United States v. Egemonye

UNITED STATES COURT OF APPEALS
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT

No. 94-1922

UNITED STATES OF AMERICA,

Appellee,

v.

LONDON EGEMONYE,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Joseph L. Tauro, U.S. District Judge]

Before

Cyr, Circuit Judge,

Bownes, Senior Circuit Judge,

and Boudin, Circuit Judge.

Joan M. Griffin, by Appointment of the Court, with whom Casner &

Edwards was on brief for appellant.

James F. Lang, Assistant United States Attorney, with whom

Donald K. Stern, United States Attorney, was on brief for the United

States.

August 3, 1995

BOUDIN, Circuit Judge. London Egemonye was indicted in

1993 under a multi-count indictment charging him and others

with conspiracy and other offenses relating to the possession

and use of other people's credit cards. 18 U.S.C.

1029(a)(2)(trafficking, fraud and use), 1029(a)(3)

(possession with intent to defraud), 1029(b)(2) (conspiracy).

On June 10, 1994, Egemonye entered guilty pleas to all

counts, and he now appeals from his sentence arguing that it

is flawed by the government's manipulation of sentencing

factors and by an improper computation of loss.

Because there was no trial, we derive the facts

primarily from the recitations at the plea hearing, from the

presentence report, and from submissions at the sentencing

hearing. United States v. Connell, 960 F.2d 191, 192-93 (1st

Cir. 1992). The case arose out of a sting operation

conducted by a joint federal-state task force investigating

credit card and other financial fraud in Massachusetts. The

critical events took place in January and February 1993.

Robert Leslie, who was cooperating with authorities,

introduced Egemonye to an undercover state trooper known to

both only as "Kathy." On January 21, 1993, Kathy supplied

Egemonye with two BayBank MasterCard credit cards and one

BayBank Visa credit card with an aggregate credit limit of

$7,450 for all three cards. Egemonye then created false

driver's licenses in the credit-card names, each license

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bearing Leslie's photograph, and drove Leslie to three

different banks to obtain cash advances of $6,900.

Egemonye purchased four more credit cards from Kathy on

January 29, 1993, and four more on February 2, 1993. The

aggregate limits on the cards in the two transactions were

$21,000 and $14,000, respectively. In between these

transactions, several of the cards were used to obtain

advances from banks, and Egemonye and others in the

conspiracy engineered deposits of some stolen checks into

accounts of individual card holders to boost the depleted

credit available for those cards.

Until the fourth transaction, Kathy made the "sales" in

exchange for a share of the proceeds, but on February 5 she

proposed that she be paid a flat $200 per card. Egemonye

said, "I'm not going to buy one card for two hundred. . . .

It has to be like ten." On February 10, Kathy told Egemonye

that she expected to receive a number of cards that day, that

Egemonye should bring $2,000 for 10 cards, and that she would

"front" (finance) any additional cards and accept payment for

them later. Egemonye agreed, subject to his examination of

the cards.

When Kathy and Egemonye met later that day, Kathy said

that she had a bag full of cards and asked Egemonye whether

he knew of another buyer if he did not want them all. He

said, "I probably can handle them," and proceeded to give

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Kathy $2,000 down, and a promise of $6,000 more later, for 40

Household Bank Visa and MasterCard credit cards with an

aggregate limit of $200,000. Egemonye was arrested

immediately thereafter, followed by the indictment and plea

already described.

At sentencing, the district court increased the base

offense level of 6 by 8 additional levels because the "loss"

attributed by the court to Egemonye was over $200,000.

U.S.S.G. 2F1.1(a), (b)(1)(H). The court computed the loss

at $242,950, representing the aggregate credit limit of the

51 credit cards purchased from Kathy in the four

transactions. The offense level was then adjusted in other

respects, not here in dispute, and Egemonye was sentenced

within the guideline range to 37 months' imprisonment.

1. On appeal, Egemonye's first claim is directed at the

40 cards supplied to him in the final transaction. Egemonye

contends that including these 40 cards in the loss

calculation condones "blatant sentencing factor manipulation

engaged in by the investigating agents" and is a violation of

constitutional due process. He relies on several decisions,

including United States v. Connell, 960 F.2d 191, 196 (1st

Cir. 1992).

We have recently had occasion to discuss Connell and the

other decisions in this circuit that have addressed

sentencing factor manipulation. United States v. Montoya,

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No. 94-1666, et al., (1st Cir. July 27, 1995). Summarizing

the prior cases, we said that "where government agents have

improperly enlarged the scope or scale of the crime," the

sentencing court has power to exclude "the tainted

transaction" from the guideline computations and for purposes

of any mandatory minimum statute. Montoya, slip op. 6-7

(quoting in part Connell, 960 F.2d at 195).

However, recognizing the broad latitude allowed to the

government in investigating and suppressing crime, we

stressed that it was only "extraordinary misconduct" by

agents that could give rise to such an exclusion, which would

occur in the teeth of a statute or guideline approved by

Congress. Montoya, slip op. at 7-8, (quoting in part United

States v. Gibbens, 25 F.3d 28, 31 (1st Cir. 1994)). While

something less than a constitutional violation might suffice,

as extraordinary misconduct, Egemonye's reference to due

process concepts is certainly in the ballpark.

In Montoya, as in previous cases, we refused to lay down

fixed rules to define sentence factor manipulation, but said

that the focus is normally upon the conduct of the government

rather than the defendant. Slip op. at 8. Indeed, Egemonye

does not claim that his will was overborne or deny that he

was predisposed to the offense. What Egemonye claims is that

the fourth transaction had no legitimate law enforcement

purpose and was designed solely to boost his federal sentence

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because government agents were unhappy with lenient treatment

that Egemonye earlier received in state court.

There is some basis for the suggestion that task force

agents were unhappy with Egemonye's prior record and

believed, in the words of one of the agents, "that he

[earlier] got off lightly for his criminal activity." That

criminal record, according to the agent just quoted, involved

a history of credit card fraud by Egemonye that could be

traced back to 1990 and involved a number of transactions.

On this appeal, the government is prepared to assume arguendo

that the background facts, "viewed collectively, could call

the government's motives into question to some extent."

Nonetheless, the government says that multiple sales

were clearly appropriate in order to identify Egemonye's co-

conspirators, which they did. As to the final sale of 40

cards, the government insists that it too "had a valid

investigatory purpose" which was "to explore the parameters

of the defendant's criminality." Egemonye's counsel replies

that this "parameters" explanation has no real substance and

could be used to enlarge a defendant's sentence to virtually

any height whatever. We think that Egemonye's reply has some

force but overstates the matter.

There is, it should be stressed, no indication that

Egemonye was coerced or pressured to achieve a new level of

crime. True, the fourth sale was much larger than the

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earlier ones; but agent Kathy did not force the 40 cards on

Egemonye. On the contrary, he had insisted on at least 10

cards for the new $200 per card payment ("I'm not going to

buy one card for two hundred. . . . It has to be like ten.")

And when offered a bag full of cards--with the request that

he recommend another buyer for those he did not want--he

responded, "I probably can handle them," and took them all.

Government agents are not limited to replicating a

suspect's largest unsolicited crime. In this case, the full

contours of the criminal operation--its size, techniques,

personnel--were, like an iceberg, largely submerged; and the

means of exploration were additional and larger transactions.

The first three transactions clearly served this purpose and

the fourth, even though followed immediately by the arrest,

provided air-tight evidence for trial that Egemonye was a

significant dealer and not a petty swindler. While the sting

could not be endlessly prolonged and enlarged, nothing in the

objective facts suggests "misconduct" at all, let alone

"extraordinary misconduct."

The question, then, is whether the fourth transaction is

tainted by the agents' subjective motives. The pallet in

such matters contains not blacks and whites but shades of

gray. Motives may be mixed; good and bad motives are often

matters of degree; and there can be multiple actors. Whether

to consider subjective motive at all presents a problem of

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policy. Compare Harlow v. Fitzgerald, 457 U.S. 800 (1982)

(refusing to do so in the qualified immunity context).

Still, we would be greatly concerned if evidence otherwise

available showed that a plainly improper subjective motive--

say, racial hostility or personal animus--had enlarged or

prolonged the sting.

But this is not such a case. About the most that can be

derived from the record, drawing all reasonable inferences in

favor of Egemonye, is that the agents thought that Egemonye

was an established and unrepentant defrauder who had escaped

serious punishment for a series of past, similar frauds.

With this in mind, they conducted a sting operation that

involved no pressure whatever on Egemonye, lasted for only

four transactions, and garnered several other defendants.

The first three transactions involved 11 cards; the last one,

40. This is a sizeable jump but hardly extraordinary.

That agents considered Egemonye's past record in

selecting him for overtures by the task force is a

commonplace of law enforcement. Undercover operations

frequently target those who are suspected of crime, and the

recent history of fraudulent activities gave the agents some

reason to think that Egemonye was not only predisposed but

actively engaged. Fed. R. Evid. 404(a), restricting

character evidence to show propensity, is a rule for trials

and not the conduct of police investigations. At worst, the

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agents went too far if and to the extent that they thought

themselves entitled to make up for any shortfall in prior

punishments. But the line is thin and blurred between such a

dubious motive and a simple desire to be sure that a

committed criminal is caught and tried for a substantial

offense based on unshakeable evidence. And, as we have

already held, Egemonye was legitimately targeted and the

sting objectively reasonable in extent. Under these

circumstances, even assuming that the agents' motives were

mixed and not of crystalline purity, we see nothing that

would require a curtailment of the sentence.

2. Egemonye's second challenge to his sentence concerns

the district court's computation of loss. As already noted,

the governing guideline keys the offense level primarily to

"the loss" caused by the offense, U.S.S.G. 2F1.1(b)(1)(loss

table), but goes on to provide (id., comment (n.7)) that

intended loss should be used if it is greater than actual

loss:

Consistent with the provisions of 2X1.1 (Attempt,
Solicitation or Conspiracy), if an intended loss
that the defendant was attempting to inflict can be
determined, this figure will be used if it is
greater than the actual loss. . . . For example,
if the fraud consisted of selling or attempting to
sell $40,000 in worthless securities . . . . the
loss would be $40,000.

In accord with the presentence report, the district

court in this case attributed to Egemonye an intended loss

equal to the aggregate limits of the purchased credit cards.

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A reading of the transcript indicates that the judge found

that Egemonye was capable of and intended to use the cards to

secure amounts at or virtually at their aggregate limits. We

review such a factual determination only for clear error,

United States v. Pavao, 948 F.2d 74, 77 (1st Cir. 1991),

reserving for closer scrutiny a buried legal issue shortly to

be described.

On the factual issue of intended use and capability, the

government bears the burden of proof because an increase in

the offense level was sought, see United States v. Sklar, 920

F.2d 107, 112 (1st Cir. 1990), but the guideline itself

cautions that a reasonable estimate of loss will suffice.

U.S.S.G. 2F1.1 comment. (n.8). Egemonye begins by pointing

out that he realized only about 53 percent of the aggregate

card limits from the cards involved in the first three

transactions and nothing at all from the final bagful of

cards since he was apprehended almost immediately. He argues

that to predict a 100 percent recovery is simply unrealistic.

Unfortunately for Egemonye, there was affirmative

evidence that he instructed his runners at the outset to

procure cash

from the banks at or virtually at the card limits. In

addition, he arranged for the deposit of stolen checks into

some of the accounts, in order to refresh their limits. By

this means, some of the accounts could have been milked for

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amounts in excess of their aggregate limits. The 53 percent

figure represented only the amount that Egemonye had secured

at the time his scheme was interrupted by arrest. See United

States v. Strozier, 981 F.2d 281, 284 (7th Cir. 1992).

In sum, taking the issue purely as a factual one of

intent and capability, we do not think that on this record

the use of the aggregate card limits as a measure of intended

and potential loss was clearly erroneous. Where there is

good evidence of actual intent and some prospect of success,

we do not think that a court needs to engage in more refined

forecasts of just how successful the scheme was likely to be.

See United States v. Lorenzo, 995 F.2d 1448, 1460 (9th Cir.),

cert. denied, 114 S. Ct. 225 (1993). The situation may be

quite difficult where intent must be inferred solely from the

likely effects of the scheme. See United States v. Stern, 13

F.2d 489 (1st Cir. 1994).

But there is a wrinkle. There is a cross-reference in

U.S.S.G. 2F1.1's application note 7 (quoted above in

pertinent part) to U.S.S.G. 2X1.1; and there is a second

such cross-reference in application note 9, which reads (in

pertinent part):

"In the case of a partially completed offense
(e.g., an offense involving a completed fraud that
is part of a larger, attempted fraud), the offense
level is to be determined in accordance with the
provisions of 2X1.1 . . . whether the conviction
is for the substantive offense, the inchoate
offense . . ., or both."

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Egemonye's counsel argues that section 2X1.1, and the

discount it makes available, apply in this case.

U.S.S.G. 2X1.1 is concerned with determining the

offense level for an attempt or conspiracy; and this it sets

at three levels less than the offense level for the

substantive offense--unless the defendant (or his co-

conspirators) have completed all of the acts believed

necessary for the substantive offense or were "about to

complete all such acts" when apprehended. For cases within

the "unless" clause--which the background comment says

represent "most" cases--there is no such discount.

Effectively, the guideline gives the defendant a three-level

discount if he is some distance from completing the

substantive crime.

Read literally, section 2X1.1 is not relevant to the

present case because 14 of the 15 counts against Egemonye

involved completed substantive offenses, ranging from

trafficking in unauthorized credit cards to producing false

driver's licenses, and the conspiracy thus embraced fully

completed crimes. On the other hand, the cross-reference to

section 2X1.1 in section 2F1.1 arguably connects the intended

loss concept to the attempt guideline, and section 2X1.1

blurs the matter further with the following application note

(comment. (n.4)), providing (in pertinent part):

In certain cases, the participants may have
completed . . . . all of the acts necessary for the

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successful completion of part, but not all, of the
intended offense. In such cases, the offense level
for the count (or group of closely related multiple
counts) is whichever of the following is greater:
the offense level for the intended offense minus 3
levels . . . or the offense level for the part of
the offense for which the necessary acts were
completed . . . . For example, where the intended
offense was the theft of $800,000 but the
participants completed . . . only the acts
necessary to steal $30,000, the offense level is
the offense level for the theft of $800,000 minus 3
levels, or the offense level for the theft of
$30,000, whichever is greater.

Interpreting these provisions is a matter of some

difficulty, and the only cases in point are in conflict.

Compare United States v. Watkins, 994 F.2d 1192 (6th Cir.

1993) with United States v. Strozier, 981 F.2d 281 (7th Cir.

1992) The problem, in a nutshell, is that section 2X1.1 has

on its face nothing to do with a completed substantive

offense or a conspiracy that has been carried to completion.

On the other hand, the notion of a discount could be extended

from the case of an incomplete offense to that of a completed

offense where intended harm is part of the calculus and the

harm is only partly completed.

Recognizing the question to be close, we are inclined to

stand by the literal language of the guidelines that directs

section 2X1.1 to cases where the substantive offense has not

been completed. E.g., United States v. Sung, 51 F.3d 92 (7th

Cir. 1995). The argument for a discount for inchoate crimes

is obvious; the defendant has started down the road toward

the substantive crime but has not gotten there yet and,

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whatever his intention, might still turn back before crossing

the line. By contrast, Egemonye did cross the line and

commit the substantive crime by acquiring the cards and

making the false documents, so the basic purpose of the

section 2X1.1 discount has nothing to do with him.

Where a completed offense is involved, it is surely

rational to measure culpability in part by the intended harm

and to refuse a discount where the offense is complete even

though the intended harm has not yet been fully realized.

From the standpoint of moral guilt, and dangerousness, there

is little to distinguish such a defendant from one who has

actually inflicted the same amount of harm. And we are

influenced in part by the fact that the case law calculating

sentences based on intended harm, most of it admittedly

without making reference to section 2X1.1, is consistent with

this view. E.g., United States v. Guyon, 27 F.3d 723 (1st

Cir. 1994); United States v. Resurreccion, 978 F.2d 759 (1st

Cir. 1992).

Of course, there would be nothing irrational in deciding

that actual harm is worse than intended harm and providing a

three-level discount wherever the sentence for a completed

offense is measured in part by intended harm. But this is

not in general the philosophy of the guidelines; if it were,

possession of drugs with intent to distribute would be

punished less harshly than the actual sale of an equivalent

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amount. The wrinkle of section 2X1.1 cannot be ironed

completely smooth, but the pertinent language already quoted

can in fact be squared with our result.

Thus, the cross-references in section 2F1.1 are easily

explained; they do invoke the discount, or the possibility of

a discount, where the underlying crime is merely an attempt

or conspiracy. Application note 4 in section 2X1.1 is less

easily reconciled; but we think the difference is that in the

theft case, there is no completed crime as to the larger

amount but only (in substance) an attempt. Here, by

contrast, all 51 of the cards were the subject of completed

crimes.

Egemonye's remaining claim as to loss is to argue that

no consideration should be given to the 40 cards in the

fourth transaction, or at least to the unexpected 30 cards

(over and above the ten cards Egemonye requested). This is

largely a restatement of the claim that sentencing factor

manipulation occurred. Having rejected that claim, we think

that--from the standpoint of intended loss--Egemonye can

fairly be charged with intending to inflict loss as to all of

the cards.

Both issues in this case are difficult and important.

We are thus especially indebted to counsel for the able

briefing and argument presented on both sides. The

Sentencing Commission's attention will be drawn to the

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arguable lack of clarity in the interplay between section

2F1.1 and section 2X1.1.

Affirmed.

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