FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 12-10240
Plaintiff-Appellee,
D.C. No.
v. 3:10-cr-00547-
CRB-1
SAMUEL COHEN, AKA Mouli
Cohen,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the Northern District of California
Charles R. Breyer, District Judge, Presiding
Argued and Submitted
May 8, 2013—San Francisco, California
Filed August 22, 2013
Before: William A. Fletcher, Ronald M. Gould,
and Morgan Christen, Circuit Judges.
Opinion by Judge Christen
2 UNITED STATES V. COHEN
SUMMARY*
Criminal Law
The panel affirmed the district court’s application of a
sentencing enhancement under U.S.S.G. § 2B1.1(b)(9)(A) for
an offense involving “a misrepresentation that the defendant
was acting on behalf of a charitable organization . . .” in a
case in which the defendant induced patrons of a charitable
organization to purchase his shares in a for-profit company by
misrepresenting that the value of the shares would soon
skyrocket, enabling the patrons to make large charitable
contributions.
The panel held that the applicability of the enhancement
does not change because the defendant purported to act in the
interest of the charitable organization but not as its agent or
representative. The panel added that it is also not significant
that the defendant’s investors may have been motivated, in
part, by a desire to profit personally. The panel explained
that the defendant’s conduct qualifies for the enhancement
because, by presenting the investment opportunity as his
means of donating to the charitable organization, the
defendant misrepresented that he was acting “to obtain a
benefit on behalf of” the organization.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
UNITED STATES V. COHEN 3
COUNSEL
Marcus S. Topel (argued), Daniel F. Cook, and Jacob N.
Foster, Kasowitz, Benson, Torres & Friedman LLP, San
Francisco, California, for Defendant-Appellant.
Merry Jean Chan (argued) and Barbara J. Valliere, Assistant
United States Attorneys; Melinda Haag, United States
Attorney, San Francisco, California, for Plaintiff-Appellee.
OPINION
CHRISTEN, Circuit Judge:
Samuel Cohen induced patrons of a charitable
organization to purchase his shares in a for-profit company by
misrepresenting that the value of the shares would soon
skyrocket, enabling the patrons to make large charitable
contributions. A federal jury found Cohen guilty of fifteen
counts of wire fraud in violation of 18 U.S.C. § 1343, eleven
counts of money laundering in violation of 18 U.S.C. § 1957,
and three counts of tax evasion in violation of 26 U.S.C.
§ 7201. The district court applied a two-level upward
enhancement to Cohen’s Guidelines range under U.S.
Sentencing Guidelines § 2B1.1(b)(9)(A) because his offense
involved “a misrepresentation that the defendant was acting
on behalf of a charitable . . . organization.” The question in
this appeal is whether the district court correctly applied this
4 UNITED STATES V. COHEN
enhancement.1 We have jurisdiction under 28 U.S.C. § 1291
and 18 U.S.C. § 3742(a), and we affirm.
BACKGROUND
Samuel Cohen posed as a wealthy philanthropist
interested in donating sixty million dollars to charitable
causes. He arranged a meeting with the Vanguard Public
Foundation, a charitable organization, on the pretext that he
was considering making a donation. But instead of donating
to Vanguard, Cohen extended an offer to the Vanguard
Foundation’s donors to sell them some of his shares in Ecast,
Inc., a company he co-founded. Cohen represented that Ecast
was about to be acquired by Microsoft and that the value of
Ecast shares would soon jump up to the Microsoft price of
$30 per share. Cohen offered to sell his Ecast shares for
$3.50 per share, ostensibly conditioning his offer on the
donors’ promise to give half their profits to charity.
In fact, Cohen had been terminated from his position at
Ecast, he did not actually transfer any of his Ecast shares to
the purchasers, he never informed Ecast that he sold any
shares, and the evidence at his criminal trial showed that
Ecast was not in talks with Microsoft or any other buyer.
Cohen was convicted after a jury trial. The district court
applied a two-level sentence enhancement for those who
misrepresent that they are acting on behalf of a charitable
organization, and this appeal followed.
1
In this opinion, we address only the imposition of the charitable
enhancement under U.S. Sentencing Guidelines § 2B1.1(b)(9)(A). We
resolve the remaining claims in a memorandum disposition filed
concurrently.
UNITED STATES V. COHEN 5
STANDARD OF REVIEW
We review de novo the district court’s interpretation of
the Sentencing Guidelines. United States v. Treadwell,
593 F.3d 990, 999 (9th Cir. 2010). We review the district
court’s application of the Guidelines to the facts for abuse of
discretion, and we review the district court’s factual findings
for clear error. Id.
DISCUSSION
The U.S. Sentencing Guidelines provide a two-level
enhancement “[i]f the offense involved . . . a
misrepresentation that the defendant was acting on behalf of
a charitable . . . organization.” U.S.S.G. § 2B1.1(b)(9). The
Guidelines commentary states that the enhancement applies
“in any case in which the defendant represented that [he] was
acting to obtain a benefit on behalf of a charitable . . .
organization, . . . when, in fact, [he] intended to divert all or
part of that benefit . . . .” Id. cmt. n.7(B).2 The examples
given in the commentary involve directly soliciting donations
on behalf of a charitable organization. Id. But the
commentary also explains that the enhancement is aimed at
defendants who take advantage of “the generosity and
charitable motives of victims.” Id. cmt. background. And the
commentary explains that “[t]aking advantage of a victim’s
self-interest does not mitigate the seriousness of fraudulent
conduct; rather, defendants who exploit victims’ charitable
2
“Guidelines commentary is authoritative in interpreting the text of a
guideline ‘unless it violates the Constitution or a federal statute, or is
inconsistent with, or a plainly erroneous reading of, that guideline.’”
Treadwell, 593 F.3d at 1006 (quoting United States v. Alvarez-Hernandez,
478 F.3d 1060, 1063–64 (9th Cir. 2007)).
6 UNITED STATES V. COHEN
impulses . . . create particular social harm.” Id.; see also
United States v. Ferrera, 107 F.3d 537, 541 (7th Cir. 1997)
(focus of inquiry must be on defendant’s motivation for
making prohibited misrepresentation rather than concern that
victims may have been motivated, in part, by self-interest).
United States v. Treadwell is the leading Ninth Circuit
authority on the application of the charitable enhancement.
See 593 F.3d 990. In Treadwell, the Ninth Circuit affirmed
the application of the charitable enhancement to the operator
of a Ponzi scheme who represented to potential investors that
the companies they were investing in would donate a portion
of the companies’ returns to charity. Id. at 1008–09. The
charitable enhancement applied in Treadwell, even though the
investment scheme involved companies that held themselves
out to be for-profit companies, id. at 1008, like Ecast.
Treadwell established that this enhancement can apply where
defendants do not purport to directly represent a charitable
organization. Id.; see also Bryan A. Garner, Garner’s
Modern American Usage 91–92 (2d ed. 2003) (noting that
“on behalf of” is commonly used to signify either “in the
interest or for the benefit of” or “as the agent or
representative of”). The result in Treadwell was not changed
by the fact that victims might be motivated, or motivated in
part, by self-interest. Treadwell, 593 F.3d at 1008.
Under the reasoning of Treadwell, Cohen’s offense fits
easily within the ambit of the charitable enhancement even
though his scheme involved the sham sale of shares in a for-
profit company: by approaching Vanguard Foundation
donors, Cohen specifically extended his offer to individuals
he knew to be inclined toward charitable giving, and he
enticed them with promises that investing in the purchase of
his Ecast shares would enable them to make even larger
UNITED STATES V. COHEN 7
charitable gifts. The applicability of this sentencing
enhancement does not change because Cohen purported to act
in the interest of the Vanguard Foundation but not as its agent
or representative. Nor is it significant that Cohen’s investors
may have been motivated, in part, by a desire to profit
personally.
Cohen argues that Treadwell is distinguishable because
the Treadwell investors could have gained the impression that
“charitable organizations were involved,” see id., while here
the investors knew that Cohen and Ecast were not themselves
representatives of a charity. But this distinction does not
undercut the rationale for application of the sentencing
enhancement. The first tier “investors” in Cohen’s scheme to
sell his Ecast stock believed that he extended a special,
lucrative offer to them because they were affiliated with the
Vanguard Foundation and because they were expected to
donate a portion of their returns to that charity. Thus, just
like the defendant in Treadwell, Cohen pretended to be
interested in diverting potential profit to charity and
represented that the donors’ investment would inure to the
benefit of a charity. Cohen’s conduct qualifies for the
enhancement because, by presenting the investment
opportunity as his means of donating to the Vanguard
Foundation, Cohen misrepresented that he was acting “to
obtain a benefit on behalf of” the Vanguard Foundation.
U.S.S.G. § 2B1.1 cmt. n.7(B).
The district court did not abuse its discretion in applying
sentencing enhancement U.S. Sentencing Guidelines
§ 2B1.1(b)(9)(A) to its calculation of Cohen’s sentence.
AFFIRMED.