Wednesday, July 8, 2020

Sixth Circuit Affirms Conviction, Upholding Relevant Conduct Tax Loss Attributable to Defendant's Conduct (7/8/20)

United States v. Igboba, 964 F.3d 501 (6th Cir. 2020), here, the Court affirmed Igboba’s conviction “on multiple criminal counts based on his participation in a conspiracy to defraud the United States Department of the Treasury by preparing and filing false federal income tax returns using others’ identities.”  The Court rejected his arguments that:
1. The tax loss, the principal driver for the sentencing calculation, improperly included tax loss of others for jointly undertaken criminal activity under S.G. 1B1.3(a)(1);
2. The sophisticated means enhancement did not apply; and
3. Two other arguments made in a pro se brief that the Court deemed insubstantial, so I don’t address them here.
I address here only the tax loss issue.

S.G. 1B1.3(a)(1), here, treats certain sentencing factors as “relevant conduct” that can be included in the tax loss calculation which determines the base offense level under S.G. §2T1.1(a), here, the tax base offense level.  In part here relevant, S.B. 1B1.3(a)(1)(B) includes:
(1)       (A)       all acts and omissions committed, aided, abetted, counseled, commanded, induced, procured, or willfully caused by the defendant; and
(B)      in the case of a jointly undertaken criminal activity (a criminal plan, scheme, endeavor, or enterprise undertaken by the defendant in concert with others, whether or not charged as a conspiracy), all acts and omissions of others that were—
(i)      within the scope of the jointly undertaken criminal activity,
(ii)      in furtherance of that criminal activity, and
(iii)      reasonably foreseeable in connection with that criminal activity;
that occurred during the commission of the offense of conviction, in preparation for that offense, or in the course of attempting to avoid detection or responsibility for that offense.
Roughly, (A) covers the sentencing factors from the defendants’ personal conduct and (B) covers the sentencing factors from the conduct of others.  The scope of (B) is not the same as and generally can be less than conduct within the scope of so-called Pinkerton liability for which a defendant can be convicted for crimes committed by others within the scope of the conspiracy.  See also Pinkerton and Sentencing for Jointly Undertaken Activity; Proposed Sentencing Guidelines Amendment (Federal Tax Crimes Blog 4/17/15), here; and 11th Circuit Holds Relevant Conduct Loss for Guideline Calculation Can Be Less Than Loss Within Scope of Criminal Conspiracy (Federal Tax Crimes Blog 2/27/19), here.

The Guideline’s Application Note 3(B) provides:
(B)       Scope.—Because a count may be worded broadly and include the conduct of many participants over a period of time, the scope of the "jointly undertaken criminal activity" is not necessarily the same as the scope of the entire conspiracy, and hence relevant conduct is not necessarily the same for every participant. In order to determine the defendant's accountability for the conduct of others under subsection (a)(1)(B), the court must first determine the scope of the criminal activity the particular defendant agreed to jointly undertake (i.e., the scope of the specific conduct and objectives embraced by the defendant's agreement). In doing so, the court may consider any explicit agreement or implicit agreement fairly inferred from the conduct of the defendant and others. Accordingly, the accountability of the defendant for the acts of others is limited by the scope of his or her agreement to jointly undertake the particular criminal activity. Acts of others that were not within the scope of the defendant's agreement, even if those acts were known or reasonably foreseeable to the defendant, are not relevant conduct under subsection (a)(1)(B). 
In cases involving contraband (including controlled substances), the scope of the jointly undertaken criminal activity (and thus the accountability of the defendant for the contraband that was the object of that jointly undertaken activity) may depend upon whether, in the particular circumstances, the nature of the offense is more appropriately viewed as one jointly undertaken criminal activity or as a number of separate criminal activities. 
A defendant's relevant conduct does not include the conduct of members of a conspiracy prior to the defendant joining the conspiracy, even if the defendant knows of that conduct (e.g., in the case of a defendant who joins an ongoing drug distribution conspiracy knowing that it had been selling two kilograms of cocaine per week, the cocaine sold prior to the defendant joining the conspiracy is not included as relevant conduct in determining the defendant's offense level). The Commission does not foreclose the possibility that there may be some unusual set of circumstances in which the exclusion of such conduct may not adequately reflect the defendant's culpability; in such a case, an upward departure may be warranted.
With that background in mind, the Court first said that Igboba did not properly preserve the argument, so the standard of review was plain error review.  The Court then moved to the merits (see Slip Op. pp. 7-12).  The Court noted that the district court "did not specifically address whether the relevant $4.1 million in losses was attributable to Defendant under subsection (A) or subsection (B)," but that "its analysis suggests that it found all $4.1 million attributable to Defendant’s own criminal activity, rather than others’ acts that were a part of 'jointly undertaken criminal activity.'"  Importantly, the district court excluded any loss "where Defendant could not be directly connected to a loss through reliable evidence."

The Court then addressed Igboba's arguments (bold-face supplied and cleaned up):
On appeal, Defendant does not identify any specific portion of this $4.1 million sum that is not attributable to his own activity—instead, he seems to suggest that the entire sum was only attributable to others’ activity. Upon review, we conclude that the district court could rightly attribute the relevant $4.1 million in losses to Defendant’s individual criminal activity based on a preponderance of the evidence. Although Defendant repeatedly asserts that the $4.1 million for which he was held responsible represented the losses caused by the entire conspiracy, LaFramboise explained at sentencing that there were many fraudulent returns filed by members of the conspiracy that were not included in the amount of loss attributed to Defendant. And the government’s loss-calculation spreadsheet connects each loss to Defendant individually—rather than to the conspiracy more broadly—through specific, identified pieces of evidence. These connections suggest that Defendant himself participated in filing the relevant fraudulent returns—whether by acquiring the taxpayer’s PII, instructing others on how to file the return, directing others to file the return, or otherwise.  
While Defendant argues that some of the evidence connecting him to this activity was unreliable, he has not actually shown that this is the case. For example, Defendant asserts that others could have accessed the email accounts that connected him to the fraudulent returns, but points to no evidence that they actually did. The weight of the evidence before the district court thus suggested that these connections were reliable. 
  In his reply brief, Defendant points out that there were not, in fact, two pieces of evidence linking him to every one of the losses attributed to him. He specifically notes that thirty-five of the 210 individual amounts attributed to him are based upon only a single evidentiary connection. Defendant is correct in this regard, and we agree that the district court erred in finding that “at least two things . . . tie each of these particular returns back to Mr. Igboba.” But no law, rule, or Sentencing Guideline requires that a defendant be connected to a loss through at least two pieces of evidence. The government simply tried to show at least two connections as part of an appropriate effort to be “conservative” in estimating the loss attributable to Defendant. 
Our precedent establishes that the district court need only make a reasonable estimate of the loss attributable to a defendant using a preponderance of the evidence standard. In light of that standard, we can discern no error in the district court attributing even these single-link sums to Defendant. Our review of the loss-calculation spreadsheet relied upon by the district court reveals that where amounts were attributed to Defendant based on only one evidentiary link, that link was particularly strong—for example, the refund went directly to Defendant’s personal bank account, the return and transcript were found in Defendant’s possession, or the return was included in one of the “work done” emails passed between Igboba and his codefendant. And Defendant presented no evidence suggesting these losses were not attributable to him to weigh against the government’s evidence. Finally, it is worth noting that the sum of the losses attributed to Defendant based on only a single link is $561,875. Even if we were to conclude that these losses were wrongly attributed to Defendant, the total loss caused by his activity would still surpass the $3.5 million threshold at which U.S.S.G. § 2B1.1(b)(1)(J) becomes applicable.  
Thus, the district court could rightly attribute $4.1 million in losses to “acts and omissions committed, aided, abetted, counseled, commanded, induced, procured, or willfully caused by” Defendant. U.S.S.G. § 1B1.3(a)(1)(A). Defendant tries to confuse the issue by asserting that these losses were instead caused solely by others’ criminal activity, and so the district court was obligated to assess whether they could properly be considered the product of “jointly undertaken criminal activity” under § 1B1.3(a)(1)(B). And both parties devote a substantial portion of their appellate briefing to analyzing the factors relevant to determining the scope of the criminal activity that a defendant agreed to jointly undertake. But that analysis is unnecessary here because § 1B1.3(a)(1)(B) does not apply to conduct that the defendant personally undertakes. As we have discussed, the evidence before the district court suggested that Defendant personally participated in the activity that caused each of the losses attributed to him. even if other people also participated in this activity, that would not negate the substantial evidence implicating Defendant himself. Accordingly, we need not—and do not—reach the question whether those losses could also be attributed to Defendant as the product of “jointly undertaken criminal activity.” U.S.S.G. § 1B1.3 cmt. n.2 (“If a defendant’s accountability for particular conduct is established under one provision of [U.S.S.G. § 1B1.3], it is not necessary to review alternative provisions under which such accountability might be established.”). 
The district court thus made no error in attributing $4.1 million in losses to Defendant at sentencing. Because there was no error, we also need not consider whether such error was obvious or clear, affected Defendant’s substantial rights, or affected the fairness, integrity, or public reputation of the proceedings. We affirm the district court’s decision to hold Defendant responsible for $4.1 million in losses.
JAT Comment:

1.  As I read the discussion, the Government might have been able to claim more relevant conduct tax loss under (B) and the district court might have approved.  However, it probably would not have had a material effect on either the Guidelines calculations or the Booker sentence.  The sentence imposed (over 13 years) meets the Government's need for appropriate punishment and sentencing messaging to the public that might be influenced by such messaging.

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