Eighth Circuit Finds Evidence Insufficient to Hold Defendant Responsible for Loss to All Victims in Fraud Conspiracy

Prior to sentencing, the judge must determine and then “consider” the sentencing range recommended by the Sentencing Guidelines.  Determining that range is a several-step process.  The first step is to determine the offense guideline for each offense of conviction.  The offense guideline is determined solely by the offense of conviction.  Almost all other guideline decisions are determined by “relevant conduct.”  “Relevant conduct” looks beyond the offense of conviction to what actually happened.  For some cases, “relevant conduct” means what the defendant did to commit the offense, or to prepare to commit the offense, or to try to avoid being caught after committing the offense.  In cases involving jointly undertaken criminal activity (such as conspiracies), “relevant conduct” also includes all reasonably foreseeable acts and omissions committed by other people in furtherance of the jointly undertaken criminal activity.  See USSG § 1B1.3. 

Defense counsel in conspiracy cases must take special care to ensure that relevant conduct is correctly determined.  Relevant conduct can be different for each member of the same conspiracy.  In conspiracy cases, the actions of other people are not relevant conduct unless the prosecution can prove two things – first that the actions were in furtherance of the jointly undertaken criminal activity and second, that the actions were reasonably foreseeable.  Unless the prosecution can prove both factors, it is not relevant conduct.  These principles are illustrated in a recent Eighth Circuit fraud case in which the Court found the evidence insufficient to support the sentencing court’s holding one defendant responsible for the entire loss to all victims of the entire conspiracy.  The sentencing court had held this defendant responsible for the entire loss because it had found that he was a manager or supervisor of other participants.  The Court of Appeals found the evidence insufficient for two reasons.  First, this defendant had not been a member of the conspiracy from the beginning.  As the Court noted, a defendant is not responsible for acts of other co-conspirators that occurred before he joined the conspiracy.  The Court also noted that a defendant is also not responsible for acts of co-conspirators that occur after he “exits” the conspiracy.  Second, there was insufficient evidence to support the district court’s finding that the defendant held a managerial or supervisory role in the conspiracy.  After this underpinning was removed, there was no evidence to support the district court’s finding concerning relevant conduct, especially since this particular defendant “was significantly less involved in the conspiracy in scope and time.” The Court remanded for the sentencing court to make individualized findings concerning the relevant conduct applicable to this defendant.  United States v. Adejumo, 2014 WL 6653283(8th Cir., Nov. 25, 2014).

Eighth Circuit Reverses Aggravating Role Ajustment

The Guidelines provide for a three-level upward adjustment for an “aggravating role” in the offense where “the defendant was a manager or supervisor (but not an organizer or leader) and the criminal activity involved five or more participants or was otherwise extensive.”  USSG § 3B1.1.  Before a court may apply this adjustment, the government must prove not only that the offense involved five or more participants (that is, people who are criminally responsible), but also that the defendant either recruited participants, planned or organized their criminal activity, or exercised some decision-making authority over them.  The Eighth Circuit recently reversed an aggravating role adjustment in a case involving five or more participants where the government offered insufficient evidence to support it.  The Court rejected the prosecution’s contention that the defendant was a manager or supervisor because he had photos of other participants in the storage locker where he kept materials related to the conspiracy.  The Court also rejected the prosecution’s claim that the fact that the defendant expressed concern for the success of the conspiracy in telephone calls made him a manager.  The Court noted that it is likely that all participants in a conspiracy share a similar concern.  In the absence of any evidence that the defendant recruited or supervised any participant, the Court reversed the adjustment and remanded for further proceedings.  United States v. Adejumo, 2014 WL 6653283(8th Cir., Nov. 25, 2014).

Eighth Circuit Reverses Obstruction of Justice Adjustment

Although the Sentencing Guidelines provide for a two-level upward adjustment for obstruction of justice, USSG § 3C1.1, it is important to remember that not all lies to authorities subjects a defendant to this adjustment.  Recently the Eighth Circuit reversed an obstruction adjustment where the government provided absolutely no evidence that lies during a proffer session “significantly obstructed or impeded the official investigation or prosecution of the instant offense.”  3C1.1, Appl. Note 4(g).  In rejecting the government’s argument that the adjustment was supported by the prosecutor’s statement to the sentencing court that the defendant’s lies had caused the government to “waste[] time [and] resources,” the Court noted that “[t]he prosecutor’s statement to the court was not evidence.”  The Court found the two-level adjustment to be clear error and remanded for further proceedings.  United States v. Adejumo,2014 WL 6653283 (8th Cir., Nov. 25, 2014).