United States v. Cordo

Opinions of the United
2003 Decisions States Court of Appeals
for the Third Circuit

4-4-2003

USA v. Cordo
Precedential or Non-Precedential: Precedential

Docket 01-2392

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 PRECEDENTIAL

Filed April 4, 2003

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 01-2392

UNITED STATES OF AMERICA
v.
JOSEPH CORDO,
Appellant

Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. Criminal No. 00-cr-00046-4)
District Court Judge: Honorable William W. Caldwell

Argued December 16, 2002
Before: NYGAARD, ALITO and RENDELL, Circuit Judges

(Filed April 4, 2003)

Peter Goldberger, Esq. [ARGUED]
Law Office of Peter Goldberger
50 Rittenhouse Place
Ardmore, PA 19003-2276
Counsel for Appellant
 1

Theodore B. Smith, III, Esq.
[ARGUED]
Office of U.S. Attorney
Federal Building, Suite 220
228 Walnut Street
P.O. Box 11754
Harrisburg, PA 17108
Counsel for Appellee

OPINION OF THE COURT

RENDELL, Circuit Judge:
Joseph Cordo appeals from a judgment of conviction and
sentence entered in the District Court on May 22, 2001,
following a jury trial for money laundering and related
charges connected to his participation in several fraudulent
investment schemes. We will affirm Cordo’s conviction, but
reverse and remand for resentencing.

I.
In the early 1990s, appellant Joseph Cordo, who worked
as an insurance salesman, was introduced to Steven
Stackpole. Together with Gavin Greene, Stackpole had
formed an investment vehicle, Entertainment Architects
(“EA”), which was selling an investment program called the
“Prime Trust Guarantee.” In order to attract investors,
Greene and Stackpole had fabricated an EA brochure and
various other promotional documents and literature, falsely
suggesting that investments in EA would be secured by
commercial real estate and other holdings. Cordo eventually
began selling EA investments.
In late 1994, Stackpole and Greene incorporated in New
Jersey as EA International (“EAI”), and formed EA
International Trust (“EAIT”), a wholly owned subsidiary of
EAI, with themselves as trustees. This new investment
vehicle, EAIT, then opened an account with Maidstone
Financial, Inc., a New York investment banking firm. For
investors, the new investment program would — at least
nominally — include positions in blue chip stocks as well
 2

as the opportunity to participate in IPO’s being
underwritten by Maidstone. Investors were guaranteed a
12% annual return over five years, and were assured no
risk of loss and that their funds were fully insured and IRA-
qualified for tax purposes. Further, investors were told that
no charges, fees, or commissions would be deducted from
their investments.
All of these representations were complete fabrications.
The funds were not insured, the plan was not IRA qualified,
there was no way of guaranteeing returns, and extensive
commissions and fees were deducted from the investments
from the outset. Further, EA never disclosed that its sales
force, such as Stackpole and Cordo, were not licensed to
sell securities, nor that several of the individuals involved,
including Stackpole and another co-defendant, Jeffrey
Klepper, had been respectively sued for and convicted of
fraudulent activities.
Between late 1994 and April 1997, thirty-four individuals
invested $1.5 million in the program. Contrary to EA’s
representations, however, less than one third of that total
was ever deposited into the Maidstone investment account,
and the only other “investments” made by EA were the
purchase of a two-bedroom condominium in New Jersey
and a topless dance club in the Bronx, for a total of
approximately $140,000.
Separate from the Maidstone investment activity, EA saw
a potential market in obtaining better returns for funeral
home directors on “pre-need” funds — money they collect
as prepayments for funeral services. Stackpole, Klepper,
and Cordo were all involved in the exploration and
development of the pre-need business, and another
company, Commonwealth Partnership Trust (“CPT”), was
formed by Klepper and Cordo to handle much of the day-to-
day operations of the new venture.
Pennsylvania law requires that pre-need funds be
deposited in trust with a Pennsylvania Bank, so, in 1996,
EAIT entered into an agreement with Nazareth National
Bank whereby Nazareth would accept pre-need funds from
funeral homes and immediately deposit them with EAIT for
investment. The homes were guaranteed at least 7% in
 3

annual returns, as well as the secondary benefit of having
CPT assume the relevant record-keeping obligations. CPT
was also responsible for marketing the venture to funeral
homes, and for its part EAI agreed to pay CPT 20% of each
dollar invested.
Some time in 1996, Cordo significantly reduced his active
participation in EAIT’s investment operations to assist in
the care of his father, who had been diagnosed with cancer.
Although not heavily involved in the daily operations of
CPT, Cordo was the company’s Vice President and was paid
as much as 4% of every dollar invested in the program.
Throughout this period, Cordo received commission checks
for his work with CPT and EAIT. Many of these checks were
endorsed over to his mother, who would cash them or,
occasionally, deposit them into her own account. Further,
Cordo would sometimes receive between two and four
checks written by EAI on the same day, each with an
amount less than $10,000 but together totaling over that
amount. On one occasion, a payment of over $72,000 was
paid by way of two checks totaling just over $7000, with
the balance deposited into a CPT money market account.
Cordo then opened a new checking account in CPT’s name,
wrote a check from the first account to the second, and
then used most of the money in the new account for
personal expenses. Also, from July 25, 1997, through
August 19, 1998, thirteen checks were written directly from
CPT to pay off a loan that Klepper had taken out on behalf
of Cordo for the purchase of a boat.
Things began unraveling for EAIT in late 1997. Nazareth
was served with a subpoena requesting all documents
relating to its dealings with EAIT, and learned that
Stackpole had been indicted for the misappropriation of
$1.4 million of investments in the late 1980s and early
1990s, prior to the creation of EA. As a result, Nazareth
immediately demanded an accounting, and subsequently
discovered that less than half of its $5 million had been
deposited into the Maidstone account.
After forcing Stackpole’s resignation, Nazareth attempted
to cover the death claim liabilities by obtaining one year
term life insurance policies on the lives of the funeral
homes’ pre-need customers. On February 28, 1998, EAIT’s
 4

Maidstone account, which by that time was worth only
$440,000, was liquidated. EAIT’s Park Avenue offices were
abandoned in March, and in May Greene reported to
Klepper and Cordo that EA had absolutely no remaining
assets.
Nonetheless, the ventures continued to represent to
investors that they remained in business. CPT sent account
statements to its funeral home customers through June of
1998, statements that inexplicably reflected automatic
increases in the EAIT accounts and no accounting for
EAIT’s extraordinary losses. In July 1998, in a phone
conversation recorded by law enforcement personnel,
Klepper represented to an investor that EAIT was still in
business and assured him that his investments were safe.
In September 1998, Greene, Klepper, and Stackpole sent a
letter to EAIT’s individual investors stating that EAIT’s
offices had moved from Park Avenue to an office suite in
New Jersey, a “suite” that was in fact a Mail Boxes Etc.
maildrop. Further, the four individual investors who had
chosen to receive monthly interest checks continued to
receive their disbursements through July of 1998, at which
point EAIT was completely insolvent. Klepper then
forwarded funds from CPT to an EAIT checking account,
and two of the four investors continued to receive monthly
checks through that October. Finally, a refund check to one
investor who sought the return of his $7,000 investment
was sent from EAIT after Cordo personally wired the money
to the EAIT account.
Ultimately, the losses from the various schemes totaled
approximately $5.9 million. A grand jury returned a 58
count indictment against Stackpole, Klepper, and Cordo.
Cordo specifically was charged with: (1) one count of
conspiracy to commit mail fraud, involving eleven mailings
made between November 1994 and December 1998 in
execution of a scheme and artifice to defraud individuals
and funeral homes with a series of affirmative
misrepresentations and omissions of material fact; (2) one
count of conspiracy to commit money laundering by
conducting financial transactions with the proceeds of
criminal activity; and (3) thirteen substantive counts of
money laundering, all relating to the payments made from
 5

CPT to pay off the loan taken out by Klepper for Cordo’s
purchase of the boat.
The jury returned a verdict convicting Stackpole and
Klepper of various charges of mail fraud, money laundering,
and related offenses, and convicting Cordo on all the
charges against him.1 Cordo submitted a sentencing
memorandum arguing that the counts against him should
be grouped under U.S.S.G. § 3D1.2. The government
opposed grouping, arguing that while the mail fraud counts
imposed distinct harms on distinct victims, the sole victim
of the money laundering was society at large. The District
Court agreed. Cordo’s offense level was therefore calculated
based on two different count groups — the mail fraud
conspiracy in one group and the money laundering counts
in another. Reflecting the two additional units for the two
groups pursuant to U.S.S.G. § 3D1.4, Cordo’s total offense
level was set at 29, which, given his criminal history
category of I, resulted in a sentencing range of 87-108
months. Ultimately, the District Court selected a sentence
from the middle of the applicable range, and sentenced
Cordo to 96 months imprisonment.2 Judgment was entered
May 22, 2001, and Cordo timely appealed. Bail pending
appeal was denied, and Cordo is presently serving his
sentence. The District Court had jurisdiction under 18
U.S.C. § 3231, and we have jurisdiction pursuant to 28
U.S.C. § 1291.

II.
Cordo’s appeal was consolidated with the appeals of his
co-defendants Steven Stackpole and Jeffrey Klepper. All
three co-defendants argued that: (1) the District Court’s
jury instructions were plainly erroneous because they
suggested that conviction for conspiracy to commit mail

1. Cordo was also charged by indictment with one count of money
laundering forfeiture, and entered a conditional guilty plea to that count
after the jury returned a verdict against him on the principal offenses.
2. Notably, Cordo was further sentenced to forfeit his interest in certain
property, to pay a special assessment of $1500, and — jointly and
severally with his co-defendants — to pay over $1.2 million in
restitution.
 6

fraud could be partly based on material omissions, and (2)
the District Court’s jury instruction on the liability of co-
conspirators pursuant to Pinkerton v. United States, 328
U.S. 640 (1946), violated Apprendi v. New Jersey, 530 U.S.
466 (2000). We find these arguments to lack merit.3
Cordo has argued separately that the government
violated its obligations under Brady v. Maryland, 373 U.S.
83 (1963), by failing to disclose material information about
the activities of Marshall Bernstein, the CEO and Chairman
of Maidstone Financial, the investment bank used by EAIT,
who was indicted for and later pled guilty to various
charges of money laundering and securities fraud five
months after Cordo was convicted. We note initially that
Cordo raises this issue for the first time on appeal, and that
generally it is “inappropriate to resolve a Brady claim in the
first instance.” United States v. Ferri, 778 F.2d 985, 997 (3d
Cir. 1985); see also United States v. Dansker, 537 F.2d 40,
65 (3d Cir. 1976). However, we have examined the merits of
this argument and conclude there was no Brady violation
because Cordo has shown neither that the government
failed to disclose material within its possession nor the
reasonable probability that the material could have
changed the outcome at trial.4
The primary issue we consider in this appeal is whether
Cordo’s mail fraud and money laundering convictions
should have been grouped under § 3D1.2 of the Sentencing
Guidelines. The circumstances under which money
laundering charges should be grouped with charges for
other related conduct is an issue that is frequently
confronted by the district courts, but has been only rarely
addressed by our court.

3. Our analysis of these issues is set forth in a separate, non-
precedential opinion issued in the cases of Stackpole and Klepper. See
United States v. Stackpole, No. 01-2033 (3d Cir. 2002).
4. Cordo also argues that there was an Apprendi violation because the
indictment omits “factual averments of the requirements for Pinkerton
liability” with regard to certain of the charges in the indictment.
However, Cordo cites no legal authority or plausible factual basis for his
argument, and we are unable to discern any potentially arguable
violation of Apprendi.
 7

A.
Section 3D1.2 of the Sentencing Guidelines provides that
“all counts involving substantially the same harm shall be
grouped” for sentencing purposes. At issue here is
subsection (b) of that guideline, which provides that counts
involve substantially the same harm when they “involve the
same victim and two or more acts or transactions
connected by a common criminal objective or constituting
part of a common scheme or plan.” U.S.S.G. § 3D1.2(b).5
The guideline commentary supplies further guidance in
the proper application of this provision. First, Application
Note 2 relevantly states:
The term “victim” is not intended to include indirect or
secondary victims. Generally, there will be one person
who is directly and most seriously affected by the
offense and is therefore identifiable as the victim. For
offenses in which there are no identifiable victims (e.g.,
drug or immigration offenses, where society at large is
the victim), the “victim” for purposes of subsections (a)
and (b) is the societal interest that is harmed. In such
cases, the counts are grouped together when the
societal interests that are harmed are closely related.
. . . Ambiguities should be resolved in accordance with
the purpose of this section as stated in the lead

5. Noting that courts had split on the question, the Sentencing
Commission recently amended the relevant guidelines to explicitly
require that mail fraud and money laundering charges such as those at
issue here be grouped for sentencing. See U.S. Sentencing Guidelines
Manual app. C, amend. 634 (2002). Although the amendment is not
directly relevant to our discussion, it is notable that in reiterating that
its amendment resolved the split, the Commission cited favorably to our
decision in United States v. Cusumano, 943 F.2d 305 (3d Cir. 1991), as
well as to the Fifth Circuit’s decision in United States. v. Leonard, 61
F.3d 1181 (5th Cir. 1995), and the Seventh Circuit’s decision in United
States v. Wilson, 98 F.3d 281 (7th Cir. 1996), each of which, as we
explain below, support the decision we reach today. Because Cordo is
not eligible for the retroactive application of these amendments, however,
see United States v. Edwards, 309 F.3d 110, 112 (3d Cir. 2002), our
analysis is limited to the provisions of the Guidelines in place at the time
of Cordo’s sentencing. Accordingly, references throughout are to the
November 1, 2000 Guidelines Manual.
 8

paragraph, i.e., to identify and group “counts involving
substantially the same harm.”
U.S. Sentencing Guidelines Manual § 3D1.2, cmt. 2 (2000).
Continuing that general theme, Application Note 4 states:
Subsection (b) provides that counts that are part of a
single course of conduct with a single criminal
objective and represent essentially one composite harm
to the same victim are to be grouped together, even if
they constitute legally distinct offenses occurring at
different times.
Id. at cmt. 4.
Relying on these Application Notes, and subsection (b)
itself, Cordo persuasively argues that the District Court
erred in refusing to group his mail fraud and money
laundering charges. Cordo urges that the individual
investors and funeral homes were the identifiable victims of
both his acts of fraud and his acts of money laundering.
Accordingly, he argues that his conduct involved “the same
victim[s] and two or more acts or transactions connected by
a common criminal objective [and] constituting part of a
common scheme or plan,” and thus should have been
grouped under the guidelines. U.S.S.G. § 3D1.2(b).
The issue of grouping matters here; if the charges had
been grouped, Cordo would not have received a two level
increase in offense level under § 3D1.4. Cordo’s base level
would therefore have been lowered to 27 from 29, resulting
in a sentencing range of 70-87 months instead of 87-108
months. Accordingly, Cordo’s sentence of 96 months would
have been reduced by at least nine, and up to sixteen,
months.
The government asserts, in contrast, that there were
different victims involved here. Whereas the mail fraud
offenses obviously took as their victim the investors
themselves, the government argues, the money laundering
offenses effected only a societal harm. The District Court’s
brief discussion of the issue suggests that it viewed the
analysis similarly:
“Insofar as the grouping is concerned, I think the
guidelines are looking at the same harms and the same
 9

victims in determining whether there should be a
grouping or not. Here in my mind, we have separate
harms and separate victims, and I think that has been
well argued by counsel in their presentations. We will
not group the two offenses of fraud and money
laundering.”
We review the District Court’s determinations of factual
questions relating to sentencing under the clearly
erroneous standard, but the “construction of § 3D1.2 is a
legal issue for our plenary review.” United States v.
Cusumano, 943 F.2d 305, 313 (3d Cir. 1991); see also, e.g.,
United States v. Rudolph, 137 F.3d 173, 178 (3d Cir. 1998).
We will reverse on this issue, and will accordingly remand
for resentencing.
B.
Our only precedent directly applicable to the question
before us is our decision in United States v. Cusumano, 943
F.2d 305 (3d Cir. 1991). Cusumano involved a kickback
scheme concerning an employee benefit plan, for which the
defendant was convicted on a number of counts of
conspiracy, embezzlement from an employee benefit plan,
receipt of kickbacks relating to an employee benefit plan,
laundering the proceeds of unlawful activity, and foreign
travel in aid of racketeering. Id. at 307-08. Stating that “the
money laundering . . . is very much in the thick of th[e]
entire scheme,” the district court rejected the defendant’s
argument that the money laundering charges were
“ancillary” to the primary kickback offenses, and grouped
the charges under subsection (b). Id. at 312-13. We noted
that although our review of the proper interpretation of
§ 3D1.2 is plenary, the only question at issue was the
“essentially factual” one of the precise role of the money
laundering in the scheme. We thus reviewed for clear error,
agreed with the district court’s determination that the
money laundering was not “ancillary” to the scheme and,
therefore, held that grouping was appropriate. Id. at 313.
We stated:
Even if we were to accept his dubious characterization
of the facts, Cusumano’s argument does not defeat the
application of § 3D1.2(b) to this case. Cusumano was
 10

convicted under the money laundering statute, 18
U.S.C. § 1956. The issue here under the Guidelines is
whether those convictions and his other convictions
“involve the same victim and two or more acts or
transactions connected by a common criminal objective
or constituting a part of a common scheme or plan.”
The victim of all offenses in this case was the Fund and
its beneficiaries. The evidence demonstrated that the
unlawful kickbacks, the embezzlement, the conspiracy,
the travel act violations and the money laundering were
all part of one overall scheme to obtain money from the
Fund and to convert it to the use of Cusumano [and
his co-defendants]. Therefore, the district court’s
conclusion that the money laundering offenses were
not “ancillary” is not clearly erroneous.
Id.
Although the specific issue in Cusumano was “essentially
factual” — i.e., whether or not Cusumano’s money
laundering conduct was actually “ancillary” to his overall
fraudulent scheme — we indicated there that, under
§ 3D1.2(b), money laundering charges should be grouped
with the charges that generated the funds unless the
money laundering was somehow a separate operation,
distinct from the scheme itself. Id. In Cusumano we made
clear that money laundering offenses do not necessarily
have society at large as their victim, and that, at least in
some circumstances, money laundering will have an
identifiable victim or victims for sentencing purposes. Id.
And, where the money laundering’s identifiable victims are
identical to the victims of the related offenses, such as the
targets of a fraudulent scheme — the employee benefit fund
and its beneficiaries in Cusumano — subsection (b) calls for
the counts to be grouped.
Until now we have not had direct occasion to reexamine
this specific issue further. However, we have consistently
referenced the reasoning we employed in Cusumano. In
United States v. Smith, 186 F.3d 290 (3d Cir. 1999), which
involved an embezzlement/kickback scheme that operated
against one private company, we noted that the district
court had grouped the defendants’ four charges —
conspiracy to defraud, interstate transport of stolen
 11

property, causing interstate transport of stolen property
with intent to distribute, and money laundering — under
subsection (b). Id. at 296-97. Although the issue was not
directly before us, we stated that the grouping was
“appropriate” because the company “was the ‘same victim’
and all transactions were connected to the kickback
scheme.” Id. at 297 (citing Cusumano, 943 F.2d at 312).
Similarly, in United States v. Diaz, 245 F.3d 294 (3d Cir.
2001), which concerned a scheme against the Department
of Education involving student loan checks, we noted that
the District Court had grouped “several counts, including
fraud and money laundering.” Id. at 303. Citing subsection
(b) and Smith, we stated:
Under the sentencing guidelines, the District Court
must group the counts into a single unit when there
are multiple counts all involving substantially the same
harm to the same victim and two or more acts or
transactions connected by a common criminal objective
or constituting part of a common scheme or plan. The
victim in all of Diaz’s offenses was the same, the DOE.
All of her acts were part of a common plan.
Id. at 300 (emphasis added) (citations omitted); see also
United States v. Omoruyi, 260 F.3d 291, 298 (3d Cir. 2001)
(noting that “several counts, including mail fraud and
money laundering, ha[d] been grouped [by the district
court] pursuant to U.S.S.G. § 3D1.2(b)”).6
The reasoning underlying Cusumano, Smith, and Diaz is
highly persuasive. Section 3D1.2(b) requires the grouping of

6. We also had occasion to examine the “victim” aspect of subsection (b)
in United States v. Rudolph, 137 F.3d 173 (3d Cir. 1998), a case not
involving money laundering. There we held that § 3D1.2(b) did not apply
to a situation in which an INS special agent convicted of taking a bribe
relating to providing a template to an unauthorized user had also sold a
confidential presentence report. Id. at 181. We held that while society at
large was the victim of the bribe, the individual for which the
presentence report was prepared was the victim of the sale. Id. Judge
Becker, concurring in the result, was of the view that the harm in both
instances should be viewed in a less formalistic manner, as the
“undermining of the citizenry’s trust in government and its officials.” Id.
at 183 (Becker, J., concurring).
 12

money laundering charges with the charges for related
offenses if the conduct is all part of one scheme with the
same identifiable victims. Where there is a single scheme or
artifice to defraud a victim or set of victims — an employee
benefits fund and its beneficiaries, a private company, the
Department of Education, or a collection of individual
investors and funeral homes — that results in charges for
money laundering as well as the conduct that generated the
subsequently laundered funds, the charges should be
grouped for sentencing.
Apparently crediting the arguments of the government,
the District Court here held otherwise, holding that the
money laundering and mail fraud counts had different
victims. Similarly, the government argues that the victims
of the mail fraud were the investors and funeral homes,
whereas the sole victim of the money laundering was
society at large. Under the sentencing guidelines, however,
the court is to consider the “victim of the offense for
grouping purposes to be “society” only if the offense had
“no identifiable victim.” U.S. Sentencing Guidelines Manual
§ 3D1.2, cmt. 2 (2000). The Guidelines cite drug and
immigration offenses as examples of such victimless crimes.
Id.
We cannot agree with the District Court that the money
laundering here had no identifiable victim. Certainly there
are cases where, for instance, the defendants are charged
with laundering funds obtained from drug sales or
gambling. But this is not such a case. Here the acts of
money laundering and mail fraud were all “in furtherance
of a single fraudulent scheme” to defraud identifiable
victims — unsuspecting investors and funeral homes. Id. at
cmt. 4.
The jury found that Cordo, Klepper, and Stackpole were
involved in conspiracies to commit mail fraud and money
laundering, and that Cordo committed thirteen substantive
acts of money laundering in connection with his purchase
of the boat. It is undisputed that all of the laundering
activity at issue involved funds that were proceeds of the
fraudulent investment scheme. The laundering was simply
the final step in the operation. In other words, “the evidence
demonstrated that” the mail fraud and money laundering
 13

were “part of one overall scheme to obtain money from [the
investors] and to convert it to the use of ” Cordo and his co-
defendants. Cusumano, 943 F.2d at 313. Thus, just as in
Cusumano, Smith, and Diaz, the acts of money laundering
were a further victimization of the defrauded investors, and
therefore did have identifiable victims. Because this was a
“single course of conduct with a single criminal objective,”
imposing “essentially one composite harm” on the “same
victim[s],” the charges should have been grouped. U.S.
Sentencing Guidelines Manual § 3D1.2, cmt. 4 (2000); see
also United States v. Wilson, 98 F.3d 281, 282-83 (7th Cir.
1996); United States v. Leonard, 61 F.3d 1181, 1186 (5th
Cir. 1995).
The government has offered no persuasive argument that
would cause us to conclude otherwise. At oral argument,
the government urged that this case was somehow
distinguishable from Cusumano because the money
laundering there had a different purpose and, further,
involved a more substantial percentage of the funds
obtained through the overall fraudulent scheme. Unlike
Cusumano, the government argued, the money laundering
activities here were meant only to conceal the defrauded
funds, and thus did not victimize the defrauded investors
but instead represented a distinct course of conduct
imposing a wholly separate type of harm.7 That conclusion
simply does not follow. The money laundering here was the
completion of a scheme to convert funds fraudulently
obtained from those investors. The payments made directly
from CPT for Cordo’s boat, for instance, were nothing but
the final act in the conversion of the funds, by way of the
scheme, to Cordo’s personal use. Similarly, the fortuitous

7. Although the government appeared to abandon the contention at oral
argument, in its brief the government attempted to further distinguish
Cusumano from the present facts by arguing that in that case “the
district court and this Court determined that grouping was proper
because society was the victim of all the offenses and the offenses
constituted part of a common scheme or plan.” That is quite clearly not
the holding of Cusumano, which to the contrary explicitly stated that
“[t]he victim of all offenses in this case was the Fund and its
beneficiaries,” and never referenced society as the potential victim.
Cusumano, 943 F.2d at 313.
 14

fact that Cordo was only charged with laundering some of
the funds obtained fraudulently does not mean that the
money laundering was not an essential aspect of the overall
fraudulent scheme. Notwithstanding the government’s
contentions to the contrary, we are unable to discern any
distinction between the type of harm involved here and the
type of harm involved in Cusumano. In both, there was a
common scheme or plan involving multiple acts or
transactions against identical victims, as expressly
contemplated by § 3D1.2(b) grouping. See Cusumano, 943
F.2d at 313.
Our analysis finds support in the grouping decisions of
several of our sister Courts of Appeals. In United States v.
Leonard, 61 F.3d 1181 (5th Cir. 1995), the defendant was
convicted on a variety of charges, including money
laundering, mail fraud, and wire fraud, relating to a
telemarketing scam. Id. at 1183. The Court of Appeals for
the Fifth Circuit, reviewing the District Court’s grouping
decision de novo, held that grouping was necessary. Id. at
1185-86. The court found that the money laundering
activities “perpetuate[d]” the other crimes by “advanc[ing]
the mail and wire fraud scheme that victimized nearly 500
people.” Id. at 1186. The court explicitly endorsed our
subsection (b) analysis in Cusumano, stating that the
situations were similar in that the money laundering
involved in both Cusumano and Leonard was not “ancillary”
or “neatly separated” from the other offenses, but was
instead part of “a single, integrated scheme.” Id.
Accordingly, the court upheld the District Court’s grouping
decision.8
The same reasoning was adopted by the Seventh Circuit
Court of Appeals in United States v. Wilson, 98 F.3d 281
(7th Cir. 1996). In Wilson, the defendant was a securities
broker who “conducted a Ponzi scheme that defrauded
forty-eight victims of more than three million dollars.” Id. at

8. Although the Fifth Circuit’s analysis seems most relevant to
subsection (b), and although the Court explicitly “follow[ed]” our
subsection (b) analysis in Cusumano, the court indicated that it was
holding that grouping was necessary under subsection (d). Leonard, 61
F.3d at 1185-86; see also Wilson, 98 F.3d at 282-83.
 15

282. Like the scheme involved here, while the investors
were told that their money was being placed into secure
investments, Wilson deposited the funds into a personal
account and “used them for both personal expenses and to
cover interest and dividend payments owed to previous
investors.” Id. Wilson pled guilty to charges of mail fraud
and money laundering, and on appeal argued that the
District Court erred in failing to group the charges. Id.
The Court of Appeals for the Seventh Circuit agreed, and
reversed the District Court’s failure to group the charges for
purposes of sentencing. Id. at 282-84. The court first
reiterated that the “central purpose” of the grouping
provisions was to “ ‘combine offenses involving closely
related counts.’ ” Id. at 282 (quoting United States v.
Mullens, 65 F.3d 1560, 1564 (11th Cir. 1995)). The court
then noted that “Wilson’s convictions for mail fraud and
money laundering without question me[t] that criterion,” as
“[a]ll of the money that Wilson laundered was money
defrauded from his investors.” Id. at 282. Thus, the court
“reject[ed] the government’s contention that these offenses
[we]re inappropriate for grouping because they involve[d]
different victims and thus different harms.” Id. at 283.
Although the court indicated that it may agree that “[i]n the
abstract” the “victim of mail fraud is the person defrauded,
while the victim of money laundering is society at large,”
the court stated:
[W]hen the defendant is convicted of laundering the
proceeds of his fraud in order to conceal or disguise
the nature, the location, the source, the ownership, or
the control of the proceeds, . . . there is intuitive force
to the argument that the victim of the fraud is also a
victim of the transaction designed to hide or “cleanse”
the funds of which she was defrauded. More to the
point, the money laundering in this case served to
perpetuate the very scheme that produced the
laundered funds.
Id. (quotations omitted); see also United States v. Rudolph,
137 F.3d 173, 184 (3d Cir. 1998) (Becker, J., concurring)
(praising the Seventh Circuit’s approach in Wilson). The
Court then quoted at length from Leonard, noted that
decision’s reliance on our opinion in Cusumano, and, like
 16

Leonard, held that grouping was required under subsection
(d). Id. at 283-84.

III.
Cordo’s acts of mail fraud and money laundering were
part of a common scheme involving identical victims —
defrauded investors. We therefore agree with Cordo that the
District Court erred in failing to group his mail fraud and
money laundering counts pursuant to § 3D1.2(b), resulting
in an incorrect base offense level and sentence.
Accordingly, we will REVERSE the District Court’s order,
and REMAND for a new sentencing consistent with this
opinion.

A True Copy:
Teste:

Clerk of the United States Court of Appeals
for the Third Circuit