Court Opinion

ID: 2966608
Source: CourtListenerOpinion
Date Created: 2015-09-22 00:52:28.963765+00
Date Added: 2024-06-11T15:02:16.323815
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA,
Plaintiff-Appellee,

v.                                     No. 95-5420

TIMOTHY R. WALKER,
Defendant-Appellant.

Appeal from the United States District Court
for the District of South Carolina, at Columbia.
Dennis W. Shedd, District Judge.
(CR-94-892)

Argued: December 6, 1996
Decided: April 25, 1997

Before RUSSELL and MOTZ, Circuit Judges, and
MICHAEL, Senior United States District Judge
for the Western District of Virginia,
sitting by designation.
Affirmed by published opinion. Judge Russell wrote
the opinion, in which Judge Motz and
Senior Judge Michael joined.

_________________________________________________________________

COUNSEL

ARGUED: Gregory Poole Harris, Columbia, South Carolina, for
Appellant. John Michael Barton, Assistant United States Attorney,
Columbia, South Carolina, for Appellee. ON BRIEF: J. Preston
Strom, Jr., United States Attorney, Columbia, South Carolina, for
Appellee.

_________________________________________________________________
OPINION

RUSSELL, Circuit Judge:

Timothy Walker, a disbarred attorney, operated as an insurance
agent representing several insurance companies in South Carolina.
In
the course of his business he received large amounts of money from
his customers for the purchase of lump-sum annuities. Walker, evi-
dently dissatisfied with his normal sales commissions, diverted the
funds into his own personal bank account. To perpetuate the scheme,
he used the United States mail to send fictitious purchase
confirma-
tions, account statements and interest payments to his defrauded
cus-
tomers. The total amount of money involved was $850,913.59.

In late 1994, a grand jury indicted Walker on nine counts of mail
fraud1 and three counts of money laundering. 2 Pursuant to a plea
agreement, Walker pleaded guilty to all twelve counts. The plea
agreement required him to aid the government in identifying and
recovering his assets. In return, the Government agreed to make a
non-binding recommendation that Walker receive a three-level down-
ward adjustment in his offense level for acceptance of
responsibility.3
The Government's obligations, however, were contingent upon
Walker being "fully truthful and forthright" concerning his assets
and
Walker's promise to use those assets "to make restitution as
directed
by the Court."

The Presentence Investigation Report calculated Walker's offense
level at 26 with a criminal history category of I, resulting in a
Sen-
tencing Guidelines range of 63-78 months imprisonment. The offense
level, however, included the downward adjustment for acceptance of
responsibility. Additionally, the report stated that the district
court
could consider Walker's past illegal acts as an attorney, none of
_________________________________________________________________

1 18 U.S.C.A. § 1341 (West Supp. 1997).

2 18 U.S.C.A. § 1956(a)(1)(A)(i) (West Supp. 1997).
3 U.S. Sentencing Guidelines Manual ("U.S.S.G.") § 3E1.1(a) & (b)
(1994).

                                 2
which had resulted in a criminal conviction, as a factor in
departing
upward in his criminal history category. 4

During the seventy-five days between his guilty plea and his sen-
tencing hearing, Walker increased his credit card debt by almost
$48,000. At the sentencing hearing, the Government, believing that
Walker had breached the plea agreement by failing to use all of his
assets for restitution, argued against a downward adjustment for
acceptance   of responsibility. Walker testified         that the
expenditures
were for professional service bills and necessities for his family.
The
district court found that Walker's conduct was inconsistent with an
acceptance of responsibility and refused to grant the downward
adjustment.

The Government then moved for an upward departure in criminal
history category because of Walker's prior illegal conduct. The
dis-
trict court granted the motion and departed to criminal history
cate-
gory III. Based on the recalculated Sentencing Guidelines range of
108-135 months, the district court sentenced Walker to 120 months
imprisonment.

On appeal, Walker complains that the Government breached the
plea agreement, the district court erroneously departed upward to
criminal history category III, and the district court miscalculated
his
offense level. Having failed to raise any of these issues below,
Walker
is only entitled to relief upon a showing of plain error. 5

I.

Walker seeks a remand for resentencing because the Government
failed to recommend, and in fact argued against, a downward adjust-
ment for acceptance of responsibility as promised in the plea
agree-
ment. In order to be entitled to the recommendation, Walker had to
assist with the identification, marshalling and distribution of all
of his
assets for the purpose of restitution. The transcript of the guilty
plea
hearing reveals that Walker was aware of his obligation. The
district
_________________________________________________________________
4 Id. at § 4A1.3(e).
5 United States v. Fant, 974 F.2d 559, 565 (4th Cir. 1992).

                                3
court specifically informed Walker that he was being released on
bond only because the court was "very interested in having the
people
who were defrauded get their money back one way or the other."

Instead of fully engaging in the   restitution process, Walker chose
to use his credit cards to pay     off various unrelated creditors.
This vio-
lation of the plea agreement       was   sufficient   to   release   the
Government
from its promise to recommend a    downward adjustment.

Walker also claims, in a one-sentence statement in his brief, that
the district court was required to give him notice that it did not
intend
to grant the downward adjustment. Unfortunately, Walker seems to
have confused a departure from the Sentencing Guidelines with an
adjustment under the Sentencing Guidelines. Although a district
court's decision to depart based on a previously unidentified
ground
requires notice,6 we have held that a district court is not
required to
give notice of its eventual withholding of an acceptance of
responsi-
bility adjustment.7

II.
The Presentence Investigation Report stated that Walker's prior
illegal conduct as an attorney could establish the basis for an
increased criminal history category. At the sentencing hearing, the
district court upwardly departed from category I to category III.

Walker raises two separate claims concerning the upward depar-
ture. First, he contends that the district court erred by failing
to con-
sider category II in making its determination. We have stated that
a
sentencing court should depart "first to the next higher category
and
. . . move on to a still higher category only upon a finding that
the
next higher category fails adequately to reflect the seriousness of
the
defendant's record."8 The sentencing hearing transcript, however,
_________________________________________________________________
6 Burns v. United States, 501 U.S. 129, 138 (1991); United States
v.
Maddox, 48 F.3d 791, 799 (4th Cir. 1995).
7 United States v. White, 875 F.2d 427, 431-32 (4th Cir. 1989).
8 United States v. Rusher, 966 F.2d 868, 884 (4th Cir. 1992). This
lan-
guage is dicta, see Rusher, 966 F.2d at 890 (Luttig, J., concurring
in part,
concurring in judgment in part, and dissenting in part), but in
United
States v. Cash, 983 F.2d 558, 561 (4th Cir. 1992), we confirmed
that it
identified the proper approach.

                               4
establishes that the district court did hear arguments concerning
crim-
inal history category II. The Government sought a two-level upward
departure based on forgery, obstruction of justice, and
embezzlement,
all allegedly committed by Walker while he was a practicing
attorney.
After discussing the specifics of Walker's prior conduct, the
district
court directed the Government to "[m]ake your argument again for
me on why [Category] II . . . doesn't apply." The Government
reiter-
ated its position that category II is intended for defendants with
only
minor past criminal conduct. Based on this exchange, we find that
the
district court adequately considered the appropriateness of
category
II.

Second, Walker argues that his credit card use was the real reason
behind the district court's upward departure to criminal history
cate-
gory III. Walker, however, misconstrues some of the district
court's
remarks in order to support his claim. As discussed above, the
record
establishes that the district court based its upward departure on
Walk-
er's prior instances of uncharged criminal activity.

III.

Walker pleaded guilty to both mail fraud and money laundering.
For the purpose of determining his base offense level under the
Sen-
tencing Guidelines, the district court grouped the counts together
pur-
suant to U.S.S.G. § 3D1.2(d) and applied the higher base offense
level
for money laundering pursuant to U.S.S.G. § 3D1.3(b). Along with
other adjustments, Walker received a four-level specific offense
char-
acteristic increase under the money laundering guideline because
the
fraudulent scheme involved between $600,000 and $1,000,000. 9
Walker claims this was a miscalculation. He argues that in
determin-
ing his specific offense characteristic the district court should
have
considered only the $5051.01 in fictitious interest payments
specifi-
cally identified in the money laundering counts of the indictment.
The
Government counters that all of the allegations in the mail fraud
counts, which Walker concedes involved $850,913.59, were incorpo-
rated into the money laundering counts by the grand jury. Further-
more, the facts of the case establish that the mail fraud and money
laundering crimes were interrelated.
_________________________________________________________________
9 U.S.S.G. § 2S1.1(b)(2)(E).

                                5
The first step in analyzing this issue is to determine if the
counts
were properly grouped. Under § 3D1.2(d), counts involving substan-
tially the same harm shall be grouped "when the offense level is
determined largely on the basis of the total amount of harm or loss
. . . or some other measure of aggregate harm, or if the offense
behav-
ior is ongoing or continuous in nature and the offense guideline is
written to cover such behavior." Application Note 6 to § 3D1.2
states
that "[c]ounts involving offenses to which different offense
guidelines
apply are grouped together under subsection (d) if the offenses are
of
the same general type and otherwise meet the criteria . . . ."
Subsec-
tion (d) expressly permits the grouping of offenses under the fraud
and money laundering guidelines, but any grouped offenses must be
"closely related."10

In United States v. Porter, this court addressed the grouping of
offenses under § 3D1.2(d) in a case where the defendant pleaded
guilty to money laundering and gambling charges. 11 Although we
found that the grouping of offenses in Porter was inappropriate
because the offenses were "completely unrelated," we noted that
"[o]ne could envision an illegal enterprise which generated monies
through illegal . . . activities and simultaneously laundered those
monies as part of the same continuing transaction or common
scheme."12
Walker's money laundering was part of his fraudulent scheme
because the funds were used to make fictitious interest payments.
In
effect, Walker conceded the offenses were closely related when he
pleaded guilty to money laundering under the particular provision
of
the statute that forbids conducting financial transactions
involving the
proceeds of a specified unlawful activity "with the intent to
promote
the carrying on of [the] specified unlawful activity."13 Following
our
analysis in Porter, we find that the offenses were properly grouped
together.14
_________________________________________________________________
10 United States v. Porter, 909 F.2d 789, 792-93 (4th Cir. 1990).
11 Id. at 791.
12 Id. at 793.
13 18 U.S.C.A. § 1956(a)(1)(A)(i).
14 See United States v. Mullens , 65 F.3d 1560, 1564 (11th Cir.
1995)
cert. denied, 116 S. Ct. 1337 (1996) (grouping mail fraud and money
laundering offenses under § 3D1.2(d)). But see United States v.
Johnson,
971 F.2d 562, 576 (10th Cir. 1992) (mail fraud and money laundering
offenses cannot be grouped under § 3D1.2(d)).

                                 6
Next, we must determine whether the Sentencing Guidelines per-
mitted the district court to use the amount of money Walker
obtained
through mail fraud as the basis for calculating his specific
offense
characteristic under the money laundering guideline. Application
Note 3 to § 3D1.3 states that a sentencing court should
"[d]etermine
whether the specific offense characteristics . . . apply based upon
the
combined offense behavior taken as a whole." In United States v.
Mullens, the Eleventh Circuit examined a similar grouping of
closely
related mail fraud and money laundering counts and found that in
determining the specific offense characteristic under the money
laun-
dering guideline a court is "`required to consider the total amount
of
funds that it believed was involved in the course of criminal
conduct.'"15
We agree and hold that the district court correctly calculated
Walker's
offense level.

IV.
For the foregoing reasons, Walker's sentence is affirmed.

AFFIRMED
_________________________________________________________________
15 Mullens, 65 F.3d at 1564 (quoting United States v. Barrios, 993
F.2d
1522, 1524 (11th Cir. 1993))

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