Court Opinion

ID: 157837
Source: CourtListenerOpinion
Date Created: 2010-08-14 05:07:38+00
Date Added: 2024-06-11T09:59:29.584398
License: Public Domain

F I L E D
                                                                 United States Court of Appeals
                                                                         Tenth Circuit
                                    PUBLISH
                                                                         APR 19 1999
                   UNITED STATES COURT OF APPEALS
                                                                      PATRICK FISHER
                                                                             Clerk
                               TENTH CIRCUIT

 UNITED STATES OF AMERICA,

       Plaintiff-Appellee,
 vs.                                                    No. 98-6179

 WARREN ELVIN ENSMINGER,

       Defendant-Appellant.

           APPEAL FROM THE UNITED STATES DISTRICT COURT
              FOR THE WESTERN DISTRICT OF OKLAHOMA
                        (D.C. No. CR-97-193-C)

Paul Antonio Lacy, Assistant Federal Public Defender, Oklahoma City,
Oklahoma, for Defendant-Appellant.

Hank Hockeimer, Jr., Assistant United States Attorney (Patrick M. Ryan, United
States Attorney, with him on the briefs), Oklahoma City, Oklahoma, for Plaintiff-
Appellee.

Before ANDERSON, KELLY, and BRISCOE, Circuit Judges.

KELLY, Circuit Judge.

       Defendant Warren Elvin Ensminger appeals his eighteen-month sentence

and conditions of probation for violation of 18 U.S.C. § 1001 (false statements).
The district court adopted the offense level calculation contained in the

presentence report under USSG § 2F1.1 (1997), which governs offenses involving

fraud and deceit, including a ten-level enhancement for an intended loss of

$540,700 and a two-level enhancement for more than minimal planning. In

addition, the district court imposed several conditions of probation, including the

monitoring of Mr. Ensminger’s financial dealings. Our jurisdiction arises under

28 U.S.C. § 1291, and we reverse in part and affirm in part.

                                    Background

      Since Mr. Ensminger’s appeal only deals with the propriety of his sentence

and probation conditions, we briefly set out the factual background of this case.

Mr. Ensminger was indicted on three counts. Counts one and two charged him

with a scheme to obtain an ownership interest in certain real property through

submitting bogus financial instruments in violation of 18 U.S.C. §§ 2 and 1341.

Mr. Ensminger allegedly purchased at least six false money orders and mailed two

of them to different banks, in order to pay off outstanding promissory notes

executed by his mother. Count three charged him with presenting a document to

the U.S. Marshal’s Office which falsely indicated that he had prevailed in a civil

action against the Farm Credit Bank of Wichita, Kansas, when in fact, Mr.

Ensminger knew that the action had been dismissed. This document, which Mr.

                                        -2-
Ensminger entitled “Special Execution and Order of Assistance for Possession,”

also indicated that the lawsuit entitled him to possession of certain real properties

located in Major County, Oklahoma. Mr. Ensminger pled guilty to count three in

exchange for the dismissal of counts one and two.

      Mr. Ensminger filed several objections to the presentence report, and the

district court heard argument on these objections at the sentencing hearing on

April 8, 1998. Mr. Ensminger contended that the amount of intended loss should

not be calculated at the full value of the properties in question ($540,700), but

rather on the one-ninth interest Mr. Ensminger would have received as a

beneficiary of his mother’s estate had his scheme been successful. Alternatively,

Mr. Ensminger argued that there was no possibility of his scheme being

successful, and thus that the amount of intended loss should be zero. He further

argued that a more than minimal planning enhancement should not be applied to

his case. The district court rejected his arguments and sentenced Mr. Ensminger

to eighteen months imprisonment and two years of supervised release.

      Mr. Ensminger appeals, contending that the district court erred in (1)

enhancing his offense level based on an intended loss of $540,700; (2) enhancing

his offense level based on a finding of more than minimal planning; and (3)

imposing special conditions of supervised release relating to financial disclosures

and restrictions.

                                         -3-
                                     Discussion

      On appeal, “[w]e review the district court’s legal interpretation of the

guidelines de novo, and review its findings of fact for clear error, giving due

deference to the district court’s application of the guidelines to the facts.” United

States v. Janusz, 135 F.3d 1319, 1324 (10th Cir. 1998) (citations omitted).

                            A. Amount of Intended Loss

      The district court sentenced Mr. Ensminger based on the uncontested value

of the properties, $540,700, that he attempted to have the U.S. Marshal seize.

Mr. Ensminger argues that the district court erred in sentencing him based upon

an intended loss of greater than $500,000, see USSG § 2F1.1(b)(1)(K), because

there was no possibility of loss occurring as a result of his “Special Execution and

Order of Assistance for Possession.” He asserts that he was “incapable of causing

loss because of governmental control over the civil execution process and judicial

intervention.” Aplt. Brief at 14.

      Mr. Ensminger relies upon our decisions in United States v. Galbraith, 20

F.3d 1054 (10th Cir. 1994), and United States v. Santiago, 977 F.2d 517 (10th

Cir. 1992). In Galbraith, the defendant argued that “because his offense was

committed in response to an undercover sting operation structured so there was no

possibility of loss to a victim, the intended or probable loss was zero.” Galbraith,

                                         -4-
20 F.3d at 1059. We agreed, stating that

      the loss defendant subjectively intended to cause is not controlling if
      he was incapable of inflicting that loss. Because this was an
      undercover sting operation which was structured to sell stock to a
      pension fund that did not exist, defendant could not have occasioned
      any loss even if the scheme had been completed.

Id.

      Galbraith relied in part on Santiago, in which we held that “whatever a

defendant’s subjective belief, an intended loss under Guidelines § 2F1.1 cannot

exceed the loss a defendant in fact could have occasioned if his or her fraud had

been entirely successful.” Santiago, 977 F.2d at 524. In that case the defendant

fraudulently filed a claim of $11,000 with his insurance company. However, the

market value of the car that he falsely claimed was stolen was only $4,800, which

was the maximum amount the insurance company would have paid had his scheme

been successful. In finding that the $4,800 was the intended loss, we looked to

the economic reality of the situation and established the principle that “the fair

market value of what a defendant has taken or attempted to take defines the upper

limit for loss valuation.” Id. at 525.

      While there is no dispute that the fair market value of the properties that

Mr. Ensminger attempted to obtain was $540,700, see Aplt. Brief at 12-13, there

is also no dispute that there was no way in which the scheme could have been

successful. Although Mr. Ensminger successfully persuaded a deputy clerk to

                                         -5-
sign the “Special Execution” document, the properties he sought had already been

sold to third parties. No record facts suggest that there was even a remote

probability that he could have either obtained the properties or the proceeds from

the sale of the properties. While it is true that Mr. Ensminger tried to obtain the

properties, and perhaps thought he could succeed, under Galbraith we must still

consider that “the loss defendant subjectively intended to cause is not controlling

if he was incapable of inflicting that loss.” Galbraith, 20 F.3d at 1059.

Ordinarily, it would be necessary to remand for a determination on this issue;

however, because the uncontroverted facts establish that there was no possibility

for Mr. Ensminger to have succeeded in his scheme 1 we hold that the ten-level

enhancement was clearly erroneous — applying Galbraith, the intended loss was

zero.

        We note that a number of circuits have disagreed with our analysis of

intended loss in Galbraith, reasoning that it “is inconsistent with application note

10 to section 2F1.1 of the guidelines, which by authorizing a downward departure

‘where a defendant attempted to negotiate an instrument that was so obviously

fraudulent that no one would seriously consider honoring it’ implies that the

        1
         This conclusion is not based on “governmental control over the civil
execution process and judicial intervention,” Aplt. Brief at 14, as Mr. Ensminger
asserts. Such control does not preclude a remote possibility that he could have
succeeded in his scheme. Rather, our conclusion is based on the fact that the
properties had already been sold to third parties.

                                         -6-
unlikelihood of an actual loss does not affect the computation of the ‘intended

loss.’” United States v. Coffman, 94 F.3d 330, 336 (7th Cir. 1996) (quoting

USSG § 2F1.1 commentary at n.10 (1997)); see, e.g., United States v. Studevent,

116 F.3d 1559, 1561-64 (D.C. Cir. 1997); United States v. Wai-Keung, 115 F.3d

874, 877 (11th Cir. 1997), cert. denied, 118 S. Ct. 1095 (1998); United States v.

Ismoila, 100 F.3d 380, 396-97 (5th Cir. 1996); United States v. Robinson, 94 F.3d

1325, 1328 (9th Cir. 1996). 2 However, because “one panel of this court is bound

by the precedent of an earlier panel absent en banc reconsideration or a

superseding contrary decision of the U.S. Supreme Court,” LeFever v.

Commissioner of Internal Revenue, 100 F.3d 778, 787 (10th Cir. 1996), we are

bound to apply Galbraith.

                         B. More Than Minimal Planning

      Mr. Ensminger next contends that the district court erred in enhancing his

base offense level by two levels for “more than minimal planning” pursuant to

USSG § 2F1.1(b)(2)(A). According to Mr. Ensminger, the government failed to

      2
         The dissent also cites cases from other circuits which “recognize the
narrow holding of Galbraith.” However, in each of those cases the defendant’s
scheme had some possibility of success, but was thwarted by police intervention.
Here, by contrast, police intervention was totally unnecessary, as Mr. Ensminger’s
scheme was inherently incapable of causing a loss due to the sale of the properties
to third parties.

                                        -7-
prove that he engaged in more planning than was necessary for committing the

offense in its simple form. Because the district court’s finding is essentially

factual, we review it only for clear error.

      The Guidelines regard “more than minimal planning” as present “in any

case involving repeated acts over a period of time, unless it is clear that each

instance was purely opportune.” USSG § 1B1.1 commentary at n.1(f) (1997). In

its ruling on the enhancement, the district court considered the following conduct:

Mr. Ensminger took a form from the U.S. Attorney’s Office and adapted it into

his “Special Execution and Order” document, complete with detailed property

descriptions; he presented the document to the district court clerk’s office and

convinced a deputy clerk to sign it; he then submitted the document to the U.S.

Marshal’s Office and, after he was informed that he needed additional money for

processing fees, he had another person resubmit the document three weeks later

with the proper fees; he followed this up with a telephone call to the Marshal’s

Office, a letter to the district court judge who had earlier presided over his civil

case, and a letter to the U.S. Marshal demanding action on the seizure. See 4 R.

at 19-20. The court concluded: “This is not an isolated instance. It is a case

where several different times Mr. Ensminger was given a chance to back out of

his criminal conduct for one thing but it’s also simply repeated acts that were

more than opportune.” 4 R. at 20.

                                          -8-
      Mr. Ensminger argues that his actions after presenting the document to the

U.S. Marshal’s Office should not be considered, because the false statement was

made when the document was presented. However, we agree with the district

court that those actions were repeated acts done in furtherance of his central

scheme to fraudulently obtain the properties. See United States v.

Channapragada, 59 F.3d 62, 65-66 (7th Cir. 1995) (affirming enhancement for

“repeated acts” where defendant misrepresented value of collateral and repeated it

three more times). Therefore, the district court’s two-level adjustment was not

clearly erroneous.

                        C. Special Conditions on Probation

      Finally, Mr. Ensminger challenges the imposition of special conditions of

supervised release relating to financial disclosures and restrictions. 3 He contends

      3
         At the end of the sentencing hearing, the court imposed the following
special conditions on his term of supervised release:

      You will disclose all assets and liabilities to the probation office.
      You will not transfer, sell, give away or otherwise convey any asset
      without first consulting with the probation office. You will, upon
      request of the probation office, authorize release of any and all
      financial records, income tax records and Social Security records.
      You will maintain a single checking account in your name which you
      will use for the deposit of all income and other pecuniary proceeds
      and used [sic] for the payment of all personal expenses. All other
      bank accounts must be disclosed to the probation office. You will
      not make application for any loan or enter into any credit

                                         -9-
that the conditions are not reasonably related to the crime of conviction. We

review for abuse of discretion. See United States v. Edgin, 92 F.3d 1044, 1047

(10th Cir. 1996).

      Although a district court has broad discretion in setting conditions of

supervised release, see id. at 1048, any condition chosen must

      (1) [be] reasonably related to the factors set forth in section
      3553(a)(1), (a)(2)(B), (a)(2)(C), and (a)(2)(D); 4

      (2) involve[] no greater deprivation of liberty than is necessary for
      the purposes set forth in section 3553(a)(2)(B), (a)(2)(C), and
      (a)(2)(D); and

      (3) [be] consistent with any pertinent policy statements issued by the
      Sentencing Commission pursuant to 28 U.S.C. 944(a).

18 U.S.C. § 3583(d)(1)-(3).

      The district court imposed the special conditions at the end of the

sentencing hearing, after it had resolved all the objections to the presentence

      arrangement without consulting the probation office. If you maintain
      an interest in any business or enterprise, you will, on request, make
      available any of the records of that business to the probation
      enterprise [sic].

4 R. at 25-26.
      4
        Under these provisions of 18 U.S.C. § 3553(a), a court must consider (a)
“the nature and circumstances of the offense and the history and characteristics of
the defendant,” and (b) the need to “afford adequate deterrence to criminal
conduct,” “protect the public from further crimes of the defendant,” and “provide
the defendant with needed . . . training, medical care, or other correctional
treatment.”

                                        - 10 -
report and after Mr. Ensminger had already made his final statement. Mr.

Ensminger did not object to the conditions. However, under similar

circumstances in Edgin, we found that there was no waiver of the issue for

appeal. See Edgin, 92 F.3d at 1049.

      In Edgin, we considered the propriety of a special condition which

prevented the defendant from contacting his son. Because the district court in

Edgin failed to make factual findings or provide any reasons for that special

condition, we remanded so that the court could state its reasoning. Likewise, the

district court in the case at bar provided no reasons for its conditions of financial

disclosures and restrictions. However, in Edgin we noted that a father generally

“has a fundamental liberty interest in maintaining his familial relationship with

his son,” id., and stated that the district court must “fine-tune” restrictions of such

a liberty interest to meet the goals of § 3553(a)(2)(B)-(D). Here no such

fundamental interests are involved, and thus the same level of “fine-tuning” is not

required.

      Under § 3583(d), a special condition of supervised release must be

reasonably related to “the nature and circumstances of the offense and the history

and characteristics of the defendant,” 18 U.S.C. § 3553(a)(1), and must involve

no greater deprivation of liberty than is reasonably necessary in light of the need

“to protect the public from further crimes of the defendant.” All three counts of

                                         - 11 -
the indictment relate to Mr. Ensminger’s attempts to defraud financial

institutions. See 2 R. at 3. Mr. Ensminger belongs to an organization, “We The

People,” which “does not believe the federal banking system has authority after

they ceased being backed by the gold standard.” 2 R. at 12. After First National

Bank of Okeene, Oklahoma and Federal Land Bank of Enid, Oklahoma refused to

honor the false money orders which formed the basis of counts one and two, Mr.

Ensminger filed “Notices of Defaults” against the banks. Given Mr. Ensminger’s

history and characteristics, and the need to protect the public from further similar

crimes, we conclude that financial conditions imposed upon Mr. Ensminger meet

the requirements of 18 U.S.C. § 3583(d).

      Although we AFFIRM the district court’s enhancement for more than

minimal planning and imposition of special conditions, we REMAND to the

district court to VACATE its sentence and resentence in accordance with this

opinion.

                                        - 12 -
98-6179, United States v. Ensminger

Anderson, Circuit Judge, dissenting in part:

      The majority reverses the ten-level enhancement for an intended loss of

$540,000, finding that our prior decisions in United States v. Galbraith, 20 F.3d

1054 (10th Cir. 1994) and United States v. Santiago, 977 F.2d 517 (10th Cir.

1992), are indistinguishable from this case and compel the conclusion that the

intended loss was zero. Because I conclude that those decisions are

distinguishable and do not compel that conclusion, I respectfully dissent from Part

A of the majority opinion.

      Galbraith involved a government sting operation, in which the defendant

attempted to purchase stock in a company, drive up the price, and then sell it to a

European pension fund. Unbeknownst to the defendant, the European pension

fund did not exist and the FBI terminated the sting operation and arrested the

defendant before any stock was actually bought or sold. We held in that case that

“The intended or probable loss was zero” because:

      the loss defendant subjectively intended to cause is not controlling if
      he was incapable of inflicting that loss. Because this was an
      undercover sting operation which was structured to sell stock to a
      pension fund that did not exist, defendant could not have occasioned
      any loss even if the scheme had been completed.

Galbraith, 20 F.3d at 1059 (emphasis added).

      In so holding, we relied in part on Santiago, in which the defendant

attempted to defraud his insurance company by falsely reporting that his car, with
a “blue book” value of $4,800, had been stolen, and submitting a claim for

$11,000 for the “stolen” car. Because an acquaintance involved in the scheme

notified law enforcement authorities, the scam did not succeed. After noting that

no actual loss occurred because of police intervention, we held that the “intended

[and] probable loss” was $4,800 because the “insurance company would not have

paid more than the car’s $4,800 blue book value in any circumstances.” Santiago,

977 F.2d at 524, 526. 1

      Considering Santiago and Galbraith together, I do not believe that the

intended loss is zero whenever the actual loss is zero, even where, as here, the

scheme to defraud is doomed from the beginning. There is a distinction between

a scheme, as in Galbraith, which is structurally and inherently incapable of

causing any loss (an undercover reverse sting operation involving the sale of

overvalued stock to a non-existent entity) and a scheme such as Mr. Ensminger’s

which, while extremely unlikely to result in any loss, nonetheless could have

occasioned a loss had the scheme succeeded. The majority opines that

Mr. Ensminger’s plan was incapable of success because, while he had

successfully persuaded a deputy clerk to sign the “Special Execution” document,

      1
        The reference to “probable” loss in Santiago and Galbraith stems from that
fact that, prior to November 1, 1991, Application note 7 to § 2F1.1 referred to
“probable or intended loss.” Effective November 1, 1991, “probable” was
deleted. U.S.S.G. App. C, amend. 393.

                                        -2-
the properties had in fact already been sold to third parties, and Mr. Ensminger

would therefore have been unable to obtain them. But that is no different from

Santiago, in which the acquaintance had notified authorities, who then notified

the insurance company, so that the defendant would in fact have been unable to

collect any insurance proceeds. Indeed, if a person presents an instrument to a

bank with the intent of defrauding it of $100,000, but the bank in fact has no

money, the person has no less attempted the fraud, and intended a loss, even

though in fact no loss could have occurred. 2

      Other courts have recognized the narrow holding of Galbraith. Indeed, in

United States v. Studevent, 116 F.3d 1559, 1564 (D.C. Cir. 1997), the court

expressed its disagreement with what it viewed as Galbraith’s holding but noted

that Galbraith itself was correctly decided under any view of intended loss:

      The victim in Galbraith–a pension fund to which overvalued stock
      was to be sold–was a Potemkin institution fabricated by law

      2
       The majority suggests that Galbraith is inconsistent with application note
10 to § 2F1.1, which authorizes a downward departure “where a defendant
attempted to negotiate an instrument that was so obviously fraudulent that no one
would seriously consider honoring it.” If a downward departure is authorized for
an obviously fraudulent scheme, so the argument goes, the guidelines must have
assumed that the unlikelihood of success is irrelevant to the calculation of
intended loss. But the extreme unlikelihood of success is still different from
structural and absolute impossibility. The fact that a scheme’s success may
depend on the stupidity or naivete of others does not mean that it is incapable of
success. Even the most harebrained of schemes may, perchance, succeed,
whereas a government sting of the sort employed in Galbraith could never, under
any circumstance, result in a loss to anyone.

                                         -3-
      enforcement officials. Galbraith thus never could have defrauded
      anyone. Studevent, on the other hand, stole checks from real entities
      and thus had real potential victims who could have been defrauded
      but for the intervention of the FBI.

Studevent, 116 F.3d at 1563 n.3; see also United States v. Rizzo, 121 F.3d 794,

802 (1st Cir. 1997) (“Unlike the fictitious victim in Galbraith, the intended

victims of Rizzo’s counterfeit check scheme were actual corporations.”); United

States v. Coffman, 94 F.3d 330, 337 (7th Cir. 1996) (“[E]ven if . . . [Galbraith]

were decided correctly, [it] would not carry the day for the defendants[] [because

it is a case] where the fraud would have done no harm even if the defendants had

not been interrupted[] [whereas h]ere the fraud had a real victim in its sights but

was interrupted before it could do any harm.”); United States v. Falcioni, 45 F.3d

24, 27 (2d Cir. 1995) (noting Galbraith’s “limited exception to use of the intended

loss figure” and stating that “Falcioni’s plan failed to result in loss, not because

his victim was a non-existent entity, but rather because [an acquaintance] notified

law enforcement authorities”); cf. United States v. Sheets, 65 F.3d 752, 753-54

(8th Cir. 1995) (holding defendant liable for intended loss created by filing false

tax return for someone else, even though intended victim demonstrated to IRS

that tax return was bogus).

      In sum, rather than implicitly criticize our holding in Galbraith, as does the

majority, I would simply confine Galbraith to its narrow factual setting. And,

following Santiago, I would calculate the intended loss of Mr. Ensminger’s

                                          -4-
scheme not at zero, as does the majority, but, as did the district court, at the fair

market value of the real property which was the object of his attempted fraud.

                                          -5-