United States v. James L. Killgo III ( 2005 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 03-3407
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United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the
* Southern District of Iowa.
James Lester Killgo III, *
*
Appellant. *
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Submitted: November 16, 2004
Filed: February 9, 2005
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Before SMITH, BEAM, and BENTON, Circuit Judges.
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SMITH, Circuit Judge.
James L. Killgo III pleaded guilty to wire fraud and money laundering arising
out of a single dealing with Access Air, an Iowa-based airline. Over Killgo's
objection, the district court1 considered Killgo's prior relationships with other aviation
companies seeking to lease aircraft as relevant conduct under United States
Sentencing Guideline § 1B1.3. Killgo now appeals his sentence arguing that the
1
The Honorable James E. Gritzner, United States District Judge for the
Southern District of Iowa.
district court erred in considering his prior dealings as relevant conduct.2 We find no
error and affirm.
In 1991, Killgo and Irving Oestreich started an aircraft leasing company in
Florida called Interjet. In December 1997, Interjet negotiated a contract with Access
Air to secure leases on two aircraft. Access Air wired Interjet a $400,000 deposit for
leases on two Boeing 737 aircraft. After Interjet received the wire, Killgo and
Oestreich withdrew the money and deposited the funds into separate overseas bank
accounts. Interjet never delivered the two 737s to Access Air and never refunded the
$400,000. On the same day that the aircraft were scheduled to be delivered to Access
Air, Interjet filed for bankruptcy. It was later revealed that during its seven years of
operation, Interjet never actually leased any aircraft. The corporation had a
checkbook, but no accounting service, no general ledger, no financial records, and no
tax returns.
On March 27, 2002, Killgo and Oestreich were jointly indicted in the Southern
District of Iowa for fraud arising out of their dealings with Access Air through
2
Killgo also argues that the United States Supreme Court decision in Blakely
v. Washington ,124 S. Ct. 2531 (June 24, 2004), requires reversal of his sentence. The
reasoning in Blakely was recently extended to the Federal Sentencing Guidelines. See
United States v. Booker, ___ U.S. ___, Nos. 04-104, 04-105 (U.S. Jan. 12, 2005)
(Stevens, J.). Nonetheless, in his plea agreement, Killgo waived his right to appeal
"any sentence imposed" except "any issues solely involving a matter of law brought
to the court's attention at the time of sentencing at which the court agrees further
review is needed." Killgo did not bring any issue akin to Blakely or Booker to the
district court's attention. The fact that Killgo did not anticipate the Blakely or Booker
rulings does not place the issue outside the scope of his waiver. See, e.g., United
States v. Johnson, 67 F.3d 200 (9th Cir. 1995); see also United States v. Rutan, 956
F.2d 827 (8th Cir. 1992) (explaining that an appeal waiver can waive a right unknown
to the defendant), overruled in part by United States v. Andis, 333 F.3d 886, 892 n.6
(8th Cir. 2003) (en banc); United States v. Rubbo, No. 04-10874 (11th Cir. Jan. 21,
2005) (holding that argument made under Booker fell within scope of appeal waiver).
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Interjet. Killgo pleaded guilty to wire fraud in violation of 18 U.S.C. § 1343 and
money laundering in violation of 18 U.S.C. § 1956(a)(1)(B)(i) for his actions in
dealing with Interjet. The wire fraud resulted in a $400,000 loss to Access Air.
After the plea, a pre-sentence report (PSR) was prepared for Killgo. The PSR
recommended a two-level increase for relevant conduct under U.S.S.G. § 1B1.3. The
PSR explained that discovery revealed Interjet had defrauded thirteen different
persons/entities for a total of $1,959,192.95. However, according to the PSR, the
government stated that it was only able to prove the losses of Access Air at $400,000,
Falcon Air at $190,000 in July 1997, Lineas Aereas Allegro at $295,000 in July 1997,
and Southend Cargo at $350,000 in October 1997. Accordingly, the PSR
recommended that Killgo's sentencing range be based on a total loss of $1,235,000.
Killgo objected to the loss calculation of $1,235,000 and argued that it should
be calculated solely on the $400,000 loss suffered by Access Air. The district court
conducted a hearing on relevant conduct in assessing Killgo's sentencing range. At
the hearing, Killgo argued that the contracts between the other air carriers were not
relevant conduct as contemplated by the Guidelines. He indicated that some contracts
involved federal drug and arms investigations in which he cooperated with the United
States Government. In addition, he argued that the other air carriers had breached
their leases, and, thus, his actions were not fraudulent.
The district court concluded that the unfulfilled leases with the other air
carriers constituted relevant conduct under U.S.S.G. § 1B1.3. Consequently, Killgo's
sentencing range was between thirty-three and forty-one months' imprisonment. The
district court sentenced him at the lower end of the range–thirty-three months. Killgo
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then filed this appeal, maintaining that the losses of the three separate air carriers
should not be considered relevant conduct.3
We review the sentence imposed for unreasonableness, judging it with regard
to the factors in 18 U.S.C. § 3553(a). United States v. Booker, ___ U.S. ___, Nos. 04-
104, 04-105 (U.S. Jan. 12, 2005) (Breyer, J.).4 Killgo's appeal relates directly to §
3553(a)(4)(A); that is, he essentially claims that the reasonableness of his sentence
is directly linked to the district court's misapplication of a relevant Guideline. Stated
another way, Killgo's argument on appeal is that the district court erred in
determining relevant conduct under the Guidelines thus rendering his sentence of
thirty-three months' imprisonment unreasonable.5 Whether an act or omission
3
The guideline provision applicable to fraud cases provides for a graduated
increase in the base offense level depending on the amount of loss resulting from
conduct relevant to the count of conviction. U.S.S.G. § 2F1.1 (deleted by
consolidation with U.S.S.G. § 2B1.1, Nov. 1, 2001). Under the Sentencing
Guidelines, the base offense level for fraud is adjusted upward if the loss resulting
from the fraud exceeded $2,000. See U.S.S.G. § 2F1.1(b). Where the loss is greater
than $800,000 but not more than $1,500,000, eleven points are added. U.S.S.G. §
2F1.1(b)(1)(L). If the loss were calculated at $400,000 as Killgo suggests, only nine
points are added. U.S.S.G. § 2F1.1(b)(1)(J).
4
Prior to the United States Supreme Court's ruling in Booker, we reviewed the
application of sentencing guidelines de novo. United States v. Red Elk, 368 F.3d
1047, 1051 (8th Cir. 2004). The Supreme Court has directed Circuit Courts to apply
its holdings in Booker to all cases on direct review. United States v. Booker, ___ U.S.
___, Nos. 04-104, 04-105 (U.S. Jan. 12, 2005) (Breyer, J.) (citing Griffith v.
Kentucky, 479 U.S. 314, 328 (1987)). While Killgo's appeal waiver is sufficient to bar
his Sixth Amendment claim, we recognize that it did not waive the application of a
constitutional standard of review on appeal.
5
Relevant conduct also relates to the "history and characteristics of the
defendant," § 3553(a)(1), as well as the need to "protect the public from further
crimes of the defendant," § 3553(a)(2)(C). Using relevant conduct in sentencing a
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constitutes relevant conduct, under the Sentencing Guidelines, is a factual
determination, which we review for clear error. United States v. Regenwether, 300
F.3d 967 (8th Cir. 2002).
The Guidelines generally provide that specific offense characteristics, such as
the calculation of fraud losses, are determined on the basis of "relevant conduct," not
the acts underlying the offense of conviction. See U.S.S.G. § 1B1.3(a). Relevant
conduct under the Guidelines includes, "solely with respect to offenses of a character
for which § 3D1.2(d) would require grouping of multiple counts, all acts and
omissions . . . that were part of the same course of conduct or common scheme or plan
as the offense of conviction." U.S.S.G. § 1B1.3(a)(2). Multiple fraud offenses are
grouped under § 3D1.2(d), so relevant conduct for purposes of sentencing Killgo
includes all fraudulent acts or omissions "that were part of the same course of conduct
or common scheme or plan" as his offense of conviction.
Section 1B1.3(a)(2) allows the district court to consider all acts and omissions
by Killgo that constituted "the same . . . common scheme or plan as the offense of
conviction." Under this guideline, a district court should consider the "'similarity,
regularity, and temporal proximity' of the conduct in determining whether it is part
of the same course of conduct or common scheme or plan." United States v.
Anderson, 243 F.3d 478, 485 (8th Cir. 2001) (citations omitted). "Common scheme
or plan" as used in § 1B1.3(a)(2) is construed broadly in determining relevant conduct
for sentencing purposes. United States v. Berry, 212 F.3d 391, 393 (8th Cir. 2000).
"For two or more offenses to constitute part of a common scheme or plan, they must
be substantially connected to each other by at least one common factor, such as
common victims, common accomplices, common purpose, or similar modus
operandi." U.S.S.G. § 1B1.3 comment. (n.9).
defendant also aids in the "need to avoid unwarranted sentence disparities." 18 U.S.C.
§ 3553(a)(6).
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The district court's determination of Killgo's relevant conduct is entirely
consistent with our holdings in similar cases.6 In this case, Killgo used Interjet as the
6
In United States v. Bush, 252 F.3d 959 (8th Cir. 2001), Bush was convicted
of diverting money from the sale of unregistered promissory notes issued by his
company. In calculating total losses, the district court considered instances where
Bush diverted borrowed funds that he promised would be used to further his
company. Id. Bush argued that only losses attributable to the sale of unregistered
promissory notes could be used to calculate total losses, and that the district court
erred in aggregating the losses from the borrowed funds. Id. We affirmed the district
court's application of § 1B1.3 reasoning that Bush's dealings bore a strong
resemblance, and, thus, were part of "the same . . . common scheme or plan," which
constituted relevant conduct. Id.
Similarly, in United States v. Howard, 235 F.3d 366 (8th Cir. 2000), Howard
and Robinson were indicted for a scheme involving the sale and trade of annuities.
Howard and Robinson told investors that they could pool money to trigger a
leveraged line of credit and receive a profit from the resale of the annuities. Id. In a
separate instance, Robinson told a different set of investors in Iowa that they could
pool their money to "trigger a line of credit" to purchase annuities, which would then
be resold at a profit. Id. We held that Robinson's actions in Iowa "were part of the
same course of conduct or common scheme or plan as the offense of conviction." Id.
at 373. Specifically, Robinson's statements to the Iowa investors were identical to the
ones made by him to the investors involved in the indicted offenses. Id. We
concluded that the criminal activity in Iowa and the criminal activity in the indictment
involved the same modus operandi, and, thus, constituted "relevant conduct" for
sentencing purposes. Id.
Likewise, in United States v. Heath, 122 F.3d 682 (8th Cir. 1997), we held that
a defendant's fraudulent activity connected with medical facilities involved a common
scheme and modus operandi for purposes of U.S.S.G § 1B1.3. In that case, Heath
pleaded guilty to submitting false insurance claims after staging a "slip and fall" and
gaining admission to hospitals. Id. Heath also gained admission to hospitals
throughout the country by falsely complaining of other medical problems in an effort
to fraudulently procure controlled substances. Id. Heath argued that the hospital and
medical services not predicated on a slip and fall insurance claim were not relevant
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common business front from which to solicit his victims. Each case was premised on
Interjet securing a lease for a transport grade aircraft. Furthermore, Killgo executed
substantially similar documents in setting up each separate fraudulent transaction.
The four acts occurred within months of each other. In addition, Killgo operated the
scheme with the same accomplice. We hold that Killgo's dealings are part of the same
common scheme or plan. Accordingly, the district court properly considered the three
dealings with Lineas Aereas Allegro, Southend Cargo, and Falcon Air as relevant
conduct under § 1B1.3. Based on the relevant consideration, we cannot say that
Killgo's thirty-three month sentence is unreasonable or that the district court erred.
The judgment of the district court is affirmed.
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conduct to the offense of wire fraud. Id. We rejected that argument explaining that all
of Heath's activity involved gaining admission to hospitals by falsely complaining of
pain. Id.
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