United States v. Kenneth J. Enrico

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 14-15447
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D.C. Docket No. 1:13-cr-00048-RWS-ECS-1
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
KENNETH J. ENRICO,
Defendant - Appellant.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(February 17, 2016)
Before WILSON, WILLIAM PRYOR, and GILMAN, ∗ Circuit Judges.
WILSON, Circuit Judge:
∗
Honorable Ronald Lee Gilman, United States Circuit Judge for the Sixth Circuit, sitting by
designation.
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Defendant-appellant Kenneth J. Enrico was convicted on one count of
conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. §§ 1341, 1343,
and 1349; three counts of mail fraud, in violation of 18 U.S.C. § 1341; and thirteen
counts of wire fraud, in violation of 18 U.S.C. § 1343. These convictions stemmed
from his involvement in a fraudulent loan scheme, in which he charged prospective
borrowers an application fee to obtain a mortgage from a private lender, knowing
the loan would never be financed. Enrico’s conviction of conspiracy rested on
circumstantial evidence that he worked with a second person—“Joe”—in
perpetrating his scheme.
The district court sentenced Enrico to 144-months imprisonment, with three
years of supervised release to follow, and ordered him to pay $1,079,150 in
restitution. On appeal, Enrico argues that (1) the district court improperly denied a
motion for mistrial based on extrinsic influence on the jury; (2) there was
insufficient evidence to support his conviction of conspiracy; and (3) his sentence
is both procedurally and substantively unreasonable. After a thorough review of
the parties’ briefs and having had the benefit of oral argument, we conclude that
the district court committed reversible error only as to the entry of a two-level
enhancement under § 3B1.1(c) of the United States Sentencing Guidelines (the
Guidelines). Therefore, we affirm in part, reverse in part, and remand for
resentencing consistent with this opinion.
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I
Enrico’s first challenge on appeal pertains to the district court’s denial of his
motion for mistrial, which Enrico raised after his attorney was subjected to a pat-
down search in the vestibule of the courthouse, in plain view of two jurors standing
in the security line. Counsel argued that the procedure was prejudicial to the jury
because Assistant United States Attorneys have security badges that permit them to
enter the building without further security screening, while defense attorneys do
not, and the pat-down created an adverse inference of criminality and overall
untrustworthiness. The district court denied the motion without investigating or
questioning the jury.
We review for an abuse of discretion the denial of a motion for mistrial
based on purported extrinsic influence on the jury. United States v. Alexander, 782
F.3d 1251, 1256 (11th Cir. 2015).
In a criminal case, any private communication, contact,
or tampering directly or indirectly, with a juror during a
trial about the matter pending before the jury is . . .
deemed presumptively prejudicial, if not made in
pursuance of known rules of the court and the
instructions and directions of the court made during the
trial, with full knowledge of the parties.
United States v. Khanani, 502 F.3d 1281, 1291 (11th Cir. 2007) (alteration in
original) (internal quotation marks omitted). “A juror’s exposure to extraneous
material or influence requires a new trial if the exposure ‘poses a reasonable
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possibility of prejudice to the defendant.’” Id. (quoting United States v. Rowe, 906
F.2d 654, 656 (11th Cir. 1990) (emphasis omitted)). The defendant bears the
burden of showing that extrinsic contact with the jury actually occurred, triggering
a presumption of prejudice; the burden then shifts to the government to show that
the contact was harmless. See Boyd v. Allen, 592 F.3d 1274, 1305 (11th Cir.
2010).
We hold that the district court did not abuse its discretion in determining that
Enrico failed to make a colorable showing of extrinsic contact that undermines the
presumption of jury impartiality. Although the United States Marshals Service
perhaps could have been more discreet by offering a private pat-down search, that
does not mean their procedures constituted an extrinsic contact with the jury.
There were no verbal communications alleged, and participating in a security
screening is not expressive conduct. Cf. Khanani, 502 F.3d at 1291–92.
Moreover, the screening procedure simply did not relate to the charges or even to
the courtroom procedure involved. See id. It was a mundane requirement of all
audience members, jurors, and defense counsel who entered the courthouse. That
two jurors witnessed defense counsel go through standard security procedures does
not create a “reasonable possibility of prejudice to the defendant.” See United
States v. Ronda, 455 F.3d 1273, 1299 (11th Cir. 2006); Boyd, 592 F.3d at 1305–06.
Therefore, we affirm the district court’s denial of the motion for a mistrial.
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II
Enrico also challenges the sufficiency of the evidence supporting his
conspiracy conviction. At trial, three of the four individuals Enrico recruited to
help sell his loan program—Gaylin Ware, Arthur Geiss, and Scott O’Neill—
testified that Enrico repeatedly mentioned an individual named “Joe” and indicated
that Joe was responsible for processing and closing the loans. Key to the
government’s case were recorded telephone calls between Geiss and Enrico,
specifically one in which Enrico said he was on his way to meet investors,
including Joe. In addition, Geiss testified at trial that during one unrecorded phone
call with Enrico, Enrico put someone else on the line who stated “the files were
being worked on.” Geiss inferred that this man was Joe. No participant in the
scheme met or otherwise interacted with Joe, and the FBI agents that searched
Enrico’s apartment found no evidence confirming Joe’s existence. They did,
however, recover almost $200,000 in cash, as well as boxes of loan applications,
with no indication that the loans were processed or closed. Defense counsel’s
initial and renewed motions for acquittal on the basis of the above facts were
denied by the district court.
We review de novo whether there was sufficient evidence to sustain a
conviction, drawing all reasonable inferences in favor of the verdict and viewing
the evidence in the light most favorable to the government. See United States v.
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Bailey, 778 F.3d 1198, 1202 (11th Cir. 2015). “Evidence is sufficient to support a
conviction if a reasonable trier of fact could find that the evidence established guilt
beyond a reasonable doubt.” Id. To affirm the defendant’s conviction, “the
evidence need not exclude every reasonable hypothesis of innocence or be wholly
inconsistent with every conclusion except that of guilt.” Id. (alteration adopted).
“We uphold the jury’s verdict unless no trier of fact could have found guilt beyond
a reasonable doubt.” United States v. Tinoco, 304 F.3d 1088, 1122 (11th Cir.
2002) (internal quotation mark omitted).
Conspiracy requires “proof of (1) . . . an agreement between two or more
persons to achieve an unlawful objective; (2) . . . knowing and voluntary
participation in the agreement; and (3) . . . an act in furtherance of the agreement.”
United States v. Jennings, 599 F.3d 1241, 1250–51 (11th Cir. 2010) (alterations in
original) (internal quotation mark omitted). We do not require that the government
demonstrate the existence of a formal agreement, see United States v. Vernon, 723
F.3d 1234, 1273 (11th Cir. 2013), or provide evidence of a co-conspirator’s name,
see United States v. Rodriguez, 765 F.2d 1546, 1552 (11th Cir. 1985). Rather, we
permit the prosecution to rely on circumstantial evidence in satisfying its burden of
showing the second person exists and there was a meeting of the minds to commit
an unlawful act. See Vernon, 723 F.2d at 1273–74; Rodriguez, 765 F.2d at 1551.
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We conclude that there was sufficient evidence supporting Enrico’s
conspiracy conviction. Based on Geiss’s testimony regarding the unrecorded
phone call, a reasonable trier of fact could have concluded that Joe existed (Geiss
testified that he heard Joe’s voice on the line); that there was an agreement
between Joe and Enrico to commit a criminal offense (the context of the phone call
was to convince Geiss that they were processing the loans); and that acts were
taken in furtherance of the scheme (Joe claimed to be working on the files, thus
prompting Geiss and the other recruited brokers to continue advertising the
program).
The context of the phone call is central to our conclusion. The record
reflects that Geiss understood that Enrico put the unnamed individual on the phone
specifically to convince Geiss “that there was some credibility behind [the loan
scheme],” and Joe furthered this objective by claiming that “the files were being
worked on.” Thus, viewing the evidence in a light most favorable to the
government and drawing all reasonable inferences in favor of the verdict, a
reasonable juror could conclude that Enrico and Joe agreed to work on the scheme
together, with Enrico gathering and Joe purportedly processing the loans, and
furthered that scheme by making statements to convince Geiss to continue
advertising the loan program. Therefore, we affirm the conviction of conspiracy.
III
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Lastly, Enrico challenges the procedural and substantive reasonableness of
his sentence. At sentencing, the district court imposed a sixteen-level enhancement
for losses exceeding $1 million and a two-level enhancement under U.S.S.G. §
3B1.1(c) for Enrico’s role in the offense in light of evidence that Enrico was
responsible for managing the activities of the organization and at least some of its
assets. After reviewing the factors contained in 18 U.S.C. § 3553(a), the district
court imposed 144-months imprisonment and ordered restitution in the amount of
$1,079,150. Enrico challenges the district court’s determination regarding (a) the
amount of loss; (b) the enhancement for his role in the offense; and (c) the
appropriateness of a twelve-year sentence for a first-time offender.
We review the district court’s interpretation of the Guidelines de novo, its
findings of fact for clear error, see United States v. Campbell, 491 F.3d 1306, 1315
(11th Cir. 2007), and the substantive reasonableness of a sentence for an abuse of
discretion, see United States v. Overstreet, 713 F.3d 627, 636 (11th Cir. 2013). We
conclude that the district court did not err in applying a sixteen-level enhancement
to Enrico’s sentence based on the amount of loss, but did err in applying the two-
level enhancement under § 3B1.1(c). Therefore, we vacate the two-level
enhancement and remand to the district court for a resentencing hearing consistent
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with this opinion on the narrow issue of whether Enrico’s role in the offense
warrants a two-level enhancement. 1
A. Amount of Loss
Enrico argues that the district court incorrectly relied on client lists to
estimate the amount of loss stemming from his fraudulent scheme, and that the
court instead should have looked to bank records that stated the amount of money
he gained from the scheme because the bank records were more reliable. Under §
2B1.1 of the Guidelines, as effective at the time of Enrico’s sentencing, when the
loss involved more than $400,000, the base offense level increases by fourteen; if
the loss involved more than $1,000,000, the offense level increases by sixteen. See
§ 2B1.1(b)(1)(H)–(I) (2014). Enrico asserts that, had the court properly relied on
the bank statements rather than the client lists, he would have received only a base
offense increase of fourteen.
We hold that the district court did not clearly err in relying on the client lists,
rather than bank statements, to calculate the amount of loss the victims suffered.
The Guidelines clearly state in their Application Notes that “gains” should only be
used “as an alternative measure of loss . . . if there is a loss but it reasonably cannot
be determined.” § 2B1.1 cmt. n.3(B). We have held that “the loss amount does
1
In light of this determination, we do not address Enrico’s claim that his sentence was
substantively unreasonable. On remand, the district court will consider the § 3553(a) factors in
issuing Enrico’s new sentence. See United States v. Estrada, 777 F.3d 1318, 1323 (11th Cir.
2015) (per curiam) (ordering that, on remand for resentencing, “the district court shall consider
all appropriate 18 U.S.C. § 3553(a) factors in determining a reasonable sentence”).
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not need to be precise and may only be a reasonable estimate of the loss based on
the available information.” United States v. Woodard, 459 F.3d 1078, 1087 (11th
Cir. 2006) (per curiam). Here, the client lists—which, we note, were submitted
into evidence without objection—provide more than merely a reasonable estimate
of the losses suffered. The client lists from Total Choice Corporation, the
corporation through which Ware sold loans, and SCS Private Funding, the
corporation through which O’Neill and Geiss sold loans, themselves totaled more
than $1 million.2 Moreover, in reality, the client lists likely underestimate the total
losses suffered because they do not account for any other earnest money forfeited
to Enrico’s scheme, penalties for missed closing dates, etc. Thus, the government
established by a preponderance of the evidence that losses exceeded $1 million.
See United States v. Bradley, 644 F.3d 1213, 1290 (11th Cir. 2011). Accordingly,
we affirm the sixteen-level sentencing enhancement under § 2B1.1.
B. Role in the Offense
In addition, Enrico contends that the district court erred in entering a two-
level enhancement under § 3B1.1(c) of the Guidelines for his role in the offense.
We agree. The district court incorrectly concluded that the two-level enhancement
2
This calculation omits any losses that Kimberly Williams’s clients suffered. The record
reflects that Enrico recruited Williams, like Ware, to sell his loan program, but she did not testify
at trial. Williams had at least 25 customers, and Enrico’s bank account reflects that he deposited
16 checks from Williams’s company, totaling $46,000.
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under that subsection could be premised on the management of the criminal assets
alone.
Under § 3B1.1(c), “[i]f the defendant was an organizer, leader, manager, or
supervisor in [the] criminal activity,” the judge may increase the offense level by
two. An enhancement under § 3B1.1 requires the government to prove by a
preponderance of the evidence that there was at least one other criminally liable
participant in the scheme. See § 3B1.1(c) cmt. n.2.; United States v. Glover, 179
F.3d 1300, 1302–03 (11th Cir. 1999). The sentencing judge may not premise a
base-level enhancement under § 3B1.1 “solely on a finding that [the] defendant
managed the assets of a conspiracy.” See Glover, 179 F.3d at 1302–03.
We hold that the district court erred by basing its enhancement under §
3B1.1(c) on Enrico’s control of the criminal assets and failing to make any
affirmative determination that Enrico managed or supervised Joe. 3 The record
reflects that the district court specifically asked both parties for Eleventh Circuit
precedent to determine whether an enhancement under § 3B1.1(c) was appropriate
in the absence of other criminally culpable participants, but neither defense counsel
nor the Government cited any cases. See Doc. 96, at 9. In concluding, without the
3
The record reflects that the district court specifically stated: “[W]e don’t know whether Joe
was directing or being directed. So I think the directing of a participant gets problematic, but I
think managing the organization is very clear and very obvious and so for that reason I will . . .
impose a two-level enhancement under 3B.1C, finding that [Enrico] clearly was responsible for
the management of the activities of this organization, as well as some of the assets of the
organization.” Doc. 96, at 14–15.
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benefit of guiding precedent, that an enhancement was appropriate under §
3B1.1(c), the district court expressly relied on the second sentence of the
Guidelines’ comments to that subsection. See id. at 14–15. However, Glover
explicitly rejects enhancements premised on a finding of asset management alone.
See 179 F.3d at 1302–03. Therefore, the district court erred in its conclusion that
the enhancement applied regardless of Enrico’s control over another criminally
culpable participant.
This error was not harmless. If there is insufficient evidence to determine
that Enrico managed or supervised Joe, then his relevant base offense level would
be 31, not 33, and the Guidelines would recommend a sentence of less than 144
months.4 Therefore, we vacate the two-level enhancement under § 3B1.1(c) and
remand to the district court for reconsideration of whether the evidence supports a
two-level enhancement for Enrico’s role in the offense. 5 Importantly, we note that
the district court may not base its determination of that issue on the involvement of
Ware, Geiss, and O’Neill. These individuals are irrelevant actors for purposes of
the enhancement because they were not presented as criminally liable participants.
4
Under the 2014 version of the Guidelines, a base offense level of 31 for an individual in
Criminal History Category I is 108 to 135-months imprisonment. See U.S.S.G. ch. 5, pt. A,
Sentencing Table. Enrico’s current sentence of 144-months imprisonment exceeds even a
sentence at the top of that recommended range.
5
Our conclusion today does not impinge the discretionary capacity of the district court. On
remand, the district court could conclude that the same sentence is warranted by applying a
discretionary two-level departure. However, under Glover, the court may not apply a mandatory
two-level enhancement under § 3B1.1(c) based on the defendant’s control over criminal assets.
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Rather, the district court’s conclusion must be based on whether the government
provided sufficient evidence that Enrico “organize[d], [led], manage[d], or
supervis[ed]” his co-conspirator, Joe. See § 3B1.1(c).
For the foregoing reasons, we affirm in part, reverse in part, and remand for
resentencing consistent with this opinion.
AFFIRMED in part, REVERSED in part, and REMANDED.
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