United States v. Johnson, Thomas L. ( 2003 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 01-3918
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
THOMAS L. JOHNSON,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 99 CR 785-1—David H. Coar, Judge.
____________
ARGUED MAY 16, 2003—DECIDED OCTOBER 20, 2003
____________
Before FLAUM, Chief Judge, and EASTERBROOK, and
ROVNER, Circuit Judges.
ROVNER, Circuit Judge. A jury found Thomas Johnson
guilty of conspiring to produce and transfer fraudulent
social security cards. Two of those cards were later used by
associates of Johnson’s in various bank fraud schemes. The
district court found that Johnson was involved in the later
bank fraud schemes, but held that his participation in those
acts did not meet the definition of relevant conduct as set
forth in the United States Sentencing Commission Guide-
lines (U.S.S.G.). The district judge concluded, nevertheless,
that Johnson’s activities in and around the bank fraud
warranted a ten-level upward departure. Because we find
2 No. 01-3918
that the district court applied the incorrect definition of
relevant conduct, we remand for re-sentencing.
I.
A jury convicted Thomas Johnson of conspiring with an
employee of the Social Security Administration (SSA) to
produce and transfer unauthorized Social Security cards. As
part of the scheme, Johnson would call his co-conspirator at
the SSA, and she would set in motion the process of issuing
replacement cards and then mailing those cards to John-
son’s home address.
Of the approximately thirty replacement cards that
Johnson procured, two are most relevant to the current
appeal. One, issued in March 1997 in the name of “J. G.,”1
a child born in September 1992, wound up in the hands of
Eugene Harris. Another, issued in the name “R.C.,” a child
born in November 1995, went to Lamar Burks. We do not
know precisely how Harris and Burks obtained their
cards—whether Johnson sold them the cards, gave them
away, or provided them as a part of a conspiracy to commit
further offenses. Both Harris and Burks used their respec-
tive fraudulent social security cards to obtain Illinois state
identification cards and then to open bank accounts using
fraudulent identification. Using his J.G. identification card,
Harris opened an account at U.S. Bank in Tinley Park,
Illinois in the name of Hewitt & Associates. He gave John-
son’s home telephone number as the business number for
Hewitt & Associates. Burks opened two bank accounts
using his R.C. identification card. The first he opened at
First Suburban National Bank in Alsip, Illinois, where he
indicated in his account application that he was an accoun-
1
We have opted to use the initials of the minors in order to limit
further intrusion on their privacy.
No. 01-3918 3
tant with Hewitt & Associates, the same fraudulent
business name that Harris had used. Burks opened the
second account at Mutual Bank in Harvey in the name of
Brady USA Telemarketing, and listed R.C. as the signatory.
In May, 1997, shortly after both bank accounts had been
established, Johnson and Burks (the latter using the name
R.C.) traveled together to Atlantic City. While there, Burks
attempted to cash a $130,000 check payable to Brady USA
Telemarketing. Johnson and Burks were arrested in
Atlantic City. Police searching Johnson’s apartment found
a copy of the Cook County Vital Statistics form that Harris
and Burks had used in their fraud schemes as well as a
color copy of Burk’s driver’s license. Various phone records
linked Johnson to Harris and to one of the banks.
After a four day trial, a jury found Johnson guilty of one
count of conspiring to unlawfully produce and transfer
approximately thirty replacement social security cards and
two counts of unlawful production and transfer of the
replacement social security cards—one for the J.G. card and
the other for the R.C. card.
At the sentencing proceedings, the court found, by a
preponderance of evidence, that Johnson was involved in
the bank fraud schemes involving Harris and Burks. After
reviewing § 1B1.3 of the sentencing guidelines (U.S.S.G.
§ 1B1.3(2000))2, however, he concluded that Johnson’s
involvement in the bank fraud scheme did not constitute
relevant conduct as he interpreted the definition within the
guideline. Nevertheless, he concluded that Johnson’s
involvement in the bank fraud scheme should be accounted
for in his sentence, that the guidelines did not adequately
2
All references, unless otherwise noted are to the 2000 edition of
the Guidelines Manual. U.S.S.G. § 1B1.11(a) (“The court shall use
the Guidelines Manual in effect on the date that the defendant is
sentenced.”)
4 No. 01-3918
take into consideration Johnson’s conduct and that, conse-
quently, an upward departure would be the appropriate
way to account for Johnson’s participation in the bank fraud
scheme. The court departed upward by ten levels— increas-
ing Johnson’s sentence by the same amount it would have
been increased had the conduct been included as relevant
conduct. Johnson appeals his sentence.
II.
At sentencing and now on appeal, Johnson objected to the
ten-level upward departure. According to Johnson, once the
district court found that the acts of bank fraud did not
constitute relevant conduct, the judge could not then rely on
those same acts to make an upward departure. Such a back
door approach, he argues, undermines the Commission’s
determinations of when to hold a defendant accountable for
acts for which he has not been convicted. The Government’s
position, on the other hand, is that the guidelines allow and
indeed encourage just the type of departure made in this
case. In the alternative, the Government argues that the
district court misread the guideline on relevant conduct
and, had it read the guideline correctly, it would have found
that Johnson’s participation in Harris’ and Burks’ bank
fraud was indeed relevant conduct and could be accounted
for in his sentence in that manner. The resulting sentence,
the Government argues, would be the same under either
scenario.
We must begin, as the district court did, with guideline
§ 1B1.3 pertaining to relevant conduct. There are two
different parameters for relevant conduct within § 1B1.3.
The first defines relevant conduct as acts and omissions
“that occurred during the commission of the offense of
conviction, in preparation for that offense, or in the course
of attempting to avoid detection or responsibility for that
offense.” U.S.S.G. § 1B1.3(a)(1). The second, applicable to
No. 01-3918 5
groupable offenses, defines relevant conduct as acts or
omissions “that were part of the same course of conduct or
common scheme or plan as the offense of conviction.” Id. at
§ (a)(2). Our first order of business is to determine whether
the district court properly interpreted the relevant conduct
guideline and applied the correct definition. The Govern-
ment argues that the district court applied the first defini-
tion when it should have applied the second, and Johnson’s
counsel conceded in oral argument on appeal that he could
not defend the district court’s interpretation of the guide-
line. We review the district court’s interpretation of this
guideline de novo. U.S. v. Bahena-Guifarro, 324 F.3d 560,
562 (7th Cir. 2003).
As the commentary to the sentencing guidelines points
out, at sentencing a defendant may be held accountable for
more acts and omissions than just those for which he has
been found criminally liable. U.S.S.G. § 1B1.3, cmt. n.1. The
relevant conduct sentencing guideline provision directs a
court to sentence a defendant for uncharged conduct which
is germane to the offense for which he has been charged.
U.S. v. Jones, 313 F.3d 1019, 1023 (7th Cir. 2002). Guide-
line 1B1.3, which follows, enunciates the parameters for
determining when conduct is relevant to the charged
offense:
§1B1.3. Relevant Conduct (factors that determine the
guideline range)
(a) Chapters Two (Offense Conduct) and Three (Adjust-
ments). Unless otherwise specified, (i) the base offense
level where the guideline specifies more than one base
offense level, (ii) specific offense characteristics and (iii)
cross references in Chapter Two, and (iv) adjustments in
Chapter Three, shall be determined on the basis of the
following:
(1) (A) all acts and omissions committed, aided, abetted,
counseled, commanded, induced, procured, or willfully
caused by the defendant; and
6 No. 01-3918
(B) in the case of a jointly undertaken criminal activity (a
criminal plan, scheme, endeavor, or enterprise under-
taken by the defendant in concert with others, whether or
not charged as a conspiracy), all reasonably foreseeable
acts and omissions of others in furtherance of the jointly
undertaken criminal activity, that occurred during the
commission of the offense of conviction, in preparation for
that offense, or in the course of attempting to avoid
detection or responsibility for that offense;
(2) solely with respect to offenses of a character for which
§3D1.2(d) would require grouping of multiple counts, all
acts and omissions described in subdivisions (1)(A) and
(1)(B) above that were part of the same course of conduct
or common scheme or plan as the offense of conviction;
(3) all harm that resulted from the acts and omissions
specified in subsections (a)(1) and (a)(2) above, and all
harm that was the object of such acts and omissions; and
(4) any other information specified in the applicable
guideline.
(b) Chapters Four (Criminal History and Criminal
Livelihood) and Five (Determining the Sentence). Factors
in Chapters Four and Five that establish the guideline
range shall be determined on the basis of the conduct and
information specified in the respective guidelines.
At sentencing, the Government maintained that the bank
fraud constituted relevant conduct under § 1B1.3(a)(2). This
section forms the keystone of the debate in this case and for
this reason we parse its language carefully. Section (a)(2) of
this guideline applies to “offenses of a character for which
§ 3D1.2(d) would require grouping of multiple counts.”
U.S.S.G. § 1B1.3(a)(2). Section 3D1.2(d) requires grouping
of multiple counts when “the offense level is determined
largely on the basis of the total amount of harm or loss.”
U.S.S.G. § 3D1.2(d). Johnson was convicted of Social Se-
curity fraud and therefore his sentence fell under U.S.S.G.
No. 01-3918 7
§ 2F1.1, a sentencing guideline in which the offense level is
determined largely on the basis of the total amount of harm
or loss. U.S.S.G. § 2F1.1 (including a table that sets the
offense level based on the dollar amount of loss). There is no
question, therefore, that § 1B1.3(a)(2) is applicable in the
instant case.
Section 1B1.3(a)(2) then states that relevant conduct
includes “all acts and omissions described in subdivisions
(1)(A) and (1)(B) above that were part of the same course of
conduct or common scheme or plan as the offense of convic-
tion.” U.S.S.G. § 1B1.3(a)(2). The district court held that
section (a)(2)’s reference to sections (a)(1)(A) and (a)(1)(B)
also incorporated the trailing clause of the entire (a)(1)
section. (Tr. 10/12/01 at 82). In other words, he concluded
that in order to constitute relevant conduct, the conduct
must have occurred “during the commission of the offense
of conviction, in preparation for that offense, or in the
course of attempting to avoid detection or responsibility for
that offense.” Id.; § 1B1.3(a)(1). Because the bank fraud did
not occur during the commission of the social security fraud,
in preparation for that offense, or in the course of attempt-
ing to avoid detection or responsibility for the Social
Security fraud, the district court concluded that Johnson’s
actions did not constitute relevant conduct for purpose of
this guideline.
The district court’s reading of subsection (a)(2), however,
creates unnecessary confusion in the statute. Under this
interpretation, when faced with a groupable offense, a court
would not know whether relevant conduct consisted of
actions “that occurred during the commission of the offense
of conviction, in preparation for that offense, or in the
course of attempting to avoid detection or responsibility for
that offense” as described in the trailing clause of § (a)(1) or
whether relevant conduct included all actions “that were
part of the same course of conduct or common scheme or
plan as the offense of conviction,” as described in § (a)(2).
8 No. 01-3918
The confusion is readily resolved by our holding that the
reference to subsections (1)(A) and (1)(B) in U.S.S.G.
§ 1B1.3(a)(2) refers only to the subsections themselves and
not the trailing clause. In other words, in the context of a
groupable offense, when evaluating whether some action
constitutes relevant conduct, a court must look to see
whether the acts and omissions “were part of the same
course of conduct or common scheme or plan as the offense
of conviction.” U.S.S.G. § 1B1.3(a)(2).
The district court’s confusion was not entirely unwar-
ranted, as this court has not before explicitly held that the
trailing clause of § (a)(1) is not incorporated in § (a)(2). We
have noted before that the definition of relevant conduct
applicable to groupable offenses is the language of § (a)(2)
involving “the same course of conduct or common plan or
scheme” and not the language of (a)(1) involving activities
which occurred during the commission of, in preparation
for, or in the course of attempting to avoid detection or
responsibility for an offense. See e.g. U.S. v. Schaefer, 291
F.3d 932, 939, n.5 (7th Cir. 2002) (in the case of groupable
counts, § 1B1.3(a)(2) applies and includes as relevant
conduct “all acts or omissions . . . that were part of the same
course of conduct or common scheme or plan,” and not
1B1.3(a)(1)), U.S. v. Polichemi, 219 F.3d 698, 713 (7th Cir.
2000) (when sentencing for money laundering, a groupable
offense, a court must look to see whether a defendant’s
actions were part of the “same course of conduct or common
scheme or plan”).
That this is the correct interpretation also becomes clear
when looking at guideline 1B1.3 as a whole. Subsection
(a)(2) of the guideline specifically incorporates (a)(1)(A) and
(a)(1)(B) but says nothing about the trailing clause. In
contrast, subsection (a)(3) of the guideline refers to all of
(a)(1) and not merely subsections (a)(1)(A) and (a)(1)(B).
From this variation in the language, we must assume that
the Sentencing Commission meant to include the trailing
No. 01-3918 9
clause in subsection (a)(3) but not in subsection (a)(2). See
Barmes v. United States, 199 F.3d 386, 389 (7th Cir. 1999)
(“Different language in separate clauses in a statute
indicates Congress intended distinct meanings.”). Conse-
quently, the trailing clause of § (a)(1) is not applicable in
the case of a groupable offense like the one at issue here.
Subsection (a)(2) allows a court to consider a broader
range of conduct than does the trailing clause of (a)(1).
U.S.S.G. § 1B1.3, cmt. background. Nevertheless, it does not
open the door for a court to consider every act or omission
of the defendant no matter how unrelated. The commentary
instructs that “[f]or two or more offenses to constitute part
of a common scheme or plan, they must be substantially
connected to each other by at least one common factor, such
as common victims, common accomplices, common purpose,
or similar modus operandi.” Id. at n.9(A). In order to
constitute the same course of conduct, the offenses must be
sufficiently connected or related to each other as to
warrant the conclusion that they are part of a single
episode, spree, or ongoing series of offenses. Factors
that are appropriate to the determination of whether
offenses are sufficiently connected or related to each
other to be considered as part of the same course of
conduct include the degree of similarity of the offenses,
the regularity (repetitions) of the offenses, and the time
interval between the offenses.
Id. at n.9(B).
The district court judge did not consider any of these
factors (he need not have, given his interpretation—which
we now hold was in error—that the conduct had to have
occurred during the commission of the offense of conviction,
in preparation for that offense, or in the course of attempt-
ing to avoid detection or responsibility for that offense).
Whether uncharged offenses are part of the same course of
conduct or common plan or scheme as the offense of convic-
tion is a factual determination, see U.S. v. Acosta, 85 F.3d
10 No. 01-3918
275, 279 (7th Cir. 1996), and should, therefore, be made by
the district court. For this reason, we remand this case to
the district court with instructions to consider whether
Johnson’s involvement in Harris’ and Burks’ acts of bank
fraud was, for the purposes of determining Johnson’s
sentence, “relevant conduct” as defined by U.S.S.G.
§1B1.3(a)(2)—that is, whether it was part of the same
course of conduct or common scheme or plan as the Social
Security Fraud for which he was convicted.
As for the propriety of the upward departure, Johnson
urges us to hold that a district court may not make an
upward departure based upon acts or omissions that do not
constitute relevant conduct. Johnson’s concern is that the
district court was rejecting the guidelines’ limits on relevant
conduct and engaging in real offense sentencing.
The Sentencing Guidelines explain that, “[o]ne of the
most important questions for the Commission to decide was
whether to base sentences upon the actual conduct in which
the defendant engaged regardless of the charges for which
he was indicted or convicted (“real offense” sentencing), or
upon the conduct that constitutes the elements of the
offense for which the defendant was charged and of which
he was convicted (“charge offense” sentencing).” U.S.S.G.
ch.1, pt. A, 4(a). Having pondered the matter, the Commis-
sion rejected a pure real offense system and, instead,
selected a charge offense system with some elements of real
offense sentencing. Id. In short, where the Commission
intended for judges to consider actual conduct instead of
charged conduct, it made its intention clear within the
guidelines. The Sentencing Commission also designed a
sentencing scheme where departures would be “rare occur-
rences” used only for unusual cases outside the range of the
more typical offenses for which the guidelines were de-
signed. Id. ch.1, pt. A, 4(b). We are indeed wary of district
court sentences that intentionally or unintentionally
incorporate real offense sentencing where the Commission
No. 01-3918 11
intended to apply charge offense sentencing only. See U.S.
v. Rogers, 270 F.3d 1076, 1083 (7th Cir. 2001) (where the
guidelines limit a court to charge offense sentencing, those
limits must be respected).
Whether Johnson’s conduct involves an aggravating factor
“of a kind, or to a degree, not adequately taken into consid-
eration by the Sentencing Commission in formulating the
guidelines,” (18 U.S.C. § 3553(b); U.S.S.G. ch 1, pt. A, 4(b)),
is a question for another day. Because the district court
misinterpreted the guideline on relevant conduct, we need
not decide whether the departure was improper. Instead,
we vacate the sentence and remand to the district court to
apply the sentencing guidelines in a manner consistent
with this opinion.
VACATED AND REMANDED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—10-20-03