Court Opinion

ID: 2995657
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:21:34.600167+00
Date Added: 2024-06-11T12:11:20.411867
License: Public Domain

In the
United States Court of Appeals
For the Seventh Circuit

No. 01-3593

United States of America,

Plaintiff-Appellee,

v.

Lisa Leonard,

Defendant-Appellant.

Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 01-CR-19--Rudolph T. Randa, Judge.

Argued February 20, 2002--Decided May 9, 2002

  Before Bauer, Ripple and Manion, Circuit
Judges.

  Bauer, Circuit Judge. Lisa Leonard was
charged with eleven counts of tax fraud.
She entered a guilty plea to Count Eleven
and the district court granted the
government’s motion to dismiss Counts One
through Ten without prejudice. At
Leonard’s sentencing hearing, the
district court sentenced Leonard to 30
months in prison. This sentence was
based, in part, on "relevant conduct,"
which was initially charged in the
dismissed counts of Leonard’s indictment.
Leonard appeals her sentence. We affirm
the sentence imposed by the district
court.

BACKGROUND

  In April of 1998, Lisa Leonard filed a
1997 federal income tax return with the
United States Treasury Department and
claimed wages of $11,657, purportedly
earned from a company named MOFOCO
Enterprises. A fraudulent W-2 Form
supposedly issued by MOFOCO showing
earned wages and withholding was attached
to Leonard’s tax form. Based on these
claimed wages, Leonard sought a tax
refund in the amount of $4,461. Leonard
was never employed at MOFOCO Enterprises.
A representative from the company
confirmed that no wages were ever paid to
Leonard and no withholding occurred.

  In all, over the course of three years,
Leonard prepared a total of eleven false
income tax returns. In addition to
submitting her own fraudulent claim for a
tax refund for 1997, Leonard assisted
five others in preparing and submitting
false federal income tax returns to
obtain refunds to which they were not
entitled for the years 1995, 1996 and
1997. These five individuals testified
that Leonard approached each of them,
offered to complete their returns and in
formed them that they were entitled to a
refund for various reasons, all of which
she fabricated. Two of these individuals
were Leonard’s neighbors and the three
others were relatives of Leonard’s
boyfriend. Leonard met with each
individual and obtained their respective
social security numbers, dependant
information and, if available, a W-2
Form. For each of these returns, Leonard
prepared and included an altered or
completely fabricated W-2 Form. In some
cases, Leonard altered a legitimate W-2
Form to show additional wages and
withholding; in other cases, Leonard cre
ated an entirely false W-2 Form for
employment that never occurred. All of
these fraudulent tax returns falsely
claimed an earned income credit and a
refund of fictitious tax income withheld.

  At Leonard’s direction, the five
individuals took their completed federal
income tax returns to H&R Block for
filing. Leonard charged each individual a
fee ranging from $50 to $1,000 for her
work in preparing their returns. Payment
was usually made at the time the refund
check was cashed, although in some
instances, Leonard required a "down
payment" prior to the preparation of the
return.

  On February 6, 2001, a federal grand
jury returned an eleven count indictment
against Leonard. Counts One through Ten
charged her with devising and executing a
scheme to assist others in obtaining
false refunds from the I.R.S. by filing
false federal income tax returns in
violation of 18 U.S.C. sec.sec. 287, 2.
Count Eleven charged her with making a
false tax claim to the I.R.S. for a
refund on her own behalf. On May 21,
2001, Leonard entered a guilty plea to
Count Eleven and the district court
granted the government’s motion to
dismiss the remaining ten counts.

  The district court conducted a
sentencing hearing in September of 2001.
The government offered various exhibits
and the testimony of witnesses to
establish that Leonard’s fraudulent
filing of tax returns on behalf of others
was "relevant conduct" for purposes of
sentencing. Each of the five individuals
for whom Leonard prepared returns
testified at the hearing. Each confirmed
that Leonard prepared his or her tax
return and that they relied upon her
expertise in seeking their refund. All
five testified that they had actually
observed Leonard prepare either their own
tax returns or the tax returns of others
in her apartment. Some also stated that
Leonard’s apartment contained papers, an
adding machine, a typewriter, white-out
and a notebook containing social security
numbers and phone numbers.

  The district court adopted the facts and
sentencing calculation set forth in the
Presentence Report (PSR). The court found
that the government established by a
preponderance of the evidence that
Leonard’s fraudulent filing of tax
returns on behalf of others constituted
"relevant conduct" to the offense in
Count Eleven for sentencing purposes.
Leonard’s offense level was adjusted
accordingly, and she was sentenced to 30
months imprisonment. This appeal
followed.

DISCUSSION

A.  "Relevant Conduct" Adjustment
  Leonard first argues that the district
court erred when it considered the tax
frauds Leonard committed on behalf of
others as "relevant conduct" under
section 1B1.3(a) of the Sentencing
Guidelines. This conduct was initially
charged in the indictment, but dismissed
pursuant to the government’s motion. At
Leonard’s sentencing hearing, the
district court determined that she caused
a total financial loss of $46,497. This
figure was based on the loss of $4,461,
which resulted from the fraud to which
Leonard pled guilty, plus an additional
loss of $42,036, resulting from the false
income tax returns filed on behalf of the
five other individuals for 1995, 1996 and
1997. Leonard argues that the district
court’s calculation is flawed: that the
$42,036 should not have been included in
the total loss she caused because it does
not constitute "relevant conduct" under
the Guidelines. She asserts that this
conduct is not part of the "same course
of conduct" or "a common scheme or plan"
as the offense to which she pled guilty
in Count Eleven. We disagree.

  A district court’s determination that
certain behavior amounts to "relevant
conduct" for sentencing purposes under
the Guidelines is a factual finding and
will only be disturbed if clearly
erroneous. United States v. Nunez, 958
F.2d 196, 198 (7th Cir. 1992). Generally,
we will affirm the district court’s
finding of relevant conduct where "the
record reveals that the district court
relied on the recommendations of the PSR
and carefully considered the government’s
theory on the relationship between the
offense of conviction and the additional
conduct." United States v. Patel, 131
F.3d 1195, 1204 (7th Cir. 1997).

  The United States Sentencing Guidelines
permit a sentencing court to consider
certain "relevant conduct," with which
the defendant has not been charged, in
calculating a defendant’s base offense
level for sentencing purposes. United
States v. Taylor, 272 F.3d 980, 982 (7th
Cir. 2001). Pursuant to section
1B1.3(a)(2) of the Guidelines, "relevant
conduct" includes any acts or omissions
that were "part of the same course of
conduct or common scheme or plan as the
offense of conviction." Application Note
9(A) to section 1B1.3 defines "common
scheme or plan" as two or more offenses
that are "substantially connected to each
other by at least one common factor, such
as common victims, common accomplices,
common purpose, or similar modus
operandi." Further, Application Note 9(B)
provides that offenses that are not part
of a "common scheme or plan" may be part
of the "same course of conduct" if they
are "connected or sufficiently related to
each other as to warrant the conclusion
that they are part of a single episode,
spree or ongoing series of offenses."
Factors to be considered in this analysis
include the degree of similarity of the
offenses, the regularity (repetitions) of
the offenses, and the time interval
between the offenses. U.S. Sentencing
Guidelines Manual sec. 1B1.3(a), cmt. n.
9(b).

  In Leonard’s case, all the financial
transactions considered fall within the
scope of "relevant conduct" as defined in
section 1B1.3(a)(2). Although Leonard
pled guilty to filing a single false tax
return, the record clearly shows that she
engaged in additional fraudulent acts
that are most certainly relevant conduct
to her offense of conviction. First, all
the financial transactions in which
Leonard was involved establish a "common
scheme or plan," as defined in
Application Note 9(A). For example, each
transaction involved the filing of false
tax returns seeking a refund. The I.R.S.
was a common victim in every instance.
See, e.g., United States v. Brierton, 165
F.3d 1133, 1137 (7th Cir. 1999)
(affirming a relevant conduct enhancement
because a credit union was the common
victim where defendant was fraudulently
altering loans and falsifying other
financial records at the credit union).
Finally, Leonard’s modus operandi was the
same for every transaction in that
sheattached an altered or falsified W-2
Form showing false wages and withholdings
to each return. Accordingly, the several
common factors establish that Leonard’s
offenses are "substantially connected"
and give rise to a "common scheme or
plan."

  In addition, Leonard’s filing of her own
1997 false return and the preparation of
false returns for others in previous
years amounts to "the same course of
conduct" pursuant to the standards set
forth in Application Note 9(B). In
considering the similarity of the conduct
in question, a sentencing court must look
to the identity of the participants and
the nature, structure and location of the
allegedly related transactions. United
States v. Cedano-Rojas, 999 F.2d 1175,
1180 (7th Cir. 1993). As described above,
a distinct similarity among all of
Leonard’s financial transactions is
evident. These offenses occurred with a
degree of regularity and temporal
proximity; the false tax returns were
filed in consecutive years. Leonard
argues that temporal proximity is not
established in her case because the other
illegal conduct was at least a year
before the offense to which she pled
guilty. The fact that the transactions
were each a year apart does not affect
the proximity; a tax return is only filed
once a year. See, e.g., U.S. Sentencing
Guidelines Manual sec. 1B1.3(a), cmt. n.
9(b) (stating "a defendant’s failure to
file tax returns in three consecutive
years appropriately would be considered a
part of the same course of conduct
because such returns are only required at
yearly intervals"). Again, we are
satisfied that the prior transactions
here are sufficiently related to the
offense of conviction and their
consideration as relevant conduct is
warranted.

  Leonard argues that after the first ten
counts of the indictment were dismissed,
all that remained was a one count
indictment alleging her own fraudulent
claim, "a course of conduct which lasted
about one day." While this is true, the
guidelines permit the sentencing court to
make certain adjustments based on
offenses outside the four corners of the
indictment. The purpose for the "relevant
conduct" adjustment in sentencing "is to
allow the sentence to reflect the
seriousness of an offense rather than
being limited by the specific charge set
out in the indictment." Taylor, 272 F.3d
at 982. Accordingly, we conclude that the
district court’s conclusions were based
on ample evidence that Leonard’s prior
illegal acts were "relevant conduct" to
the offense of conviction.

B.   Apprendi

  Leonard next argues that the district
court acted contrary to the Supreme
Court’s holding in Apprendi v. New
Jersey, 530 U.S. 466 (2000), by enhancing
Leonard’s sentence based on prior tax
offenses that were not proved to a jury
beyond a reasonable doubt. We review a
district court’s interpretation of the
Sentencing Guidelines de novo. United
States v. Parolin, 239 F.3d 922, 928 (7th
Cir. 2001).

  We find Leonard’s Apprendi argument to
be without merit. Under the Supreme
Court’s holding in Apprendi, any fact,
other than the fact of a prior
conviction, that increases the penalty
for a crime beyond the prescribed
statutory maximum must be submitted to a
jury and proved beyond a reasonable
doubt. Apprendi, 530 U.S. at 490.
However, it is well-settled in this
Circuit that Apprendi does not apply in
cases where the actual sentence imposed
is less severe than the statutory
maximum. United States v. Watts, 256 F.3d
630, 634 (7th Cir. 2001); United States
v. Jones, 245 F.3d 645, 649 (7th Cir.
2001) ("We have repeatedly held that when
a defendant is sentenced to a term of
imprisonment within the statutory maximum
for the crime of which he is convicted,
Apprendi is beside the point.") (internal
citations omitted). Put another way,
Apprendi is limited to situations in
which findings affect statutory maximum
punishment. United States v. Behrman, 235
F.3d 1049, 1054 (7th Cir. 2000). Where
the statutory maximum is not exceeded,
the sentencing court may adjust the
sentence after making the appropriate
findings by a preponderance of the
evidence. Id.

  Leonard pled guilty to one count of tax
fraud, in violation of 18 U.S.C. sec.sec.
287, 2, and the statutory limit on
imprisonment for this offense is five
years. The district court determined by a
preponderance of the evidence that
Leonard was responsible for prior tax
fraud and imposed a sentence of 30
months. Although Leonard’s sentence was
enhanced based on the prior fraudulent
acts, the sentence did not exceed the
statutory maximum for the offense of
which she was convicted. Accordingly,
Apprendi does not apply.

CONCLUSION

  For the foregoing reasons, we AFFIRM the
district court’s decision to sentence
Leonard to 30 months in prison.