Court Opinion

ID: 54982
Source: CourtListenerOpinion
Date Created: 2010-04-26 01:38:11+00
Date Added: 2024-06-11T17:19:27.544744
License: Public Domain

[DO NOT PUBLISH]

              IN THE UNITED STATES COURT OF APPEALS

                      FOR THE ELEVENTH CIRCUIT                    FILED
                        ________________________         U.S. COURT OF APPEALS
                                                           ELEVENTH CIRCUIT
                                                              AUGUST 21, 2007
                              No. 07-10383                  THOMAS K. KAHN
                          Non-Argument Calendar                 CLERK
                        ________________________

                   D. C. Docket No. 06-00237-CR-TCB-1-1

UNITED STATES OF AMERICA,

                                                                Plaintiff-Appellee,

                                   versus

STEPHANIE N. COWLING,

                                                          Defendant-Appellant.

                        ________________________

                 Appeal from the United States District Court
                    for the Northern District of Georgia
                      _________________________

                             (August 21, 2007)

Before BIRCH, HULL and WILSON, Circuit Judges.

PER CURIAM:

     After pleading guilty, Stephanie N. Cowling appeals her 42-month sentence
for conspiracy to commit wire and mail fraud, in violation of 18 U.S.C. §§ 1341,

1343, 1349. After review, we affirm.

                               I. BACKGROUND

A.    Offense Conduct

      From approximately July 2000 through May 2002, Cowling was employed

as a Line Haul Manager at Excel Direct Incorporated (“Excel”). From

approximately December 2002 through September 2003, Cowling was employed

as a Domestic Manager at DHL Danzas Air & Ocean (“DHL”). While in these

positions, Cowling and her husband devised a scheme to defraud her employers by

establishing Eric Nelams as a vendor for the companies and then causing

$453,054.40 in payments to be mailed to Nelams for fictitious freight bills.

      Cowling’s fraud was discovered after DHL conducted an internal audit,

which revealed that Cowling had circumvented the automated system and initiated

payments to Nelams through a manual process. Specifically, Cowling approved

the payments to Nelams and then faxed the invoices to the accounts payable

department for processing. The audit revealed that the work for which Cowling

authorized payment was actually performed by another company, Cargo Express.

      After the DHL embezzlement scheme was uncovered, Cowling and her

husband met with Nelams and his wife. Cowling wanted Nelams to get “on the

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same page” before they were interviewed by DHL security personnel. Cowling

gave Nelams two documents: (1) a freight bill in the amount of $2,900 in Nelams’s

name and signed by Cowling; and (2) a document in Cowling’s handwriting

containing trucking and billing language as well as explanations. Cowling also

urged Nelams to accept the blame for the fraud, but Nelams resisted.1

      A federal grand jury returned a sixty-count indictment charging Cowling

with conspiracy to commit wire and mail fraud and with multiple counts of mail

fraud, wire fraud and transporting checks taken by fraud in interstate commerce.

Cowling pled guilty to the conspiracy count pursuant to a written plea agreement.

B.    PSI

      The Presentence Investigation Report (“PSI”) assigned Cowling a base

offense level of 6, and increased her offense level to 14 because the loss was more

than $400,000 but less than $1,000,000, pursuant to U.S.S.G. § 2B1.1(b)(1)(H).

After a two-level increase because the offense involved an abuse of a position of

trust, see U.S.S.G. § 3B1.1(c), and three-level reduction for acceptance of

responsibility, see U.S.S.G. § 3E1.1(a)-(b), the PSI recommended a total offense

level of 19 and a criminal history category of I, resulting in an advisory guidelines

range of 30 to 37 months’ imprisonment. The government objected to the PSI’s

      1
          Shortly after the meeting, Nelams was found murdered outside his residence.

                                                3
failure to include a two-level enhancement because the offense involved

sophisticated means, pursuant to U.S.S.G. § 2B1.1(b)(8)(C) (2002).2

C.     Sentencing

       At the sentencing hearing, the government presented witness testimony

regarding the nature and scope of Cowling’s embezzlement schemes to support a §

2B1.1(b)(8)(C) sophisticated means enhancement. Wade Sorenson, the Director of

Domestic Operations for DHL, conducted the internal audit that eventually

uncovered Cowling’s embezzlement scheme. Sorenson testified that during the

audit, he discovered: (1) duplicate entries of services that had already been

provided by a functioning vendor; and (2) duplicate charges that were “put in to be

paid” to a vendor of whom he was not aware. Sorenson contacted, among others,

his regional manager, Mike Ginnis, who then contacted Cowling to determine if

she knew who this vendor was. Upon being questioned about this vendor, Cowling

indicated that she knew who the vendor was, but would have to gather and review

certain paperwork before discussing the matter further.

       Sorenson also stated that Cowling’s scheme was difficult to uncover because

she engaged in “manual cost manifest,” which was a recognized process at DHL

for a Domestic Manager. Sorenson explained that this manual process allowed

       2
        To avoid ex post facto problems, the district court applied the 2002 Sentencing
Guidelines in effect on the date of Cowling’s offense. See U.S.S.G. § 1B1.11(b)(1).

                                                4
Cowling to pay an invoice that was not in the computer system and that the scheme

was finally detected because of the repetition and unusual amount of the payments.

According to Sorenson, Cowling carried out the scheme by taking invoices from

DHL’s local vendor in Atlanta and copying that information, which included the

house air bill number (a file reference number for each individual shipment) as

well as the date and weight of the pieces to be shipped, and then sending the

invoices to the department that paid them. Sorenson also stated that during his

investigation he did not find any original invoices in the files, which suggested that

they were either removed or destroyed.

      Robert Betzer, District Manager at DHL in Atlanta, testified that Cowling

left work shortly after being asked to provide documentation verifying that Nelams

was a vendor and had submitted invoices to DHL. Betzer stated that he was unable

to find any documents in Cowling’s office that indicated that Nelams was a vendor

with whom DHL did business.

      Both Betzer and Sorenson were shown a handwritten document found in

Nelams’s home that contained the names of several DHL employees and their job

descriptions. Sorenson described this document as a “cheat sheet” that contained

information about DHL that a typical vendor-supplier would know. Betzer

indicated that the document listed key contacts within DHL’s organization.

                                           5
      Linda Beth, Cowling’s direct supervisor at Excel, testified that at the time

Cowling was terminated for performance-related problems, Excel was unaware of

Cowling’s fraud. Beth learned of the scheme only after she received a telephone

call from Excel’s security personnel, who had been notified by DHL that it had

been defrauded by Cowling. After an investigation, Beth discovered that Cowling

committed fraud by creating fictitious paperwork and using Excel’s computer

system.

      According to Beth, the normal practice at Excel was to bill at the time the

load was shipped, which would create a manifest that the warehouse could use to

check off for each piece of shipment. However, Cowling billed only after the

invoices were received, so no manifest was created that could be checked off.

Cowling submitted invoices on behalf of Nelams claiming delivery of items for

which orders had been cancelled before shipment. In addition, Cowling would

override the computer system to alter the originating shipping destination and

maximize the amount of money paid for the fictitious shipment. Beth testified that

she was never able to figure out how Cowling manipulated the paperwork to input

Nelams as a vendor in Excel’s computer system.

      Finally, Cathy Nelams, Nelams’s sister, testified that Nelams, who was

never involved in the trucking business, told her that he was approached about

                                          6
being involved in the fraud scheme by Cowling’s husband. The week of Nelams’s

murder, Nelams met with the Cowlings, and Stephanie Cowling “wrote out a

script” for Nelams of what he was supposed to say when company investigators

called.

      After presenting this evidence, the government argued that the overall nature

of Cowling’s scheme made it sophisticated. Cowling objected, arguing, inter alia,

that the government had not met the higher “sophisticated means” standard.

      The district court sustained the government’s objection, concluding that

Cowling’s offense involved sophisticated means, as follows:

      [I] think that [the fraud] did involve particularly complex or especially
      intricate conduct pertaining to the execution and particularly the
      concealment of the crime. I don’t agree that this was a garden variety
      fraud in light of not only the testimony today, but the stipulated facts
      and conceded facts in the presentence report. These were repeated
      acts over an extended period of time that were not merely opportune,
      and in my judgment they were sufficiently complex and intricate to
      justify the description sophisticated means.

After adding the two-level sophisticated means enhancement, the district court

found that Cowling’s adjusted offense level was 21 and her criminal history

category was I, yielding an advisory guidelines range of 37 to 46 months’

imprisonment. The district court imposed a 42-month sentence and ordered

Cowling to pay $453,054.40 in restitution.

      Cowling filed this appeal.

                                         7
                                      II. DISCUSSION

       On appeal, Cowling argues that the district court erred in imposing the

sophisticated means enhancement.3 Section 2B1.1(b)(8)(C) of the Sentencing

Guidelines provides for a two-level enhancement if the offense involved

sophisticated means. U.S.S.G. § 2B1.1(b)(8)(C).4 The commentary defines

sophisticated means as:

       especially complex or especially intricate offense conduct pertaining
       to the execution or concealment of an offense. For example, in a
       telemarketing scheme, locating the main office of the scheme in one
       jurisdiction but locating soliciting operations in another jurisdiction
       ordinarily indicates sophisticated means. Conduct such as hiding
       assets or transactions, or both, through the use of fictitious entities,
       corporate shells, or offshore financial accounts also ordinarily
       indicates sophisticated means.

U.S.S.G. § 2B1.1, cmt. n.6(B).

       Given the overall evidence in this case, the district court did not err in

imposing the sophisticated means enhancement. Rather than mere double-billing,

Cowing’s fraud scheme was complex and involved the use of her specialized

       3
          In addressing a § 2B1.1(b)(8)(C) enhancement for sophisticated means, we review the
district court’s factual findings for clear error and the application of the guideline provision to
those facts de novo. United States v. Humber, 255 F.3d 1308, 1311 (11th Cir. 2001). Here,
Cowling does not challenge any of the district court’s factual findings, but rather argues that the
facts established do not rise to the level of sophisticated means.
       4
         We reject as meritless Cowling’s claim that the district court applied the “more than
minimal planning” standard of now-obsolete U.S.S.G. § 2F1.1 (2000). A review of the record
reveals that the district court was aware of and applied the applicable “sophisticated means”
standard found in U.S.S.G. § 2B1.1(b)(8)(C).

                                                 8
knowledge of the business operations and the computer and bookkeeping systems

at Excel and DHL to create and then hide the transactions. For example,

Cowling’s offense involved establishing Nelams, who had never been involved in

trucking, as a third-party vendor and creating fictitious invoices to perpetrate her

scheme. Cowling then manipulated Excel’s computer system to change the

originating shipping destination to maximize the amount of money that was paid

for the fictitious shipments and manipulated DHL’s computer system to pay

invoices that were not entered into the computer system. Additionally, Cowling

attempted to avoid detection of the DHL scheme by providing Nelams with details

about the scheme and DHL’s business operations. Cowling’s schemes were

difficult to detect because of the careful and intricate methods she used to conceal

them. Indeed, Excel did not discover the fraud until it learned of the fraud at DHL.

      Considering the nature and scope of the embezzlement schemes, the

magnitude of the amount of loss – almost $500,000 – and given that Cowling

engaged in repeated fraudulent acts at two different companies for an extended

period of time, the district court did not err in finding that Cowling’s conduct

involved sophisticated means.

      AFFIRMED.

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