United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 09-3298
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United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the
* Northern District of Iowa.
Jack Straw, *
*
Appellant. *
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Submitted: April 15, 2010
Filed: August 5, 2010
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Before BYE, JOHN R. GIBSON, and GRUENDER, Circuit Judges.
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BYE, Circuit Judge.
Jack Straw appeals the 180-month sentence imposed following conviction for
four counts of wire fraud in violation of 18 U.S.C. § 1343, one count of mail fraud in
violation of 18 U.S.C. § 1341, one count of making, possessing, and uttering a forged
security in violation of 18 U.S.C. § 513(a), and one count of money laundering in
violation of 18 U.S.C. § 1957. Straw contends the district court1 improperly heard
testimony by a non-victim at sentencing, erroneously enhanced Straw’s sentence on
1
The Honorable Linda R. Reade, Chief Judge, United States District Court for
the Northern District of Iowa.
the basis that his crime involved fifty or more victims, and unreasonably varied
upward from the Guidelines in imposing Straw’s sentence. We affirm.
I
Jack Straw owned and operated an insurance business in which he acted as a
financial advisor, maintained trust accounts, and sold annuities and insurance policies
to his clients. Straw operated several fraudulent schemes in conjunction with his
business. During the relevant period: (1) Straw took more than $180,000 in client
funds which he claimed to invest in stocks, but which he actually used for his own
purposes or to pay prior victims in order to conceal his fraud; (2) Straw sold real
property that he did not have permission from the owners to sell and kept the
$399,932.54 in purchase money; (3) Straw forged client signatures on checks; (4)
Straw used a client’s bank account to make automatic payments of sixteen dollars per
month on a life insurance policy for his son-in-law (on which his daughter was named
beneficiary); and (5) Straw held a financial planning seminar in which he offered to
prepare wills for participants for a fee of $50 per will. He collected money but never
prepared the wills. Straw defrauded a couple from that seminar of approximately
$60,000 in his annuities scheme. Most of the money given to Straw by his clients
remains unaccounted for.
On December 2, 2008, Straw was charged in a seven-count information: four
counts of wire fraud in violation of 18 U.S.C. § 1343, one count of mail fraud in
violation of 18 U.S.C. § 1341, one count of making, possessing, and uttering a forged
security, in violation of 18 U.S.C. § 513(a), and one count of money laundering, in
violation of 18 U.S.C. § 1957. Straw pleaded guilty to all charges. The district court
found Straw’s base offense level under the United States Sentencing Guidelines
Manual (U.S.S.G.) to be seven and imposed an eighteen-level increase for an intended
loss of $3,041,805.68, a four-level increase because the offenses involved more than
fifty victims, a two-level increase because one or more of the victims were vulnerable
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victims, and a two-level increase for abusing a position of trust. Straw was awarded
a three-level reduction for acceptance of responsibility. The district court found
Straw’s criminal history category to be I, and, using an offense level of thirty,
calculated an advisory guidelines range of 97-121 months. After considering Straw’s
request for a downward variance and all the 18 U.S.C. § 3553(a) sentencing factors,
the district court varied upward and imposed a sentence of 180 months’ imprisonment
followed by three years of supervised release and $700 in mandatory special
assessments. This timely appeal followed.
II
Straw first challenges the district court’s decision to hear the testimony of
Straw’s cousin at the sentencing hearing. Several victims testified at Straw’s
sentencing hearing; in the midst of the testimony, Straw’s cousin Jodie Hansen gave
a brief statement indicating Straw had defrauded their 91-year-old grandmother and
had not come to see their grandmother the day she died. Straw was charged with
intentionally misappropriating the grandmother’s property in 2002 but the district
attorney dropped the charges.
Because Straw failed to object to Hansen’s testimony at the sentencing hearing,
we review under the plain error standard. See United States v. Shepard, 462 F.3d
847, 870 (8th Cir. 2006); United States v. Montayne, 996 F.2d 190, 192 (8th Cir.
1993) (en banc). Straw argues his cousin should not have been permitted to testify
because she is not a “crime victim” entitled to a right to be heard at public proceedings
under the Crime Victim’s Rights Act. 18 U.S.C. § 3771(e). This provision defines a
“crime victim” as “a person directly and proximately harmed as the result of the
commission of a federal offense.” Id. Even though 18 U.S.C. § 3771(a) grants a
crime victim the right to be heard at public proceedings, the statute does not operate
to exclude others from being heard at such proceedings. Congress has provided that
“[n]o limitation shall be placed on the information concerning the background,
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character, and conduct of a person convicted of an offense which a court of the United
States may receive and consider for the purpose of imposing an appropriate sentence.”
18 U.S.C. § 3661. Furthermore, in sentencing, “a judge may appropriately conduct
an inquiry broad in scope, largely unlimited either as to the kind of information he
may consider, or the source from which it may come. . . .” United States v. M.R.M.,
513 F.3d 866, 870 (8th Cir. 2008) (quoting United States v. Tucker, 404 U.S. 446
(1972)) (emphasis added). Therefore it was not plain error for the district court to
hear Hansen’s statement because the statement concerned Straw’s background,
character, and conduct.
Straw further contends the district court improperly considered Hansen’s
testimony as a victim impact statement. While the court and the prosecutor did refer
to the cousin as a “victim” in passing, it is clear all parties were aware of who she was
and who she represented. The district court spoke at length to explain the sentence
and did not mention the prior conduct related to Straw’s grandmother. We conclude
the district court did not erroneously consider the cousin’s statement as victim impact
testimony.
III
Straw next challenges the district court’s enhancement of his offense level by
four levels because his offense involved fifty or more victims. He contends the
district court erred by counting the victims of his uncharged wills-and-estate-planning
scheme and by counting each married couple as two victims. “We review the district
court’s interpretation and application of the guidelines de novo and its finding of fact
for clear error.” United States v. Icaza, 492 F.3d 967, 969 (8th Cir. 2007). Section
2B1.1(b)(2) of the sentencing guidelines provides: “If the offense . . . (B) involved 50
or more victims, increase by 4 levels . . . .” Section 2B1.1, Application Note 1,
defines “victim” as “any person who sustained any part of the actual loss determined
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under subsection (b)(1) . . . ‘Person’ includes individuals, corporations, companies,
associations, firms, partnerships, societies, and joint stock companies.”
Straw contends the district court incorrectly counted as victims the twenty
people he defrauded in his wills-and-estate-planning scheme for the purposes of the
U.S.S.G. § 2B1.1(b)(2) enhancement because the nature of the offense against those
victims was different and because many of his egregious behaviors did not apply to
those victims. U.S.S.G. § 1B1.3(a)(2) provides “all acts or omissions . . . that were
part of the same course of conduct or common scheme or plan as the offense of
conviction” may be considered as factors that determine the Guidelines range.
“Offenses . . . may . . . qualify as part of the same course of conduct if they are
sufficiently connected or related to each other as to warrant the conclusion that they
are part of a single episode, spree, or ongoing series of offenses.” U.S.S.G. § 1B1.3,
Application n. 9. In United States v. Lewis, 557 F.3d 601, 614 (8th Cir. 2009)
(quoting United States v. DeRosier, 501 F.3d 888, 896 (8th Cir. 2007)), we stated that
“we take a broad view of what conduct and related loss amounts can be included in
calculating loss,” and we applied the same reasoning to a calculation of victims,
rejecting a defendant’s contention that only victims named in the indictment should
be counted for the purposes of U.S.S.G. § 2B1.1(b)(2)(B). See also United States v.
Branch, 591 F.3d 602, 612 (8th Cir. 2009) (considering testimony from victims of
several of the defendant’s fraudulent schemes for the purposes of a U.S.S.G.
§ 2B1.1(b)(2)(B) enhancement).
Straw routinely used his financial seminars to meet and develop relationships
with potential victims and to determine whether they possessed assets he could steal.
Once he found the assets, Straw used one or more of his schemes to defraud his new
clients. Straw operated according to this pattern in 2006, when he met twenty new
potential victims at one of his financial planning seminars. Straw falsely promised
these individuals and couples he would provide wills for $50. Straw collected their
money and never provided wills, and he proceeded to defraud one of these couples out
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of nearly $60,000 using his annuity scheme. Given the fact that the victims of Straw’s
wills-and-estate-planning scheme overlapped with the victims of other schemes, and
that Straw used those seminars to find new victims for his other crimes and assess
their financial situations, it was not clearly erroneous for the district court to determine
they were part of the same course of conduct. Therefore, the district court properly
counted the twenty wills-and-estate-planning victims when it applied U.S.S.G.
§ 2B1.1(b)(2).
Straw also challenges the district court’s decision to count each member of the
married couples as a separate victim. Straw contends each of the thirteen married
couples should have been counted as a single victim, and that the government did not
prove that the funds invested in his schemes were jointly held or invested on behalf
of both members of each couple. The Presentence Investigation Report (PSR) stated
that Straw stole funds from thirteen married couples. Although the PSR determined
each married couple constituted a partnership (and therefore a single victim), the
district court found that the PSR incorrectly counted each married couple as only one
victim and recounted the thirteen married couples as twenty-six separate victims. This
put Straw over the fifty victims necessary for enhancement under U.S.S.G.
§ 2B1.1(b)(2)(B).
In United States v. Densmore, 210 Fed. Appx. 965 (11th Cir. 2006)
(unpublished) (cited with approval in United States v. Ellisor, 522 F.3d 1255 (11th
Cir. 2008)), the Eleventh Circuit found it was appropriate to count each member of the
married couples who had invested in a defendant’s fraudulent schemes as a separate
victim. The Densmore court relied on the language defining a victim as “any person
who sustained any part of the actual loss” in U.S.S.G. § 2B1.1, Application Note 1,
to find that both persons in a marriage suffered loss when jointly held money was
taken or when the investment was made on behalf of both persons. Densmore, 210
Fed. Appx. at 971. We do not need to decide whether the district court erred by
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counting each married person individually because the record demonstrates any error
in application of the enhancement would be harmless.
Incorrect application of the Guidelines is harmless error where the district court
specifies the resolution of a particular issue did not affect the ultimate determination
of a sentence. United States v. Vickers, 528 F.3d 1116, 1121 (8th Cir. 2008). Where
“the record clearly . . . show[s] not only that the district court intended to provide an
alternative sentence, but also that the alternative sentence is based on an identifiable,
correctly calculated guidelines range,” United States v. Johnston, 533 F.3d 972, 978
(8th Cir. 2008)(quoting United States v. Icaza, 492 F.3d 967, 971 (8th Cir. 2007)), any
error in applying an enhancement for number of victims is harmless. Here, the district
court stated:
So I will score Paragraphs 114 and 115 as a four-point increase as
opposed to a two-point increase [for number of victims]. Alternatively,
if the Court is incorrect in its interpretation of the guidelines, the Court
would depart under United States sentencing guidelines. I would depart
upward two levels because, in light of the unusual circumstances, the
weight attached to the number of victims under the guidelines would be
inadequate if there were only a two-level increase for the number of
victims.
Straw has not argued the district court could not have departed upward under these
circumstances. Since the district court clearly stated that it intended to provide an
alternative sentence that was based upon a correctly calculated Guidelines range, any
error in applying an enhancement for number of victims is harmless.
IV
Finally, Straw contends the district court’s upward variance constituted an
abuse of discretion. We review the district court’s sentencing, whether inside or
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outside the guidelines range, for an abuse of discretion. Gall v. United States, 552
U.S. 38, 51 (2007). We first review for procedural error, “such as failing to calculate
(or improperly calculating) the Guidelines range, treating the Guidelines as
mandatory, failing to consider the § 3553(a) factors, selecting a sentence based on
clearly erroneous facts, or failing to adequately explain the chosen sentence–including
an explanation for any deviation from the Guidelines range.” Id. If no procedural
error has been committed, we review the sentence for substantive reasonableness
under an abuse of discretion standard. United States v. Feemster, 572 F.3d 455, 461
(8th Cir. 2009)(en banc). The burden is on the appellant to show that his sentence
should have been lower considering the factors enumerated in 18 U.S.C. § 3553(a).
United States v. Milk, 447 F.3d 593, 603 (8th Cir. 2006).
Straw first contends the district court committed procedural error by failing to
take his mental condition and acceptance of responsibility into account at sentencing.
The PSR contains extensive information about Straw’s mental health history,
including his diagnosis of Bipolar Disorder and Adult Antisocial Behavior, and the
time he spent near the time of his arrest in a mental health facility into which he
checked himself voluntarily just as his crimes were discovered. The sentencing record
reflects his history of depression, and includes letters written by his wife and children
describing his history and requesting leniency. Even though the district court did not
mention Straw’s mental health issues when it discussed the upward variance, it stated
that it would not remand Straw to a mental health facility because the prison system
was equipped to treat his conditions adequately. In United States v. Wood, 587 F.3d
882, 884 (8th Cir. 2009) we considered a sentence where the district court did not
address the defendant’s mental health issues on record during sentencing, although
there had been argument on the issue and the district court specified it had reviewed
all submitted materials, including a competency examination. The district court is not
required to address on record every reasonable argument set forth by a defendant, and
we presume the district court considered relevant § 3553(a) factors at sentencing. See
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id. The record shows the district court was aware of Straw’s mental health issues and
there is no evidence it disregarded them in varying upward.
Straw next challenges the reasonableness of his sentence, arguing the district
court did not have justification for an upward variance because Straw’s crimes were
not out of the ordinary and the Guidelines contemplated all the aggravating factors.
We have consistently rejected this type of argument. See United States v. Chase, 560
F.3d 828, 831 (8th Cir. 2009) (“[F]actors that have already been taken into account
in calculating the advisory guideline range . . . can nevertheless form the basis of a
variance.”); United States v. Ruvalcava-Perez, 561 F.3d 883, 887 (8th Cir. 2009)
(rejecting claim of unreasonable variance where the district court varied upward based
on a defendant’s domestic violence convictions, which were already accounted for by
the Guidelines.). The district court repeatedly emphasized issues accounted for by the
Guidelines and specified which portions of the criminal conduct were not adequately
addressed by the Guidelines. The district court acknowledged that the Guidelines
accounted for the amount of the fraud, the number of victims, and the vulnerability of
the victims (many of whom were elderly). However, the district court stated the
Guidelines failed to take into account: (1) the fact Straw targeted the victims close to
retirement and targeted their retirement assets knowing they would have little or no
opportunity to replace those assets before their intended retirement dates; (2) the
serious impact of Straw’s fraudulent schemes on the victims of the crimes; (3) the fact
that Straw used a variety of methods to defraud his victims and each scheme
separately required significant premeditation and careful planning; and (4) Straw’s
production of false documents to lull his victims and his lack of intent to ever invest
the funds he received.
Straw points to United States v. Finn, 206 Fed. Appx. 631 (8th Cir. 2006)
(unpublished) and United States v. Tonks, 574 F.3d 628 (8th Cir. 2009), as evidence
he was improperly sentenced. In Finn, the defendant was sentenced at the top of the
Guidelines range to 135 months’ imprisonment for fraudulently receiving more than
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$3.7 million from over 100 investors. The difference between a sentence of 135
months at the top of the Guidelines range and a variance upward to 180 months does
not constitute the kind of disparity that would render Straw’s higher sentence
unreasonable. This difference is supported by the aggravating factors set forth by the
district court, including the significant impact that Straw’s fraud had upon his elderly
victims, the fact that he specifically targeted victims close to retirement age, and the
wide variety of schemes Straw employed to defraud his victims. In Tonks the
defendant was sentenced to 78 months’ imprisonment for cheating a single elderly
victim out of over $200,000. Tonks, 574 F.3d at 630. Tonks’ sentence of seventy-
eight months for stealing $200,000 from a single victim does not demonstrate Straw’s
sentence for stealing more that $3 million from multiple victims in multiple schemes
created unwarranted disparity.
The district court adequately justified the upward variance and we cannot
conclude the district court abused its discretion in doing so. Straw has failed in his
burden to show his sentence should have been lower considering the factors
enumerated in 18 U.S.C. § 3553(a).
V
Accordingly, we affirm the judgment of the district court.
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