United States v. Ellis ( 2002 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 01-11017
_____________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
LARRY WAYNE ELLIS,
Defendant-Appellant.
_________________________________________________________________
Appeal from the United States District Court
for the Northern District of Texas
(3:01-CR-20-1-X)
_________________________________________________________________
July 11, 2002
Before HIGGINBOTHAM, JONES, and BARKSDALE, Circuit Judges.
PER CURIAM:*
Pursuant to a written agreement, Larry Wayne Ellis pled
guilty to one count of securities fraud. In this appeal, Ellis
raises two objections to the district judge’s application of the
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
federal sentencing guidelines in determining his sentence. We
reject both objections and AFFIRM Ellis’s sentence.
Ellis solicited persons to invest money in investment
contracts and promissory notes with his companies. He represented
to these investors that their money would be used to buy and
operate automatic teller machines (ATMs) from which they would get
the profits and that this ATM investment program had already
successfully generated significant returns. After obtaining
investor funds on the basis of these and other representations,
Ellis diverted a substantial amount of investor funds to his own
use. To disguise the diversions, he sent statements to some
investors that falsely represented the condition of their
investments and used the funds of new victims to pay “profits” to
earlier investors. The fraudulent scheme involved no fewer than 57
investors who sustained combined losses of over $700,000 on an
aggregate investment of about $1.12 million.
Pursuant to Ellis’s guilty plea, Ellis and the Government
agreed to a stipulation recommending that the court not impose the
sentencing enhancements that Ellis attacks in this appeal. Ellis’s
presentence report made the same recommendations. The district
court rejected these recommendations. On appeal, Ellis argues that
the district court was wrong to do so. For the reasons stated
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below, we are not persuaded that the district court committed
reversible error with respect to these matters.
First, Ellis objects to the district court’s decision to
reject the stipulation’s recommendation that the court grant a
decrease in Ellis’s guidelines score pursuant to U.S.S.G. § 3E1.1,
which provides for such a decrease “[i]f the defendant clearly
demonstrates acceptance of responsibility for his offense.”
Because “[t]he sentencing judge is in a unique position to evaluate
the defendant’s acceptance of responsibility,” we review the
district court’s decision on this issue with “great deference.”
U.S.S.G. § 3E1.1 cmt. n.5. This standard of review is even more
deferential than the “clear error” standard; we affirm unless the
decision was “without foundation.” United States v. Brenes, 250
F.3d 290, 292 (5th Cir. 2001); United States v. Pierce, 237 F.3d
693, 694-95 (5th Cir. 2001).
One of the factors that the district court may consider
in determining whether to grant a reduction for acceptance of
responsibility is whether the defendant “truthfully admitt[ed] the
conduct comprising the offense of conviction, and truthfully
admitt[ed] or [did] not falsely deny[] any additional relevant
conduct for which the defendant is accountable under § 1B1.3
(Relevant Conduct).” U.S.S.G. § 3E1.1 cmt. n.1(a). “[A] defendant
who falsely denies . . . relevant conduct that the court determines
to be true has acted in a manner inconsistent with acceptance of
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responsibility.” Id. See United States v. Patino-Cardenas, 85
F.3d 1133, 1135 (5th Cir. 1996). There was evidence from which the
district court could have concluded that Ellis had not truly
accepted responsibility for his conduct because he had falsely
denied that his ATM “business” was a fraudulent scheme from the
beginning. Because the district court’s decision was not without
foundation, we affirm it. See Pierce, 237 F.3d at 695; United
States v. Galan, 82 F.3d 639, 640 (5th Cir. 1996); United States v.
Vital, 68 F.3d 114, 120-21 (5th Cir. 1995).
Second, Ellis objects to the district court’s decision to
disregard another recommendation contained in the stipulation and
to impose a two-level enhancement under former U.S.S.G. §
2F1.1(b)(3) for using “mass-marketing” in the commission of his
offense.1 “Mass-marketing,” as used in the guidelines provision,
“means a plan, program, promotion, or campaign that is conducted
through solicitation by telephone, mail, the Internet, or other
means to induce a large number of persons to (A) purchase goods or
services; . . . or (C) invest for financial profit.” U.S.S.G. §
2F1.1 cmt. n.3. Ellis used brochures and other printed materials,
an Internet World Wide Web site, a newspaper advertisement, and
five contract salespersons to attract investors. Ellis argues that
1
Former U.S.S.G. § 2F1.1(b)(3) has since been repealed and
replaced by current U.S.S.G. § 2B1.1(b)(2)(A)(ii). See U.S.S.G.,
supplement to app. C (Nov. 2001), amendment 617.
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these solicitation methods did not amount to “mass-marketing”
because they did not actually induce large numbers of persons to
invest in his fraudulent scheme. We disagree. The application
note does not define mass-marketing as “a plan, program, promotion
or campaign that is conducted through solicitation . . . and
induces a large number of persons” to purchase, invest, or the
like. Mass-marketing efforts can be mass-marketing efforts even if
they are ineffectual. See generally United States v. Pirello, 255
F.3d 728, 732 (9th Cir. 2001), cert. denied, 122 S. Ct. 577 (2001).
Judgment AFFIRMED.
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