United States v. Ronald Wayland ( 2008 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 08-2194
U NITED STATES OF A MERICA,
Plaintiff-Appellee,
v.
R ONALD E. W AYLAND,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of Illinois.
No. 07 CR 40039—J. Phil Gilbert, Judge.
A RGUED O CTOBER 16, 2008—D ECIDED D ECEMBER 3, 2008
Before R IPPLE, E VANS and T INDER, Circuit Judges.
R IPPLE, Circuit Judge. A jury found Ronald E. Wayland
guilty of making false statements relating to health care
matters, in violation of 18 U.S.C. §§ 1035(a)(2), 24(b). At
sentencing, the district court concluded that Mr.
Wayland used “sophisticated means” to perpetrate the
fraud and, accordingly, applied a two-level upward
adjustment to his offense level, see U.S.S.G. § 2B1.1(b)(9).
The district court sentenced Mr. Wayland to 41 months’
imprisonment; Mr. Wayland filed a timely notice of
2 No. 08-2194
appeal. Because the district court did not clearly err in
determining that Mr. Wayland used sophisticated means
to commit this fraud, we affirm the judgment of the
district court.
I
BACKGROUND
A. Facts
The Illinois Department of Rehabilitation Services (“the
Department”) oversees a program through which Illinois
residents with disabilities can use Medicaid funds to pay
for the services of in-home personal assistants and
thereby avoid transfer to nursing homes. Dorothy
Wayland, a program participant, was essentially incapaci-
tated. Consequently, her son Ronald Wayland, acted on
her behalf under a power of attorney. In that role,
Ronald Wayland defrauded the Department of more
than $108,000 by claiming that a man named Cyril
Sturm was serving as his mother’s personal assistant.
Sturm, in fact, had died in 1983, but Mr. Wayland
persuaded the Department that Sturm was caring for
Dorothy Wayland. Mr. Wayland somehow obtained
Sturm’s social security number and submitted it, along
with identification cards that he created by using a rela-
tive’s photograph, to the Department. Mr. Wayland also
registered a post office box in both his name and Sturm’s,
to which the Department sent correspondence
addressed to Sturm. Mr. Wayland also opened a joint
checking account into which he, and later the Department,
No. 08-2194 3
deposited checks payable to Sturm. The bank let Mr.
Wayland establish the account because he represented
that Sturm was homebound. Because the Department
would pay Sturm to assist Dorothy Wayland only during
those hours in which Mr. Wayland could not be at home,
Mr. Wayland also submitted fraudulent documents
showing that he was employed at local hospitals. Addi-
tionally, Mr. Wayland filed tax returns for Sturm because,
the Government asserts, Mr. Wayland knew that the
Department was withholding taxes on Sturm’s behalf,
and he did not want the scheme to attract the IRS’ at-
tention.
After nine years, the scheme began to unravel. The
Department sent letters to Sturm and to Mr. Wayland
requesting a meeting with Sturm; he never showed up.
The Department pressed Mr. Wayland to document
Sturm’s existence and employment. In three written
responses, Mr. Wayland insisted that Sturm existed and
diligently was looking after Dorothy Wayland and that
all of the identification submitted to the Department was
genuine. These letters formed the basis of his indictment
on three counts of making false statements regarding
health care matters. 18 U.S.C. §§ 1035(a)(2), 24(b). A jury
found Mr. Wayland guilty on each count.
B. Sentencing
The probation officer recommended a two-level upward
adjustment under U.S.S.G. § 2B1.1(b)(9)(C) for Mr.
Wayland’s use of sophisticated means to perpetrate the
fraud. Mr. Wayland disputed that his conduct met this
4 No. 08-2194
standard, but the district court stated: “If this wasn’t a
sophisticated means of perpetrating a fraud, I don’t know
what is.” R.95 at 71. Mr. Wayland’s total offense level of
20 and criminal history category of I yielded an
advisory guidelines range of 31 to 41 months’ imprison-
ment. After considering the sentencing factors set forth
in 18 U.S.C. § 3553(a), the court imposed three concur-
rent prison terms of 41 months.
II
DISCUSSION
We review for clear error a district court’s finding
that the defendant employed sophisticated means.
United States v. Robinson, 538 F.3d 605, 607 (7th Cir. 2008).
The sentencing guidelines call for a two-level upward
adjustment if an individual has perpetrated a fraud
through sophisticated means. See U.S.S.G. § 2B1.1(9)(C).
Application note 8 to U.S.S.G. § 2B1.1 states:
“ ‘[S]ophisticated means’ means especially complex or
especially intricate offense conduct pertaining to the
execution or concealment of an offense.” The note goes
on to provide several examples of such conduct, in-
cluding the use of fictitious entities or corporate shells;
but this list is not exhaustive and merely suggests the
wide variety of criminal behavior covered by the guide-
line. United States v. Allan, 513 F.3d 712, 715 (7th Cir. 2008).
Mr. Wayland contends that fraudulently registering
both a post office box and checking account, as well as
filing false tax returns, are not complex or intricate actions,
No. 08-2194 5
and therefore, are not sophisticated. He relies on two
cases from other circuits holding that sophisticated con-
duct did not extend to fraudulently registering a post
office box, United States v. Hance, 501 F.3d 900, 911 (8th
Cir. 2007), or to filing false tax returns, United States v.
Lewis, 93 F.3d 1075, 1083 (2d Cir. 1996).
Offense conduct is sophisticated if it displays “a greater
level of planning or concealment” than a typical fraud of
that kind. See Robinson, 538 F.3d at 607-08 (finding defen-
dant’s use of false contact information for check counter-
feiting made the scheme sophisticated); United States v.
Fife, 471 F.3d 750, 753-54 (7th Cir. 2006) (holding that
the defendants’ use of detailed planning and more con-
cealment than typical made the tax fraud sophisticated);
Hance, 501 F.3d at 909 (“[T]he government must show that
Hance’s mail fraud, when viewed as a whole, was
notably more intricate than that of the garden-variety
mail fraud scheme.”). We must decide whether
Mr. Wayland’s crime involved a greater level of planning
or concealment than the typical health care fraud case.
Mr. Wayland’s conduct was far more intricate than that
in a typical health care fraud scheme. According to an
agent who investigated the case, a typical fraud of this
kind involves inflated claims of hours actually worked
by a personal assistant. Here, the personal assistant did
not exist. Mr. Wayland submitted false documents so the
Department would believe that Dorothy Wayland had
a personal assistant. He also fraudulently registered a
joint bank account and post office box to facilitate the
Government’s payments and filed fraudulent tax re-
6 No. 08-2194
turns so that the IRS would not alert the Department.
This scheme required a greater level of planning or con-
cealment than the typical health care fraud case. It cer-
tainly was not clear error for the district court to find
that Mr. Wayland’s conduct was sophisticated.
Mr. Wayland also submits that, because he erred in
the design and execution of his fraud, it could not have
been sophisticated. He suggests that his admission that
he shared an account with Sturm was foolish and
that his forgeries must have been amateurish because
investigators quickly were able to uncover the fraud.
However, a sophisticated scheme need not exhibit intelli-
gence or expertise. See Fife, 471 F.3d at 754. It does not
matter that Mr. Wayland might have done a better job
perpetrating and concealing the fraud. See United States
v. Madoch, 108 F.3d 761, 766 (7th Cir. 1997) (noting that,
even though “more elaborate mechanisms” of concealing
fraud were possible, the defendant nevertheless used
sophisticated means to perpetrate fraud). Nor does it
matter that Mr. Wayland’s own sloppiness or errors of
judgment may have contributed to the unraveling of his
scheme. See United States v. Rettenberger, 344 F.3d 702, 709
(7th Cir. 2003). Mr. Wayland’s scheme displayed a
greater level of planning and concealment than the
typical health care fraud and its failings do not suggest
that the district court clearly erred.
Even if Mr. Wayland’s individual actions could be
characterized as unsophisticated, we would follow the
approach of our sister circuits and affirm Mr. Wayland’s
sentence on the ground that his overall scheme, which
No. 08-2194 7
lasted nine years and involved a series of coordinated
fraudulent transactions, was complex and sophisticated.
See United States v. Jackson, 346 F.3d 22, 25 (2d Cir. 2003)
(holding that even if each step in the appellant’s
scheme was not elaborate, an enhancement for em-
ploying “sophisticated means” was nevertheless appro-
priate where “the total scheme was sophisticated in
the way all the steps were linked together”); United States
v. Halloran, 415 F.3d 940, 945 (8th Cir. 2005) (holding that
an enhancement was appropriate where certain aspects
of the appellant’s scheme were not elaborate, but the total
scheme was sophisticated); see also Rettenberger, 344 F.3d
at 709 (affirming a finding of sophisticated means where
the appellant engaged in “[c]areful execution and coordi-
nation over an extended period. . . .”).
Conclusion
For the foregoing reasons, we affirm the sentence im-
posed by the district court.
A FFIRMED
12-3-08