Court Opinion

ID: 2792158
Source: CourtListenerOpinion
Date Created: 2015-04-08 20:00:34.59232+00
Date Added: 2024-06-11T11:11:35.579342
License: Public Domain

NOT PRECEDENTIAL

                      UNITED STATES COURT OF APPEALS
                           FOR THE THIRD CIRCUIT
                                _____________

                                    No. 14-1517
                                   _____________

                          UNITED STATES OF AMERICA

                                           v.

                               DAVID MCCLOSKEY,
                                             Appellant
                                 _______________

                    On Appeal from the United States District Court
                       for the Western District of Pennsylvania
                             (D.C. No. 2-09-cr-00225-001)
                        District Judge: Honorable Joy F. Conti
                                   _______________

                      Submitted Under Third Circuit LAR 34.1(a)
                                  January 15, 2015

               Before: AMBRO, FUENTES, and ROTH, Circuit Judges

                                 (Filed: April 8, 2015)
                                  _______________

                                     OPINION*
                                  _______________

      *
        This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
FUENTES, Circuit Judge.

       David McCloskey challenges the procedural reasonableness of the District Court’s

imposition of a 120-month imprisonment sentence. For the reasons set forth below, we

affirm.1

                                              I.

       In 1999, Kenneth Cowden, an acquaintance of McCloskey, began conducting

fraudulently inflated real estate appraisals. Cowden circumvented Pennsylvania’s

requirement that real estate appraisers be licensed by using other appraisers’ licenses.

His fraudulent scheme also involved rendering inflated property values by using better

neighborhoods for comparables and by making the property itself appear to be in much

better condition that it actually was.

       By late 2000 or early 2001, McCloskey was working for First Atlantic Financial

(“First Atlantic”), a mortgage brokerage owned by his mother. While McCloskey’s

mother handled the payroll and directed its legal affairs, McCloskey was considered the

day-to-day boss. Indeed, his subordinates referred to him as “King.” When Cowden told

McCloskey that he was appraising real estate for other mortgage brokers, McCloskey

urged him to do the same for First Atlantic. In fact, McCloskey began paying Cowden

$400 per appraisal upfront to prioritize First Atlantic’s business.

       When Cowden provided an inflated appraisal to First Atlantic, he would write

“Ken’s World” on the loan file to alert McCloskey that the appraisal was “beyond

1
 We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. The District Court
had jurisdiction pursuant to 18 U.S.C. § 3231. Because we write for the parties, we recite
only those facts necessary to our conclusion.
                                              2
reality” and that additional measures were needed to make it seem plausible. App. 244.

For those appraisals, McCloskey and his subordinates would create bogus supporting

documents which would exaggerate borrowers’ income, overstate their assets, and

mischaracterize their employment status.

       This scheme continued until 2005, when federal agents appeared at Cowden’s

home. Cowden admitted his conduct, confessed that he had provided unlicensed and

inflated appraisals to McCloskey and others at First Atlantic, and provided documents to

substantiate his admissions. In addition, the subordinates working with McCloskey at

First Atlantic also confessed to receiving fraudulent appraisals from Cowden while they

worked for McCloskey.

       In 2009, a grand jury indicted McCloskey of conspiring to commit mail fraud with

Cowden and others “[f]rom in and around August 2004 and continuing thereafter until in

and around April 2005.” App. 9A-10A. Cowden pleaded guilty in June 2010. At the

plea hearing, McCloskey’s attorney clarified McCloskey was admitting only that he knew

Cowden was an unlicensed appraiser and that McCloskey was not conceding that he

hired Cowden to perform inflated appraisals. The District Court questioned McCloskey

thoroughly regarding his potential sentence noting that he could be sentenced to the

statutory maximum for his offense, which was 20 years in prison. The District Court

explicitly stated: “So you understand that . . . you will still be bound by your guilty plea

and will have no right to withdraw it even if your counsel made a mistake?,” to which

McCloskey responded affirmatively. App. 11.

                                              3
       The parties then began to prepare for sentencing and an initial Presentence

Investigation Report was prepared. In August 2010, the Government alerted McCloskey

that it would argue that he was responsible for the losses Cowden caused at First Atlantic

and other brokerages. McCloskey moved to strike the Government’s objections—which

included its loss estimates—on the eve of the evidentiary hearing. The District Court

denied McCloskey’s motion to strike and held the evidentiary hearing. After the

evidentiary hearing, McCloskey filed a counseled motion to withdraw his guilty plea,

asserting his innocence to the crime charged in an affidavit affixed to the motion. App.

361. At a hearing on the motion, McCloskey withdrew his motion after he was reminded

that the hearing could result in waiver of the attorney-client privilege and could

potentially expose him to prosecution for perjury.

       The District Court determined that, in calculating McCloskey’s advisory

Guidelines range, his offense level should be increased to account for: (1) his leadership

role under U.S.S.G. § 3B1.1(a); (2) the fact that his fraud victimized more than 50 people

under U.S.S.G. § 2B1.1(b)(2); (3) the sophisticated means he used to commit the fraud

per U.S.S.G. § 2B1.1(b)(10)(C); and (4) his attempt to withdraw his guilty plea, which

obstructed justice under U.S.S.G. § 3C1.1. In addition, the Court found that McCloskey

failed to demonstrate his clear acceptance of responsibility for purposes of a reduction

under U.S.S.G. § 3E1.1(a). The Court did, however, grant McCloskey’s request for a

downward variance, sentencing him to 120 months in prison. This timely appeal

followed.

                                             II.

                                             4
       We review the procedural reasonableness of a sentence under an abuse of

discretion standard. When sentencing a defendant, the district court must follow a three-

step analysis set forth in Gall v. United States, 552 U.S. 38 (2007). First, the district

court must correctly determine the applicable guidelines range. Second, the court must

determine whether to adjust the guidelines range. Third, it must consider all the factors

set forth in 18 U.S.C. § 3553(a) as a whole, including whether a variance is warranted.

       If we find no procedural error, we must “‘then, at stage two, consider [the

sentence’s] substantive reasonableness.’” United States v. Tomko, 562 F.3d 558, 567 (3d

Cir. 2009) (quoting United States v. Levinson, 543 F.3d 190, 195 (3d Cir. 2008)). The

“touchstone of ‘reasonableness’ is whether the record as a whole reflects rational and

meaningful consideration of the factors enumerated in 18 U.S.C. § 3553(a).” United

States v. Grier, 475 F.3d 556, 571 (3d Cir. 2007) (en banc).

       On appeal, McCloskey asserts two arguments: (1) that the District Court erred by

misapplying the concept of “relevant conduct” in calculating the advisory Guidelines;

and (2) that it erred in applying the obstruction-of-justice enhancement while refusing to

give him credit for acceptance of responsibility. We address each claim in turn.

A. The District Court Did Not Err in Considering Relevant Conduct.

       McCloskey argues that the District Court impermissibly considered conduct

occurring prior to 2004 in determining whether to apply the leadership-role enhancement,

the sophisticated-means enhancement, and the number-of-victims adjustment in

calculating his offense level. Because McCloskey concedes that he failed to preserve this

argument, we review this claim solely for plain error. To establish error under this

                                              5
standard, McCloskey must prove that there was “(1) ‘error,’ (2) that is ‘plain,’ and (3)

that [it] ‘affect[s] substantial rights.’” Johnson v. United States, 520 U.S. 461, 467

(1997) (quoting United States v. Olano, 507 U.S. 725, 732 (1993)). Further, “[i]f all

three conditions are met, [we] may then exercise [our] discretion to notice a forfeited

error, but only if [] the error ‘seriously affect[s] the fairness, integrity, or public

reputation of judicial proceedings.’” Id. (quoting Olano, 507 U.S. at 732) (internal

quotation marks omitted).

       Here, McCloskey can prove that there was an error and that the error was plain.

But the error was not in the District Court’s interpretation of U.S.S.G. § 1B1.3(a)(1) in

determining relevant conduct, but rather in its application of this section. As the

Government contends, McCloskey’s substantive offense was wire fraud, which is found

in U.S.S.G. § 2B1.1(a)(1). Offenses governed by U.S.S.G. § 2B1.1 are subject to

grouping. That being so, the Court should have used the definition of “relevant conduct”

in U.S.S.G. § 1B1.3(a)(2), which permits it to consider “all acts and omissions described

in subdivisions (1)(A) and (1)(B) . . . that were part of the same course of conduct or

common scheme or plan as the offense of conviction.” U.S.S.G. § 1B1.3(a)(2).

Therefore, the first two prongs of Olano are met.

       McCloskey, however, cannot prove the error affected his substantial rights.

Because U.S.S.G. § 1B1.3(a)(2) encompasses a broader range of “relevant conduct,”

McCloskey’s claim falters. Section 1B1.3(a)(2) defines “common scheme or plan” as

covering conduct “substantially connected by at least one common factor, including

common victims, common accomplices, common purpose, or similar modus operandi,”

                                                6
and construes “same course of conduct” to mean actions “sufficiently connected or

related to each other,” and involving factors such as “the degree of similarity in offenses,

the regularity or number of repetitions, and the time interval between offenses.” U.S.S.G.

§ 1B1.3(a)(2) cmt. 9. The record is clear that this scheme was connected by “at least one

common factor”: Cowden, an unsavory real estate appraiser who operated illegally using

other people’s licenses. Indeed, while McCloskey argues that the District Court

erroneously relied on the testimony of subordinates who ceased working at First Atlantic

in 2003, this argument is belied by the fact that McCloskey continued the fraud with new

employees and the same modus operandi. Accordingly, McCloskey fails to prove the

District Court’s error affected his substantial rights in applying U.S.S.G. § 1B1.3(a)(1)

and considering pre-indictment conduct as “relevant conduct.” The District Court was

entitled to rely on this conduct in applying the leadership role, sophisticated means, and

number-of-victims enhancements.

B. The District Court Did Not Err in Declining to Credit McCloskey for Acceptance
of Responsibility and Applying an Obstruction-of-Justice Enhancement.

       We now turn to McCloskey’s second argument: that the District Court erred in

failing to credit him for acceptance of responsibility, while applying an obstruction-of-

justice enhancement for his withdrawn guilty plea. These arguments were preserved and

we review them for clear error. United States v. Siddons, 660 F.3d 699, 707-08 (3d Cir.

2011). A finding is only clearly erroneous “when, although there is evidence to support

it, the reviewing body on the entire evidence is left with the definite and firm conviction

                                             7
that a mistake has been committed.” Grier, 475 F.3d at 570 (internal alterations and

citations omitted).

       McCloskey argues that the obstruction-of-justice enhancement for withdrawing his

guilty plea was inappropriate. The Guidelines authorize an increase in a defendant’s

offense level if he “willfully obstructed or impeded, or attempted to obstruct or impede,

the administration of justice with respect to the [. . .] prosecution.” U.S.S.G. § 3C1.1.

Furthermore, this enhancement applies to defendants who commit perjury. Id. cmt.

n.4(B). When applying U.S.S.G. § 3C1.1, “the court should be cognizant that inaccurate

testimony or statements sometimes may result from confusion, mistake, or fault memory

and, thus, not all inaccurate testimony or statements necessarily reflect a willful attempt

to obstruct justice.” Id. cmt. n.2.

       McCloskey does not deny that the sworn statements he made in his affidavit were

false. Instead, he asserts that, “[i]t is not unreasonable for confusion to set in after [he]

pleaded guilty believing one set of facts to be true only to find out after the guilty plea

that the stakes have been exponentially raised.” Appellant’s Br. 47. He contends he “did

not intend to obstruct justice by filing a motion to withdraw his guilty plea and asserting

his innocence.” Id. McCloskey’s assertions of “confusion” and “fear,” however, fail.

McCloskey was not confused that he was providing false testimony. Rather, he knew his

testimony was false when he was giving it. A defendant who perjures himself in an

attempt to withdraw his guilty plea obstructs justice. Thus, the District Court did not err

in applying this enhancement.

                                               8
       Finally, we turn to McCloskey’s argument that the District Court failed to credit

him for acceptance of responsibility for his offense under U.S.S.G. § 3E1.1. The

Guidelines permit a court to credit a defendant where he “clearly demonstrates acceptance

of responsibility for his offense.” U.S.S.G. § 3E1.1. A defendant who enters a guilty plea,

however, is not entitled to this credit “as a matter of right.” Id. cmt. n.3. Moreover,

“conduct resulting in an enhancement under § 3C1.1 (Obstructing or Impeding the

Administration of Justice) ordinarily indicates that the defendant has not accepted

responsibility for his criminal conduct.” Id. cmt. n.4. As the Guidelines note, there may

be “extraordinary cases” in which adjustments under § 3C1.1 and § 3E1.1 apply. Id.

       To determine whether McCloskey’s case is “extraordinary,” the District Court

appropriately reviewed the totality of the circumstances. In doing so, the Court explained

that McCloskey’s “obstructive conduct occurred long after the investigation in this case,

required the government to file a lengthy response, required the court to hold a hearing,

and further delayed resolution of the proceedings.” App. 495-96. Significantly, we join

the District Court in noting that McCloskey “has not yet admitted his obstructive

conduct.” Thus, while we commend McCloskey for abandoning his motion to withdraw

his guilty plea, we ultimately hold that the District Court did not err in refusing to apply

this enhancement.

                                             III.

       For all the reasons stated above, we affirm the District Court’s sentence.

                                              9