278 F.3d 988 (9th Cir. 2001), 00-10443, United States v. Martin

Docket Nº:00-10443,, 00-10607
Citation:278 F.3d 988
Case Date:November 05, 2001
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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278 F.3d 988 (9th Cir. 2001)




Nos. 00-10443,, 00-10607

United States Court of Appeals, Ninth Circuit

November 5, 2001

Argued and Submitted November 5, 2001--San Francisco, California

--San Francisco, California

January 29, 2002

Amended March 13, 2002

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Appeals from the United States District Court for the Eastern District of California William B. Shubb, District Judge, Presiding D.C. No. CR-99-00094-WBS

Counsel Bruce Locke, Moss & Locke, Sacramento, California, for defendant-appellant-cross-appellee. R. Steven Lapham, Assistant United States Attorney, for plaintiff-appellee-cross-appellant.

Before: William C. Canby, Jr., Susan P. Graber, and Richard A. Paez, Circuit Judges.


Graber, Circuit Judge

Defendant Curtis R. Martin, Jr., entered a conditional guilty plea to one count each of mail fraud, 18 U.S.C. § § 1341; wire fraud, 18 U.S.C. § § 1343; interstate transportation of stolen property, 18 U.S.C. § § 2314; and money laundering, 18 U.S.C. § § 1957. In his plea agreement, Defendant reserved the right to appeal his sentence and the denial of his motion to suppress.

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Defendant had moved to suppress all the government's evidence, arguing that it was obtained "in violation of his right to privacy in his relationship with his attorney. " On appeal from the denial of that motion, he makes the same assertion.

Defendant also challenges his sentence, arguing that (1) the district court improperly grouped his mail fraud and money laundering counts separately; (2) the court abused its discretion by departing upward one criminal history category and two guideline levels; (3) Apprendi v. New Jersey , 530 U.S. 466 (2000), applies to his case; (4) the district court judge should have recused himself because of comments that the judge made during the sentencing hearing; and (5) the district court erred in ordering that restitution was payable immediately.

The government cross-appeals with respect to the sentence. The government contends that the district court abused its discretion by applying an enhancement for "role in the offense" under U.S.S.G. § § 3B1.1 to only the money laundering offense but not also to the fraud offenses.

We affirm the district court's denial of the motion to suppress. We vacate the sentence and remand for resentencing because the district court erred in departing upward two offense levels to reflect Defendant's likelihood of recidivism. At the time Defendant was sentenced, the district court correctly grouped the money laundering and fraud offenses separately. Due to an amendment to the Sentencing Guidelines, the district court may conclude on resentencing that Defendant's money laundering and fraud offenses should be grouped together. If (but only if) the counts remain separately grouped on resentencing, we agree with the government that the leadership enhancement should apply to both the money laundering and the fraud counts.


A. The Fraudulent Scheme

In April of 1998, Curtis R. Martin, Jr., set up a company called CCM Capital (CCM). He had determined through library research that this was the name of a subsidiary of Mingly, a large Hong Kong corporation. The real CCM Capital had no employees and no offices in the United States. Martin filed a false report with Dun & Bradstreet, stating that the CCM that he had incorporated was the Mingly subsidiary. He rented office space in downtown Sacramento and began actively promoting his company as an arm of the Hong Kong corporation.

Martin posed as the Chief Financial Officer of CCM; his co-defendant, William Yu, served as the Senior Vice President. Martin signed documents using the name "Michael Nock," a Senior Vice President of the actual CCM Capital. Yu signed documents as "Lam Yu," another actual officer of the legitimate CCM Capital. On other occasions, William Yu held himself out as the nephew of Lam Yu. Another codefendant, Justina Cheung, posed as "Kim Wong, " a CPA for Deloitte Touche Tohmatso, the real CCM Capital's controller. Cheung frequently distributed actual Mingly financial reports by fax and mail in order to perpetuate the bogus CCM.

In July of 1998, Martin -posing as Michael Nock--secured a $2 million line of credit on CCM's behalf from IBM Credit Corporation. He used this line of credit to enter into eight contracts to lease computer equipment from Inacomp Computer Center (Inacomp), purportedly for Mingly's fictional United States operations. Instead, Martin, Cheung, and Yu sold the computer equipment to retailers in the Page 994

United States and Canada. The computers were shipped in interstate commerce to the purchasers.

Martin also admitted to securing an additional $1.85 million in computers from Inacomp. He provided post-dated checks for this transaction with a false Wells Fargo Bank Guarantee. Martin met with a co-defendant, fugitive Vladimir Slov, to discuss a deal to sell $3.9 million in computers to Slov's company. This deal included the $1.85 million in computers that Martin already had obtained falsely; the rest did not exist. By providing bogus serial numbers for these nonexistent computers, Martin and Slov obtained $2 million in cash from lines of credit to Slov's company. Part of the funds from this transaction support the money laundering count.

B. Martin's Relationship With Lawyer Robert Wilson

In late spring of 1998, Martin met lawyer Robert Wilson. Wilson was a former criminal defense lawyer who had a law practice on the same floor as Martin's CCM offices. In the summer of 1998, Martin and Wilson began discussions about Wilson's possible employment as general counsel for CCM. They agreed that Wilson would be put on retainer for CCM beginning September 1, 1998. Wilson moved his offices into the CCM suite on October 1, 1998, and formally became counsel for CCM on or about November 1, 1998.

During his talks with Martin about becoming CCM's lawyer, Wilson wrote a letter for Martin challenging a mechanic's lien. Over the course of his employment at CCM, he performed additional small-scale legal work for Martin. For example, he provided blank forms in connection with a landscaping project. He reported a stolen truck. Also, he consulted on a real estate transaction that involved both Martin personally and CCM. Martin was going through a divorce, and Wilson may have referred him to a family lawyer in that matter.

On March 4, 1999, a representative of Wells Fargo Bank called Wilson and told him that the bank would not be doing any further business with CCM because of a problem with one of CCM's officers. Later that morning, a representative of Ernst & Young called Wilson to say that Ernst & Young was also disassociating itself from the company based on a background check on Martin. The background check, or"Scherzer Report," stated that Curtis R. Martin, Jr., had served five years in San Quentin for grand theft, receiving stolen property, and attempted grand theft.

Wilson contacted acquaintances in the local United States Attorney's Office in an effort to confirm that the Curtis R. Martin, Jr., named in the Scherzer Report was the same person as the Curtis Martin who worked for CCM. Later that day, Wilson was to fly to Arizona to attend a meeting with Martin and some prospective business contacts from Bank One, and he was concerned that Martin might be defrauding CCM. At this point, Wilson still believed that he was working for the real CCM, a subsidiary of the Mingly corporation. As general counsel, he considered himself the highest ranking official of the company in the United States, other than Martin.

Wilson brought the Scherzer Report to Assistant United States Attorney (AUSA) Jodi Rafkin. That morning, Rafkin had just completed a meeting with an FBI agent, Dave Hienle. After Wilson told Rafkin about the reason for his visit, she called Hienle back into her office. Later, she also called AUSA Steve Lapham, a member of the office's white-collar crime division, to talk about Martin with Wilson as well. At this meeting, no one asked Page 995

Wilson if he had the authority to disclose the background check or whether it was protected by the attorney-client privilege.

Later on March 4, Wilson flew to Arizona, as planned, to meet with Martin and representatives of Bank One. He did not tell Martin about the background check or his visit to the United States Attorney's Office.

After Wilson returned to Sacramento, FBI agent Paul Artley confirmed that the Curtis Martin of CCM was the same person as the Curtis R. Martin, Jr., named in the Scherzer Report. Wilson wrote a letter explaining the situation to the home office of Mingly in Hong Kong, using an address on file in CCM's offices. Unbeknownst to Wilson, the address was that of a mail drop set up by Martin.

On March 7, Wilson phoned Mingly in Hong Kong and determined that the real CCM had no affiliation in the United States. The receptionist with whom he spoke told him that his colleagues had no affiliation with CCM Capital or Mingly. He also determined that the address to which he had sent the Federal Express letter was not affiliated with Mingly or CCM Capital.

The next day, Wilson met again with Lapham, Artley, and other government agents. He told them what he had learned. He also told them that Martin was attempting to obtain various credit lines with banks and private companies. He explained the structure of CCM and the roles played by William Yu and Kim Wong (a/k/a/ Justina...

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