United States v. Daren Gadsden , 616 F. App'x 539 ( 2015 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-4924
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
DAREN KAREEM GADSDEN, a/k/a D,
Defendant - Appellant.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. William D. Quarles, Jr., District
Judge. (1:11-cr-00302-WDQ-3)
Argued: January 29, 2015 Decided: April 1, 2015
Before DUNCAN, WYNN, and THACKER, Circuit Judges.
Affirmed in part and remanded with instructions in part by
unpublished opinion. Judge Duncan wrote the opinion, in which
Judge Wynn and Judge Thacker joined.
ARGUED: Sarah F. Lacey, LEVIN & CURLETT LLC, Baltimore,
Maryland, for Appellant. Sujit Raman, OFFICE OF THE UNITED
STATES ATTORNEY, Greenbelt, Maryland, for Appellee. ON BRIEF:
Steven H. Levin, LEVIN & CURLETT LLC, Baltimore, Maryland, for
Appellant. Rod J. Rosenstein, United States Attorney, OFFICE OF
THE UNITED STATES ATTORNEY, Baltimore, Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
DUNCAN, Circuit Judge:
A jury convicted Daren Kareem Gadsden of one count of
conspiracy to commit bank fraud, eight counts of bank fraud, two
counts of aggravated identity theft, and two counts of evidence
tampering. The district court sentenced Gadsden to 286 months’
imprisonment. Gadsden appeals the district court’s denial of
his motion for judgment of acquittal, his sentence, and the
district court’s restitution order. For the following reasons,
we affirm Gadsden’s convictions and sentence, but remand with
instructions to adjust his restitution amount as agreed to by
both parties.
I.
Gadsden was a landlord in the Housing Authority of
Baltimore City’s (“HABC”) Section 8 program. HABC disbursed
rental payments to Section 8 landlords from the bank account it
held with Bank of America. In late 2009 and early 2010, HABC
lost several thousand dollars from its Bank of America account
in unauthorized Automated Clearing House (“ACH”) transfers to a
PNC Bank account held by Daren Gadsden, LLC. 1 When HABC
1
ACH is “a payment system that . . . allows financial
institutions to send and receive funds” through electronic
transfers. J.A. 77.
2
confronted him about the losses, Gadsden denied wrongdoing but
agreed to pay the agency $1,400.
In the spring of 2010, Gadsden recruited Tyeast Brown to
participate in a scheme to steal money from HABC using
unauthorized ACH transfers. Brown in turn recruited William
Darden and Keith Daughtry. Darden, posing as Daughtry and using
a forged driver’s license with Daughtry’s name but Darden’s
photograph, opened a PNC Bank account for Keith Daughtry
Contracting, LLC (“Daughtry LLC”). Gadsden then transferred
funds through the ACH from HABC’s Bank of America account to the
Daughtry LLC account. Gadsden also used a stolen identity to
open a Bank of America account under the name James Fisher
Consulting, LLC (“Fisher LLC”). Gadsden began transferring
funds to that account through the ACH after submitting a
fraudulent consulting agreement between Fisher LLC and HABC in
which he forged the signature of HABC’s CFO.
Gadsden, Brown, Darden, and Daughtry gained access to the
stolen funds through the following three methods: (1) they
transferred funds through the ACH from the Daughtry LLC account
at PNC Bank into 54 NetSpend debit card accounts in the names of
other individuals, some of whose identities Gadsden had stolen;
(2) they made in-person cash withdrawals from the Daughtry LLC
account; and (3) they opened accounts, such as the Fisher LLC
account, at banks other than PNC--sometimes by using stolen
3
identities--and effected ACH transfers to those accounts. All
told, Gadsden, Brown, Darden, and Daughtry obtained almost $1.4
million from HABC’s Bank of America account through unauthorized
ACH transfers. PNC Bank ultimately covered that loss by
returning the full amount to Bank of America, and it reduced its
net loss to $1.1 million by recovering some money from other
banks that received ACH transfers as part of the scheme.
In April 2011, an FBI agent told Gadsden he wanted to speak
to him about a bank fraud investigation. Two days after they
spoke, an email account directly associated with the fraud was
deleted; five days later, another email account associated with
the fraud was similarly deleted. Testimony at trial established
that the IP address used to login to the two deleted accounts
matched the IP address used to login to Gadsden’s personal email
account, suggesting that Gadsden operated all three accounts.
A grand jury indicted Gadsden in May 2012 on thirteen
counts related to the fraud. At trial in October 2012, the jury
could not reach a unanimous verdict, resulting in a mistrial.
After a second trial in July 2013, the jury convicted Gadsden on
all counts.
Gadsden moved under Federal Rule of Criminal Procedure 29
(“Rule 29”) for judgment of acquittal. He argued that the
government failed to produce sufficient evidence to support any
of the convictions under the heightened burden of proof it
4
accepted. The district court denied the motion on the ground
that the evidence was in fact sufficient. It sentenced Gadsden
to 286 months’ imprisonment and ordered restitution in the
amount of $1,399,700. Gadsden appealed.
II.
A Rule 29 motion challenges the sufficiency of the evidence
to support the conviction. See Fed. R. Crim. P. 29(a), (c). We
review the denial of a Rule 29 motion de novo, “constru[ing] the
evidence in the light most favorable to the government, assuming
its credibility, and drawing all favorable inferences from it.”
United States v. Penniegraft, 641 F.3d 566, 571 (4th Cir. 2011).
A Rule 29 movant bears a heavy burden. We “will sustain the
jury's verdict if any rational trier of fact could have found
the essential elements of the crime charged beyond a reasonable
doubt.” Id. (emphasis in original).
III.
Gadsden argues on appeal that the district court erred by
denying his motion for judgment of acquittal, imposing an
unreasonable sentence, and setting his restitution amount at
$1,399,700. We address each issue in turn.
5
A.
Gadsden first argues that he was entitled to judgment of
acquittal because the evidence was insufficient to support any
of his convictions. We disagree. A rational jury could have
found the elements of the crimes charged beyond a reasonable
doubt.
1.
Count One, which charged Gadsden with conspiracy to commit
bank fraud in violation of 18 U.S.C. § 1349, need not detain us
long. Gadsden challenges his conspiracy conviction solely on
the ground that the government failed to produce sufficient
evidence to support the substantive bank fraud convictions. See
Appellant’s Br. at 15–22; J.A. 1164–69. Consequently, he has
waived any other potential challenges to his conviction under
Count One because he raised no other arguments in his brief.
See United States v. Al-Hamdi, 356 F.3d 564, 571 n.8 (4th Cir.
2004) (“It is a well settled rule that contentions not raised in
the argument section of the opening brief are abandoned.”).
Because Gadsden tethers his only argument under Count One to his
sufficiency argument under Counts Two through Nine, if there was
sufficient evidence for the substantive bank fraud convictions,
his conspiracy argument fails. As explained below, we affirm
the substantive bank fraud convictions on the ground that they
6
were supported by sufficient evidence. Therefore, we also
affirm the conviction for Count One.
2.
Counts Two through Nine charged Gadsden with bank fraud in
violation of 18 U.S.C. § 1344. Section 1344 reads as follows:
Whoever knowingly executes, or attempts to execute, a
scheme or artifice--
(1) to defraud a financial institution; or
(2) to obtain any of the moneys, funds, credits,
assets, securities, or other property owned by, or
under the custody or control of, a financial
institution, by means of false or fraudulent
pretenses, representations, or promises;
shall be fined not more than $1,000,000 or imprisoned
not more than 30 years, or both.
18 U.S.C. § 1344. A person commits bank fraud by violating
either subsection. United States v. Brandon, 298 F.3d 307, 311
(4th Cir. 2002).
The government presented a theory of liability under
§ 1344(2), alleging that Gadsden executed a single, integrated
scheme to obtain funds that were first in the custody of Bank of
America and then in the custody of PNC Bank. The government
conceded at trial, and continues to concede on appeal, that it
therefore had to prove that Gadsden violated § 1344 as to both
banks. 2 The district court instructed the jury in accordance
2
We express no opinion as to whether this concession was
(continued)
7
with that concession. See J.A. 1123. The district court also
instructed the jury, without objection by either party, that the
government had to prove that Gadsden “placed the banks at a risk
of loss and that the banks did not knowingly accept such a
risk.” 3 J.A. 1125.
necessary or appropriate. Regardless of whether the government
was required to prove a violation as to both banks, the evidence
was sufficient to support the § 1344 convictions.
3
While this case was on direct appeal, the Supreme Court
issued Loughrin v. United States, in which it rejected the
argument that risk of loss is an element of bank fraud under
§ 1344(2). See 134 S. Ct. 2384, 2395 n.9 (2014). Even if
Loughrin were to apply retroactively and render the district
court’s “risk of loss” instruction erroneous, we would not
correct that error because it would not affect the outcome of
this case: the jury convicted Gadsden despite the favorable
instruction, and, as we discuss below, the evidence supports the
convictions. See Fed. R. Crim. P. 52(a) (“Any error, defect,
irregularity, or variance that does not affect substantial
rights must be disregarded.”).
While Gadsden argues that we should not retroactively apply
Loughrin, Appellant’s Br. at 22–23, 30, he also maintains that
if Loughrin were to apply, the government must have had to prove
that Gadsden obtained funds “by means of false statements that
were the mechanism naturally inducing each bank to part with
HABC’s funds.” Appellant’s Br. at 26. Assuming Gadsden’s
interpretation of Loughrin is correct and that the government
failed to meet that standard, we still would not reverse under
Loughrin because Gadsden requested an instruction at trial,
which the district court gave, that the false statements “must
relate to a material fact or matter” and must have been made “in
furtherance of the alleged scheme to defraud,” regardless of
whether they naturally induced the banks to part with funds.
Supp. J.A. 16; J.A. 1124–25. Even if that instruction
constituted plain error, we would not correct that error because
Gadsden invited it, and “[i]n the context of plain error review,
an error that was invited by the appellant ‘cannot be viewed as
(continued)
8
Gadsden argues on appeal that the evidence at trial was
insufficient to support the finding that Bank of America
suffered a risk of loss. Because the jury could have reasonably
inferred that Bank of America suffered a risk of loss to HABC,
an actual loss to PNC, or both, we hold that the evidence was
sufficient to support Gadsden’s convictions for bank fraud.
As to risk of loss, PNC investigator Michael Hersh
testified at trial that Daughtry LLC “was going to receive
[approximately $1.3 million] from Bank of America” in ACH
transfers from the HABC account. J.A. 79. Although PNC
returned the full amount to Bank of America, the jury could have
reasonably inferred from Hersh’s testimony that Bank of America
suffered a risk of loss in that it would have been liable to
HABC for the fraudulently transferred funds but for PNC’s
decision to return all of the funds.
Indeed, the jury could also have reasonably inferred that
Bank of America suffered an actual loss based on Hersh’s
testimony that PNC Bank “recover[ed] some money from the
branches or banks that the funds were sent to,” bringing its
loss down to $1.1 million. J.A. 188. Although Hersh did not
one that affected the fairness, integrity, or public reputation
of judicial proceedings.’” United States v. Lespier, 725 F.3d
437, 450 (4th Cir. 2013) (quoting United States v. Gomez, 705
F.3d 68, 76 (2d Cir. 2013)).
9
name any specific bank, the jury received evidence that accounts
at Bank of America were the second most-common recipients of
funds transfers from the Daughtry LLC account, with over
$250,000 going into the Fisher LLC account alone. See J.A.
1456–61. This evidence supports the conclusion that PNC
recovered some of the money from Bank of America, indicating
that Bank of America suffered an actual loss.
Based on the evidence described above, a rational jury
could have concluded beyond a reasonable doubt that Bank of
America suffered a risk of loss or actual loss, either of which
was sufficient to support the convictions. Accordingly, we
affirm the convictions for Counts Two through Nine.
3.
Counts Ten and Eleven charged Gadsden with aggravated
identity theft in violation of 18 U.S.C. § 1028A. A person who,
“during and in relation to any [predicate] felony
violation . . . , knowingly transfers, possesses, or uses,
without lawful authority, a means of identification of another
person,” commits aggravated identity theft. 18 U.S.C.
§ 1028A(a)(1). Bank fraud is a predicate felony violation. Id.
§ 1028A(c)(5).
Gadsden does not challenge that he used stolen identities,
but rather argues on appeal that his aggravated identity theft
conviction requires not just the commission, but also
10
conviction, of bank fraud. Thus, he submits that, because there
was insufficient evidence for the bank fraud convictions, there
cannot have been sufficient evidence for the aggravated identity
theft convictions. See Appellant’s Br. at 21–22; J.A. 1164 n.3.
Therefore, as with the conspiracy count, if there was sufficient
evidence for the bank fraud convictions, his argument fails.
Whether conviction of the predicate offense is required to
support an aggravated identity theft conviction is a question of
first impression in this circuit. But the jury did convict
Gadsden of bank fraud, and we affirm those convictions, so we
need not answer that question here. Because the bank fraud
convictions were supported by sufficient evidence, and because
Gadsden does not otherwise challenge his identity theft
convictions, we also affirm the convictions for Counts Ten and
Eleven.
4.
Counts Twelve and Thirteen charged Gadsden with evidence
tampering in violation of 18 U.S.C. § 1512(c)(1) based on the
deletion of two email accounts directly associated with the
fraud. Under that subsection, a person commits tampering if he
“corruptly . . . alters, destroys, mutilates, or conceals a
record, document, or other object, or attempts to do so, with
the intent to impair the object’s integrity or availability for
use in an official proceeding.” § 1512(c)(1). Gadsden makes
11
three arguments regarding the sufficiency of the evidence to
support these convictions. First, he argues that the government
failed to provide sufficient evidence to prove that it was
Gadsden, as opposed to another co-conspirator, who deleted the
accounts. See Appellant’s Br. at 36–37; J.A. 1170–71. Second,
he contends that he did not act “with the intent to impair the
object’s integrity or availability for use in an official
proceeding,” 18 U.S.C. § 1512(c)(1), because deleting an email
account does not obstruct or impair an investigation, and
because he had legitimate reasons for the deletion, see
Appellant’s Br. at 33–35; J.A. 1171–73. And third, he argues
that the government’s evidence was “entirely circumstantial.”
J.A. 1170. 4
As we noted above, the evidence at trial showed that the
email accounts were deleted within days of the FBI agent’s
conversation with Gadsden about a bank fraud investigation, and
that the IP address used to login to the two deleted accounts
matched the IP address used to login to Gadsden’s personal email
4
Gadsden also argues--for the first time on appeal--that an
email account, as opposed to an email message, is not a “record,
document, or other object” under the statute. Appellant’s Br.
at 32. Because Gadsden failed to raise that legal argument in
addition to the factual arguments in his Rule 29 motion, thereby
“precluding the district court from having the first opportunity
to opine on it,” the argument is waived. United States v. Chong
Lam, 677 F.3d 190, 200 (4th Cir. 2012).
12
account. Taking that evidence together, a rational factfinder
could have concluded beyond a reasonable doubt that Gadsden
deleted the email accounts with the intent to impair the
investigation. 5 And that the evidence may have been
circumstantial does not support his claim. “[C]ircumstantial
evidence is treated no differently than direct evidence, and may
be sufficient to support a guilty verdict even though it does
not exclude every reasonable hypothesis consistent with
innocence.” United States v. Jackson, 863 F.2d 1168, 1173 (4th
Cir. 1989). We thus affirm the convictions for Counts Twelve
and Thirteen.
B.
We turn now to Gadsden’s challenge to the reasonableness of
his sentence. The district court imposed on Gadsden the minimum
within-Guidelines sentence of 286 months’ imprisonment:
individual, concurrent sentences of 262 months for Counts One
through Nine; concurrent 240-month sentences for Counts Twelve
and Thirteen, to run concurrently with the sentences for Counts
One through Nine; and concurrent 24-month sentences for Counts
5
Because § 1512(c)(1) criminalizes attempts to tamper with
evidence with the intent to impair an investigation, whether the
deletion succeeded at impairing the investigation is immaterial.
13
Ten and Eleven, to run consecutively with the other sentences. 6
J.A. 1341.
In calculating the Guidelines range, the district court
applied several enhancements. Gadsden objected to the following
four, each of which increased his offense level by two: (1)
making a misrepresentation that the defendant was acting on
behalf of a government agency; (2) using sophisticated means in
the offense; (3) deriving more than $1 million in gross receipts
from a financial institution as a result of the offense; and (4)
obstructing justice. 7 J.A. 1300–01. He now argues that the
sentence was procedurally unreasonable because the district
court misapplied those enhancements.
When a defendant challenges the reasonableness of a
criminal sentence, we review the sentencing determination for an
abuse of discretion. United States v. McManus, 734 F.3d 315,
317 (4th Cir. 2013). “We review the district court's factual
findings for clear error and its legal conclusions de novo.”
6
A sentence for conviction under § 1028A (Counts Ten and
Eleven) must be consecutive with sentences for other crimes,
though sentences for multiple convictions of § 1028A may run
concurrently with each other at the court’s discretion. 18
U.S.C. § 1028A(b)(2), (4).
7
The obstruction-of-justice enhancement does not apply to a
conviction of evidence tampering, so as to prevent double
counting. U.S.S.G. § 3C1.1 cmt. n.7. But the enhancement does
apply where, as here, the obstruction offense is grouped with an
underlying offense, such as bank fraud. See § 3C1.1 cmt. n.8.
14
Id. “The burden is on the Government to prove the facts needed
to support a sentencing enhancement by a preponderance of the
evidence.” Id. at 319.
We have considered Gadsden’s arguments with respect to the
sentencing enhancements and find no clear error as to the first
three enhancements, which Gadsden challenges on the facts, and
no error as to the obstruction enhancement, see supra n.7.
Accordingly, we conclude that the district court did not abuse
its discretion. The evidence showed that (1) Gadsden made a
misrepresentation that he was acting on behalf of a government
agency by forging the signature of HABC’s CFO; (2) Gadsden used
sophisticated means in the fraud, as it included, for example,
fabricated documents, multiple stolen identities, and the
transfer of funds into numerous different accounts at several
different banks; (3) the scheme derived more than $1 million
from a bank; and (4) Gadsden attempted to obstruct justice in
connection with the bank fraud by deleting the email accounts. 8
We therefore affirm Gadsden’s sentence.
C.
Finally, Gadsden challenges the restitution amount of
$1,399,700. Appellant’s Br. at 46 n.8. Because PNC Bank
8
The obstruction-of-justice enhancement, like the evidence-
tampering statute, applies to attempts as well as to completed
acts. U.S.S.G. § 3C1.1.
15
mitigated its loss to $1.1 million, the government concedes that
the restitution amount should be $1.1 million, and asks this
court to remand the case to the district court with instructions
to adjust its judgment accordingly. Appellee’s Br. at 58 n.21.
We do so here.
IV.
For the foregoing reasons, we affirm the judgment of the
district court as to Gadsden’s convictions and sentence, and
remand with instructions to alter the restitution amount to
$1,100,000.00.
AFFIRMED IN PART AND
REMANDED WITH INSTRUCTIONS IN PART
16