Court Opinion

ID: 2790696
Source: CourtListenerOpinion
Date Created: 2015-04-01 19:01:06.190038+00
Date Added: 2024-06-11T11:10:36.278036
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 13-4924

UNITED STATES OF AMERICA,

                Plaintiff - Appellee,

           v.

DAREN KAREEM GADSDEN, a/k/a D,

                Defendant - Appellant.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.     William D. Quarles, Jr., District
Judge. (1:11-cr-00302-WDQ-3)

Argued:   January 29, 2015                 Decided:   April 1, 2015

Before DUNCAN, WYNN, and THACKER, Circuit Judges.

Affirmed in part and remanded with instructions in part by
unpublished opinion.   Judge Duncan wrote the opinion, in which
Judge Wynn and Judge Thacker joined.

ARGUED:    Sarah F. Lacey, LEVIN & CURLETT LLC, Baltimore,
Maryland, for Appellant.     Sujit Raman, OFFICE OF THE UNITED
STATES ATTORNEY, Greenbelt, Maryland, for Appellee.     ON BRIEF:
Steven H. Levin, LEVIN & CURLETT LLC, Baltimore, Maryland, for
Appellant. Rod J. Rosenstein, United States Attorney, OFFICE OF
THE UNITED STATES ATTORNEY, Baltimore, Maryland, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
DUNCAN, Circuit Judge:

      A   jury    convicted      Daren    Kareem    Gadsden     of      one    count    of

conspiracy to commit bank fraud, eight counts of bank fraud, two

counts of aggravated identity theft, and two counts of evidence

tampering.       The district court sentenced Gadsden to 286 months’

imprisonment.          Gadsden appeals the district court’s denial of

his   motion     for   judgment    of    acquittal,      his   sentence,        and    the

district court’s restitution order.                 For the following reasons,

we affirm Gadsden’s convictions and sentence, but remand with

instructions to adjust his restitution amount as agreed to by

both parties.

                                          I.

      Gadsden     was     a   landlord      in     the   Housing        Authority       of

Baltimore City’s (“HABC”) Section 8 program.                         HABC disbursed

rental payments to Section 8 landlords from the bank account it

held with Bank of America.               In late 2009 and early 2010, HABC

lost several thousand dollars from its Bank of America account

in unauthorized Automated Clearing House (“ACH”) transfers to a

PNC   Bank     account    held    by     Daren   Gadsden,      LLC. 1         When    HABC

      1
       ACH is “a payment system that . . . allows financial
institutions to send and receive funds” through electronic
transfers. J.A. 77.

                                           2
confronted him about the losses, Gadsden denied wrongdoing but

agreed to pay the agency $1,400.

        In the spring of 2010, Gadsden recruited Tyeast Brown to

participate           in    a   scheme       to       steal     money    from       HABC     using

unauthorized ACH transfers.                       Brown in turn recruited William

Darden and Keith Daughtry.                  Darden, posing as Daughtry and using

a   forged       driver’s       license      with      Daughtry’s       name     but   Darden’s

photograph,           opened     a    PNC    Bank       account       for    Keith     Daughtry

Contracting,          LLC    (“Daughtry       LLC”).          Gadsden       then    transferred

funds through the ACH from HABC’s Bank of America account to the

Daughtry LLC account.                 Gadsden also used a stolen identity to

open    a    Bank      of   America     account         under    the    name       James   Fisher

Consulting,           LLC   (“Fisher        LLC”).        Gadsden       began      transferring

funds       to    that      account     through        the    ACH      after     submitting      a

fraudulent consulting agreement between Fisher LLC and HABC in

which he forged the signature of HABC’s CFO.

       Gadsden, Brown, Darden, and Daughtry gained access to the

stolen      funds      through       the    following         three     methods:       (1)   they

transferred funds through the ACH from the Daughtry LLC account

at PNC Bank into 54 NetSpend debit card accounts in the names of

other individuals, some of whose identities Gadsden had stolen;

(2) they made in-person cash withdrawals from the Daughtry LLC

account; and (3) they opened accounts, such as the Fisher LLC

account,         at   banks     other      than    PNC--sometimes           by   using     stolen

                                                  3
identities--and effected ACH transfers to those accounts.                              All

told, Gadsden, Brown, Darden, and Daughtry obtained almost $1.4

million from HABC’s Bank of America account through unauthorized

ACH    transfers.           PNC   Bank     ultimately       covered    that    loss     by

returning the full amount to Bank of America, and it reduced its

net loss to $1.1 million by recovering some money from other

banks that received ACH transfers as part of the scheme.

       In April 2011, an FBI agent told Gadsden he wanted to speak

to him about a bank fraud investigation.                      Two days after they

spoke, an email account directly associated with the fraud was

deleted; five days later, another email account associated with

the fraud was similarly deleted.                   Testimony at trial established

that the IP address used to login to the two deleted accounts

matched the IP address used to login to Gadsden’s personal email

account, suggesting that Gadsden operated all three accounts.

       A    grand    jury    indicted      Gadsden     in   May    2012   on   thirteen

counts related to the fraud.               At trial in October 2012, the jury

could not reach a unanimous verdict, resulting in a mistrial.

After a second trial in July 2013, the jury convicted Gadsden on

all counts.

       Gadsden moved under Federal Rule of Criminal Procedure 29

(“Rule      29”)    for   judgment    of       acquittal.     He    argued     that    the

government failed to produce sufficient evidence to support any

of    the   convictions       under      the    heightened    burden      of   proof    it

                                               4
accepted.     The district court denied the motion on the ground

that the evidence was in fact sufficient.               It sentenced Gadsden

to   286   months’   imprisonment      and    ordered    restitution   in    the

amount of $1,399,700.        Gadsden appealed.

                                      II.

      A Rule 29 motion challenges the sufficiency of the evidence

to support the conviction.          See Fed. R. Crim. P. 29(a), (c).          We

review the denial of a Rule 29 motion de novo, “constru[ing] the

evidence in the light most favorable to the government, assuming

its credibility, and drawing all favorable inferences from it.”

United States v. Penniegraft, 641 F.3d 566, 571 (4th Cir. 2011).

A Rule 29 movant bears a heavy burden.                  We “will sustain the

jury's verdict if any rational trier of fact could have found

the essential elements of the crime charged beyond a reasonable

doubt.”    Id. (emphasis in original).

                                      III.

      Gadsden argues on appeal that the district court erred by

denying    his    motion   for   judgment     of     acquittal,   imposing    an

unreasonable     sentence,    and   setting    his    restitution   amount    at

$1,399,700.      We address each issue in turn.

                                       5
                                       A.

      Gadsden first argues that he was entitled to judgment of

acquittal because the evidence was insufficient to support any

of his convictions.         We disagree.       A rational jury could have

found the elements of the crimes charged beyond a reasonable

doubt.

                                       1.

      Count One, which charged Gadsden with conspiracy to commit

bank fraud in violation of 18 U.S.C. § 1349, need not detain us

long.    Gadsden challenges his conspiracy conviction solely on

the   ground   that   the   government      failed   to   produce   sufficient

evidence to support the substantive bank fraud convictions.               See

Appellant’s Br. at 15–22; J.A. 1164–69.               Consequently, he has

waived any other potential challenges to his conviction under

Count One because he raised no other arguments in his brief.

See United States v. Al-Hamdi, 356 F.3d 564, 571 n.8 (4th Cir.

2004) (“It is a well settled rule that contentions not raised in

the   argument   section    of   the   opening   brief    are   abandoned.”).

Because Gadsden tethers his only argument under Count One to his

sufficiency argument under Counts Two through Nine, if there was

sufficient evidence for the substantive bank fraud convictions,

his conspiracy argument fails.              As explained below, we affirm

the substantive bank fraud convictions on the ground that they

                                       6
were       supported   by   sufficient   evidence.        Therefore,   we   also

affirm the conviction for Count One.

                                         2.

       Counts Two through Nine charged Gadsden with bank fraud in

violation of 18 U.S.C. § 1344.           Section 1344 reads as follows:

       Whoever knowingly executes, or attempts to execute, a
       scheme or artifice--

       (1) to defraud a financial institution; or

       (2) to obtain any of the moneys, funds, credits,
       assets, securities, or other property owned by, or
       under   the  custody   or  control   of,    a  financial
       institution,   by   means   of  false    or   fraudulent
       pretenses, representations, or promises;

       shall be fined not more than $1,000,000 or imprisoned
       not more than 30 years, or both.

18 U.S.C. § 1344.           A person commits bank fraud by violating

either subsection.          United States v. Brandon, 298 F.3d 307, 311

(4th Cir. 2002).

       The     government    presented       a   theory   of   liability    under

§ 1344(2), alleging that Gadsden executed a single, integrated

scheme to obtain funds that were first in the custody of Bank of

America and then in the custody of PNC Bank.                    The government

conceded at trial, and continues to concede on appeal, that it

therefore had to prove that Gadsden violated § 1344 as to both

banks. 2      The district court instructed the jury in accordance

       2
       We express no opinion as to whether this concession was
(continued)
                                         7
with that concession.   See J.A. 1123.   The district court also

instructed the jury, without objection by either party, that the

government had to prove that Gadsden “placed the banks at a risk

of loss and that the banks did not knowingly accept such a

risk.” 3   J.A. 1125.

necessary or appropriate.   Regardless of whether the government
was required to prove a violation as to both banks, the evidence
was sufficient to support the § 1344 convictions.
     3
       While this case was on direct appeal, the Supreme Court
issued Loughrin v. United States, in which it rejected the
argument that risk of loss is an element of bank fraud under
§ 1344(2).   See 134 S. Ct. 2384, 2395 n.9 (2014).       Even if
Loughrin were to apply retroactively and render the district
court’s “risk of loss” instruction erroneous, we would not
correct that error because it would not affect the outcome of
this case: the jury convicted Gadsden despite the favorable
instruction, and, as we discuss below, the evidence supports the
convictions.   See Fed. R. Crim. P. 52(a) (“Any error, defect,
irregularity, or variance that does not affect substantial
rights must be disregarded.”).

     While Gadsden argues that we should not retroactively apply
Loughrin, Appellant’s Br. at 22–23, 30, he also maintains that
if Loughrin were to apply, the government must have had to prove
that Gadsden obtained funds “by means of false statements that
were the mechanism naturally inducing each bank to part with
HABC’s funds.”    Appellant’s Br. at 26.      Assuming Gadsden’s
interpretation of Loughrin is correct and that the government
failed to meet that standard, we still would not reverse under
Loughrin because Gadsden requested an instruction at trial,
which the district court gave, that the false statements “must
relate to a material fact or matter” and must have been made “in
furtherance of the alleged scheme to defraud,” regardless of
whether they naturally induced the banks to part with funds.
Supp. J.A. 16; J.A. 1124–25.         Even if that instruction
constituted plain error, we would not correct that error because
Gadsden invited it, and “[i]n the context of plain error review,
an error that was invited by the appellant ‘cannot be viewed as
(continued)
                               8
       Gadsden argues on appeal that the evidence at trial was

insufficient        to    support       the     finding     that     Bank        of     America

suffered a risk of loss.                Because the jury could have reasonably

inferred that Bank of America suffered a risk of loss to HABC,

an actual loss to PNC, or both, we hold that the evidence was

sufficient to support Gadsden’s convictions for bank fraud.

       As    to    risk     of    loss,        PNC    investigator        Michael            Hersh

testified     at    trial      that     Daughtry      LLC   “was     going       to     receive

[approximately       $1.3        million]      from    Bank     of    America”          in     ACH

transfers     from       the   HABC      account.        J.A.      79.       Although          PNC

returned the full amount to Bank of America, the jury could have

reasonably inferred from Hersh’s testimony that Bank of America

suffered a risk of loss in that it would have been liable to

HABC   for    the    fraudulently          transferred        funds       but     for        PNC’s

decision to return all of the funds.

       Indeed, the jury could also have reasonably inferred that

Bank    of   America       suffered       an    actual      loss     based       on     Hersh’s

testimony     that       PNC     Bank    “recover[ed]         some       money        from    the

branches or banks that the funds were sent to,” bringing its

loss down to $1.1 million.                 J.A. 188.        Although Hersh did not

one that affected the fairness, integrity, or public reputation
of judicial proceedings.’”   United States v. Lespier, 725 F.3d
437, 450 (4th Cir. 2013) (quoting United States v. Gomez, 705
F.3d 68, 76 (2d Cir. 2013)).

                                               9
name any specific bank, the jury received evidence that accounts

at Bank of America were the second most-common recipients of

funds     transfers     from    the     Daughtry        LLC    account,    with      over

$250,000 going into the Fisher LLC account alone.                             See J.A.

1456–61.       This     evidence       supports     the       conclusion      that     PNC

recovered some of the money from Bank of America, indicating

that Bank of America suffered an actual loss.

      Based    on   the    evidence      described       above,    a   rational       jury

could have      concluded      beyond    a     reasonable      doubt   that     Bank    of

America suffered a risk of loss or actual loss, either of which

was   sufficient      to   support     the     convictions.         Accordingly,        we

affirm the convictions for Counts Two through Nine.

                                          3.

      Counts    Ten     and    Eleven     charged       Gadsden    with    aggravated

identity theft in violation of 18 U.S.C. § 1028A.                      A person who,

“during       and     in      relation       to     any        [predicate]        felony

violation . . . ,          knowingly     transfers,           possesses,    or       uses,

without lawful authority, a means of identification of another

person,”      commits      aggravated        identity         theft.       18     U.S.C.

§ 1028A(a)(1).        Bank fraud is a predicate felony violation.                      Id.

§ 1028A(c)(5).

      Gadsden does not challenge that he used stolen identities,

but rather argues on appeal that his aggravated identity theft

conviction      requires       not      just      the     commission,      but        also

                                          10
conviction, of bank fraud.            Thus, he submits that, because there

was insufficient evidence for the bank fraud convictions, there

cannot have been sufficient evidence for the aggravated identity

theft convictions.         See Appellant’s Br. at 21–22; J.A. 1164 n.3.

Therefore, as with the conspiracy count, if there was sufficient

evidence for the bank fraud convictions, his argument fails.

     Whether conviction of the predicate offense is required to

support an aggravated identity theft conviction is a question of

first impression in this circuit.                But the jury did convict

Gadsden of bank fraud, and we affirm those convictions, so we

need not answer that question here.                 Because the bank fraud

convictions were supported by sufficient evidence, and because

Gadsden     does     not    otherwise     challenge      his   identity   theft

convictions, we also affirm the convictions for Counts Ten and

Eleven.

                                         4.

     Counts Twelve and Thirteen charged Gadsden with evidence

tampering in violation of 18 U.S.C. § 1512(c)(1) based on the

deletion    of     two   email     accounts   directly   associated   with     the

fraud.     Under that subsection, a person commits tampering if he

“corruptly . . .         alters,    destroys,    mutilates,    or   conceals    a

record, document, or other object, or attempts to do so, with

the intent to impair the object’s integrity or availability for

use in an official proceeding.”               § 1512(c)(1).      Gadsden makes

                                         11
three arguments regarding the sufficiency of the evidence to

support these convictions.               First, he argues that the government

failed    to     provide    sufficient          evidence    to    prove      that    it   was

Gadsden, as opposed to another co-conspirator, who deleted the

accounts.        See Appellant’s Br. at 36–37; J.A. 1170–71.                         Second,

he contends that he did not act “with the intent to impair the

object’s       integrity        or   availability      for       use    in   an     official

proceeding,” 18 U.S.C. § 1512(c)(1), because deleting an email

account    does     not     obstruct       or    impair     an     investigation,         and

because     he     had     legitimate       reasons        for    the     deletion,       see

Appellant’s Br. at 33–35; J.A. 1171–73.                          And third, he argues

that the       government’s          evidence    was   “entirely        circumstantial.”

J.A. 1170. 4

     As we noted above, the evidence at trial showed that the

email    accounts        were    deleted    within     days      of    the   FBI     agent’s

conversation with Gadsden about a bank fraud investigation, and

that the IP address used to login to the two deleted accounts

matched the IP address used to login to Gadsden’s personal email

     4
       Gadsden also argues--for the first time on appeal--that an
email account, as opposed to an email message, is not a “record,
document, or other object” under the statute.     Appellant’s Br.
at 32.   Because Gadsden failed to raise that legal argument in
addition to the factual arguments in his Rule 29 motion, thereby
“precluding the district court from having the first opportunity
to opine on it,” the argument is waived. United States v. Chong
Lam, 677 F.3d 190, 200 (4th Cir. 2012).

                                            12
account.     Taking that evidence together, a rational factfinder

could     have    concluded      beyond   a    reasonable     doubt       that   Gadsden

deleted     the    email    accounts      with       the   intent    to    impair    the

investigation. 5           And     that       the     evidence      may     have    been

circumstantial does not support his claim.                       “[C]ircumstantial

evidence is treated no differently than direct evidence, and may

be sufficient to support a guilty verdict even though it does

not     exclude     every     reasonable            hypothesis      consistent      with

innocence.”       United States v. Jackson, 863 F.2d 1168, 1173 (4th

Cir. 1989).        We thus affirm the convictions for Counts Twelve

and Thirteen.

                                          B.

      We turn now to Gadsden’s challenge to the reasonableness of

his sentence.       The district court imposed on Gadsden the minimum

within-Guidelines          sentence       of        286    months’        imprisonment:

individual, concurrent sentences of 262 months for Counts One

through Nine; concurrent 240-month sentences for Counts Twelve

and Thirteen, to run concurrently with the sentences for Counts

One through Nine; and concurrent 24-month sentences for Counts

      5
       Because § 1512(c)(1) criminalizes attempts to tamper with
evidence with the intent to impair an investigation, whether the
deletion succeeded at impairing the investigation is immaterial.

                                          13
Ten and Eleven, to run consecutively with the other sentences. 6

J.A. 1341.

     In    calculating    the     Guidelines    range,    the     district   court

applied several enhancements.          Gadsden objected to the following

four, each of which increased his offense level by two: (1)

making    a   misrepresentation      that   the    defendant      was    acting   on

behalf of a government agency; (2) using sophisticated means in

the offense; (3) deriving more than $1 million in gross receipts

from a financial institution as a result of the offense; and (4)

obstructing justice. 7          J.A. 1300–01.       He now argues that the

sentence      was   procedurally     unreasonable       because    the    district

court misapplied those enhancements.

     When      a    defendant     challenges      the   reasonableness       of   a

criminal sentence, we review the sentencing determination for an

abuse of discretion.            United States v. McManus, 734 F.3d 315,

317 (4th Cir. 2013).            “We review the district court's factual

findings for clear error and its legal conclusions de novo.”

     6
       A sentence for conviction under § 1028A (Counts Ten and
Eleven) must be consecutive with sentences for other crimes,
though sentences for multiple convictions of § 1028A may run
concurrently with each other at the court’s discretion.     18
U.S.C. § 1028A(b)(2), (4).
     7
       The obstruction-of-justice enhancement does not apply to a
conviction of evidence tampering, so as to prevent double
counting. U.S.S.G. § 3C1.1 cmt. n.7. But the enhancement does
apply where, as here, the obstruction offense is grouped with an
underlying offense, such as bank fraud. See § 3C1.1 cmt. n.8.

                                       14
Id.    “The burden is on the Government to prove the facts needed

to support a sentencing enhancement by a preponderance of the

evidence.”     Id. at 319.

       We have considered Gadsden’s arguments with respect to the

sentencing enhancements and find no clear error as to the first

three enhancements, which Gadsden challenges on the facts, and

no    error   as   to   the   obstruction    enhancement,    see    supra     n.7.

Accordingly, we conclude that the district court did not abuse

its discretion.         The evidence showed that (1) Gadsden made a

misrepresentation that he was acting on behalf of a government

agency by forging the signature of HABC’s CFO; (2) Gadsden used

sophisticated means in the fraud, as it included, for example,

fabricated     documents,      multiple      stolen    identities,    and      the

transfer of funds into numerous different accounts at several

different banks; (3) the scheme derived more than $1 million

from a bank; and (4) Gadsden attempted to obstruct justice in

connection with the bank fraud by deleting the email accounts. 8

We therefore affirm Gadsden’s sentence.

                                        C.

       Finally,    Gadsden     challenges     the     restitution    amount     of

$1,399,700.        Appellant’s    Br.   at   46     n.8.   Because    PNC     Bank

       8
       The obstruction-of-justice enhancement, like the evidence-
tampering statute, applies to attempts as well as to completed
acts. U.S.S.G. § 3C1.1.

                                        15
mitigated its loss to $1.1 million, the government concedes that

the restitution amount should be $1.1 million, and asks this

court to remand the case to the district court with instructions

to adjust its judgment accordingly.         Appellee’s Br. at 58 n.21.

We do so here.

                                    IV.

     For the foregoing reasons, we affirm the judgment of the

district court as to Gadsden’s convictions and sentence, and

remand   with   instructions   to   alter   the   restitution   amount   to

$1,100,000.00.

                                                  AFFIRMED IN PART AND
                                    REMANDED WITH INSTRUCTIONS IN PART

                                    16