Court Opinion

ID: 3185495
Source: CourtListenerOpinion
Date Created: 2016-03-15 15:06:41.714349+00
Date Added: 2024-06-11T12:18:45.261424
License: Public Domain

United States Court of Appeals
         For the Eighth Circuit
     ___________________________

             No. 14-3636
     ___________________________

          United States of America

    lllllllllllllllllllll Plaintiff - Appellee

                       v.

               Brenda S. Laws

   lllllllllllllllllllll Defendant - Appellant
      ___________________________

             No. 14-3639
     ___________________________

          United States of America

    lllllllllllllllllllll Plaintiff - Appellee

                       v.

               Lareka S. Laws

   lllllllllllllllllllll Defendant - Appellant
      ___________________________

             No. 14-3640
     ___________________________

          United States of America

    lllllllllllllllllllll Plaintiff - Appellee
                                           v.

                                 Milton L. Laws, Jr.

                    lllllllllllllllllllll Defendant - Appellant
                       ___________________________

                                No. 14-3642
                        ___________________________

                             United States of America

                        lllllllllllllllllllll Plaintiff - Appellee

                                           v.

                                   Jameel L. Laws

                    lllllllllllllllllllll Defendant - Appellant
                                    ____________

                  Appeals from United States District Court
               for the Eastern District of Arkansas - Little Rock
                                ____________

                          Submitted: December 15, 2015
                             Filed: March 15, 2016
                                 ____________

Before MURPHY, BENTON, and KELLY, Circuit Judges.
                          ____________

KELLY, Circuit Judge.

                                           -2-
      Brenda Laws, Lareka Laws, Milton Laws, and Jameel Laws were charged with
conspiracy to defraud the United States by falsely claiming tax refunds in violation
of 18 U.S.C. § 286, and making false claims to the IRS in violation of 18 U.S.C.
§ 287. These charges arose from a scheme in which the defendants filed more than
200 tax returns claiming first-time homebuyer tax credits to which the named
taxpayer was not entitled. The tax refunds, including the falsely-claimed credit, were
then deposited into one of 17 bank accounts owned or controlled by a member of the
Laws family. The total amount of the refunds fraudulently claimed was $1,730,086,
and the total amount of the refunds issued was $1,364,171.

       Following a jury trial, the four defendants were found guilty on all counts.1 On
November 6, 2014, the district court entered judgment and sentenced the defendants
to terms of imprisonment ranging between 30 and 64 months. On appeal, Brenda
Laws challenges the district court’s calculation of the applicable Guidelines
sentencing range; Milton Laws challenges the court’s denial of his motion to
suppress; Lareka Laws challenges the denial of her motion for acquittal; and Jameel
Laws challenges the sufficiency of the evidence to support his conviction. We
address each argument in turn.

      I. Brenda Laws

       In sentencing Brenda Laws, the district court overruled her objection to three
sentencing enhancements, which collectively raised her total offense level from 22
to 32. Based on the total offense level of 32, the court sentenced Laws to 64 months
on the conspiracy count and 30 months on the false claims count, to run concurrently.

      1
      The indictment alleged one count of conspiracy against all four defendants
(Count 1), and six separate counts of making false claims to the IRS (Counts 2–7).
Brenda Laws was found guilty on Counts 1 and 7; Milton Laws was found guilty on
Counts 1 and 7; Lareka Laws was found guilty on Counts 1, 2, and 5; and Jameel
Laws was found guilty on Counts 1 and 4.

                                         -3-
Laws appeals the application of the three enhancements, arguing that they were
erroneously applied given the facts and circumstances of her offense. We review the
district court’s interpretation and application of the Sentencing Guidelines de novo,
and review findings of fact for clear error. United States v. Ault, 598 F.3d 1039,
1040 (8th Cir. 2010).

       The first sentencing enhancement Laws challenges is the 2-level sophisticated
means enhancement under USSG § 2B1.1(b)(10)(C). That enhancement applies
when the offense involved “especially complex or especially intricate . . . conduct.”
 USSG § 2B1.1(b)(10)(C), Application Note 9(B) (2013). The relative sophistication
of a scheme of fraudulent conduct is “viewed in light of the fraudulent conduct and
differentiated, by assessing the intricacy or planning of the conduct, from similar
offenses conducted by different defendants.” United States v. Hance, 501 F.3d 900,
909 (8th Cir. 2007). Thus, for the enhancement to apply, the government must show
that the offense conduct at issue was notably more complex or intricate than the
garden-variety version of that offense. Id. The question is not whether the offense
is generally considered a sophisticated one—for instance, securities fraud as
compared to simple assault. Rather, the question is whether the particular offense
conduct was more than usually sophisticated when compared to the offense in its
basic form. Id. at 909–11 (holding that renting a post office box under an assumed
name and using that box to carry out a fraud scheme was not distinguishable “from
the multitude of other mail fraud cases”).

      Here, the district court concluded that the “repetitive and coordinated conduct”
involved in the offense made its means sophisticated. Even if any single part of the
offense was not particularly complicated, “repetitive and coordinated conduct can
amount to a sophisticated scheme.” United States v. Sethi, 702 F.3d 1076, 1079 (8th
Cir. 2013) (quoting United States v. Fiorito, 640 F.3d 338, 351 (8th Cir. 2011)).
Importantly, however, mere repetition is not sufficient to make an offense
sophisticated. Instead, the sophistication of the offense conduct is associated with the

                                          -4-
means of repetition, the coordination required to carry out the repeated conduct, and
the number of repetitions or length of time over which the scheme took place. See,
e.g., Fiorito, 640 F.3d at 351 (scheme required coordinating sale or refinancing of
multiple homes, took place over the course of three years, and involved at least 11
victims); United States v. Bistrup, 449 F.3d 873, 883 (8th Cir. 2006) (scheme
required repeatedly lying to victims, was maintained by using later-acquired funds to
make partial payments to earlier victims, required the use of multiple financial
accounts, and took place over almost five years); United States v. Finck, 407 F.3d
908, 915 (8th Cir. 2005) (scheme to obtain vehicles required obtaining multiple false
confirmations that money had been transferred and coordinating sale of multiple
vehicles in different states).

       The government argued, in support of the enhancement, that the offense in this
case involved opening and closing over 20 bank accounts for the purpose of receiving
fraudulent refunds; filing tax returns without a preparer name listed; filing tax returns
listing false addresses, “which made it difficult to verify information with the
victims”; using P.O. boxes to receive tax refunds and correspondence; and filing over
200 fraudulent returns. See USSG § 2B1.1(b)(10)(C), Application Note 9(B); Hance,
501 F.3d at 910; Fiorito, 640 F.3d at 351; United States v. Huston, 744 F.3d 589, 592
(8th Cir. 2014). Tax fraud is generally a sophisticated offense, and any single one of
the aggravating factors here may not be sufficient to elevate the offense conduct
beyond the ordinary version of the offense. Moreover, we are not convinced that the
mere repetitive conduct as it played out in this particular case rendered it
sophisticated. But in combination, the multiple bank accounts, the use of multiple
P.O. boxes, the filing of returns with no preparer listed, and the filing of returns
listing false addresses demonstrates a carefully-considered attempt to conceal the
nature of the scheme, to make identifying its multiple perpetrators more difficult, and
to partially obscure the identity of the victims. See USSG § 2B1.1(b)(10)(C),
Application Note 9(B). This, combined with the fact that at least six people were
involved in executing the scheme and collectively managed to file more than 200

                                          -5-
fraudulent returns claiming over $1.7 million in refunds, makes the offense conduct
in this case “notably more intricate” than the garden-variety conspiracy to defraud the
United States or false claim to the IRS. See Hance, 501 F.3d at 910. Accordingly, we
conclude that the district court did not err in applying the sophisticated means
sentencing enhancement to Brenda Laws.

       The second sentencing enhancement Laws challenges is the 4-level organizer
or leader enhancement under USSG § 3B1.1(a). The organizer/leader enhancement
applies when the defendant was “an organizer or leader of a criminal activity that
involved five or more participants or was otherwise extensive.” USSG § 3B1.1(a)
(2013). In determining whether to apply the enhancement, the court

      should consider . . . the exercise of decision making authority, the nature
      of participation in the commission of the offense, the recruitment of
      accomplices, the claimed right to a larger share of the fruits of the crime,
      the degree of participation in planning or organizing the offense, the
      nature and scope of the illegal activity, and the degree of control and
      authority exercised over others.

USSG § 3B1.1(a), Application Note 4. Though all these factors are relevant, the
primary requirement is that the defendant “directed or procured the aid of underlings”
in committing the offense. United States v. Adejumo, 772 F.3d 513, 532 (8th Cir.
2014), cert. denied sub nom. Okeayainneh v. United States, 135 S. Ct. 1869 (2015)
(“[W]e have always required evidence that the defendant directed or procured the aid
of underlings.”) (quoting United States v. Irlmeier, 750 F.3d 759, 764 (8th Cir.
2014)).

      In this case, there is insufficient evidence to show that Brenda Laws was an
organizer or leader. The only evidence in support of this conclusion is the fact that
Laws owned the house where the IRS searched and seized relevant evidence and was
the “owner and subscriber” for the internet access used to submit the fraudulent tax

                                          -6-
returns. There was no evidence that Laws planned the fraudulent scheme, organized
or directed her co-conspirators in carrying out the scheme, or otherwise controlled the
commission of the offense. The facts that Laws’ co-conspirators were her adult
children and that the offense was apparently committed in her home may give rise to
a general suspicion that she was likely in control of the family’s conspiracy—but this
gut feeling is insufficient to support a conclusion, by a preponderance of the
evidence, that Laws was an organizer or leader of the offense for purposes of this
enhancement. While the district court found that Laws “exercised decision-making
authority over other participants,” neither the court nor the government identified any
specific evidence to support this conclusion. The evidence in the record is simply
insufficient to support a finding that Laws was an organizer or leader, and application
of this sentencing enhancement was erroneous.

       Third and finally, Laws challenges the 4-level sentencing enhancement for an
offense involving 50 or more victims, under USSG § 2B1.1(b)(2)(B) (2013). For
purposes of the enhancement, a victim is defined as a person who “sustained any part
of the actual loss,” and actual loss means “the reasonably foreseeable pecuniary harm
that resulted from the offense.” USSG § 2B1.1(b)(2)(B), Application Notes 1, 3(A)(i)
(2013). Taxpayers who have false tax returns filed in their name may be considered
victims of tax fraud—rather than unindicted co-conspirators, as Laws
urges2—because they will be held responsible for the fraud until they can prove their
innocence and because the “adverse effect of battling the bureaucracy is a reasonably
foreseeable pecuniary harm.” United States v. Quevedo, 654 F.3d 819, 825 (8th Cir.
2011).

      2
        Such taxpayers who benefited from the fraudulent scheme may of course be
unindicted co-conspirators, rather than victims, but Laws has presented no evidence
that this was the case here.

                                         -7-
       Here, the district court found that the government identified 245 people whose
names were used to submit fraudulent tax returns. All of those 245 people were
audited, many were required to spend time in interviews or filling out questionnaires
to prove that they were not responsible for the fraud, and any who received money to
which they were not entitled will lose future refund payments from the IRS. These
facts are sufficient to support the finding that Laws’ offense involved 50 or more
victims, and the district court did not err in applying the corresponding sentencing
enhancement.

      A non-harmless procedural error in calculating the applicable Guidelines
sentencing range “requires a remand for resentencing.” United States v. Spikes, 543
F.3d 1021, 1023 (8th Cir. 2008) (citing United States v. Vickers, 528 F.3d 1116, 1120
(8th Cir. 2008)). Because the district court improperly imposed the organizer/leader
sentencing enhancement, increasing Brenda Laws’ total offense level by four levels,
we reverse and remand for resentencing.

      II. Milton Laws

       On the fourth day of trial, Milton Laws moved to suppress statements he made
to an IRS agent at his mother’s home, while a search of the home was being executed.
Specifically, Laws asserted that he was handcuffed, and therefore in custody, at the
time he was interviewed by the IRS agent. After a hearing, which began that same
day, the district court granted Laws’ motion to suppress. Two days later, the
government moved for reconsideration and, at a second hearing, presented the
testimony of nine additional witnesses. After this hearing, the district court issued a
thorough written decision discussing the evidence presented and applying the
appropriate legal test to determine whether Laws was in custody at the time of his
interview. The district court found that while Laws had been handcuffed when his
pockets were searched, he was subsequently uncuffed and told that he was free to

                                         -8-
leave before he was interviewed by the IRS agent.3 The court concluded that Laws
had not been in custody at the time he made the statements and, this time, denied his
motion to suppress. Laws argues that the district court abused its discretion in
granting the government’s motion to reconsider, and clearly erred in finding that he
was not in custody when he made the statements to the IRS agent.

      We review the district court’s decision to reconsider its ruling on the
suppression issue for abuse of discretion. United States v. Hayden, 759 F.3d 842, 845
(8th Cir.), cert. denied, 135 S. Ct. 691 (2014). The standard that the district court is
required to apply in making that decision, however, is not established in this circuit.
See id. at 846. There are two basic standards in use in other circuits: while some
require the government to justify its failure to present relevant evidence at the original
suppression hearing, others have declined to impose a justification requirement and
have instead prioritized the introduction of lawfully obtained evidence. Compare
United States v. Allen, 573 F.3d 42, 53 (1st Cir. 2009); United States v. Kithcart, 218
F.3d 213, 219–20 (3d Cir. 2000); United States v. Dickerson, 166 F.3d 667, 678–79
(4th Cir. 1999), rev’d on other grounds, 530 U.S. 428 (2000); United States v.
Villabona-Garnica, 63 F.3d 1051, 1055 (11th Cir. 1995); McRae v. United States, 420
F.2d 1283, 1286–88 (D.C. Cir. 1969) with United States v. Rabb, 752 F.2d 1320,
1323 (9th Cir. 1984), abrogated on other grounds by Bourjaily v. United States, 483
U.S. 171, 181 (1987). Under either standard, we conclude that the district court did
not abuse its discretion in reopening the suppression issue.

      3
        The district court’s findings suggested that some of the confusion stemmed
from a difference in policy between the IRS, whose agent testified that use of
handcuffs was very uncommon during the execution of IRS search warrants, and the
Pine Bluff Police Department, who assisted in the execution of the warrant and whose
officer testified that use of handcuffs was their standard procedure in executing drug-
related warrants. For some reason, many of the police officers who assisted in the
execution of the warrant were officers from the Vice and Narcotics Unit.

                                           -9-
        Laws’ initial motion to suppress was untimely, raised on the fourth day of trial.
The initial suppression hearing began that same day, giving the government little or
no time to prepare its response to Laws’ allegations. The government filed its motion
to reconsider only two days after the court’s initial ruling, and cited specific evidence
bearing directly on the question of custody that had not been presented to the court
at the first hearing. A time period of two days to gather and interview nine witnesses,
while trial was ongoing, is not excessive, and the government may not reasonably
have been able to gather that evidence in the time between the filing of Laws’
suppression motion and the court’s ruling. Even under the more stringent standard,
the government provided sufficient justification for its failure to present all relevant
evidence at the first hearing on Laws’ belated motion to suppress. Under these
circumstances, the district court did not abuse its discretion in granting the
government’s motion to reconsider its prior ruling and reopen the suppression issue.
Cf. United States v. Chavez Loya, 528 F.3d 546, 555 (8th Cir. 2008).

       We now proceed to our substantive review of the court’s denial of Laws’
motion to suppress. We review the district court’s factual findings for clear error, and
its legal conclusions de novo. Chavez Loya, 528 F.3d at 552. Laws does not identify
any clear error in the factual findings underlying the district court’s ruling. In fact,
the court resolved the bulk of the disputed factual issues in Laws’ favor,
finding—contrary to the testimony presented by the government—that he was in fact
handcuffed at some point during the execution of the search warrant. Rather, Laws
argues that the district court erred in concluding that, given the facts and
circumstances of his interview with the IRS agent, a reasonable person would not
have understood himself to be in custody.

       “In determining whether a suspect is ‘in custody’ at a particular time we
examine the extent of the physical or psychological restraints placed on the suspect
during interrogation in light of whether a ‘reasonable person in the suspect’s position
would have understood his situation’ to be one of custody.” United States v. Griffin,

                                          -10-
922 F.2d 1343, 1347 (8th Cir. 1990) (quoting Berkemer v. McCarty, 468 U.S. 420,
442 (1984)). Indicia of custody include:

      (1) whether the suspect was informed at the time of questioning that the
      questioning was voluntary, that the suspect was free to leave or request
      the officers to do so, or that the suspect was not considered under arrest;
      (2) whether the suspect possessed unrestrained freedom of movement
      during questioning; (3) whether the suspect initiated contact with
      authorities or voluntarily acquiesced to official requests to respond to
      questions; (4) whether strong arm tactics or deceptive stratagems were
      employed during questioning; (5) whether the atmosphere of the
      questioning was police dominated; or, (6) whether the suspect was
      placed under arrest at the termination of the questioning.

Id. at 1349. The district court found that Laws had been handcuffed before his
interview, that he did not initiate the interview, that the atmosphere of the house was
dominated by law enforcement, and that the occupants of the house were not free to
move around without being accompanied by police. The district court also found that
Laws was not arrested at the end of the interview, and that the interview lasted only
ten minutes. Most importantly, the district court found that an IRS agent advised all
occupants of the house, including Laws, that they were free to leave after Laws was
uncuffed and before he made any statements to one of the agents.

       Based on these factual findings, the district court did not err in finding that
Laws was not in custody when he made the statements he seeks to suppress. Though
here the second, third, and fifth Griffin factors weigh in favor of custody, an explicit
advisory that an individual is free to leave generally “weigh[s] heavily toward a
finding of non-custodial status.” United States v. Elzahabi, 557 F.3d 879, 884 (8th
Cir. 2009). Laws was handcuffed for a period of time before being told that he was
free to leave. He was not personally advised of his right to leave, but rather was
generally advised along with all other occupants of the house that they were free to
go. These factors make this a closer case for custody than those situations where a

                                         -11-
suspect is specifically, personally, and repeatedly advised of their right to end the
encounter with law enforcement. See id.; United States v. Czichray, 378 F.3d 822,
826 (8th Cir. 2004). Nevertheless, we have held more than once that an “explicit
assertion that the defendant may end the encounter . . . . generally removes any
custodial trappings from the questioning.” Elzahabi, 557 F.3d at 884 (quoting United
States v. Ollie, 442 F.3d 1135, 1138 (8th Cir. 2006)). Here, the district court found
that Laws was so advised. The court’s finding was not clearly erroneous, and we
accordingly conclude that Milton Laws was not in custody at the time of his interview
with the IRS agent. The district court properly denied Laws’ motion to suppress.

      III. Lareka Laws

       Lareka Laws challenges the district court’s denial of her motion for a judgment
of acquittal. She asserts that the government’s evidence was insufficient to establish
who in fact owned the real estate identified on the tax returns, or that the properties
could not properly qualify for the homebuyer tax credit. She also argues that the
government failed to prove that she had sufficient intent to defraud, or that any
fraudulent claims she made were material. We review the denial of a motion for
judgment of acquittal de novo. United States v. Ford, 726 F.3d 1028, 1033 (8th Cir.
2013), cert. denied, 135 S. Ct. 131 (2014) (citing United States v. Lewis, 557 F.3d
601, 612 (8th Cir. 2009)). When a motion for judgment of acquittal is based on
insufficiency of the evidence, we view all evidence in the light most favorable to the
verdict, accept all reasonable inferences in support of the verdict, and reverse only if
no reasonable jury could have found the defendant guilty beyond a reasonable doubt.
Id.

      We conclude that the evidence against Laws was sufficient to support the jury’s
guilty verdict. The evidence included more than 200 tax returns that improperly
claimed a first-time homebuyer tax credit, a significant number of which Laws
personally prepared; deposit of the credits into one of 17 accounts owned by a

                                         -12-
member of the Laws family, including two accounts owned or co-owned by Lareka
Laws; an admission by Laws that she had filed some of the relevant tax returns;
testimony that Laws knew that the individuals she was filing returns for were not
entitled to the homebuyer credit; and testimony that Laws had fabricated information
on the tax returns she filed. Viewing this evidence in the light most favorable to the
jury’s verdict and accepting all reasonable inferences in favor of the verdict, we
cannot say that no reasonable jury could have found Laws guilty beyond a reasonable
doubt. Though the jury could alternatively have accepted the arguments Laws
advances on appeal, it was not required to do so. See United States v. Hively, 437
F.3d 752, 761 (8th Cir. 2006). Because the evidence was sufficient to support a
verdict of guilty, the district court did not err in denying Laws’ motion for a judgment
of acquittal.

      IV. Jameel Laws

       Like Lareka Laws, Jameel Laws challenges the sufficiency of the evidence to
support his convictions for conspiracy to defraud the United States and for making
false claims to the IRS. Jameel Laws asserts that there was insufficient evidence of
an agreement to commit an illegal act, insufficient evidence of an unlawful objective
on his part, and insufficient evidence of an act done in furtherance of the alleged
conspiracy. We review the sufficiency of the evidence to support a conviction de
novo, viewing the evidence in the light most favorable to the jury’s verdict and
accepting all reasonable inferences in support of the verdict. United States v.
Armstrong, 782 F.3d 1028, 1035 (8th Cir. 2015).

       The evidence against Laws included a tax return filed in his name and prepared
by his sister Lareka Laws claiming a first-time homebuyer credit; the deposit of the
associated tax refund into an account owned by Jameel Laws; testimony that Jameel
Laws had never purchased a home and did not qualify for the tax credit; evidence that
tax refunds of other individuals who received credits to which they were not entitled

                                         -13-
were deposited into bank accounts controlled by Jameel Laws; and evidence that
Jameel Laws had withdrawn the money deposited into these accounts. Viewing this
evidence in the light most favorable to the jury’s verdict and accepting all reasonable
inferences in support of the verdict, we cannot conclude that no reasonable jury could
have found Laws guilty beyond a reasonable doubt. Armstrong, 782 F.3d at 1035.
Based on the evidence presented, a reasonable jury could have found that Laws
knowingly presented a tax return falsely claiming a tax credit to which he was not
entitled, and that Laws conspired to defraud the United States by obtaining this
fraudulent credit. Accordingly, we conclude that the evidence was sufficient to
support Laws’ conviction.

      V. Conclusion

      For the foregoing reasons, we reverse the district court’s application of the
organizer/leader sentencing enhancement as to Brenda Laws and remand her case for
resentencing. We affirm the judgment of the district court in all other respects.
                       ______________________________

                                         -14-