cir. 1999). 50 Noting that the amount of societal harm caused by the scheme was impossible to calculate precisely, the court estimated the loss for enhancement purposes at between $200,000 and $350,000. Given the conflicting estimates presented to the court, the difficulty inherent in calculating loss caused by a mail fraud scheme and the liberality embodied in § 2F1.1 of the Guidelines, the court did not clearly err in determining the amount of loss and the attendant increase in offense level. Therefore, we affirm the portion of the sentence based on the court's calculation of the loss; we need not address the government's waiver argument. 51
52 King challenges the enhancement for violation of an administrative order, claiming that even though his wife had been given notice of the Postal Service's order tocease and desist from falsely representing directly or indirectly, in substance and effect, whether by affirmative statements, implications or omissions that . . . Recipients of Respondents' post cards have won a prize which is more valuable than the required remittance, he had never received adequate notice of the order. He also claims the district court failed to specify what conduct was prohibited by the order. The district court's factual findings are reviewed for clear error. Avila, 95 F.3d at 889. 53 A 1992 Postal Service Decision specifically found King bound by the Order because he had actual notice of it. The decision lists James Toledano as King's attorney, and certified mail receipts demonstrate that Toledano received copies of the decision. King argues Toledano did not represent him in the administrative matter. However, he offers no information to contradict the records of the administrative proceeding other than his own unsworn assertions. 54 Based on the evidence that King had notice of the administrative decision, the district court's decision to apply the enhancement under U.S.S.G. § 2F1.1(b)(4)(C) was not clearly erroneous. We therefore affirm the application of the enhancement.
55 King argues he did not qualify for a sentencing enhancement for commission of a crime within two years of release or while on supervised release. U.S.S.G. § 4A1.1(d) & (e). He was released from custody on May 16, 1991, meaning that the enhancement should apply under § 4A1.1(d) or (e) if he were found to have engaged in a component of the mail fraud before May 16, 1993. 56 The indictment alleges that King began devising the fraudulent scheme [b]eginning in or about July 1991. No factual basis in the record supports this date, however. King contends his first efforts to further the Final Notice  scheme began in November 1993. 57 On remand, the district court is instructed to address this argument. If it does not find that a preponderance of evidence shows that King began his efforts in furtherance of the Final Notice scheme before May 16, 1993, it must not add the three-point enhancement described in U.S.S.G. § 4A1.1(d) and (e) in its recalculation of King's sentence.
58 Under the Sentencing Guidelines, if an undischarged term of imprisonment resulted from offense(s) that have been fully taken into account in the determination of the offense level for the instant offense, the sentence for the instant offense shall be imposed to run concurrently to the undischarged term of imprisonment. U.S.S.G. § 5G1.3(b). Otherwise, the sentencing judge may impose the new sentence concurrently, partially concurrently or consecutively to achieve a reasonable punishment for the instant offense. U.S.S.G. § 5G1.3(c). 59 King contends the district court should have made his sentence concurrent with the 51-month sentence he was already serving for bank and mail fraud charges after his conviction in the District of Nevada. That conviction involved King's attempt to defraud a Bank of America branch in Nevada by depositing checks drawn on Canadian bank accounts that he had already closed, then withdrawing the money from the Nevada accounts before the bank discovered the deposits were invalid. See United States v. King, 200 F.3d 1207, 1211 (9th Cir. 1999). Because he used the Nevada accounts to deposit some of the proceeds from theFinal Notice scheme, King contends the offense relating to his prior conviction was fully taken into account in the determination of the offense level for the instant offense,  making § 5G1.3(b) applicable. This argument is meritless: the mere fact that the same Nevada accounts were involved in both convictions does not mean the prior conviction was at all taken into account in determining his offense level in this case. 60 Section 5G1.3(c), the provision affording sentencing courts the discretion to run a new sentence consecutively, concurrently or partially concurrently to a prior undischarged sentence in order to arrive at a reasonable punishment for the new offense, presents a closer question. The 1994 version of the Guidelines instructed courts to estimate a reasonable punishment by determining the hypothetical sentence if both charges had been contained in the same indictment and were therefore subject to U.S.S.G. § 5G1.2. Courts were then required to impose a sentence approximating this hypothetical penalty or state their reasons for failing to do so. See United States v. Luna-Madellaga, 133 F.3d 1293, 1295 (9th Cir. 1998). 61 The Guidelines were amended in 1995. Instead of requiring courts to engage in a hypothetical exercise, the new version mandated consideration of the following factors: 62 [T]he type and length of the prior undischarged sentence; the time served, and the time likely to be served before release, on the undischarged sentence; whether the undischarged sentence was imposed in state rather than federal court; and any other circumstances that are deemed relevant to the determination of an appropriate sentence for the instant offense. 63 Id. (citing U.S.S.G. § 5G1.3 cmt. n.3 (1995)). 64 King contends the 1994 Guidelines should apply because the conduct occurred prior to the effective date of the new version -- November 1, 1995. Sentencing courts should use the version of the Guidelines in effect on the date of sentencing unless doing so would violate the ex post facto clause. U.S.S.G. § 1B1.1. The ex post facto clause prohibits the retrospective imposition of punishment if it disadvantages the offender, such as when a sentencing provision has been increased between the time the offense is committed and the time of sentencing. United States v. Guzman-Bruno, 27 F.3d 420, 422 (9th Cir. 1994). 65 The 1994 Guideline version of§ 5G1.3(c) is more favorable to King than the 1995 Guideline version. United States v. Chea, 231 F.3d 531, 539-40 (9th Cir. 2000). Thus, the district court must apply the 1994 Guidelines on remand in determining whether and to what extent to run the new sentence concurrently to King's prior undischarged term of imprisonment. In doing so, it must either apply the methodology described in the Guideline commentary or provide a good reason for not doing so. Id. at 536; United States v. Redman, 35 F.3d 437, 441 (9th Cir. 1994). If the court chooses the latter course, it must explain its decision on the record in a way that indicates it has considered the commentary methodology. Id. 66
67 King challenges the portion of his sentence for the counterfeit postage meter stamp violation on two grounds. First, he claims the district court erred by applying the wrong guideline for the charge. Guideline § 2B5.1 covers offenses involving counterfeiting of United States currency and coins, food stamps, postage stamps, treasury bills, bearer bonds and other items that generally could be described as bearer obligations of the United States, i.e., that are not made out to a specific payee. U.S.S.G. § 2B5.1 cmt. n.2. King argues that postage meter imprints, unlike physical stamps, are made out to a specific payee, in that they bear one meter user's authorization number and are therefore not transferable or redeemable for cash. Therefore, King contends, the Guideline for general fraud offenses, § 2F1.1, should have been applied. 68 Physical stamps and postage meter stamps are both bearer obligations of the United States. When presented with either form of postage (in the appropriate amount), the United States has an obligation to deliver the mail to which the postage is affixed to its designated destination. A counterfeiter of physical stamps and a counterfeiter of postage meter imprints both seek to obtain delivery of their mail through the postal service without paying for the service. The difference in form of the counterfeited device is of no import. We have found no authority supporting King's contention that alternative forms of postage should be treated differently in this context. We therefore reject the argument. 69 King also argues the court impermissibly added an enhancement for more than minimal planning when the relevant provision of the Guidelines, § 2B5.1, does not provide for such an enhancement. The government concedes the enhancement was erroneous. We therefore reverse this aspect of the sentence as well and instruct the district court to correct the error during resentencing.
70 Reiterating his claims concerning the errors in the government's estimate of the amount of loss, King argues the $302,000 in restitution he was ordered to pay the United States Postal Service was excessive. He also contends the $47,000 he must already pay the Postal Service as part of his bank fraud conviction should be deducted from any order of restitution in this case. Moreover, King objects to the district court's failure to consider his inability to pay restitution. 71 Restitution orders are reviewed de novo. United States v. DeSalvo, 41 F.3d 505, 511 (9th Cir. 1994). The factual findings underlying these orders are reviewed for clear error. United States v. Hughes Aircraft Co., 20 F.3d 974, 980 (9th Cir. 1994). 72 For the reasons described above, the district court was justified in assigning a value of $302,000 to the amount of counterfeit postage King used. Thus, the estimate was not clearly erroneous. 73 King's argument about the $47,000 paid to the Postal Service for undelivered mail is also unavailing. Apparently, his argument is as follows: he was convicted in Nevada for paying the Post Office $47,000 with a bad check. However, the Post Office failed to deliver the mail for which he was paying the $47,000. Thus, under a no harm, no foul theory, the $47,000 in restitution he owes the Post Office as part of his prior conviction should be deducted from any restitution imposed in this case. Though creative, this argument has no support in law. We therefore reject it. 74 King was ordered to pay restitution under the Victim and Witness Protection Act, 18 U.S.C. § 3663. The Act requires courts to consider a defendant's financial resources, including needs and earning ability, before imposing restitution. 18 U.S.C. § 3663(a)(1)(B)(i)(II). However, courts have broad discretion regarding the type and extent of evidence they will consider in making this determination. United States v. Ramilo, 986 F.2d 333, 335 (9th Cir. 1993). Ability to pay is only one factor involved in setting the amount of restitution. Id. Ultimately, the standard is a fairly lenient one: [A]t the time restitution is ordered the record must reflect some evidence the defendant may be able to pay restitution in the amount ordered in the future. Id. at 336; see also United States v. Jackson, 982 F.2d 1279, 1284 (9th Cir. 1992) ([T]he Ninth Circuit does not require that the defendant be able to pay in order to justify a restitution award.). 75 The evidence before the district court established that King has some college education and a background in accounting, as well as extensive business experience, which should allow him to obtain gainful employment upon his release from prison. Furthermore, the court took into account his relative ability to pay in deciding not to impose a fine in addition to the restitution amount. Accordingly, the record supports the amount of restitution as established by the district court, and we affirm that portion of the sentence. 5
76 After oral argument in this case, King filed a supplemental brief contending the district court violated Apprendi v. New Jersey, 120 S. Ct. 2348 (2000), by imposing a sentence beyond the statutory maximum for mail fraud without proof beyond a reasonable doubt of the facts relied on to justify the increased sentence. See id. at 2362-63 (Other than the fact of a prior conviction, any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt.). Because we are already vacating and remanding for resentencing, we need not address the Apprendi issues on appeal, and leave it to the district court to consider the effect of Apprendi, if any, on its resentencing decision.