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UNPUBLISHED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Affirmed in part; vacated and remanded in part by unpublished per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Unpublished opinions are not binding precedent in this circuit.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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