United States v. Patricia Fountain ( 2015 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
Nos. 13-3023, 13-3025, 13-3478
_____________
UNITED STATES OF AMERICA
v.
PATRICIA FOUNTAIN,
Appellant in 13-3023
CALVIN JOHNSON, JR.,
Appellant in 13-3025
and LARRY ISHMAEL,
Appellant in 13-3478
_______________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-12-cr-00155-001, 2-12-cr-00155-002 and
2-12-cr-00155-003, )
District Judge: Honorable Stewart Dalzell
_______________
Argued: December 10, 2014
Before: FUENTES, FISHER, and KRAUSE, Circuit Judges.
(Opinion Filed: July 10, 2015)
_______________
JOSEPH J. KHAN (Argued)
Office of United States Attorney
615 Chestnut Street
Suite 1250
Philadelphia, PA 19106
Counsel for Appellee United States of America
RICHARD COUGHLIN
JULIE A. MCGRAIN (Argued)
Office of Federal Public Defender
800-840 Cooper Street
Suite 350
Camden, NJ 08102
Counsel for Appellant Patricia Fountain
LAWRENCE J. BOZZELLI (Argued)
Suite 701
211 North 13th Street
Philadelphia, PA 19107
Counsel for Appellant Calvin Johnson, Jr.
DANIEL I. SIEGEL (Argued)
Office of Federal Public Defender
800 King Street
Suite 200
Wilmington, DE 19801
2
Counsel for Appellant Larry Ishmael
___________
OPINION OF THE COURT
KRAUSE, Circuit Judge.
This is a consolidated criminal appeal, arising out of a
large tax fraud conspiracy, that presents us with an
opportunity to clarify the mental states required of the payor
and payee to uphold a conviction for Hobbs Act extortion
under color of official right. For the reasons set forth below,
we will affirm.1
I. Background
Between 2007 and 2012, Appellant Patricia Fountain,
an IRS employee, helped orchestrate several schemes to
fraudulently obtain cash refunds from the IRS. Those
schemes involved filing false tax returns that claimed refunds
pursuant to the Telephone Excise Tax Refund (“TETR”), the
First Time Home Buyer Credit (“FTHBC”), or the American
Opportunity Tax Credit (“AOTC”). Fountain employed her
knowledge of the IRS’s fraud detection procedures to avoid
suspicion, including that TETR claims below $1,500 would
not be flagged for review. Over time, Fountain and her
significant other, Appellant Larry Ishmael, enlisted various
people, including Appellant Calvin Johnson, Jr., to recruit
1
The District Court had subject matter jurisdiction
under 18 U.S.C. § 3231, and we have jurisdiction under 28
U.S.C. § 1291 and 18 U.S.C. § 3742.
3
claimants who would provide their personal information in
exchange for a portion of a cash refund. During the same
period, Johnson became involved in an additional conspiracy
with some of his family members and other acquaintances
that involved submitting fraudulent FTHBC and AOTC
claims.
After a two-week trial, a jury convicted Fountain,
Ishmael, and Johnson on multiple counts of conspiracy and
filing false claims to the IRS in violation of 18 U.S.C. §§ 286and 287. Fountain was also convicted on one count of Hobbs
Act Extortion and two counts of making or presenting false
tax returns, violations of 18 U.S.C. § 1951(a) and 26 U.S.C. §
7206, respectively. Additionally, Johnson was convicted of
filing false claims to the IRS while on pretrial release in
violation of 18 U.S.C. §§ 287 and 3147(1).
Fountain moved for a judgment of acquittal after trial
on the Hobbs Act charge, which the District Court denied.
Following evidentiary hearings on the dollar amounts
involved in the Defendants’ schemes, the District Court
sentenced Fountain to 228 months’ imprisonment and a three-
year term of supervised release, and ordered her to pay
restitution of $1,740,221.40. The District Court sentenced
Ishmael to 144 months’ imprisonment and a three-year term
of supervised release, and ordered him to pay restitution of
$1,751,809.40. Finally, the District Court sentenced Johnson
to 216 months’ imprisonment and a three-year term of
supervised release, and ordered him to pay restitution of
$1,248,392.40. Each of these sentences fell within the
applicable Guidelines ranges after the District Judge imposed
various enhancements.
II. Discussion
4
A. Fountain’s Hobbs Act Conviction
Fountain contends that the evidence at trial was
insufficient to support a conviction for extortion under color
of official right. While sufficiency of the evidence is a
question of law subject to plenary review, “[w]e review ‘the
evidence in the light most favorable to the Government,’
afford ‘deference to a jury’s findings,’ and draw ‘all
reasonable inferences in favor of the jury verdict.’” United
States v. Moyer, 674 F.3d 192, 206 (3d Cir. 2012) (quoting
United States v. Riley, 621 F.3d 312, 329 (3d Cir. 2010)). We
will overturn the verdict “only when the record contains no
evidence, regardless of how it is weighted, from which the
jury could find guilt beyond a reasonable doubt.” Id. (quoting
Riley, 621 F.3d at 329) (internal quotation marks omitted).
The extortion count against Fountain alleged that she
obtained and attempted to obtain money from Deborah
Alexander under color of official right as an IRS employee.
As the Government demonstrated at trial, Alexander was a
client at Natashia Witherspoon’s hair salon. Witherspoon,
who was also Fountain’s hairstylist, recruited Alexander and
other clients to provide personal information so that Fountain
could file fraudulent tax returns in their names. Witherspoon
had Alexander fill out blank IRS forms with her personal
information and then gave those forms to Fountain for her to
file. Alexander never dealt directly with Fountain, but she
knew Fountain worked for the IRS. Sometime after her tax
return was filed, Witherspoon told her that she had to pay
Fountain a $400 fee. Alexander testified that she became
suspicious, but paid the fee anyway. Witherspoon testified
that she told some people that Fountain would “red flag”
them if they did not pay her fee, but did not say whether she
conveyed that information to Alexander in particular.
5
Likewise, Alexander did not recall Witherspoon mentioning
any consequences for failing to make the payment.
We hold that the evidence adduced at trial was
sufficient to support Fountain’s Hobbs Act conviction.
Because we have articulated the appropriate standard for an
official right extortion conviction in varying ways in past
cases, we take this opportunity to synthesize our case law and
explain how we come to this result.
1. Elements of Hobbs Act Extortion
Under Color of Official Right
The federal statute penalizing extortion, 18 U.S.C. §
1951, a codification of the 1946 Hobbs Act, provides that:
Whoever in any way or degree obstructs,
delays, or affects commerce or the movement of
any article or commodity in commerce, by
robbery or extortion or attempts or conspires so
to do, or commits or threatens physical violence
to any person or property in furtherance of a
plan or purpose to do anything in violation of
this section shall be fined under this title or
imprisoned not more than twenty years, or both.
18 U.S.C. § 1951(a). Extortion is defined as “the obtaining of
property from another, with his consent, induced by wrongful
use of actual or threatened force, violence, or fear, or under
color of official right.” Id. § 1951(b)(2). As we explained in
United States v. Manzo, 636 F.3d 56 (3d Cir. 2011):
6
Congress sought to proscribe coercive activity
through enactment of the Hobbs Act. Under the
terms of the Hobbs Act, a person can only
commit extortion in one of two ways: (1)
through threatened force, violence or fear or (2)
under color of official right. See 18 U.S.C. §
1951(b)(2). Both of these types of extortion are
inherently coercive.
Id. at 65.
Whereas in a case of extortion by force, violence, or
fear, the acts or threats supply the coercion, “when
proceeding under a ‘color of official right’ theory, the ‘misuse
of public office is said to supply the element of coercion.’”
Id. (quoting United States v. Hathaway, 534 F.2d 386, 393
(1st Cir. 1976)); see also Evans v. United States, 504 U.S.
255, 266 (1992) (adopting the majority rule that “the coercive
element” of Hobbs Act extortion under color of official right
“is provided by the public office itself”). In other words, the
importance of a defendant’s public office or official act to a
Hobbs Act charge is its coercive effect on the payor.
Accordingly, after reviewing the legislative history and
evaluating competing constructions of the statute, the
Supreme Court held in Evans that to prove a conviction for
extortion under color of official right, “the Government need
only show that a public official has obtained a payment to
which he was not entitled, knowing that the payment was
made in return for official acts.” 504 U.S. at 268.
We interpreted Evans in United States v. Antico, 275
F.3d 245 (3d Cir. 2001), and explained that “no ‘official act’ .
7
. . need be proved to convict under the Hobbs Act.” Id. at
257. Rather, we focus on (1) the motivation of the payor, that
is, whether a payment “was made in return for official acts,”
and (2) whether the defendant knew the payor’s motivation.
Id. (emphasis added) (quoting Evans, 504 U.S. at 268)
(internal quotation marks omitted). As such, in Antico, we
approved a district court’s instruction that the jury had to
decide “whether the giver gave the payments . . . because he
believed the defendant would use his office for acts not
properly related to his official duty.” Id. at 259 (underline
added). Similarly, in United States v. Urban, 404 F.3d 754(3d Cir. 2005), we upheld a Hobbs Act conviction where the
government adduced substantial evidence that (1) the payors
made payments to the defendants knowing they were “public
officials exercising governmental authority”; (2) the payors
“made payments in order to assure advantageous exercise of
that government authority”; and (3) the defendants “knew that
the [payors’] payments were made for an improper purpose,
i.e., the influencing of their governmental authority.” Id. at
769.
In other decisions, however, we have expressly
identified another consideration in our official right extortion
inquiry: whether the payor’s belief was reasonable. This line
of cases began with our en banc decision in United States v.
Mazzei, 521 F.2d 639 (3d Cir. 1975) (en banc). There, the
defendant, a state senator, received payments in exchange for
helping a corporation obtain a lease from a state executive
agency. Id. at 641. The defendant argued that he could not
have been acting under color of official right because he “had
no official power” in that area, and he “never pretended to
have any official power.” Id. at 643. We acknowledged that
the “defendant had no statutory power as a state senator to
8
control the granting of leases by state executive agencies,”
but rejected the defendant’s argument, because “in order to
find that defendant acted ‘under color of official right,’ the
jury need not have concluded that he had actual de jure power
to secure grant of the lease so long as it found that [the payor]
held, and defendant exploited, a reasonable belief that the
state system so operated that the power in fact of defendant’s
office included the effective authority to determine recipients
of the state leases here involved.” Id.We recently extended Mazzei in United States v.
Bencivengo, 749 F.3d 205 (3d Cir. 2014). There, we upheld a
Hobbs Act conviction of the Mayor of Hamilton Township,
New Jersey, who accepted payments in exchange for agreeing
to influence the awarding of School Board insurance
contracts. Id. at 208. We noted that the defendant “had no
actual de jure or de facto power over the award” of such
contracts, and that unlike in Mazzei, there was no evidence
“that [the payor] believed he had such power.” Id. at 212.
Nonetheless, we held that Mazzei extended to situations
where a payor reasonably believed the defendant possessed
“influence,” if not “effective power,” over an exercise of
governmental authority. Id. at 212-13. Thus, we concluded,
“where a public official has, and agrees to wield, influence
over a governmental decision in exchange for financial gain,
or where the official’s position could permit such influence,
and the victim of an extortion scheme reasonably believes that
the public official wields such influence, that is sufficient to
sustain a conviction under the Hobbs Act, regardless of
whether the official holds any de jure or de facto power over
the decision.” Id.Read together, our holdings in Mazzei, Antico, Urban,
and Bencivengo, while emphasizing different aspects of the
9
payor’s motivation, are consistent in accounting for the
payor’s reasonable belief as a reflection of the coercive effect
of the defendant’s official acts. The reason we included in
our inquiry the reasonableness of the payor’s belief that the
defendant would engage in particular “official acts”—
whether by exercising de jure power, de facto power, or
“influence”—in Mazzei and Bencivengo but not Antico or
Urban is simple: The defendant’s authority to engage in the
relevant “official acts” was not contested in Antico or Urban.
Both of those cases involved Philadelphia Licenses and
Inspections officers who accepted illicit payments in
exchange for favorable exercises of their authority, i.e., they
rewarded people who paid and punished people who did not.
See Urban, 404 F.3d at 760-62; Antico, 275 F.3d at 249.2
Those defendants clearly exercised de jure power over
governmental decisions. In contrast, in Mazzei and
Bencivengo, the defendants’ authority was contested, as
indicated above.3 But in all of these cases, reasonableness
was inherent in our inquiry.
Thus, our case law articulates a unified standard for
official right extortion cases: We will uphold a conviction for
Hobbs Act extortion where the evidence indicates (1) that the
payor made a payment to the defendant because the payor
held a reasonable belief that the defendant would perform
official acts in return, and (2) that the defendant knew the
payor made the payment because of that belief.
2
One might refer to these as “classic” official right
extortion cases.
3
Fountain raises similar arguments here, as explored
below.
10
2. Application
Upon a careful consideration of the record, we agree
with the District Court that a rational juror could conclude
that Alexander paid Fountain $400 with the understanding
that Fountain would use her position at the IRS to help her
obtain a cash refund, and that Fountain knew that Alexander
paid her for that reason. While Fountain may not have had
any power over the IRS’s decision to grant any of the
fraudulent refunds she filed, we need not find that Fountain
actually used her position or performed an official act in
furtherance of the scheme to uphold her conviction; the focus
of our inquiry is on Alexander’s state of mind. See Antico,
275 F.3d at 257 (“In other words, no ‘official act’ (i.e., no
‘quo’) need be proved to convict under the Hobbs Act.
Nonetheless, the official must know that the payment—the
‘quid’—was made in return for official acts.”); see also
Urban, 404 F.3d at 768 (“[T]he government need not prove . .
. that the public official acted or refrained from acting as a
result of payments made.”).
Fountain contends both that Alexander did not
subjectively believe and that no reasonable person in
Alexander’s position could have believed that Fountain, a
customer service representative for the IRS, could influence
whether she received a refund. Viewing the evidence in the
light most favorable to the Government, however, the
evidence at trial allowed the jury to find that Alexander
reasonably believed Fountain could wield such influence. It
is not clear exactly what Alexander understood about
Fountain’s position, as Alexander interacted only with
Witherspoon, but as Alexander testified, once her refund
claim was submitted, she was told she had to pay $400 of the
refund to Fountain and, despite her suspicions, she acquiesced
11
because she was “still hoping to get the money.” Fountain’s
App. 327. This suggests she understood her $400 payment to
be compensation for services rendered. Indeed, when the IRS
demanded repayment of the refund, Alexander told Fountain
and Witherspoon, “I want my $400 back, because if I had to
pay the $1,400 back [to the IRS], I’m not going to give her
$400.” Fountain’s App. 318. On the basis of this evidence,
the jury easily could have found that Alexander reasonably
believed Fountain would help her obtain the refund.
The jury also could have found that Alexander
reasonably feared reprisal. Alexander paid Fountain after her
claim had been submitted and despite her suspicions about
Fountain’s demand for payment. Even though neither
Alexander nor Witherspoon testified to any explicit
discussion with Alexander about the consequences of failing
to pay, Witherspoon did testify generally that Fountain
threatened to “red flag” claimants who did not pay her fee and
that she repeated Fountain’s warning to claimants. Fountain’s
App. 265-66. Thus, a reasonable inference from the
testimony, as well as the timing of the payment, is that
Alexander paid Fountain because she was concerned that
Fountain, as an IRS employee, otherwise would have
prevented the refund or flagged it to a superior for suspected
fraud.4
Finally, we reject Fountain’s argument that the
evidence in support of the Hobbs Act charge was insufficient
because the Government failed to prove that she used the
4
Indeed, the Government demonstrated that Fountain
did submit amended returns for claimants who ultimately
failed to pay, leading the IRS to reclaim some of the
fraudulently-obtained refunds, including from Alexander.
12
power of her employment at the IRS to induce Alexander to
pay her in exchange for filing a false claim with the IRS.
Inducement is not an element of Hobbs Act extortion under
color of official right. Evans, 504 U.S. at 256; Urban, 404
F.3d at 768; Antico, 275 F.3d at 256. Accordingly, we affirm
Fountain’s conviction.5
B. The District Court’s Guidelines
Determinations
Fountain, Ishmael, and Johnson each challenge the
District Court’s calculation of the applicable Guidelines range
for their sentence. Where an objection is preserved at
sentencing, we exercise plenary review of a district court’s
interpretation of the Guidelines but review its factual findings
for clear error. United States v. Grier, 475 F.3d 556, 570 (3d
Cir. 2007) (en banc). If the facts underlying a Guidelines
determination are not in dispute, “but the issue is whether the
agreed-upon set of facts fit within the enhancement
requirements,” we review the District Court’s application of
the enhancement for clear error. United States v. Fish, 731
F.3d 277, 279 (3d Cir. 2013). Finally, where an objection is
not preserved at sentencing, we review that challenge for
plain error. United States v. Couch, 291 F.3d 251, 252-53 (3d
Cir. 2002); United States v. Knight, 266 F.3d 203, 206 (3d
Cir. 2001).
1. Sophisticated Means Enhancements
5
Because we conclude the evidence supports
Fountain’s conviction for the completed offense, we need not
consider the Government’s alternative contention that the
evidence supported a conviction of attempted extortion.
13
a. Fountain and Johnson
Fountain and Johnson both argue that the District
Court erred in applying a two-level enhancement for
sophisticated means to their sentences under U.S.S.G. §
2B1.1 because there was nothing particularly sophisticated
about the means employed in their schemes. Their arguments
are unpersuasive.
While the Application Notes to § 2B1.1 suggest that
the use of “fictitious entities, corporate shells, or offshore
financial accounts” would constitute sophisticated means,6 an
offense can easily warrant the sophisticated means
enhancement absent the use of those tactics. See United
States v. Jennings, 711 F.3d 1144, 1147 (9th Cir. 2013)
6
See U.S.S.G. § 2B1.1 cmt. n.9(B) (“‘[S]ophisticated
means’ means especially complex or especially intricate
offense conduct pertaining to the execution or concealment of
an offense. For example, in a telemarketing scheme, locating
the main office of the scheme in one jurisdiction but locating
soliciting operations in another jurisdiction ordinarily
indicates sophisticated means. Conduct such as hiding assets
or transactions, or both, through the use of fictitious entities,
corporate shells, or offshore financial accounts also ordinarily
indicates sophisticated means.”); id. § 2T1.1 cmt. n.5
(explaining similar factors for applying the sophisticated
means enhancement for tax fraud offenses); see also id. §
2T1.1 cmt. background (“Although tax offenses always
involve some planning, unusually sophisticated efforts to
conceal the offense decrease the likelihood of detection and
therefore warrant an additional sanction for deterrence
purposes.”).
14
(upholding a sophisticated means enhancement in the absence
of corporate shells or offshore accounts, and explaining that
“the list contained in the application note is not exhaustive,”
and that “the enhancement properly applies to conduct less
sophisticated than the list articulated in the application note”);
see also Fish, 731 F.3d at 280 (holding that the existence of
one of the facts listed in the application note is not necessary
to a determination that an offense employed sophisticated
means).
Determining whether a defendant employed
sophisticated means can involve considering factors like the
duration of a scheme, the number of participants, the use of
multiple accounts, and efforts to avoid detection. See Fish,
731 F.3d at 280. Ultimately, a sophisticated means
enhancement is appropriate where a defendant’s conduct
“shows a greater level of planning or concealment than a
typical fraud of its kind.” United States v. Fumo, 655 F.3d
288, 315 (3d Cir. 2011) (quoting United States v. Landwer,
640 F.3d 769, 771 (7th Cir. 2011)) (internal quotation mark
omitted).
The enhancement was clearly appropriate here.
Fountain identified IRS programs that would pay substantial
sums and then designed a scheme to maximize her payout
while avoiding detection. In finding that she employed
sophisticated means, the District Court pointed specifically to
Fountain’s use of inside knowledge of the IRS’s enforcement
thresholds, including that TETR claims under $1,500 would
not be flagged for review. Fountain took steps to conceal her
identity even from others involved in the scheme, employing
third parties to recruit claimants and collect their fees so she
could avoid any contact with them. Additionally, Fountain
developed an enforcement mechanism to ensure her fees were
15
paid: submitting amended returns that tipped off the IRS
when claimants were reluctant to pay her. Fountain’s choice
to use the IRS as her enforcer further decreased the likelihood
that claimants would report her, as they would fear
prosecution themselves. In short, Fountain endowed the
scheme with a sophisticated knowledge of IRS practices—
including some not known to the public—and an elaborate
plan for manipulating hundreds of people.
For his part, Johnson engaged recruiters to collect
additional claimants and instituted additional practices to
avoid detection. He routed refunds into accounts that would
not raise alarms, like the business bank accounts of various
relatives and the estate and personal accounts of his recently-
deceased grandmother, and he used different business and
personal addresses for the delivery and cashing of checks.
Moreover, he electronically filed claims in such a manner that
they could be traced only to a third party’s wireless network,
rather than his own.
Overall, the sophisticated means employed by
Fountain, Johnson, and their co-conspirators (including
Ishmael) allowed the scheme to grow to an extraordinary size
while remaining undetected for years. Their cunning and
willingness to abuse Fountain’s position with the IRS clearly
set this scheme apart from a “typical fraud of its kind.” See
Fumo, 655 F.3d at 315. Their conduct led the District Judge
to remark, at Johnson’s sentencing, that “this was as
sophisticated a tax fraud scheme as this Judge has seen in 22
years.” Gov’t’s Supplemental App. 74. In light of these
findings, the application of sophisticated means
enhancements to Fountain and Ishmael was not clear error.
b. Ishmael
16
In the District Court, Ishmael challenged the
sophisticated means enhancement to his sentence on the same
grounds that Fountain and Johnson did: that the scheme, as a
whole, did not involve sophisticated means. Ishmael does not
raise that argument on appeal. Instead, he argues that the
District Court committed procedural error under U.S.S.G. §
1B1.3(a)(1)(B). He points to the District Court’s statement
during his sentencing hearing that the fraud scheme “was only
possible because of the sophisticated means that, to be sure,
were made possible by Ms. Fountain, not Mr. Ishmael.”
Ishmael’s App. 151. Ishmael contends that this statement
indicates that the District Court attributed Fountain’s
sophisticated means to Ishmael and that it erred by doing so
without finding that Fountain’s use of those means was
reasonably foreseeable to Ishmael. He asks us to remand for
resentencing so the District Court can make this finding.7
Ishmael argues that our decision in United States v.
Collado, 975 F.2d 985 (3d Cir. 1992), compels us to remand
for the District Court to make a finding of reasonable
7
Because Ishmael did not raise this objection in the
District Court, the Government argues that we should apply
plain error review. Ishmael counters that our decision in
United States v. Flores-Mejia, 759 F.3d 253 (3d Cir. 2014)
(en banc), does not apply retroactively, and, accordingly, that
we should review for an abuse of discretion. We conclude
that Ishmael’s challenge fails even if we do review for an
abuse of discretion, and we thus need not decide whether his
challenge should be subject to plain error review.
17
foreseeability.8 To the contrary, Collado indicates that we
may conduct our own review of the record to see if it supports
a finding of reasonable foreseeability. See Collado, 975 F.2d
at 997. If we are convinced that the attribution of Fountain’s
sophisticated means is firmly supported by the record, there is
“no reason to remand this case only to have the district court
reach the same sentencing decision.” United States v. Duliga,
204 F.3d 97, 101 n.2 (3d Cir. 2000).
Here, it is clear that the sophisticated means Fountain
employed were reasonably foreseeable to Ishmael. Fountain
and Ishmael lived together and had children together. The
evidence established that Ishmael knew about the IRS’s
$1,500 threshold for flagging TETR claims for review, and
that he knew that Fountain would reverse claimants’ refunds
if they did not pay her fee. Moreover, the District Court
found that Ishmael was “the engine that drove [the]
conspiracy from one that might have involved a handful of
phony tax refunds to one that involved hundreds at a cost of
over $2 million to the United States treasury,” and that
Ishmael’s leadership “succeeded in spreading [the] scheme
like wild fire.” Ishmael’s App. 163. Thus, we are convinced
that a finding of reasonable foreseeability is firmly supported
8
Although Collado dealt with the inclusion of drug
quantities dealt by co-conspirators in a defendant’s base
offense level calculation, also known as “accomplice
attribution,” rather than a sophisticated means enhancement,
the same “reasonably foreseeable” standard applies to each
inquiry, as both are guided by § 1B1.3. See United States v.
Anobah, 734 F.3d 733, 739 (7th Cir. 2013); United States v.
Crosgrove, 637 F.3d 646, 666 (6th Cir. 2011).
18
by the record, and we affirm the District Court’s application
of the sophisticated means enhancement to Ishmael.
2. Fountain’s Enhancement for Using a
Minor
Fountain argues that the District Court erred in
applying a two-level enhancement for using a minor to
commit her offenses under U.S.S.G. § 3B1.4. The evidence
established, however, that Fountain used her minor daughter
to collect payments that had been given to Witherspoon on at
least one occasion. Fountain counters that her use of her
daughter cannot support the enhancement because by the time
she had her daughter collect payments, the crime was
complete, as Fountain had already filed the false returns.9
But the focus of a court’s inquiry under § 3B1.4 “is on the
actions and intent of the defendant. Whether the minor
himself engaged in any criminal actions, whether the minor
intended to assist in the adult’s criminal activity, or whether
the minor even knew that the adult was involved in criminal
activity are factors irrelevant to application of the § 3B1.4
enhancement.” United States v. Gaskin, 364 F.3d 438, 464-
65 (2d Cir. 2004) (collecting cases). Moreover, the crime
continued after the filing of returns, as collecting payment,
which occurred after filing, was the whole point of the
scheme. Further, the evidence indicates that Fountain and her
co-conspirators continued filing false returns after Fountain
9
The Government notes that Fountain did not raise
this argument in the District Court, and argues that it should
be reviewed for plain error as a result. Because we conclude
that the District Court committed no error in applying the
enhancement, we need not decide which standard applies.
19
had her daughter pick up payments from Witherspoon. Thus,
the imposition of this enhancement was not clear error.
3. Johnson’s Leadership Role
Enhancement
Johnson argues that the District Court erred in
applying a four-level enhancement under U.S.S.G. § 3B1.1(a)
because the record lacks evidence that Johnson was a leader
or organizer. To support this enhancement, the evidence must
show that Johnson exercised some degree of control over at
least one other person involved in the offense. United States
v. Helbling, 209 F.3d 226, 243-44 (3d Cir. 2000). The
evidence indicated that Johnson recruited his father and a
friend named Andre Bruce to participate in the AOTC and
FTHBC schemes, and that Johnson’s father eventually
became a recruiter for Johnson and would withdraw money
for him after the IRS issued refunds. Johnson also directed
Bruce to destroy evidence while Johnson was on pre-trial
release. Thus, the District Court did not clearly err in
imposing this enhancement.
4. Johnson’s Loss Calculation
Johnson also argues that in calculating the loss
attributable to him, the District Court improperly included
losses that overstate his criminal conduct and were not
reasonably foreseeable to him. It is well-settled that a
sentencing court need only make a “reasonable estimate” of
loss that is based on the available evidence in the record,
United States v. Tupone, 442 F.3d 145, 156 (3d Cir. 2006),
and it is clear the District Court did so here.
20
Johnson’s arguments fail upon a review of the
Government’s loss methodology, which the District Court
approved when it adopted the most conservative of the
Government’s proposed loss calculations. Johnson argues
that the District Court erred by attributing all fraudulent tax
returns to him, but the District Court did not do so. In fact,
the Government did not ask the District Judge to do so.
Along the same lines, Johnson argues he was improperly held
responsible for returns filed from Fountain’s IRS computer
and for claims filed before he joined the conspiracy or after
he left. The Government, however, excluded those amounts
from its calculations. Further, Johnson argues that Bruce, not
he, was responsible for returns filed from Bruce’s IP address.
But the District Court and the jury already rejected this
argument based on Bruce’s trial testimony. Thus, attributing
those amounts to Johnson at sentencing was not clear error.
Finally, Johnson argues that the District Court
improperly attributed to Johnson losses from the TETR and
FTHBC conspiracies that were not reasonably foreseeable to
him. In light of Johnson’s role in recruiting claimants and
allowing the use of his address and bank account in the TETR
scheme and his leadership in the FTHBC scheme, the District
Judge’s inclusion of those amounts as reasonably foreseeable
losses was not clear error.
In sum, the District Court arrived at a reasonable
estimate of the loss amount attributable to Johnson by
adopting the Government’s conservative calculation. As
such, we will not disturb the District Court’s findings on
appeal.
C. Reasonableness of Fountain and Johnson’s
Sentences
21
Fountain and Johnson both argue that their sentences
were procedurally and substantively unreasonable. We
review a criminal sentence for an abuse of discretion and
proceed in two stages. United States v. Wright, 642 F.3d 148,
152 (3d Cir. 2011). First, we review for procedural error,
including failure to give meaningful consideration to a
defendant’s arguments or the factors listed in 18 U.S.C. §
3553(a). Id. Second, if there is no such error, we review for
substantive reasonableness, and “we will affirm [the
sentence] unless no reasonable sentencing court would have
imposed the same sentence on that particular defendant for
the reasons the district court provided.” Id. (alteration in
original) (quoting United States v. Tomko, 562 F.3d 558, 568
(3d Cir. 2009) (en banc)) (internal quotation marks omitted).
Sentences that fall within the applicable Guidelines range are
more likely to be reasonable than those that do not. United
States v. Woronowicz, 744 F.3d 848, 852 (3d Cir. 2014).
1. Fountain’s Sentence
Fountain contends the District Court committed
procedural error by placing undue weight on the Guidelines
and on deterrence interests while minimizing the offender-
specific considerations in this case, including that she was a
first-time offender and the sole caregiver of four children, one
of whom received a terminal medical diagnosis during the
course of this prosecution. But the District Court gave
adequate consideration to all of these factors, finding they
were not “sufficiently extraordinary” to warrant a variance,
and noted that they did not deter Fountain from her
“egregious and protracted criminality.” Fountain’s App.
1008-09.
22
Fountain’s argument ultimately amounts to a challenge
of substantive unreasonableness, as a complaint that a district
court’s choice of sentence did not afford certain factors
enough weight “is a substantive complaint, not a procedural
one.” United States v. Merced, 603 F.3d 203, 217 (3d Cir.
2010); see also United States v. Bungar, 478 F.3d 540, 546
(3d Cir. 2007) (“Nor do we find that a district court’s failure
to give mitigating factors the weight a defendant contends
they deserve renders the sentence unreasonable.”). As such,
notwithstanding the tragic circumstances facing Fountain’s
family, Fountain cannot meet her heavy burden of showing
that a sentence within the applicable Guidelines range was
substantively unreasonable in light of the sophisticated nature
of her crimes, her lack of remorse, her abuse of her position
with the IRS, and the need to deter other public employees
from taking advantage of sensitive information.
2. Johnson’s Sentence
Johnson argues the District Court committed
procedural error by cutting off his counsel’s arguments at his
sentencing hearing. But the District Judge merely declined to
allow Johnson’s attorney to cite an additional case in support
of his sophisticated means objection. The District Judge only
did so, moreover, after noting that all of Johnson’s objections
had been briefed ad nauseam. Thus, we find no abuse of
discretion in that decision. Johnson also contends the District
Court erred in treating a sentence within the applicable
Guidelines range as presumptively correct, and by failing to
address some of Johnson’s arguments at sentencing. This
contention, however, ignores the protracted exchange
between the District Judge and Johnson’s counsel on the
question of whether to grant a departure or variance. The
District Court also heard allocution from Johnson himself.
23
On the whole, Johnson cannot show the District Court failed
to give meaningful consideration to any of his arguments or
any sentencing factor, nor can he show any other procedural
error.
Finally, given the District Court’s findings that
Johnson grew from a relatively small player in the TETR
scheme to a major player in the conspiracy associated with
the FTHBC and the AOTC, that he continued to commit
offenses while he was on pretrial release, and that he failed to
appreciate the magnitude of his crimes, Johnson cannot show
that a sentence within the applicable Guidelines range was
substantively unreasonable.
III. Conclusion
For the reasons stated above, we affirm the judgment
of the District Court.
24