Opinion ID: 76070
Heading Depth: 3
Heading Rank: 1

Heading: The in the business Test

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