United States v. Kenneth Kennedy ( 2013 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 13a0131p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
X
Plaintiff-Appellee, -
UNITED STATES OF AMERICA,
-
-
-
Nos. 11-5904/6223
v.
,
>
-
-
KENNETH KENNEDY (11-5904) and ANN
Defendants-Appellants. N-
SCARBOROUGH (11-6223),
Appeal from the United States District Court
for the Middle District of Tennessee at Nashville.
No. 3:07-cr-263—William J. Haynes, Jr., District Judge.
Argued: April 23, 2013
Decided and Filed: May 10, 2013
Before: GILMAN, ROGERS, and SUTTON, Circuit Judges.
_________________
COUNSEL
ARGUED: Paul J. Bruno, Nashville, Tennessee, for Appellant in 11-5904. Rayburn
McGowan, Jr., Nashville, Tennessee, for Appellant in 11-6223. Cecil W. VanDevender,
UNITED STATES ATTORNEY’S OFFICE, Nashville, Tennessee, for Appellee
ON BRIEF: Paul J. Bruno, Nashville, Tennessee, for Appellant in 11-5904. Rayburn
McGowan, Jr., Nashville, Tennessee, for Appellant in 11-6223. Sandra G. Moses,
UNITED STATES ATTORNEY’S OFFICE, Nashville, Tennessee, for Appellee.
_________________
OPINION
_________________
RONALD LEE GILMAN, Circuit Judge. This is an appeal of the convictions
and sentences received by two participants in a multi-year scheme that defrauded dozens
of victims of over $3 million. Codefendants Kenneth Kennedy (K. Kennedy) and Ann
Scarborough were the husband and close friend, respectively, of the scheme’s principal
1
Nos. 11-5904/6223 United States v. Kennedy et al. Page 2
participant, Sheila Kennedy (S. Kennedy). The fraud consisted of soliciting money to
invest in S. Kennedy’s alleged real estate deals and in her proceedings to obtain an
inheritance purportedly worth hundreds of millions of dollars, each with the promise of
a lucrative return. But the real estate deals and the large inheritance, like the promised
returns, proved fictitious.
After a two-week trial, both K. Kennedy and Scarborough were convicted by a
jury on multiple counts of mail and wire fraud, and Scarborough was convicted on a
separate money-laundering count. The district court subsequently sentenced K. Kennedy
to 100 months of imprisonment and ordered him to pay more than $3 million in
restitution, and Scarborough was sentenced to 72 months of imprisonment and ordered
to pay more than $2.6 million in restitution. Both K. Kennedy and Scarborough argue
on appeal that (1) the government’s evidence was insufficient to sustain their
convictions, (2) the district court erred in denying K. Kennedy’s post-trial motions to
inspect a jury note and conduct jury interviews, and (3) the district court erroneously
applied various sentencing enhancements under the U.S. Sentencing Guidelines. For the
reasons set forth below, we AFFIRM the judgment of the district court.
I. BACKGROUND
A. Factual background
S. Kennedy and Scarborough first met in the early 1990s in the small art shop
that Scarborough operated in Hopkinsville, Kentucky. The two formed a company
called “ASK, LLC” in January 2005. Scarborough soon thereafter opened two checking
accounts in the company’s name, giving both herself and S. Kennedy signatory
authority. S. Kennedy already had her own business entity at that point, called “SEK,
LLC,” which Scarborough understood was involved in real estate investments.
Their joint scheme to obtain money on the pretense of making real estate
investments appears to have begun in 2005. Although the details varied, the pair’s
solicitations for money would follow a basic theme. The government’s brief captures
the essence of that theme: “S. Kennedy was a real-estate developer who, through her
Nos. 11-5904/6223 United States v. Kennedy et al. Page 3
connections, could learn of well-heeled companies that wanted to develop properties.
Thereafter, S. Kennedy would purchase land, and then re-sell it to the company for
several times the purchase price.” But Scarborough admitted that these purported real-
estate deals never existed. She had seen only one piece of land on which S. Kennedy
once possessed an “option,” and even that option Scarborough knew had previously
lapsed. Scarborough further admitted to an investigating government agent that she was
the one who came up with the idea of soliciting money based on a “land option,” but
claimed that the idea of promising investors a $25,000 return on a $5,000 investment
was S. Kennedy’s.
Using short-term promissory notes with substantial interest rates, Scarborough
convinced many of her friends and associates to invest in these fictitious real estate
deals. Most of the solicitations occurred in 2005 and 2006. Scarborough knew that,
contrary to her representations, these investors were in fact “investing in Sheila
Kennedy” rather than in real estate. When the promissory notes became due, K.
Kennedy, S. Kennedy, and Scarborough gave a variety of excuses for not having the
funds necessary to pay the notes, including that the IRS had seized the bank account, that
the government was “freezing” the money due to the large amounts involved and
because of heightened security after the 9/11 terrorist attacks, that the money was “tied
up” by a federal judge or local banks, and/or that the distribution of funds would be
delayed due to S. Kennedy’s serious illness. They also began assuring investors that the
investments were safe because, even if the real estate transactions did not work out,
everyone would be repaid from S. Kennedy’s pending inheritance.
But those assurances led only to further successful solicitations of money from
persons who had already invested in the fictitious real estate deals and from new
investors. Both K. Kennedy and Scarborough also sought money to facilitate S.
Kennedy’s accessing her purported inheritance. They told investors that the money was
needed to pay attorneys and back taxes, to satisfy an outstanding judgment against the
estate, or for other vague but somewhat plausible reasons. In fact, Scarborough was
using portions of the investors’ funds for her own personal benefit, paying off credit card
Nos. 11-5904/6223 United States v. Kennedy et al. Page 4
debt and loans. No investor received any return on his or her investment, and only one
person had any amount of principal returned—and that was only after he threatened to
swear out warrants against the Kennedys and Scarborough. A few investors received
items as collateral, such as a John Deere lawnmower, jewelry, guns, prints, and a coin
collection.
By early 2006, S. Kennedy had met a financial planner in Tennessee named
Philip Russell. He soon joined the scheme and began soliciting his clients and friends
to invest in S. Kennedy’s purported real estate deals, assuring them that he had vetted
S. Kennedy, that their investments were guaranteed, and that he had successfully
invested his own money with S. Kennedy. One friend and client of Russell, Deborah
Kondis, invested more than $1 million by checks and wire transfers. Some of these
investors received checks in the mail that purported to be investment returns, but all the
checks bounced.
S. Kennedy and Russell traveled together to New York City in June 2007 and
lived for several months in hotels there and in Atlantic City. Meanwhile, K. Kennedy
remained in Kentucky soliciting more money, which he explained would go toward
getting S. Kennedy’s inheritance money released, toward getting money distributed from
the real estate transactions, or toward paying for S. Kennedy’s medical care and hospital
stays in the northeast (the latter payments supposedly benefitting the investors by
allowing S. Kennedy to continue the pursuit of the inheritance and real estate money).
K. Kennedy typically cashed the checks that he received from these solicitations and
deposited them into an account belonging to Russell, who would then use the funds with
S. Kennedy for personal spending. K. Kennedy also prepared and transmitted purported
legal documents related to the investment scheme and sent packages of promissory notes
to S. Kennedy.
Despite the indictment of S. Kennedy and Russell in December of 2007 for their
roles in this scheme, K. Kennedy and Scarborough continued to solicit funds from
victims under the pretense of getting S. Kennedy’s inheritance money released and
distributed to all investors. K. Kennedy also assisted S. Kennedy, who was released
Nos. 11-5904/6223 United States v. Kennedy et al. Page 5
pending trial, in purchasing two new vehicles with checks from an ASK, LLC account,
which checks were returned for insufficient funds. He also assisted her in initiating the
purchase of a $1.15 million home and with obtaining checks in their names that listed
the not-yet-purchased home as their address. The transaction never closed because no
funds were in fact available for the purchase.
B. Procedural background
In September 2010, a grand jury issued its fourth superseding indictment
charging K. Kennedy and Scarborough with seven counts of wire fraud, in violation of
18 U.S.C. § 1343 (Counts One through Seven), for transactions occurring between
October 2005 and July 2006, and with five counts of mail fraud, in violation of 18
U.S.C. § 1341 (Counts Eight through Twelve), for mailings that occurred in mid-April
2007. Scarborough alone was indicted on one count of money laundering, in violation
of 18 U.S.C. § 1957 (Count Twenty), for negotiating a $25,000 check for $20,000 in
cash and depositing the remaining funds into two unspecified bank accounts. The two
were tried together in a two-week jury trial that ended in October 2010. Arguing that
the evidence presented was insufficient to convict them of the crimes charged, they both
moved for an acquittal at the close of the government’s proof pursuant to Rule 29 of the
Federal Rules of Criminal Procedure. The district court denied both motions.
At the close of all the proof, the district court submitted the case to the jury with
instructions that any written communication to the court during the course of
deliberations “should never state or specify the vote of the jury at the time.” But the jury
nonetheless sent a note during its deliberations stating that a specific number of jurors
intended “not to vote guilty.” The court informed counsel that it had received a jury note
indicating the vote count, but the court did not reveal what that count was. With no
objection from either defendant, the court called the jury back and issued an Allen
charge, see Allen v. United States, 164 U.S. 492, 501-02 (1896), using Sixth Circuit
Pattern Instruction 9.04.
The jury returned a verdict later that same day, convicting K. Kennedy on Counts
Five through Twelve and convicting Scarborough on Counts One through Seven and on
Nos. 11-5904/6223 United States v. Kennedy et al. Page 6
Count Twenty. In other words, K. Kennedy was convicted on two of the wire-fraud
counts and on all of the mail-fraud counts, whereas Scarborough was convicted only on
the wire-fraud and money-laundering counts. K. Kennedy filed motions a week later to
review the jury note in its entirety and for approval to interview the jurors, both of which
requests were denied.
Both K. Kennedy and Scarborough objected at their respective sentencing
hearings to the district court’s calculations of the number of victims and amount of loss
for which each defendant was responsible. The court found that they were responsible
for the foreseeable consequences of the other actors participating in the scheme and
imposed sentencing enhancements for losses in excess of $2.5 million and for an offense
involving more than 50 victims. It also found that they both had used sophisticated
means during the course of the scheme, which subjected them to another sentencing
enhancement. Finally, Scarborough received an obstruction-of-justice sentencing
enhancement for giving what the court concluded was perjured testimony at trial. They
have each timely appealed.
II. ANALYSIS
A. Standards of review
Several standards of review apply to the issues in this case. First, the standard
of review on appeal for an insufficient-evidence challenge is “whether, after viewing the
evidence in the light most favorable to the prosecution, any rational trier of fact could
have found the essential elements of the crime beyond a reasonable doubt.” Jackson v.
Virginia, 443 U.S. 307, 319 (1979) (emphasis in original). But that standard changes
when the defendant fails to renew a Rule 29 motion “at the close of all evidence.”
United States v. Swidan, 888 F.2d 1076, 1080 (6th Cir. 1989) (internal quotation marks
omitted) (emphasis in original). Under those circumstances, the defendant “forfeit[s] his
right to challenge the sufficiency of the evidence” unless the record reveals a “manifest
miscarriage of justice.” Id. (internal quotation marks omitted).
Nos. 11-5904/6223 United States v. Kennedy et al. Page 7
Next, a district court’s findings of fact for the purpose of calculating a sentencing
range under the Guidelines are reviewed under the clear-error standard. United States
v. Hamilton, 263 F.3d 645, 651 (6th Cir. 2001). But “whether those facts as determined
by the district court warrant the application of a particular guideline provision is purely
a legal question and is reviewed de novo by this court.” United States v. Triana,
468 F.3d 308, 321 (6th Cir. 2006) (internal quotation marks omitted). Finally, we review
de novo the denial of a post-trial motion regarding a purely legal issue, see United States
v. Al-Cholan, 610 F.3d 945, 950 (6th Cir. 2010) (reviewing de novo post-trial motions
raising purely legal issues of entrapment and manufactured jurisdiction), and review the
district court’s determination of the proceedings necessary to discover alleged jury
misconduct under the abuse-of-discretion standard, United States v. Griffith, 17 F.3d
865, 880 (6th Cir. 1994).
B. Sufficiency of the evidence
K. Kennedy and Scarborough moved for judgments of acquittal at the close of
the government’s proof, arguing that the evidence presented was insufficient to sustain
their convictions. See Fed. R. Crim. P. 29(a). The district court considered and denied
the motions, and neither defendant renewed his or her respective motion at the close of
all the evidence, see Swidan, 888 F.2d at 1080, or within 14 days after their guilty
verdicts, see Fed. R. Crim. P. 29(c)(1). They have thus failed to preserve their rights to
challenge the sufficiency of the evidence in the absence of a miscarriage of justice. See
Swidan, 888 F.2d at 1080; see also United States v. Faymore, 736 F.2d 328, 334 (6th
Cir. 1984) (holding that the defendant’s insufficient-evidence claim was barred by his
failure to renew his Rule 29 motion at the close of all the evidence because there was no
manifest miscarriage of justice). Both K. Kennedy and Scarborough conceded at oral
argument that this highly deferential standard of review applies in the present case, and
we have found no “manifest miscarriage of justice” in the record to warrant reversal of
either defendant’s convictions. See Swidan, 888 F.2d at 1080.
And even if K. Kennedy and Scarborough were entitled to a review of their
insufficient-evidence claims under the Jackson standard, they have failed to show that,
Nos. 11-5904/6223 United States v. Kennedy et al. Page 8
viewing the evidence in the light most favorable to the government, a rational trier of
fact could not have found the elements of each crime beyond a reasonable doubt. See
Jackson, 443 U.S. at 319. A wire-fraud conviction requires proof that “the defendant
devised or willfully participated in a scheme to defraud[,] . . . used or caused to be used
an interstate wire communication in furtherance of the scheme[,] . . . and . . . intended
to deprive a victim of money or property.” United States v. Faulkenberry, 614 F.3d 573,
581 (6th Cir. 2010) (internal quotation marks omitted). Mail fraud requires proof of a
defendant’s “(1) devising or intending to devise a scheme to defraud (or to perform
specified fraudulent acts); (2) involving a use of the mails; and (3) for the purpose of
executing the scheme or attempting to do so.” United States v. Frost, 125 F.3d 346, 354
(6th Cir. 1997). This court has interpreted the mail-fraud and wire-fraud statutes as
having essentially the same elements, except for the use of the mails versus the wires.
United States v. Bibby, 752 F.2d 1116, 1126 (6th Cir. 1985).
K. Kennedy contends that he solicited “loans” rather than “investments,” and that
he neither was aware of a scheme nor had the intent to defraud anyone. His first
contention provides no support for his insufficient-evidence claim because he fails to
show any legally material distinction between the two terms. A victim can just as easily
be deprived of money or property through a fraudulent loan as through a fraudulent
investment.
His second contention, which amounts to a “good-faith” argument, fares no
better. The government introduced witness testimony and bank records from which the
jury could have concluded that K. Kennedy was aware of the scheme and was
intentionally furthering it through his many solicitations, the transfer of victim funds, the
preparation and transmission of purported legal documents, and the mailing of
promissory notes. See, e.g., United States v. Goodpaster, 769 F.2d 374, 378 (6th Cir.
1985) (describing circumstantial evidence from which a jury could infer the requisite
intent for mail fraud). Moreover, the “belief or faith that a venture will eventually
succeed no matter how impractical or visionary the venture may be” is no defense to a
charge of fraud. United States v. Stull, 743 F.2d 439, 446 (6th Cir. 1984).
Nos. 11-5904/6223 United States v. Kennedy et al. Page 9
At the very least, a rational juror could have found that K. Kennedy’s material
misstatements to victims regarding the existence of an inheritance purportedly due his
wife were reckless. He had never seen any document evidencing such an inheritance,
and he knew that his wife had been sued in the past for making false representations
regarding an alleged inheritance. The government met the mail- and wire-fraud statutes’
intent requirements through proof that K. Kennedy was reckless in his disregard for the
truth of the statements that he made to victims to obtain their money. See United States
v. DeSantis, 134 F.3d 760, 764 (6th Cir. 1998) (holding that the prosecution may
establish the intent element of mail fraud by proving that the defendant was reckless);
see also United States v. Turner, 22 F. App’x 404, 410 (6th Cir. 2001) (noting that the
government’s evidence in a mail-fraud case met the intent requirement because it
supported a jury finding that the defendant “deliberately ignored a high probability” that
the securities form he submitted contained material false information).
Scarborough’s good-faith defense—that she “believed every word from S.
Kennedy”—likewise fails. She admitted to the investigating agents that obtaining
money through purported real estate deals was her idea and that she continued to mislead
current and potential investors even after she knew that S. Kennedy’s one “land option”
had lapsed. Moreover, Scarborough’s contention that she did not obtain the money for
her own benefit is irrelevant because obtaining money for one’s personal use is not an
element of wire or mail fraud. See Faulkenberry, 614 F.3d at 581 (listing the elements
of wire fraud); Frost, 125 F.3d at 354 (listing the elements of mail fraud). This
contention is also contradicted by her statements to the investigating agents that she used
a portion of the victim funds to make personal credit-card and loan payments.
In sum, even if K. Kennedy and Scarborough had fully preserved their
insufficient-evidence challenges, we would still conclude that the evidence was
sufficient to establish that they were both willful participants in a scheme to defraud and
that the use of the mails and wires by the other participants were foreseeable and in
furtherance of the scheme. See, e.g., Frost, 125 F.3d at 362 (“[A] mailing may support
a mail fraud conviction as long as the defendant knew that use of the mails would follow
Nos. 11-5904/6223 United States v. Kennedy et al. Page 10
in the ordinary course of business, or that a reasonable person would have foreseen use
of the mails.”). We therefore reject their insufficient-evidence claims.
C. Reviewing the jury note and interviewing jurors
K. Kennedy separately challenges the district court’s denial of his post-trial
motions to review the note sent by the jury and to interview individual jurors. He
contends that the denial prejudiced him because the information that he anticipated
gathering from the note and the juror interviews would likely show that the jury reached
an impermissible “compromise verdict.” Scarborough echoes this argument in her brief,
but she did not join in the motions below or file her own motions. Her argument is
therefore forfeited on these two issues because she raised them for the first time on
appeal. See United States v. Ellison, 462 F.3d 557, 560 (6th Cir. 2006) (noting this
court’s general rule that arguments not first raised in the district court are forfeited).
1. Jury note
With regard to the note from the jury, K. Kennedy argues that Rule 43 of the
Federal Rules of Criminal Procedure, which codifies a defendant’s right under the Sixth
Amendment’s Confrontation Clause and the Fifth Amendment’s Due Process Clause to
be present at all critical stages of the trial, United States v. Taylor, 489 F. App’x 34, 43
(6th Cir. 2012), confers a right to have access to all communications between the judge
and the jury. Although numerous courts have indeed recognized a defendant’s right to
be made aware of such communications, see, e.g., United States v. Mejia, 356 F.3d 470,
474 (2d Cir. 2004), they have likewise recognized that courts are not required to reveal
vote counts, see, e.g., United States v. Henry, 325 F.3d 93, 106 (2d Cir. 2003) (noting
that the district court should have informed counsel that it was redacting the vote count
from a jury note, but that the failure to reveal the vote count itself was not an abuse of
discretion); United States v. Warren, 594 F.2d 1046, 1049 (5th Cir. 1979) (“The district
court did not err in failing to disclose the vote of the jury.”).
The First Circuit’s decision in United States v. Maraj, 947 F.2d 520 (1st Cir.
1991), lends some support to K. Kennedy’s argument, but ultimately demonstrates that
Nos. 11-5904/6223 United States v. Kennedy et al. Page 11
the district court’s handling of the jury note in the present case was proper. According
to the First Circuit, the district court erred when it disclosed the jury’s request for a copy
of a sworn statement but omitted a portion of the jury’s note that stated: “There is only
one person who has a doubt as to this.” Id. at 525-26. The parties were not informed
that any portion of the note had been omitted. Id. at 525.
In contrast, the district court in the present case told counsel that the jury had,
contrary to the court’s instructions, revealed a vote split. This gave K. Kennedy the
immediate opportunity to argue that he should be told the vote count so that he could
make an informed objection to the court’s proposed Allen charge. But he failed to do so.
Learning that there was a vote split also afforded K. Kennedy (and Scarborough) the
chance to seek a plea bargain with the government.
Moreover, Maraj relied in part on a Second Circuit en banc decision, id. at 526
(citing United States v. Robinson, 560 F.2d 507, 516 (2d Cir. 1977)), in which the
majority found that “there was little or no need for [the district court] to consult with
counsel concerning [the court’s] response” to a jury note that revealed a vote split.
Robinson, 560 F.2d at 516. And even the dissenting judges in Robinson noted that the
district court “should have revealed to counsel the substance of the juror’s note, without
disclosing the individual juror’s name or the jury vote.” Id. at 524 (Oakes, J.,
dissenting) (emphasis added). That is exactly what the district court did in the present
case.
In sum, K. Kennedy cites no authority that unequivocally supports his
proposition that he had the right to know the vote count revealed in the jury note. And
even in Maraj, his best supporting case, the error was found to be “harmless beyond any
reasonable doubt.” 947 F.2d at 526. We thus follow the precedent of the Second and
Fifth Circuits in concluding that the district court’s denial of K. Kennedy’s motion to
review the entire jury note was not erroneous.
Nos. 11-5904/6223 United States v. Kennedy et al. Page 12
2. Juror interviews
K. Kennedy also sought permission from the district court to interview jurors “for
the sole purpose of determining whether a compromise verdict was returned in this
case.” He speculates that the convictions on some counts but acquittals on others
indicate that the jury was not unanimous regarding any of the counts. But even if his
speculation is accurate, it would provide no basis for interviewing the jurors because
juror testimony with regard to a verdict’s validity is limited to whether “extraneous
prejudicial information was improperly brought to the jury’s attention; an outside
influence was improperly brought to bear on any juror; or a mistake was made in
entering the verdict on the verdict form.” Fed. R. Evid. 606(b).
K. Kennedy’s theory of a compromise verdict fits none of these exceptions.
Rather, it is an allegation of improper “internal influence,” which this court has held
cannot provide a basis for post-verdict juror interrogation. See United States v. Logan,
250 F.3d 350, 380-81 (6th Cir. 2001) (holding that juror interviews were not permissible
where the alleged jury misconduct of premature deliberations constituted internal
influence); Helm v. Bunch, No. 88-5120, 869 F.2d 1490, 1989 WL 20403, at *7 (6th Cir.
March 8, 1989) (unpublished) (concluding that a juror’s affidavit about the jury reaching
a compromise verdict was “clearly prohibited by Rule 606(b)”).
D. Sentencing enhancements
1. Amount of loss and number of victims
We now turn to the challenged enhancements under the U.S. Sentencing
Guidelines. K. Kennedy and Scarborough both object to the amount-of-loss and
number-of-victim calculations that the district court adopted for the purpose of
determining their sentences. Scarborough argues that the court should have held her
responsible for only the losses of which she was specifically aware, and both she and K.
Kennedy contend that the jury’s verdict limits the scope of the losses that the court may
attribute to them. But the Guidelines provide that a defendant is responsible for “all
reasonably foreseeable acts and omissions of others in furtherance of the jointly
Nos. 11-5904/6223 United States v. Kennedy et al. Page 13
undertaken criminal activity,” whether or not that activity is charged as a conspiracy.
U.S.S.G. § 1B1.3(a)(1)(B). A district court must make “particularized findings with
respect to both the scope of the defendant’s agreement and the foreseeability of his co-
conspirators’ conduct before holding the defendant accountable for the scope of the
entire conspiracy.” United States v. Campbell, 279 F.3d 392, 400 (6th Cir. 2002)
(emphases omitted).
The district court made such findings with respect to both K. Kennedy and
Scarborough. Neither has pointed to any facts in the record showing that the district
court’s findings were clearly erroneous. See United States v. Hamilton, 263 F.3d 645,
651 (6th Cir. 2001) (explaining that findings of fact from a sentencing hearing will not
be set aside unless clearly erroneous). Nor does either one offer a convincing argument
for why any losses in the course of the scheme were outside the scope of his or her
agreement to participate in the scheme or were not foreseeable. See Campbell, 279 F.3d
at 400. Both contend that they were unaware of Russell’s activities and thus should not
be held responsible for losses suffered by the victims that Russell solicited. But the
government’s evidence showed that Scarborough deposited into the ASK, LLC bank
account one check from a Russell victim and another check written by Russell himself.
The evidence also showed that K. Kennedy received money from the ASK, LLC account
and that he deposited some of the funds that he solicited from other victims into an
account held by Russell, indicating his awareness of (and his benefitting from) Russell’s
participation in the scheme.
Both K. Kennedy and Scarborough fully participated in the fundamental aspect
of the scheme—convincing victims to part with their money using promises of
guaranteed (and typically exorbitant) returns from fictitious real estate deals or the
inheritance purportedly due S. Kennedy. This was not a case in which the defendants
agreed to play only a minor role in a larger scheme. The district court’s specific findings
were sufficient to apply sentencing enhancements for both of them based on their
responsibility for more than $2.5 million in losses from more than 50 victims. See
U.S.S.G. § 2B1.1(b)(1)(J) and § 2B1.1(b)(2)(B).
Nos. 11-5904/6223 United States v. Kennedy et al. Page 14
2. Sophisticated means
K. Kennedy and Scarborough next argue that the district court erred in applying
a two-level enhancement for the use of sophisticated means, see U.S.S.G.
§ 2B1.1(b)(10)(C), because their specific conduct, according to them, was not
“especially complex or especially intricate.” To the contrary, the district court identified
conduct by each of them that it found was “sophisticated.” K. Kennedy was directly
involved in wire transactions, preparing various sham legal documents, handling
promissory notes, and restructuring deposits to avoid bank-reporting requirements.
Scarborough solicited numerous investors by the use of promissory notes and based her
solicitations on purported interstate real estate transactions. The district court’s
conclusion that such activities constituted “sophisticated means” is not clearly erroneous.
3. Obstruction of justice
Finally, the district court applied a two-level enhancement for obstruction of
justice, see U.S.S.G. § 3C1.1, in its calculation of the Guidelines range for
Scarborough’s sentence. This enhancement is properly applied when the court finds that
the defendant committed perjury in relation to the offense of conviction. U.S.S.G.
§ 3C1.1 cmt. n.4(B). “[T]he court must 1) identify those particular portions of
defendant’s testimony that it considers to be perjurious; and 2) either make a specific
finding for each element of perjury or, at least, make a finding that encompasses all of
the factual predicates for a finding of perjury.” United States v. Boring, 557 F.3d 707,
712 (6th Cir. 2009) (internal quotation marks omitted). Those elements are “false
testimony concerning a material matter with the willful intent to provide false testimony,
rather than as a result of confusion, mistake, or faulty memory.” Id. (internal quotation
marks omitted).
Scarborough argues that what she said at trial was exactly the same as what she
said in her interview with the investigating agents. But the record, as the district court
noted, indicates otherwise. Scarborough testified that she believed that the real estate
transactions she was offering were legitimate and that she did not suggest the land-
investment scheme to S. Kennedy. This testimony contradicted her statements to the
Nos. 11-5904/6223 United States v. Kennedy et al. Page 15
investigating agents that “she came up with the idea of [a] land option because she did
not think people would loan them [S. Kennedy and Scarborough] money,” and that “she
knew that she misled investors by telling them that they were investing in a land option.”
Scarborough’s false testimony was material because it went to the heart of her intent to
defraud. And her testimony did not appear to be the result of confusion, mistake, or
faulty memory. See Boring, 557 F.3d at 712. The court’s application of the obstruction-
of-justice enhancement was thus appropriate.
III. CONCLUSION
For all of the reasons set forth above, we AFFIRM the judgment of the district
court.