Court Opinion

ID: 3021975
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:25:51.30362+00
Date Added: 2024-06-11T11:47:31.200810
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Opinions of the United
2006 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

5-4-2006

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Precedential or Non-Precedential: Non-Precedential

Docket No. 05-2424

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Recommended Citation
"USA v. Kossak" (2006). 2006 Decisions. Paper 1156.
http://digitalcommons.law.villanova.edu/thirdcircuit_2006/1156

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                                                              NOT PRECEDENTIAL

                     UNITED STATES COURT OF APPEALS
                          FOR THE THIRD CIRCUIT
                                __________

                                   No. 05-2424
                                   __________

                         UNITED STATES OF AMERICA

                                         v.

                               ROBERT KOSSAK,

                                                      Appellant

                                   __________

                  On Appeal from the United States District Court
                            for the District of Delaware
                        (D.C. Criminal No.02-cr-00064-1)
                   District Judge: Honorable Gregory M. Sleet
                                    __________

                             Argued on March 7, 2006

                 Before: RENDELL and AMBRO , Circuit Judges,
                          and SHAPIRO*, District Judge.

                               (Filed: May 4, 2006)

______________________

  * Honorable Norma L. Shapiro, Judge of the United States District Court for the
    Eastern District of Pennsylvania, sitting by designation.
Mark S. Greenberg [ARGUED]
LaCheen, Dixon, Wittles & Greenberg
1429 Walnut Street, 13th Floor
Philadelphia, PA 19102

Counsel for Appellant
Robert Kossak

Richard G. Andrews [ARGUED]
Office of the United States Attorney
1007 Orange Street, Suite 700
Wilmington, DE 19899

Counsel for Appellee
United States of America

                                       __________

                               OPINION OF THE COURT
                                     __________

RENDELL, Circuit Judge.

       Appellant Robert Kossak was convicted at trial of conspiracy, interstate

transportation of stolen property, and bank fraud. Before trial, Kossak filed a motion to

suppress, which was denied. The District Court sentenced Kossak to 60 months

imprisonment. During the sentencing hearing, before imposing sentence, the District

Court calculated Kossak’s sentencing guideline range to be 57-71 months. The guideline

range was calculated after resolving, among other things, two disputed sentencing issues–

whether Kossak should have received a two-level upward adjustment for “mass

marketing” and a two-level upward adjustment for “vulnerable victims.”

                                            2
       On appeal, Kossak argues that the District Court’s denial of his motion to suppress

certain financial documents was reversible error. He also argues that the District Court

abused its discretion in sentencing him by incorrectly calculating his sentencing guideline

range. He argues that the upward adjustments for “mass marketing” and “vulnerable

victims” should not have been applied. He requests that we reverse his conviction and

remand the matter to the District Court for a new trial with instructions to suppress the

financial documents, or, should we find that reversal is not merited, that we remand for

re-sentencing.1

                                  I. Motion to Suppress

       Kossak’s argument that the District Court erred in failing to grant his motion to

suppress focuses on his claim that the government engaged in “outrageous government

conduct.” Kossak’s basis for this argument is that, during the FBI’s investigation, he was

represented by a Delaware attorney, Joseph Kulesza, whom the FBI may also have had

reason to suspect of wrongdoing in connection with the same fraudulent scheme. On the

advice of his attorney, Kulesza, Kossak cooperated with the investigation, turning over

various corporate financial records. Kossak now argues that these records should have

been suppressed, because the government did not inform him that his attorney may also

have been suspected of wrongdoing and had a potential conflict of interest. This was,

  1
    The District Court had jurisdiction pursuant to 18 U.S.C. § 3231. We have
jurisdiction over the appeal pursuant to 28 U.S.C. §§ 1291 and 3742.

                                             3
Kossak argues, “outrageous government conduct” that rose to the level of violating

Kossak’s Fifth Amendment right to due process. We disagree.2

       In 1952, the Supreme Court recognized that outrageous misconduct by law

enforcement officers in detecting and obtaining incriminating evidence could rise to the

level of a due process violation. Rochin v. California, 342 U.S. 165 (1952) (vacating

conviction and dismissing indictment where police had pumped stomach of suspected

drug pusher to obtain incriminating evidence). In Rochin, the Court said that “the

proceedings by which this conviction was obtained do more than offend some fastidious

squeamishness or sentimentalism about combating crime too energetically. This is

conduct that shocks the conscience.” Id. at 172. In United States v. Russell, 411 U.S.
423, 431-32 (1973), the Court referred to the type of conduct which violated the Due

Process Clause as conduct that violates “fundamental fairness” and is “shocking to the

universal sense of justice.”

       In United States v. Voigt, Judge Cowen noted that “the judiciary is extremely

hesitant to find law enforcement conduct so offensive that it violates the Due Process

Clause.” 89 F.3d 1050, 1065 (3d Cir. 1996). In United States v. Jannotti, 673 F.2d 578,

608 (3d Cir. 1982) (en banc), we observed that “the majority of the Court has manifestly

reserved for the constitutional defense only the most intolerable government conduct.”

  2
   Our review of the denial of a motion to suppress is mixed. We have plenary review of
the District Court’s legal conclusions and defer to its factual findings unless they are
clearly erroneous. United States v. Perez, 280 F.3d 318, 336 (3d Cir. 2002); United
States v. Voigt, 89 F.3d 1050, 1064 (3d Cir. 1996).

                                            4
We cautioned that “[w]e must necessarily exercise scrupulous restraint before we

denounce law enforcement conduct as constitutionally unacceptable.... Unless the

behavior of the F.B.I. agents rose to the level of outrageousness which would bar

conviction, the conduct of agents of the executive branch who must protect the public

from crime is more appropriately considered through the political process where

divergent views can be expressed in the ballot box.” Id. at 607, 609.

       In order to raise a colorable claim of outrageousness pertaining to alleged

governmental intrusion into the attorney-client relationship, Kossak must demonstrate

each of the three following elements: (1) the Government’s objective awareness of an

ongoing personal attorney-client relationship between its informant and the defendant;

(2) deliberate intrusion into that relationship; and (3) actual and substantial prejudice.

See Voigt, 89 F.3d at 1067. Here, the record indicates that the Government was aware of

an ongoing attorney-client relationship between Kulesza and Kossak. At issue is whether

the Government deliberately intruded into that relationship and whether Kossak suffered

actual and substantial prejudice.

       The Government’s conduct with respect to the Kulesza-Kossak attorney-client

relationship falls far short of the sort of purposeful intrusion into the attorney-client

relationship that would rise to the level of outrageousness. The record contains no

indication that the Government extorted information from Kulesza, promised him a deal

in exchange for testimony against his client, or, in any way, obtained information that

                                               5
was covered by the attorney-client privilege. We are aware of no authority, and Kossak

has cited none, imposing an affirmative duty on the Government to inform a suspect that

he has a potential conflict of interest with his attorney.3 In addition, while the

Government may well have been aware of a potential conflict of interest, there is no

evidence that (1) an actual conflict existed or (2) the Government had knowledge of any

such actual conflict. The Government did not subpoena Kulesza or introduce at trial any

statements made by him in violation of the attorney-client privilege.

       Additionally, Kossak was not prejudiced by the Government’s conduct. Kossak

argues that he was prejudiced because his attorney advised him to cooperate with the

Government’s investigation contrary to his interests. He argues: “Had Mr. Kulesza not

been under investigation he would have counseled [Kossak] to invoke his Fifth

Amendment right against self-incrimination and not disclose documentary evidence, like

the CMB and KRA spreadsheets that were not subject to grand jury subpoena.”

Appellant’s Br. at 22. This argument, however, is flawed. Kossak has made no showing

that the financial documents he turned over would have been protected under the Fifth

Amendment right against self-incrimination. The corporate financial records at issue

were not subject to this protection. See Rogers Transp., Inc. v. Stern, 763 F.2d 165, 166

  3
    The case primarily relied on by Kossak, Voigt, involved far more egregious conduct
than what is presented here. The Voigt court addressed a situation where the attorney
was also acting as a government informant, secretly supplying information about his
client to the Government. 89 F.3d at 1059-63. Here, there is no evidence that Kulesza
was providing secret information to the Government.

                                              6
(3d Cir. 1985). While the act of producing a document might be protected under the

Fifth Amendment if the act is both “testimonial” and “incriminating,” id. at 168, Kossak

makes no attempt in his brief to explain why he believes that his act of turning over the

documents was “testimonial” in this case. While he argues that the contents of the

documents aided the Government in connecting him to the scheme, he does not argue that

his act of turning them over had testimonial effect. Further, CMB and KRA are both

corporations. As a corporate custodian, Kossak would not have been entitled to resist a

subpoena on the ground that his act of production would have been personally

incriminating. Braswell v. United States, 487 U.S. 99, 117 (1988).

       Therefore, for these reasons, we find that the Government’s conduct was not

“outrageous” and did not violate the Fifth Amendment’s Due Process Clause.

                                      II. Sentencing

              Kossak argues that the sentence imposed by the District Court was

unreasonable because the guideline range was incorrectly calculated to include a two-

level enhancement for “mass-marketing” under U.S.S.G. § 2F1.1(b)(3)4 and a two-level

enhancement for preying on “vulnerable victims” under U.S.S.G. § 3A1.1(b).5

  4
  Former U.S.S.G. § 2F1.1(b)(3) has since been repealed and replaced by U.S.S.G. §
2B1.1(b)(2)(A)(ii).
  5
    We exercise plenary review over the meaning and construction of the sentencing
guidelines, but review underlying factual determinations for clear error. United States v.
Butch, 256 F.3d 171, 177 (3d Cir. 2001). The District Court’s sentence is also reviewed
for reasonableness. United States v. Booker, 125 S. Ct. 738, 765-66 (2005).

                                             7
                                  A. “Mass-Marketing”

              As used in the sentencing guidelines, mass-marketing “means a plan,

program, promotion or campaign that is conducted through solicitation by telephone,

mail, the Internet, or other means to induce a large number of persons to (A) purchase

goods or services; (B) participate in a contest or sweepstakes; or (C) invest for financial

profit. The enhancement would apply, for example, if the defendant conducted or

participated in a telemarketing campaign that solicited a large number of individuals to

purchase fraudulent life insurance policies.” U.S.S.G. § 2F1.1, cmt. 3.

       Kossak argues that the mass-marketing enhancement was improper because the

borrowers who were defrauded were, for the most part, referred by friends, family

members, and attorneys. While Kossak admits that “there was testimony that [Kossak’s]

related companies solicited individuals by use of a lead machine, telemarketing and

advertising,” he argues that the evidence indicates that only 13 of the borrowers

implicated in the scheme had been solicited through telemarketing. Appellant’s Br. at

28-9. This, he argues, is not “a large number.” Id.

       We find that the District Court did not err in viewing Kossak’s scheme as mass-

marketing. As the District Court observed, this was a situation in which telemarketing

was a significant part of the scheme. The District Court found that Kossak had employed

12 or 13 telemarketers to solicit loans as part of his business practice. Further, 13 of 49

victims came into contact with Infinity through mass-marketing. The fact that the other

                                              8
36 victims were solicited by other means does not make the enhancement inapplicable.

The comments accompanying § 2F1.1 indicate that the enhancement applies where a

large number of people are “solicited,” not only where a large number of people are, in

fact, induced and defrauded. In other words, the enhancement targets conduct and not

result. Therefore, because Kossak’s scheme made use of telemarketing, the mass-

marketing enhancement was properly applied.

                                B. “Vulnerable Victims”

       Kossak objected to a two-level enhancement for targeting vulnerable victims. We

conduct a three-step analysis in reviewing the application of a vulnerable victim analysis.

       The enhancement may be applied where: (1) the victim was particularly
       susceptible or vulnerable to the criminal conduct; (2) the defendant knew or
       should have known of this susceptibility or vulnerability; and (3) this
       vulnerability or susceptibility facilitated the defendant's crime in some
       manner; that is, there was a nexus between the victim's vulnerability and
       the crime's ultimate success.

United States v. Iannone, 184 F.3d 214, 220 (3d Cir. 1999) (quotations and citations

omitted).

       The District Court underwent this analysis, observing that Kossak’s victims

included (1) a 62-year-old man in an oxygen tent, (2) a 90-year-old man, (3) an 80-year-

old woman, (4) a 59-year-old blind woman, (5) a 59-year-old woman who was entirely

unaware of the loan, (6) a man who was 64 at the time of a first loan and 65 at the time of

a second, (7) a 68-year-old man, (8) a 73-year-old woman, (9) an 81-year-old man living

in a nursing home, (10) a bankrupt man, who had lost his savings and whose wife had

                                             9
just lost her job at the time of the transaction, and (11) a man who did not speak English.

App. at 434.

       The District Court found that “the record clearly establishes that these victims’

ages, disabilities and vulnerabilities were apparent, thereby satisfying the Court that the

defendant knew or should have known of their vulnerability.” Id. The District Court

also found the existence of the requisite nexus between the victims’ vulnerabilities and

the success of the defendant’s crime. Id. at 434-35. Kossak stole significantly more from

his elderly and disabled victims than he did from his younger and non-disabled victims.

The District Court found that the average return from the total amount of fraudulent loans

in the indictment was 14.83 percent, while the return on the loans to the disabled, elderly,

and non-English speaking victims was 44.1 percent. “In this regard,” the District Court

stated, “it is clear that the defendant exploited the vulnerable victims to a greater degree

of success in accomplishing his crime.” Id. at 435. We find no error in the District

Court’s analysis.

                                      III. Conclusion

       For the reasons set forth above, we will AFFIRM the Judgment and Commitment

Order of the District Court.

                                             10