United States v. Iwuanyanwu ( 2023 )

United States Court of Appeals
For the First Circuit
Nos. 22-1297, 22-1609
UNITED STATES OF AMERICA,
Appellee,
v.
PAUL IWUANYANWU,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Denise J. Casper, U.S. District Judge]
Before
Gelpí, Lynch, and Thompson,
Circuit Judges.
Christine DeMaso, Assistant Federal Public Defender, for
appellant.
Alexia R. De Vincentis, Assistant United States Attorney,
with whom Rachael S. Rollins, United States Attorney, was on brief,
for appellee.
May 30, 2023
GELPÍ, Circuit Judge. Appellant Paul Iwuanyanwu
("Iwuanyanwu") participated in two fraud schemes, business email
compromise ("BEC") and online romance, for which he pled guilty to
one count of conspiracy to commit wire fraud, two counts of wire
fraud, one count of conspiracy to commit mail fraud, one count of
mail fraud, and one count of engaging in monetary transactions in
property derived from specified unlawful activity ("unlawful
monetary transactions"). The district court, considering the
unauthorized use of a third-party identity and the substantial
financial hardship caused to one of the victims, sentenced
Iwuanyanwu to thirty months imprisonment, which represented a
downward variance from the Guidelines Sentencing range.
Iwuanyanwu now challenges the district court's imposition of two
Sentencing Guidelines enhancements: (1) the unauthorized use of a
means of identification unlawfully to produce another means of
identification and (2) substantial financial hardship caused to
one of the victims. For the reasons discussed below, we affirm.
I. Background
Relevant Facts
Because this appeal follows a guilty plea, we draw the
facts from the uncontested portions of the Presentence Report
("PSR") and the transcript of the sentencing hearing. United
States v. Bishoff, 58 F.4th 18, 20 n.1 (1st Cir. 2023). First, we
introduce what a business email compromise ("BEC") scheme is; next,
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we outline the conspiracy against specific victims. Finally, we
review the procedural history of the case before appeal.
BEC Fraud Scheme
From April 2017 through March 2019, Iwuanyanwu engaged
in a BEC scheme. BEC scams involve fraudulent business
transactions conducted via wire transfer payments. The fraud is
carried out by compromising and/or "spoofing" legitimate business
email accounts through computer intrusion techniques, such as
phishing, with the goal of inducing employees at a targeted company
to transfer funds without authorization, most often to accounts
controlled by the perpetrators of the scheme. Here, the spoofed
email addresses looked almost exactly like the email addresses
belonging to the victims.
Funds Diverted from Russian Company
On approximately May 21, 2018, Victim Company 1 (a
custom tube and pipe manufacturer based in Illinois) emailed Victim
Company 3 (a construction company based in Moscow, Russia) an
invoice for $888,274 pursuant to a contract between both. Because
Victim Company 1's email had at some point been compromised, the
email and attachment were redirected to emails controlled by the
co-conspirators. One or more co-conspirators then altered the
attached invoice, by adding payment instructions, and subsequently
sent the altered invoice to Victim Company 3 from a spoofed email
account. The altered invoice instructed Victim Company 3 to wire
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payments to a Regions Bank account opened by one of Iwuanyanwu's
co-conspirators. Prior to the transfer, however, Regions Bank
closed the account.
As a result of the account's closure, on or about July 6,
2018, Iwuanyanwu opened an account at a Bank of America branch in
Medfield, Massachusetts in the name of Victim Company 1.
Iwuanyanwu falsely listed himself as the owner of the business,
the sole account holder, and the only authorized signer. On
approximately July 9, 2018, one or more of the co-conspirators,
pretending to be Victim Company 1, sent a new invoice to Victim
Company 3 instructing the company to transfer $884,274 to the newly
opened Bank of America account. A week later, Victim Company 3
wired $884,274 from its bank in Russia to the Bank of America
account that Iwuanyanwu had recently opened. A day later,
Iwuanyanwu transferred $95,320 from the Bank of America account to
a Citibank, N.A. account in New York, held by a Nigerian bank.
Funds Diverted from Pakistani Company
Later that year, on approximately October 18, 2018, an
individual posing as S.P.1 used a false Florida driver's license
to open a Branch Banking and Trust ("BB&T") account in the name of
S.P. DBA Quantek Renovation ("S.P. DBA" or "S.P. account"). A
real person, posing as S.P., used S.P.'s actual birth date and
1 Initials are used throughout to protect the victim's identity.
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social security number to open the account. The real S.P. did not
know about or authorize the use of his identity and personal
identifying information. From approximately November 17 to
November 19, 2018, Iwuanyanwu exchanged WhatsApp messages with a
co-conspirator who identified himself as "More Blessing 1" in the
messaging platform. They exchanged information about the S.P. DBA
account.
On approximately November 27, 2018, a WhatsApp user
identified as "Motorola 1" notified Iwuanyanwu that Victim
Company 4 (a Pakistani textile company) made a wire transfer to
the S.P. account. From approximately November 27 to December 5,
2018, the S.P. account received eight international transfers
totaling $164,327. BB&T closed the account shortly thereafter.
Attempted Diversion of Funds from Victim Company 6
On or about July 19, 2018, a co-conspirator sent
Iwuanyanwu a WhatsApp message stating the name of Victim Company 6.
That same day, Iwuanyanwu went to a Santander Bank branch and
opened an account in the name of Victim Company 6, which he
attested to being the owner of. Although a co-conspirator later
sent a spoofed email to a customer of Victim Company 6 with
instructions on how to remit payment via wire transfer, no funds
were ever wired to said Santander Bank account.
Online Romance Fraud Scheme
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From around 2016 through January 2020, Iwuanyanwu, and
one or more co-conspirators, conspired to defraud victims that
they encountered on online dating sites by persuading them to send
and/or receive money on their behalf. Iwuanyanwu, and one or more
co-conspirators, cashed and withdrew funds from the accounts to
which victim funds were sent.
Victim A
In connection with this scheme, from March 2018 through
approximately January 2020, Iwuanyanwu persuaded Victim A (who
allegedly was his long-time girlfriend at the time) to open several
bank accounts for him to receive transfers that he claimed were
for a car business. Victim A opened a Crescent Credit Union
account in her own name and another account at Citizens Bank in
the name of WJ Export. The latter was used in connection with
Victim B.
Victim B
In or about February and March 2019, an individual using
the identity "Sergey Vince" (not Iwuanyanwu or the named co-
conspirator), who was in an online romantic relationship with
Victim B, told Victim B that he was traveling for work and needed
some money because he ran short of funds. Victim B, a disabled
and unemployed woman, agreed to help him out. "Sergey" then
provided her the account information for the WJ Export Citizens
Bank account that had been opened by Victim A at Iwuanyanwu's
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direction. Between February 20, 2019, and March 6, 2019, at
"Sergey's" request, Victim B sent $6,000 via two $3,000 wire
transfers. Between February 21-22, 2019, Iwuanyanwu made five
separate withdrawals of $600 cash from the account that Victim B
had sent money to. On or about March 6, 2019, Iwuanyanwu asked
Victim A to accompany him to the bank to withdraw $3,000 from the
account that she had opened for him. Later that day, Iwuanyanwu
and Victim A went to the bank and withdrew the $3,000.
Victim C
Beginning in 2016, Victim C engaged in an online
relationship with an individual (not Iwuanyanwu) who she believed
was in Africa. Between April and November 2018, Victim C was
fraudulently induced to send funds to various bank accounts in
Ghana and Nigeria, totaling more than $10,000. On or about
February 28, 2019, Iwuanyanwu deposited into his personal bank
account a money order for $500 that Victim C had sent one of his
co-conspirators the day before. About a week later, following the
commands of one of Iwuanyanwu's co-conspirators, Victim C sent via
United States mail a $500 money order to Iwuanyanwu's Medfield
address. Victim C believed she was sending the money to help pay
her online friend's rent.
Procedural Background
In April 2019, a grand jury indicted Iwuanyanwu and a
co-conspirator (not a party to this appeal), charging them each
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with one count of conspiracy to commit wire fraud related to the
BEC scheme, one count of wire fraud, and charging Iwuanyanwu with
one count of engaging in an unlawful monetary transaction.
However, in July 2020, the grand jury issued a six-count
superseding indictment against Iwuanyanwu charging him with
conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349;
two counts of wire fraud, in violation of 18 U.S.C. § 1343;
conspiracy to commit mail fraud, in violation of 18 U.S.C. § 1349;
mail fraud, in violation of 18 U.S.C. § 1341; and unlawful monetary
transactions, in violation of 18 U.S.C. § 1957. On October 27,
2021, Iwuanyanwu pled guilty to all six counts of the superseding
indictment.
The parties and the Probation Office agreed that
Iwuanyanwu's criminal history category was I, his base offense
level was seven, a fourteen-point enhancement applied because of
the loss amount, and a three-point deduction applied for acceptance
of responsibility. The PSR added a two-point enhancement pursuant
to U.S.S.G. § 2B1.1(b)(11)(A)(ii) because Iwuanyanwu used
fraudulent certificates of incorporation to open the bank
accounts. He objected. In response to Iwuanyanwu's objection to
the § 2B1.1(b)(11)(A)(ii) enhancement, the Amended PSR instead
applied an enhancement for unauthorized use of a means of
identification on subsection (C)(i) because a member of the
conspiracy used S.P.'s identity to open a bank account. The
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Amended PSR also added a two-point enhancement under U.S.S.G.
§ 2B1.1(b)(2)(A)(iii) based on the substantial financial hardship
Victim B endured. Iwuanyanwu objected to both enhancements in his
sentencing memorandum.
At the sentencing hearing, the district court adopted
the Amended PSR's Guideline calculation, overruling Iwuanyanwu's
objections to both enhancements. The applicable sentencing range
was forty-one to fifty-one months. The district court, however,
sentenced him, by way of a downward variance, to thirty months
imprisonment, followed by two years of supervised release.
Iwaunyanwu timely appealed.
II. Standard of Review
We review preserved challenges to the district court's
application of Sentencing Guidelines enhancements for abuse of
discretion. United States v. Ilarraza, 963 F.3d 1, 7 (1st Cir.
2020). However, this standard is not "monolithic." Id. Thus,
"our review . . . consists of 'clear error review [of] factual
findings, de novo review [of] interpretations and applications of
the [G]uidelines, and abuse of discretion review [of] judgment
calls.'" United States v. Kitts, 27 F.4th 777, 789 (1st Cir. 2022)
(alterations in original) (quoting United States v. O'Brien, 870
F.3d 11, 15 (1st Cir. 2017)).
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III. Discussion
Enhancement for Unauthorized Use of Means of
Identification
Iwuanyanwu challenges the district court's application
of a two-point enhancement under U.S.S.G. § 2B1.1(b)(11)(C)(i)
related to the use of S.P.'s identity. He asserts that it was not
foreseeable to him that the conspiracy would use the identity of
a third party (S.P.'s name, birth date, and social security
number), who was not involved in the scheme, to fraudulently open
a bank account. He further contends that the government did not
prove that he knew or should have known that the bank account was
not opened by S.P.
The enhancement at issue here provides for a two-point
increase for "the unauthorized transfer or use of any means of
identification unlawfully to produce or obtain any other means of
identification[.]" U.S.S.G. § 2B1.1(b)(11)(C)(i). The
Guidelines' commentary clarifies that it "applies in a case in
which a means of identification of an individual other than the
defendant (or a person for whose conduct the defendant is
accountable under § 1B1.3 (Relevant Conduct)) is used without that
individual's authorization unlawfully to produce or obtain another
means of identification." Id. cmt. n.10(C)(i). A means of
identification, such as a name, social security number, date of
birth, or any other personal identification number, see 18 U.S.C.
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§ 1028(d)(7), "shall be of an actual (i.e., not fictitious)
individual, other than the defendant," U.S.S.G. § 2B1.1 cmt. n.1.
For example, a defendant who obtains a bank loan using an
individual's personal information, such as that listed above, is
eligible for this enhancement. U.S.S.G. § 2B1.1 cmt.
n.10(C)(ii)(I).
Although individual conduct can trigger the enhancement,
in the case of joint criminal activity -- such as the conspiracy
here -- the enhancement may apply based on a co-conspirator's
actions if said actions "were (i) within the scope of the jointly
undertaken criminal activity, (ii) in furtherance of [said]
activity, and (iii) reasonably foreseeable in connection with that
criminal activity." U.S.S.G. § 1B1.3(a)(1)(B). In other words,
Iwuanyanwu is "not automatically saddled with the full weight of
the conspiracy's wrongdoing[,]" but we will find him responsible
if his co-conspirators' acts "were reasonably foreseeable by him
so long as those acts were committed" in furtherance of the
conspiracy and within its scope. United States v. Soto-Villar, 40
F.4th 27, 31 (1st Cir. 2022) (quoting United States v. Sepulveda,
15 F.3d 1161, 1197 (1st Cir. 1993)). The government must establish
by a preponderance that the unauthorized use of means of
identification was reasonably foreseeable to Iwuanyanwu. Cf. id.We now turn to the issue before us.
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"Whether the conduct was reasonably foreseeable to
[Iwuanyanwu] is a fact-bound determination that we review for clear
error." United States v. Sandoval, 6 F.4th 63, 106 (1st Cir.
2021). Here, the district court found that, based on the record
and what was said at the sentencing hearing, the misuse was
reasonably foreseeable to Iwuanyanwu. Thus, we will only find
clear error if "on the whole of the record, we form a strong,
unyielding belief that a mistake has been made." United States v.
Teixeira, 62 F.4th 10, 24 (1st Cir. 2023) (quoting United States
v. Franklin, 51 F.4th 391, 399 (1st Cir. 2022)).
Before us, Iwuanyanwu argues that he could not have
foreseen that a co-conspirator would have fraudulently used S.P.'s
identity to open an account in S.P.'s name because he "had limited
involvement in the conspiracy" and the scheme's modus operandi was
that conspirators would open bank accounts "with their own
identities." Moreover, Iwuanyanwu asserts that he played a
"middleman role" in the scheme. We are unpersuaded. The record
establishes that Iwuanyanwu was not a passive spectator in the
conspiracy. He knew the scheme inside and out.
For instance, in a WhatsApp exchange with Motorola 1
regarding the delay in the withdrawal of money from the S.P.
account, Iwuanyanwu expressed that in this kind of "business[,]
sometimes things like this happen." He expressed confidence that
the money was going to be withdrawn soon and advised Motorola 1 to
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"relax," "be positive," and not worry. The reasonable import of
Iwuanyanwu's statements is that he is well-versed in the ups and
downs of BEC schemes. Moreover, we must not overlook the fact
that Iwuanyanwu coordinated with "specialists" in schemes like the
one here, who drove fifteen hours to withdraw money from the S.P.
account.2 Said level of coordination belies his assertion that he
had a limited role or was merely a middleman.
Additionally, although he opened two bank accounts using
his own name, he did so by falsely listing himself as the owner,
the sole account holder, and the only authorized signer of Victim
Company 1 and Victim Company 6 respectively. Moreover, he used
fraudulent certificates of incorporation to open the bank
accounts. Iwuanyanwu had no affiliation with either company. Even
assuming arguendo that Iwuanyanwu was not one of the main players
in the scheme, his use of fraudulent corporate documents to open
bank accounts used to perpetrate the fraud is sufficient to
establish that it was reasonably foreseeable to him that the
conspiracy could use false identities when opening additional bank
accounts in furtherance of the conspiracy.
2It is unclear from the record who the so-called "specialists"
were and what their expertise was. However, from the conversation
between Iwuanyanwu and Motorola 1, we infer that the "specialists"
were individuals accustomed to withdrawing large amounts of cash
from fraudulent bank accounts that were part of BEC schemes.
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Lastly, Iwuanyanwu relies on a Fifth Circuit case to
argue that the misuse of a means of identification enhancement was
improperly applied. Our reading of that case leads us to the
opposite conclusion. In United States v. Jones, the Fifth Circuit
held that the district court correctly applied the misuse of a
means of identification enhancement, such as here, because Jones,
who acted as a runner in a fraudulent check cashing scheme, could
reasonably foresee that the photograph that she provided would be
used by the scheme operators to create a false identification card
containing her photograph but someone else's personal information.
533 F. App'x 448, 459-60 (5th Cir. 2013) (per curiam)
(unpublished). As to the six-point enhancement under U.S.S.G.
§ 2B1.1(b)(2)(C) (for an offense resulting in substantial
financial hardship to twenty-five or more victims), the Fifth
Circuit determined that the district court erred in applying said
enhancement because Jones could not have foreseen that the scheme
operators were getting personal information by stealing mail from
collection boxes. Id. at 454-55.
Iwuanyanwu posits that, similar to Jones, he had a
limited role in a larger conspiracy. He claims that he was unaware
of the other methods used by the scheme to open bank accounts, and
thus, the enhancement is inapplicable. The district court did not
err in rejecting this argument. Iwuanyanwu was actively involved
in the discussions regarding the S.P. account. He exchanged
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messages via WhatsApp with Motorola 1 and More Blessing when
someone who pretended to be S.P. -- possibly another co-
conspirator -- called BB&T to inquire about the account given that
there was trouble withdrawing money from it. Likewise, Iwuanyanwu
would like us to accept that he believed S.P. had opened the bank
account himself "even though []Iwuanyanwu and his co-conspirators
were using the account without S.P.'s knowledge and for nefarious
purposes." Again, such a contention defies reason given that S.P.
would have noticed unknown transactions involving large sums of
money, coming from international banks, and would have likely
flagged this activity to his bank. Certainly, someone in
Iwuanyanwu's position would have thought that a co-conspirator had
fraudulently opened the account in S.P.'s name or that S.P. was
himself a co-conspirator or someone participating in the
conspiracy. Furthermore, as discussed supra, Iwuanyanwu himself
used fraudulent certificates of incorporation to open bank
accounts, undercutting his argument that the use of fraudulent
identifying documents to open accounts was not reasonably
foreseeable. Last, but not least, Iwuanyanwu fails to explain why
misusing corporate documents is different from misusing personal
identification information.
The evidence establishes by a preponderance that it was
reasonably foreseeable to Iwuanyanwu that his co-conspirators
could open a bank account using a fraudulent name to further the
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scheme. Given that the district court's "conclusions were properly
rooted in the evidence and its inferences founded in logical
reasoning," Sandoval, 6 F.4th at 106 (quoting United States v.
Hernández, 218 F.3d 58, 71 (1st Cir. 2000)), the district court
did not clearly err in applying the two-point enhancement.
Enhancement for Substantial Financial Hardship
Iwuanyanwu also objects to the two-point enhancement for
causing Victim B substantial financial hardship. The conspiracy
obtained in a one-month period approximately $6,000 from Victim B,
who is disabled, unable to work, and lives with a fixed income of
$1,000 per month. The Amended PSR notes that Victim B "received
a limited income" and that the amount wired to Iwuanyanwu "was
equal to almost six months of income." As a result, Victim B had
to take out personal loans shortly thereafter to pay her medical
expenses because she had sent to the conspirators all the money
that she had available at the time.
The Sentencing Guidelines provide for a two-point
enhancement when the offense "resulted in substantial financial
hardship to one or more victims." U.S.S.G. § 2B1.1(b)(2)(A)(iii).
The commentary thereto provides that, when considering said
enhancement, the district court
shall consider, among other factors, whether
the offense resulted in the victim[:]
(i) becoming insolvent;
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(ii) filing for bankruptcy . . .;
(iii) suffering substantial loss of a
retirement, education, or other savings or
investment fund;
(iv) making substantial changes to his or her
employment, such as postponing his or her
retirement plans;
(v) making substantial changes to his or her
living arrangements, such as relocating to a
less expensive home; and
(vi) suffering substantial harm to his or her
ability to obtain credit.
Id. cmt. n.4(F). We are mindful that our inquiry must "focus on
the victim['s] individual circumstances," "plac[ing] greater
emphasis on the extent of harm that [a] particular victim[]
suffer[s]." United States v. George, 949 F.3d 1181, 1185 (9th
Cir. 2020) (quoting Sentencing Guidelines for Unites States
Courts, 80 Fed. Reg. 25,782-01, 25,791 (May 5, 2015)). We review
the factual findings underlying the sentencing enhancement for
clear error. See Kitts, 27 F.4th at 789.
Iwuanyanwu challenges the finding that Victim B suffered
substantial financial hardship because the loans, which were used
to pay medical expenses that Victim B incurred, were taken out
after the wire transfers. The record supports a finding that the
loans were a direct consequence of the scheme because, if Victim
B had not been induced to send the wire transfers, she would have
had the means to cover her medical bills. Her loss of savings
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"inescapably constitutes substantial financial hardship within the
ambit of the [G]uidelines." Id. at 790.
Next, Iwuanyanwu contends that the money Victim B
transferred was some "extra" money that she had available.
However, the record plainly shows how little "extra" money Victim
B had after meeting life's basic necessities. Few other
substantial life changes could have occurred as a result of her
loss because she could not work and already resided with her
daughter. Lastly, Iwuanyanwu argues that Victim B visited a local
casino frequently, refuting her financial hardship claim. We
reject this argument given that the repeat nature of her visits to
the casino appears to be incentivized by vouchers sent by the
casino, which were valid only for specific periods of time.
Because we cannot say that the district court clearly erred in
finding that Victim B suffered substantial financial hardship, we
find no abuse of discretion in the district court's application of
said sentencing enhancement.
Affirmed.
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