FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS September 20, 2019
Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v. No. 18-1217
KAREN LYNN MCCLAFLIN,
Defendant - Appellant.
_________________________________
Appeal from the United States District Court
for the District of Colorado
(D.C. No. 1:17-CR-00168-CMA-1)
_________________________________
Ann Marie Taliaferro, Brown, Bradshaw & Moffat, L.L.P., Salt Lake City, Utah, for
Defendant-Appellant.
James C. Murphy, Assistant United States Attorney (Jason R. Dunn, United States
Attorney, with him on the brief), Denver Colorado, for Plaintiff-Appellee.
_________________________________
Before MATHESON, SEYMOUR, and BACHARACH, Circuit Judges.
_________________________________
SEYMOUR, Circuit Judge.
_________________________________
Defendant Karen McClaflin pled guilty to two counts stemming from the
operation of a residential Ponzi scheme which defrauded investors of more than
$14.5 million dollars. At sentencing, the district court calculated the advisory
sentencing guidelines at 135 to 168 months’ imprisonment, applied a 6-level
enhancement for substantial financial hardship to more than twenty-five victims, and
then determined that a downward variant sentence of 96 months was appropriate. On
appeal, Ms. McClaflin argues the district court: (1) abused its discretion by denying
her motion for an additional continuance of the sentencing hearing, (2) procedurally
erred by imposing the 6-level enhancement based upon victim impact statements, and
(3) failed to consider all of the requisite 18 U.S.C. § 3553(a) factors. We affirm.
I.
Between March 2011 and early 2017, Ms. McClaflin operated a “fix and flip”
real estate Ponzi scheme in which she made false promises to investors. On June 21,
2017, Ms. McClaflin entered into a plea agreement with the government for wire
fraud and money laundering. The plea deal included a 2-level enhancement for a
crime involving more than ten victims. The government indicated that it did not have
the evidence at that time to support a 6-level enhancement for substantial financial
hardship to more than twenty-five victims.
The parties jointly filed a motion to continue on September 1, 2017, and the
district court moved the sentencing hearing set for January 17, 2018 to March 14 to
give the parties more time to analyze documents regarding loss and restitution. On
March 5, counsel for Ms. McClaflin requested another continuance due to Ms.
McClaflin’s poor health and hip problems. The district court moved the sentencing
hearing to May 10, nearly an entire year after Ms. McClaflin pled guilty to the
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charges. The week of the hearing Ms. McClaflin again requested her sentencing be
continued on the grounds of her ill health. The district court denied the motion and it
repeated this denial when Ms. McClaflin’s counsel urged a continuance at the
sentencing hearing.
At sentencing, the court questioned the government’s decision not to pursue
the 6-level enhancement. Notwithstanding the government’s reticence and in order to
implement the enhancement, the district court conducted an extensive review of the
sworn victim impact statements attached to the presentence Report (“PSR”). The
court made independent findings of fact regarding Ms. McClaflin’s scheme and
specifically found that Ms. McClaflin’s offense resulted in substantial financial
hardship to twenty-five or more victims. See U.S.S.G. § 2B1.1(b)(2)(C).
Prior to passing sentence, the district court heard testimony from victims of
Ms. McClaflin’s scheme from the Receiver who had been appointed by the court to
recover assets related to the scheme, and from Ms. McClaflin herself. Finding that
Ms. McClaflin committed a level 33 offense with a criminal history category of I,
resulting in an advisory imprisonment range between 135 and 168 months, the court
determined a downward variant sentence of 96 months was warranted. Ms.
McClaflin appeals.
II.
We review the denial of a motion for continuance for abuse of discretion and
will only find error if the district court’s decision was “arbitrary or unreasonable and
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materially prejudiced” the defendant. Rogers v. Andrus Transp. Services, 502 F.3d
1147, 1151 (10th Cir. 2007). In determining whether the denial of a continuance
constitutes an abuse of discretion, we look to the individual circumstances of the
case. Id.
The framework for reviewing the denial of a motion for a continuance
“involves an examination of four factors: (1) the diligence of the party seeking the
continuance; (2) the likelihood the continuance, if granted, would have accomplished
the stated purpose; (3) the inconvenience to the opposing party, witnesses, and the
court; and (4) the need for the continuance and any harm resulting from its denial.”
United States v. Glaub, 910 F.3d 1334, 1345 (10th Cir. 2018). “The final factor is
the most important.” United States v. Orr, 692 F.3d 1079, 1100 (10th Cir. 2012).
Of those four factors, Ms. McClaflin has not clearly satisfied any of them. Ms.
McClaflin’s counsel admitted that he was not prepared for the sentencing hearing,
that he had not sufficiently talked to witnesses, and that he had not explained the
extent of Ms. McClaflin’s medical condition or ascertained proper facilities through
the BOP. Nor had he filed a motion for a variant sentence. There was not a high
likelihood that if a continuance were granted, Ms. McClaflin’s health would improve
much more than it already had. The district court noted that Ms. McClaflin was not
undergoing an imminent medical procedure, and Ms. McClaflin’s counsel conceded
that her hip infection was “as low as it can be right now.” Rec., vol. IV at 11.
Conversely, granting the continuance would have greatly inconvenienced the
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opposing party and the court. Ms. McClaflin requested the continuance a mere five
days before the hearing was set to commence, and it is likely that the victims and
witnesses had previously made preparations to attend. The district court already had
granted Ms. McClaflin and the government almost a year to review financial
information and to prepare for sentencing, and it would have been required to
rearrange its calendar even further in order to grant Ms. McClaflin a new hearing
date.
Significantly, Ms. McClaflin has failed to demonstrate prejudice. In United
States v. West, 828 F.2d 1468, 1471 (10th Cir. 1987), we held that the district court
abused its discretion in denying the requested continuance because it precluded the
defendant from calling “the only eyewitness who might have presented directly
exculpatory testimony.” 1 There,“the testimony was important and the prejudice
resulting from the denial of a continuance was severe.” Id. Here, however, the
continuance would merely allow Ms. McClaflin to accumulate additional mitigating
evidence. The district court did not abuse its discretion in denying the motion for a
continuance.
1
In West, 828 F.2d at 1470, the defendant’s primary defense to a first-degree
murder charge was that he did not strike the victim and was therefore innocent. The
court denied the defendant’s continuance motion until the next day, even when a
subpoenaed witness who would testify that the defendant did not strike the victim did
not appear on the day he was called and a reasonable possibility existed he would
voluntarily appear the next day. Id. at 1470–71.
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III.
Ms. McClaflin also contends that the district court made two procedural errors:
first, by relying on sworn victim impact statements to sua sponte impose the 6-level
enhancement; and second by failing to consider the requisite § 3553(a) factors. The
parties disagree on the relevant standard of review.
“Fairness and judicial efficiency demand that litigants notify the district court
of a procedural sentencing error with reasonable specificity, thereby providing that
court the opportunity to correct its action in the first instance.” United States v.
Robertson, 568 F.3d 1203, 1209 (10th Cir. 2009). We require timely objections so
the district court can consider and resolve them at the time they are raised and
because “[i]n the case of an actual or invited procedural error, the district court can
often correct or avoid the mistake so that it cannot possibly affect the ultimate
outcome.” Puckett v. United States, 556 U.S. 129, 134 (2009). It is Ms. McClaflin’s
position that she properly objected to the procedural errors and any failure to
preserve the issues was excused because it was plain that further objection would
have been futile. On the other hand, the government contends these claims were not
properly objected to and should only be reviewed for plain error, which requires there
be an “(1) error, (2) that is plain, which (3) affects substantial rights, and which (4)
seriously affects the fairness, integrity, or public reputation of judicial proceedings.”
United States v. Wright, 848 F.3d 1274, 1278 (10th Cir. 2017).
A. 6-level enhancement
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Prior to sentencing, the government filed a written objection to the 6-level
enhancement recommended in the PSR for substantial financial hardship to twenty-
five or more victims. The only ground stated for the objection was that the
government elected to stand by the plea agreement’s offense level calculation of a 2-
level enhancement based on more than ten victims. Ms. McClaflin joined the
government’s objection. At sentencing, the district court explained its process for
applying the 6-level enhancement and walked through its underlying findings of fact.
When the court prompted Ms. McClaflin’s counsel to make any statement in regards
to the written objection to the 6-level enhancement, defense counsel merely stated,
“[i]t is the Government’s objection . . . not the defendant’s.” Rec., vol. IV at 22. The
judge prompted counsel a second time “to make any statement for purposes of your
record on appeal” and counsel reiterated that he did not have a statement. Id. Ms.
McClaflin’s claim that further objection would have been futile is thus unconvincing.
We require that parties object with specificity so that the district court can
correct its actions in the first instance. See, e.g., United States v. Holloway, 826 F.3d
1237, 1251 (10th Cir. 2016); Robertson, 568 F.3d at 1209. Ms. McClaflin did not
object to the accuracy of the sworn victim impact statements nor to the district
court’s reliance upon them. “We have repeatedly held that if a defendant fails to
object to his presentence report, he waives his right to challenge the district court’s
reliance on it, unless the district court’s decision to do so amounts to plain error.”
Holloway, 826 F.3d at 1251; see also United States v. Figueroa-Labrada, 720 F.3d
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1258, 1266 (10th Cir. 2013). Because Ms. McClaflin did not properly preserve the
issue at sentencing, we review for plain error.
The district court did not err by using the sworn victim impact statements to
make its own independent findings of fact. “The sentencing judge remains ultimately
responsible for determining the facts and must establish the relevant facts even if all
the parties argue to the contrary.” United States v. Aragon, 922 F.3d 1102, 1109
(10th Cir. 2019) (internal brackets omitted). In determining the number of victims
and calculating loss, a district court must make independent findings supporting its
conclusions. Holloway, 826 F.3d at 1251. In doing so, the court can look beyond
admissible evidence at trial as long as the information has a sufficient indica of
reliability to support its probable accuracy. See, e.g., United States v. Caiba-Antele,
705 F.3d 1162, 1165 (10th Cir. 2012); see also United States v. Sunmola, 887 F.3d
830, 836–37 (7th Cir. 2018); U.S.S.G. § 6A1.3(a).
Here, the district court made independent factual findings by relying upon
victim impact statements that were submitted under penalty of perjury and whose
accuracy was not disputed by any party. The court heard testimony from the
government’s IRS agent who likewise relied upon the victim impact statements.
Speaking in allocution, Ms. McClaflin referred to the statements, indicating she had
“read them over and over and over . . ..” Rec., vol. IV at 101. At no point did Ms.
McClaflin raise any concerns or objection or otherwise contend that these sworn
victim impact statements were unreliable. Accordingly, the victim impact statements
were properly considered by the court.
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In calculating the number of victims who suffered substantial financial
hardship2, the district court first determined that there were over ninety investors who
were defrauded by Ms. McClaflin, counting husband and wife couples together as
one victim. Of those ninety, sixty-three filed victim impact statements under penalty
of perjury. Twenty-eight of these indicated that they had to make substantial changes
to their employment or substantial changes to their living arrangements as a direct
result of Ms. McClaflin’s fraudulent scheme. At the very least the twenty-eight
sworn statements meet the standard for substantial financial hardship laid out in the
Sentence Guidelines Application Note. See U.S.S.G. § 2B1.1, cmt. n.4(f) (iv), and
(v). Because the district court’s consideration of this evidence was well within its
discretion, the district court did not procedurally err in relying on the sworn victim
impact statements.
B. § 3553(a) factors
2
“Substantial Financial Hardship.—In determining whether the offense
resulted in substantial financial hardship to a victim, the court shall consider, among
other factors, whether the offense resulted in the victim—
(i) becoming insolvent;
(ii) filing for bankruptcy under the Bankruptcy Code (title 11, United States
Code);
(iii) suffering substantial loss of a retirement, education, or other savings or
investment fund;
(iv) making substantial changes to his or her employment, such as postponing
his or her retirement plans;
(v) making substantial changes to his or her living arrangements, such as
relocating to a less expensive home; and
(vi) suffering substantial harm to his or her ability to obtain credit.”
U.S.S.G. § 2B1.1, cmt. n.4(f).
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Ms. McClaflin also claims the district court failed to properly consider all of the
relevant § 3553(a) factors before imposing its sentence. But, once again, she never
objected to the district court’s sentencing process at trial. We therefore review only
for plain error.
Ms. McClaflin contends that the court did not ask to hear from counsel or the
defendant until after it had already made up its mind. She relies on the court’s
statement prior to sentencing that “I am inclined to grant a variant sentence
somewhere within that adjusted advisory guideline range . . . . However, I have not
decided where within that range of 87 to 108 months the sentence should actually
be.” Rec., vol. IV at 85-86. But Ms. McClaflin takes a single statement out of the
context of the entire sentencing process. Overall that process shows that the district
court proceeded properly and considered the requisite factors. For example, when
the court began it’s sentencing, it stated:
I will tell you where I am going, in terms of my inclinations, so that
you can target any arguments you have to what my concerns are, and
to persuade me otherwise, or to persuade me to go the way I have
indicated, if that is what you want. I will hear from [defense counsel],
then [the government], and finally, if Ms. McClaflin wishes to make
any statement to me on her own behalf, I will hear from her.
Id. at 73–74. The court thus clearly demonstrated that, although it had a general idea
based upon the PSR, it would hear from the parties involved before making the final
decision.
Ms. McClaflin further contends the district court failed to consider other
relevant mitigating factors besides Ms. McClaflin’s cooperation with the government
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when imposing her sentence. We disagree. While the court put an emphasis on Ms.
McClaflin’s cooperation, this was not the only factor it considered. For example, the
court clearly considered the nature and circumstances of the offense by noting the
impact of Ms. McClaflin’s scheme on her victims. It also noted that Ms. McClaflin
did not act in a manner entirely consistent with a woman who was truly sorry for her
conduct, expressing concerns about Ms. McClaflin’s failure to account for personal
assets and her divorce from her husband to secure his assets. With respect to the
§ 3553(a) factors, “[w]e do not require a ritualistic incantation to establish
consideration of a legal issue, nor do we demand that the district court recite any
magic words to show us that it fulfilled its responsibility to be mindful of the factors
that Congress has instructed it to consider.” United States v. Lopez-Flores, 444 F.3d
1218, 1223 (10th Cir. 2006) (citation omitted); see also United States v. Rines, 419
F.3d 1104, 1107 (10th Cir. 2005) (“It is true that the district court did not march
through § 3553(a)’s sentencing factors, but we have never imposed such a
requirement.”).
Although Ms. McClaflin specifically alleges that the district court did not
consider her medical circumstances, the record reveals that in fact it did do so before
determining that the Bureau of Prisons was better suited to decide which facilities
and treatments were necessary. Rec., vol. IV at 115 (“I think the Bureau of Prisons
can sort out whether she really does have serious medical issues that are different
from any of the other defendants that they see on a regular basis who have medical
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issues.”). The court was clearly aware of and considered Ms. McClaflin’s medical
needs at sentencing, but it did not deem them determinative, noting that Ms.
McClaflin was not at risk of undergoing a major procedure in the imminent future.
Because the district court clearly considered the relevant § 3553(a) factors, it did not
plainly err when it sentenced Ms. McClaflin.
We AFFIRM the judgment of the district court.
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