Court Opinion

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Date Created: 2015-10-13 23:20:23.024114+00
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Opinions of the United
2009 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

2-19-2009

USA v. Adjei
Precedential or Non-Precedential: Non-Precedential

Docket No. 07-2295

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                                                                 NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                 ____________

                                      No. 07-2295
                                     ____________

                           UNITED STATES OF AMERICA

                                            v.

                                  RICHARD ADJEI,

                                           Appellant
                                     ____________

                    On Appeal from the United States District Court
                              for the District of Delaware
                                (D.C. No. 06-cr-00055)
                     District Judge: Honorable Gregory M. Sleet
                                     ____________

                      Submitted Under Third Circuit LAR 34.1(a)
                                  January 6, 2009

    Before: FUENTES and FISHER, Circuit Judges, and PADOVA,* District Judge.

                               (Filed: February 19, 2009 )
                                     ____________

                              OPINION OF THE COURT
                                   ____________

      *
        Honorable John R. Padova, Senior United States District Judge for the Eastern
District of Pennsylvania, sitting by designation.
FISHER, Circuit Judge.

       Richard Adjei pleaded guilty to four counts of violating federal law in relation to

his conduct of using stolen identities to file false tax returns. Adjei was sentenced to a

total of 75 months of imprisonment. On appeal, he raises two challenges to his sentence.

For the reasons set forth below, we will affirm.

                                              I.

       We write exclusively for the parties, who are familiar with the factual context and

legal history of this case. Therefore, we will set forth only those facts necessary to our

analysis.

       On May 11, 2006, a federal grand jury in Delaware returned a four-count

indictment charging Adjei with various violations of federal law. On November 16,

2006, Adjei waived the indictment and pleaded guilty to an information charging him

with one count of bank fraud in violation of 18 U.S.C. § 1344, one count of aggravated

identity theft in violation of 18 U.S.C. § 1028A, one count of engaging in monetary

transactions using property derived from unlawful activity in violation of 18 U.S.C.

§ 1957, and one count of filing false claims in violation of 18 U.S.C. § 287. The

Memorandum of Plea Agreement provided that “[i]f the Government in its sole discretion

determines that the defendant has fulfilled his obligations of cooperation,” then at

sentencing the Government would (1) make Adjei’s cooperation known to the District

Court; (2) enter a motion for departure if Adjei provided substantial and truthful

                                              2
assistance in the investigation or prosecution of another person; and (3) make sentencing

recommendations that the Government deemed appropriate.

       Additionally, in the plea agreement, Adjei admitted that between November 2005

and April 2006 he filed 175 false tax returns with the Internal Revenue Service. Adjei

filed these tax returns by using stolen identification information from hospital patients –

which was taken from a billing collection company used by multiple hospitals – and did

so without the knowledge or consent of the individuals whose identities he

misappropriated. Adjei also used 149 of the fraudulent refund claims to secure refund

anticipation loans from HSBC Bank, JP Morgan (Bank One), and Santa Barbara Bank &

Trust (SBB&T).

       The District Court held a sentencing hearing on April 17, 2007. At this time, Adjei

objected to the amount of loss calculation set forth in the Presentence Investigation

Report (PSR). The PSR determined that the amount of loss that Adjei intended to cause

was more than $1 million but less than $2.5 million. The District Court sustained Adjei’s

objection and determined that the proper range for the amount of loss was between

$400,000 and $1 million. Adjei did not object to any of the other calculations contained

in the PSR. Adjei’s base offense level of six under U.S.S.G. § 2B1.1(a)(2) was increased

fourteen levels pursuant to U.S.S.G. § 2B1.1(b)(1)(H) for the intended loss, four levels

pursuant to U.S.S.G. § 2B1.1(b)(2)(B) because the offense involved more than fifty

victims, and one level pursuant to U.S.S.G. § 2S1.1(b)(2)(A) because he was convicted

                                              3
under 18 U.S.C. § 1957. Additionally, a three-level reduction for acceptance of

responsibility was applied. Thus, Adjei’s total offense level was 22 and his criminal

history category was I. Based on these calculations, the District Court determined that the

corresponding Guidelines range was between 41 and 51 months of imprisonment on

Counts One, Three, and Four. A mandatory two-year minimum sentence of imprisonment

was statutorily required on Count Two and would run consecutive to any sentence

imposed under the other counts.

       Although defense counsel did not make any objections to the calculation of the

Guidelines sentence, he did argue for a downward variance to a sentence “not much

above” the two-year mandatory minimum set by 18 U.S.C. § 1028A. He stated:

       Mr. Adjei has, from the very beginning, acknowledged his guilt. He has
       been debriefed by the government. He has told the government about other
       people who were involved, the identity of the individual who supplied him
       with the Social Security numbers. He has – I mean, unfortunately, the
       government has not seen fit to file a motion for downward departure or a
       motion under 3553(e) for a sentence below the mandatory minimum of two
       years in this case.

(App. 40-41.) After listening to testimony from a director of the hospital billing company

and arguments from both parties, the District Court specifically found that as a result of

Adjei’s conduct, the individual hospital patients

       had to engage in a long, drawn-out process to regain their identities and
       obtain proper tax returns. Not only was this process burdensome, but in the
       words of some of the victims whose identities you stole, they quote, it
       ‘mess[ed] up their finances,’ . . . during a difficult period of time in their
       lives with respect to their individual health conditions.

                                             4
(App. 56-57.) The District Court proceeded to sentence Adjei to 51 months of

imprisonment on Counts One, Three, and Four, and an additional 24 months of

imprisonment on Count Two. Adjei timely appealed the judgment of sentence.

                                               II.

       The District Court had jurisdiction over this case pursuant to 18 U.S.C. § 3231,

and we have jurisdiction to review the District Court’s judgment of sentence pursuant to

28 U.S.C. § 1291 and 18 U.S.C. § 3742. Because Adjei did not object to the number of

victims enhancement at sentencing, we review his challenge to the application of this

provision for plain error. Under the plain error standard, “we may vacate a sentence and

remand for resentencing only if we find that (1) an error was committed; (2) the error was

plain, that is, it is ‘clear’ and ‘obvious;’ and (3) the error ‘affected [the defendant’s]

substantial rights.’” United States v. Nappi, 243 F.3d 758, 762 (3d Cir. 2001) (quoting

United States v. Olano, 507 U.S. 725, 734 (1993)). We exercise plenary review over

Adjei’s breach of plea agreement argument. United States v. Hodge, 412 F.3d 479, 485

(3d Cir. 2005).

                                              III.

       Adjei challenges his sentence on two separate grounds. First, he argues that the

District Court committed plain error by applying the number of victims sentence

enhancement pursuant to U.S.S.G. § 2B1.1(b)(2). Second, he argues that the Government

acted in bad faith by failing to inform the District Court of the nature and extent of his

                                               5
cooperation and by failing to move for a downward departure under U.S.S.G. § 5K1.1, 28

U.S.C. § 994(n), and 18 U.S.C. § 3553(e). We will address each argument in turn.

                                             A.

       Adjei acknowledges that he did not make an objection to the application of the

number of victims enhancement at the time of sentencing and therefore our review of this

claim is for plain error. Nonetheless, Adjei contends that the District Court committed

plain error because only those persons who sustain “actual loss” meet the definition of

“victim” under U.S.S.G. § 2B1.1(b)(2), and as applied to the facts of his case, the only

victims were the Internal Revenue Service, the three banks, and the hospital billing

company. Accordingly, Adjei argues that it was plain error for the District Court to count

the individual hospital patients as victims for the purpose of applying the four-level

enhancement pursuant to U.S.S.G. § 2B1.1(b)(2)(B).

       Under the plain error standard, Adjei’s argument fails because he cannot establish

that the District Court committed an error that was clear and obvious. To begin, the

Guidelines define “victim” as “any person who sustained any part of the actual loss.”

U.S.S.G. § 2B1.1 cmt. n.1. Relatedly, “actual loss” is defined as “the reasonably

foreseeable pecuniary harm that resulted from the offense.” U.S.S.G. § 2B1.1 cmt.

n.3(A)(i). “Pecuniary harm” is defined as “harm that is monetary or that otherwise is

readily measurable in money,” but “does not include emotional distress, harm to

reputation, or other non-economic harm.” U.S.S.G. § 2B1.1 cmt. n.3(A)(iii). At the time

                                             6
Adjei was sentenced, we had not yet issued a precedential opinion interpreting the

definition of “victim” under U.S.S.G. § 2B1.1 and its Application Notes. Since that time,

we decided United States v. Kennedy, – F.3d – , 2009 WL 250105 (3d Cir. Feb. 4, 2009),

in which we held that “only those who are actually harmed by the crime can be counted as

victims for purposes of USSG § 2B1.1(b)(2).” Id. at *1. In Kennedy, we determined that

it was error for the district court to include individual account holders as victims under

U.S.S.G. § 2B1.1(b)(2) because it was undisputed that the individuals “did not ‘sustain[]

any part of the actual loss,’” and the Government did not “prove that the account holders

even knew that their funds had been stolen before they were completely reimbursed.” Id.

at *3. But our decision in Kennedy did not answer the question that is at issue in this

case, namely, whether defrauded individuals who “spent time or money seeking

reimbursement” qualify as victims under U.S.S.G. § 2B1.1(b)(2). Id. at *6. Thus,

applying the number of victims enhancement to the factual scenario presented in the

instant case – where there was testimony about the time and effort expended by individual

hospital patients in order to obtain their rightful tax refunds – was not error under current

law when Adjei was sentenced and, following our decision in Kennedy, still cannot

conclusively be characterized as such.

       Furthermore, although in recent years several Courts of Appeals have addressed

questions related to the application of U.S.S.G. § 2B1.1(b)(2), the differing results

reached in those cases undermine Adjei’s assertion that the District Court committed clear

                                              7
and obvious error. Compare United States v. Pham, 545 F.3d 712, 720-21 (9th Cir. 2008)

(explaining that if, prior to being reimbursed, individual account holders experienced

losses that were not short-lived, U.S.S.G. § 2B1.1(b)(2) could be applied), United States

v. Abiodun, 536 F.3d 162, 169 (2d Cir. 2008) (concluding that because each individual

“had to spend an appreciable amount of time securing reimbursement from their banks or

credit card companies” they could be considered victims under U.S.S.G. § 2B1.1(b)(2)),

and United States v. Lee, 427 F.3d 881, 895 (11th Cir. 2005) (finding that U.S.S.G.

§ 2B1.1(b)(2) applied because individuals suffered “more than a small out-of-pocket loss

and were not immediately reimbursed”), with United States v. Conner, 537 F.3d 480, 489

(5th Cir. 2008) (concluding that because individual accounts were quickly reimbursed by

credit card companies the individuals could not be counted as victims under U.S.S.G.

§ 2B1.1(b)(2)), United States v. Icaza, 492 F.3d 967, 970 (8th Cir. 2007) (finding that

U.S.S.G. § 2B1.1(b)(2) did not apply where defendants stole from hundreds of retail

stores in a franchise because only the parent corporation ultimately bore the loss), and

United States v. Yagar, 404 F.3d 967, 971 (6th Cir. 2005) (holding that individual account

holders could not be counted as victims under U.S.S.G. § 2B1.1(b)(2) because “they were

fully reimbursed for their temporary financial losses”). Even courts which determined

that reimbursed individuals did not meet the definition of “victims” under U.S.S.G.

§ 2B1.1(b)(2) recognized that under different circumstances such individuals might

qualify as victims. See Conner, 537 F.3d at 491 (noting that if individual account holders

                                             8
“encountered difficulty in obtaining reimbursement, a different question would be

presented”); Yagar, 404 F.3d at 971 (noting that “there may be situations in which a

person could be considered a ‘victim’ under the Guidelines even though he or she is

ultimately reimbursed”).

       Consequently, even if we were today to accept Adjei’s interpretation of U.S.S.G.

§ 2B1.1(b)(2), we would still be unable to conclude that the District Court committed an

error that was clear and obvious under existing law when it included the individual

hospital patients as victims for the purpose of sentencing. See United States v. Clark, 237
F.3d 293, 299 (3d Cir. 2001) (finding no plain error where the defendant could not show

that at the time of sentencing the district court committed an “error [which was] clear

under current law”) (internal quotation marks and citation omitted). Therefore, under the

plain error standard, Adjei’s challenge to the application of the number of victims

enhancement must fail.

                                             B.

       Adjei also argues that the Government acted in bad faith by failing to carry

through with the terms of the plea agreement after he fulfilled his obligations to

cooperate, but he notes that these allegations of bad faith were not brought to the District

Court’s attention. Furthermore, Adjei recognizes that the plea agreement does not contain

a promise that the Government will file a downward departure motion, but instead it

reserves “sole discretion” for the Government to decide whether to make such a motion.

                                              9
Despite this recognition, Adjei argues that the Government’s refusal to file a downward

departure motion is attributable to bad faith and constitutes a violation of the plea

agreement.

       Although Adjei did not raise this argument at any point prior to this appeal, we

will nonetheless exercise plenary review over this contention. See Hodge, 412 F.3d at

485 (“We rejected the notion that breach-of-plea arguments should be reviewed for plain

error, and instead held that we must exercise plenary review.” (citing United States v.

Moscahlaidis, 868 F.2d 1357, 1360 (3d Cir. 1989))). Adjei bears the burden of

establishing by a preponderance of the evidence that the Government breached the plea

agreement. See United States v. Huang, 178 F.3d 184, 187 (3d Cir. 1999); see also

United States v. Isaac, 141 F.3d 477, 484 (3d Cir. 1998) (“[D]efendant must make a

showing of bad faith to trigger some form of hearing” on the question of whether the

prosecutor’s decision not to file a downward departure motion violated the plea

agreement (internal quotation marks omitted)).

       The only relevant reference to the breach of plea argument contained in the record

is defense counsel’s statement at sentencing that Adjei “has been debriefed by the

government. He has told the government about other people who were involved, the

identity of the individual who supplied him with the Social Security numbers. . . .

[U]nfortunately, the government has not seen fit to file a motion for downward departure

or a motion under 3553(e).” But this statement contains no allegation that the

                                             10
Government acted in bad faith by failing to file a motion at sentencing and provides no

accusations of improper motive for us to review. The fact that the Government did “not

see[] fit to file a motion” hardly demonstrates that it acted in bad faith and breached the

plea agreement, especially when we consider that the plea agreement reserved “sole

discretion” to the Government to determine if Adjei provided substantial and truthful

assistance. Moreover, although the statement highlights that Adjei was debriefed by the

Government, this alone does not support his contention that the Government acted in bad

faith in light of the express language of the plea agreement, which stated that “a

debriefing does not amount to substantial assistance.” There is simply no evidence of the

Government’s bad faith, let alone the preponderance of evidence which Adjei would need

in order to carry his burden of demonstrating that the Government breached the plea

agreement. Consequently, we are unable to conclude that the Government’s failure to

move for a downward departure constituted a breach of the plea agreement, and Adjei’s

argument to this effect must be rejected.

                                             IV.

       For the foregoing reasons, we will affirm the judgment of the District Court.

                                             11