United States v. Darra Shephard

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 17-4148
UNITED STATES OF AMERICA,
Plaintiff − Appellee,
v.
DARRA LEE SHEPHARD, a/k/a Nora Southerland, a/k/a Donna Ramirez,
Defendant – Appellant.
Appeal from the United States District Court for the Western District of North Carolina, at
Charlotte. Robert J. Conrad, Jr., District Judge. (3:13-cr-00021-RJC-DCK-3)
Argued: March 22, 2018 Decided: June 15, 2018
Before NIEMEYER, WYNN, and DIAZ, Circuit Judges.
Affirmed by published opinion. Judge Diaz wrote the majority opinion, in which Judge
Niemeyer joined. Judge Wynn wrote a dissenting opinion.
ARGUED: Chiege Ojugo Kalu Okwara, LAW OFFICE OF CHIEGE O. KALU
OKWARA, Charlotte, North Carolina, for Appellant. Joanna Katherine Wood Bowman,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON
BRIEF: Kenneth A. Blanco, Acting Assistant Attorney General, Trevor N. McFadden,
Deputy Assistant Attorney General, Ellen R. Meltzer, William H. Bowne, Gustav W. Eyler,
Fraud Section, Criminal Division, UNITED STATES DEPARTMENT OF JUSTICE,
Washington, D.C.; Jill Westmoreland Rose, United States Attorney, OFFICE OF THE
UNITED STATES ATTORNEY, Charlotte, North Carolina, for Appellee.
DIAZ, Circuit Judge:
Darra Lee Shephard conspired to defraud U.S. residents through a telemarketing
sweepstakes scheme. From a call center in Costa Rica, Shephard and others would tell
their unwitting victims that they had won a sweepstakes prize. The catch? Winners could
receive their prize money only after paying a “refundable insurance fee.” Victims of the
scheme wired thousands of dollars to the call center, but of course, no fees were refunded
and no prize money was ever paid.
Shephard pleaded guilty to conspiracy to commit wire and mail fraud, conspiracy
to commit money laundering, eight substantive counts of wire fraud and aiding and
abetting, and four substantive counts of money laundering and aiding and abetting. She
was sentenced to ninety-six months in prison and ordered to pay $7,215,695.20 in
restitution. On appeal, she challenges (1) the district court’s application of the vulnerable
victim sentencing enhancement and (2) its calculation of the actual loss amount. We
affirm.
I.
A.
From 2007 through February 2015, Shephard “participated in, and otherwise
facilitated,” a sweepstakes telemarketing call center in Costa Rica for the purpose of
defrauding U.S. residents by convincing them to pay money in order to claim a fake
sweepstakes prize. J.A. 158.
2
The call center required “openers” to call residents in the United States and inform
them that they had won second prize in a sweepstakes in the amount of $350,000 to
$450,000. The “openers”—often falsely representing themselves as U.S. government
employees—would explain that in order to receive the prize money, the U.S. resident must
pay a “refundable insurance fee” by wiring money via Western Union, MoneyGram or an
international bank. Victims then wired money to a “runner,” who would collect wire
transfers at banks in Costa Rica, or a “bridge,” who would receive the funds in the United
States and forward them along to the call center in Costa Rica.
Once someone fell prey to the scam and made an initial payment, a “loader” would
call again and convince the victim to send more money. The “loader” would tell the victim
that a mistake had been made and he had actually won first prize, which was more than
$3,000,000. Of course, the victim would first need to pay thousands of additional dollars
in increased insurance fees to claim this larger prize. If the victim fell for the scheme again
and made another payment, the “loader” would continuously raise the sweepstakes prize
and ask for more money from the same victim. This process is known as “reloading.” At
various times throughout her tenure, Shephard worked in the call center as an “opener,” a
“runner,” and a “loader.”
B.
Shephard was arrested in Costa Rica in July 2015 and then extradited to the United
States. She pleaded guilty to all fourteen counts of her indictment without the benefit of a
plea agreement. Shephard also agreed to a written factual basis for her plea, which
described the sweepstakes scheme and her involvement. Shephard reserved her right to
3
object to two proposed findings at sentencing: (1) that the loss amount was over $3,500,000
and (2) that she knew that many of the victims were over the age of fifty-five and
vulnerable.
Shephard’s presentence report (“PSR”) relied on the factual basis, as well as two
written statements from Shephard, to calculate the appropriate Guidelines range. The PSR
applied a base offense level of 7 for wire fraud, a number of enhancements, and a three-
level downward adjustment for acceptance of responsibility. For our purposes, only two
of the enhancements matter: First, the PSR applied a two-level enhancement because the
offense involved vulnerable victims. U.S.S.G. § 3A1.1(b)(1). Second, it applied an
eighteen-level increase for a loss amount of more than $3,500,000 but less than or equal to
$9,500,000. U.S.S.G. § 2B1.1(b)(1)(J). The PSR relied on the financial analysis prepared
by the government, which explained that during Shephard’s involvement the loss amount
collected from victims via Western Union was $5,876,814.27 and the loss amount collected
via MoneyGram was $1,338,880.93, resulting in a total loss amount of $7,215,695.20.
Shephard objected to the vulnerable victim enhancement and the loss amount
calculation. She argued there was no evidence that the scheme targeted unusually
vulnerable victims or that Shephard knew it targeted such victims. As for the loss amount,
she claimed it should be less than $3,500,000 because the victims’ losses were not
adequately documented and her involvement in the call center was sporadic. The court
overruled the objection to the vulnerable victim enhancement “based on responses from
the government, consistent with my other rulings in other [related] call center cases that
. . . vulnerable victim enhancements were appropriate in the nature of how this fraud
4
activity worked.” J.A. 71. And it affirmed the loss amount as a “conservative estimate”
based on “solid methodology.” J.A. 70. The court further explained that Shephard was
responsible for the criminal activity of her coconspirators even after her personal
participation ended because she never affirmatively withdrew from the conspiracy.
The district court adopted the PSR’s Guidelines calculation, which applied a total
offense level of 34 and a criminal history of I for a Guidelines range of 151 to 188 months’
imprisonment. The court then departed and varied downward to arrive at a sentence of
ninety-six months’ imprisonment and $7,215,695.20 in restitution.
Shephard filed a timely appeal.
II.
We review criminal sentences for reasonableness using an abuse of discretion
standard. Gall v. United States, 552 U.S. 38, 51 (2007). A sentence based on an improperly
calculated Guidelines range is procedurally unreasonable. United States v. Davis, 679 F.3d
177, 182 (4th Cir. 2012). In reviewing whether a sentencing court properly calculated the
Guidelines range, we review the court’s factual findings for clear error and its legal
conclusions de novo. Id.
A.
The Sentencing Guidelines allow for a two-level enhancement “[i]f the defendant
knew or should have known that a victim of the offense was a vulnerable victim.” U.S.S.G.
§ 3A1.1(b)(1). A vulnerable victim is a person “(A) who is a victim of the offense of
conviction and any conduct for which the defendant is accountable . . . and (B) who is
5
unusually vulnerable due to age, physical or mental condition, or who is otherwise
particularly susceptible to the criminal conduct.” U.S.S.G. § 3A1.1 cmt. n.2.
For the vulnerable victim enhancement to apply, the record must show that (1) the
victim of the offense was unusually vulnerable and (2) the defendant knew or should have
known of the victim’s unusual vulnerability. United States v. Llamas, 599 F.3d 381, 388
(4th Cir. 2010). The enhancement thus “requires a fact-based explanation of why advanced
age or some other characteristic made one or more victims unusually vulnerable to the
offense conduct, and why the defendant knew or should have known of this unusual
vulnerability.” Id. (internal quotation marks omitted).
In this case, the factual basis and Shephard’s written statements to the probation
officer explain that the conspiracy involved “reloading” victims and that Shephard herself
worked as a “loader.” The practice of “reloading” involves targeting people who have
already fallen victim to the scheme at least once, if not repeatedly. The question, then, is
whether this practice of reloading, at least in the context of this particular telemarketing
sweepstakes conspiracy, is sufficient to support the vulnerable victim enhancement.
We have not yet addressed this issue, 1 but many of our sister circuits have,
concluding that evidence of reloading may support the enhancement. See United States v.
1
The dissent claims that our decision in Llamas is controlling and that if record
evidence of a reloading scheme were sufficient to uphold the application of the vulnerable
victim enhancement, we would have done so there. In Llamas, however, we rejected the
district court’s application of the enhancement because, after discussing how one victim
took medication for Alzheimer’s disease and another fell for the scheme when she was
expecting a call about her daughter’s health, the court provided no explanation as to why
6
Lloyd, 807 F.3d 1128, 1172‒73 (9th Cir. 2015); United States v. Hoffecker, 530 F.3d 137,
201‒02 (3d Cir. 2008); United States v. Day, 405 F.3d 1293, 1295‒96 (11th Cir. 2005);
United States v. Coe, 220 F.3d 573, 582 (7th Cir. 2000); United States v. Brawner, 173
F.3d 966, 972‒73 (6th Cir. 1999); United States v. O’Neil, 118 F.3d 65, 75‒76 (2d Cir.
1997). 2
As these courts have explained, a victim’s decision to wire money in response to the
initial fraudulent phone call is evidence that they are “particularly susceptible to the
criminal conduct” and that is why fraudsters then repeatedly target that victim through the
process of “reloading.” For example, in United States v. Jackson, which addressed a
similar fraudulent telemarketing scheme, the Seventh Circuit held the vulnerable victim
enhancement applied because the defendants “reloaded” victims. 95 F.3d 500, 502‒03 (7th
Cir. 1996). The court reasoned:
Whether these persons are described as gullible, overly trusting, or just naive
(and whatever the cause of this condition), . . . their readiness to fall for the
the defendant knew or should have known about these two victims’ unique vulnerabilities.
Llamas, 599 F.3d at 388‒89.
When the government on appeal argued the enhancement was appropriate because
Llamas “reloaded” persons who had already fallen for the sweepstakes scheme, we did not
reject the argument—we just noted that the district court never adopted it. We said the
enhancement “cannot be justified simply because there might be some evidence in the
record-not addressed by the sentencing court-supporting [it].” Id. at 389. Here, by contrast,
the sentencing court relied on the practice of reloading as evidence to support its
application of the vulnerable victim enhancement. See infra at 9‒10.
2
The dissent cites the Second Circuit’s decision in United States v. Dupre, 462 F.3d
131 (2d Cir. 2006). There, the court did note that simply asking a fraud victim for more
money does not warrant application of the vulnerable victim enhancement, but it expressly
left open the possibility that “repeated targeting of certain victims” could justify the
enhancement, as it did in O’Neil. Id. at 146.
7
telemarketing rip-off, not once but twice (and in [one] case, four times),
demonstrated that their personalities made them vulnerable in a way and to a
degree not typical of the general population. . . . The structuring of the
reloading process, the designating of customers as “reloads,” . . . the charging
of higher sums to reloads, and the systematic re-victimizing of people . . .
amply demonstrate that the defendants believed the reloaded persons to be
especially vulnerable and that they specifically targeted them because of this
vulnerability.
Id. at 508.
In other words, the reloading process was sufficient to support a finding that the
victims were unusually vulnerable and that the defendants targeted them because of their
vulnerability. The dissent contends that the district court there made findings about one
particular victim. But the court did not just find one or two victims to be unusually
vulnerable. Instead, the court “focussed on the technique of reloading” and concluded
“those who were successfully reloaded” were unusually vulnerable. Id. at 507‒08.
Likewise, the Third and Eleventh Circuits affirmed applications of the vulnerable victim
enhancement based on the simple fact that reloading—the repeated targeting of a victim—
“constitutes evidence that the defendant knew the victim was particularly vulnerable to the
fraud scheme.” Day, 405 F.3d at 1296; Hoffecker, 530 F.3d at 201 (quoting Day).
We believe the reasoning of our sister circuits is sound and applies here. The record
shows that the more experienced telemarketers in this fraudulent sweepstakes scheme,
including Shephard, were specifically designated as “loaders.” The “loaders” called
victims who had already fallen for the scheme and tried to get them to make additional
payments. Shephard explained that she and her coconspirators “would reload the victim
as long as the victim was willing and able to continue to transfer funds” and that “[m]any
8
victims sent tens of thousands of dollars” in response to these calls. J.A. 442. Further, the
individual victim impact statements attached to the presentence report demonstrate, as one
would suspect, that the victims were in fact unusually vulnerable. Thus, we find no clear
error in the district court’s determination that some victims were particularly vulnerable
and that Shephard was aware of this vulnerability. It is why she and her coconspirators
purposefully targeted such victims again and again. 3
Shephard also argues that the district court did not sufficiently explain its decision
to apply the vulnerable victim enhancement. A district court must provide a “sufficient
explanation of its rationale” to enable review, United States v. Wilkinson, 590 F.3d 259,
269 (4th Cir. 2010), and must “place on the record an individualized assessment based on
the particular facts of the case before it,” United States v. Carter, 564 F.3d 325, 330 (4th
Cir. 2009) (internal quotation marks omitted). The district court here overruled Shephard’s
objection to the vulnerable victim enhancement “based on responses from the government,
consistent with my other rulings in other [related] call center cases that there were
vulnerable victim enhancements were appropriate in the nature of how this fraud activity
worked. [sic]” J.A. 71.
Although the district court’s explanation was terse, we find it sufficient. First, the
court based its decision to apply the enhancement on the government’s response. The
3
We need not (and do not) decide whether the mere practice of reloading (without
more) will always justify applying the vulnerable victim enhancement. There may be
unique factual scenarios that rebut the strong inference that defendants who reload victims
target them because they are unusually vulnerable. But here, the district court’s
determination to apply the enhancement was entirely appropriate.
9
government’s response to Shephard’s objection was that “the practice of reloading victims
evinces an offense reliant on unusually vulnerable victims.” J.A. 380. The government
fully explained the argument and cited a number of cases. Second, the court said the
enhancement was appropriate given “the nature of how this fraud activity worked,” which
further confirms that the court found the practice of reloading sufficient to support the
enhancement.
We therefore affirm the district court’s decision to apply the vulnerable victim
enhancement.
B.
Shephard also objects to the loss amount used to justify an eighteen-level
enhancement. Shephard argues that the district court clearly erred in finding a loss amount
of $7,215,695.20. In her view, the real loss amount is under $3,500,000, which should
have resulted in a sixteen rather than eighteen-level enhancement. See U.S.S.G.
§ 2B1.1(b)(1)(I)‒(J).
We review a district court’s calculation of loss amount for clear error. United States
v. Jones, 716 F.3d 851, 859‒60 (4th Cir. 2013). “Loss” is “the greater of actual loss or
intended loss.” U.S.S.G. § 2B1.1 cmt. n.3(A). Here, the court relied on “actual loss,”
defined as “the reasonably foreseeable pecuniary harm that resulted from the offense.”
U.S.S.G. § 2B1.1 cmt. n.3(A)(i). The government must establish the amount of loss by a
preponderance of evidence. United States v. Catone, 769 F.3d 866, 876 (4th Cir. 2014).
But the court need only make a “reasonable estimate” of the loss. U.S.S.G. § 2B1.1 cmt.
n.3(C).
10
In the case of a conspiracy, loss is attributable to a defendant “if it results from the
conduct of others so long as the conduct was in furtherance of, and reasonably foreseeable
in connection with the criminal activity.” United States v. Otuya, 720 F.3d 183, 191 (4th
Cir. 2013) (internal quotation marks omitted). “A defendant’s membership in a conspiracy
is presumed to continue until he withdraws from the conspiracy by affirmative action.
Withdrawal must be shown by evidence that the defendant acted to defeat or disavow the
purposes of the conspiracy.” United States v. Allmendinger, 706 F.3d 330, 341 (4th Cir.
2013) (internal quotation marks omitted). “[M]ere cessation of activity in furtherance of
the conspiracy is insufficient.” United States v. Walker, 796 F.2d 43, 49 (4th Cir. 1986).
The defendant must point to “[a]ffirmative acts inconsistent with the object of the
conspiracy and communicated in a manner reasonably calculated to reach co-conspirators.”
United States v. U.S. Gypsum Co., 438 U.S. 422, 464–65 (1978). The burden of proving
withdrawal rests with the defendant. Walker, 796 F.2d 43, 49 (4th Cir. 1986).
Shephard first argues that the loss amount is wrong because it includes MoneyGram
wire transfers even though the substantive wire fraud and money laundering counts in the
indictment speak only of Western Union transfers. But this argument fails because the
factual basis and Shephard’s written statements to the probation officer clearly establish
that MoneyGram transfers were part of the conspiracy described in counts 1 and 10 of the
indictment.
Next, Shephard argues that the calculation wrongly includes losses accrued through
February 2015 even though she stopped working at the call center in December 2012.
Shephard, however, stipulated in the factual basis supporting the plea that she participated
11
in, or otherwise facilitated, the conspiracy from 2007 through February 2015. And
although Shephard reserved the right to object to the loss amount and whether she
knowingly targeted vulnerable victims, she twice told the court that she agreed “with
everything else” in the factual basis. J.A. 49‒50. This express acknowledgment of her
involvement in the conspiracy through February 2015 is a sufficient basis for including
losses through February 2015 in the loss calculation. See United States v. Gilliam, 987
F.2d 1009, 1013 (4th Cir. 1993) (finding government may use defendant’s
acknowledgements during the Rule 11 colloquy or sentencing proceedings to establish
facts for sentencing purposes).
Further, even if Shephard stopped actively participating in the conspiracy in
December 2012, there is no evidence that she acted to defeat or disavow the purposes of
the conspiracy. Withdrawal requires more than the mere cessation of activity in
furtherance of the conspiracy. Walker, 796 F.2d at 49. The record indicates Shephard’s
involvement in the conspiracy was “on and off” and that, at times, she held legitimate jobs.
Without evidence of an affirmative withdrawal, we don’t know if Shephard was taking
another temporary hiatus from the call center or if she had really abandoned the criminal
enterprise.
Finally, Shephard claims the district court didn’t make any particularized findings
that the MoneyGram transfers or post-2012 Western Union transfers were within the scope
of the criminal activity Shephard agreed to jointly undertake. No such findings are
necessary, however, because it’s clear on the face of the indictment, as well as the factual
basis, that the conspiracy involved MoneyGram transfers. Further, the factual basis
12
establishes Shephard’s involvement in the conspiracy through February 2015 and, even if
she did leave earlier, there’s no allegation that the conspiracy changed in any unforeseeable
way after December 2012. And as we’ve noted, absent proof of an affirmative withdrawal
from the conspiracy, Shephard is liable for the losses her coconspirators continued to
inflict. 4
III.
For the reasons given, we affirm the district court’s judgment.
AFFIRMED
4
The parties dispute whether the spreadsheet of wire transfers that the government
entered as an exhibit at sentencing was complete. We are satisfied that the exhibit as
presently constituted, in conjunction with the rest of the record, establishes a total loss of
$7,215,695.20 based on sound methodology. Accordingly, we deny the government’s
motion to supplement the Joint Appendix and also deny as moot Shephard’s motion to
strike the same.
13
WYNN, Circuit Judge, dissenting in part:
I agree with the majority opinion’s approach to calculating the loss amount in this
case, and I join fully in that portion of the majority opinion. I write separately, however,
because I disagree with the majority opinion’s holding regarding the vulnerable victim
enhancement, U.S.S.G. § 3A1.1(b)(1). I do not believe the district court sufficiently
explained its rationale for imposing that enhancement, which would therefore lead me to
vacate the Defendant’s sentence and remand for resentencing.
The majority correctly cites the controlling test for whether the vulnerable victim
enhancement applies, although the majority’s paraphrasing of the law misses a key aspect
of the inquiry. This Court has said that applying the vulnerable victim enhancement
requires satisfying a two-part test. See United States v. Llamas, 599 F.3d 381, 388 (4th
Cir. 2010) [“Llamas I”]. “First, a sentencing court must determine that a victim was
unusually vulnerable. Second, the court must then assess whether the defendant knew or
should have known of such unusual vulnerability.” Id. (internal citation omitted). This
discussion makes clear that the district court must identify at least one specific victim who
serves as a basis for applying the enhancement—not that the record must merely reflect
such possible applicability—and then also find that the defendant knew or should have
known of that victim’s unusual vulnerability. The next sentence in Llamas I makes this
requirement all the more clear: “In other words, applying the vulnerable victim adjustment
‘requires a fact-based explanation of why advanced age or some other characteristic made
one or more victims unusually vulnerable to the offense conduct, and why the defendant
knew or should have known of this unusual vulnerability.’” Id. (quoting United States v.
14
Vega-Iturrino, 565 F.3d 430, 434 (8th Cir. 2009) (discussing importance of “evidentiary
support” particularized to the specific victim or victims, such as a victim who “had received
only an eighth grade education [and] had no experience or understanding of investments
outside of connection with the defendant”)).
Additionally, as the majority opinion correctly recognizes, when a district court
applies a sentencing enhancement—like the vulnerable victim enhancement—the “district
court must provide a ‘sufficient explanation of its rationale’ to enable review.” Ante at 9
(quoting United States v. Wilkinson, 590 F.3d 259, 269 (4th Cir. 2010)). And a district
court “must ‘place on the record an individualized assessment based on the particular facts
of the case before it.’” Id. (quoting United States v. Carter, 564 F.3d 325, 330 (4th Cir.
2009) (emphasis added) (internal quotation marks omitted)). In light of this standard, the
majority opinion acknowledges that the district court’s explanation for applying the
vulnerable victim enhancement in this case was “terse.” Id. at 9. Nonetheless, the majority
opinion finds the district court’s rationale “sufficient” to pass muster. Id. I disagree.
To begin, I want to emphasize just how “terse” the district court’s rationale for
imposing the enhancement was. The district court’s entire explanation for imposing the
enhancement reads as follows:
I will overrule that objection based on responses from the government,
consistent with my other rulings in other Bonner call center cases that there
were vulnerable victim enhancements were [sic] appropriate in the nature of
how this fraud activity worked
15
J.A. 71. Parsing out this rationale makes clear that it is not sufficiently “tailored to the
particular case at hand . . . to permit ‘meaningful appellate review.’” Carter, 564 F.3d at
330 (quoting Gall v. United States, 552 U.S. 38, 50 (2007)).
I start with the latter portion of the district court’s rationale: that the decision to
apply the enhancement was “consistent with my other rulings in other Bonner call center
cases that . . . vulnerable victim enhancements were appropriate in the nature of how this
fraud activity worked.” J.A. 71. Here, the district court alludes to Defendant’s co-
defendants, Jeffrey Bonner (who ran the call center) and another individual who worked
there, as well as other defendants in related cases. But the government did not have
transcripts prepared of the sentencings for Defendant’s co-defendants, nor has the
government provided us with transcripts from any of the related cases. The district court’s
explanations in those cases are thus not before this Court. Consequently, although the
district court knew what reasoning was provided for sentencing Defendant’s co-
defendants—reasons that may have included significant factual findings—that information
has not been conveyed to this Court in the record presented to us. Accordingly, the district
court’s reference to the other cases is a quintessential example of when a record does not
allow for “meaningful appellate review.” Carter, 564 F.3d at 330. From the documents
provided, this Court simply has no way of knowing what rationale the district court may
have used in those other cases.
The closest the district court comes to explaining its rationale in the previous cases
was to say that the enhancement was appropriate, given “the nature of how this fraud
activity worked.” J.A. 71. This statement, albeit vague, corresponds with the other basis
16
listed by the district court for its holding—the “responses from the government.” Id. The
government laid out its position on the enhancement in two places: the “United States’
Response to Defendant’s Objections to the Draft Presentence Investigation Report” and the
Final Presentence Report. J.A. 379–81, 453–454. ∗ At the sentencing hearing, no party
offered substantive argument on the issue, instead relying on their written submissions.
J.A. 71. So, when the district court refers to the “responses from the government,” it
presumably is referring to these written filings, both of which, like the district court’s
comment about the “nature” of the fraud, relied on a generalized argument about the
structure of the sweepstakes scheme. Id.
To give greater detail, in these filings, the government argued that Defendant
“would seek out individuals gullible enough to believe her false promises and send money
overseas, and then repeatedly victimize those same individuals until they had nothing left
to send.” J.A. 379–80. The government then argued that, “[i]t is well established that the
practice of reloading victims evinces an offense reliant on unusually vulnerable victims.”
J.A. 380. To support that proposition, the government listed one case from the Fourth
Circuit, two from the Ninth Circuit, and one case from the Seventh Circuit. See id. These
cases do not bear the weight claimed, however.
∗
The latter version filed with the Final Presentence Report quoted almost entirely
from the earlier response and is not different from the prior version in any material way.
Thus, for the sake of consistency, this opinion will quote from the first version, since that
is the version quoted by the majority opinion.
17
The sole Fourth Circuit case cited by the government for that proposition deserves
some introduction. The government cited United States v. Llamas, 473 Fed. App’x. 176
(4th Cir. 2012) [“Llamas II”], an unpublished opinion rendered by a panel of this Court
after Llamas I vacated the defendant’s sentence on grounds that the district court failed to
adequately support the application of the vulnerable victim enhancement. The facts of the
Llamas cases are strikingly similar to those here. The defendant in Llamas was part of a
sweepstakes scheme based out of Costa Rica that operated in a manner almost
indistinguishable from the call center in this case. Llamas I, 599 F.3d at 383–85. At
sentencing, the district court identified two specific victims that it viewed as unusually
vulnerable: one had Alzheimer’s disease; the other “had been expecting a call from a doctor
regarding her daughter’s health,” which put her in a vulnerable, high-stress state of mind.
Id. at 386. Critically, however, the district court did not make any findings about how the
defendant knew or should have known about those vulnerabilities. Id. at 389. And for that
reason, this Court found that the district court did not provide adequate reasons for applying
the enhancement and vacated the defendant’s sentence. Id.
Thus, the district court in Llamas I actually gave more reasons than the district court
did in this case—and this Court nonetheless vacated the defendant’s sentence. The district
court in Llamas I identified specific victims and gave a detailed explanation as to why those
victims were vulnerable. Those vulnerabilities were individualized to specific victims, not
just blanket assertions premised on how the general structure of the fraudulent scheme
targeted gullible people. In fact, had record evidence of a reloading scheme been sufficient,
by itself, to apply the enhancement—as the majority opinion appears to conclude—the
18
Llamas I Court would have upheld the application of the vulnerable victim enhancement,
because the scheme in that case relied on a reloading system almost identical to the one
here. See id. at 384. Instead, this Court vacated the sentence because the district court’s
findings were insufficient. See id. at 389.
Here, in contrast with Llamas I, the district court did not identify any specific
victims as unusually vulnerable or make any findings as to why Defendant had knowledge
of that vulnerability. The district court merely referenced the government’s written
submissions, which themselves relied on a vague theory that reloading schemes target
gullible people. I do not discount the possibility that an individual could be so gullible to
qualify as unusually vulnerable. But, at the very minimum, the Guidelines require the
district court to identify the specific victims it found to be so vulnerable that they would
serve as a basis for applying the enhancement. As the case stands, however, nothing in the
record indicates which victims the government or the district court believed supported
application of the enhancement. We simply know that some individuals (although who
specifically, we do not know) gave money more than once to the scheme, which, according
to the government, makes them unusually vulnerable (despite not knowing any more details
about why these victims contributed to the scheme multiple times or any other information
supporting this alleged vulnerability).
The approach to the enhancement I am describing also best accords with the
enhancement’s application note. That commentary states: “The adjustment would apply,
for example, in a fraud case in which the defendant marketed an ineffective cancer cure or
in a robbery in which the defendant selected a handicapped victim. But it would not apply
19
in a case in which the defendant sold fraudulent securities by mail to the general public and
one of the victims happened to be senile.” U.S.S.G. § 3A1.1 cmt. n.2. The case at issue
here is analogous to the situation described in the second part of the application note—at
least as the case is currently described by the government and the district court.
Defendant’s co-conspirators called members of the general public and sought money.
Presumably, many would decline, while some would provide the requested money. As the
application note example contemplated, however, some of the people called would be
gullible enough to fall for the scheme. But, at least upon initial phone contact, the co-
conspirators had no way of differentiating the gullible from the savvy. Once someone gave
to the scheme, however, then the co-conspirators would come back to that person over and
over again. Returning to previous victims potentially could cross the line to exploiting a
vulnerable victim, but the key problem is that we do not know who those specific
vulnerable victims were in this case. The record does not explain which victims were
targeted multiple times, what actions the conspiracy took toward those specific individuals,
and whether or how Defendant knew or should have known about those particular victims’
vulnerabilities.
The majority opinion claims the victim impact statements demonstrate that there
were unusually vulnerable victims, but the statements do not provide that level of detail.
For example, the statements do not ask questions that would indicate who was reloaded,
which, according to the government, is the key indicator of vulnerability. The other
documents in the record are similarly vague on this point. For example, the government
provided the district court with various charts detailing the total amounts of money taken
20
from each victim, but these documents do not also reveal who was reloaded, because they
do not show discrete transactions. An appellate court reviewing this record is left to guess
who was reloaded based upon the total money an individual lost to the scheme.
Furthermore, even if this Court could discern who specifically was reloaded from these
documents, we have no additional details explaining what may have motivated an
individual to contribute to the scheme more than once and how Defendant would have
known of that person’s alleged vulnerability. Without directing us toward specific
information about particular victims, the district court’s findings do not satisfy the standard
established by this Court in Llamas I. See 599 F.3d at 387–89.
That backdrop—the binding precedent of Llamas I and its impact on this case—sets
the stage for the government’s filings below, in which it cited the unpublished opinion in
Llamas II to support the allegedly “well established” principle of applying the vulnerable
victim enhancement to reloading schemes. J.A. 380. Llamas II was issued after the district
court resentenced the defendant and again applied the vulnerable victim enhancement. 473
Fed. App’x at 177–78 & n.1. Significantly, the defense did not challenge the application
of the enhancement in the second appeal; it only challenged the district court’s
consideration of the sentencing factors found in 18 U.S.C. § 3553(a) for procedural and
substantive reasonableness. See id. at 179. In fact, this Court specifically said, “[b]ecause
Llamas does not challenge his Guidelines calculation, we do not need to address that stage
of the resentencing.” Id. at 178 n.2. Nonetheless, in its filings below, the government
described this case as “affirming [a] sentence incorporating [the] vulnerable victim
adjustment against a similarly situated Costa Rican telemarketing fraud defendant.” J.A.
21
380. Although technically true, the government’s characterization omits the crucial fact
that the panel in Llamas II expressly declined to opine on the appropriateness of the
enhancement’s application, because that issue was not appealed. Thus, even if it were
binding precedent, Llamas II does not carry the weight the government tries to place on it.
The Fourth Circuit has not previously applied the vulnerable victim enhancement in the
way the majority opinion appears to do here. To the contrary, the binding case on this
issue—Llamas I—undercuts the government’s argument by requiring detailed findings
from the district court. A panel of this Court has since reiterated that holding. See United
States v. Johnson, 480 Fed. App’x. 186, 189 (4th Cir. 2012) (quoting Llamas I for the
proposition that “our precedent stresses the importance of an adequate explanation” for
applying the vulnerable victim enhancement and then finding application of the
enhancement procedurally unreasonable because the district court “failed to make explicit
findings on the record as to the victims, their unusual vulnerability, and [the defendant’s]
knowledge of such vulnerability”). Yet the government appears to take great pains to avoid
citing a published case that diminishes its argument, instead relying on a misleading
characterization of a subsequent unpublished opinion to make its point.
The government’s filings below also relied on three other cases: one from the
Seventh Circuit and two from the Ninth Circuit. The Seventh Circuit case, like Llamas,
does not help the government’s argument. See United States v. Jackson, 95 F.3d 500 (7th
Cir. 1996). The Seventh Circuit in Jackson upheld the application of the vulnerable victim
enhancement in a case factually similar to the one here. See id. at 502–04, 506–08. Unlike
in this case, however, the district court in Jackson identified at least one particular victim
22
as vulnerable, detailed the conspiracy’s actions to take advantage of that person, and
explained why the defendant should have known about that particular victim’s
vulnerability. See id. at 507–08. Thus, the court in Jackson made the critical factual
findings absent in this case.
Contrary to the majority opinion’s characterization of Jackson, the vulnerability of
specific victims played a key role in the outcome of that case. The Seventh Circuit
articulated the enhancement’s requirements as being that “the district court must find both
1) that a victim of the defendant’s crime was unusually vulnerable in some way, and 2) that
the defendant targeted that victim because of this vulnerability.” 95 F.3d at 507 (emphases
added). The court’s subsequent explanation follows that standard. For example,
throughout the opinion, the court discusses J.Z., one of the scheme’s victims. See id. at
504, 507–08. The opinion details how J.Z. was defrauded into contributing to the scheme
four times and the amounts he contributed on each occasion. See id. at 504. Thus, although
the Seventh Circuit may have appeared to speak in general terms—which the majority is
quick to emphasize—the court’s analysis was firmly grounded in the specifics of a
particular victim’s case. See, e.g., id. at 508 (“[T]he district court clearly determined that
[the victims’] readiness to fall for the telemarketing rip-off, not once but twice (and in J.Z.’s
case, four times), demonstrated that their personalities made them vulnerable in a way and
to a degree not typical of the general population.”); id. (“[T]he systematic re-victimizing
of people like J.Z. amply demonstrate[s] that the defendants believed the reloaded persons
to be especially vulnerable.”).
23
Only the Ninth Circuit cases cited by the government may support its argument,
because it is unclear from the appellate opinions whether the district court made findings
about particular victims. See United States v. Durant, 89 Fed. App’x 56, 58 (9th Cir. 2004);
United States v. Randall, 162 F.3d 557, 560–61 (9th Cir. 1998). Yet the import of that
precedent is unclear, because, for example, a more recent Ninth Circuit opinion goes into
significant detail about the specific findings made about particular victims and why the
defendant in a reloading scheme knew about the vulnerabilities of those victims. See
United States v. Lloyd, 807 F.3d 1128, 1172–73 (9th Cir. 2015).
To the extent that my position splits with that of the Ninth Circuit in Durant and
Randall, I believe the Ninth Circuit’s approach, as described in the cases cited by the
government below, are at odds with this Circuit’s binding precedent in Llamas I. The
majority opinion also cites cases from other circuits to support the proposition that
“evidence of reloading may support the enhancement.” Ante at 6–7 (collecting cases). The
cases cited do support the proposition that a reloading scheme may support applying the
vulnerable victim enhancement—a conclusion with which I agree. My dispute with the
majority opinion stems from whether a reloading scheme is sufficient to warrant applying
the enhancement. The majority appears to argue that it is, thereby creating a broad rule
that would apply the enhancement to any case where a victim falls prey to a similar scheme
more than once—without any limiting principle in sight. In contrast, I argue that a district
court must make adequate factual findings about at least one specific victim to justify
applying the enhancement. The cases cited by the majority, like the Ninth Circuit opinions
in Durant and Randall, leave unclear the extent to which the relevant district courts may
24
have made specific findings about particular victims. See United States v. Hoffecker, 530
F.3d 137, 201–02 (3d Cir. 2008); United States v. Day, 405 F.3d 1293, 1295–96 (11th Cir.
2005); United States v. Coe, 220 F.3d 573, 582 (7th Cir. 2000); United States v. Brawner,
173 F.3d 966, 972–73 (6th Cir. 1999); United States v. O’Neil, 118 F.3d 65, 75–76 (2d Cir.
1997). Thus, as the majority opinion notes, these cases stand merely for the proposition
that a reloading scheme can support applying the enhancement; they do not address the key
distinction between my view and that of the majority. That said, to the extent any of those
cases indeed uphold application of the enhancement absent particularized findings about
specific victims, I believe that approach conflicts with this Circuit’s binding precedent, as
articulated in Llamas I.
Furthermore, the approach taken by the Ninth Circuit in Durant and Randall
diverges from that of several other circuits. The Second Circuit, for example, has spoken
particularly well on the matter in United States v. Dupre, 462 F.3d 131 (2d Cir. 2006). In
that case, co-conspirators targeted evangelical Christians by using Christian imagery and
rhetoric to ask them to provide money again and again to a fraudulent investment scheme.
See id. at 134–36, 144–45. Although such “[s]chemes . . . inevitably attract the gullible,”
the Second Circuit rejected applying the vulnerable victim enhancement in the case solely
based on such a generalized argument. Id. at 145. The court specifically said that “a
criminal successfully asking a fraud victim for additional money does not itself
demonstrate that the victim is especially vulnerable.” Id. at 146. The court further
elaborated:
25
We have no reason to believe that evangelical Christians as a class are
‘unusually susceptible’ to fraud. The application notes reiterate that the
vulnerable victims enhancement is improper except in cases where
defendants ‘should have known’ of their victims’ unusual vulnerability, such
as ‘in a fraud case in which the defendant marketed an ineffective cancer
cure’ . . . . Absent findings by the District Court that any specific victim was
especially gullible because of his religion, we cannot conclude that
evangelical Christian victims were susceptible to fraudulent schemes
involving religious imagery in a manner analogous to how desperate cancer
patients might be susceptible to con artists selling placebos.
Id. at 145 (emphasis added) (internal footnote omitted) (quoting U.S.S.G. § 3A1.1 cmt. 2).
This case presents the same situation. “Absent findings by the District Court that any
specific victim was especially gullible,” we cannot meaningfully review this record and
find that the enhancement was appropriately applied. Id. (emphasis added).
My good colleagues in the majority fail to grasp the basis of my reliance on Llamas
I and Dupre. Indeed, I do not dispute that evidence of a reloading scheme can support
application of the vulnerable victim enhancement, nor do I argue that Llamas I and Dupre
bar reliance on such a scheme as a basis for applying the enhancement. Rather, I rely on
Llamas I and Dupre for the proposition that a court may not apply the vulnerable victim
enhancement unless the government introduces victim-specific, as opposed to generalized,
evidence. Notably, like Llamas I and Dupre, several other circuit opinions have vacated
sentences applying the vulnerable victim enhancement when a district court failed to make
factual findings regarding specific victims. See, e.g., United States v. Angeles-Mendoza,
407 F.3d 742, 747–48 (5th Cir. 2005) (vacating application of the enhancement when the
district court’s “scant, generalized findings” mentioned only “general characteristics
commonly held” by the victims and “inherent” in the class of victims targeted); United
26
States v. Anderson, 349 F.3d 568, 573 (8th Cir. 2003) (vacating application of the
enhancement when the “general, not thorough” explanation provided below gave “no
detailed analysis of why th[e] evidence established that [the defendant] knew or should
have known that any victim was unusually vulnerable”).
Accordingly, our binding precedent in Llamas I required the district court to identify
at least one specific victim who served as the basis for applying the vulnerable victim
enhancement and to explain why the defendant knew or should have known of that
particular victim’s unusual vulnerability. The district court did not do so in this case.
Therefore, I would vacate the Defendant’s sentence and remand her case for resentencing.
Because the majority opinion reaches a different conclusion, I respectfully dissent.
27