United States v. Apodaca

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT April 18, 2005
Charles R. Fulbruge III
No. 04-50252 Clerk
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
CHRISTINE APODACA,
Defendant-Appellant
--------------------
Appeal from the United States District Court for the
Western District of Texas, El Paso Division
No. EP-03-CR-1732 PRM
--------------------
Before GARWOOD, BENAVIDES, and STEWART, Circuit Judges.
*
BENAVIDES, Circuit Judge:
This case involves an appeal of an upward departure in
Appellant’s sentence for mail fraud. Appellant claims the
district court based the departure on a misapplication of the
U.S. Sentencing Guidelines as they existed pre-Booker/Fanfan and,
because of Booker, she also argues that her mandatory sentence
enhancements were unconstitutional. See United State v. Booker,
125 S. Ct. 738 (2005). We find no reversible error in the
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
1
district court’s enhancements under the mandatory Guidelines.
However, we do conclude that the lower court erred in upwardly
departing from the Guidelines. Thus, we vacate the sentence and
remand.
I. Background
Defendant-Appellant Christine Apodaca pleaded guilty to a
one-count information that charged her with mail fraud. The plea
agreement waived her right to appeal her sentence, with the
exception of any upward departure. The plea agreement’s factual
basis described how Apodaca in 1999 solicited money from various
individuals to invest in a high-yield, risk-free enterprise. No
such investment opportunity actually existed; Apodaca, in fact,
operated a Ponzi scheme. In doing so, she defrauded her
“investors” of almost $300,000.
Apodaca was initially assessed a total offense level of 24.
This reflected a base offense level of six for violation of 18
U.S.C. § 1341, pursuant to the U.S. Sentencing Guidelines
(U.S.S.G. § 2B1.1). It also included, based on the Sentencing
Guidelines, (1) a 12-level increase because the loss exceeded
$200,000 (U.S.S.G. § 2B1.1(b)(1)(G)), (2) a two-level increase
because the offense involved more than ten victims (U.S.S.G. §
2B1.1(b)(2)(A)), (3) a two-level increase for abuse of trust
(U.S.S.G. § 3B1.3), and (4) a two-level increase for obstruction
of justice (U.S.S.G. § 3C1.1). The district court granted
2
Apodaca’s request for a three-level reduction because of her
acceptance of responsibility. Thus, her final offense level was
21.
The U.S. Probation Office did not recommend any upward
departure in this case. However, the district court announced
its intention to depart upward in sentencing Apodaca during the
February 17, 2004, sentencing hearing:
The Court in this case, based upon the circumstances of
the Defendant, based upon the circumstances of the case,
and based upon all of the information available, given
the enormity of the crime that has been committed, given
the number of victims involved and the amounts involved,
the Court is going to depart upward in this case . . . .
The district judge further elaborated on the grounds for
upward departure later in the same hearing. In contrast to the
earlier statement, the judge focused on the fact that Apodaca
hired an impostor to assist her in her fraudulent scheme.
Apodaca marketed her “investment” as being secured by a
(fictitious) financier, named Clayton E. Wilson. To placate some
concerned “investors,” Apodaca hired an individual to pose as
Wilson for a meeting with these “investors.” Apodaca paid the
impostor $1700 following this meeting. During the sentencing
hearing, the district judge chastised Apodaca for this particular
ruse:
I’m judging your judgement and your behavior on all of
the days that you took advantage of all of these people,
and the perpetuation of a scheme to the extent of going
and hiring an impostor to play this role of being the
person who secured the assets. That’s going the extra
mile[;] that’s the reason I departed upward in the case.
3
The court recessed and resumed on February 25th to deal with
issues of restitution. The judge sentenced Apodaca to 54 months
in prison and again mentioned the two-level upward departure,
without providing further justification.1 The court memorialized
the grounds for departure in writing: “The sentence departs
upward from the guideline range because of the high number of
victims affected, and the amount of monetary loss incurred in
this case.” From this sentence, Apodaca appeals.2
II. Discussion
1
Apodaca argues that she did not receive sufficient notice
of the district court’s intent to upwardly depart, as required by
Federal Rules of Criminal Procedure. See Fed. R. Crim. P. 32(h)
(“Before the court may depart from the applicable sentencing
range on a ground not identified for departure either in the
presentence report or in a party’s prehearing submission, the
court must give the parties reasonable notice that it is
contemplating such a departure. The notice must specify any
ground on which the court is contemplating a departure.”). See
also Burns v. United States, 501 U.S. 129, 138-39 (1991).
However, she was given one week’s notice (the time between the
first sentencing hearing and the actual sentencing on February
25th) and the judge set forth the grounds for the departure in
that first hearing. This amount of time clearly constitutes
sufficient notice. See United States v. Clements, 73 F.3d 1330,
1341 (5th Cir. 1996) (finding six day notice of intent to
upwardly depart sufficient). And it is of no moment that
Apodaca’s initial notice was at the first sentencing hearing.
See United States v. Andrews, 390 F.3d 840, 845 (5th Cir. 2004)
(finding adequate notice where the court, following the initial
sentencing hearing, “continued the case for thirty days, telling
[the defendant] that it planned to depart upwardly to the maximum
possible sentence for the offenses charged”).
2
The district judge sua sponte recognized an objection on
the part of Apodaca to preserve the question of the departure’s
permissibility for appeal.
4
We review a district court’s departure under the pre-Booker
federal Guidelines de novo. United States v. Bell, 371 F.3d 239,
243 (5th Cir. 2004). See also United States v. Villegas, __ F.3d
__, 2005 U.S. App. LEXIS 4517, *8-9 (5th Cir. Mar 17, 2005)
(stating that our sister circuits have found “that Booker did not
alter the standard for reviewing a district court’s
interpretation and application of the Guidelines”). Naturally,
any related findings of fact, though, will be reviewed only for
clear error. See United States v. Deavours, 219 F.3d 400, 402
(5th Cir. 2000). Accord United States v. Doe, 398 F.3d 1254,
1257 (10th Cir. 2005). Because of the lack of objection to the
mandatory sentence enhancements during the proceeding in the
lower court, we review Apodaca’s Booker claim for plain error.
See Villegas, __ F.3d at __, 2005 U.S. App. LEXIS 4517, *6.
A. The District Court’s Upward Departure
The government concedes that neither the number of victims
affected nor the magnitude of the monetary loss they suffered
constitutes a legitimate ground for an upward departure from the
Guidelines in this case. Rather, it argues that “the district
court based its departure on the basis of Appellant going the
‘extra mile’ and hiring an imposter which made Appellant’s case
different from the ordinary.”
Assuming that we are free to focus only on one comment in
the sentencing colloquy and ignore what the district court
5
claimed in writing constituted its grounds for the upward
departure--an issue that appears to be unsettled in this Circuit
under now-excised 18 U.S.C. § 3742(e)--we hold that the district
court’s upward departure was impermissible. See Bell, 371 F.3d
at 245 (noting that “[t]he statutory framework is unclear as to
whether a reviewing court may consider ‘factors’ that are not
discussed in the written statement of reasons when making
determinations . . . ”).3
The Sentencing Guidelines carve out a “heartland,” or group
of typical cases that represent the conduct punished by each
guideline. See United States v. Grosenheider, 200 F.3d 321, 330-
31 (5th Cir. 2000). Thus, when deciding whether to depart from
the Guidelines, courts are instructed to determine whether “there
exists an aggravating or mitigating circumstance of a kind, or to
a degree, not adequately taken into consideration by the
Sentencing Commission in formulating the guidelines that should
result in a sentence different from that described. ” 18 U.S.C.
§ 3553(b)(1). See also U.S.S.G. § 5K2.0. “Unusual or atypical
3
We again recently noted the problem caused by a trial
court’s failure to clearly state in writing its grounds for
departure: “In deciding to grant an upward departure, the court
pronounced justifications in its oral pronouncement that were
different from those in its written opinion. Although the
government correctly indicates that some of these grounds might
be legitimate bases for upward departure . . . , it is not
evident whether the statutory framework allows us to consider
factors that were in the oral explanation but not the written
one.” Andrews, 390 F.3d at 850.
6
cases are not ‘adequately taken into consideration,’ hence the
heartland departure.” United States v. Hemmingson, 157 F.3d 347,
360 (5th Cir. 1998). The Sentencing Guidelines explain: “When a
court finds an atypical case, one to which a particular guideline
linguistically applies but where conduct significantly differs
from the norm, the court may consider whether a departure is
warranted.” U.S.S.G. ch. 1, pt. A, introductory cmt., 4(b).
The government argues that hiring an impostor to meet once
with some “investors” to maintain the scheme’s artifice makes
Apocada’s crime unusual enough to place it outside of the federal
Guidelines’ heartland. Thus, we need only consider this one
factor of Apodaca’s crime. It is clear that this factor, the
hiring of an impostor, is not a factor that is forbidden,
encouraged, or discouraged by the Sentencing Guidelines.4
“If the factor is not mentioned in the guidelines, the court
4
“[A] sentencing court considering a departure should ask
the following questions:
‘1) What features of this case, potentially, take it
outside the Guidelines’ ‘heartland’ and make of it a
special, or unusual, case?
‘2) Has the Commission forbidden departures based on
those features?
‘3) If not, has the Commission encouraged departures
based on those features?
‘4) If not, has the Commission discouraged departures
based on those features?’”
United States v. Evans, 148 F.3d 477, 484 (5th Cir. 1998)
(citations omitted).
7
must consider the ‘structure and theory of both relevant
individual guidelines and the Guidelines taken as a whole’ and
decide whether the factor is sufficient to take the case outside
the heartland.” Hemmingson, 157 F.3d at 361 (quoting Koon v.
United States, 518 U.S. 81, 96 (1996)). It also must “bear[] in
mind that departures based on grounds not mentioned in the
Guidelines will be highly infrequent.” United States v. Barrera-
Saucedo, 385 F.3d 533, 536 (5th Cir. 2004).
Examining the grounds for departure provided in the notes to
U.S.S.G. § 2B1.1, we recognize that none appear to be analogous
to the ground given in this case. The application notes present
the following “non-exhaustive” list of factors that can be used
when considering an upward departure: (1) “A primary objective of
the offense was an aggravating, non-monetary objective. For
example, a primary objective of the offense was to inflict
emotional harm.”; (2) “The offense caused or risked substantial
non-monetary harm. For example, the offense caused physical harm,
psychological harm, or severe emotional trauma . . . .”; (3) “The
offense involved a substantial amount of interest of any kind,
finance charges, late fees, penalties . . . .”; (4) “The offense
created a risk of substantial loss beyond the loss determined for
purposes of subsection (b)(1)”; (5) “In a case involving stolen
information from a ‘protected computer’ . . . the defendant
sought the stolen information to further a broader criminal
8
purpose”; (6) “In a case involving access devices or unlawfully
produced or unlawfully obtained means of identification” the
victim was seriously hurt by his loss of identity (damaged
credit, denial of employment, erroneous arrest, or diminished
reputation) or the defendant assumed the victim’s identity.
U.S.S.G. § 2B1.1, application note 19(A). The notes further
advise “that, ordinarily, the sentences of defendants convicted
of federal offenses should reflect the nature and magnitude of
the loss caused or intended by their crimes.” Id. at 19(c).
This loss could be loss to the defendant’s direct victims or even
a loss to society by diminishing public trust in government or
charitable organizations. See id.
Strikingly, the application notes tend to focus on the
result and/or goal of the fraud, not the type of lie told to
induce the fraud nor the individual who actually lied to the
victims. This does not mean that such features may never
comprise sufficient grounds for an upward departure; rather, the
Guidelines only inform our judgment, as we may look to them
generally to assist in determining whether a feature of a crime
removes it from the heartland. See States v. Iannone, 184 F.3d
214, 228 (3d Cir. 1999) (discussing commentary to fraud guideline
when determining heartland through analysis of guideline’s
“structure and theory”).
An examination of the encouraged grounds for departure
9
listed in § 5K2 strengthens this sense. See id. at 228-29
(analogizing to the rest of the Sentencing Guidelines in
“structure and theory” analysis). Many deal directly with the
effect the crime had on the victim or society. See, e.g.,
U.S.S.G. § 5K2.1. (death); U.S.S.G. § 5K2.2. (physical injury);
U.S.S.G. § 5K2.3. (extreme psychological harm); U.S.S.G. § 5K2.5.
(property damage or loss); U.S.S.G. § 5K2.7. (disruption of
government function). Others reflect particularly dangerous or
heinous means. See, e.g., U.S.S.G. § 5K2.4. (abduction of
unlawful restraint); U.S.S.G. § 5K2.6. (weapons and dangerous
instrumentalities); U.S.S.G. § 5K2.8. (extreme conduct). Again,
this weakens the conclusion that hiring an imposter in this case
removed Apodaca’s fraud from the heartland.
Indeed, this case is noticeably different from other fraud
cases applying former § 2F1.1 (the precursor to current § 2B1.1)
where courts have found upward departures based on unmentioned
grounds appropriate. For instance, when upholding a § 5K2.0
upward departure, the Second Circuit has found that “there is no
indication that when it formulated punishments for mail fraud,
the [Sentencing] Commission took into account the possible
causation of massive environmental damage.” United States v.
Paccione, 949 F.2d 1183, 1205 (2d Cir. 1991). The Eighth Circuit
approved an upward departure because, inter alia, the appellant-
lawyer’s fraud “irreparably harmed” “[his former] firm’s goodwill
10
with the public and standing in the legal community” and “had
financial repercussions on the firm, its shareholders and
employees.” United States v. Moskal, 211 F.3d 1070, 1074 (8th
Cir. 2000). And the First Circuit approved an upward departure
when defendant carried loaded gun while committing credit card
fraud. See United States v. Yates, 973 F.2d 1, 6-7 (1st Cir.
1992) (noting that § 2F1.1 “does not list or mention as a
relevant factor the possession or use of a firearm as a
characteristic of that offense” and concluding that “[c]learly
the presence of the loaded pistol was a circumstance beyond the
‘mine run’ of cases involving misuse of a credit card”).5 Courts
have also found that frauds involving minors are outside of the
heartland. See United States v. Porter, 145 F.3d 897, 904-06
(7th Cir. 1998) (finding no error in upward departure for use of
fifteen year old girl in committing fraud); United States v.
Passmore, 984 F.2d 933, 935-37 (8th Cir. 1993) (approving upward
departure where adult defendant’s accomplice in the fraudulent
scheme was a female minor whom he corrupted and sexually abused
since she was eleven years old).6
The Third Circuit approved an upward departure in a case
5
Although § 5K2.6 provides possession of a weapon during
commission of the offense as a ground for departure, the court
explicitly departed upward under § 5K2.0.
6
The Sentencing Guidelines have since been amended to
increase the offense by two levels if a minor is involved in the
crime’s commission. See U.S.S.G. § 3B1.4.
11
where there were numerous factors of the crime it deemed
“unmentioned” in the Sentencing Guidelines; these included, inter
alia, that the defendant, in furtherance of his fraud, pretended
that he was a highly decorated Vietnam veteran, that he was in
the witness protection program, that he was a secret government
agent, that he was recommended for the Congressional Medal of
Honor, and that a drunk driver killed his family. See Iannone,
184 F.3d at 227-31. He also staged his own death causing his own
family severe grief. Id. at 230. The Circuit Court acknowledged
“that fraudulent misrepresentations [are] an inherent part of
[this] offense and therefore, to a certain degree, are included
in the base offense level for fraud.” Id. However, it found
that the district court did not abuse its discretion by
concluding that the fraud calculated to “exploit [] victims’
charitable impulses” featured “misrepresentations . . . beyond
the usual ‘heartland.’” Id. “The [district] court [also] found
[the defendant’s] repeated misrepresentations that he had
received combat medals particularly offensive, noting that
misrepresentation of the ownership of a combat medal may violate
federal law.” Id.These cases all involve facts patently differentiating them
from what is normally found in a fraudulent scheme. The
government asserts that hiring an imposter as part of a
fraudulent scheme is such a clearly unusual occurrence. In
12
reality, though, operators of illegal Ponzi schemes routinely
hire or work in conjunction with other individuals to further the
enterprise. See, e.g., United States v. Hayes, 385 F.3d 1226,
1227-28 (9th Cir. 2004); United States v. McCrimmon, 362 F.3d
725, 727-28 (11th Cir. 2004); United States v. Aptt, 354 F.3d
1269, 1273-75 (10th Cir. 2004); United States v. Maxwell, 351
F.3d 35, 36 (1st Cir. 2003); United States v. Rogers, 321 F.3d
1226, 1228 (9th Cir. 2003); United States v. Morris, 286 F.3d
1291, 1292-93 (11th Cir. 2002); United States v. Gravatt, 280
F.3d 1189, 1191 (8th Cir. 2002); United States v. Godwin, 272
F.3d 659, 663-66 (4th Cir. 2001). We are unable to identify a
case where a court sentenced a Ponzi scheme defendant under §
2B1.1 (or § 2F1.1) and upwardly departed under § 5K2.0 due to
assistance the perpetrator solicited.
This is not to say that the means utilized by an individual
violating anti-fraud laws will never remove a case from the
heartland. The Third Circuit’s Iannone case is clearly such an
example. However, we conclude that this single act, as framed by
the district court, cannot possibly render Apodaca’s scheme
special or unusual in the commission of mail fraud. The one
meeting in which Apodaca’s impostor participated was merely a
continuation of the on-going lie Apodaca had propagated. It
rests directly at the heart of her fraudulent scheme. This is
not a situation where the government contends that this fraud
13
differs significantly in kind from others or that Apodaca’s
general artifice was unusual. Rather, Apodaca merely had someone
else tell the same lie she had been telling throughout.
Recognizing that upward departures based on unmentioned factors
are to be “highly infrequent,” Barrera-Saucedo, 385 F.3d at 536,
we reverse the district court because this particular technical
detail of Apodaca’s fraudulent method, standing alone, cannot
possibly render this case “extremely rare,” “extraordinary or
even unusual in comparison to other cases . . . .” United States
v. Winters, 174 F.3d 478, 485 (5th Cir. 1999).
Thus, we find that the upward departure was impermissible
and vacate Apodaca’s sentence.
B. Mandatory Sentence Enhancements
Assuming arguendo Apodaca has not waived her right to appeal
this aspect of her sentence, as she contends in her supplemental
brief, we still cannot grant relief based on her Booker claim,
because the enhancement of her sentence under the federal
Sentencing Guidelines is not plain error. Simply put, Apocada
fails to carry her “burden of establishing that the error
affected the outcome of the proceeding.” United States v. Mares,
__ F.3d __, 2005 U.S. App. LEXIS 3653, *1 (5th Cir. Mar. 4,
2005).
We apply a plain error analysis because Apodaca failed to
raise this issue at trial. Id. at *22. This Court will reverse
14
if the appellant can show that (1) there is error; (2) the error
is plain; and (3) the error affects “substantial rights,” i.e.,
the error “must have affected the outcome of the district court
proceedings.” United States v. Olano, 507 U.S. 725, 732-34
(1993). “‘If all three conditions are met, an appellate court
may then exercise its discretion to notice a forfeited error, but
only if (4) the error “seriously affects the fairness, integrity,
or public reputation of judicial proceedings.”’” United States
v. Cotton, 535 U.S. 625, 631 (2002) (quoting Johnson v. United
States, 520 U.S. 461, 467 (1997)). Clearly, Apodaca cannot meet
the third prong. She points to nothing in the record indicating
that, had the district court sentenced her under an advisory
scheme, her sentence would be significantly shorter. See Mares,
__ F.3d at __, 2005 U.S. App. LEXIS 3653, *27-28. Indeed, the
trial court departed upward because it found her punishment under
the mandatory Guidelines insufficient.
III. Conclusion
Because we find that the district court erred under the
federal Sentencing Guidelines by departing upward, we VACATE
Apodaca’s sentence and REMAND to the district court for re-
sentencing.
15