United States v. Michael Harris , 576 F. App'x 265 ( 2014 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-4536
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
MICHAEL F. HARRIS,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Richmond. Henry E. Hudson, District
Judge. (3:12-cr-00170-HEH-1)
Submitted: April 18, 2014 Decided: June 27, 2014
Before SHEDD, KEENAN, and THACKER, Circuit Judges.
Affirmed by unpublished per curiam opinion.
David B. Hargett, HARGETT LAW, PLC, Glen Allen, Virginia, for
Appellant. Dana J. Boente, Acting United States Attorney,
Alexandria, Virginia, Michael R. Gill, Assistant United States
Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Richmond,
Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Michael Harris (“Appellant”) was charged in an eight-
count indictment with securities fraud, wire fraud, and mail
fraud arising out of a fraudulent investment scheme. After a
jury trial, Appellant was convicted of three counts of wire
fraud and one count of mail fraud and was sentenced to 108
months’ imprisonment. On appeal, Appellant challenges the
sufficiency of the evidence at trial as well as the district
court’s calculation of his Sentencing Guidelines range. We have
reviewed the record and find no reversible error. Accordingly,
we affirm.
I.
On October 15, 2012, a grand jury in the Eastern
District of Virginia returned an eight-count indictment charging
Appellant with several crimes in connection with an investment
fraud scheme. According to the indictment, Appellant solicited
investor funds by representing to investors that the funds would
be used to conduct human trials and develop patents on a
treatment for HIV/AIDS. Instead of using the money for those
purposes, the indictment alleged that Appellant
misappropriated/converted a vast majority of the money for his
personal use and that he concealed his fraud from investors.
The specific charges against Appellant were: securities fraud,
in violation of 15 U.S.C. §§ 77q(a) and 77x (Counts 1-4); wire
2
fraud, in violation of 18 U.S.C. § 1343 (Counts 5-7); and mail
fraud, in violation of 18 U.S.C § 1341 (Count 8).
A.
Appellant pled not guilty to all charges. Before
trial, Appellant filed a motion to dismiss Counts 1 and 2 on
statute of limitations grounds, which the district court
granted. Appellant proceeded to a jury trial on the remaining
Counts. 1 The following facts are based on the testimony at
trial, which took place between February 25, 2013 and March 4,
2013.
Appellant was the president, CEO, and principal
shareholder of M.F. Harris Research (“MFH”), a company that was
allegedly involved in researching a cure for HIV/AIDS.
According to the evidence presented at trial, Appellant claimed
that MFH was developing a treatment for HIV/AIDS that involved
using a hyperbaric chamber to introduce nitrogen into a
patient’s cells, which would combat the HIV/AIDS virus.
Between 2005 and 2011, Appellant solicited investments
by selling shares of MFH stock for $1.00 a share. In soliciting
these investments, Appellant made a number of presentations in
which he told potential investors that their money would be used
1
As explained below, Counts 3 and 4 were dismissed post-
trial for lack of venue. Therefore, this section focuses only
on the facts relating to Counts 5 through 8.
3
by MFH to obtain the necessary patents, begin human trials of
the hyperbaric chamber treatment, and continue research. From
October 2005 through July 2011, Appellant received approximately
$900,000.00 in investments. Of that amount, no money was used
for HIV/AIDS research, and only $54,787.24 was used to pay for
patent fees. The Government presented evidence that the
remaining investor funds were spent by Appellant on personal
expenses, including mortgage payments, vehicles, a gun
collection, farm and horse expenses, 2 child support, and other
personal purchases.
1.
Count Five
The trial evidence relating to the wire fraud charge
in Count 5 was based on the circumstances surrounding a single
investment of $200,000.00 by Dr. T.M. 3 In 2006, Dr. T.M.
discovered that he and his former partner, M.B., were HIV
positive. At the end of August 2006, Dr. T.M. was joined by
M.B. and S.B., a friend who was also HIV positive, on a trip
2
Appellant was involved in competitive steeplechase horse
racing, and the evidence at trial revealed that he spent
investor funds on horse boarding and other farm-related
expenses. In addition, Appellant met several MFH investors at
horse shows.
3
To protect the confidentiality of several victims in this
case, we refer to them by their initials.
4
from California to Virginia to meet with Appellant. Over
several days, the three men discussed with Appellant his
research of HIV treatment using hyperbaric chambers. At trial,
witnesses testified that Appellant represented to Dr. T.M. that
if he invested in MFH, his investment dollars would go toward
HIV research and that Dr. T.M., M.B., and S.B. would be the
first patients to receive the treatment.
Dr. T.M. agreed to invest $200,000.00 in MFH. The
Government presented evidence that between October 3, 2006 and
February 7, 2007, almost all of Dr. T.M.’s investment was used
by Appellant for his personal expenses, including $107,974.74 to
purchase and maintain a home. Only $6,000.00 was used to pay
patent expenses and none of the money went to HIV research.
On October 31, 2006, Dr. T.M. died of causes unrelated
to HIV. Dr. T.M.’s brother, John M., served as executor of Dr.
T.M.’s estate and tried to obtain information from Appellant
about his brother’s $200,000.00 investment. John M. sent
letters to Appellant requesting information about MFH’s future
plans and asking for Dr. T.M.’s stock certificates. After these
letters went unanswered, John M. attempted to contact other MFH
investors and made complaints to several state and federal
agencies.
On March 12, 2008, Appellant sent John M. an email in
which Appellant alleged that John M. was falsely impersonating
5
an investor of MFH and that if he continued to do so, he would
“be contacted by authorities with a restraining order.” J.A.
1001. 4 John M. responded, explaining that he was acting on Dr.
T.M.’s behalf and that he needed the stock certificates for the
$200,000.00 investment. John M. also wanted to know how the
investment money was being spent. Appellant replied to this
email, telling John M. that MFH shares are non-transferable.
Appellant still did not provide the requested financial
information to John H.
2.
Count Six
With respect to the wire fraud charge in Count 6, the
Government introduced evidence that in 2008, Appellant went to
the home of David Evans to present Mr. Evans and his wife with
an opportunity to invest in MFH. Mr. Evans testified that
Appellant told him and his wife that their investment would be
used to obtain patent approval and to finish clinical trials of
the HIV/AIDS treatment that MFH was developing. According to
Mr. Evans, there was no discussion during Appellant’s
presentation regarding Appellant using investment money to pay
his own salary or to pay for any personal expenses. At trial,
4
Citations to the “J.A.” refer to the Joint Appendix filed
by the parties in this appeal.
6
Mr. Evans testified, “[i]f I thought he was going to use my
money for salary, I wouldn’t have given him any of my money.”
J.A. 53.
After the presentation, Mr. Evans decided he would
invest $5,000.00, and on August 4, 2008, Appellant sent Mr.
Evans an email welcoming him to the project and providing him
with wire transfer information. As Appellant’s counsel pointed
out at trial, the August 4, 2008 email also attached several
documents, including a request for government funding that
referenced an annual salary of $100,000.00, plus another
$22,400.00 in annual benefits, for the CEO of MFH.
On August, 15, 2008, Mr. Evans followed Appellant’s
instructions and wired $5,000.00 to the MFH bank account. Just
before Mr. Evans’s investment arrived in MFH’s bank account, the
account’s balance was $40.87. By August 21, 2008, the account
was overdrawn. The Government’s evidence at trial demonstrated
that Appellant used Mr. Evans’s investment to pay for a number
of personal expenses.
3.
Count Seven
Count 7 was a wire fraud charge based on an investment
from Diane Desch in 2011. Ms. Desch testified that she went to
Appellant’s home in early 2011 and Appellant presented her with
information regarding MFH and its research. With respect to
7
MFH’s progress in developing a cure for HIV/AIDS, Appellant told
Ms. Desch that “he was very close. He finished Stage I. He was
in Stage II, and all he had to do was go to Stage III.” J.A.
97. Then, on June 13, 2011, Appellant called Ms. Desch and told
her that he needed $2,500.00 by noon to pay patent fees in
Europe or MFH was “dead in the water.” Id. at 100. Later that
day, Ms. Desch went to the bank and sent $2,500.00 to Appellant
via wire transfer. Financial analysis presented at trial showed
that only $2,100.00 of this money was used to pay patent
expenses and the remainder was used by Appellant for personal
expenses.
Shortly thereafter, Appellant asked Ms. Desch to
invest additional money into MFH, telling her that she could
receive a block of shares at $5,000.00 per block. Appellant
told Ms. Desch that she could purchase shares of MFH for $1.00
per share but that those shares would eventually be worth $22.00
or $23.00 per share. On June 28, 2011, Ms. Desch wire
transferred $7,500.00 to MFH to secure two full bocks of shares.
This wire transfer formed the basis for the wire fraud charge in
Count 7. Appellant never told Ms. Desch that any of her
investment would be used for Appellant’s personal expenses. Ms.
Desch testified that she understood her investment would be used
to research the cure for AIDS and she would not have invested in
MFH had she known her money would be used for Appellant’s
8
personal expenses. Financial analysis presented at trial
demonstrated that Appellant spent Ms. Desch’s entire $7,500.00
investment on personal expenses.
4.
Count Eight
Count 8, the mail fraud charge, was based on a
November 2010 mailing sent by Appellant to MFH investors
notifying them of a November 20, 2010 shareholder meeting in
McLean, Virginia. Nicole Gentry, an investor who had invested
$5,000.00 in MFH in 2005, testified at trial that she received
the notification of the shareholder meeting in the United States
mail. Several investors attended the meeting, including Ms.
Gentry, Mr. Evans, and Rusty Carrier. Mr. Carrier made an
audio-recording of the meeting, which was played for the jury.
At the meeting, Appellant made a number of
representations about the financial and business status of MFH,
including the following: patent expenses were costing MFH
approximately $9,000.00 per quarter; MFH was the owner of the
patent; Appellant was actively working on financial reports to
show investors how MFH dollars were being spent; and Appellant
had won money through steeplechase horse racing and used the
winnings to fund MFH. The Government presented evidence at
trial which contradicted Appellant’s representations to the
investors at the shareholder meeting. In particular, the
9
Government presented the following evidence: Appellant spent
only $6,972.42 for patent fees in 2010 and patent expenditures
for the entire period between 2005 and 2011 totaled only
$54,787.24; Appellant -- not MFH -- owned the patent and
Appellant transferred ownership of the patent to MFH just weeks
before trial; Appellant had never provided investors with any of
the promised financial information concerning MFH; and an
analysis of Appellant’s horse income and expenses revealed a net
loss rather than a gain. Appellant also told investors at the
shareholder meeting that MFH needed more money and that
Appellant was concerned that a rival company was developing
similar science as MFH.
B.
At the close of the Government’s case-in-chief,
Appellant moved for a judgment of acquittal pursuant to Federal
Rule of Criminal Procedure 29, challenging the sufficiency of
the evidence. The district court denied Appellant’s motion.
Appellant renewed his Rule 29 motion for judgment of acquittal
at the conclusion of the trial evidence, which the district
court also denied.
The case was presented to the jury, and on March 4,
2013, the jury found Appellant guilty of securities fraud
(Counts 3-4), wire fraud (Counts 5-7), and mail fraud (Count 8).
With respect to Counts 3 and 4, Appellant filed a post-trial
10
motion for judgment of acquittal, arguing that the Government
failed to establish venue. The district court granted the
motion.
C.
Appellant proceeded to sentencing on the remaining
counts of conviction (Counts 5-8) on July 10, 2013. At the
sentencing hearing, the district court calculated Appellant’s
total offense level at 29 with a criminal history category of I,
which yielded an advisory range under the United States
Sentencing Guidelines (“U.S.S.G.”) of 87 to 108 months’
imprisonment. Included in the total offense level calculation
was a two-level increase because a victim of the offense was a
vulnerable victim, see U.S.S.G. § 3A1.1, and a two-level
increase for Appellant’s abuse of a position of trust, see
U.S.S.G. § 3B1.3. The district court overruled Appellant’s
objections to each of these offense-level enhancements.
Thereafter, the district court imposed a within-Guidelines
sentence of 108 months’ imprisonment on Counts 5 through 8, all
to be served concurrently. The district court also imposed a
three-year period of supervised release for each Count, also to
run concurrently.
On July 12, 2013, Appellant timely appealed his
convictions and sentence. Appellant challenges his convictions
on sufficiency of evidence grounds and, in the alternative,
11
challenges the district court’s Sentencing Guidelines
calculation, arguing that he should not have been subject to the
vulnerable victim or abuse of a position of trust enhancements.
We possess jurisdiction pursuant to 28 U.S.C. § 1291 and 18
U.S.C. § 3742(a).
II.
A.
Appellant contends that the evidence was insufficient
to support his convictions for wire fraud and mail fraud. It is
well settled that “[a] defendant challenging the sufficiency of
the evidence faces a heavy burden.” United States v. Foster,
507 F.3d 233, 245 (4th Cir. 2007). We review such challenges de
novo. United States v. Kelly, 510 F.3d 433, 440 (4th Cir.
2007). In so doing, “we view the evidence on appeal in the
light most favorable to the government in determining whether
any rational trier of fact could find the essential elements of
the crime beyond a reasonable doubt.” United States v. Cone,
714 F.3d 197, 212 (4th Cir. 2013) (citing United States v.
Collins, 412 F.3d 515, 519 (4th Cir. 2005)). We do not weigh
the evidence or review the credibility of the trial witnesses,
and we assume that the jury resolved all discrepancies in
testimony in favor of the government. See id. “We will uphold
the jury’s verdict if substantial evidence supports it and will
reverse only in those rare cases of clear failure by the
12
prosecution.” Id. As we have explained, “substantial evidence”
is that which “a reasonable finder of fact could accept as
adequate and sufficient to support a conclusion of a defendant’s
guilt beyond a reasonable doubt.” United States v. Moye, 454
F.3d 390, 394 (4th Cir. 2006) (en banc) (internal quotation
marks omitted).
B.
Appellant was convicted of wire fraud and mail fraud.
“Sections 1341 and 1343 of Title 18 punish anyone who, ‘having
devised or intending to devise any scheme or artifice to
defraud, or for obtaining money or property by means of false or
fraudulent pretenses, representations, or promises,’ uses the
mails or electronic wires ‘for the purpose of executing such
scheme or artifice.’” United States v. Wynn, 684 F.3d 473, 477
(4th Cir. 2012) (quoting 18 U.S.C. §§ 1341, 1343). Therefore,
the offenses of mail fraud and wire fraud require the Government
to prove beyond a reasonable doubt that the defendant: “(1)
devised or intended to devise a scheme to defraud and (2) used
the mail or wire communications in furtherance of the scheme.”
Id. Proof of a “scheme to defraud” requires proof of “the
specific intent to deprive one of something of value through a
misrepresentation or other similar dishonest method, which
indeed would cause him harm.” Id. at 478.
13
When viewed in the light most favorable to the
Government, we are satisfied that substantial evidence was
presented at trial for a rational jury to conclude beyond a
reasonable doubt that Appellant committed the offenses of wire
fraud and mail fraud.
1.
We begin with the Count 5 wire fraud conviction.
Appellant argues there was insufficient evidence to support this
conviction because the March 12, 2008 email from Appellant to
John M. did not communicate any false information. As Appellant
notes, the email did not provide John M. with any of the
requested financial information and simply stated that shares of
MFH were non-transferable, which was consistent with the
shareholder subscription agreement that Dr. T.M. signed.
Therefore, according to Appellant, this email could not
constitute wire fraud because the email did not communicate a
falsehood.
Appellant’s argument misses the point, as it seems to
contend that the wire communication at issue must itself
establish all of the essential elements of wire fraud.
However, 18 U.S.C. § 1343 requires only that the wire
communication be used in furtherance of the scheme to defraud.
See Wynn, 684 F.3d at 477. Thus, the existence of the scheme to
14
defraud, as well as Appellant’s specific intent to defraud, can
be established through other evidence.
Throughout the trial, the Government presented
overwhelming evidence of Appellant intentionally depriving MFH
investors of investment funds through misrepresentations and
deceit. This evidence included Appellant’s solicitation of
funds from Dr. T.M. through assurances that the money would be
used for HIV research and that Dr. T.M., M.B., and S.B. would be
the first patients to receive the treatment. Yet, despite these
promises, Dr. T.M.’s $200,000.00 investment was largely spent by
Appellant on personal expenses. Appellant’s intent to defraud
MFH investors was established well before he sent the March 12,
2008 email to John M.
The Government’s theory with respect the specific wire
communication referenced in Count 5 was that it was used in
furtherance of Appellant’s scheme to defraud because it was sent
for the purpose of concealing the fraud from John M., the
executor of Dr. T.M.’s estate. It is of no consequence whether
the information communicated in Appellant’s email to John M. was
consistent with the shareholder subscription agreement that Dr.
T.M. had signed. The jury was entitled to consider the email
communication in the context of all the evidence and conclude
that the email’s purpose was to further Appellant’s fraud.
Accordingly, there was substantial evidence from which the jury
15
could conclude that Appellant was guilty beyond a reasonable
doubt of wire fraud, as charged in Count 5.
2.
Turning next to Counts 6, 7, and 8, Appellant argues
that there was insufficient evidence to support these
convictions because the Government did not establish a specific
intent to defraud. Specific intent is required to convict an
individual of wire fraud or mail fraud. Wynn, 684 F.3d at 478.
This means, “a defendant must specifically intend to lie or
cheat or misrepresent with the design of depriving the victim of
something of value.” Id. A defendant’s specific intent to
defraud may be inferred from the totality of the circumstances.
United States v. Godwin, 272 F.3d 659, 666 (4th Cir. 2001).
With this standard in mind, we turn to the evidence presented to
support the specific intent to defraud in Counts 6, 7, and 8.
a.
Counts 6 and 7 can be analyzed together because
Appellant raises virtually the same argument for each -- namely,
that any evidence of misrepresentations or an intent to defraud
was negated by documentation received by investors that
referenced an annual salary of $100,000.00 for the CEO of MFH.
According to Appellant, Mr. Evans, the investor referenced in
Count 6, “knew or should have known . . . that most if not all
of the investment would go toward [Appellant’s] salary, negating
16
any intent to defraud.” See Appellant’s Br. at 19. Similarly,
Appellant notes that Ms. Desch, the investor referenced in Count
7, “did not specifically deny that the paperwork contained
information about a salary.” Id. at 20. Essentially, Appellant
claims that he was entitled to draw a salary and, as a result,
he did not defraud investors because they should have known that
their money would be used by Appellant to pay for his personal
expenses.
In contrast, the Government presented evidence that
Appellant assured investors, time and again, that their
investment dollars would be used for obtaining patents,
conducting research, or conducting clinical trials. Both Mr.
Evans and Ms. Desch testified that they would not have invested
in MFH if Appellant had told them that he was going to use their
investments to pay for personal expenses. Yet, within a week of
receiving Mr. Evans’s $5,000.00 investment, Appellant spent that
money on farm and horse expenses, housing costs, and bank fees.
Likewise, in less than a month after having received Ms. Desch’s
$7,500.00 investment, Appellant also spent those funds on
personal expenses.
The jury was entitled to consider the dichotomy
between Appellant’s promises to Mr. Evans and Ms. Desch on the
one hand, and his subsequent use of their investment funds on
the other hand, to conclude that Appellant specifically intended
17
to “misrepresent with the design of depriving [Mr. Evans and Ms.
Desch] of something of value.” See Wynn, 684 F.3d at 478.
Moreover, the jury was entitled to reject -- and apparently did
reject -- Appellant’s contention that the documents referencing
a salary somehow negated his specific intent to defraud Mr.
Evans and Ms. Desch. Accordingly, there was substantial
evidence from which the jury could conclude that Appellant was
guilty beyond a reasonable doubt of wire fraud, as charged in
Counts 6 and 7.
b.
Finally, Appellant challenges the sufficiency of the
evidence with respect to his mail fraud conviction in Count 8.
Appellant argues that the Government failed to prove that the
November 2010 mailing sent by Appellant to MFH investors
notifying them of a November 20, 2010 shareholder meeting was
sent with the intent to defraud the investors. We disagree.
The evidence at trial demonstrated that Ms. Gentry, an
MFH investor, received the notice of the shareholder meeting in
the United States mail and subsequently attended the meeting.
At the meeting, Appellant made a number of representations about
the financial status of MFH and about how investment funds were
being used. The Government presented evidence at trial that
contradicted these representations. The jury was thus entitled
to consider the Government’s evidence and conclude that
18
Appellant’s representations at the shareholder meeting were
false. Further, the jury was entitled to conclude that
Appellant held the shareholder meeting, and sent the mailing
that formed the basis for Count 8, with the intent to lull MFH
investors into believing that their funds were being used for
legitimate business purposes when in fact they were not.
Accordingly, there was substantial evidence from which the jury
could conclude that Appellant was guilty beyond a reasonable
doubt of mail fraud, as charged in Count 8.
III.
A.
As an alternative to his sufficiency of evidence
arguments, Appellant challenges the district court’s calculation
of his Sentencing Guidelines range. We review a sentence for
reasonableness, applying an abuse of discretion standard. Gall
v. United States, 552 U.S. 38, 51 (2007). In considering
whether a district court properly applied the Sentencing
Guidelines, “we review the court’s factual findings for clear
error and its legal conclusions de novo.” United States v.
Osborne, 514 F.3d 377, 387 (4th Cir. 2008) (internal quotation
marks omitted). Clear error exists “only if, on the entire
evidence, we are left with the definite and firm conviction that
a mistake has been committed.” United States v. Manigan, 592
19
F.3d 621, 631 (4th Cir. 2010) (internal quotation marks and
alterations omitted).
B.
1.
Appellant challenges the two-level enhancement to his
Sentencing Guidelines range resulting from the district court’s
conclusion that Dr. T.M. qualified as a “vulnerable victim.”
Pursuant to U.S.S.G. § 3A1.1(b)(1), a defendant’s Guidelines
range increases by two levels “[i]f the defendant knew or should
have known that a victim of the offense was a vulnerable
victim.” The commentary to the Guidelines defines a vulnerable
victim as a person “(A) who is a victim of the offense of
conviction and any conduct for which the defendant is
accountable under § 1B1.3 (Relevant Conduct); and (B) who is
unusually vulnerable due to age, physical or mental condition,
or who is otherwise particularly susceptible to the criminal
conduct.” U.S.S.G. § 3A1.1 cmt. n.2. For the enhancement to
apply, the district court must determine that a victim was
“unusually vulnerable” and “assess whether the defendant knew or
should have known of such unusual vulnerability.” United States
v. Llamas, 599 F.3d 381, 388 (4th Cir. 2010).
Appellant contends that Dr. T.M. cannot be considered
an unusually vulnerable victim simply by virtue of his HIV
status. Appellant makes the following arguments in an attempt
20
to support his contention: the fraud for which Appellant was
convicted involved an investment opportunity, not the actual
treatment of HIV/AIDS; the science supporting the investment
opportunity was not challenged by the Government at trial; Dr.
T.M. was a physician at the time of his investment; Dr. T.M. was
not under any disability or impairment due to his HIV status;
there is no record of Dr. T.M. himself raising any concerns
regarding how his investment funds were being used; and
Appellant did not specifically target Dr. T.M. because of his
HIV status. We are unpersuaded by these arguments.
During Appellant’s sentencing hearing, the district
court made detailed findings before concluding that a vulnerable
victim enhancement was warranted in this case:
The defendant argues that the investor, Dr. [T.M.],
was not unusually vulnerable. He was a board
certified anesthesiologist. They contend that he was
not suffering from any active disability or
impairment. However, the evidence was clear that he
was HIV positive and seeking a cure for his condition.
The testimony of his brother, who probably knew him
better than any other witness in the case, indicated
that his brother was very anxious for a cure, and saw
the concept offered by [Appellant], Mr. Harris, as a
possible avenue toward either relieving him of the
symptoms or curing his disease. And it was in
reliance upon that that Dr. [T.M.] invested $200,000.
But also the evidence at trial and today indicated
that Dr. [T.M] had clear expectations that he would be
afforded an opportunity to participate in some of the
research, and some of the human trials supposedly
being conducted by [Appellant], and that he was
anxious to do so. However, there was no research ever
21
conducted in this case, and there was no money
invested whatsoever in human trials for research.
The Court finds that Dr. [T.M] was an unusually
vulnerable victim, seeking treatment and cure for his
medical condition, which was exploited when he
invested the $200,000 to Mr. Harris based upon false
representations, and therefore all the requirements
for the 2-level enhancement are satisfied under 3A1.1.
J.A. 1205-06. Appellant has not offered any argument that the
district court’s factual findings were clearly erroneous. In
this case, Dr. T.M. had been recently diagnosed with HIV and was
actively seeking a cure. His $200,000.00 investment in MFH was
based, at least in part, on Appellant’s promise that Dr. T.M.
would be among the first patients to participate in human
trials. The promise of these human trials as a possible cure
for Dr. T.M.’s HIV made him “particularly susceptible,” see
U.S.S.G. § 3A1.1 cmt. n.2, to Appellant’s fraud. Accordingly,
the district court did not err in applying this two-level
enhancement to Appellant’s Sentencing Guidelines range.
2.
Appellant also argues that the district court erred by
applying a two-level enhancement for abuse of a position of
trust by Appellant. Pursuant to U.S.S.G. § 3B1.3, a defendant’s
Guidelines range increases by two levels “[i]f the defendant
abused a position of public or private trust, or used a special
skill, in a manner that significantly facilitated the commission
22
or concealment of the offense.” The commentary to the
Guidelines further defines “public or private trust” as follows:
a position of public or private trust characterized by
professional or managerial discretion (i.e.,
substantial discretionary judgment that is ordinarily
given considerable deference). Persons holding such
positions ordinarily are subject to significantly less
supervision than employees whose responsibilities are
primarily non-discretionary in nature. For this
adjustment to apply, the position of public or private
trust must have contributed in some significant way to
facilitating the commission or concealment of the
offense (e.g., by making the detection of the offense
or the defendant's responsibility for the offense more
difficult).
U.S.S.G. § 3B1.3 cmt. n.1.
As we have explained, “[w]hether a defendant held a
position of trust must be approached from the perspective of the
victim.” United States v. Bollin, 264 F.3d 391, 415 (4th Cir.
2001) (internal quotation marks omitted). Moreover, “[i]n every
case of fraud, the defendant will have created confidence and
trust in the victim. But fraud alone does not justify the
enhancement.” Id. Therefore, this enhancement will apply where
“the victim’s trust is based on the defendant’s position in the
transaction” rather than “where trust is created by the
defendant’s personality or the victim’s credulity.” Id.(internal quotation marks omitted).
Here, the district court explained the basis for
applying the abuse of a position of trust enhancement:
23
Enhancement under 3B1.3 applies where the defendant
has broad discretion to act on behalf of the victim,
and the victim believes the defendant will act in the
victim’s best interest. In this case, [Appellant],
based upon his purported experience, training,
convinced scores of investors to entrust money to him
for research and development of an unproven theory for
treating HIV and AIDS. He maintained complete control
over the management decisions, marketing, funding,
investment of funds, and bank accounts. He exercised
unbridled discretion without supervision or
consultation with others.
This degree of management autonomy allowed him to
convert the investors’ funds to his own use and
benefit without accountability or investor oversight.
And in addition, he concealed assets from the
accountant and others, and did not reveal the purpose
for which it was being used to any of the investors.
J.A. 1206-07. We agree with the district court that the
enhancement was warranted here. Appellant held himself out to
investors as being highly experienced in the field of HIV/AIDS
research. Through this claimed experience, Appellant created an
impression to investors that he would manage MFH in a way that
was consistent with the best interests for the company and its
investors. In entrusting Appellant with their money, the
investors provided Appellant with the discretion to use their
investment to advance MFH’s purported goals and its supposed
HIV/AIDS research. Appellant did not do so, however. Instead,
he utilized his position as CEO of MFH to conceal his fraud from
investors for years. Accordingly, the district court did not
err in applying this two-level enhancement to Appellant’s
Sentencing Guidelines range.
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IV.
For the reasons stated, we affirm Appellant’s
convictions and sentence. We dispense with oral argument
because the facts and legal contentions are adequately presented
in the materials before this Court and argument would not aid
the decisional process.
AFFIRMED
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