Opinion ID: 76070
Heading Depth: 2
Heading Rank: 1

Heading: Proper Test for Applying the Enhancement

Text: 14 Based on our own analysis, we now adopt the totality of the circumstances test for applying the two-level enhancement set out in § 2B6.1(b)(2) for being in the business of receiving and selling stolen property. Under the fence test, the sentencing courts merely examine[] the defendant's operation to determine: (1) if stolen property was bought and sold, and (2) if the stolen property transactions encouraged others to commit property crimes. United States v. Warshawsky, 20 F.3d 204, 215 (6th Cir.1994) (holding that the purchase and resale of tens of thousands of dollars of stolen property warranted application of the enhancement because it bestowed bountiful rewards on individuals willing to steal the property of others). 10 Courts that have adopted the fence test have generally done so based on the language in the commentary to former § 2B1.2 of the guidelines: 15 The Sentencing Commission has decided that fences deserve longer sentences than mere thieves because a sentence based solely on the amount of (stolen) property recovered by the police is likely to underrepresent the scope of their criminality and the extent to which [the defendant] encourage[s] or facilitate[s] other crimes. 16 Warshawsky, 20 F.3d at 214-15 (quoting U.S.S.G. § 2B1.2, comment. (backg'd.)). 17 By contrast, circuits adopting the totality of the circumstances test undertake a case-by-case approach, weighing... [all] the circumstances, with particular emphasis on the regularity and sophistication of a defendant's operation. United States v. St. Cyr, 977 F.2d 698, 703 (1st Cir.1992). In exploring the regularity of a defendant's illegal operations — the most important factor — the stolen goods need not be the defendant's sole or even dominant source of income. Id. at 703. 18 Nevertheless, a sentencing court can certainly consider evidence about the amount of income generated through fencing activities, the defendant's past activities, his demonstrated interest in continuing or expanding the operation, and the value of the property handled. Where there is no indication either of a pattern of dealing in stolen property or of a developed operation that promises such consistency for the future, the defendant is unlikely to be in the business.... [C]ourts have insisted that more than isolated, casual, or sporadic activity be shown before a business is found to exist. 19 Id. at 703-04 (citations omitted). 11 The sophistication of the defendant's operations is also important and may itself indicate business conduct ... [as] a meaningful proxy for regularity, say, by showing that the operation crossed a threshold of sophistication and commitment. 12 Id. at 704; see also United States v. Cottman, 142 F.3d 160, 167 (3d Cir.1998) ([T]he government can sustain application of the enhancement, where sales are only `irregular or occasional,' if the sales underrepresent the true `scope of the defendant's criminality.'). 13 20 We adopt the totality of the circumstances test for several reasons. First, determining the regularity and sophistication of a defendant's fencing operation, though inherently subjective, is far less so than deciphering to what extent the operation encourages subsidiary, future crimes. For the same reason, it is also more lenient on defendants. Moreover, the policy rationale on which courts such as Warshawsky relied in developing the fence test has subsequently been withdrawn from the guidelines commentary in 1993 when §§ 2B1.1 and 1.2 were consolidated. Concluding that there was never a bright line for applying the enhancement, the First Circuit in St. Cyr noted: 21 [The commentary] proves too much.... [E]ven purchasers of stolen goods who never sell and sellers of stolen goods who never purchase can strengthen the black market and thereby facilitate other crime.... It is almost always possible to argue that the conduct for which a defendant has been convicted is likely to underrepresent his entire criminal career or his contribution to a general subculture of criminality. There is no sound basis on which trafficking in stolen goods, per se, can be singled out in this respect. 977 F.2d at 702. 14
22 Because Sharon also attacks the district court's application of the enhancement on the ground that she was not a fence, we address whether the totality of the circumstances test operates to the exclusion of the first prong of the fence test: whether stolen property was actually bought and sold. In short, can the enhancement be applied where the defendant was either a seller who did not receive or a receiver who did not sell? We hold that it cannot; a prerequisite to the application of the two-level enhancement in § 2B6.1(b)(2) is that the defendant personally received and sold stolen property. 23 In considering this question, we look first to the plain language and ordinary meaning of the enhancement. See United States v. Singh, 291 F.3d 756, 761 (11th Cir.2002). By stating receiving and selling in the conjunctive, the Sentencing Commission indicated its intent that the defendant must have engaged in both. See U.S.S.G. § 2B6.1(b)(2). Indeed, [t]he common understanding of a person in the business of receiving and selling stolen property is a professional fence.... United States v. Braslawsky, 913 F.2d 466, 468 (7th Cir.1990). In addition, the text of the amendment to the enhancement in § 2B1.1(b)(4) justifies the totality of the circumstances test because it more properly targets the conduct of the individual who is actually in the business of fencing.  U.S.S.G.App. C, Amend. 617 at 182 (2001) (emphasis added). By its plain terms and meaning, then, the enhancement first and foremost requires that the defendant at least be a fence for stolen property. 24 The structure of the guidelines and parallel development of the [other] sentencing guideline governing thefts of property are also instructive. McMinn, 103 F.3d at 219. In 1989, the words receiving and were added to the language of the enhancement in former § 2B1.2 increasing the penalty for those in the business of selling stolen property, U.S.S.G. § 2B1.2(b)(3)(A) (1989), in order to retain its narrow focus upon defendants who `fence' stolen goods. McMinn, 103 F.3d at 220. Also, prior to its consolidation with § 2B1.1 in 1993, § 2B1.2, dealing with offenses involving the receipt of stolen property, included this enhancement while § 2B1.1, dealing only with theft offenses, did not. After consolidation, the enhancement in § 2B1.1 now applies only [i]f the offense [itself first] involved receiving stolen property, U.S.S.G. § 2B1.1(b)(4) (2001) (emphasis added), and, therefore, does not apply to theft crimes. See McMinn, 103 F.3d at 220-21. Coupled with the fact that other enhancements in the guidelines apply equally to thieves and fences, the Commission must have intended that only fences, who by definition are not thieves themselves, receive the enhancement. See id. at 219-20. 25 We also look to the underlying purpose of the enhancement. See Singh, 291 F.3d at 761 (where there is no particular application indicated by the guidelines, we look both to their language and purpose). When we study its rationale, the enhancement evinces a clear intent to impose heightened punishment on fences. United States v. Sutton, 77 F.3d 91, 94 (5th Cir. 1996) (The enhancement is intended as a punishment for fences, people who buy and sell stolen goods ... as opposed to thieves who merely sell the goods which they have stolen.). Commentary to former § 2B1.2(b)(4)(A), later consolidated with § 2B1.1, reveals this intent: Persons who receive stolen property for resale receive a sentence enhancement because the amount of property is likely to underrepresent the scope of their criminality and the extent to which they encourage or facilitate other crimes. 15 U.S.S.G. § 2B1.2, comment. (backg'd.) (1992). After all, a professional fence facilitates the commission of many thefts by creating a clearinghouse for stolen goods. Braslawsky, 913 F.2d at 468. That the enhancement requires, at a minimum, that the defendant be a fence comports with basic guideline[s] sentencing policy as well. McMinn, 103 F.3d at 221. Specifically, Congress requires that court[s], in determining the particular sentence to be imposed,... consider ... the need for the sentence ... to reflect the seriousness of the offense ... [and] to afford adequate deterrence to criminal conduct. 18 U.S.C. § 3553(a)(2)(A)-(B). 26 [In this regard t]he services of a professional fence undoubtedly facilitate the ready, advantageous disposition of property stolen by the less well-situated thief.... Furthermore, the interposition of a sophisticated fencing operation between the thief and the ultimate purchaser of the stolen property may confound or obstruct the investigation and prosecution of theft offenses ... [as] the loot is more likely to be dispersed before law enforcement agencies can respond. 27 McMinn, 103 F.3d at 221. 28 Moreover, we said in Maung that [a] defendant who has not received and sold cannot be `in the business of receiving and selling.' 267 F.3d at 1119. Other circuits, too, have held that the enhancement applies only when the defendant is first a fence. See, e.g., McMinn, 103 F.3d at 219; Braslawsky, 913 F.2d at 468. 29 Finally, we note that an interpretation of the enhancement requiring that the defendant be a fence is not inconsistent with our adoption of the totality of the circumstances test for applying the enhancement. The fence test has two prongs. 16 The first requires the receipt and sale of stolen goods as a threshold requirement, the second, the facilitation of theft and other crimes. It is the second prong that distinguishes the fence test from the totality of the circumstances test because it sets out the touchstone for determining whether the defendant was actually in the business. That the defendant must also receive and sell stolen goods is the common denominator between the two tests. The decisions of the First Circuit most clearly illustrate this proposition. In St. Cyr, the court rejected the fence test and adopted the totality of the circumstances test. 977 F.2d at 703. Later in McMinn, however, the court held that the enhancement does not apply to mere thieves who are not also fences, 103 F.3d at 219, and rejected the government's argument that the enhancement guideline should be construed simply to require proof that McMinn's sales of stolen goods [, which he himself had stolen,] had a certain regularity or sophistication under the totality of the circumstances test. Id. at 222. In doing so, the court pointed out that its opinion in St. Cyr [adopting the totality of the circumstances test] ... neither expressed nor implied disapproval of the basic proposition that the ... enhancement guideline should apply only to `professional fences.' Id. 30 Other courts agree. Although some Circuits have described the `totality of the circumstances' approach, upon which this Court relies, as a `competing test,' ... [we are not] foreclose[d] ... from requiring in the future that a defendant be a `fence' for the enhancement to apply. Cottman, 142 F.3d at 167 n. 9. Some courts have declined even to adopt one or the other test because the facts of their cases trigger the enhancement under both tests. See, e.g., United States v. Payseno, 104 F.3d 191, 192 (8th Cir.1997) (Because [t]he court's factual findings indicate that Payseno received and sold stolen goods for profit over an extended period of time ... [and] she specifically purchased products ... which she knew were stolen ..., it is not necessary to employ either of the two competing tests....). In fact, we have discovered hardly a [single case] ..., in which a federal appellate court upheld the `in the business' enhancement against a defendant who did not personally participate in receiving and selling (or intending to sell) stolen property, including those courts in the totality-of-the-circumstances-circuits. 17 Maung, 267 F.3d at 1119-20. Thus, we conclude that, even under the totality of the circumstances test, the enhancement in guidelines § 2B6.1(b)(2) only applies if the defendant fenced stolen property.