United States v. Egemonye ( 1995 )

  • USCA1 Opinion



    No. 94-1922





    Defendant, Appellant.




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



    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 _______________


    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


    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


    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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