United States v. Thomas, Scott

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-1104
United States of America,
Plaintiff-Appellee,
v.
Scott Thomas,
Defendant-Appellant.
Appeal from the United States District Court
for the Central District of Illinois.
No. CR 98-20031--Michael P. McCuskey, Judge.
Argued September 16, 1999--Decided December 16, 1999
Before Ripple, Manion, and Diane P. Wood, Circuit
Judges.
Diane P. Wood, Circuit Judge. For over two years,
Scott Thomas played a part in a telemarketing
fraud scheme centered in Atlanta, Georgia, under
which elderly victims were persuaded to send
advance "tax" payments on fictional cash prizes
they had won. Of course, there were no prizes,
and the supposed tax payments went into the
pockets of the crooks. After he was caught,
Thomas pleaded guilty to three counts of wire
fraud, in violation of 18 U.S.C. sec. 1343, and
received a sentence of 21 months’ imprisonment.
His appeal raises only one question: whether the
district court erred when it found that the
"jointly undertaken criminal activity" (as the
term is used in U.S. Sentencing Guideline sec.
1B1.3(a)(1)(B)) in which Thomas participated was
the whole scam. Thomas argues that he should be
held accountable only for the wire transfers in
which he was actually involved. We conclude that
the district court’s decision was not in error,
and we therefore affirm.
I
The telemarketing scheme itself was the
brainchild of George Coe, David Beasley, and
Jeffrey Thomas (Scott’s brother), all of whom
operated out of Atlanta. One of those three would
call an elderly individual at home and inform her
that she had won a cash prize. The only catch was
that the lucky winner would have to pay taxes on
the prize money before she could receive it. The
caller would then instruct the victim to wire the
tax payment to an identified individual.
In order to protect themselves, Coe, Beasley,
and Jeffrey Thomas did not require the victims to
wire the money directly to them. Instead, they
used "runners" located in the Danville-Champaign,
Illinois, area. Thomas was one of those runners,
along with a number of other people; all of them
were old friends of Coe and Beasley. Because
Western Union requires photo identification
before it will release wired funds to a
recipient, the runners had to use their real
names for the system to work. So, for example, a
victim would wire funds addressed to Thomas; he
would collect the money at Western Union; he
would then retain a share (usually 10 percent);
and then, using an alias, he would wire the
balance to Coe, Beasley, or Jeffrey Thomas.
Normally the runners worked independently, but
from time to time Thomas accompanied another
runner, Aaron Williams, on his pick-ups.
Thomas began his work as a runner in September
1995. While he was in custody in Danville,
Illinois, on an unrelated charge, he acknowledged
that he had known Coe all his life and that he
had picked up one wire transfer for Coe. For some
reason, however, that was not enough to alert
authorities to the full operation. Not until 1997
did a serious investigation begin. Early in that
year, an official of the U.S. Postal Inspection
Service met with Thomas and interviewed him.
Thomas acknowledged that his role was to pick up
money wired by Coe or Beasley. In March 1997, the
postal inspector informed Thomas that the scheme
targeted elderly victims. Undeterred and
unstopped, Thomas continued to play his part in
the enterprise after that meeting.
In May 1998, Thomas and four others were (at
last) indicted and charged with 24 counts of wire
fraud. Thomas pleaded guilty to three counts, and
the government agreed to dismiss the others at
sentencing. The pre-sentence report (PSR)
calculated the total losses under the scheme to
be $32,885. Of that amount, Thomas personally
picked up $12,700 in wire transfers. Thomas
raised three objections to the PSR: first, he
argued that he should not be held accountable for
his co-defendants’ posing as agents of the
Internal Revenue Service; second, he objected to
the conclusion that there were no factors
warranting a downward departure; and third, he
objected to the recommendation that he should be
accountable for the entire loss. The district
court sustained the first objection, finding that
Thomas did not know about the IRS angle used in
the telemarketing portion of the transaction
(apart from his realization that something was
"fishy"). It overruled the second, finding that
a downward departure was unwarranted because he
had ten criminal history points (including a
felony drug offense). Last, the court rejected
the third objection, with the following comment:
One, the Court based on the evidence finds that
Mr. Scott Thomas is an admitted runner in this
scheme and, two, that he accompanied Mr. Aaron
Williams to various events of which Mr. Williams
was a runner; that all of the individuals in this
transaction know each other, are friends, and,
therefore, Mr. Thomas is accountable for the
entire scheme from the date that he first entered
participation which was . . . September 27, 1995.
The $32,885 figure gave Thomas an adjusted
offense level of 10 under U.S.S.G. sec.
2F1.1(b)(1)(E). Along with his criminal history
category IV, his sentencing range was 15 to 21
months. The district court sentenced him to 21
months, the top of that range.
II
On appeal, Thomas urges us to find that the
district court erroneously conflated two separate
requirements of the relevant conduct guideline,
sec. 1B1.3, when it found him responsible for the
full amount of the scheme. The relevant language
of the guideline is as follows:
[The base offense level must be determined on the
basis of,] in the case of a jointly undertaken
criminal activity (a criminal plan, scheme,
endeavor, or enterprise undertaken by the
defendant in concert with others, whether or not
charged as a conspiracy), all reasonably
foreseeable acts and omissions of others in
furtherance of the jointly undertaken criminal
activity[.]
Thomas rightly notes that this section first
requires the sentencing court to determine what
was the jointly undertaken criminal activity, and
then, with respect to that activity, to decide
what acts or omissions were reasonably
foreseeable to the defendant. Application Note 2
makes this even more clear, when it states:
In the case of a jointly undertaken criminal
activity, subsection (a)(1)(B) provides that a
defendant is accountable for the conduct (acts
and omissions) of others that was both:
(i) in furtherance of the jointly undertaken
criminal activity; and
(ii) reasonably foreseeable in connection with
that criminal activity.
Relying heavily on the Second Circuit’s decision
in United States v. Studley, 47 F.3d 569 (2d Cir.
1995), Thomas argues that the court here looked
only at the second of those two factors--
reasonable foreseeability--and failed to
recognize that his jointly undertaken criminal
activity was limited to his role as a runner in
the transactions he actually handled.
In Studley, the defendant participated as a
caller in a fraudulent telemarketing scheme. He
and several others, working a phone bank, called
people and asked if they wanted to apply for a
loan. After fraudulently telling the target that
he had been "preapproved," Studley and his
colleagues would instruct him to send in a $249
loan processing fee. Like the prizes in our case,
the loans were fictional. The question before the
Second Circuit was whether Studley should be
accountable for all losses inflicted by the
scheme, or for only the losses Studley caused
directly. The court used a two-step analysis to
resolve the case: it asked first which acts were
within the scope of Studley’s agreement, and
second, whether those acts were reasonably
foreseeable to him. It found a number of factors
to be relevant to the first question: Were
profits and resources pooled? Was there a joint
design and execution? What precise role did the
defendant agree to play? Even if the defendant
was perfectly aware of the breadth of the scheme,
if he was not part of all of it, his sentence
could not be based on more than the part to which
he had agreed.
Thomas is not the first defendant to argue to
this court that the Studley analysis was
applicable to his case. In each of three other
cases, the same point was presented, and in each
of them, we have distinguished Studley. See
United States v. Giang, 143 F.3d 1078, 1080-81
(7th Cir. 1998) (distinguishing Studley because
the defendant was active in one of three nearly
identical fraudulent transactions and facilitated
a second one); United States v. Senn, 129 F.3d
886, 898 (7th Cir. 1997) (distinguishing Studley
because the defendant was responsible for 78
percent of the scheme’s take, developed the most
successful "rap" and scam, and knew from the
beginning that the operation had other
participants); United States v. Boatner, 99 F.3d
831, 837 (7th Cir. 1996) (distinguishing Studley
because co-conspirators worked together to
defraud one victim, including concocting the same
story, lying to police, and hiring the same
lawyer to pursue their fraudulent claims).
In none of those cases did we assume that the
requirements for conduct in furtherance of a
jointly undertaken criminal activity and for
reasonable foreseeability were one and the same.
Nor do we do so here. To that extent, we have no
quarrel with the Second Circuit’s Studley
decision, which rightly acknowledges the two
separate inquiries that must be undertaken to
determine relevant conduct under U.S.S.G. sec.
1B1.3. Studley also rightly recognizes that the
first question, which goes to the scope of the
defendant’s agreement, is one of fact, and that
the answer will depend on the particular
circumstances of the case. On the other hand, we
do not read Studley as holding that the
defendant’s knowledge about the broader scheme is
utterly beside the point in ascertaining the
"jointly undertaken criminal activity" in which
the defendant has agreed to participate.
Knowledge is pertinent to both parts of the sec.
1B1.3 inquiry, even if it is not sufficient
standing alone to prove the scope of an
agreement.
Here, Thomas argues that the evidence compelled
a conclusion that his jointly undertaken criminal
activity was limited to the narrower set of
transactions for which he served as a runner. He
notes that his compensation was in no way related
to the broader scheme, because it was just a cut
of the particular wire transfer he collected. He
admits to knowing that other runners were also
involved, but their activities were independent
of his. Without more conscious or specific
coordination with the others, Thomas argues, the
evidence cannot support a finding that he agreed
to join the scheme as a whole.
We review district court determinations of
relevant conduct for clear error, United States
v. Townsend, 73 F.3d 747, 751 (7th Cir. 1996), as
long as the court has used the proper legal
framework. Here, while our task of reviewing
Thomas’s sentence would have been easier if the
district court had explained itself more fully,
we are satisfied that it committed no legal
errors in interpreting sec. 1B1.3. Its comment
and its reliance on the PSR indicate that it was
aware that more than simple foreseeability was
required before Thomas could be held responsible
for the full amount of money collected from the
victims. That leaves only the court’s factual
determination, which was that the "jointly
undertaken criminal activity" in which Thomas
participated was the scheme as a whole, not just
his specific part. On this question, the evidence
could have supported either conclusion, which
means that the district court could not have
clearly erred when it chose one of those options.
United States v. Yusuff, 96 F.3d 982, 989 (7th
Cir. 1996), cert. denied, 519 U.S. 1134 (1997).
Thomas was closely linked with the ringleaders of
the scam, two of whom were lifelong friends.
Unlike Studley’s crime, which lasted only a few
weeks, Thomas’s activity spanned more than two
years. During that time, he had several close
brushes with the law, but he managed to avoid
spoiling things for himself and his colleagues.
Thomas also went along with Williams on some of
the latter’s pick-ups, which evidenced at least
minimal cooperation among the runners. Thomas’s
use of aliases to wire money exhibited an
understanding of the scope of the offense and the
roles of the various actors. Finally, his
agreement to serve as a runner was essential to
the success of the scheme and furthered the
criminal activity of the group as a whole.
Like the district court, we are satisfied that
these facts are enough to distinguish the present
case from Studley and to justify the district
court’s finding that Thomas was responsible for
all $32,885 collected by the group. We therefore
Affirm the judgment of the district court.