United States Court of Appeals,
Eleventh Circuit.
Nos. 93-8706, 93-8751.
UNITED STATES of America, Plaintiff-Appellee,
v.
Ed PAGE, a/k/a Ed Rose, Mary M. Jackson, a/k/a Mary King, a/k/a
Denise Wood, a/k/a India Bullock, Doris Y. Rogers, a/k/a Evon
Rogers, a/k/a Evon Wellington, Davis Scalise, a/k/a David Baker,
Defendants-Appellants,
UNITED STATES of America, Plaintiff-Appellee,
v.
Seeta McKNIGHT, Defendant-Appellant.
Nov. 16, 1995.
Appeals from the United States District Court for the Northern
District of Georgia. (Nos. 1:92-cr-111-1, 1:92-cr-111-8), Harold L.
Murphy, Judge.
Before CARNES, Circuit Judge, DYER and GARTH*, Senior Circuit
Judges.
GARTH, Senior Circuit Judge:
Defendants Seeta McKnight, Edsel ("Ed") Page, Mary Jackson,
Doris Rogers, and David Scalise were each indicted on a 31-count
indictment, charging them with conspiracy to defraud under 18
U.S.C. § 371; 24 counts of mail fraud under 18 U.S.C. §§ 1341,
1342; and six counts of wire fraud under 18 U.S.C. §§ 1343, 1342.
Seeta McKnight pleaded guilty, and the remaining defendants were
convicted after a jury trial on all 31 counts. On appeal, various
*
Honorable Leonard I. Garth, Senior U.S. Circuit Judge for
the Third Circuit, sitting by designation.
defendants challenge their convictions and sentences on a number of
different grounds, including "vulnerable victim" enhancement,
restitution, admission of similar act evidence, lack of pretrial
notice with respect to certain similar act evidence, "minor role,"
insufficient evidence, and withdrawal from conspiracy.
We have jurisdiction pursuant to 28 U.S.C. § 1291 and 18
U.S.C. § 3742. We will vacate and remand for resentencing, the
case against Seeta McKnight, No. 93-8751, as well as the case
against the other defendants, No. 93-8706, for implementations of
United States v. Jones, 899 F.2d 1097 (11th Cir.1990), cert.
denied, 498 U.S. 906, 111 S.Ct. 275, 112 L.Ed.2d 230 (1990),
overruled on other grounds, 984 F.2d 1136, 1137 (11th Cir.1993) (en
banc) and United States v. Remillong, 55 F.3d 572 (11th Cir.1995).1
We will affirm the judgments and sentences imposed by the district
court in all other respects.
I.
From September to December of 1991, Seeta McKnight, Ed Page,
Mary Jackson, Doris Rogers, and David Scalise participated in an
"advance fee loan scheme" in which they falsely promised loans to
customers to collect the customers' advance fees. McKnight was a
founder of the scheme. Page, Jackson, Rogers, and Scalise, were
telemarketers who worked under her direction.
In September of 1991, McKnight and her brother-in-law Graham
1
See our discussion, infra, Part IV, concerning the impact
on all of the defendants of the district court's joint and
several restitution order.
Tomlins2 opened the advance fee loan scheme under the name of
Certified Financial, at 290 Hilderbrand Drive, Suite B-11, Atlanta,
Georgia. In early October of 1991, McKnight and Paul Brown, whom
Seeta McKnight had hired to be the office manager,3 placed
advertisements in newspapers and journals, outside of Georgia,
throughout the United States. The advertisements stated:
LOANS AVAILABLE NOW
Program for bad credit.
Job verification required.
(Transcript of Trial at 646). McKnight and Brown hired
telemarketers to answer calls responding to the advertisements.
Page, Jackson, Rogers, and Scalise were among the telemarketers
that they hired.
The telemarketers used aliases in speaking to callers. Ed
Page used "Ed Rose," Mary Jackson used "Mary King," Doris Rogers
used "Evon Rogers," and David Scalise used "David Baker." The
telemarketers followed a script that McKnight had provided. First,
they would ask personal information from the callers:
Certified Financial. How may I help you? All right. Let me
just ask you a few questions to see if you qualify. Are you
over 21 years of age? Have you ever been bankrupt, had
repossessions or foreclosures. How much do you want to
borrow? Who do you work for? How long have you worked there?
... Does your wife or husband work? What is your combined
monthly income? Also I need your Social Security number and
I need your address and telephone number.
(Transcript of Trial at 43, 315). Then the telemarketers, again
following the script, set out the "terms" of the loan:
2
Tomlins was indicted separately on September 8, 1993. He
is not a party to this appeal.
3
Brown pleaded guilty to five counts of the superseding
indictment and testified in the government's case.
All right, our terms are from 1 to 10 years. The
interest rate will not be more than 16 per cent and may be as
low as 12 per cent. The rate is fixed and there is no early
repayment penalty.
Have you been to a bank or anyone else for this loan?
Well, you'll be pleased to know that we're not a bank. We
work with individual lenders and when we can find one that
will handle your kind of request we will require a fee of
$250. That's the only fee you will have to pay and only if we
find you a lender, naturally. Now, I will need about 1 hour
before I have an answer from the lenders. So, could I ask you
to call me back? Do you have a pen and paper?
Id. at 44. Telemarketers testified that, contrary to what they
told the customers, they did not check for lenders during the hour
but instead "approved" the customer for the loan as long as the
customer made at least $1,000 per month.
When the customers called back to ask about their loan
applications, the telemarketers, again following the script, would
say:
Certainly, I'll check on that for you. One moment please.
Sorry to keep you holding on. I'll have it in just a minute.
Oh, good news. We have been successful and found you a lender
for that amount.
(Transcript of Trial at 45-46).
The telemarketers then told the customers that the loan was
being held for only 72 hours, id. at 46, and that they should send
a $250 money order to Certified Financial. They also urged the
customers to send the money by Federal Express. Id. at 46-47.
Postal Inspector Marcia Fresco testified that perpetrators of
advance fee loan schemes often advise their victims to use Federal
Express as an attempt to avoid mail fraud liability.
The telemarketers then told the customers that they would
receive their loan proceeds within one week or 14 days, and that
their $250 fee would be refunded if they did not get the loan.
Page, Rogers, Jackson, and Scalise also departed from the script to
tell customers that their loans had been "approved" or
"guaranteed," despite being instructed not to do so.
The telemarketers then sent out reservation letters with
applications to the customers, using their aliases. The
reservations letters stated:
Since our telephone call I have discussed your loan with
our senior broker. He agrees that we should push ahead with
your application particularly as we have found a lender who is
willing to handle your request ...
If you have not already sent your Money Order for $250.00
I strongly suggest that you send it as I cannot hold this
reservation much longer.
When you send your papers back to us, please mark them
and the Money Order with your Reservation Number to ensure
that everything goes smoothly....
(Transcript of Trial at 69-70). The telemarketers testified that
there was no "senior broker" and that they did not even attempt to
find lenders for the callers who submitted $250 and completed
applications.
Fourteen days after Certified Financial began operation,
customers began to call in to ask about their loan proceeds. After
three weeks had passed, customers began to call in with complaints.
McKnight hired a "customer service representative" to handle
complaints full time. The customer service representative sat in
the same room as the telemarketers and would take customer's
complaints while the telemarketers talked to new customers.
Rogers, using a different alias than her telemarketing alias,
sometimes handled customer service calls. By November of 1991, a
large volume of complaint calls was coming into Certified
Financial.
In mid-November, the Postal Inspection Service began receiving
complaints from customers about Certified Financial and began an
investigation.
At about this time, Page, who had been working at Certified
Financial for about six weeks, left to join another advance-fee
loan scheme as a telemarketer. Scalise did the same on November
22, 1991, after working at Certified Financial for seven weeks.
Neither Page nor Scalise notified the victims or the authorities
that Certified Financial was a fraudulent scheme.
On December 5, 1991, McKnight shut down Certified Financial,
moved the advance fee loan scheme to 1060 Concord Road in Smyrna,
Georgia and changed the scheme's name to Consumer Funding Services.
Later, McKnight again changed the name to Cypress Fidelity
Services. Rogers worked at the new location under the alias
"Violet Wellington," and Jackson used the alias "Denise Wood." The
scheme operated at the new location for approximately one week.
Altogether, Rogers worked a total of about 10 weeks at the two
advance loan schemes. Jackson worked approximately 9 weeks.
On December 13, 1991, Paul Brown was arrested as a result of
the Postal Inspection Service's investigation. McKnight
immediately telephoned her telemarketers those on duty to abandon
the premises.
On December 19, 1991, Postal Inspectors with a search warrant
searched the automobile owned by McKnight's husband and seized
documents and records pertaining to Certified Financial, Consumer
Funding Services, and Cypress Fidelity Services. Among other
things, the Postal Inspectors found Federal Express receipts
showing that on December 18, 1991, Rogers accepted three Federal
Express Packages addressed to Consumer Funding Services.
On December 20, 1991, Postal Inspector Marsha Fresco
interviewed Jackson who admitted working at Certified Financial but
said that she quit when numerous complaints started coming in.
Jackson did not mention working at Consumer Funding or Cypress
Fidelity.
On the same day, Postal Inspector Gary Cantley interviewed
Scalise by telephone. Scalise denied ever working as a salesperson
or telemarketer at Certified Financial and said that he only worked
there as a carpenter/repair person during off hours.
The inspection later revealed that on December 20, 1991,
Rogers opened a check cashing account at Check-X-Change and cashed
two money orders in the amount of $250 payable to Consumer Funding
Service.
On January 3, 1992, Postal Inspectors with a search warrant
searched the office of Consumer Funding/Cypress Financial and
seized documents relating to that entity.
Over the course of its investigation, the Postal Inspection
Service found that approximately 424 victims who had sent in $250
fees to the advance fee loan scheme. (Transcript of Trial at 66).
Not one of the approximately 100 customers interviewed ever
received the promised loan.
All five defendants were charged, in the Superseding
Indictment, with conspiracy to defraud under 18 U.S.C. § 371; 24
counts of mail fraud under 18 U.S.C. §§ 1341, 1342, and six counts
of wire fraud under 18 U.S.C. §§ 1343, 1342.
On September 1, 1992, six months before trial, the government
sent defendants a letter notifying them of its intention to present
evidence at trial, pursuant to Fed.R.Evid. 404(b), showing that the
defendants had worked at other advance fee telemarketing schemes
before and after working at Certified Financial and Consumer
Funding/Cypress Fidelity.
On the morning of the first day of trial, McKnight pleaded
guilty to all 31 counts of the Superseding Indictment and later
testified for the government at trial. The remaining defendants,
Page, Rogers, Jackson, and Scalise were tried together in a
multi-defendant jury trial, which was held from March 1, 1993 to
March 11, 1993. Page, Rogers, Jackson, and Scalise sought to prove
that they did not know that Certified Financial and Consumer
Funding/Cypress Fidelity were not actually arranging loans, and
that they therefore lacked the requisite intent to defraud.
At trial, over the defendants' objections, the district court
admitted evidence that Page, Rogers, Jackson and Scalise had each
been employed in other advance fee loan schemes shortly before
and/or shortly after working at Certified Financial. The district
court gave the jury limiting instructions regarding this similar
act evidence.
Page, Rogers, Jackson and Scalise were each convicted on all
31 counts of the Superseding Indictment. In sentencing each of
these defendants and McKnight, the district court enhanced the
offense level of each defendant for specifically targeting persons
with credit and financial problems pursuant to U.S.S.G. § 3A1.1.
The district court denied the requests of Page, Rogers, Jackson,
and Scalise to reduce their offense levels pursuant to U.S.S.G. §
3B1.2 for being minor participants in the scheme.
By Judgments entered May 20, 1993, Seeta McKnight was
sentenced to 36 months of incarceration on each count, to be served
concurrently; Page was sentenced to 21 months of incarceration on
each count, to be served concurrently; and Jackson was sentenced
to 24 months of incarceration on each count, to be served
concurrently. By Judgment entered July 7, 1993, Rogers was
sentenced to 24 months of incarceration on each count, to be served
concurrently. By Judgment entered July 27, 1993, Scalise was
sentenced to 24 months of incarceration on each count, to be served
concurrently. Each of the five defendants was also sentenced to
three years of supervised release following their terms of
imprisonment; joint and several restitution of $106,000; and a
special assessment of $1,550. No objection was made to the
sentence of restitution at that time. The district court denied
Page's motion for acquittal.
Each of the defendants separately appealed. Their appeals
have been consolidated for disposition before this Court.
II.
A.
All five defendants challenge their sentences, arguing among
other things that the district court erred in increasing each of
their offense levels under U.S.S.G. § 3A1.1 for targeting victims
with "bad credit."4 " "The district court's application of § 3A1.1
4
By the time this matter was orally argued before us on
September 13, 1995, four of the five defendants had finished
serving their prison terms; and the fifth was in a halfway
presents a mixed question of law and fact, which we review de
novo.' " United States v. Thomas, 62 F.3d 1332, 1344 (11th
Cir.1995) (quoting United States v. Davis, 967 F.2d 516, 523 (11th
Cir.1992), rehearing on other grounds, 30 F.3d 108 (11th
Cir.1994)). We have recognized, however, that the district court's
determination of a victim's "vulnerability" is essentially a
factual finding to which we should give due deference. See United
States v. Salemi, 26 F.3d 1084, 1087 (11th Cir.1994) ("The
determination of vulnerability is a factual finding which is
entitled to due deference on review") (citation omitted), cert.
denied, --- U.S. ----, 115 S.Ct. 612, 130 L.Ed.2d 521 (1994); 18
U.S.C. § 3742(e) ("The court of appeals ... shall give due
deference to the district court's application of the guidelines to
the facts.").5 Further, the district court's findings of
house, according to defense counsel. Thus whether this appeal
was moot was a potential issue, though not one raised by the
government. We hold that this appeal is not moot.
First, the Supreme Court has recognized that " "the
possibility of a criminal defendant's suffering "collateral
legal consequences' from a sentence already served'
precludes a finding of mootness." Minnesota v. Dickerson, -
-- U.S. ----, ---- n. 2, 113 S.Ct. 2130, 2134 n. 2, 124
L.Ed.2d 334 (1993) (citations omitted). Because "[a] number
of disabilities may attach to a convicted defendant even
after he has left prison," a defendant who has finished
serving his sentence still has standing to challenge the
legality of his conviction. North Carolina v. Rice, 404
U.S. 244, 247, 92 S.Ct. 402, 404, 30 L.Ed.2d 413 (1971).
Second, all of the defendants are at least still
serving their terms of supervised release, which involve
restrictions on their liberty. Only success in this appeal
could alter the supervised release portion of their
sentences. See Dawson v. Scott, 50 F.3d 884, 886 n. 2 (11th
Cir.1995).
5
The "due deference" standard in 18 U.S.C. § 3742 "serves as
an additional caution against overly intense judicial review."
historical fact cannot be reversed unless clearly erroneous.
United States v. Davis, 967 F.2d 516, 523 (11th Cir.1992),
rehearing on other grounds, 30 F.3d 108 (11th Cir.1994).
B.
Section 3A1.1 of the Sentencing Guidelines provides for a
two-level upward adjustment to the defendant's offense level:
If the defendant knew or should have known that a victim of
the offense was unusually vulnerable due to age, physical or
mental condition, or that a victim was otherwise particularly
susceptible to the criminal conduct.
U.S.S.G. § 3A1.1. The commentary to section 3A1.1 provides that
sentence enhancement is warranted with respect to "offenses where
an unusually vulnerable victim is made a target of criminal
activity by the defendant." (Application Note 1 to U.S.S.G. §
3A1.1). (emphases added). For example, the adjustment would
apply:
in a fraud case where the defendant marketed an ineffective
cancer cure or in a robbery where the defendant selected a
handicapped victim. But it would not apply in a case where
the defendant sold fraudulent securities by mail to the
general public and one of the victims happened to be senile.
Similarly, for example, a bank teller is not an unusually
vulnerable victim solely by virtue of the teller's position in
a bank.
(Application Note 1 to U.S.S.G. § 3A1.1).
This court has clearly recognized that the "vulnerable
United States v. Mejia-Orosco, 868 F.2d 807, 808 (5th Cir.1989),
cert. denied, 492 U.S. 924, 109 S.Ct. 3257, 106 L.Ed.2d 602
(1989). The "purported purpose" of the "due deference" clause of
§ 3742 is " "to give the court of appeals flexibility in
reviewing the application of a guideline standard that involves
some subjectivity.' " Id. at 809 (citing Congressional Record at
H11257 (1988)). As we stated in United States v. Long, 935 F.2d
1207 (11th Cir.1991), "[w]e review the factual findings
underlying the district judge's decision for "clear error,' but
we review his application of the sentencing guidelines to those
facts with only "due deference.' " Id. at 1211.
victim" adjustment "focuses chiefly on the conduct of the
defendant" and should be applied only where "the defendant selects
the victim " due to the victim's perceived vulnerability to the
offense. Long, 935 F.3d at 1210. We stated that:
[T]he applicability of section 3A1.1 turns on the defendant's
decision to target the victim. The section does not authorize
sentence enhancement based upon the severity of the victim's
suffering. A victim's testimony can be relevant to the
sentencing court's determination of "vulnerability," but only
to the extent that the victim discusses facts that might have
been known to defendants and motivated the defendants in
selecting the victim.
Id. at 1211.6 Thus, to determine whether defendants have targeted
"vulnerable victims," we look to "the facts known to defendants
when they decided to target the [victims]." See id. at 1212.
III.
It is clear that having bad credit or otherwise being in a
precarious financial situation is a "vulnerability" to fraudulent
financial solicitations such as the advance fee loan scheme in this
case. See United States v. Borst, 62 F.3d 43, 46 (2d Cir.1995)
(affirming "vulnerable victim" sentence enhancement where
defendant's mobile home financing scheme targeted persons with
financial difficulties); United States v. Holmes, 60 F.3d 1134,
1137 (4th Cir.1995) ("It is manifest that persons with poor credit
ratings who have been turned down elsewhere for loans would be
6
Thus the focus is not on the harm actually suffered by the
"vulnerable victim." See United States v. Yount, 960 F.2d 955,
958 (11th Cir.1992) (defendant who had embezzled money from trust
accounts belonging to elderly and infirm people warranted
"vulnerable victim" enhancement even though the bank reimbursed
the victims such that the latter did not suffer harm); United
States v. Salemi, 26 F.3d 1084, 1088 (11th Cir.1994) (holding
that a six-month-old baby was a "vulnerable victim" to kidnapping
even though the baby was not harmed), cert. denied, --- U.S. ----
, 115 S.Ct. 612, 130 L.Ed.2d 521 (1994).
unusually vulnerable, that is, more prone than most to yield to the
melodious beseeching of a charlatan who assures them that their
dreams are within their grasp"); United States v. Peters, 962 F.2d
1410, 1418 (9th Cir.1992) (persons with poor credit histories were
particularly susceptible to credit card fraud).
A closer issue in this case is whether the defendants
targeted persons with bad credit. The district court found that
they did, and we agree.
A.
Section 3A1.1 provides that "vulnerable victim" enhancement is
appropriate, for instance, "in a fraud case where the defendant
marketed an ineffective cancer cure." (Application Note 1 to §
3A1.1). On the other hand, the "vulnerable victim" enhancement is
not appropriate where, for example, "the defendant sold fraudulent
securities by mail to the general public and one of the victims
happened to be senile." Id. We are persuaded that the instant
case is more closely analogous to the ineffective cancer cure
illustration found in Application Note 1 of § 3A1.1.
The scheme in this case was not simply a loan fraud aimed at
the general public. McKnight advertised a "Program for bad
credit." The district court found that "[t]he intent clearly of
the ads was to prey upon people with financial problems, troubled
people, people desperate for loans as indicated by the
advertisements themselves." (Sentencing Hearing of Seeta McKnight,
May 14, 1993 at 18). Indeed, one of the victims, Tracey Shafer,
testified that she understood the advertisement to be "an ad to
apply for a loan if you had poor credit or a bad credit history or
bankruptcy." (Transcript of Trial at 511). Another victim, Pamela
Westbrook, testified that the advertisement "was about loans, and
that it was something to the fact of not worrying about credit
history or past credit problems." Id. at 597. Yet another victim,
Nathan Councilman thought "the gist of the ad was loans by mail,
bad credit, no problem, poor credit, no problem." Id. at 617.
Furthermore, once the victims called in to inquire about the
loan, the script, as written by McKnight and delivered by the
telemarketers, focused on persons with bad credit. The script
directed the telemarketers to ask whether the customer had been to
a bank or anyone else for this loan. John Beach, who had worked at
Certified Financial as a telemarketer, testified that the purpose
of this question was to find out how easy of a target the victim
was; and thus how eagerly the telemarketer should pursue the
victim. Beach explained:
If they say yes to this, they have been turned down, the odds
are ninety percent you're going to get this person's money,
because he's already been through the experience of being
turned down. If he says no, he hasn't been to a bank, this
may lead you to shy away from him a little bit because he may
not send the money in. He may still go to a bank. You're
looking for immediate response from these people in a matter
of 24 to 36 hours.
(Transcript of Trial at 316).
The script then went on to say: "Well, you'll be pleased to
know that we're not a bank." See id. at 317. The intent of this
part of the script was clearly to offer hope to desperate persons
whose applications had been rejected by banks or other commercial
institutions. Thus, as Beach testified, Certified Financial was
targeting "basically low income, people that have poor credit,
bankruptcies." Id. at 277. The scheme targeted people with bad
credit because "they're desperate for money." Id.
Hence, the present case is not a broad-based fraud aimed at
the general public but which happens to ensnare a few particularly
"vulnerable victims."7 The advance fee loan scheme at issue here
specifically addressed itself to persons with bad credit.
Accordingly, like the promise of a cancer cure to persons afflicted
with cancer, the advance fee loan scheme in the present case
targeted the most desperate victims.8
B.
7
United States v. Wilson, 913 F.2d 136 (4th Cir.1990), which
the defendants cite, is distinguishable. In Wilson, the Fourth
Circuit declined to find that Wilson had targeted vulnerable
victims under section 3A1.1 where he had fraudulently solicited
cash donations for tornado victims by sending solicitation
letters to five residents of Raleigh, North Carolina, an area
recently hit by a tornado.
The limited nature of the Wilson holding, however, is
evident from the Fourth Circuit's recent opinion in United
States v. Holmes, 60 F.3d 1134 (4th Cir.1995). Holmes held
that the defendant, who had engaged in a mortgage loan
scheme, warranted sentence enhancement under § 3A1.1 where
he admitted that he was targeting persons with credit
problems, and where two of his victims testified that they
were drawn to the defendant's scheme because they were
unable to obtain mortgage loans elsewhere. In Holmes, the
Fourth Circuit read Wilson as rejecting § 3A1.1 enhancement
because there had been no showing that any of the randomly
selected victims were more susceptible to the tornado relief
fund scheme than most persons asked to provide donations for
disaster relief. Holmes, 60 F.3d at 1135. In contrast, it
is well established that persons with bad credit are more
susceptible than other potential victims to credit frauds.
8
The telemarketer defendants (Page, Rogers, Jackson, and
Scalise) allege that they cannot be held accountable for the
advertisement because it had been drafted by McKnight only. We
disagree. The telemarketer defendants participated in the same
conspiracy, and knew about and benefitted from the advertisement.
Thus, we find that they are equally culpable for the
advertisement. Furthermore, there can be no dispute that the
telemarketers are accountable for the content of the scripts
which they willingly and repeatedly delivered.
Further, the record shows that even if the telemarketer
defendants did not initially know of their victims'
vulnerabilities, they warrant § 3A1.1 enhancement because they
learned of such vulnerabilities at some point during the loan fraud
yet continued to perpetrate the fraud against victims whom they
knew to be unusually vulnerable to the loan scheme.
In our recent decision in United States v. Thomas, 62 F.3d
1332 (11th Cir.1995), we held that "where the "thrust of the
wrongdoing' was continuing in nature, the defendant's attempt to
exploit the victim's vulnerability will result in an enhancement
even if that vulnerability did not exist at the time the defendant
initially targeted the victim." Id. at 1345.
Thomas, like the present case, involved an advance fee loan
scheme. After commencing the fraud against Colonel Lewis, the
defendants learned that he had to leave the country on short notice
and would be gone for a lengthy period of time. Before he left,
Lewis gave the defendants a power of attorney, which the defendants
later used to obtain two loans without his knowledge. We affirmed
the district court's finding that Lewis's absence from the country
was a "vulnerability" to the fraud, and we found that the
defendant's exploitation of Lewis's absence sufficiently
constituted "targeting" or "retargeting" of Lewis for purposes of
§ 3A1.1. Even though Lewis's vulnerability (absence from the
country) did not exist at the time that the defendants first
targeted him, we agreed with the district court that the defendants
warranted a § 3A1.1 because the "thrust of the wrongdoing" was
"continuing" in nature, and the defendants exploited the
vulnerability once it appeared.
The "thrust" of the fraud here was also "continuing" in
nature. The fraud was set up in several steps: (1) the newspaper
advertisements encouraging people to call; (2) the telemarketers
taking the customer's personal information to see if the customer
"qualifies" for a "loan," (3) the telemarketers telling the
customer of the "terms" of the "loan;" (4) the telemarketers
instructing the customer to call back after an hour to see if the
"loan" was "approved," (5) the telemarketers telling the customer
that the "loan" was "approved" and urging the customer to send in
the $250 by overnight mail to hold the loan; (6) the customer
sending in the money.
At an early stage of the fraud, the defendants learned of
their victims' financial profiles, including in many instances,
their financial desperation. The script instructed the
telemarketers to ask, among other things, if customers had ever
been bankrupt, had repossessions or foreclosures; how much they
wanted to borrow; who they were working for and for how long;
their income and the income (if any) of their spouse. (Transcript
of Trial at 315). In listening to the customers' responses to
these questions, each of the four telemarketer defendants had
occasion to learn of the bad credit or other serious financial
difficulties of at least some of their victims.
For example, Page persuaded Susan Sirmans to send in the $250
fee for the "loan" even though she told him that she made a little
less than $550 every two weeks and that her husband had been
unemployed for quite a while. (Transcript of Trial at 656).
Rogers persuaded Saundra Hawkins, to send in $250 even though
Hawkins had to take that amount out of her mortgage payment. Id.
at 913. Rogers also persuaded Denise Jones to send the $250 even
after learning that Jones, who needed the money because she had
just had a baby and also needed a car, only made $526 every two
weeks and that her husband made about the same amount of money by
holding down two jobs. Id. at 629-31.
Scalise persuaded Nathan Councilman to send in the $250 for
the "loan" after Councilman had explained that he needed the loan
because he was going through a divorce and had bad credit. Id. at
618.
Jackson apparently felt so badly about the financial plight of
Sonia Gibbs, who desperately needed the money because her car was
about to be repossessed, that she, Jackson, refunded Gibbs her fee.
Id. at 1162. On other occasions, however, Jackson did not hesitate
to collect the $250 fee from James Brundage who told her that he
needed the loan because he was just coming out of Chapter 13
bankruptcy, id. at 490; from Pamela Westbrook, who needed the loan
to pay rent that she owed in arrears, id. at 601; or from Laurie
Cornell, who was overextended on her credit cards and other debts.
Id. at 609.
Thus we find that the record amply supports the conclusion
that, whether or not they initially knew of the victims'
vulnerabilities (bad credit or desperate financial situations), the
telemarketer defendants learned of those vulnerabilities by asking
personal financial information of the customers; yet persisted in
carrying out the fraud against them. Accordingly, we are satisfied
that under our recent decision in Thomas, that the telemarketers
"targeted" "vulnerable victims" for purposes of § 3A1.1.
C.
The defendants argue that "vulnerable victim" enhancement is
inappropriate here because people with good incomes also answered
the advertisement, including a deputy sheriff, an employee at the
Bank of New York, and a woman whose combined income with her
husband was $60,000-$70,000. We disagree.
We will not absolve the defendants of their culpability for
having targeted "vulnerable victims" simply because, in casting out
their net, they happened to ensnare and defraud some individuals
who did not share this vulnerability. See United States v. Small,
35 F.3d 557 (4th Cir.1994) ("Our review of the record discloses
that the district court was not clearly erroneous in finding that
Small targeted especially vulnerable victims, even though he also
defrauded people who were not in this category."); see e.g. United
States v. Thomas, 62 F.3d 1332 (11th Cir.1995) (upholding § 3A1.1
enhancement on both defendants where one of the defendants' 15
victims was "vulnerable"); United States v. Holmes, 60 F.3d 1134,
1137 (4th Cir.1995) ("vulnerable victim" enhancement appropriate
where defendant admitted to targeting persons with bad credit in
his mortgage fraud scheme, even though the government only produced
evidence that two of the 78 victims were drawn to the scheme
because they had bad credit).
In conclusion, we hold that the district court did not err in
finding that the defendants targeted "vulnerable victims," and by
so doing were subject to sentence enhancement pursuant to section
3A1.1.
IV.
Seeta McKnight contends that the district court erred in
ordering her to pay restitution of $106,000, jointly and severally
with her co-defendants, without considering her financial means.
In addition, even though the remaining defendants, Page, Rogers,
Jackson, and Scalise, did not raise the issue of restitution in
their appeal briefs before us, the district court's restitution
order necessarily must affect them as well, as it was imposed on
all five defendants on a joint and several basis. Because of that
fact, and because the cases of the other four defendants are before
us in this appeal anyway, we exercise our discretion to consider
the restitution issue as though each defendant in this appeal had
raised it.
We normally will not entertain error that was not preserved
in the district court, nor error that has been waived in this
court. Here, as noted, no defendant objected at the time of
sentencing, and all of the defendants other than McKnight failed to
raise in their briefs to this Court any issue involving compliance
with Jones or as to restitution. Nevertheless, because under our
supervisory powers we have required the district court to conduct
certain inquiries during the sentencing process, see United States
v. Jones, 899 F.2d 1097, 1102 (11th Cir.1990), cert. denied, 498
U.S. 906, 111 S.Ct. 275, 112 L.Ed.2d 230 (1990), overruled on other
grounds, 984 F.2d 1136, 1137 (11th Cir.1993) (en banc), we will
review the defendants' sentences here. In doing so, we will vacate
the sentences imposed on all of the defendants by the district
court, and we will remand for resentencing.
A.
As a threshold matter, we find that the district court, in
sentencing McKnight, Page, Jackson, and Scalise, failed to comply
with United States v. Jones, 899 F.2d 1097 (11th Cir.1990), cert.
denied, 498 U.S. 906, 111 S.Ct. 275, 112 L.Ed.2d 230 (1990),
overruled on other grounds, 984 F.2d 1136, 1137 (11th Cir.1993) (en
banc).9
In Jones, we ruled pursuant to our supervisory power, that
after imposing a sentence, the district court must give the parties
an opportunity to object to the court's ultimate findings of facts
and conclusions of law, and to the manner in which the sentence is
pronounced. Id. at 1102. Moreover, we required that the district
court elicit from counsel a full articulation of the grounds on
which any objection is based. Id. "Where the district court has
not elicited fully articulated objections following the imposition
of sentence, this court will vacate the sentence and remand for
further sentencing in order to give the parties an opportunity to
raise and explain their objections." Id. at 1103. On the other
hand:
Where the district court has offered the opportunity to object
and a party is silent or fails to state the grounds for
objection, objections to the sentence will be waived for
purposes of appeal, and this court will not entertain an
appeal based upon such objections unless refusal to do so
would result in manifest injustice.
9
The district court did provide Rogers with an opportunity
to put "any exceptions into the record" after it had imposed
sentence on her. (Transcript of Sentencing Hearing, July 2,
1993, at 21). Rogers' counsel did not make any objections at
that point. Id.
Id.
In the present case, after the district court stated its
findings and imposed its sentence on McKnight, it did not solicit,
and McKnight did not make, any objections to the restitution order
or to any other portion of the sentence. (Transcript of Sentencing
Hearing of Seeta McKnight, May 14, 1993, at 16-20, 24-26). The
court simply advised McKnight that she had the right to appeal the
sentence. Id. at 26. Thereafter, McKnight's counsel only asked
that McKnight be allowed a 60 day delay in her date of surrender:
a request that the court granted. Id. at 27.
The district court's obligation to make a Jones inquiry was
not excused by the fact that McKnight, in her plea agreement,
"acknowledge[d] that the Court may order restitution as part of the
sentence imposed in the instant case." (Negotiated Plea Agreement,
¶ 2). While she acknowledged that restitution could be imposed,
McKnight did not thereby agree to pay any and all amounts of
restitution. Thus, she did not waive her right to contest what she
now claims to be an excessive amount of restitution.
Similarly, the district court failed to solicit any objections
after imposing sentences on Page and Jackson. (Transcript of
Sentencing Hearing of Edsel Page, May 14, 1993, at 12-14);
(Transcript of Sentencing Hearing of Mary Jackson, May 14, 1993, at
34). With respect to Scalise, the district court asked only for
any "exceptions" to its application of the Sentencing Guidelines,
but it did not provide the parties with a broader opportunity to
object. (Transcript of Sentencing Hearing of David Scalise, July
22, 1993, at 18).
Accordingly, the district court on remand will be obligated to
make the appropriate Jones inquiries with respect to McKnight,
Page, Jackson, and Scalise. Rogers, as we have noted, see supra,
footnote 9, was afforded an opportunity to except to her sentence.
B.
Furthermore, the district court's order cannot be implemented
in light of that court's failure to consider each defendant's
ability to pay. Section 3664 of title 18 of the United States Code
provides that:
The court, in determining whether to order restitution under
section 3663 of this title and the amount of such restitution,
shall consider the amount of the loss sustained by any victim
as a result of the offense, the financial resources of the
defendant, the financial needs and earning ability of the
defendant and the defendant's dependents, and such other
factors as the court deems appropriate.
18 U.S.C. § 3664(a) (emphases added). We have recently held in
United States v. Remillong, 55 F.3d 572 (11th Cir.1995), that we
will affirm an order of restitution only if the record reveals that
the district court considered the defendant's ability to pay prior
to imposing the amount of restitution. Id. at 574. The fact that
the defendant bears the burden of proving his or her financial
ability, 18 U.S.C. § 3664(d), does not diminish the district
court's duty in this respect. We recognize that Remillong was
decided after the district court had sentenced the defendants, but
under Griffith v. Kentucky, 479 U.S. 314, 328, 107 S.Ct. 708, 716,
93 L.Ed.2d 649 (1987), Remillong is applicable to this case.
At the sentencing hearings, the district court imposed
restitution of $106,000 on McKnight and the other defendants
without considering any of the defendants' abilities to pay. (See
e.g. Sentencing Hearing of Seeta McKnight, May 14, 1993, at 20).
With respect to McKnight, the court had earlier adopted the
findings and conclusions of the Presentence Investigation Report
(the "PSR") in all respects. Id. at 2. The PSR concluded that
McKnight "will be unable to make a lump sum fine or restitution
payment," but that she "should be able to make periodic payments
from income from work in prison industries or from income from
legitimate employment while on Supervised Release." (PSR of Seeta
McKnight at 15). However, the wholesale adoption of the PSR at the
commencement of the sentencing hearing, without more, does not
suffice to meet the court's obligation under 18 U.S.C. § 3664(a)
and under Remillong to consider a defendant's financial resources
before imposing restitution. The PSR's findings do not take into
consideration the objections to the PSR or the arguments made by
both parties during the sentencing hearing. Nor did the district
court reaffirm its adoption of the PSR's findings after all
arguments had been heard and before it imposed restitution on
McKnight.
The district court did not consider the financial abilities of
Page, Rogers, or Scalise at all. With respect to Jackson, the
court found that she "certainly cannot pay all this restitution"
but nonetheless imposed restitution for the full $106,000 on her.
(Transcript of Sentencing Hearing of Mary Jackson, May 14, 1993, at
23).
Therefore, we instruct the district court, when it resentences
the defendants in conjunction with its Jones inquiries, to consider
each defendant's ability to pay, pursuant to Remillong, before
imposing a restitution amount.
C.
Moreover the district court, on remand, will be obliged to
clarify the joint and several nature of its restitution order.
When sentenced, all of the defendants were required, jointly and
severally, to pay restitution in the amount of $106,000. Yet the
sentences of McKnight, Rogers, and Scalise also provided: "[t]he
defendant's restitution obligations shall not be affected by any
restitution payments that may be made by other defendants in this
case." (See e.g. Judgment and Commitment of Seeta McKnight at 4).10
Because of the joint and several nature of the restitution
imposed by the district court, the district court could not at the
same time also provide that the monies paid by one defendant could
not be credited toward the restitution obligations of the other
defendants.
While we do not preclude a joint and several restitution order
under appropriate circumstances where the district court has
complied with our mandates on sentencing, see e.g., the
requirements of Jones and Remillong, we do not encourage such a
joint and several provision particularly where differences may
appear in the ability of various defendants to respond to the
overall restitution ordered.
10
The sentences of Page and Jackson did not include this
language. (Judgment and Commitment of Edsel Page at 4);
(Judgment and Commitment of Mary Jackson at 4). However, during
Jackson's sentencing hearing, the district stated that Jackson's
obligation to make restitution shall not be affected by the
restitution payments made by the other defendants until full
restitution has been made. (Transcript of Sentencing Hearing of
Mary Jackson, May 14, 1993, at 32).
In this particular case, if the district court decides to
reinstate the joint and several provision in its order, it cannot
provide that "[t]he defendant's restitution obligations shall not
be affected by any restitution payments that may be made by other
defendants in this case," inasmuch as the two concepts are mutually
exclusive. Five defendants cannot be ordered as a group to pay
what amounts to five times the amount of loss suffered by the
victims.
It may be that the district court, after considering each
defendant's financial ability pursuant to Remillong, will find that
each defendant can bear the whole restitution amount of $106,000,
in which case a joint and several order may be appropriate. If it
does not so find, however, it would appear that restitution should
be ordered, if at all, only in accordance with each defendant's
financial ability.11
V.
In addition to the "vulnerable victim" and restitution issues,
11
Finally, the district court should also clarify and
correct the sentences of McKnight and Jackson with respect to the
statement of the total amount of restitution owed. Currently,
those sentences provide that the defendants shall make
restitution of $250 "to each of the 453 victims identified by the
Postal Inspector." (See e.g. Judgment and Commitment of Seeta
McKnight at 4). On its face, this statement is inconsistent with
the later provision, found in the same Judgment, that states:
"[t]he total amount of restitution ordered is $106,000." The
calculation which results from multiplying 453 victims by $250 is
$113,250.
It is evident from the record that the district court
intended to impose a restitution amount of no more than
$106,000 on each of the defendants. (See Transcript of
Sentencing Hearing of Mary Jackson, May 14, 1993, at 35).
If, on remand, the district court intends some other
restitution, it is free to order it, if supported by the
record.
the various defendants raised the following issues on appeal:
Page contested the admission of similar act evidence at trial
and argued that his sentence should have been reduced for a minor
role. He also appealed the district court's denial of his motion
for acquittal and the district court's denial of his motion to
dismiss those counts of the indictment that were based on the
conspiracy's activities after his departure.
Jackson contended that she was not afforded pretrial notice
with respect to certain similar act evidence and also contested the
admission in general of all similar act evidence against her. She
also argued that her sentence should have been reduced based on her
minor role.
Rogers contested the admission of similar act evidence at
trial and argued that her sentence should have been reduced based
on her minor role.
Scalise argued that his sentence should have been reduced
based on his minor role.
We have reviewed all of the defendants' contentions and have
considered all of the remaining grounds on which defendants
challenge their convictions and sentences on appeal, and we find
them to be without merit.
VI.
We will VACATE and REMAND the sentences of all of the
defendants and instruct the district court to resentence each of
these defendants pursuant to the requirements of United States v.
Jones, 899 F.2d 1097 (11th Cir.1990), United States v. Remillong,
55 F.3d 572, 574 (11th Cir.1995), and this opinion.
In particular, after the district court has conducted its
inquiries as required by Jones and Remillong, and after it has
resentenced the defendants as to restitution, it need not revisit
the other sentencing issues which we have affirmed in this opinion.
Thus, issues concerning minor role and "victim vulnerability,"
having been decided in this opinion, will not be available to be
raised by the defendants as objections under Jones.
We will AFFIRM the judgments and sentences imposed by the
district court in all other respects.
United States v. Page
Court: Court of Appeals for the Eleventh Circuit
Date filed: 1995-11-16
Citations: 69 F.3d 482
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