[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
AUGUST 21, 2007
No. 07-10383 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 06-00237-CR-TCB-1-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
STEPHANIE N. COWLING,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
_________________________
(August 21, 2007)
Before BIRCH, HULL and WILSON, Circuit Judges.
PER CURIAM:
After pleading guilty, Stephanie N. Cowling appeals her 42-month sentence
for conspiracy to commit wire and mail fraud, in violation of 18 U.S.C. §§ 1341,
1343, 1349. After review, we affirm.
I. BACKGROUND
A. Offense Conduct
From approximately July 2000 through May 2002, Cowling was employed
as a Line Haul Manager at Excel Direct Incorporated (“Excel”). From
approximately December 2002 through September 2003, Cowling was employed
as a Domestic Manager at DHL Danzas Air & Ocean (“DHL”). While in these
positions, Cowling and her husband devised a scheme to defraud her employers by
establishing Eric Nelams as a vendor for the companies and then causing
$453,054.40 in payments to be mailed to Nelams for fictitious freight bills.
Cowling’s fraud was discovered after DHL conducted an internal audit,
which revealed that Cowling had circumvented the automated system and initiated
payments to Nelams through a manual process. Specifically, Cowling approved
the payments to Nelams and then faxed the invoices to the accounts payable
department for processing. The audit revealed that the work for which Cowling
authorized payment was actually performed by another company, Cargo Express.
After the DHL embezzlement scheme was uncovered, Cowling and her
husband met with Nelams and his wife. Cowling wanted Nelams to get “on the
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same page” before they were interviewed by DHL security personnel. Cowling
gave Nelams two documents: (1) a freight bill in the amount of $2,900 in Nelams’s
name and signed by Cowling; and (2) a document in Cowling’s handwriting
containing trucking and billing language as well as explanations. Cowling also
urged Nelams to accept the blame for the fraud, but Nelams resisted.1
A federal grand jury returned a sixty-count indictment charging Cowling
with conspiracy to commit wire and mail fraud and with multiple counts of mail
fraud, wire fraud and transporting checks taken by fraud in interstate commerce.
Cowling pled guilty to the conspiracy count pursuant to a written plea agreement.
B. PSI
The Presentence Investigation Report (“PSI”) assigned Cowling a base
offense level of 6, and increased her offense level to 14 because the loss was more
than $400,000 but less than $1,000,000, pursuant to U.S.S.G. § 2B1.1(b)(1)(H).
After a two-level increase because the offense involved an abuse of a position of
trust, see U.S.S.G. § 3B1.1(c), and three-level reduction for acceptance of
responsibility, see U.S.S.G. § 3E1.1(a)-(b), the PSI recommended a total offense
level of 19 and a criminal history category of I, resulting in an advisory guidelines
range of 30 to 37 months’ imprisonment. The government objected to the PSI’s
1
Shortly after the meeting, Nelams was found murdered outside his residence.
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failure to include a two-level enhancement because the offense involved
sophisticated means, pursuant to U.S.S.G. § 2B1.1(b)(8)(C) (2002).2
C. Sentencing
At the sentencing hearing, the government presented witness testimony
regarding the nature and scope of Cowling’s embezzlement schemes to support a §
2B1.1(b)(8)(C) sophisticated means enhancement. Wade Sorenson, the Director of
Domestic Operations for DHL, conducted the internal audit that eventually
uncovered Cowling’s embezzlement scheme. Sorenson testified that during the
audit, he discovered: (1) duplicate entries of services that had already been
provided by a functioning vendor; and (2) duplicate charges that were “put in to be
paid” to a vendor of whom he was not aware. Sorenson contacted, among others,
his regional manager, Mike Ginnis, who then contacted Cowling to determine if
she knew who this vendor was. Upon being questioned about this vendor, Cowling
indicated that she knew who the vendor was, but would have to gather and review
certain paperwork before discussing the matter further.
Sorenson also stated that Cowling’s scheme was difficult to uncover because
she engaged in “manual cost manifest,” which was a recognized process at DHL
for a Domestic Manager. Sorenson explained that this manual process allowed
2
To avoid ex post facto problems, the district court applied the 2002 Sentencing
Guidelines in effect on the date of Cowling’s offense. See U.S.S.G. § 1B1.11(b)(1).
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Cowling to pay an invoice that was not in the computer system and that the scheme
was finally detected because of the repetition and unusual amount of the payments.
According to Sorenson, Cowling carried out the scheme by taking invoices from
DHL’s local vendor in Atlanta and copying that information, which included the
house air bill number (a file reference number for each individual shipment) as
well as the date and weight of the pieces to be shipped, and then sending the
invoices to the department that paid them. Sorenson also stated that during his
investigation he did not find any original invoices in the files, which suggested that
they were either removed or destroyed.
Robert Betzer, District Manager at DHL in Atlanta, testified that Cowling
left work shortly after being asked to provide documentation verifying that Nelams
was a vendor and had submitted invoices to DHL. Betzer stated that he was unable
to find any documents in Cowling’s office that indicated that Nelams was a vendor
with whom DHL did business.
Both Betzer and Sorenson were shown a handwritten document found in
Nelams’s home that contained the names of several DHL employees and their job
descriptions. Sorenson described this document as a “cheat sheet” that contained
information about DHL that a typical vendor-supplier would know. Betzer
indicated that the document listed key contacts within DHL’s organization.
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Linda Beth, Cowling’s direct supervisor at Excel, testified that at the time
Cowling was terminated for performance-related problems, Excel was unaware of
Cowling’s fraud. Beth learned of the scheme only after she received a telephone
call from Excel’s security personnel, who had been notified by DHL that it had
been defrauded by Cowling. After an investigation, Beth discovered that Cowling
committed fraud by creating fictitious paperwork and using Excel’s computer
system.
According to Beth, the normal practice at Excel was to bill at the time the
load was shipped, which would create a manifest that the warehouse could use to
check off for each piece of shipment. However, Cowling billed only after the
invoices were received, so no manifest was created that could be checked off.
Cowling submitted invoices on behalf of Nelams claiming delivery of items for
which orders had been cancelled before shipment. In addition, Cowling would
override the computer system to alter the originating shipping destination and
maximize the amount of money paid for the fictitious shipment. Beth testified that
she was never able to figure out how Cowling manipulated the paperwork to input
Nelams as a vendor in Excel’s computer system.
Finally, Cathy Nelams, Nelams’s sister, testified that Nelams, who was
never involved in the trucking business, told her that he was approached about
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being involved in the fraud scheme by Cowling’s husband. The week of Nelams’s
murder, Nelams met with the Cowlings, and Stephanie Cowling “wrote out a
script” for Nelams of what he was supposed to say when company investigators
called.
After presenting this evidence, the government argued that the overall nature
of Cowling’s scheme made it sophisticated. Cowling objected, arguing, inter alia,
that the government had not met the higher “sophisticated means” standard.
The district court sustained the government’s objection, concluding that
Cowling’s offense involved sophisticated means, as follows:
[I] think that [the fraud] did involve particularly complex or especially
intricate conduct pertaining to the execution and particularly the
concealment of the crime. I don’t agree that this was a garden variety
fraud in light of not only the testimony today, but the stipulated facts
and conceded facts in the presentence report. These were repeated
acts over an extended period of time that were not merely opportune,
and in my judgment they were sufficiently complex and intricate to
justify the description sophisticated means.
After adding the two-level sophisticated means enhancement, the district court
found that Cowling’s adjusted offense level was 21 and her criminal history
category was I, yielding an advisory guidelines range of 37 to 46 months’
imprisonment. The district court imposed a 42-month sentence and ordered
Cowling to pay $453,054.40 in restitution.
Cowling filed this appeal.
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II. DISCUSSION
On appeal, Cowling argues that the district court erred in imposing the
sophisticated means enhancement.3 Section 2B1.1(b)(8)(C) of the Sentencing
Guidelines provides for a two-level enhancement if the offense involved
sophisticated means. U.S.S.G. § 2B1.1(b)(8)(C).4 The commentary defines
sophisticated means as:
especially complex or especially intricate offense conduct pertaining
to the execution or concealment of an offense. For example, in a
telemarketing scheme, locating the main office of the scheme in one
jurisdiction but locating soliciting operations in another jurisdiction
ordinarily indicates sophisticated means. Conduct such as hiding
assets or transactions, or both, through the use of fictitious entities,
corporate shells, or offshore financial accounts also ordinarily
indicates sophisticated means.
U.S.S.G. § 2B1.1, cmt. n.6(B).
Given the overall evidence in this case, the district court did not err in
imposing the sophisticated means enhancement. Rather than mere double-billing,
Cowing’s fraud scheme was complex and involved the use of her specialized
3
In addressing a § 2B1.1(b)(8)(C) enhancement for sophisticated means, we review the
district court’s factual findings for clear error and the application of the guideline provision to
those facts de novo. United States v. Humber, 255 F.3d 1308, 1311 (11th Cir. 2001). Here,
Cowling does not challenge any of the district court’s factual findings, but rather argues that the
facts established do not rise to the level of sophisticated means.
4
We reject as meritless Cowling’s claim that the district court applied the “more than
minimal planning” standard of now-obsolete U.S.S.G. § 2F1.1 (2000). A review of the record
reveals that the district court was aware of and applied the applicable “sophisticated means”
standard found in U.S.S.G. § 2B1.1(b)(8)(C).
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knowledge of the business operations and the computer and bookkeeping systems
at Excel and DHL to create and then hide the transactions. For example,
Cowling’s offense involved establishing Nelams, who had never been involved in
trucking, as a third-party vendor and creating fictitious invoices to perpetrate her
scheme. Cowling then manipulated Excel’s computer system to change the
originating shipping destination to maximize the amount of money that was paid
for the fictitious shipments and manipulated DHL’s computer system to pay
invoices that were not entered into the computer system. Additionally, Cowling
attempted to avoid detection of the DHL scheme by providing Nelams with details
about the scheme and DHL’s business operations. Cowling’s schemes were
difficult to detect because of the careful and intricate methods she used to conceal
them. Indeed, Excel did not discover the fraud until it learned of the fraud at DHL.
Considering the nature and scope of the embezzlement schemes, the
magnitude of the amount of loss – almost $500,000 – and given that Cowling
engaged in repeated fraudulent acts at two different companies for an extended
period of time, the district court did not err in finding that Cowling’s conduct
involved sophisticated means.
AFFIRMED.
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