United States v. Randy Poulson ( 2017 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 16-1224
___________
UNITED STATES OF AMERICA,
v.
RANDY POULSON,
Appellant
___________________________________________
On Appeal from the District Court
for the District of New Jersey
(District Court No. 1-14-cr-00309-001)
District Court Judge: Honorable Renee M. Bumb
___________________________________________
Submitted under Third Circuit L.A.R. 34.1(a)
on April 28, 2017
Before: McKEE, VANASKIE and RENDELL,
Circuit Judges
(Opinion filed: September 14, 2017)
Mark E. Coyne
Office of United States Attorney
970 Broad Street
Room 700
Newark, NJ 07102
Deborah P. Mikkelsen
Office of United States Attorney
Camden Federal Building & Courthouse
401 Market Street
Camden, NJ 08101
Counsel for Plaintiff-Appellee United States of
America
Robert Epstein
Brett G. Sweitzer
Federal Community Defender Office for the Eastern District
of Pennsylvania
601Walnut Street
The Curtis Center, Suite 540 West
Philadelphia, PA 19106
Counsel for Defendant-Appellant Randy
Poulson
____________
2
OPINION
____________
RENDELL, Circuit Judge:
From 2006 through 2011, Appellant Randy Poulson
tricked homeowners facing foreclosure into selling him their
homes and engaged in a multi-million-dollar Ponzi scheme
that defrauded investors in those distressed properties.
Poulson pleaded guilty to one count of mail fraud in violation
of 18 U.S.C. § 1341, and the District Court calculated his
total fraud to be $2,721,240.94. The District Court concluded
that this fraud resulted in “substantial financial hardship” for
more than twenty-five victims. The District Court
accordingly sentenced Poulson to 70 months’ imprisonment
followed by three years of supervised release. As a condition
of supervised release, the District Court prohibited Poulson
from working in the real estate industry for five years.
Poulson now appeals, urging that the District Court erred with
respect to two aspects of his sentence: (1) the District Court’s
determination of the number of victims who, as a result of
Poulson’s fraud, suffered a “substantial financial hardship”
under § 2B1.1 of the U.S. Sentencing Guidelines
(“Guidelines”), and (2) the District Court’s imposition of a
five-year occupational restriction as part of the terms of his
supervised release. Because we conclude that the District
Court properly used the considerable discretion afforded to it
by § 2B1.1, we will affirm the District Court’s finding as to
the number of victims who endured a “substantial financial
hardship” under the Guidelines. We agree with Poulson,
however, that the District Court erred in imposing the five-
year occupational restriction on his three-year term of
3
supervised release, and we will vacate and remand the case to
the District Court to correct the sentence with respect to the
terms of Poulson’s supervised release only.
I.
Beginning around July 2006, Poulson used a variety of
sources to construct and perpetuate a fraudulent real estate
investment scheme. Poulson targeted homeowners facing
foreclosure on their properties and offered to purchase the
deeds to their residences, falsely promising that he would pay
their mortgages in return for the sales. He conducted these
transactions through Equity Capital Investments, LLC
(“Equity Capital”), a limited liability real estate investment
company that he established. Poulson ultimately acquired the
deeds to more than twenty-five distressed homeowners’
residences.
Poulson also established Poulson Russo LLC, a real
estate investment education company through which he
organized speeches, seminars, monthly dinners, and private
tutorials that purported to teach real estate investing tips to
individuals who paid fees to attend the events. Poulson
solicited the attendees at these events to invest in Equity
Capital and falsely claimed in written and oral materials that
the investors’ money would be used to fund the purchase,
maintenance, and improvement of specific residential
properties. He also drew on his contacts from the South
Jersey Real Estate Investors Association, where he had
previously served as president, as well as on family and
friends.
Poulson ultimately convinced over fifty people to
invest in Equity Capital, and those investors sent him their
4
money either by wire transfer or through the U.S. Postal
Service. Poulson promised them that their money would be
used to purchase and improve properties, which would then
be rented, and he assured them that their investments would
be secured by mortgages. The investors typically executed
promissory notes with Equity Capital that guaranteed a 10%
to 20% return, monthly interest payments, and a fixed
maturity date. Poulson used the properties he had purchased
from the distressed homeowners to secure the promissory
notes, but with a group of over fifty investors, he often
used—unbeknownst to them—the same properties to secure
multiple investments. Poulson also used the funds invested to
finance his personal expenses.
When this “business model” began to “unravel and fall
apart,” A. 213, Poulson fashioned a classic Ponzi scheme and
used newly obtained money to repay earlier investors. The
scheme soon collapsed, eventually leading Poulson to stop
paying the monthly mortgages on the properties and causing
those mortgages to go into foreclosure—all without the
distressed homeowners’ knowledge. Poulson’s fraud
ultimately cost over fifty of his investors more than $2.7
million.
On June 23, 2015, Poulson pleaded guilty to one count
of mail fraud in violation of 18 U.S.C. § 1341. Poulson’s
sentencing took place over the course of two days. At the
first sentencing hearing, held on December 16, 2015, the
District Court recognized that the term “substantial financial
hardship” was a “new provision” in the 2015 Guidelines that
increases an offense level based on the extent of harm that
particular victims suffer as opposed to the previous version of
5
the enhancement that looked primarily at the total number of
victims.1 (A. 116.)
At the second sentencing hearing on January 20, 2016,
the District Court addressed Poulson’s objection regarding the
application of § 2B1.1 as it related to certain victims. The
District Court examined the contours of the newly amended
enhancement and rejected Poulson’s contention that it needed
to know “how much money [each victim] started with” in
order to determine whether a “substantial financial hardship”
occurred. (A. 169.) The District Court reasoned:
I don’t care if it was someone who started with
a million dollars or a hundred thousand dollars,
if they filed for bankruptcy because they lost
their money they qualified. . . . It is hard to
envision that what is contemplated by this
[G]uideline is that the victims must come
forward and lay out their financial wherewithal.
. . . It seems to me that if victims fill out a
victim statement or a victim declaration and say
that they lost their retirement funds, not all but
some, that they had to file bankruptcy, that they
had to move in with their daughter or whatever,
1
Poulson’s plea agreement, dated March 27, 2015,
predated the amended enhancement, which took effect on
November 1, 2015, and therefore the parties did not have an
opportunity to consider the application of “substantial
financial hardship” to the victims of Poulson’s fraud.
6
that those are substantial financial hardships.
We’re not talking about the Donald Trumps.
(A. 170–71.) The District Court then reviewed and
incorporated the impact statements submitted by the victims
into its findings, using them to determine whether each victim
suffered a “substantial financial hardship.” It ultimately
found that at least twenty-five victims had experienced this
type of harm.
The District Court’s computation of Poulson’s offense
level under the 2015 Guidelines2 went as follows: Poulson’s
offense under 18 U.S.C. § 1341 put him at a base offense
level of seven. U.S.S.G. § 2B1.1(a)(1). The District Court
found that the amount of the loss ranged between $1.5 million
and $3.5 million, increasing the offense level by sixteen,
2
The District Court also engaged in a lengthy discussion
with counsel about which version of the Guidelines to use.
Both the 2009 and the 2015 versions were potentially
applicable, the former being in effect at the time of Poulson’s
offense and the latter at the time of his sentencing. However,
pursuant to U.S.S.G. § 1B1.11, sentencing courts are to use
the Guideline Manual in effect at the time of sentencing
unless doing so would run afoul of due process. U.S.S.G. §
1B1.11(a)–(b)(1). The District Court calculated Poulson’s
offense level under each version and then compared the two
outcomes. The District Court, with the parties’ consent,
reasoned through Poulson’s sentence based on the 2015
version of the Guidelines and looked to the nature of the
hardship, not merely the number of victims.
7
U.S.S.G. § 2B1.1 (b)(1)(I), and that over twenty-five
investors endured a “substantial financial hardship,”
increasing the offense level by six, U.S.S.G. §
2B1.1(b)(2)(C). The District Court also found that the
“sophisticated means” and “obstruction of justice”
enhancements, which would have each increased the offense
level by two, U.S.S.G. §§ 2B1.1(b)(10) and 3C1.1, did not
apply. With the total offense level then at 29, the District
Court found that Poulson deserved credit for accepting
responsibility under U.S.S.G. §§ 3E1.1(a) and (b), and it
reduced the offense level to twenty-six. This calculation
placed Poulson’s sentence in a range of 63 to 78 months’
imprisonment under the Guidelines. The District Court then
analyzed the 18 U.S.C. § 3553(a) factors and sentenced
Poulson to 70 months’ imprisonment followed by three years
of supervised release with an occupational restriction that
barred him from working in the real estate industry for five
years.3 This timely appealed followed.
3
The District court also ordered Poulson to conduct 100
hours of community service and to pay restitution to victims
and a $100 special assessment.
8
II.4
A. “Substantial Financial Hardship”
Poulson challenges the District Court’s application of
the § 2B1.1 enhancement based on eight victims who Poulson
contends did not suffer the level of “substantial financial
hardship” contemplated by the Guidelines. If the District
Court had correctly applied the enhancement, Poulson argues,
“it would have counted fewer than 25 victims who suffered
such hardship, and thus it would not have triggered the 6-
level increase.” (Appellant’s Br. 11.) We will first address
the enhancement in general and then turn to the specific
victims whose inclusion Poulson challenges.
Section 2B1.1 of the Guidelines provides for increased
offense levels for economic crimes that “result[] in substantial
financial hardship” to victims. U.S.S.G. § 2B1.1(b)(2)(A)–
(C). This enhancement is a recent addition to the Guidelines
that took effect on November 1, 2015. It advises sentencing
courts to consider the extent of the harm rather than merely
the total number of victims of the offense (as its predecessor
did) in an effort to “place greater emphasis on the extent of
harm that particular victims suffer as a result of the offense.”
Sentencing Guidelines for the United States Courts, 80 Fed.
Reg. 25,782, 25,791 (May 5, 2015). The newly amended §
2B1.1 is thus “[c]onsistent with the Commission’s overall
4
The District Court had subject matter jurisdiction under
18 U.S.C. § 3231. We have appellate jurisdiction under 18
U.S.C. § 3742(a).
9
goal of focusing more on victim harm” and “ensures that an
offense that results in even one victim suffering substantial
financial harm receives increased punishment, while also
lessening the cumulative impact of loss and the number of
victims, particularly in high-loss cases.” United States
Sentencing Commission, Guidelines Manual, Supplement to
Appendix C 112–13 (Nov. 1, 2015).
Though § 2B1.1 “effect[ed] a substantive change” to
the Guidelines, United States v. Jesurum, 819 F.3d 667, 672
(2d Cir. 2016), our Court has not yet had the opportunity to
consider it, and the challenge to its application presents us
with an issue of first impression. Despite the scarcity of
relevant case law, Application Note 4(F) offers instructive
commentary that sentencing courts are required to consider
when applying § 2B1.1. See United States v. Knobloch, 131
F.3d 366, 372 (3d Cir. 1997) (“Courts are required to follow
the Application Notes . . . in imposing sentences for federal
offenses.”); see also United States v. Minhas, 850 F.3d 873,
877 (7th Cir. 2017) (noting the authority of the application
notes in the context of U.S.S.G. § 2B1.1(b)(2)). Application
Note 4(F) states:
In determining whether the offense resulted in
substantial financial hardship to a victim, the
court shall consider, among other factors,
whether the offense resulted in the victim—
(i) becoming insolvent;
(ii) filing for bankruptcy under the
Bankruptcy Code . . . ;
10
(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.
U.S.S.G. § 2B1.1(2) cmt. n.4 (emphasis added); see also
U.S.S.G. App. C at 112 (referring to Application Note 4(F)’s
list of factors that courts consider in assessing “substantial
financial hardship” as “non-exhaustive”).5
5
Poulson urges that there are “three key insights” to glean
from the texts of § 2B1.1 and Application Note 4(F): (1) the
victim must have suffered “qualitative harm” over and above
the loss itself (Appellant’s Br. 14); (2) the harm must be
monetary, so “non-pecuniary harms, such as personal or
familial distress, . . . do not qualify” (id. at 15); and (3) the
hardship must be “large enough to trigger a significant change
in life circumstances” (id.). These “insights” are unavailing,
as they are based solely on a discrete set of factors despite the
fact that the set is not exhaustive. More specifically, the
“insights” overlook Application Note 4(F)(iii), i.e., the factor
listing “substantial loss of a retirement, education, or other
savings or investment fund.” The Commission’s inclusion of
this factor neither requires a “qualitative harm” nor
necessarily “trigger[s] a significant change in life
circumstances.”
11
We agree with the observation by our sister circuits
that the determination of “substantial financial hardship” is
subject to the usual—and significant—degree of discretion
afforded a district court during sentencing:
[B]etween a minimal loss or hardship
(occurring, perhaps, when a defendant
fraudulently obtains five dollars a victim had
intended to donate to charity), and a devastating
loss (occurring in the wake of a scheme to wipe
out of a victim’s life savings), there lies a wide
range in which we rely upon the judgment of
the district courts, guided by the non-exhaustive
list of factors in Application Note 4[(F)]. In the
end, this is just one more determination of a fact
that bears on the ultimate sentence; that
determination is entitled to the normal
deference that applies to all facts found at
sentencing.
Minhas, 850 F.3d at 878; see also United States v. Brandriet,
840 F.3d 558, 561–62 (8th Cir. 2016) (noting that even
though the district court relied on a “thin” evidentiary record
as well as its own inference to determine “substantial
financial hardship,” it was not clear error for it to have done
so).
That discretion is crucial, as § 2B1.1’s increased
emphasis on individual harm means that “substantial financial
hardship” is measured on a sliding scale that is also fairly
subjective. We echo the analysis by the Seventh Circuit that:
12
The 2015 amendment to § 2B1.1(b)(2)
introduces a measure of relativity into the
inquiry. That is, whether a loss has resulted in a
substantial hardship . . . will, in most cases, be
gauged relative to each victim. The same dollar
harm to one victim may result in a substantial
financial hardship, while for another it may be
only a minor hiccup. Much of this will turn on
a victim’s financial circumstances, as the
district court recognized when it noted that “[a]
loss that may not be substantial to Bill Gates
may be substantial to a working person.”
Minhas, 850 F.3d at 877–78.6 Still, this “measure of
relativity” does not require the sentencing court to identify
6
We are not persuaded by Poulson’s attempt to
distinguish Minhas on the basis that the District Court in our
case “specifically rejected” the argument that “substantial
financial hardship” was a “relative term.” Poulson Rule 28j
Letter dated Mar. 30, 2017, at 1. Nor do we view the District
Court’s approach in our case as incompatible with that taken
in Minhas. While we agree with Minhas that the severity of a
financial hardship generally depends on both the value of the
loss and the victim’s financial means (and is therefore
“relative” to the victim’s wealth), 850 F.3d at 877, the
determination of “substantial financial hardship” is not based
on those numbers alone. Just as the Guidelines do not require
a specific dollar amount to qualify as a “substantial financial
hardship,” they also do not require the loss of a specific
percentage of the victim’s wealth. The District Court in this
case took direct account of the impact of each victim’s loss on
his or her overall financial health and appropriately used its
13
finite dollar amounts—the amount a victim started with and
then ended up with after the fraud—when it measures
“substantial financial hardship.” To the contrary, it is
axiomatic that sentencing courts may draw reasonable
inferences from the factual record before them. See United
States v. Cicirello, 301 F.3d 135, 141 (3d Cir. 2002) (“[T]he
sentencing court is always free to draw inferences from facts
of record . . . .”); see also United States v. Loney, 219 F.3d
281, 288 (3d Cir. 2000) (noting that the district court drew
reasonable inferences when it found a relationship between
defendant’s gun possession and his drug possession).
Sentencing courts may therefore look at the factual record to
infer the extent of the financial loss endured by a particular
victim, and the District Court acted within the discretion
afforded by the Guidelines when it did so here.
We note that in other legal contexts, the word
“substantial” has been treated as occupying a middle ground,
with courts typically focusing on magnitude and permanence
discretion to infer the magnitude of financial hardship based
on the actions each victim was forced to take as a result. In
other words, it determined the nature of each victim’s loss
relative to his or her personal circumstances. Further, the
District Court arguably construed the Guidelines more strictly
than the court in Minhas. In contrast to the sentencing court
in Minhas, which held “it was more likely than not” that
certain victims qualified for the § 2B1.1 enhancement, 850
F.3d at 879, the District Court in this case made
individualized findings after reviewing each victim’s loss
amount and impact statement.
14
to determine substantiality. When applied to evidence, for
example, “substantial” means “more than a mere scintilla,”
Plummmer v. Apfel, 186 F.3d 422, 427 (3d Cir. 1999)
(internal quotation marks omitted), “not overwhelming,”
Gregory v. Chehi, 843 F.2d 111, 114 (3d Cir. 1988), and
enough that a “reasoning mind might accept as adequate to
support a conclusion,” Cotter v. Harris, 642 F.2d 700, 704
(3d Cir. 1981). Other circuits have held that a “substantial”
financial hardship in the tax payment context must be more
than a mere inconvenience, but rather a form of “sacrifice.”
See Matter of Carlson v. United States, 126 F.3d 915, 921
(7th Cir. 1997). More broadly, Black’s Law Dictionary
defines “substantial” as “having actual, not fictitious,
existence”; “of real worth and importance”; “considerable in
amount or value”; and “having permanence or near-
permanence; long lasting.”7 Substantial, Black’s Law
Dictionary (10th ed. 2014). When applying the term to
financial hardship in the sentencing context, therefore, we
ought to consider not only the pecuniary value of the loss but
also such intangibles as its impact on the victim. A loss of a
large volume of savings that is quickly regained or has
minimal effect on the victim is likely not a substantial
financial hardship. As when using “substantial” in other
7
When a statutory term is undefined, we give it its
ordinary meaning. United States v. Santos, 553 U.S. 507,
511; Cadapan v. Att’y Gen., 749 F.3d 157, 161 (3d Cir.
2014). We may refer to legal and general dictionaries to
ascertain the ordinary meaning of a term. Pa., Dep’t of Pub.
Welfare v. U.S. Dep’t of Health & Human Servs., 647 F.3d
506, 511 (3d Cir. 2011).
15
contexts, so too here, there is no specific percentage of total
earnings or duration of impact that demarcates a substantial
financial hardship from an insubstantial one. The term’s
fluidity across various legal applications thus buttresses the
conclusion of the District Court and of other courts that
drawing inferences based on a variety of facts is appropriate
in construing “substantial financial hardship.”
With these principles in mind, we now turn to the
specific victims who Poulson argues did not endure
“substantial financial hardship” as defined by the Guidelines.8
8
Of the eight victims in question, three—LF, CS, and
NN—lost money in accounts that were joint with their
respective spouses. The District Court counted each couple
as one victim but recognized that it could have counted them
separately. If the District Court had counted the married
couples as two separate victims, the total number of victims
would have been 33 instead of 27. Poulson does not directly
challenge the District Court’s (unexplained) decision to count
this way, and only argues that if we find that each victim
should have been counted individually, then we “should
remand the case for further proceedings, as there is
insufficient evidence in the record to determine the nature of
the couples’ joint accounts and the spouses’ individual
hardships.” (Appellant’s Br. 18–19 n.6.) We disagree with
that characterization of the record and note—as the District
Court recognized during sentencing—that the District Court
could have counted each married victim separately despite the
titling of their account. See United States v. Ryan, 806 F.3d
691, 694 (2d Cir. 2015). Though the commentary to § 2B1.1
defines a “victim” as “any person who sustained any part of
16
The applicable standard of review depends on whether
Poulson raised his objection to the victim in question before
the District Court. “Where an objection is preserved at
sentencing,” as Poulson’s was with respect to CD and LF,
“we exercise plenary review of a district court’s interpretation
of the Guidelines but review its factual findings for clear
error.” United States v. Fountain, 792 F.3d 310, 318 (3d Cir.
2015). Because we are tasked with reviewing the District
Court’s interpretation of “substantial financial hardship”
under the Guidelines, we exercise plenary review over the
challenge to the enhancement insofar as it is based on CD and
LF.9 See United States v. Nagle, 803 F.3d 167, 179 (3d Cir.
the actual loss,” U.S.S.G. § 2B1.1 cmt. n.1, the District Court
was not required to count each spouse separately.
9
The Government is incorrect that the clear error standard
governs our review of Poulson’s challenge to the
enhancement as based on CD and LF. As the Government
rightly notes, we have consistently held that “[i]f 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.” Fountain,
792 F.3d at 318 (quoting United States v. Fish, 731 F.3d 277,
279 (3d Cir. 2013)). But that is not the issue presented to us.
Poulson’s appeal tasks us with reviewing the contours of §
2B1.1 as well as whether the District Court construed the
amended enhancement correctly when assessing the
magnitude of CD’s and LF’s respective losses. That is not
the same as determining whether undisputed facts align
correctly with specific statutory requirements.
17
2015) (“When the calculation of the correct Guidelines range
turns on an interpretation of ‘what constitutes loss’ under the
Guidelines, we exercise plenary review.”); United States v.
Fumo, 655 F.3d 288, 309 (3d Cir. 2011) (“The appropriate
standard of review of a district court’s decision regarding the
interpretation of the Sentencing Guidelines . . . is plenary.”);
United States v. Kennedy, 554 F.3d 415, 418 (3d Cir. 2009)
(“The District Court’s interpretation of the Sentencing
Guidelines is subject to plenary review.”).
Poulson did not contest the District Court’s inclusion
of the remaining six victims—BDA, SP, CS, SB, NN, and
SO—at sentencing. We therefore review the application of
the enhancement as it relates to those victims for plain error.
United States v. Moreno, 809 F.3d 766, 773 (3d Cir. 2016)
(citing United States v. Wood, 486 F.3d 781, 790 (3d Cir.
2007)). To prevail on these six challenges, therefore, Poulson
must show that there is “(1) an error; (2) that is plain; (3) that
affects substantial rights; and (4) which seriously affects the
fairness, integrity, or public reputation of judicial
proceedings.” Id. It is not sufficient if the legal error is
“subject to reasonable dispute.” Puckett v. United States, 556
U.S. 129, 135 (2009). Even if Poulson satisfies those four
requirements, we may still deny his challenge. See United
States v. Tyson, 653 F.3d 192, 211 (3d Cir. 2011); see also
United States v. Olano, 507 U.S. 725, 735–36 (1993).
Finally, we note that we may “affirm the rulings of the
District Court for any proper reason that appears on the
record even where not relied on by it.” United States v.
Perez, 280 F.3d 318, 337 (3d Cir. 2002).
18
i. Victims CD and LF10
CD lost $60,000 in retirement savings to Poulson and
successfully obtained a $124,184.60 civil judgment against
him that included the $60,000 lost principal as well as the
promised interest. In finding that CD had endured a
“substantial financial hardship,” the District Court counted
the fact that she “was forced to file a civil lawsuit,” noting
that it was not an “enumerated factor under the [G]uidelines”
but that the factors listed in the Guidelines were not
exclusive. (A. 183.) LF lost $70,661 in a retirement/savings
fund, and the District Court noted that “[she] now ha[s] to
work longer to make up for the money.” (A. 184.) In
addressing Poulson’s objection to these victims at the hearing,
the District Court also noted that it was “call[ing] out . . .
important facts, not necessarily the only important facts.” (A.
193.)
Poulson argues on appeal that in CD’s case, the
monetary loss did not amount to a “significant life
consequence, or ‘hardship’” (Appellant’s Br. 16), and that
mere “impact[]” to a retirement plan, as in LF’s case, was not
enough to constitute a “substantial financial hardship” (id. at
17). These arguments are not persuasive. As we have
discussed supra, the factors listed in Application Note 4(F)
10
We note that the appendix containing the victim impact
statements is sealed. The panel notified counsel for both
parties of its intent to make reference to some of the contents
of the victim impact statements and received no objection to
their disclosure.
19
are not exhaustive, and the financial burden of filing a lawsuit
and proceeding with litigation is not only a relevant factor but
also potentially indicative of the magnitude of the loss to CD
given that it was apparently substantial enough to move her to
pursue litigation. LF’s entire victim impact statement, which
the District Court incorporated into its findings, likewise
offers sufficient examples of life consequences that the
District Court was justified in construing as a “substantial
financial hardship.”11 Therefore, given CD’s and LF’s
respective impact statements, as well as the criteria required
by “substantial,” we reject Poulson’s challenge to his
sentence insofar as it relates to these two victims and hold
that the District Court did not commit legal error in finding
that CD and LF endured “substantial financial hardship”
under the Guidelines.
ii. Victims BDA, CS, SO, SP, SB, and NN
BDA’s loss of $16,000 to Poulson sabotaged her plan
to use her investment with Poulson to purchase a home for
herself and her 87-year-old sister. We are not persuaded by
Poulson’s argument that the District Court plainly erred on
the grounds that that “this hardship is not akin to being forced
to leave a home.” (Appellant’s Br. 16.) To the contrary, it
comfortably fits in with the factors of “suffering substantial
11
For example, LF wrote in a letter to the District Court
that the monetary loss forced her to shorten her maternity
leave and postpone purchasing a car and home. Contrary to
Poulson’s assertion, these impacts on her life surely signal
significant financial difficulty.
20
loss of a . . . savings or investment fund,” Application Note
4(F)(iii), and “substantial changes to . . . living
arrangements,” Application Note 4(F)(v).
CS lost $9,500 in a joint investment account with his
wife, a loss that CS stated “impacted [their] savings
substantially and altered [his] wife’s retirement plans.” (A.
252.) SO and his wife, who is completely reliant on SO for
retirement savings, invested $13,000 in a retirement account
with Poulson. His fraud cost them the principal as well as
$3,120 in interest—approximately 25% of their total
retirement savings. Poulson urges that the District Court
erroneously applied the enhancement based on CS and SO,
reasoning that there was no “substantial financial hardship
merely because their retirement plans were ‘altered’ or
‘impacted’” and noting that “there was no indication that
these victims actually had to delay their retirements.”
(Appellant’s Br. 17.) But the Guidelines do not in any way
indicate that “substantial financial hardship” is conditional on
retirement delay, and the application was therefore not clear
error.
Poulson similarly contends that SP, SB, and NN
should not have qualified as having endured “substantial
financial hardship,” though he does not articulate his
reasoning. SP lost $42,250 in an investment fund, forcing
him to work additional side jobs; SB lost $10,000 in a
retirement fund; and NN, along with his wife, lost $11,000 in
a retirement fund to Poulson, forcing them to restart their
retirement savings “from scratch” (A. 256). The record
supports the District Court’s finding that all of these losses
amounted to “substantial financial hardship,” and Poulson has
21
not cited to anything that would indicate it was clear error for
the District Court to apply the enhancement accordingly.
We recognize Poulson’s argument that by virtue of
including the word “substantial,” the Commission intended a
limiting principle to confine the application of § 2B1.1. (See
Appellant’s Br. 17 (“Although LF specified that she and her
husband had to work longer to make up the money that they
had lost, that is necessarily true of any victim who loses
money from a retirement fund.”).) But we are not persuaded
that the Commission intended the enhancement to be as
limited, or as difficult to satisfy, as Poulson urges. Indeed,
Application Note 4(F) itself states that its explanatory factors
are not exhaustive, and the other courts that have reviewed §
2B1.1 have all emphasized the sentencing court’s
considerable discretion in determining where on the “wide
range” between “a minimal loss or hardship . . . and a
devastating loss” a particular victim’s loss might fall.
Minhas, 850 F.3d at 878; see also Brandriet, 840 F.3d at 561–
62. To that end, though Poulson is determined that the
enhancement cannot possibly be justified by all of the victims
identified by the District Court, he has not explained how the
District Court’s inclusion of these eight victims amounts to
plain error such that “the legal error [was] clear or obvious,
rather than subject to reasonable dispute.”12 Puckett, 556
U.S. at 135; see also United States v. Clark, 237 F.3d 293,
12
Beyond the considerable latitude afforded by the
Guidelines, Poulson arguably faces an even higher hurdle to
demonstrating that the error was “clear or obvious” given the
scarcity of case law on this recently enacted enhancement.
22
298–99 (3d Cir. 2001) (quoting Olano, 507 U.S. at 734)
(holding that an argument that was “plausible” and “within
the range of possibility” was not enough to show that an error
was “clear under current law”).
B. Terms of Supervised Release
Poulson’s next challenges the District Court’s
imposition of a five-year occupational restriction as part of
the terms of his supervised release. Because Poulson failed to
object to this term at sentencing, we review the challenge for
plain error. Fountain, 792 F.3d at 318.
Poulson argues that the District Court erred by
imposing an occupational restriction that bars him from
working in the real estate industry for five years because
Poulson’s term of supervised release is only three years,
which is the statutory maximum.13 The Government
concedes that the statutory maximum prohibits an
occupational restriction for more than three years and that “a
limited remand is appropriate . . . [to] allow the District Court
to correct the sentence so that the occupational restriction is
coterminous with the term of supervised release.”
(Appellee’s Br. 39.)
The parties are correct on the relevant law. 18 U.S.C.
§ 3583 authorizes a sentencing court to impose a term of
13
Poulson does not contest the three-year term of
supervised release or the occupation restriction during those
three years.
23
supervised release that follows a defendant’s term of
imprisonment. The statute sets the maximum term of
supervised release based on the offense of conviction. 18
U.S.C. § 3583(b). In this case, Poulson pled guilty to one
count of mail fraud in violation of 18 U.S.C. § 1341, which is
a Class C felony. See 18 U.S.C. § 3559(a)(3) (Class C felony
is one for which maximum prison sentence is between 10 and
25 years); 18 U.S.C. § 1341 (maximum prison sentence for
mail fraud is 20 years). The District Court was therefore
only authorized to impose a maximum term of three years’
supervised release on Poulson. Because the District Court
imposed, as a term of supervised release, an occupational
restriction lasting five years, this part of Poulson’s sentence
amounted to plain error. See United States v. Lewis, 660 F.3d
189, 192 (3d Cir. 2011) (“A sentence that exceeds the
statutory maximum constitutes plain error.”).
We will therefore vacate and remand this case to the
District Court for the “sole and limited purpose of correcting
the sentence . . . to reflect the applicable statutory
provisions.” United States v. Kukafka, 478 F.3d 531, 540 (3d
Cir. 2007). The occupational restriction cannot exceed three
years.
III.
For the foregoing reasons, we will affirm Poulson’s
sentence with respect to the § 2B1.1 “substantial financial
hardship” enhancement, and we will vacate and remand the
case to the District Court to correct the sentence with respect
to the terms of Poulson’s supervised release only.
24