United States v. Kossak

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
5-4-2006
USA v. Kossak
Precedential or Non-Precedential: Non-Precedential
Docket No. 05-2424
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
No. 05-2424
__________
UNITED STATES OF AMERICA
v.
ROBERT KOSSAK,
Appellant
__________
On Appeal from the United States District Court
for the District of Delaware
(D.C. Criminal No.02-cr-00064-1)
District Judge: Honorable Gregory M. Sleet
__________
Argued on March 7, 2006
Before: RENDELL and AMBRO , Circuit Judges,
and SHAPIRO*, District Judge.
(Filed: May 4, 2006)
______________________
* Honorable Norma L. Shapiro, Judge of the United States District Court for the
Eastern District of Pennsylvania, sitting by designation.
Mark S. Greenberg [ARGUED]
LaCheen, Dixon, Wittles & Greenberg
1429 Walnut Street, 13th Floor
Philadelphia, PA 19102
Counsel for Appellant
Robert Kossak
Richard G. Andrews [ARGUED]
Office of the United States Attorney
1007 Orange Street, Suite 700
Wilmington, DE 19899
Counsel for Appellee
United States of America
__________
OPINION OF THE COURT
__________
RENDELL, Circuit Judge.
Appellant Robert Kossak was convicted at trial of conspiracy, interstate
transportation of stolen property, and bank fraud. Before trial, Kossak filed a motion to
suppress, which was denied. The District Court sentenced Kossak to 60 months
imprisonment. During the sentencing hearing, before imposing sentence, the District
Court calculated Kossak’s sentencing guideline range to be 57-71 months. The guideline
range was calculated after resolving, among other things, two disputed sentencing issues–
whether Kossak should have received a two-level upward adjustment for “mass
marketing” and a two-level upward adjustment for “vulnerable victims.”
2
On appeal, Kossak argues that the District Court’s denial of his motion to suppress
certain financial documents was reversible error. He also argues that the District Court
abused its discretion in sentencing him by incorrectly calculating his sentencing guideline
range. He argues that the upward adjustments for “mass marketing” and “vulnerable
victims” should not have been applied. He requests that we reverse his conviction and
remand the matter to the District Court for a new trial with instructions to suppress the
financial documents, or, should we find that reversal is not merited, that we remand for
re-sentencing.1
I. Motion to Suppress
Kossak’s argument that the District Court erred in failing to grant his motion to
suppress focuses on his claim that the government engaged in “outrageous government
conduct.” Kossak’s basis for this argument is that, during the FBI’s investigation, he was
represented by a Delaware attorney, Joseph Kulesza, whom the FBI may also have had
reason to suspect of wrongdoing in connection with the same fraudulent scheme. On the
advice of his attorney, Kulesza, Kossak cooperated with the investigation, turning over
various corporate financial records. Kossak now argues that these records should have
been suppressed, because the government did not inform him that his attorney may also
have been suspected of wrongdoing and had a potential conflict of interest. This was,
1
The District Court had jurisdiction pursuant to 18 U.S.C. § 3231. We have
jurisdiction over the appeal pursuant to 28 U.S.C. §§ 1291 and 3742.
3
Kossak argues, “outrageous government conduct” that rose to the level of violating
Kossak’s Fifth Amendment right to due process. We disagree.2
In 1952, the Supreme Court recognized that outrageous misconduct by law
enforcement officers in detecting and obtaining incriminating evidence could rise to the
level of a due process violation. Rochin v. California, 342 U.S. 165 (1952) (vacating
conviction and dismissing indictment where police had pumped stomach of suspected
drug pusher to obtain incriminating evidence). In Rochin, the Court said that “the
proceedings by which this conviction was obtained do more than offend some fastidious
squeamishness or sentimentalism about combating crime too energetically. This is
conduct that shocks the conscience.” Id. at 172. In United States v. Russell, 411 U.S.
423, 431-32 (1973), the Court referred to the type of conduct which violated the Due
Process Clause as conduct that violates “fundamental fairness” and is “shocking to the
universal sense of justice.”
In United States v. Voigt, Judge Cowen noted that “the judiciary is extremely
hesitant to find law enforcement conduct so offensive that it violates the Due Process
Clause.” 89 F.3d 1050, 1065 (3d Cir. 1996). In United States v. Jannotti, 673 F.2d 578,
608 (3d Cir. 1982) (en banc), we observed that “the majority of the Court has manifestly
reserved for the constitutional defense only the most intolerable government conduct.”
2
Our review of the denial of a motion to suppress is mixed. We have plenary review of
the District Court’s legal conclusions and defer to its factual findings unless they are
clearly erroneous. United States v. Perez, 280 F.3d 318, 336 (3d Cir. 2002); United
States v. Voigt, 89 F.3d 1050, 1064 (3d Cir. 1996).
4
We cautioned that “[w]e must necessarily exercise scrupulous restraint before we
denounce law enforcement conduct as constitutionally unacceptable.... Unless the
behavior of the F.B.I. agents rose to the level of outrageousness which would bar
conviction, the conduct of agents of the executive branch who must protect the public
from crime is more appropriately considered through the political process where
divergent views can be expressed in the ballot box.” Id. at 607, 609.
In order to raise a colorable claim of outrageousness pertaining to alleged
governmental intrusion into the attorney-client relationship, Kossak must demonstrate
each of the three following elements: (1) the Government’s objective awareness of an
ongoing personal attorney-client relationship between its informant and the defendant;
(2) deliberate intrusion into that relationship; and (3) actual and substantial prejudice.
See Voigt, 89 F.3d at 1067. Here, the record indicates that the Government was aware of
an ongoing attorney-client relationship between Kulesza and Kossak. At issue is whether
the Government deliberately intruded into that relationship and whether Kossak suffered
actual and substantial prejudice.
The Government’s conduct with respect to the Kulesza-Kossak attorney-client
relationship falls far short of the sort of purposeful intrusion into the attorney-client
relationship that would rise to the level of outrageousness. The record contains no
indication that the Government extorted information from Kulesza, promised him a deal
in exchange for testimony against his client, or, in any way, obtained information that
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was covered by the attorney-client privilege. We are aware of no authority, and Kossak
has cited none, imposing an affirmative duty on the Government to inform a suspect that
he has a potential conflict of interest with his attorney.3 In addition, while the
Government may well have been aware of a potential conflict of interest, there is no
evidence that (1) an actual conflict existed or (2) the Government had knowledge of any
such actual conflict. The Government did not subpoena Kulesza or introduce at trial any
statements made by him in violation of the attorney-client privilege.
Additionally, Kossak was not prejudiced by the Government’s conduct. Kossak
argues that he was prejudiced because his attorney advised him to cooperate with the
Government’s investigation contrary to his interests. He argues: “Had Mr. Kulesza not
been under investigation he would have counseled [Kossak] to invoke his Fifth
Amendment right against self-incrimination and not disclose documentary evidence, like
the CMB and KRA spreadsheets that were not subject to grand jury subpoena.”
Appellant’s Br. at 22. This argument, however, is flawed. Kossak has made no showing
that the financial documents he turned over would have been protected under the Fifth
Amendment right against self-incrimination. The corporate financial records at issue
were not subject to this protection. See Rogers Transp., Inc. v. Stern, 763 F.2d 165, 166
3
The case primarily relied on by Kossak, Voigt, involved far more egregious conduct
than what is presented here. The Voigt court addressed a situation where the attorney
was also acting as a government informant, secretly supplying information about his
client to the Government. 89 F.3d at 1059-63. Here, there is no evidence that Kulesza
was providing secret information to the Government.
6
(3d Cir. 1985). While the act of producing a document might be protected under the
Fifth Amendment if the act is both “testimonial” and “incriminating,” id. at 168, Kossak
makes no attempt in his brief to explain why he believes that his act of turning over the
documents was “testimonial” in this case. While he argues that the contents of the
documents aided the Government in connecting him to the scheme, he does not argue that
his act of turning them over had testimonial effect. Further, CMB and KRA are both
corporations. As a corporate custodian, Kossak would not have been entitled to resist a
subpoena on the ground that his act of production would have been personally
incriminating. Braswell v. United States, 487 U.S. 99, 117 (1988).
Therefore, for these reasons, we find that the Government’s conduct was not
“outrageous” and did not violate the Fifth Amendment’s Due Process Clause.
II. Sentencing
Kossak argues that the sentence imposed by the District Court was
unreasonable because the guideline range was incorrectly calculated to include a two-
level enhancement for “mass-marketing” under U.S.S.G. § 2F1.1(b)(3)4 and a two-level
enhancement for preying on “vulnerable victims” under U.S.S.G. § 3A1.1(b).5
4
Former U.S.S.G. § 2F1.1(b)(3) has since been repealed and replaced by U.S.S.G. §
2B1.1(b)(2)(A)(ii).
5
We exercise plenary review over the meaning and construction of the sentencing
guidelines, but review underlying factual determinations for clear error. United States v.
Butch, 256 F.3d 171, 177 (3d Cir. 2001). The District Court’s sentence is also reviewed
for reasonableness. United States v. Booker, 125 S. Ct. 738, 765-66 (2005).
7
A. “Mass-Marketing”
As used in the sentencing guidelines, mass-marketing “means a plan,
program, promotion or campaign that is conducted through solicitation by telephone,
mail, the Internet, or other means to induce a large number of persons to (A) purchase
goods or services; (B) participate in a contest or sweepstakes; or (C) invest for financial
profit. The enhancement would apply, for example, if the defendant conducted or
participated in a telemarketing campaign that solicited a large number of individuals to
purchase fraudulent life insurance policies.” U.S.S.G. § 2F1.1, cmt. 3.
Kossak argues that the mass-marketing enhancement was improper because the
borrowers who were defrauded were, for the most part, referred by friends, family
members, and attorneys. While Kossak admits that “there was testimony that [Kossak’s]
related companies solicited individuals by use of a lead machine, telemarketing and
advertising,” he argues that the evidence indicates that only 13 of the borrowers
implicated in the scheme had been solicited through telemarketing. Appellant’s Br. at
28-9. This, he argues, is not “a large number.” Id.
We find that the District Court did not err in viewing Kossak’s scheme as mass-
marketing. As the District Court observed, this was a situation in which telemarketing
was a significant part of the scheme. The District Court found that Kossak had employed
12 or 13 telemarketers to solicit loans as part of his business practice. Further, 13 of 49
victims came into contact with Infinity through mass-marketing. The fact that the other
8
36 victims were solicited by other means does not make the enhancement inapplicable.
The comments accompanying § 2F1.1 indicate that the enhancement applies where a
large number of people are “solicited,” not only where a large number of people are, in
fact, induced and defrauded. In other words, the enhancement targets conduct and not
result. Therefore, because Kossak’s scheme made use of telemarketing, the mass-
marketing enhancement was properly applied.
B. “Vulnerable Victims”
Kossak objected to a two-level enhancement for targeting vulnerable victims. We
conduct a three-step analysis in reviewing the application of a vulnerable victim analysis.
The enhancement may be applied where: (1) the victim was particularly
susceptible or vulnerable to the criminal conduct; (2) the defendant knew or
should have known of this susceptibility or vulnerability; and (3) this
vulnerability or susceptibility facilitated the defendant's crime in some
manner; that is, there was a nexus between the victim's vulnerability and
the crime's ultimate success.
United States v. Iannone, 184 F.3d 214, 220 (3d Cir. 1999) (quotations and citations
omitted).
The District Court underwent this analysis, observing that Kossak’s victims
included (1) a 62-year-old man in an oxygen tent, (2) a 90-year-old man, (3) an 80-year-
old woman, (4) a 59-year-old blind woman, (5) a 59-year-old woman who was entirely
unaware of the loan, (6) a man who was 64 at the time of a first loan and 65 at the time of
a second, (7) a 68-year-old man, (8) a 73-year-old woman, (9) an 81-year-old man living
in a nursing home, (10) a bankrupt man, who had lost his savings and whose wife had
9
just lost her job at the time of the transaction, and (11) a man who did not speak English.
App. at 434.
The District Court found that “the record clearly establishes that these victims’
ages, disabilities and vulnerabilities were apparent, thereby satisfying the Court that the
defendant knew or should have known of their vulnerability.” Id. The District Court
also found the existence of the requisite nexus between the victims’ vulnerabilities and
the success of the defendant’s crime. Id. at 434-35. Kossak stole significantly more from
his elderly and disabled victims than he did from his younger and non-disabled victims.
The District Court found that the average return from the total amount of fraudulent loans
in the indictment was 14.83 percent, while the return on the loans to the disabled, elderly,
and non-English speaking victims was 44.1 percent. “In this regard,” the District Court
stated, “it is clear that the defendant exploited the vulnerable victims to a greater degree
of success in accomplishing his crime.” Id. at 435. We find no error in the District
Court’s analysis.
III. Conclusion
For the reasons set forth above, we will AFFIRM the Judgment and Commitment
Order of the District Court.
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