United States v. Delyle Augare , 800 F.3d 1173 ( 2015 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 14-30131
Plaintiff-Appellee,
D.C. No.
v. 4:13-cr-00065-
BMM-2
DELYLE SHANNY AUGARE,
Defendant-Appellant.
OPINION
Appeal from the United States District Court
for the District of Montana
Brian M. Morris, District Judge, Presiding
Submitted August 31, 2015*
Seattle, Washington
Filed September 9, 2015
Before: Alfred T. Goodwin, Ronald M. Gould,
and Sandra S. Ikuta, Circuit Judges.
Opinion by Judge Gould
*
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
2 UNITED STATES V. AUGARE
SUMMARY**
Criminal Law
The panel affirmed a sentence in a case in which the
district court applied a “sophisticated means” enhancement
under U.S.S.G. § 2B1.1(b)(10)(C) following the defendant’s
guilty plea to conspiracy to defraud the United States, False
Claims Act conspiracy, theft from an Indian tribe receiving
federal funding, and federal income tax evasion.
The panel held that the district court did not abuse its
discretion when it applied the “sophisticated means”
enhancement to the defendant’s offense conduct. The panel
explained that the coordinated and repetitive steps that the
defendant took to transfer money from the Po’Ka project to
his personal bank account are comparable in complexity and
sophistication to the schemes held to warrant the
enhancement in both this court’s precedent and persuasive
authority from other circuits.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
UNITED STATES V. AUGARE 3
COUNSEL
Colin M. Stephens, Smith & Stephens, P.C., Missoula,
Montana, for Defendant-Appellant.
Michael W. Cotter, United States Attorney, and Carl E.
Rostad, Assistant United States Attorney, United States
Attorney’s Office, Great Falls, Montana, for Plaintiff-
Appellee.
OPINION
GOULD, Circuit Judge:
We consider under what circumstances a “sophisticated
means” sentencing enhancement may be given under
U.S.S.G. § 2B1.1(b)(10)(C).
Delyle Shanny Augare appeals his sentence following his
guilty plea to four counts: (1) conspiracy to defraud the
United States, in violation of 18 U.S.C. § 372; (2) False
Claims Act conspiracy, in violation of 18 U.S.C. § 286;
(3) theft from an Indian tribe receiving federal funding, in
violation of 18 U.S.C. § 666(a)(1)(A); and (4) federal income
tax evasion, in violation of 26 U.S.C. § 7201.
Specifically, Augare challenges the district court’s
application of the “sophisticated means” sentencing
enhancement under U.S.S.G. § 2B1.1(b)(10)(C). We review
a district court’s application of the Sentencing Guidelines to
4 UNITED STATES V. AUGARE
the facts for abuse of discretion.1 United States v. Jennings,
711 F.3d 1144, 1146 (9th Cir. 2013). For the reasons that
follow, we conclude that the district court did not abuse its
discretion when it applied the “sophisticated means”
enhancement to Augare’s offense conduct.
Augare argues that “[n]either the fraud perpetrated
through [the Po’Ka Project] nor Augare’s conduct involve[d]
sophisticated means,” and asks us to vacate his sentence and
remand for resentencing without the “sophisticated means”
enhancement under § 2B1.1(b)(10)(C). Augare contends that
because Application Note 9(B) to § 2B1.1(b)(10)(C) defines
“sophisticated means” as an “especially complex or
especially intricate offense conduct pertaining to the
execution or concealment of an offense,” the “sophisticated
means” enhancement does not apply to his conduct, which he
asserts consisted of simple lies, “penny ante” fraud involving
improper use of fuel cards, and transferring money, to which
he was not entitled, into and out of a bank account that he
controlled jointly with the Project’s co-director.
Augare asks us to parse the language of the “sophisticated
means” enhancement under § 2B1.1 in the same way we
parsed the “sophisticated means” enhancement for smuggling
under § 2T3.1(b)(1) in United States v. Montano, 250 F.3d
709 (9th Cir. 2001). There, we reversed the district court’s
application of a “sophisticated means” enhancement under
§ 2T3.1(b)(1), because the defendants’ activities were “all
inherent in the activity of smuggling[, which], by its nature,
1
We reject Augare’s assertion that our review is de novo here. As the
government contends, the district court “merely [applied] the facts to the
guidelines” when it sentenced Augare. It did not interpret the meaning of
the guidelines.
UNITED STATES V. AUGARE 5
involves active steps to avoid detection.” Id. at 715. Augare
contends that “[a]ll of this activity was necessary to
perpetrate the scheme, nothing more. Had the money
remained in the [Project’s] fund, no crime would have
occurred.” Augare also contrasts his use of the charity’s bank
account with what he contends are more egregious methods
such as setting up shell corporations or using foreign tax
havens, urging that “[t]he simple and common practice of
moving money from one bank to another is not only
unsophisticated, it is common practice in the modern global
economy.” We disagree with Augare’s characterization of
his offense conduct, and more precisely it was not an abuse
of discretion for the district court to disagree.
Augare’s comparison of his conduct to the offense
conduct in Montano is misplaced. The “sophisticated means”
enhancement that applied there was specific to the offense
conduct of smuggling, not the type of financial fraud involved
here. Also, the defendant in Montano simply used a bank
account to pay others to do his dirty work—i.e., physical
smuggling of Mexican pharmaceuticals into the United
States. See id. at 711. Here, Augare sent money from the
Po’Ka Project to one of his co-defendants for services
allegedly rendered to the Po’Ka Project. That co-defendant
then “donated” half of the money back to a children’s charity
using checks that were shipped to the Po’Ka Project’s offices
and closely guarded by the Project’s directors, including
Augare. Then Augare, who controlled the children’s
charity’s bank account, withdrew the “donated” money and
deposited it into his personal bank account.
Under our precedent on “sophisticated means”
enhancements that apply to financial fraud offense conduct,
Augare’s conduct here supports the district court’s
6 UNITED STATES V. AUGARE
application of the “sophisticated means” enhancement under
§ 2B1.1(b)(10)(C). See United States v. Tanke, 743 F.3d
1296, 1307 (9th Cir. 2014) (noting that while the defendant
did not use corporate shells or offshore financial accounts as
mentioned in Application Note 9(B), the “sophisticated
means” enhancement under § 2B1.1(b)(10)(C) was justified
because he engaged in “dozens of various acts,” including
falsifying invoices and checks, to conceal payments);
Jennings, 711 F.3d at 1145 (upholding a “sophisticated
means” enhancement for using a bank account with a
deceptive name to conceal income and stating that conduct
need not involve “highly complex schemes or exhibit
exceptional brilliance” to warrant the enhancement); see also
United States v. Horob, 735 F.3d 866, 872 (9th Cir. 2013)
(per curiam) (affirming application of the “sophisticated
means” enhancement under § 2B1.1(b)(10)(C), in part,
because the defendant falsified documents and left a
“complicated and fabricated” paper trail that made it hard to
uncover his fraud).
Applying the “sophisticated means” enhancement under
§ 2B1.1(b)(10)(C) to Augare’s conduct is also consistent with
precedents from other federal circuits. See United States v.
Ghertler, 605 F.3d 1256, 1267–68 (11th Cir. 2010) (holding
that although some of the defendant’s fraudulent activities
were not sophisticated, the “totality of the scheme” qualified
for the “sophisticated means” enhancement, as the defendant
had conducted extensive research to identify his targets, used
unwitting couriers to deliver the proceeds of his fraud, forged
company documents, and had funds transferred to the
accounts of unwitting third parties); see also United States v.
Jackson, 346 F.3d 22, 25 (2d Cir. 2003) (holding that even if
each step in an identity theft scheme is not elaborate, a
“sophisticated means” enhancement is warranted if the steps
UNITED STATES V. AUGARE 7
in the scheme are “linked together so that [the defendant can]
perceive and exploit different vulnerabilities in different
systems in a coordinated way”); United States v. Finck,
407 F.3d 908, 915 (8th Cir. 2005) (“While [the defendant] did
not use sophisticated means to conceal his criminal activity,
we find that he used sophisticated means to execute his
scheme. Repetitive and coordinated conduct, though no one
step is particularly complicated, can be a sophisticated
scheme.”).
Here, the coordinated and repetitive steps that Augare
took to transfer money from the Po’Ka project to his personal
bank account are comparable in complexity and
sophistication to the schemes held to warrant a “sophisticated
means” enhancement in both our precedent and persuasive
authority from other circuits reviewed above. The district
court did not abuse its discretion by applying the
“sophisticated means” enhancement under § 2B1.1(b)(10)(C)
to Augare’s offense conduct.
AFFIRMED.