Opinion ID: 220180
Heading Depth: 3
Heading Rank: 2

Heading: Applicability of the Upward Adjustments

Text: Keck also claims the district court erred when it applied enhancements to the drug conspiracy offense. We disagree. We begin with a brief overview of the Guidelines, which set forth a multi-step process for determining a recommended sentencing range. The Guidelines are divided into several chapters, each of which constitutes a particular step in the process. For example, Chapter Two sets forth specific offenses, while Chapter Three details upward or downward adjustments, based on considerations such as obstructing justice or accepting responsibility. The first step in the sentencing process is to determine the offense section that is applicable to the offense of conviction, identify the appropriate offense level, and then follow the instructions contained in the applicable guideline. USSG § 1B1.1(a)(1)-(2). The second step is to apply the adjustments described in Chapter Three. Id. at §1B1.1(a)(3). If there are multiple counts of convictions, a court should repeat these steps for each count, grouping the various counts and adjusting the offense level accordingly. Id. at § 1B1.1(4). Occasionally, in multiple-conviction cases, the offense level of one offense is determined by reference to a related offense in another guideline; in these cases, the adjustments ordinarily are also determined in respect to the referenced guideline. Id. at § 1B1.5(c). For example, if a defendant bribed a public official in order to facilitate a fraud, then the bribery's offense level would be equal to the fraud's offense level, and any enhancement on the bribery offense for obstructing justice would be based on the underlying fraud. Id. at § 2C1.1(c)(1). At sentencing, the district court determined Keck's drug conspiracy convictions fell under USSG § 2D1.1 and his money-laundering conviction fell under USSG § 2S1.1. The offense level for the money-laundering offense is determined with reference to the offense from which the laundered funds were derived, which in this case was the drug conspiracy. USSG § 2S1.1(a)(1). But Application Note 2(C) to § 2S1.1 specifies: Notwithstanding § 1B1.5(c) [the general instruction to base adjustments on the underlying offense], in cases in which subsection [§ 2S1.1](a)(1) applies, application of any Chapter Three adjustment shall be determined based on the offense covered by this guideline (i.e., the laundering of criminally derived funds) and not the underlying offense from which the laundering funds were derived. Accordingly, after calculating Keck's offense level under Chapter Two, the district court applied three adjustments under Chapter Three: (1) a two-level enhancement for the use of a minor under USSG § 3B1.4; (2) a four-level enhancement for being the organizer or leader of a criminal activity under § 3B1.1(a); and (3) a two-level enhancement for obstruction of justice under § 3C1.1. [2] Keck does not dispute he engaged in conduct described by the enhancements, but he argues this conduct related only to the drug conspiracy, not the money laundering. Relying on Application Note 2(C), he contends Chapter Three adjustments cannot be applied to his drug conspiracy unless the adjustments related specifically to his money-laundering conviction. We have not previously considered, in the context of multi-offense convictions involving money laundering, the applicability of enhancements that are based on other offenses. Thus, whether Application Note 2(C) entirely prohibits Chapter Three adjustments unless they are based on the money-laundering offense, or merely prevents the double-counting that would arise if enhancements were applied to both the underlying crime and the money-laundering offense, is an open question. The only circuit to have directly considered this issue has rejected an interpretation of Application Note 2(C) similar to that proposed by Keck. [3] In United States v. Byors, 586 F.3d 222, 226-28 (2d Cir. 2009), the Second Circuit affirmed the sentence of a defendant who, like Keck, received a two-level increase under § 3C1.1 for obstructing justice after being convicted of money laundering and other offenses. The court rejected the defendant's argument that an application note to a separate guideline implicitly `creates an exception' to § 3C1.1, because this interpretation would negate, sub silentio, substantial portions of an entirely different guideline. Id. at 228. Instead, the court attempted to harmonize the commentary with the Guidelines by treat[ing] references to the `offense of conviction' in § 3C1.1 as references to the offense of money laundering. Id. So in the context of money laundering, the court read the adjustment language as follows: If (A) the defendant willfully obstructed or impeded, or attempted to obstruct or impede, the administration of justice with respect to the investigation, prosecution, or sentencing of the [money laundering offense], and (B) the obstructive conduct related to (i) the defendant's [money laundering offense] and any relevant conduct; or (ii) a closely related offense, increase the offense level by 2 levels. Id. Because the Byors defendant's obstruction (A) occurred during the money-laundering investigation and (B) related to fraud, which was a relevant conduct or at least an offense that closely related to the money-laundering offense, the court upheld the application of § 3C1.1. Id. In this case, if the district court had taken the Second Circuit's approach during sentencing and considered the Chapter Three adjustments with reference to the money-laundering conviction, it likely would have reached the same result. With regard to the obstruction of justice enhancement, Keck's drug conspiracy was closely related to the money-laundering offense. Although the other enhancements do not use § 3C1.1's broad language, but only refer to the offense, see USSG § 3B1.1(a) (the adjustment for being the organizer of criminal activity) and § 3B1.4 (the adjustment for using a minor), the record indicates they would have been appropriate even if they applied only to the money-laundering conviction. Because Keck used his daughter, a minor, to wire money, an adjustment under § 3B1.4 would be proper. Likewise, § 3B1.1 is applicable, even under the Second Circuit's reasoning, because Keck organized a money-laundering conspiracy involving five or more participants. See R., Vol. 3 at 385-89 (identifying Keck and four other individuals as having sent or received wire transfers associated with the money-laundering conspiracy). Nonetheless, we do not adopt wholesale the Second Circuit's approach. When applied to enhancements other than USSG § 3C1.1, their construction has the potential of significantly negating the applicability of Chapter Three adjustments in multi-offense cases. Like the Second Circuit, we construe the guideline and its commentary together and seek to harmonize them. If a harmonizing interpretation is possible, that is the proper one (so long as it does not violate the Constitution or a federal statute). See United States v. Pedragh, 225 F.3d 240, 245 (2d Cir.2000). But although [t]he intent of the Sentencing Commission is demonstrated in part through its commentary, a district court is not obliged to follow the explanatory application if it is inconsistent with the Guidelines. See United States v. Mojica, 214 F.3d 1169, 1171 (10th Cir.2000) (citing Stinson v. United States, 508 U.S. 36, 42-43, 113 S.Ct. 1913, 123 L.Ed.2d 598 (1993)). Because Chapter Three adjustments often refer only to the offense, substituting the offense of money-laundering would make many of these enhancements inapplicable on related offenses in some cases. Thus, a defendant convicted of a drug conspiracy might receive a substantially lower sentencing recommendation if he or she was also convicted of money laundering. This paradoxical result is inconsistent with the Guidelines, which do not articulate a limitation in cases involving money laundering. Instead, we interpret Application Note 2(C) as governing only the applicability of adjustments on money-laundering convictions, as opposed to the offense calculations of other, related offenses. Thus, the phrase in cases where subsection (a)(1) applies in the application note refers to money-laundering convictions whose base offense level are determined by reference to the offense level of the underlying offense. Consequently, the sentencing court may still apply adjustments to other offenses of conviction for conduct relating to those convictions. This construction maintains consistency between the commentary and the Guidelines, while also achieving the application note's goal of preventing double-counting. See United States v. Arthur, No. 04-CR-122, 2006 WL 3857491 at  (E.D.Wis. Dec. 22, 2006). With this construction in mind, the district court did not commit error by adding eight levels based on Chapter Three adjustments.