United States v. Lugo

Filed: May 19, 2005
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
_______________
No. 02-4708(L)
(CR-01-374-AMD)
_______________
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
JUDITH LUGO,
Defendant - Appellant.
O R D E R
The court amends its opinion filed May 13, 2005, as follows:
On Page 23, the last paragraph is revised to read:
In light of the foregoing we find no error in either of the
Appellants’ convictions. However, in light of Booker and Bolden,
we vacate their sentences and remand for resentencing in
accordance with the principles discussed herein.
For the Court
/s/ Patricia S. Connor
____________________________
Clerk
ON REHEARING
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 02-4708
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
JUDITH LUGO,
Defendant - Appellant.
No. 02-4734
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
JOEL KATZ,
Defendant - Appellant.
No. 04-4124
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
JOEL KATZ,
Defendant - Appellant.
No. 04-4241
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
JUDITH LUGO,
Defendant - Appellant.
Appeals from the United States District Court for the District of
Maryland, at Baltimore. Frederic N. Smalkin, District Judge;
Andre M. Davis, District Judge. (CR-01-373-AMD; CR-01-374-AMD)
Argued: September 29, 2004 Decided: May 13, 2005
Before WILLIAMS, KING, and DUNCAN, Circuit Judges.
Affirmed in part; vacated and remanded in part by unpublished per
curiam opinion.
ARGUED: Thomas Walsh Farquhar, Washington, D.C., for Judith Lugo;
Francis Joseph Gorman, GORMAN & WILLIAMS, Baltimore, Maryland, for
Joel Katz. Joyce Kallam McDonald, Assistant United States
Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Baltimore,
Maryland, for the United States. ON BRIEF: Christopher C. Bosley,
GORMAN & WILLIAMS, Baltimore, Maryland, for Joel Katz. Thomas M.
DiBiagio, United States Attorney, Robert R. Harding, Assistant
United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY,
Baltimore, Maryland, for the United States.
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Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
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PER CURIAM:
In July 2001, a grand jury in Maryland returned two
indictments charging Joel Katz and Judith Lugo with various crimes
in connection with a fraudulent telemarketing scheme, and Katz with
bankruptcy fraud and illegal possession of a firearm. In three
separate trials on these charges, juries convicted Katz and Lugo on
all counts. The district court imposed custodial sentences of 97
months for Katz and 51 months for Lugo. This court’s initial
opinion affirmed the Appellants’ convictions, affirmed Katz’s
sentence based in part on United States v. Hammoud, 381 F.3d 316,
348-53 (4th Cir. 2004) (en banc), and vacated Lugo’s sentence. See
United States v. Lugo, No. 02-4708(L), 2005 WL 102986 (4th Cir.
Jan. 19, 2005). The Appellants petitioned for rehearing, objecting
principally to our resolution of their sentencing objections under
United States v. Booker, 125 S. Ct. 738 (2005). Because Booker
abrogates this court’s decision in Hammoud, and in order to clarify
the disposition of the Appellants’ assignments of error, we grant
the Appellants’ petition for rehearing and withdraw our earlier
opinion. For the reasons that follow, we again affirm their
convictions and vacate and remand their sentences for resentencing
in accordance with Booker.
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I.
The criminal conduct underlying this appeal centered around a
telemarketing scheme devised by Katz. Katz purchased an automatic
dialing machine that would sequentially dial telephone numbers.
When a call was answered, a recorded message would state that a
“VISA-card processing center” was attempting to reach the
individual and that the individual could be connected automatically
with an “operator” for further information. If the individual
agreed to be connected automatically, the machine would transfer
the call to one of Katz’s telemarketers, who would then attempt to
sell the individual a membership in “The Money Club,” “Tele-Money
Club,” “Smart Savers Club,” or “Cash Card Express.” Membership
would entitle the individual to a pre-approved VISA credit card and
up to $2,500 in coupons. The cost of these memberships varied from
$49.95 to $149.95, but at no time did Katz have an agreement with
a credit card issuer or financial institution to make such offers.
Rather than distributing the promised cards or coupons, Katz would
mail the individuals a list of institutions that did offer such
cards.
Lugo initially worked for Katz as a telemarketer, offering
credit card club membership programs to consumers. Subsequently,
Lugo moved up within Katz’s operation and became responsible for
supervising a room of telemarketers, writing sales scripts, and
confirming the individuals’ authorization to debit their checking
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account to pay for their memberships. When Katz was later forced
from the organization by his creditors as a result of the growing
number of complaints and requests for refunds, Lugo opened a
separate call center modeled on Katz’s scheme.
Poor performance led to the eventual collapse of the
operation, which left Katz with debts that far exceeded his assets.
Apparently mindful of his potential default, Katz ensured that most
of his property was held in the name of Martha Tuxford, his long-
time girlfriend. Katz eventually capitalized on this arrangement
in filing for personal bankruptcy by declaring only $5,280 in
assets, despite his possession of a house and two cars. During an
investigation into whether Katz’s bankruptcy petition was
fraudulent, authorities learned that Katz’s operation routinely
issued monthly “Martha checks” that covered the amount of the
mortgage and upkeep on the home, and that almost all of the funds
necessary to acquire the home and two cars came from Katz’s
businesses. Additionally, when authorities investigating the
adequacy of Katz’s bankruptcy petition executed a search warrant at
Katz’s home on April 24, 2001 as part of their inquiry, they
discovered a shotgun in Katz’s bedroom closet.
Three separate trials were conducted with respect to Katz’s
and Lugo’s conduct. A two-day jury trial that began on October 15,
2001 resulted in Katz’s conviction under 18 U.S.C. § 922(g)(1) for
possessing a shotgun despite a prior felony conviction. A second
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jury returned a conviction as to the bankruptcy fraud charges
against Katz on October 23, 2001. The charges related to Katz’s
and Lugo’s participation in the telemarketing fraud scheme (the
“telemarketing trial”) were also tried before a jury, which
returned a guilty verdict as to each defendant on June 6, 2002. At
the conclusion of these trials, the district court sentenced Katz
to ninety-seven months’ incarceration followed by three years’
supervised release, and Lugo to fifty-seven months’ incarceration
followed by three years’ supervised release. In addition, the
court fined Katz $10,000 and ordered restitution in the amount of
$867.77. Katz and Lugo timely appeal.
II.
Katz and Lugo offer five challenges to their convictions.
First, Katz argues that the district court erred in denying his
request for a jury instruction regarding his potential
justification for possessing a firearm. Second, Katz argues that
the court erred in denying his requests for jury instructions
regarding his alleged reliance on advice of counsel in filing his
bankruptcy petition. Third, Katz challenges the district court’s
jury instruction as to what constitutes an equitable interest in
property that must be disclosed when filing for bankruptcy.
Fourth, Katz argues that the court erred in allowing evidence of an
injunction that prevented him from using the VISA brand name.
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Finally, Lugo argues that the court erred in allowing evidence of
a prior conviction to be admitted on cross-examination. We
consider these issues in turn.
A.
Katz’s first assignment of error addresses the court’s
decision to deny his request for a jury instruction regarding the
defense of justification in his trial for possessing a shotgun in
violation of § 922(g)(1). We review the denial of a requested jury
instruction de novo. United States v. Perrin, 45 F.3d 869, 871
(4th Cir. 1995). In support of his proposed instruction, Katz
argued that a threat against Martha Tuxford by a disenchanted
creditor in 1998 justified his possession of the shotgun discovered
in his closet in 2001. However, the district court found the
nature of this threat was insufficient to support a justification
defense, and we agree.1 In order to assert a justification
defense, a defendant cannot continue to possess a weapon long after
the threat has ceased to be imminent. See United States v. Holt,
79 F.3d 14, 16 (4th Cir. 1996). As a result, Katz’s proposed
instruction regarding justification was properly denied.
1
For purposes of our analysis, we assume without deciding that
a defendant may base a defense of justification on a threat of
death or serious bodily injury to a third person. See United
States v. Newcomb, 6 F.3d 1129, 1135-36 (6th Cir. 1993).
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B.
Katz next argues the district court improperly denied a jury
instruction regarding his reliance on the advice of counsel when
completing his bankruptcy petition. Prior to filing his fraudulent
bankruptcy petition, Katz retained Howard Rubenstein, a bankruptcy
attorney, and Andrew Radding, a criminal defense attorney. Citing
his retention of these attorneys, Katz argues it should be presumed
that the disclosures in his petition reflected their legal advice.
Although demonstrating a reliance on poor legal advice may negate
the inference of fraudulent intent in completing a bankruptcy
petition, see, e.g., In re Hatton, 204 B.R. 477, 484 (E.D. Va.
1997), that defense is not absolute. A defendant must demonstrate
that he made full disclosure of all pertinent facts to counsel and
relied on counsel’s advice in good faith. See United States v.
Butler, 211 F.3d 826, 833 (4th Cir. 2000). We agree with the
district court that Katz failed to present an adequate foundation
as to either Radding or Rubenstein under Butler, as Katz offered
only the fact that he retained counsel as a basis for his
instruction.2 Such a foundation is clearly inadequate.
2
Indeed, Katz actually stipulated prior to trial that he had
not relied on Radding’s advice in completing his bankruptcy
petition. To the extent Katz argues that the district court
improperly allowed the United States to use his stipulation as
leverage to prevent him from presenting at trial the evidence
necessary to support an advice of counsel defense as to Radding, we
agree with the district court that the proper recourse, if Katz
were to proceed with such evidence, was to “allow the stipulation
to be put into evidence, and the jury . . . to decide what effect
it has.” J.A. 77.
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C.
Katz’s third challenge to his conviction concerns the district
court’s instruction to the jury in his bankruptcy fraud trial as to
what constitutes an “equitable interest” in property. In a
bankruptcy petition, a debtor must disclose all interests in
property as of the date of his petition, including equitable
interests. In re Morehead, 283 F.3d 199, 202 (4th Cir. 2002). The
nature of a pre-petition interest is determined by state law. In
re Shearin, 224 F.3d 346, 349 (4th Cir. 2001). Katz argues the
district court erred in refusing to instruct the jury that he was
not required to disclose an interest in his house, which was held
in the name of Martha Tuxford, as he possessed only a defeasible
contingent remainder interest. As before, we review the denial of
a requested jury instruction de novo. Perrin, 45 F.3d at 871.
Our review of the foundation for Katz’s proposed instruction
indicates that it was properly denied. The deed to the home in
which he and Tuxford lived conferred the property and improvements
thereon to Katz in fee simple, while reserving for Tuxford a life
estate and the power “to sell, lease, mortgage, convey or otherwise
dispose of or encumber the whole and entire fee simple estate,”
J.A. 532-33, even in a manner that would defeat Katz’s contingent
remainder interest. Emphasizing the unusually broad powers granted
to Tuxford, Katz cited a Georgia bankruptcy case for the
proposition that a “contingent remainder . . . is not property of
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the debtor’s estate.” In re Hicks, 22 B.R. 243, 244 (N.D. Ga.
1982). However, the conclusion in Hicks turned not on the
identification of the interest in question as a “contingent
remainder,” but the fact that the interest could not be transferred
or assigned under Georgia law. See In re Baydush, 171 B.R. 953,
957 (E.D. Va. 1994) (discussing Hicks as applied to Virginia law).
In Maryland, a contingent interest assigned by the grantor to a
designated remainderman and contingent only to an event is
descendible, divisible, and may be assigned by the remainderman.
See Willoughby v. Trevisonno, 97 A.2d 307, 311 (Md. 1953). As the
only remainderman to Tuxford’s life estate, Katz had an equitable
interest in the home deeded to Tuxford for life, and thus was
obliged to disclose this interest in his bankruptcy petition.
D.
Katz’s final challenge to his convictions addresses the
introduction of evidence in the telemarketing trial regarding an
injunction that enjoined Katz from trespassing on the VISA
trademark by “‘participating in any manner in or with any business,
enterprise, venture, entity or individual that solicits customers”
or otherwise used the trademark VISA “‘in any way.’” J.A. 1176,
1181, 1426-34. Although Katz had secured a pre-trial ruling
preventing the United States from introducing his subsequent
criminal contempt conviction for violating the injunction, Katz
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testified in his defense, and during cross-examination the United
States indicated its intent to question Katz about the injunction
itself. The court found discussion of the injunction alone to be
appropriate for cross-examination, and Katz was allowed to explain
his understanding of the injunction on redirect. We review Katz’s
challenge to the district court’s evidentiary determination for an
abuse of discretion. United States v. Godwin, 272 F.3d 659, 670
(4th Cir. 2001).
We find no merit in Katz’s theory that any reference to the
injunction constituted an attempt to introduce evidence of his
prior conviction in violation of Fed. R. Evid. 404(b). Although
Katz argues that the 1985 injunction was both stale and irrelevant,
we agree with the court below that it was a permissible subject for
cross-examination in light of the heavy reliance on the VISA name
in Katz’s telemarketing strategy and Katz’s assertions that his
offers were not fraudulent. Hence, we find no error on this issue,
or indeed on any of the issues underlying Katz’s convictions.
E.
Turning to Lugo’s only challenge to her conviction on mail and
wire fraud charges, we find no error in the district court’s
decision to allow the United States to reference her prior
conviction for conspiring to distribute cocaine base for
impeachment purposes during trial. Essentially, Lugo argues that
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the district court failed to make the findings required by the
balancing test of Federal Rule of Evidence 609(a) before allowing
discussion of her prior conviction on cross-examination. United
States v. Gray, 852 F.2d 136, 139 (4th Cir. 1988) (noting a court’s
duty to “make an explicit finding on the record” as to whether the
probative value of the evidence outweighs its prejudicial effect
before allowing a party to question a witness about a prior felony
conviction on cross-examination). Although Lugo’s counsel raised
several objections to the introduction of her prior felony
conviction, he did not contest the adequacy of the district court’s
findings under Rule 609(a) either before or during trial.3
When a defendant presents on appeal an objection she failed to
raise at trial, our review is for plain error only. Under plain
error, Lugo must show: (1) there was error; (2) that is plain; (3)
that affects her substantial rights; (4) and that the error
“affected fairness, integrity or public reputation of judicial
proceedings” to such a degree that this court is persuaded to
exercise its discretion to correct the error. United States v.
Vonn, 535 U.S. 55, 62-63 (2002) (internal quotations omitted).
Assuming for the purposes of our analysis that Lugo has identified
3
Instead, Lugo’s counsel filed a motion in limine, which the
court denied, and withdrew an objection that the prior conviction
did not constitute a felony for purposes of Rule 609.
Additionally, at trial, Lugo’s counsel objected to the manner in
which the conviction was characterized, and received the jury
instruction he requested, without ever objecting that the court had
failed to conduct the balancing test required by Gray.
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error that qualifies as plain, Lugo completely fails to demonstrate
prejudice beyond the conclusory assertions to that effect in her
brief, which we find unpersuasive given the weight of the evidence
presented against her at trial. See United States v. Hastings, 134
F.3d 235, 240-41 (4th Cir. 1998) (discussing requirement of
demonstrating prejudice in order to satisfy the substantial rights
prong of the plain error analysis). As a result, we find Lugo
fails to demonstrate error in her conviction.4
4
Katz and Lugo also contest the district court’s denial of
their motions for new trial predicated on what they assert is
evidence that should have been disclosed to them under Brady v.
Maryland, 373 U.S. 83 (1963). To be entitled to a new trial, a
convicted defendant must show that the evidence “[is] not merely
cumulative or impeaching.” United States v. Lofton, 233 F.3d 313,
318 (4th Cir. 2000) (internal quotations omitted). However, Katz
and Lugo fail to satisfy this requirement with respect to all three
pieces of evidence presented in their motions.
Katz and Lugo argue first that they are entitled to a new
trial because the Federal Trade Commission (the FTC) initiated
proceedings against a financial clearing house operated by Gerald
Federico, who testified against them, and the prosecution should
have disclosed this fact under Brady. However, the FTC’s
proceedings began after the Appellants’ sentencings, and Katz and
Lugo offer no reason to infer that the prosecution was actually or
constructively aware of the FTC’s activities. Nor have the they
shown that the investigation yielded anything more than impeachment
evidence against Federico, whose testimony in the telemarketing
trial was corroborated by other witnesses.
Katz’s and Lugo’s arguments with respect to their additional
evidence are similarly deficient. There is no indication that the
evidence indicating that Shawn Hatfield, a cooperating conspirator,
had continued to engage in fraudulent conduct during the time of
the Appellants’ trial was either known to the prosecution or useful
for purposes beyond impeachment. Similarly, the affidavit from an
attorney indicating that his former client, Jeffery Augen,
testified falsely (in that attorney’s opinion) regarding
conversations they had on matters peripheral to the case against
Katz and Lugo also fails to constitute anything other than
impeachment evidence.
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III.
Katz and Lugo also offer several challenges to the calculation
of their sentences. Katz and Lugo principally argue that their
sentences are erroneous following United States v. Booker, ___ U.S.
___, 125 S. Ct. 738 (2005). In United States v. Hughes, 401 F.3d
540 (4th Cir. 2005), we held that when a sentence calculated under
the Sentencing Guidelines that exceeded the maximum sentence
authorized by the facts found by the jury alone, the defendant
could demonstrate plain error that warranted resentencing under
Booker. Id. at 547. Because it is undisputed that the district
court made factual determinations beyond the jury’s findings that
increased the Appellants’ sentences,5 they are entitled to
resentencing. Hughes, 401 F.3d at 547.
Before remanding for resentencing, however, we pause to
consider the particular challenges raised by Katz and Lugo
regarding the manner in which the district court calculated their
Accordingly, we find no abuse of discretion in the district
court’s decision to deny Katz and Lugo a new trial. See United
States v. Perry, 335 F.3d 316, 322 (4th Cir. 2003) (providing
standard of review). Because we are remanding for resentencing,
and resentencings are to be conducted de novo unless otherwise
limited by this court’s mandate, United States v. Broughton-Jones,
71 F.3d 1143, 1149 n.4 (4th Cir. 1995), we defer to the district
court the decision of what use, if any, to make of this evidence on
resentencing.
5
At sentencing, the United States relied upon a trial exhibit
to summarize what it believed was the loss attributable to the
Appellants’ fraudulent activities, and the district court accepted
this summary. Appellee’s Br. at 39.
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sentences under the Sentencing Guidelines. Katz and Lugo first
argue jointly that the court erred in denying their request for the
aid of a forensic accountant at sentencing. Second, Katz argues
that the district court applied the wrong guideline in determining
his sentence. Third, Lugo contends the district court erred in
applying a two-level enhancement under U.S. Sentencing Guidelines
Manual § 3C1.1 (1998).6 Finally, Lugo also argues the court failed
to properly determine her degree of responsibility in Katz’s
criminal enterprise. We consider each issue in turn.7
A.
Katz and Lugo first argue jointly that the district court
abused its discretion in denying their request for a forensic
6
At sentencing, the district court used the 1998 Sentencing
Guidelines Manual. Generally, a sentencing court applies the
Guidelines Manual that is in effect on the date of sentencing.
USSG § 1B1.11(a) (2004). However, a sentencing court must apply
instead “the Guidelines Manual ‘in effect on the date that the
offense of conviction was committed,’ if it determines that use of
the Guidelines Manual ‘in effect on the date that the defendant is
sentenced would violate the ex post facto clause of the United
States Constitution.’” Elliott v. United States, 332 F.3d 753, 767
n.12 (4th Cir.) (quoting § 1B1.11(b)(1)), cert. denied, 540 U.S.
991 (2003). Although there is little difference between the 1998
and 2002 Guidelines Manuals, we rely on the 1998 Guidelines Manual
in order to attenuate any potential uncertainty.
7
Although we are not obliged in every case presenting
reversible error under Booker to address any underlying allegations
of calculation error under the Sentencing Guidelines, Hughes, 401
F.3d at 556 n.15, we do so here due to the complexity of this case
and in an effort to assist the district court by narrowing the
issues that must be resolved upon resentencing.
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accountant to assist in establishing the total loss for which they
could be held accountable at sentencing. Under the Criminal
Justice Act of 1964, see 18 U.S.C. § 3006A, the district court may,
at its discretion, authorize appointed counsel “to obtain
investigative, expert, or other services necessary for adequate
representation,” provided the expertise is necessary “and that the
person is financially unable to obtain them.” Id. The district
court nevertheless determined that a forensic accountant was
unnecessary, as “the evidence presented at trial and the arguments
set forth in the government’s sentencing memorandum” suggested that
the loss exceeded $1.5 million by a wide margin. J.A. 1502. The
district court’s denial of authorization for an expert witness is
reviewed for an abuse of discretion. United States v. Hartsell,
127 F.3d 343, 349 (4th Cir. 1997).
We find no abuse of discretion in the district court’s
decision to deny Katz and Lugo a forensic accountant. Under the
Sentencing Guidelines, a sentencing court may make “a reasonable
estimate of the loss” based on the evidence presented. USSG
§ 2F1.1, cmt. n.8 (1998). Here, the loss figure underlying the
court’s sentencing calculations reflected the evidence and
testimony presented at trial. The Appellants were able to cross-
examine the witnesses who testified as to loss in order to probe
the validity of their calculations and the manner in which the
final numbers were derived. Finally, the records substantiating
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these estimations of loss were presented at trial and explored in
some detail. Accordingly, we find no abuse of discretion in the
district court’s determination that Katz and Lugo did not need a
court-appointed forensic accountant to assist them in challenging
the loss estimations used to determine their sentences.
B.
Katz next argues the court applied the wrong guideline in
determining his sentence. The district court calculated Katz’s
sentence under the guideline applicable to mail and wire fraud as
defined by 18 U.S.C. §§ 1341, 1343, see § 2F1.1, rather than money
laundering as defined by 18 U.S.C. § 1956(a)(1)(B)(1), see USSG
§ 2S1.1 (1998). However, Katz’s contention that his conviction for
money laundering under § 1956 represents the “most serious
offense,” as § 2S1.1 provides a higher base offense level than
§ 2F1.1, reflects a mistaken understanding of the Sentencing
Guidelines.
Under the Sentencing Guidelines, convictions for offenses
punishable under § 2F1.1 (mail and wire fraud) and § 2S1.1 (money
laundering) are closely related offenses that must be grouped. See
USSG § 3D1.2(d) (1998). When offenses are grouped under
§ 3D1.2(d), the sentencing court is to apply “the offense guideline
that produces the highest offense level” when determined “in
accordance with Chapter Two and Parts A, B and C of Chapter Three”
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as applied to the defendant’s aggregate conduct. USSG § 3D1.3(b)
(1998). Hence, the “most serious” offense is that which yields the
highest total offense level, rather than the conviction that
carries the highest base offense level. See id.8 Katz’s argument
is premised on his misunderstanding that “most serious offense” is
predicated on base offense level, rather than total offense level,
and as such is without merit.
C.
Turning to the first of Lugo’s two challenges to her sentence,
we find no error in the district court’s decision to apply a two-
level enhancement to Lugo’s offense level following her perjurious
testimony at trial. Lugo’s presentence report states that Lugo
testified at trial that she was merely “a clerical employee
fulfilling only administrative duties,” misrepresented her dates of
employment by Katz, and denied (a) “being a supervisory employee,”
(b) opening a telemarketing room on behalf of a successor to Katz,
and (c) knowing that the sales promises underlying the scheme were
empty. Lugo argues that these findings are insufficient to justify
an offense level enhancement for obstruction of justice under
8
See also United States v. Harris, 959 F.2d 246, 267 (D.C.
Cir. 1992), overruled on other grounds, Bailey v. United States,
516 U.S. 137 (1995) (noting that “any error in the choice of the
base offense level when convictions are grouped pursuant to section
3D1.2 always benefits the defendant, because the Guidelines require
the imposition of the highest available offense level”).
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§ 3C1.1. In order to apply § 3C1.1 based on a defendant’s
testimony at trial, the sentencing court must find that the
defendant gave “false testimony concerning a material matter with
the willful intent to provide false testimony” under oath. United
States v. Dunnigan, 507 U.S. 87, 94-95 (1993).
Here, we find no error in the district court’s application of
§ 3C1.1. Lugo argues that some of the matters on which she is
accused of testifying falsely include her awareness during
verification calls of a particular individual’s age or whether
another individual with whom she was speaking was disabled.
However, Lugo’s statements on these matters were offered to
attenuate her involvement in Katz’s operation, and by extension her
culpability. Further, the district court specifically considered
whether Lugo’s assertions were “knowing falsehoods on a material
issue” and specifically identified as a “knowingly false statement”
Lugo’s representations at trial regarding her awareness of a
particular consumer’s disability status. Hence, the district court
findings are sufficient to support the application of an
enhancement under § 3C1.1.
D.
We find Lugo’s second sentencing objection, however, to be
well-founded. Lugo argues the district court erred in failing to
properly establish the amount of loss attributable to her in
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calculating her sentence. Under the Sentencing Guidelines, when a
defendant is charged with “jointly undertaken criminal activity,”
USSG § 1B1.3(a)(1)(B) (1998), this Court requires “that a
sentencing court, in order to hold a defendant accountable for the
conduct of his coconspirators, should make particularized findings
with respect to both prongs of § 1B1.3(a)(1)(B).” United States v.
Bolden, 325 F.3d 471, 499 (4th Cir. 2003). As a result, “the fraud
loss properly attributable to a defendant[] must be determined on
the basis of (1) the acts and omissions committed, aided, abetted,
counseled, commanded, induced, procured, or willfully caused by a
defendant; and (2) in the case of a jointly undertaken criminal
activity, all reasonably foreseeable acts and omissions of others
in furtherance of the jointly undertaken criminal activity.” Id.
Lugo argues that the district court failed to identify “(1) the
scope of the criminal activity [s]he agreed to jointly undertake,
[and] (2) whether all the [losses] were reasonably foreseeable.”
Id. at 499.
As noted above, the loss attributable to Katz’s scheme was
somewhat amorphous. Evidence at trial demonstrated that Lugo
served as a supervisor of one of Katz’s telemarketing rooms and
that in that capacity, Lugo oversaw several operators, was familiar
with the scheme, distributed scripts to the operators, and
confirmed the authorization of debits from the victims. Further,
there was sufficient evidence to demonstrate her willful
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participation. However, while the loss attributable generally to
a defendant’s fraud may be reasonably estimated, see § 2F1.1, cmt.
(n.9), when the defendant is not situated at a top position in a
particular criminal organization, the district court must go beyond
simply estimating what portion may fairly be attributed to that
defendant.
At sentencing, the district court did not make the
particularized findings required by Bolden. Rather, the district
court stated
in the absence of a clearer indication of precisely when
Ms. Lugo not only foresaw, as you say, but culpably
insinuated herself with the scheme, so far as I can tell,
the $1.6 million or the $1.5 million is excessive. So,
I am going to give Ms. Lugo the benefit of a doubt that
is, and I can understand the government’s position on
this, a doubt that perhaps she is not entitled to. But I
am going to find that Ms. Lugo’s relevant conduct fell
between $500,000 and $800,000. Frankly, I think that is
a generous finding.
J.A. 1565. Although the district court did not have the benefit of
Bolden in calculating Lugo’s sentence in 2002, Lugo is nevertheless
entitled to resentencing on this matter. The district court’s
attempt to apportion the loss on a temporal basis appears to
recognize the need for some objective specificity in this
determination, and that need is only enhanced by the fact that “a
verdict speaks to the scope of the defendant’s agreement only in
very general terms: It does not address the question of which
specific actions demonstrated at trial were in furtherance of that
single conspiracy or were foreseeable to the conspirators.”
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Bolden, 325 F.3d at 498. Although there was ample evidence to
implicate Lugo in Katz’s scheme, the calculation of Lugo’s sentence
is not supported by that evidence alone, as “[n]otwithstanding the
verdict, the court was obliged to make individualized findings on
fraud loss.” Id. (emphasis added).
IV.
In light of the foregoing we find no error in either of the
Appellant’s convictions. However, in light of Booker and Bolden,
we vacate their sentences and remand for resentencing in accordance
with the principles discussed herein.
AFFIRMED IN PART;
VACATED AND REMANDED IN PART
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