United States v. Melton ( 1997 )

F I L E D
United States Court of Appeals
Tenth Circuit
DEC 15 1997
PUBLISH
PATRICK FISHER
UNITED STATES COURT OF APPEALS Clerk
TENTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 97-6028
CLYDE WAYNE MELTON,
Defendant-Appellant.
Appeal from the United States District Court
for the Western District of Oklahoma
(D.C. No. CR-96-86-A)
On the briefs:
O. Ronald McGee, of O.Ronald McGee & Associates, P.C., Ponca City,
Oklahoma and Kenneth E. Holmes and James A. Schaffer, of Holmes & Schaffer,
Ponca City, Oklahoma, for Defendant-Appellant.
Patrick M. Ryan, United States Attorney and Teresa Black, Assistant U.S.
Attorney, Oklahoma City, Oklahoma, for Plaintiff-Appellee.
Before SEYMOUR, Chief Judge, PORFILIO and MURPHY, Circuit Judges.
SEYMOUR, Chief Judge.
Clyde Wayne Melton pled guilty to one count of conspiracy to violate
federal counterfeiting statutes and was sentenced to twenty-seven months in
prison. On appeal, he contends the district court improperly enhanced his
sentence on the basis of coconspirators’ conduct. We agree, vacate his sentence,
and remand for resentencing. 1
I
The record of Mr. Melton’s plea proceeding and sentencing reveals the
following undisputed facts. On April 3, 1996, John Delaney, a convicted
counterfeiter, met with Ronnie Sims and Keene Edenfield in Amarillo, Texas, to
discuss a plan to print counterfeit Federal Reserve notes in Oklahoma City. Mr.
Sims agreed to finance the operation and Mr. Edenfield agreed to distribute the
counterfeit money. Mr. Edenfield was a confidential government informant and
notified the Secret Service. Mr. Delaney was put under surveillance, and was
observed making preparations to set up the printing equipment.
Mr. Delaney recruited Mr. Melton, who agreed to help locate a suitable
building and to loan Mr. Delaney a truck and an employee to help move
1
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1.9. The cause is
therefore ordered submitted without oral argument.
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equipment. Agents observed Mr. Delaney and Mr. Melton’s employees
transporting printing equipment to Mr. Delaney’s apartment. Mr. Melton found a
building and the equipment was to be moved into it on May 2, 1996. On May 1
federal agents arrested Mr. Melton and Mr. Delaney after they were observed
removing tracking devices which the agents had placed on their vehicles.
After his arrest, Mr. Delaney worked actively with the Secret Service to set
up a reverse sting operation in order to further investigate Mr. Sims, the Texas
investor. Pursuant to this operation, the government provided a building, bought
the supplies, and secured a press. The operation ultimately printed over $30
million in counterfeit money, none of which was distributed. Mr. Melton did not
participate in any of this activity. The government admits that Mr. Melton never
had any contact with either Mr. Sims or Mr. Edenfield, and that he had no part in
deciding the amount to be printed during the sting operation.
The presentence report recommended a sixteen-level increase in Mr.
Melton’s base offense level based on the $30 million in counterfeit bills printed
by the sting operation after his arrest. Mr. Melton objected to the enhancement,
arguing that his role in the conspiracy ended when he was arrested on May 1, and
that he should not be held accountable at sentencing for the amount of money
printed by Mr. Delaney pursuant to the sting.
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The government originally agreed with Mr. Melton. Counsel for the
government stated at the sentencing hearing that “[f]or all practical purposes, on
May One, when Mr. Melton was arrested, his involvement stopped with this entire
situation.” Aplt. App. at 27. Counsel further stated:
There’s some confusion as to exactly who said the 30 million
or what, but all of this was, I think, arrived at after Mr. Melton had
ceased to be involved with Mr. Delaney. And of course, he had no
involvement with Sims, the financier of it, nor with the other
informant . . . , who’s in Texas. . . . And I would submit that Mr.
Melton didn’t really have anything, no control over it, how they
arrived at the 30 million, or the supplies or renting of the place. And
I say quite candidly that the government supplied the place to carry
out the sting operation . . . , bought the supplies, secured the press.
Id. at 28. Nonetheless, the district court overruled Mr. Melton’s objection and
found that the production of the $30 million in counterfeit funds was part of the
conspiracy and that the printing of a large amount was reasonably foreseeable
even though Mr. Melton did not participate in determining the amount.
II
We review the sentencing court’s application of the guidelines de novo and
its fact findings under the clearly erroneous standard. United States v. Morales,
108 F.3d 1213, 1225 (10th Cir. 1997). The government bears the burden of
proving by a preponderance of the evidence that the conduct of coconspirators is
to be attributed to the defendant for sentencing purposes. Id. at 1226.
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Under the guideline applicable to the offense of conspiracy, the base
offense level is determined by the guideline for the substantive offense plus the
adjustments for that guideline which “can be established with reasonable
certainty.” USSG § 2X1.1(a). The base offense level for counterfeiting
violations is nine. Id. § 2B5.1(a). The guideline further provides that if the face
value of the counterfeit items is over $2,000, the offense level is increased by
reference to the table applicable to fraud offenses in USSG § 2F1.1. That table,
in turn, provides that offenses involving $30 million are enhanced sixteen levels.
See USSG § 2F1.1(b)(1)(Q).
In addition, because Mr. Melton was convicted of conspiracy, the relevant
conduct for sentencing purposes is to be determined by USSG § 1B1.3(a)(1)(B),
applicable to jointly undertaken criminal activity. Under that guideline, Mr.
Melton’s sentence is to be calculated on the basis of “all reasonably foreseeable
acts and omissions of others in furtherance of the jointly undertaken criminal
activity, that occurred during the commission of the offense of conviction, in
preparation for that offense, or in the course of attempting to avoid detection or
responsibility for that offense.” Id. (emphasis added). The commentary to this
guideline provides the following guidance in its application.
The principles and limits of sentencing accountability under this
guideline are not always the same as the principles and limits of
criminal liability. Under subsections (a)(1) and (a)(2), the focus is
on the specific acts and omissions for which the defendant is to be
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held accountable in determining the applicable guideline range,
rather than on whether the defendant is criminally liable for an
offense as a . . . conspirator.
USSG § 1B1.3, comment. (n.1). The commentary further states that
the scope of the criminal activity jointly undertaken by the defendant
(the “jointly undertaken criminal activity”) is not necessarily the
same as the scope of the entire conspiracy, and hence relevant
conduct is not necessarily the same for every participant. In order to
determine the defendant’s accountability for the conduct of others
under subsection (a)(1)(B), the court must first determine the scope
of the criminal activity the particular defendant agreed to jointly
undertake (i.e., the scope of the specific conduct and objectives
embraced by the defendant’s agreement).
Id. comment. (n.2).
In response to Mr. Melton’s objection to the sixteen-point enhancement
recommended by the presentence report and the government’s comments on the
matter, the court stated at the sentencing hearing
the Probation Office’s position is essentially that “in for a penny, in
for a pound;” and as a co-conspirator, an offense for which Mr.
Melton has entered a plea of guilty, he is responsible for the
foreseeable consequences of the acts of his coconspirators. I’m not
aware of any principle that that liability ends so long as the
conspiracy is set in motion. It doesn’t come to an end merely
because extrinsic events like an arrest interrupt a particular
conspirator’s participation. . . . So the objection is overruled with
respect to the 30 million dollars, and I find that the production of that
amount was a foreseeable consequence of a conspiracy. No
particular dollar amount would be foreseeable to Mr. Melton, but it is
foreseeable that there would be production of counterfeit money in
large amounts, that’s the very purpose of the conspiracy, and it is
relevant conduct connected to Mr. Melton because it is a foreseeable
consequence of the corrupt agreement.
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Aplee. Supp. App. at 24, 28-29.
Although the court’s statement is somewhat unclear, it reveals two possible
grounds for the court’s conclusion that the sixteen-level enhancement was
appropriate. First, the court apparently believed that the scope of Mr. Melton’s
participation in the conspiracy extended beyond the date of his arrest and that he
was therefore accountable for the final product of the entire conspiracy, i.e., $30
million in counterfeit bills produced by the reverse sting operation. 2 Second, even
if the scope of the criminal activity Mr. Melton agreed to jointly undertake did not
include events subsequent to his arrest, the court might have concluded it was
reasonably foreseeable to Mr. Melton that $30 million of currency would be
produced in the original counterfeiting scheme. 3
As the commentary quoted above makes clear, “the court must first
determine . . . the scope of the specific conduct and objectives embraced by the
defendant’s agreement.” USSG § 1B1.3, comment. (n.2). In making this
determination, the court must keep in mind that “the scope of the criminal activity
jointly undertaken by the defendant . . . is not necessarily the same as the scope of
the entire conspiracy.” Id.; see also United States v. Williams, No. 91-2183, 1992
WL 129615, at *2-*3 (10th Cir. June 11, 1992) (incorrect application of
2
The “in for a penny; in for a pound” rationale.
3
The “reasonably foreseeable” rationale.
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guidelines where district court “made no distinction between the scope of
[defendant’s] agreement and that of his coconspirators”). 4 Proper attribution at
sentencing requires the district court to analyze, and make “particularized
findings” about, the scope of the specific agreement the individual defendant
joined in relation to the conspiracy as a whole. See United States v. Thomas, 114
F.3d 228, 255 (D.C. Cir. 1997); United States v. Childress, 58 F.3d 693, 722-23
(D.C. Cir. 1995), cert. denied, 116 S. Ct. 825 (1996).
The district court failed to make such “particularized findings” and
misapplied the sentencing guidelines by improperly assuming that the scope of the
criminal activity Mr. Melton agreed to jointly undertake was the same as the
scope of the entire conspiracy, including the reverse sting. We need not remand
for further proceedings on the scope of Mr. Melton’s particular agreement,
however, because the facts underlying the determination are undisputed and do
not carry the government’s burden of establishing Mr. Melton’s accountability for
the activity that took place after he was arrested. 5 Mr. Melton agreed to aid the
4
In accordance with 10th Cir. R. 36.3, we find this unpublished opinion
persuasive.
5
Indeed, at the sentencing hearing, when the court specifically asked the
government to bear its burden of proof and present facts in support of an
adjustment upward based on the $30 million produced in the reverse sting
operation, the government admitted it could not meet this burden. The only facts
it could present to the court were “actually what occurred:” “on May One, when
Mr. Melton was arrested, his involvement stopped with this entire situation,” and
(continued...)
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original scheme by providing a truck to help move equipment obtained by Mr.
Delaney and by finding a building for that equipment. After he and Mr. Delaney
were arrested, the original agreement was abandoned and was replaced by a
reverse sting operation which was set up, funded, and equipped by the
government in order to investigate a coconspirator Mr. Melton had never met
through activity to which Mr. Melton never agreed. Mr. Melton was indicted only
for activities that took place from March 1, 1996 to May 1, 1996, the date of his
arrest. He was not indicted for the events of the reverse sting operation. We have
found no indication in the record that the post-arrest metamorphosis of the
original counterfeiting plan was within the scope of the criminal activity Mr.
Melton agreed to undertake. A defendant should not be held accountable when
coconspirators substantially alter the agreed-upon plan without his knowledge or
acquiescence. United States v. Gonzales, 65 F.3d 814, 822-23 (10th Cir. 1995),
vacated on other grounds, 117 S. Ct. 1032 (1997).
Insofar as the district court’s upward enhancement of Mr. Melton’s
sentence relied on the $30 million produced subsequent to his arrest, the court’s
observation that the printing of a large amount of money was reasonably
foreseeable simply does not inform the issue of the scope of Mr. Melton’s
5
(...continued)
“the conspiracy . . . was over at that point with [regard to] him.” Aplt. App. at
27.
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agreement. “[R]easonable foreseeability is not by itself sufficient to establish
liability for the acts of coconspirators. To be considered as relevant conduct,
such acts also must be in furtherance of ‘jointly undertaken criminal activity.’”
United States v. McDuffy, 90 F.3d 233, 236 (7th Cir. 1996); Childress, 58 F.3d at
723 (“[W]ith respect to scope of the agreement analysis, . . . court ‘was actively
employing the wrong legal standard’ by focusing exclusively on reasonable
foreseeability.”) (citation omitted).
Furthermore, although the district court was correct in noting that a
conspiracy does not end simply because one conspirator has been arrested, the
court failed to address the more relevant and narrow issue of whether the arrest of
a conspirator signals the end of that particular conspirator’s role in the ongoing
conspiracy. Although a conspirator’s arrest or incarceration by itself is
insufficient to constitute his withdrawal from the conspiracy, see United States v.
Nelson, No. 90-3081, 1991 WL 163061, at *12 (10th Cir. Aug. 23, 1991), an
arrest may under certain circumstances amount to a withdrawal. Compare United
States v. Harris, 542 F.2d 1283, 1299, 1301 (7th Cir. 1976) (no withdrawal where
arrested conspirator continued to give orders concerning conspiracy from jail);
United States v. Agueci, 310 F.2d 817, 839 (2d Cir. 1962) (no withdrawal where
arrested conspirator designated others to look after his interest in conspiracy and
continued to have stake in venture) with United States v. Brown, No. 96-3371,
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1997 WL 589180, at *1 (10th Cir. Sept. 24, 1997) (arrest plus agreement to
cooperate with law enforcement officials constituted withdrawal); 6 United States
v. Urrego, 853 F. Supp. 646, 649-50 (E.D.N.Y. 1994) (arrest plus no evidence of
continued involvement in conspiracy amounted to withdrawal); United States v.
Escobar, 842 F. Supp. 1519, 1528 (E.D.N.Y. 1994) (involvement in conspiracy
terminated with arrest where continued participation in conspiracy impossible).
See also United States v. Price, 13 F.3d 711, 732 (3d Cir. 1994) (although arrest
does not automatically bar attribution to defendant of coconspirators’ acts after
that date, “since ‘[t]he relevant conduct provision limits accomplice attribution to
conduct committed in furtherance of the activity the defendant agreed to
undertake,’ a defendant cannot be held responsible for conduct committed after he
or she could no longer assist or monitor his or her coconspirators.”) (quoting
United States v. Collado, 975 F.2d 985, 997 (3d Cir. 1992)). Here, the
government clearly conceded that Mr. Melton’s participation in the conspiracy
terminated with his arrest and that Mr. Melton had absolutely no involvement
with the reverse sting operation which was entirely set up and funded by the
government with the cooperation of Mr. Delaney. Aplt. App. at 27-28. The acts
of Mr. Melton’s fellow conspirators therefore cannot be attributed to him
following his arrest.
6
See n.4 supra.
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Having concluded that Mr. Melton’s role in the conspiracy ended with his
arrest, we now turn to whether it was reasonably foreseeable to Mr. Melton when
he participated in the original scheme that Mr. Sims and Mr. Delaney would agree
to counterfeit a sum of $30 million. The district court must also make
“particularized findings” as to the reasonable foreseeability of the amount of
money attributed to the individual defendant. Thomas, 114 F.3d at 255.
Accordingly, the district court must
do more than state in “conclusory” terms that the quantity of [money]
attributed was reasonably foreseeable to the defendant. Rather, the
judge must “set[] forth the reasons why the particular amount of
[money] was reasonably foreseeable to him, with reference to the
evidence before the court.”
Childress, 58 F.3d at 723 (quoting United States v. Edwards, 945 F.2d 1387, 1399
(7th Cir. 1991)). At the sentencing hearing, the district court explicitly stated that
“[n]o particular dollar amount would be foreseeable to Mr. Melton, but it is
foreseeable that there would be production of counterfeit money in large
amounts.” Aplee. Supp. App. at 28. While reasonable estimates based on “the
available information” will suffice in determining the attributable amount of
money under U.S.S.G. § 2F1.1(b), see U.S.S.G. § 2F1.1 comment. (n.8); United
States v. Copus, 110 F.3d 1529, 1535 (10th Cir. 1997), we hold it was clear error
for the court to arbitrarily assign $30 million as the “large amount[]” of
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counterfeit money foreseeable to Mr. Melton absent any factual support for this
particular amount in the record.
Even if the district court based its finding of reasonable foreseeability on
conversations between Mr. Sims and Mr. Delaney that $30 million was the
amount of the original counterfeiting scheme, Aplt. App. at 4, the court’s
determination was nonetheless clearly erroneous. Courts must examine a
conspirator’s position within a conspiracy and whether that position gave him
firsthand knowledge of the quantity of counterfeit money involved to determine
whether the conduct of other conspirators is reasonably foreseeable to him. See,
e.g., Thomas, 114 F.3d at 257. If, for instance, Mr. Melton was not aware of the
amount of counterfeit money that Mr. Sims and Mr. Delaney agreed to produce,
the district court cannot permissibly conclude that the sum of $30 million was
reasonably foreseeable to Mr. Melton and enhance his sentence based on this
amount. Cf. United States v. Pretty, 98 F.3d 1213, 1222 (10th Cir. 1996) (amount
of money received by coconspirator in bribery conspiracy was reasonably
foreseeable and therefore properly attributed to defendants where the “nature of
the conspiracy was such that each participant almost certainly knew how much
money was going where”), cert. denied, 117 S. Ct. 2436 (1997); United States v.
Chalarca, 95 F.3d 239, 245-46 (2d Cir. 1996) (upholding district court’s
imposition of sentence based upon least amount of cocaine in Sentencing
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Guidelines Drug Quantity Table where record revealed defendant lacked
knowledge of “how much cocaine was the subject of the conspiratorial
agreement”).
The district court did not make particularized findings as to the reasonable
foreseeability of the amount attributed to Mr. Melton. Nor is there anything in
this record that indicates Mr. Delaney ever discussed with Mr. Melton the amount
originally agreed upon by Mr. Delaney and Mr. Sims, even though Mr. Delaney
provided much information about the conspiracy by cooperating with the
government. Indeed, the government concedes in its brief there is no evidence
Mr. Melton knew of the $30 million sum agreed to by the other conspirators.
Aplee. Br. at 12. Mr. Melton’s lack of knowledge about the amount to be
counterfeited is further supported by the fact that he played a minimal role in the
conspiracy, as the district court held, and had no direct dealings with either Mr.
Sims, the financier, or Mr. Edenfield, the informant. Significantly, the record
reflects that Mr. Delaney misled Mr. Melton about the amount Mr. Delaney was to
receive from Mr. Sims. Mr. Delaney said he was receiving $150,000 for his part
in the scheme and that Mr. Melton would receive $50,000 of this amount for
assisting Mr. Delaney. Mr. Delaney, however, was actually to receive $3 million.
Aplee. Supp. App. at 20. Thus, the only evidence in the record concerning Mr.
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Melton’s knowledge is that he was being misinformed by Mr. Delaney about the
scope of the counterfeiting scheme.
Accordingly, we conclude the district court misapplied the guidelines by
equating the scope of the criminal activity Mr. Melton agreed to undertake with
the scope of the entire conspiracy. The record contains no evidence that Mr.
Melton agreed to the criminal activity undertaken after his arrest, or that it was
reasonably foreseeable to Mr. Melton the amount of $30 million was the object of
the original counterfeiting scheme. We therefore VACATE the sentence and
REMAND for resentencing in light of this opinion.
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