United States v. Apodaca

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT April 18, 2005

Charles R. Fulbruge III
No. 04-50252 Clerk

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

CHRISTINE APODACA,

Defendant-Appellant

--------------------
Appeal from the United States District Court for the
Western District of Texas, El Paso Division
No. EP-03-CR-1732 PRM
--------------------

Before GARWOOD, BENAVIDES, and STEWART, Circuit Judges.
*
BENAVIDES, Circuit Judge:

This case involves an appeal of an upward departure in

Appellant’s sentence for mail fraud. Appellant claims the

district court based the departure on a misapplication of the

U.S. Sentencing Guidelines as they existed pre-Booker/Fanfan and,

because of Booker, she also argues that her mandatory sentence

enhancements were unconstitutional. See United State v. Booker,

125 S. Ct. 738 (2005). We find no reversible error in the

*
Pursuant to 5TH CIR. R. 47.5, the Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.

1
district court’s enhancements under the mandatory Guidelines.

However, we do conclude that the lower court erred in upwardly

departing from the Guidelines. Thus, we vacate the sentence and

remand.

I. Background

Defendant-Appellant Christine Apodaca pleaded guilty to a

one-count information that charged her with mail fraud. The plea

agreement waived her right to appeal her sentence, with the

exception of any upward departure. The plea agreement’s factual

basis described how Apodaca in 1999 solicited money from various

individuals to invest in a high-yield, risk-free enterprise. No

such investment opportunity actually existed; Apodaca, in fact,

operated a Ponzi scheme. In doing so, she defrauded her

“investors” of almost $300,000.

Apodaca was initially assessed a total offense level of 24.

This reflected a base offense level of six for violation of 18

U.S.C. § 1341, pursuant to the U.S. Sentencing Guidelines

(U.S.S.G. § 2B1.1). It also included, based on the Sentencing

Guidelines, (1) a 12-level increase because the loss exceeded

$200,000 (U.S.S.G. § 2B1.1(b)(1)(G)), (2) a two-level increase

because the offense involved more than ten victims (U.S.S.G. §

2B1.1(b)(2)(A)), (3) a two-level increase for abuse of trust

(U.S.S.G. § 3B1.3), and (4) a two-level increase for obstruction

of justice (U.S.S.G. § 3C1.1). The district court granted

2
Apodaca’s request for a three-level reduction because of her

acceptance of responsibility. Thus, her final offense level was

21.

The U.S. Probation Office did not recommend any upward

departure in this case. However, the district court announced

its intention to depart upward in sentencing Apodaca during the

February 17, 2004, sentencing hearing:

The Court in this case, based upon the circumstances of
the Defendant, based upon the circumstances of the case,
and based upon all of the information available, given
the enormity of the crime that has been committed, given
the number of victims involved and the amounts involved,
the Court is going to depart upward in this case . . . .

The district judge further elaborated on the grounds for

upward departure later in the same hearing. In contrast to the

earlier statement, the judge focused on the fact that Apodaca

hired an impostor to assist her in her fraudulent scheme.

Apodaca marketed her “investment” as being secured by a

(fictitious) financier, named Clayton E. Wilson. To placate some

concerned “investors,” Apodaca hired an individual to pose as

Wilson for a meeting with these “investors.” Apodaca paid the

impostor $1700 following this meeting. During the sentencing

hearing, the district judge chastised Apodaca for this particular

ruse:

I’m judging your judgement and your behavior on all of
the days that you took advantage of all of these people,
and the perpetuation of a scheme to the extent of going
and hiring an impostor to play this role of being the
person who secured the assets. That’s going the extra
mile[;] that’s the reason I departed upward in the case.

3
 The court recessed and resumed on February 25th to deal with

issues of restitution. The judge sentenced Apodaca to 54 months

in prison and again mentioned the two-level upward departure,

without providing further justification.1 The court memorialized

the grounds for departure in writing: “The sentence departs

upward from the guideline range because of the high number of

victims affected, and the amount of monetary loss incurred in

this case.” From this sentence, Apodaca appeals.2

II. Discussion

1
Apodaca argues that she did not receive sufficient notice
of the district court’s intent to upwardly depart, as required by
Federal Rules of Criminal Procedure. See Fed. R. Crim. P. 32(h)
(“Before the court may depart from the applicable sentencing
range on a ground not identified for departure either in the
presentence report or in a party’s prehearing submission, the
court must give the parties reasonable notice that it is
contemplating such a departure. The notice must specify any
ground on which the court is contemplating a departure.”). See
also Burns v. United States, 501 U.S. 129, 138-39 (1991).
However, she was given one week’s notice (the time between the
first sentencing hearing and the actual sentencing on February
25th) and the judge set forth the grounds for the departure in
that first hearing. This amount of time clearly constitutes
sufficient notice. See United States v. Clements, 73 F.3d 1330,
1341 (5th Cir. 1996) (finding six day notice of intent to
upwardly depart sufficient). And it is of no moment that
Apodaca’s initial notice was at the first sentencing hearing.
See United States v. Andrews, 390 F.3d 840, 845 (5th Cir. 2004)
(finding adequate notice where the court, following the initial
sentencing hearing, “continued the case for thirty days, telling
[the defendant] that it planned to depart upwardly to the maximum
possible sentence for the offenses charged”).

2
The district judge sua sponte recognized an objection on
the part of Apodaca to preserve the question of the departure’s
permissibility for appeal.
4
 We review a district court’s departure under the pre-Booker

federal Guidelines de novo. United States v. Bell, 371 F.3d 239,

243 (5th Cir. 2004). See also United States v. Villegas, __ F.3d

__, 2005 U.S. App. LEXIS 4517, *8-9 (5th Cir. Mar 17, 2005)

(stating that our sister circuits have found “that Booker did not

alter the standard for reviewing a district court’s

interpretation and application of the Guidelines”). Naturally,

any related findings of fact, though, will be reviewed only for

clear error. See United States v. Deavours, 219 F.3d 400, 402

(5th Cir. 2000). Accord United States v. Doe, 398 F.3d 1254,

1257 (10th Cir. 2005). Because of the lack of objection to the

mandatory sentence enhancements during the proceeding in the

lower court, we review Apodaca’s Booker claim for plain error.

See Villegas, __ F.3d at __, 2005 U.S. App. LEXIS 4517, *6.

A. The District Court’s Upward Departure

The government concedes that neither the number of victims

affected nor the magnitude of the monetary loss they suffered

constitutes a legitimate ground for an upward departure from the

Guidelines in this case. Rather, it argues that “the district

court based its departure on the basis of Appellant going the

‘extra mile’ and hiring an imposter which made Appellant’s case

different from the ordinary.”

Assuming that we are free to focus only on one comment in

the sentencing colloquy and ignore what the district court

5
claimed in writing constituted its grounds for the upward

departure--an issue that appears to be unsettled in this Circuit

under now-excised 18 U.S.C. § 3742(e)--we hold that the district

court’s upward departure was impermissible. See Bell, 371 F.3d

at 245 (noting that “[t]he statutory framework is unclear as to

whether a reviewing court may consider ‘factors’ that are not

discussed in the written statement of reasons when making

determinations . . . ”).3

The Sentencing Guidelines carve out a “heartland,” or group

of typical cases that represent the conduct punished by each

guideline. See United States v. Grosenheider, 200 F.3d 321, 330-

31 (5th Cir. 2000). Thus, when deciding whether to depart from

the Guidelines, courts are instructed to determine whether “there

exists an aggravating or mitigating circumstance of a kind, or to

a degree, not adequately taken into consideration by the

Sentencing Commission in formulating the guidelines that should

result in a sentence different from that described. ” 18 U.S.C.

§ 3553(b)(1). See also U.S.S.G. § 5K2.0. “Unusual or atypical

3
We again recently noted the problem caused by a trial
court’s failure to clearly state in writing its grounds for
departure: “In deciding to grant an upward departure, the court
pronounced justifications in its oral pronouncement that were
different from those in its written opinion. Although the
government correctly indicates that some of these grounds might
be legitimate bases for upward departure . . . , it is not
evident whether the statutory framework allows us to consider
factors that were in the oral explanation but not the written
one.” Andrews, 390 F.3d at 850.

6
cases are not ‘adequately taken into consideration,’ hence the

heartland departure.” United States v. Hemmingson, 157 F.3d 347,

360 (5th Cir. 1998). The Sentencing Guidelines explain: “When a

court finds an atypical case, one to which a particular guideline

linguistically applies but where conduct significantly differs

from the norm, the court may consider whether a departure is

warranted.” U.S.S.G. ch. 1, pt. A, introductory cmt., 4(b).

The government argues that hiring an impostor to meet once

with some “investors” to maintain the scheme’s artifice makes

Apocada’s crime unusual enough to place it outside of the federal

Guidelines’ heartland. Thus, we need only consider this one

factor of Apodaca’s crime. It is clear that this factor, the

hiring of an impostor, is not a factor that is forbidden,

encouraged, or discouraged by the Sentencing Guidelines.4

“If the factor is not mentioned in the guidelines, the court

4
“[A] sentencing court considering a departure should ask
the following questions:

‘1) What features of this case, potentially, take it
outside the Guidelines’ ‘heartland’ and make of it a
special, or unusual, case?
‘2) Has the Commission forbidden departures based on
those features?
‘3) If not, has the Commission encouraged departures
based on those features?
‘4) If not, has the Commission discouraged departures
based on those features?’”

United States v. Evans, 148 F.3d 477, 484 (5th Cir. 1998)
(citations omitted).

7
must consider the ‘structure and theory of both relevant

individual guidelines and the Guidelines taken as a whole’ and

decide whether the factor is sufficient to take the case outside

the heartland.” Hemmingson, 157 F.3d at 361 (quoting Koon v.

United States, 518 U.S. 81, 96 (1996)). It also must “bear[] in

mind that departures based on grounds not mentioned in the

Guidelines will be highly infrequent.” United States v. Barrera-

Saucedo, 385 F.3d 533, 536 (5th Cir. 2004).

Examining the grounds for departure provided in the notes to

U.S.S.G. § 2B1.1, we recognize that none appear to be analogous

to the ground given in this case. The application notes present

the following “non-exhaustive” list of factors that can be used

when considering an upward departure: (1) “A primary objective of

the offense was an aggravating, non-monetary objective. For

example, a primary objective of the offense was to inflict

emotional harm.”; (2) “The offense caused or risked substantial

non-monetary harm. For example, the offense caused physical harm,

psychological harm, or severe emotional trauma . . . .”; (3) “The

offense involved a substantial amount of interest of any kind,

finance charges, late fees, penalties . . . .”; (4) “The offense

created a risk of substantial loss beyond the loss determined for

purposes of subsection (b)(1)”; (5) “In a case involving stolen

information from a ‘protected computer’ . . . the defendant

sought the stolen information to further a broader criminal

8
purpose”; (6) “In a case involving access devices or unlawfully

produced or unlawfully obtained means of identification” the

victim was seriously hurt by his loss of identity (damaged

credit, denial of employment, erroneous arrest, or diminished

reputation) or the defendant assumed the victim’s identity.

U.S.S.G. § 2B1.1, application note 19(A). The notes further

advise “that, ordinarily, the sentences of defendants convicted

of federal offenses should reflect the nature and magnitude of

the loss caused or intended by their crimes.” Id. at 19(c).

This loss could be loss to the defendant’s direct victims or even

a loss to society by diminishing public trust in government or

charitable organizations. See id.

Strikingly, the application notes tend to focus on the

result and/or goal of the fraud, not the type of lie told to

induce the fraud nor the individual who actually lied to the

victims. This does not mean that such features may never

comprise sufficient grounds for an upward departure; rather, the

Guidelines only inform our judgment, as we may look to them

generally to assist in determining whether a feature of a crime

removes it from the heartland. See States v. Iannone, 184 F.3d

214, 228 (3d Cir. 1999) (discussing commentary to fraud guideline

when determining heartland through analysis of guideline’s

“structure and theory”).

An examination of the encouraged grounds for departure

9
listed in § 5K2 strengthens this sense. See id. at 228-29

(analogizing to the rest of the Sentencing Guidelines in

“structure and theory” analysis). Many deal directly with the

effect the crime had on the victim or society. See, e.g.,

U.S.S.G. § 5K2.1. (death); U.S.S.G. § 5K2.2. (physical injury);

U.S.S.G. § 5K2.3. (extreme psychological harm); U.S.S.G. § 5K2.5.

(property damage or loss); U.S.S.G. § 5K2.7. (disruption of

government function). Others reflect particularly dangerous or

heinous means. See, e.g., U.S.S.G. § 5K2.4. (abduction of

unlawful restraint); U.S.S.G. § 5K2.6. (weapons and dangerous

instrumentalities); U.S.S.G. § 5K2.8. (extreme conduct). Again,

this weakens the conclusion that hiring an imposter in this case

removed Apodaca’s fraud from the heartland.

Indeed, this case is noticeably different from other fraud

cases applying former § 2F1.1 (the precursor to current § 2B1.1)

where courts have found upward departures based on unmentioned

grounds appropriate. For instance, when upholding a § 5K2.0

upward departure, the Second Circuit has found that “there is no

indication that when it formulated punishments for mail fraud,

the [Sentencing] Commission took into account the possible

causation of massive environmental damage.” United States v.

Paccione, 949 F.2d 1183, 1205 (2d Cir. 1991). The Eighth Circuit

approved an upward departure because, inter alia, the appellant-

lawyer’s fraud “irreparably harmed” “[his former] firm’s goodwill

10
with the public and standing in the legal community” and “had

financial repercussions on the firm, its shareholders and

employees.” United States v. Moskal, 211 F.3d 1070, 1074 (8th

Cir. 2000). And the First Circuit approved an upward departure

when defendant carried loaded gun while committing credit card

fraud. See United States v. Yates, 973 F.2d 1, 6-7 (1st Cir.

1992) (noting that § 2F1.1 “does not list or mention as a

relevant factor the possession or use of a firearm as a

characteristic of that offense” and concluding that “[c]learly

the presence of the loaded pistol was a circumstance beyond the

‘mine run’ of cases involving misuse of a credit card”).5 Courts

have also found that frauds involving minors are outside of the

heartland. See United States v. Porter, 145 F.3d 897, 904-06

(7th Cir. 1998) (finding no error in upward departure for use of

fifteen year old girl in committing fraud); United States v.

Passmore, 984 F.2d 933, 935-37 (8th Cir. 1993) (approving upward

departure where adult defendant’s accomplice in the fraudulent

scheme was a female minor whom he corrupted and sexually abused

since she was eleven years old).6

The Third Circuit approved an upward departure in a case

5
Although § 5K2.6 provides possession of a weapon during
commission of the offense as a ground for departure, the court
explicitly departed upward under § 5K2.0.
6
The Sentencing Guidelines have since been amended to
increase the offense by two levels if a minor is involved in the
crime’s commission. See U.S.S.G. § 3B1.4.

11
where there were numerous factors of the crime it deemed

“unmentioned” in the Sentencing Guidelines; these included, inter

alia, that the defendant, in furtherance of his fraud, pretended

that he was a highly decorated Vietnam veteran, that he was in

the witness protection program, that he was a secret government

agent, that he was recommended for the Congressional Medal of

Honor, and that a drunk driver killed his family. See Iannone,

184 F.3d at 227-31. He also staged his own death causing his own

family severe grief. Id. at 230. The Circuit Court acknowledged

“that fraudulent misrepresentations [are] an inherent part of

[this] offense and therefore, to a certain degree, are included

in the base offense level for fraud.” Id. However, it found

that the district court did not abuse its discretion by

concluding that the fraud calculated to “exploit [] victims’

charitable impulses” featured “misrepresentations . . . beyond

the usual ‘heartland.’” Id. “The [district] court [also] found

[the defendant’s] repeated misrepresentations that he had

received combat medals particularly offensive, noting that

misrepresentation of the ownership of a combat medal may violate

federal law.” Id.

These cases all involve facts patently differentiating them

from what is normally found in a fraudulent scheme. The

government asserts that hiring an imposter as part of a

fraudulent scheme is such a clearly unusual occurrence. In

12
reality, though, operators of illegal Ponzi schemes routinely

hire or work in conjunction with other individuals to further the

enterprise. See, e.g., United States v. Hayes, 385 F.3d 1226,

1227-28 (9th Cir. 2004); United States v. McCrimmon, 362 F.3d

725, 727-28 (11th Cir. 2004); United States v. Aptt, 354 F.3d

1269, 1273-75 (10th Cir. 2004); United States v. Maxwell, 351

F.3d 35, 36 (1st Cir. 2003); United States v. Rogers, 321 F.3d

1226, 1228 (9th Cir. 2003); United States v. Morris, 286 F.3d

1291, 1292-93 (11th Cir. 2002); United States v. Gravatt, 280

F.3d 1189, 1191 (8th Cir. 2002); United States v. Godwin, 272

F.3d 659, 663-66 (4th Cir. 2001). We are unable to identify a

case where a court sentenced a Ponzi scheme defendant under §

2B1.1 (or § 2F1.1) and upwardly departed under § 5K2.0 due to

assistance the perpetrator solicited.

This is not to say that the means utilized by an individual

violating anti-fraud laws will never remove a case from the

heartland. The Third Circuit’s Iannone case is clearly such an

example. However, we conclude that this single act, as framed by

the district court, cannot possibly render Apodaca’s scheme

special or unusual in the commission of mail fraud. The one

meeting in which Apodaca’s impostor participated was merely a

continuation of the on-going lie Apodaca had propagated. It

rests directly at the heart of her fraudulent scheme. This is

not a situation where the government contends that this fraud

13
differs significantly in kind from others or that Apodaca’s

general artifice was unusual. Rather, Apodaca merely had someone

else tell the same lie she had been telling throughout.

Recognizing that upward departures based on unmentioned factors

are to be “highly infrequent,” Barrera-Saucedo, 385 F.3d at 536,

we reverse the district court because this particular technical

detail of Apodaca’s fraudulent method, standing alone, cannot

possibly render this case “extremely rare,” “extraordinary or

even unusual in comparison to other cases . . . .” United States

v. Winters, 174 F.3d 478, 485 (5th Cir. 1999).

Thus, we find that the upward departure was impermissible

and vacate Apodaca’s sentence.

B. Mandatory Sentence Enhancements

Assuming arguendo Apodaca has not waived her right to appeal

this aspect of her sentence, as she contends in her supplemental

brief, we still cannot grant relief based on her Booker claim,

because the enhancement of her sentence under the federal

Sentencing Guidelines is not plain error. Simply put, Apocada

fails to carry her “burden of establishing that the error

affected the outcome of the proceeding.” United States v. Mares,

__ F.3d __, 2005 U.S. App. LEXIS 3653, *1 (5th Cir. Mar. 4,

2005).

We apply a plain error analysis because Apodaca failed to

raise this issue at trial. Id. at *22. This Court will reverse

14
if the appellant can show that (1) there is error; (2) the error

is plain; and (3) the error affects “substantial rights,” i.e.,

the error “must have affected the outcome of the district court

proceedings.” United States v. Olano, 507 U.S. 725, 732-34

(1993). “‘If all three conditions are met, an appellate court

may then exercise its discretion to notice a forfeited error, but

only if (4) the error “seriously affects the fairness, integrity,

or public reputation of judicial proceedings.”’” United States

v. Cotton, 535 U.S. 625, 631 (2002) (quoting Johnson v. United

States, 520 U.S. 461, 467 (1997)). Clearly, Apodaca cannot meet

the third prong. She points to nothing in the record indicating

that, had the district court sentenced her under an advisory

scheme, her sentence would be significantly shorter. See Mares,

__ F.3d at __, 2005 U.S. App. LEXIS 3653, *27-28. Indeed, the

trial court departed upward because it found her punishment under

the mandatory Guidelines insufficient.

III. Conclusion

Because we find that the district court erred under the

federal Sentencing Guidelines by departing upward, we VACATE

Apodaca’s sentence and REMAND to the district court for re-

sentencing.

15