United States v. Osuji , 413 F. App'x 603 ( 2011 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 08-5207
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
PAUL OSUJI,
Defendant - Appellant.
No. 08-5209
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
TAMARA VARNADO,
Defendant - Appellant.
Appeals from the United States District Court for the Western
District of North Carolina, at Charlotte. Lacy H. Thornburg,
District Judge. (3:06-cr-00415-LHT-1; 3:06-cr-00415-LHT-2)
Argued: September 21, 2010 Decided: January 21, 2011
Before WYNN, Circuit Judge, HAMILTON, Senior Circuit Judge, and
Mark S. DAVIS, United States District Judge for the Eastern
District of Virginia, sitting by designation.
Affirmed in part, vacated in part, and remanded with
instructions by unpublished opinion. Judge Wynn wrote the
opinion, in which Senior Judge Hamilton and Judge Davis
concurred.
ARGUED: Ann Loraine Hester, FEDERAL DEFENDERS OF WESTERN NORTH
CAROLINA, INC., Charlotte, North Carolina; Matthew McGavock
Robinson, ROBINSON & BRANDT, PSC, Covington, Kentucky, for
Appellants. Melissa Louise Rikard, OFFICE OF THE UNITED STATES
ATTORNEY, Charlotte, North Carolina, for Appellee. ON BRIEF:
Claire J. Rauscher, Executive Director, Kevin A. Tate, FEDERAL
DEFENDERS OF WESTERN NORTH CAROLINA, INC., Charlotte, North
Carolina, for Appellant Tamara Varnado. Edward R. Ryan, United
States Attorney, Charlotte, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
WYNN, Circuit Judge:
A federal jury convicted Paul Osuji and Tamara Varnado
(“Defendants”) of one count of conspiracy to defraud a health
care benefit program in violation of 18 U.S.C. §§ 1347 & 1349;
nine counts of aiding and abetting health care fraud in
violation of 18 U.S.C. §§ 2 & 1347; one count of conspiracy to
commit money laundering in violation of 18 U.S.C.
§§ 1956(a)(1)(A)(i) & 1956(h); and seven counts of aiding and
abetting money laundering in violation of 18 U.S.C. §§ 2 &
1956(a)(1)(A)(i). Defendants appeal their convictions and
sentences. We conclude that the district court did not err by
refusing to appoint Osuji new counsel shortly before the trial
of this complex case, allowing the government to call a witness
who asserted her Fifth Amendment privilege before the jury, or
instructing the jury using the words “statute violated.”
Further, the jury had substantial evidence to support its health
care fraud and money laundering verdicts. However, we hold that
the district court erred in refusing to instruct the jury on
venue, and that proof of venue is insufficient regarding several
of Varnado’s money laundering convictions. The district court
also erred in applying an incorrect base level when calculating
Defendants’ sentences. We therefore affirm in part, vacate in
part, and remand.
3
I.
This case arises from an alleged fraudulent scheme to
obtain Medicare reimbursements for motorized wheelchairs.
[U.S.Br.4] Defendant Paul Osuji owned and operated Chimatex, a
Medicare-authorized durable medical equipment (“DME”) supplier
in North Carolina. Defendant Tamara Varnado owned Medisource
2000, a Texas delivery company for Chimatex’s DME. Defendants
worked with Prince Yellowe, an unindicted co-conspirator who
pled guilty to health care fraud in Texas. Defendants also
worked with Dr. Linda Morgan, another unindicted co-conspirator
who signed fraudulent Certificates of Medical Necessity (“CMN”s)
in exchange for cash. The government alleged that Defendants
fraudulently claimed approximately $2.5 million for wheelchair
reimbursements, and that Medicare paid approximately $1.3
million.
At trial, Yellowe testified against Defendants and
explained how the scheme operated. Recruiters, or “runners,”
found beneficiaries and collected information including their
Medicare numbers. The runners provided the information to
either First Choice Billing, Yellowe’s company, or Medisource.
First Choice and Medisource were operated from the same location
and were, for practical purposes, interchangeable. First Choice
and Medisource submitted motorized wheelchair claims to Medicare
using First Choice’s billing number and Chimatex’s supplier
4
number. When claims were approved, Medicare mailed
reimbursement checks to Chimatex in Charlotte, North Carolina.
Chimatex then remitted money to Medisource under a profit
sharing agreement. Medisource followed up with paperwork,
including obtaining CMNs with Morgan’s signature. Medisource
then purchased scooters—not motorized wheelchairs, which cost
substantially more—from a DME wholesale supplier in Houston,
Texas and delivered the scooters to the beneficiaries.
The government subpoenaed Morgan to testify against
Defendants. On the third day of trial, Morgan’s lawyer told the
district court that Morgan would assert her Fifth Amendment
right not to testify. The judge said that when Morgan was
called, he would excuse the jury to explain her rights to her.
When Morgan was called the next day, however, the judge did not
excuse the jury. Morgan stated her name, and then the judge
asked her whether she intended to assert her Fifth Amendment
privilege. Morgan said she would. The judge excused her and
directed the government to call its next witness. At Osuji’s
request, the district court instructed the jury not to draw any
inferences from Morgan’s invocation of her privilege.
At the close of the government’s evidence and again at the
close of trial, Defendants moved for a judgment of acquittal.
The district court denied those motions. The district court
also denied Varnado’s request for an instruction on venue. The
5
district court then instructed the jury, after which Varnado
objected to the wording of headings on several pages of the
instructions. The headings included the caption “statute
violated” instead of the caption Varnado preferred, “statute
charged.” The court noted the objection but concluded that it
was unlikely that the jury would be misled by the captions.
On January 15, 2008, the jury returned guilty verdicts on
all counts against both Defendants. The district court
sentenced Osuji to 211 months’ imprisonment followed by three
years of supervised release, and ordered Osuji to pay
$1,208,256.53 in restitution. The district court sentenced
Varnado to 63 months’ imprisonment followed by three years of
supervised release, and ordered Varnado to pay $1,208,256.53 in
restitution. Defendants appealed both their convictions and
sentences.
II.
We first address Osuji’s argument that the district court
erred in failing to grant him new counsel. He argues that he
timely requested new counsel and that communication with his
attorney had completely broken down. We discern no error in the
district court’s refusal to grant Osuji new counsel.
The Sixth Amendment to the United States Constitution
guarantees that “[i]n all criminal prosecutions, the accused
6
shall enjoy the right ... to have the Assistance of Counsel for
his defense.” U.S. Const. amend. VI. A defendant’s right to
have a lawyer of his own choosing is an essential element of the
Sixth Amendment right to assistance of counsel. United States
v. Gallop, 838 F.2d 105, 107 (4th Cir. 1988). A defendant’s
right to choose a lawyer is, however, not absolute. United
States v. Mullen, 32 F.3d 891, 895 (4th Cir. 1994). Rather,
“[s]uch right must not obstruct orderly judicial procedure and
deprive courts of the exercise of their inherent power to
control the administration of justice.” Gallop, 838 F.2d at
108. Further, an indigent defendant must show good cause for a
new appointed lawyer. Id.We review the district court’s determination of whether a
defendant’s motion for substitution of counsel should be granted
under the abuse of discretion standard. Mullen, 32 F.3d at 895.
In evaluating whether the court abused its discretion in denying
a defendant’s motion for substitution of counsel, this Court
considers three factors: (1) the timeliness of the motion; (2)
the adequacy of the court’s inquiry into the defendant’s
complaint; and (3) whether the conflict between the attorney and
the client was so great that it “resulted in total lack of
communication preventing an adequate defense.” Id.Regarding the timeliness of Osuji’s motion, the record
shows that a magistrate judge conducted a hearing and properly
7
concluded that Osuji’s pre-trial motion for substitution of
counsel was untimely. The case was over a year old, and the
motion was made about a month before trial was set to begin. We
agree with the determination that Osuji’s motion for new counsel
was untimely. See, e.g., Gallop, 838 F.2d 105 (affirming denial
of motion for substitution of counsel made five days before
trial); United States v. Williams, 176 F.3d 301 (6th Cir. 1999)
(affirming denial of motion for substitution of counsel made two
weeks before trial in complex multidefendant conspiracy case). 1
Regarding the adequacy of the district court’s inquiry,
Osuji does not argue that the extensive pretrial inquiry into
his substitution motion was insufficient. Rather, he contends
that the district court failed to inquire adequately when the
issue was again raised at trial. Osuji did not, however, make a
second motion to substitute counsel. Rather, Osuji’s counsel
simply informed the court that Osuji wished to address the issue
at the appropriate time. But neither Osuji nor the district
court ever followed up. Under these circumstances, the district
court did not abuse its discretion when it did not conduct a
second inquiry.
1
Osuji does not argue that a mid-trial motion for
substitution, had one been made, would have been timely.
8
Finally, regarding whether the conflict between Osuji and
his counsel was so great that it resulted in a total lack of
communication preventing an adequate defense, the record does
not support Osuji’s claim that communication between himself and
his attorney completely broke down. The record instead shows
that Osuji’s counsel cross-examined every government witness,
argued numerous objections and motions, and conducted an
appropriate direct examination of Osuji when he testified in his
own defense. Under these circumstances, the district court did
not abuse its discretion in denying Osuji’s motion to substitute
counsel. See United States v. Hanley, 974 F.2d 14, 17 (4th Cir.
1992) (holding counsel’s vigorous defense at trial indicated a
lack of complete communication breakdown).
III.
We next address both Defendants’ argument that the jury
lacked sufficient evidence to convict them of health care fraud,
conspiracy to commit health care fraud, money laundering, and
conspiracy to commit money laundering. Defendants contend that
the government failed to show that they intended to commit fraud
or that they knew that the money they received came from an
illegal source. We disagree.
“A jury’s verdict must be upheld on appeal if there is
substantial evidence in the record to support it.” United
9
States v. Foster, 507 F.3d 233, 244 (4th Cir. 2007). In
determining whether the evidence is substantial, we must view
the evidence in the light most favorable to the government and
ensure that there is sufficient evidence to allow a reasonable
fact finder to conclude that the defendant is guilty beyond a
reasonable doubt. Id. The uncorroborated testimony of an
accomplice can alone sustain a conviction. United States v.
Wilson, 115 F.3d 1185, 1190 (4th Cir. 1997). And we assume that
the jury resolved all contradicting evidence in the government’s
favor. Foster, 507 F.3d at 245.
Defendants first challenge the sufficiency of the evidence
regarding aiding and abetting health care fraud and conspiracy
to commit health care fraud. A person commits health care fraud
when he:
knowingly and willfully executes, or attempts to
execute, a scheme or artifice-- (1) to defraud any
health care benefit program; or (2) to obtain, by
means of false or fraudulent pretenses,
representations, or promises, any of the money or
property owned by, or under the custody or control of,
any health care benefit program . . . .
18 U.S.C. § 1347. Whoever aids and abets in the commission of
health care fraud is punishable as a principal. 18 U.S.C. § 2.
“A defendant is guilty of aiding and abetting if he has
‘knowingly associated himself with and participated in the
criminal venture.’” United States v. Burgos, 94 F.3d 849, 873
(4th Cir. 1996) (quoting United States v. Winstead, 708 F.2d
10925, 927 (4th Cir. 1983)). To prove association, the government
must establish that the defendant was “cognizant of the
principal’s criminal intent and the lawlessness of his
activity.” Id.The elements of a conspiracy offense are: “an agreement
among the defendants to do something which the law prohibits;
knowing and willing participation by the defendants in the
agreement; and an overt act by the defendants in furtherance” of
the agreement’s purpose. United States v. Hedgepeth, 418 F.3d
411, 420 (4th Cir. 2005) (internal quotation marks and citation
omitted). A conspiracy need not be proven by direct evidence;
it may be inferred from the facts and circumstances of the case.
United States v. Laughman, 618 F.2d 1067, 1074 (4th Cir. 1980).
In this case, Osuji contends that the government presented
no evidence that he knew of Yellowe’s fraud or that he entered
into any agreement with the intent to commit fraud. At trial,
however, Yellowe testified that he and Osuji had an agreement
and that Osuji knew not only that a fraud was being conducted
but how it was being conducted:
Q. Let’s talk about everyone’s role now in the scheme.
Mr. Osuji, what role did he play?
A. He was a partner, I mean, based on all I have said.
You know, we had a profit sharing. As the evidence
that was admitted from his office states, that we have
an understanding to get this patient information,
share the profit 50/50 after cost.
11
. . . .
Q. But based on your conversation with him, he was
certainly aware of how the fraud was conducted?
A. Correct. He was aware of everything we did, yes.
Taken in the light most favorable to the government, this
evidence is sufficient to show that Osuji knew of Yellowe’s
fraud and entered into an agreement with the intent to commit
fraud. See United States v. Baker, 985 F.2d 1248 (4th Cir.
1993) (affirming a conspiracy conviction based on an
accomplice’s testimony).
Likewise, Varnado argues that the government presented no
evidence that she acted with knowledge that Yellowe was
defrauding Medicare. But at trial, Yellowe testified that
Varnado knew exactly how the scheme worked:
Q. Did [Varnado] understand how your business
operated? Did you communicate that to her?
A. Yes. . . .
. . . .
Q. And you also had communicated to her that there was
profit potential involved in this particular type of
business where you bill for the [motorized wheelchair]
regardless of what’s provided?
A. She actually knew exactly how I run my operation,
yes.
Q. Is that because you had discussed that with her?
A. Yes.
12
Varnado asserts that, while she may have known of Yellowe’s
previous fraud, there was no evidence that she knew the new
business would be run fraudulently. Yellowe testified, however,
that he discussed with Varnado the possibility of continuing the
fraud by setting up another supplier. Yellowe stated that
Varnado had agreed to “put the next fraudulent entity in her
name.” Yellowe also told Varnado that he was probably going to
jail. Taken in the light most favorable to the government, this
evidence is sufficient to show that Varnado knew that Yellowe
was defrauding Medicare.
Finally, both Defendants challenge the sufficiency of the
evidence regarding money laundering and conspiracy to commit the
same. A person commits promotion money laundering when he:
knowing that the property involved in a financial
transaction represents the proceeds of some form of
unlawful activity, conducts or attempts to conduct
such a financial transaction which in fact involves
the proceeds of specified unlawful activity . . . with
the intent to promote the carrying on of specified
unlawful activity . . . .
18 U.S.C. § 1956 (a)(1)(A)(i). For the jury to convict on the
money laundering conspiracy charge, “the prosecution was obliged
to prove that (1) a conspiracy to commit promotion money
laundering was in existence, and (2) that during the conspiracy,
the defendant knew that the proceeds used to further . . .
illicit operations had been derived from an illegal activity,
13
and knowingly joined in the conspiracy.” United States v.
Alerre, 430 F.3d 681, 693-94 (4th Cir. 2005).
Defendants contend that neither Osuji nor Varnado knew that
the financial transactions were “anything other than legitimate
transactions undertaken in furtherance of a lawful medical
equipment business.” But the evidence considered above, taken
in the light most favorable to the government, shows that both
Defendants knowingly participated in a fraudulent scheme and
knew that the transactions furthered that scheme. See Alerre,
430 F.3d at 695 (affirming conviction based on testimony of a
co-conspirator).
IV.
Defendants next argue that the district court erred by
allowing the government to call an unindicted co-conspirator to
the stand to assert her Fifth Amendment privilege before the
jury. We disagree.
When a government witness invokes a testimonial privilege,
it may constitute reversible error under two circumstances. The
first is “‘when the Government makes a conscious and flagrant
attempt to build its case out of inferences arising from use of
the testimonial privilege.’” United States v. Johnson, 587 F.3d
625, 631 (4th Cir. 2009) (quoting Namet v. United States, 373
U.S. 179, 186-87 (1963)), cert. denied sub nom. Martin v. United
14
States, 130 S. Ct. 2128 (2010). The second is when “inferences
from a witness’ refusal to answer added critical weight to the
prosecution’s case in a form not subject to cross-examination,
and thus unfairly prejudiced the defendant.” Id. “And even when
the objectionable inferences might have been found prejudicial,
it has been held that instructions to the jury to disregard them
sufficiently cured the error.” Namet, 373 U.S. at 187.
In this case, Defendants argue that the inferences that the
jury could have drawn from Morgan’s invocation of her Fifth
Amendment privilege added critical weight to the prosecution’s
case. Specifically, Defendants argue that Morgan’s invocation
of her right not to testify corroborated Yellowe’s accusation
that Morgan received money and blank prescriptions. Defendants
overlook the fact that other testimony at trial established
Morgan’s complicity. Indeed, a witness from Medicare testified
that Morgan was listed as the referring physician on the
fraudulent claims. While Morgan’s testimony could have damaged
Varnado’s assertions of innocence, it is hard to imagine how her
refusal to testify substantiated Yellowe’s accusations. Thus,
any potential inferences from Morgan’s assertion of her Fifth
Amendment privilege did not add critical weight to the
government’s case. Moreover, at Osuji’s request, the district
court instructed the jury not to draw any inferences from
Morgan’s invocation of her Fifth Amendment privilege. We
15
presume that the jury followed that instruction (Johnson, 587
F.3d at 631) and hold that the instruction sufficiently cured
any potential error in allowing Morgan to invoke her privilege
before the jury.
V.
Defendants next argue that the district court erred in
refusing to give Varnado’s requested instruction on venue.
Proper venue in a criminal case is a constitutional right
secured by Article III, Section 2 and by the Sixth Amendment of
the United States Constitution. 2 United States v. Bowens, 224
F.3d 302, 308 (4th Cir. 2000) (citing U.S. Const. art. III, § 2,
cl. 3 (“The Trial of all Crimes ... shall be held in the State
where the said Crimes shall have been committed.”) and U.S.
Const. amend. VI (providing a criminal defendant with the right
to a trial “by an impartial jury of the State and district
wherein the crime shall have been committed”)); see also Fed. R.
Crim. P. 18 (“Except as otherwise permitted by statute or these
rules, the prosecution shall be had in a district in which the
2
“Strictly speaking the former constitutional provision is
a venue provision, since it fixes the place of trial, while the
latter is a vicinage provision, since it deals with the place
from which the jurors are to be selected.” 2 Charles Alan
Wright & Peter J. Henning, Federal Practice and Procedure § 301
(4th ed. 2009).
16
offense was committed.”). When a defendant is charged with more
than one count, venue must be proper on each count. Bowens, 224
F.3d at 308. The government must prove venue by a preponderance
of the evidence. Id.We addressed the question of when venue is properly “in
issue” so as to raise a question of fact for the jury in United
States v. Martinez, 901 F.2d 374, 376 (4th Cir. 1990). In that
case, we followed the approach taken by the Eighth Circuit in
United States v. Moeckly, 769 F.2d 453, 461 (8th Cir. 1985). 3 We
held that venue is in issue when “the jury was able to convict
the defendant[s] of the offenses charged without an implicit
finding that the acts used to establish venue had been proven.”
Martinez, 901 F.2d at 376. However, “proof of venue may be so
clear that failure to instruct on the issue is not reversible
error.” Id.Varnado asserts that her case involves a multi-district
conspiracy, with acts alleged to have occurred in Texas, South
Carolina, and North Carolina. Varnado notes that five of the
seven counts of money laundering are based on transactions that
took place entirely in Texas. Varnado contends that it is
impossible to determine from the instructions and verdict here
3
In fact, the Fourth Circuit followed a similar approach
before adopting Moeckly in United States v. Griley, 814 F.2d
967, 974 (4th Cir. 1987).
17
whether the jury found that any part of her alleged offenses
took place in the Western District of North Carolina.
Under 18 U.S.C. § 1956(i), venue for money laundering is
proper in:
(A) any district in which the financial or monetary
transaction is conducted; or
(B) any district where a prosecution for the
underlying specified unlawful activity could be
brought, if the defendant participated in the transfer
of the proceeds of the specified unlawful activity
from that district to the district where the financial
or monetary transaction is conducted.
18 U.S.C. § 1956(i).
Here, the district court instructed the jury on the money
laundering charges without mentioning the location of the
alleged transactions. Indeed, the district court’s only
allusion to venue was a passing reference to “the time and place
described in the indictment.” The indictment alleged that
Defendants engaged in promotion money laundering “within the
Western District of North Carolina and the Southern District of
Texas, Houston Division.”
Given the district court’s instructions, the jury could
have found Varnado guilty of money laundering without finding
that she “participated in the transfer of the proceeds of the
specified unlawful activity from [the Western District of North
Carolina] to the district where the financial or monetary
transaction [was] conducted.” 18 U.S.C. § 1956 (i). In other
18
words, the jury was able to convict Varnado of the offenses
charged “without an implicit finding that the acts used to
establish venue had been proven.” Martinez, 901 F.2d at 376.
The district court therefore erred in not instructing the jury
on venue. To determine whether the error was harmless, we must
evaluate the government’s proof of each money laundering count
against Varnado.
Count fourteen alleges a wire transfer from Osuji to
Medisource “as payment towards Defendants’ profit sharing
agreement.” Count seventeen alleges that Osuji purchased a
Cashiers check made payable to Medisource as payment toward
Defendants’ profit sharing agreement. Regarding these counts,
the evidence offered at trial supports a finding of venue in the
Western District of North Carolina. In describing the operation
of the scheme, Yellowe testified that Varnado was responsible
for billing Medicare using First Choice’s billing number and
Chimatex’s supplier number. Once Medicare sent the
reimbursement to Osuji in Charlotte, North Carolina, Osuji would
remit part of the profit to Medisource’s account, over which
Varnado held sole signatory authority. Varnado then completed
the paperwork necessary to substantiate the claims. Because
this evidence showed that Varnado “participated in the transfer
of the proceeds” on counts fourteen and seventeen (18 U.S.C.
19
§ 1956(i)), the district court’s failure to instruct on venue
was not reversible error.
Regarding the remaining counts of money laundering,
however, the evidence of venue is not as compelling. All the
other money laundering counts describe transactions that took
place in Texas, including Varnado’s purchasing a Cashiers check
payable to a DME supply company, depositing and cashing personal
checks, and issuing a check for delivery of DME. The government
showed that Varnado handled money in Texas but did not prove
that Varnado transferred any funds relating to those counts.
And evidence of handling money only in Texas alone is
insufficient to support a finding of venue in the Western
District of North Carolina. See United States v. Cabrales, 524
U.S. 1, 8 (1998) (rejecting argument that venue is appropriate
for money laundering without evidence of transportation of
funds); United States v. Stewart, 256 F.3d 231, 240 (4th Cir.
2001) (deeming evidence insufficient to establish venue for
money laundering in Virginia where defendant “handled money only
in California and was not responsible for or charged with the
transportation of the money from Virginia to California”). The
error in not instructing on venue was not harmless with regard
to these counts. We therefore must vacate Varnado’s conviction
on counts twelve, thirteen, fifteen, sixteen, and eighteen.
20
VI.
We turn next to Defendants’ argument that the district
court erred in giving the jury instructions that read “statute
violated.” Defendants assert that this instruction
impermissibly directed the jury to return a guilty verdict. We
disagree.
A trial court may not direct the jury to find a defendant
guilty. United States v. Martin Linen Supply Co., 430 U.S. 564,
572-73 (1977). “In reviewing jury instructions, we ‘accord the
district court much discretion and will not reverse provided
that the instructions, taken as a whole, adequately state the
controlling law.’” United States v. Wills, 346 F.3d 476, 492
(4th Cir. 2003) (quoting Teague v. Bakker, 35 F.3d 978, 985 (4th
Cir. 1994)).
In this case, the district court read the instructions to
the jury and provided the jurors with a written copy of the
instructions. Although the district court did not read this
portion of the instructions to the jury, the copy provided
entitled the instructions on each alleged offense “statute
violated.” While including in the written instructions’ heading
the language “statute violated” may have been suggestive, it did
not direct a guilty verdict. On the contrary, the district
court properly instructed the jury that the government bore the
burden of proving guilt beyond a reasonable doubt. The district
21
court’s instructions, taken as a whole, adequately stated the
controlling law, and Defendants are not entitled to reversal on
this basis. See Hanley, 974 F.2d at 17-18 (affirming
defendant’s conviction where jury instructions on burden of
proof were, taken as a whole, correct despite judge’s having
told jury to find defendant guilty if it found that reasonable
doubt existed).
VII.
Finally, we turn to Defendants’ argument that the district
court plainly erred by incorrectly calculating their offense
levels under the Sentencing Guidelines. The government concedes
that the district court erred in calculating Defendants’ base
offense level, but contends that Defendants have not shown that
the error affected their substantial rights.
“In reviewing any sentence, ‘whether inside, just outside,
or significantly outside the Guidelines range,’ we apply a
‘deferential abuse-of-discretion standard.’” United States v.
Carter, 564 F.3d 325, 328 (4th Cir. 2009) (quoting Gall v.
United States, 552 U.S. 38, 40 (2007)). We first consider
whether the district court committed any significant procedural
error, such as improperly calculating the guidelines range.
United States v. Evans, 526 F.3d 155, 161 (4th Cir. 2008), cert.
denied, 129 S.Ct. 476 (2008). And when a party has failed to
22
preserve his challenge to procedural sentencing errors, we
review for plain error only. United States v. Lynn, 592 F.3d
572, 576-77 (4th Cir. 2010). To establish plain error, an
appellant must show that an error (1) was made, (2) is clear,
and (3) affects a substantial right. United States v.
Massenburg, 564 F.3d 337, 342-43 (4th Cir. 2009). “Even if an
appellant makes this three-part showing, an appellate court may
exercise its discretion to correct the error only if it
‘seriously affects the fairness, integrity or reputation of
judicial proceedings.’” Lynn, 592 F.3d at 577 (quoting
Massenburg, 564 F.3d at 343).
Here, the jury convicted Defendants of money laundering in
violation of 18 U.S.C. § 1956, which is sentenced under United
States Sentencing Guideline (“U.S.S.G.”) § 2S1.1. That
provision of the Sentencing Guidelines says that the base
offense level shall be the offense level for the underlying
offense from which the laundered funds were derived (subject to
conditions not contested here). U.S.S.G. 2S1.1(a)(1). The
underlying offense was health care fraud in violation of 18
U.S.C. § 1347, which is sentenced under U.S.S.G. § 2B1.1. That
provision provides for a base offense level of seven “if (A) the
defendant was convicted of an offense referenced to this
guideline, and (B) that offense of conviction has a statutory
maximum term of imprisonment of 20 years or more[.]” U.S.S.G.
23
§ 2B1.1(a)(1). Otherwise the base offense level is six.
U.S.S.G. § 2B1.1(a)(2).
As the probation officer noted in Defendants’ pre-sentence
reports, the violations of 18 U.S.C. § 1347 subjected Defendants
to a maximum term of ten years’ imprisonment. Only the money
laundering convictions carried a twenty-year statutory maximum.
But the money laundering offense was not “referenced to this
guideline” under U.S.S.G. § 2B1.1(a)(1). 4 Therefore, under
U.S.S.G. § 2B1.1(a), the correct base offense level was six, not
seven, which the district court used here.
The government concedes that the district court should have
used a base offense level of six instead of seven. Regarding
Osuji, the government recognizes that his 211-month sentence was
one month outside the applicable guideline range. The
government nevertheless contends that Osuji has not shown
prejudicial error. We disagree and conclude that the district
court plainly erred in failing properly to calculate Osuji’s
base offense level and that the error affected Osuji’s
substantial rights. See United States v. Godwin, 253 F.3d 784,
4
An offense is “referenced to this guideline” if “this
guideline is the applicable Chapter Two guideline determined
under the provisions of § 1B1.2 (Applicable Guidelines) for the
offense of conviction[.]” U.S.S.G. § 2B1.1 Application Note
2(A). Money laundering in violation of 18 U.S.C. § 1956 is not
referenced to § 2B1.1. See U.S.S.G. Appendix A.
24
789 (4th Cir. 2001) (holding that resentencing was required
where the district court used an incorrect, higher base level).
Because the district court must resentence Osuji, we need not
reach Osuji’s other arguments about his sentence. See United
States v. Llamas, 599 F.3d 381, 387 n.6 (4th Cir. 2010) (not
reaching defendant’s alternative sentencing arguments).
Regarding Varnado, the record shows that her 63-month
sentence falls within the properly calculated guideline range.
We are persuaded, however, that Varnado is also entitled to
resentencing. In Gall, 552 U.S. at 40, the Supreme Court
explained that a district court must begin the sentencing
process by correctly calculating the appropriate guidelines
range. The error in this case therefore appears to be plain.
Regarding whether the error affected Varnado’s substantial
rights, we are cognizant of the fact that the district court
granted Varnado a variance/departure and sentenced Varnado to
the low end of the improperly calculated guideline range (within
a window of 63 to 78 months). It is reasonable to presume that
the district court might have imposed a lower sentence had it
been aware of the correct guidelines range. We therefore hold
that Varnado is entitled to resentencing. See United States v.
McCrary, 887 F.2d 485, 489 (4th Cir. 1989) (holding that
defendant should be resentenced where district court imposed a
sentence under an erroneously calculated guidelines range—even
25
where the sentence imposed fell within the correct range).
Because the district court must resentence Varnado, we need not
reach her other arguments about her sentence. 5 Llamas, 599 F.3d
at 387 n.6.
VIII.
In conclusion, we affirm Osuji’s conviction. We affirm
Varnado’s conviction except as to counts twelve, thirteen,
fifteen, sixteen, and eighteen. We vacate her conviction on
those counts because the district court erred in refusing to
instruct the jury on venue and the error was not harmless. We
also vacate both Defendants’ sentences because the district
court erred in applying an incorrect base level when calculating
the sentences. We remand the case to the district court for
resentencing under the correctly calculated guidelines range.
AFFIRMED IN PART, VACATED IN PART,
AND REMANDED WITH INSTRUCTIONS
5
Varnado argues, for example, that the district court erred
in applying an enhancement pursuant to section 3B1.1 for being
an organizer, leader, manager or supervisor of the money
laundering offense. See U.S.S.G. § 3B1.1. We are concerned
that there may have been insufficient evidence to support this
enhancement. We reserve ruling on the matter, however, in order
to give the parties and the district court the opportunity to
reexamine the issue at resentencing.
26