Court Opinion

ID: 6339869
Source: CourtListenerOpinion
Date Created: 2022-05-12 00:00:29.747154+00
Date Added: 2024-06-11T15:49:13.147255
License: Public Domain

Case: 21-40220     Document: 00516315623         Page: 1     Date Filed: 05/11/2022

           United States Court of Appeals
                for the Fifth Circuit                            United States Court of Appeals
                                                                          Fifth Circuit

                                                                        FILED
                                                                    May 11, 2022
                                  No. 21-40220
                                                                   Lyle W. Cayce
                                                                        Clerk

   United States of America,

                                                             Plaintiff—Appellee,

                                       versus

   Babatope Joseph Aderinoye,

                                                         Defendant—Appellant.

                  Appeal from the United States District Court
                       for the Eastern District of Texas
                            USDC No. 4:19-CV-252

   Before Richman, Chief Judge, and Costa and Ho, Circuit Judges.
   Gregg Costa, Circuit Judge:
          Babatope Aderinoye and accomplices stole millions of dollars in a
   transcontinental business email compromise scheme. A jury convicted him
   of numerous counts of fraud, money laundering, and identify theft for his role
   in the operation. On appeal, Aderinoye challenges his sentence for the fraud
   and laundering convictions. He argues that the district court erred by
   including five enhancements when calculating his Sentencing Guidelines
   range. Finding no error, we AFFIRM.
Case: 21-40220     Document: 00516315623           Page: 2   Date Filed: 05/11/2022

                                    No. 21-40220

                                         I
          Aderinoye committed the type of fraud HR departments warn their
   employees about. Posing as companies known to his targets, Aderinoye and
   his co-conspirators emailed potential victims seemingly legitimate requests
   to update their payment information. By complying, the targets unwittingly
   sent payments to fraudulent accounts controlled by the schemers. Aderinoye
   would then either withdraw the funds or transfer them to other accounts in
   the United States and Nigeria to evade detection. The far-reaching scheme
   involved at least forty fraudulent bank accounts opened under more than
   twenty personal and professional aliases.
          All told, Aderinoye attempted to steal $4.8 million and succeeded in
   causing $1.9 million in loss. Victims of the scheme include a school district,
   a nonprofit, small businesses, and elders.
          A jury convicted Aderinoye of one count of conspiracy to commit bank
   fraud, four counts of wire fraud, one count of conspiracy to commit wire
   fraud, one count of mail fraud, one count of conspiracy to commit money
   laundering, and seven counts of aggravated identity theft.
          At sentencing, the district court adopted the Presentence Report’s
   Sentencing Guidelines calculation, which recommended a sentence of 210–
   262 months for the fraud and money laundering convictions based on an
   adjusted offense level of 37. That offense level included a two-level increase
   under U.S.S.G. § 2B1.1(b)(2)(A)(iii) because the offense resulted in a
   substantial financial hardship to at least one victim; a two-level increase
   under § 2B1.1(b)(9)(A) because the offense involved a misrepresentation
   that the defendant was acting on behalf of a charitable organization; a two-
   level increase under § 2B1.1(b)(10)(C) because the offense involved
   sophisticated means; a two-level increase under § 2B1.1(b)(11)(A)(ii)
   because the offense involved the possession or use of an authentication

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                                       No. 21-40220

   feature; and a four-level leadership role adjustment under § 3B1.1. The
   district court sentenced Aderinoye within the Guidelines to 240 months on
   the fraud and laundering counts.1
                                             II
          Aderinoye does not allege any defects in his trial. He challenges only
   the district court’s calculation of his Sentencing Guidelines range. He
   contends that his sentence would have been lower if the district court had not
   applied the five enhancements listed above.
          We address each of Aderinoye’s objections to his sentence in turn.
   The standard of review varies depending on whether a claim is preserved.
   Normally, we review the district court’s interpretation of the Sentencing
   Guidelines de novo and its findings of fact for clear error. United States v.
   Mauskar, 557 F.3d 219, 232 (5th Cir. 2009). But we apply the more
   deferential plain error review to the claims Aderinoye raises for the first time
   on appeal. United States v. Medina-Anicacio, 325 F.3d 638, 643 (5th Cir.
   2003). We will reverse under this standard only if the error is clear or
   obvious, affected the outcome of the case, and “seriously affect[s] the
   fairness, integrity or public reputation of judicial proceedings.” Puckett v.
   United States, 556 U.S. 129, 135 (2009) (internal quotations omitted).
                                             A
          Several of Aderinoye’s challenges are readily resolved.
          Aderinoye argues for the first time that the district court should not
   have added two points to his offense level for a crime that “involved

          1
            The district court also sentenced Aderinoye to consecutive, 24 month sentences
   on each of the aggravated identity theft convictions. Aderinoye does not contest those
   sentences.

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                                    No. 21-40220

   sophisticated means.”     U.S.S.G. § 2B1.1(b)(10)(C).      The sophisticated
   means enhancement applies to “complex” or “intricate” efforts to commit
   or conceal a crime. Id. cmt. 9(B). “[H]iding assets or transactions, or both,
   through the use of fictitious entities, corporate shells, or offshore financial
   accounts . . . ordinarily indicates sophisticated means.” Id. Aderinoye’s
   conduct falls squarely within this definition. He created at least forty
   fraudulent bank accounts in the names of real and fictious persons and
   business entities to receive funds from his victims. He then transferred the
   funds between those accounts and eventually to accounts in his true name
   and to Debatop Properties, a shell corporation he maintained in Nigeria.
   Together these actions constitute sophisticated means that “made it more
   difficult for the offense to be detected.” United States v. Valdez, 726 F.3d
   684, 695 (5th Cir. 2013); see United States v. Conner, 537 F.3d 480, 492 (5th
   Cir. 2008) (using a fictitious name and business to conduct fraudulent
   transactions in multiple states involved sophisticated means); United States
   v. Clements, 73 F.3d 1330, 1340 (5th Cir. 1996) (depositing checks into wife’s
   bank account to “obscure the link between the money and . . . [the
   defendant]” involved sophisticated means). The district court did not err,
   let alone plainly err, in applying the sophisticated means enhancement.
          Next, Aderinoye faults the district court for applying a two-level
   enhancement for an offense involving “the possession or use of
   any . . . authentication feature.” U.S.S.G. § 2B1.1(b)(11)(A)(ii). Aderinoye
   did not raise this issue below, so again we review for plain error. See Medina-
   Anicacio, 325 F.3d at 643. Aderinoye wisely accepts that the false passports
   and driver’s license he used to register corporate aliases and open fraudulent
   bank accounts contain an “authentication feature” within the meaning of the
   Guideline. See United States v. Azubuike, 743 F. App’x 958, 960 (11th Cir.
   2018) (per curiam) (concluding that false passport card contained
   authentication features); United States v. Rogers, 769 F.3d 372, 383 (6th Cir.

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                                     No. 21-40220

   2014) (same for driver’s license); see also United States v. Biyiklioglu, 716 F.
   App’x 270, 273 (5th Cir. 2017) (accepting that altered passport and driver’s
   license contained “authentication features” for purposes of a different
   enhancement). He argues instead that the enhancement is inapplicable
   because the authentication features must relate to an actual person. The only
   support Aderinoye offers for this proposition is an out-of-circuit case relating
   to a different, now-defunct enhancement. See United States v. Melendrez, 389
   F.3d 829, 830 (9th Cir. 2004). His argument may fail on plain error review
   for this lack of authority alone. United States v. Gonzalez, 792 F.3d 534, 538
   (5th Cir. 2015) (“[A] lack of binding authority is often dispositive in the plain-
   error context . . . .”). In any event, Aderinoye did use the information of a
   real person—a California dentist—on a false British passport and a false
   Texas driver’s license in furtherance of his scheme. Consequently, this
   enhancement applies even under Aderinoye’s view.
          We next address Aderinoye’s claim that the district court misapplied
   the four-level aggravating role enhancement because he was not “an
   organizer or leader of a criminal activity that involved five or more
   participants or was otherwise extensive.” U.S.S.G. § 3B1.1(a). Although
   this claim is preserved, it fails under the deference owed the district court on
   this determination. See United States v. Akins, 746 F.3d 590, 609 (5th Cir.
   2014) (noting we must uphold the district court’s factual findings if they are
   “plausible in light of the record read as a whole”).
          The record supports the district court’s conclusion that Aderoniye’s
   fraud was extensive.     The scheme involved multiple participants, both
   witting and unwitting, across two continents and several states. See U.S.S.G.
   § 3B1.1 cmt. 3 (noting that a fraud that “used the unknowing services of many
   outsiders could be considered extensive”). It was accomplished through a
   complex web of falsified identification documents, fraudulent bank accounts,
   shell corporations, and a sophisticated business email compromise scheme.

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   And it was conducted on a massive scale: Aderinoye and company stole
   millions of dollars from numerous victims. As the district court aptly noted,
   “if this isn’t extensive, what would be?”
           Aderinoye played a key role in this scheme. To determine whether a
   defendant led or organized criminal activity, courts may consider, among
   other factors, whether the defendant exercised decision making authority,
   the nature of the defendant’s participation in the offense, whether the
   defendant recruited accomplices, the defendant’s share of the fruits of the
   crime, and the degree of the defendant’s control over others. Id. cmt. 4; see
   also United States v. Warren, 986 F.3d 557, 568 (5th Cir. 2021) (explaining
   that these factors are neither exhaustive nor dispositive). Our precedent does
   not limit the enhancement to defendants who controlled other participants
   in the scheme; it is enough that the defendant managed the criminal
   enterprise’s property, assets, or activities. United States v. Ochoa-Gomez, 777
   F.3d 278, 283 (5th Cir. 2015); see also Warren, 986 F.3d at 569 (applying this
   rule but noting its inconsistency with Application Note 2). Aderinoye
   exercised extensive authority and control over the scheme’s network of
   fraudulent bank accounts. And he was paid like a leader for his efforts—he
   admitted to investigators that he kept 40% of the proceeds for himself. The
   district court’s conclusion that Aderinoye organized or led extensive criminal
   activity was not clearly erroneous.2
           The district court did not err by enhancing Aderinoye’s sentence for
   use of sophisticated means, use of an authentication feature, or his leadership
   role.

           2
            Because we agree with the district court’s finding of “otherwise extensive”
   criminal activity, we need not address Aderinoye’s alternative argument that the
   enhancement fails because the scheme did not involve five or more participants.

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                                          B
           Aderinoye’s remaining challenges warrant more discussion.
                                          1
          He offers two reasons why the district court should not have added
   two points to his offense level for causing “substantial financial hardship” to
   one of the victims, a Houston-area pipe broker named Prime Pipe LLC.
   U.S.S.G. § 2B1.1(b)(2)(A)(iii).
          First, Aderinoye maintains that the enhancement does not apply
   because a business cannot be a “victim” under this Guideline.             This
   argument was not raised below. Even if it had been, it would fail. The
   commentary defines “victim” as “any person who sustained any part of the
   actual loss” and defines “person” broadly to include “individuals,
   corporations, companies, associations, firms, partnerships, societies, and
   joint stock companies.” Id. cmt. 1. As a limited liability corporation, Prime
   Pipe meets this definition. To our knowledge, no court has limited the
   enhancement in the way Aderinoye urges. Compare United States v. Amin,
   839 F. App’x 810, 812 (4th Cir. 2021) (per curiam) (declining to address an
   argument identical to Aderinoye’s), with United States v. Piper, No. 20-1867,
   2021 WL 5088709, at *3 (6th Cir. Nov. 2, 2021) (assuming that the
   enhancement applies to both businesses and people).
          Alternatively, Aderinoye maintains—this time in a claim he
   preserved—that the government did not meet its burden of showing by a
   preponderance of the evidence that Prime Pipe’s loss was “substantial.” We
   have never defined substantial hardship but agree with other circuits that a
   loss qualifies if it significantly impacts the victim’s resources. See United
   States v. George, 949 F.3d 1181, 1185 (9th Cir. 2020) (“By including
   ‘substantial’ before ‘financial hardship,’ the provision excludes minor or
   inconsequential financial harms. That conclusion is supported by the noun

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   ‘hardship,’ which itself suggests something more than a mere
   inconvenience.”); United States v. Minhas, 850 F.3d 873, 878 (7th Cir. 2017)
   (“[T]he word ‘substantial’ implies that the loss or hardship must be
   significant, meaning at least more than minimal or trivial.”). Insolvency,
   bankruptcy, loss of a large portion of a retirement or other investment
   account, needing to change employment or living arrangements, and
   difficulty obtaining credit all indicate substantial financial hardship. U.S.S.G.
   § 2B1.1(b)(2) cmt. 4(F). The district court “may make reasonable inferences
   about the victims’ financial circumstances and about their level of financial
   harm, so long as those inferences find some support in the record.” United
   States v. Howder, 748 F. App’x 637, 644 (6th Cir. 2018).
        The district court’s finding that Prime Pipe suffered a substantial loss
   was not clearly erroneous. In its victim impact statement, Prime Pipe
   explained:
        Prime Pipe LLC was spoofed out of $200,000.00, in which
        $98,000.00 was recovered. We are a small business so that is a lot
        of money to us. That $102,000.00 loss . . . set us back for over six
        months. We were not able to pay some of our vendors and it was
        difficult to make payroll. It also affected how we conducted
        business, especially electronically. We had to take extra steps to
        insure [sic] that the emails and electronic communication was safe
        and secure, which inturn [sic] took more manpower hours and
        time.
   Prime Pipe’s loss was not ruinous; the company continued to operate after
   the fraud. But it was not minor or inconsequential, either. A six-month
   setback is significant for any business, particularly a small one. See Minhas,
   850 F.3d at 877 (noting that courts should evaluate hardship relative to the
   victim’s means).     And inability to pay vendors constitutes temporary
   insolvency, a factor the commentary identifies as indicative of substantial
   financial hardship. See U.S.S.G. § 2B1.1(b)(2) cmt. 4(F). Prime Pipe’s loss

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   falls somewhere in the area “between a minimal loss or hardship . . . and a
   devastating loss . . . in which we rely upon the judgment of the district
   courts.” Minhas, 850 F.3d at 878. Because the district court’s factual
   determination has support in the record, we again find no error.
                                         2
          Finally, Aderinoye challenges the two-level enhancement for an
   offense involving a “misrepresentation that the defendant was acting on
   behalf of a charitable [] organization.” See U.S.S.G. § 2B1.1(b)(9)(A). The
   parties dispute whether this issue was adequately raised below. But even
   assuming that it was, we find no clear error.
          Our cases applying this enhancement typically fall into two categories.
   The first occurs when defendants raise funds for a real or made-up charity
   but keep the money for themselves. See U.S.S.G. § 2B1.1(b)(9)(A) cmt. 8(B)
   (giving examples of this type of misrepresentation). An example is a case in
   which defendants created a fake Salvation Army website to solicit Hurricane
   Katrina donations that were never given to victims. See United States v.
   Stephens, 571 F.3d 401, 403 (5th Cir. 2009). The other covers cases in which
   employees of a charity misappropriate the organization’s funds for their own
   use. See, e.g., United States v. Reasor, 541 F.3d 366, 372 (5th Cir. 2008)
   (affirming enhancement for church bookkeeper who wrote checks to herself
   from church’s account); United States v. Wiant, 314 F.3d 826, 828–29 (6th
   Cir. 2003) (affirming enhancement for administrative officer of charity who
   instructed bank to transfer grant funds into his personal account). In short,
   we allow the enhancement both “if a defendant lied about having any
   connection to a listed organization” in order to fraudulently raise funds and
   “if a defendant had authority to act for a charity but diverted some of the
   funds the nonprofit received for ‘personal gain.’” United States v. Diggles,

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   928 F.3d 380, 391 (5th Cir. 2019) (quoting U.S.S.G. § 2B1.1(b)(9)(A) cmt.
   8(B)), aff’d on reh’g, 957 F.3d 551, 554 (5th Cir. 2020) (en banc).
          Aderinoye’s conduct does not fall neatly into either category. He or a
   co-conspirator emailed Origin Bank pretending to be Project 4031, a
   nonprofit that assists terminally ill individuals and their families. The email
   requested cashiers’ checks drawn from Project 4031’s account, which
   Aderinoye then deposited into his fraudulent accounts. This conduct does
   not fit within the first category because Aderinoye did not exploit a third
   party’s altruistic impulses. And it does not fall within the second because he
   had no actual authority to manage Project 4031’s funds.
          Nonetheless, the text of the Guideline and its commentary supports
   the district court’s application of the enhancement. The emails to Origin
   Bank “misrepresent[ed] that the defendant was acting on behalf of a
   charitable [] organization.”     See U.S.S.G. § 2B1.1(b)(9)(A).       And the
   commentary confirms that the enhancement applies “regardless of whether
   the defendant actually was associated with the organization.” Id. cmt. 8(B).
   Guideline 2B1.1(b)(9)(A) thus applies when a defendant unaffiliated with a
   charity steals from the organization by pretending to have authority over its
   accounts.
          This is not to say the enhancement applies every time a charity is a
   fraud victim. The requirement that the defendant purport to act “on behalf
   of” a charity provides the limiting principle. See id. § 2B1.1(b)(9)(A). The
   enhancement would seemingly not apply, for instance, if a defendant stole
   from a charity by hacking into its accounts because that crime would not
   involve the defendant’s actual or perceived authority to act for the charity.
          After   reviewing    Aderinoye’s     challenges     to   the   numerous
   enhancements, we find no reversible error.

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                                  ***
         We AFFIRM.

                                   11