U.S. v. Coonce

• Decision Date: 14 April 1992
• Docket Number: No. 90-3516,90-3516
• Citation: 961 F.2d 1268
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Randall E. COONCE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1268

961 F.2d 1268

UNITED STATES of America, Plaintiff-Appellee, v. Randall E. COONCE, Defendant-Appellant.

No. 90-3516.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 17, 1991.

Decided April 14, 1992.

Thomas E. Karmgard, Asst. U.S. Atty., Office of the U.S. Atty., Danville, Ill. and Rodger A. Heaton, Asst. U.S. Atty. (argued), Office of the U.S. Atty., Springfield, Ill., for plaintiff-appellee.

Stephen Ryan (argued), Ryan, Cini, Bennett & Radloff, Mattoon, Ill., for defendant-appellant.

Before CUMMINGS, COFFEY and KANNE, Circuit Judges.

COFFEY, Circuit Judge.

Randall Coonce pled guilty to four counts of mail fraud under 18 U.S.C. § 1341, and received consecutive five-year sentences on Counts I, II, and III, to be followed by five years' probation on Count IV. After entering his plea, Coonce objected to the content of the Presentence Report (PSR), which contained descriptions of uncharged misconduct. Specifically, the PSR stated that in addition to committing mail fraud, he had participated in a criminal enterprise devoted to defrauding senior citizens by misrepresenting insurance policies as investment vehicles. Coonce moved to have the PSR stricken and redrafted. The court denied the motion. He then moved to withdraw his plea of guilty, alleging that the plea was unknowingly and unintelligently made because he did not realize that the uncharged activity of conspiracy or misrepresentation of products could be mentioned in the PSR and considered at sentencing. The court denied this motion as well. On appeal, Coonce alleges that the district court erred: (1) in denying his motions to strike the PSR and withdraw his guilty plea, (2) in placing the burden on him to prove that the PSR was inaccurate, (3) in finding that the PSR was reliable, and (4) in giving vent to its bias against the defendant by giving him excessive, consecutive sentences, disproportionate to those given to other participants in the scheme.

I. BACKGROUND

From 1983 to 1988, Randall Coonce ran a life insurance agency with offices in Charleston, Illinois and Indianapolis, Indiana. He sold life insurance as well as supervising several sales agents in the Charleston and Indianapolis offices. Though he sold insurance for several companies, most of the policies he sold were from the Inter-state Assurance Company. Initially, he contracted with Inter-state in 1984, and eventually became its regional marketing general agent, in charge of sales in several midwestern states.

Since 1980, Coonce had also been involved in wagering on sporting events. At first his bets were around $500 per game, but in 1984 his average wager escalated to between $3,000 and $4,000. In early 1986, Coonce was in serious financial difficulty as a result of substantial gambling debts, and to pay them he began to convert clients' insurance premiums to his own use. For the most part, the scheme worked as follows. As a general rule, Inter-state required initial premium payments on life insurance policies to accompany the customer's application, and the policy was effective when the application and premium were received. In some cases, however, it accepted applications without premiums, requiring payment when the approved policy During this same period, Coonce and his agents in Charleston and Indianapolis participated in a scheme to defraud senior citizens. Using a list of senior citizens that Coonce purchased from the National Association of Retired Persons (NARP) as leads, both Coonce and his agents contacted elderly people and convinced them to buy expensive life insurance policies that they misrepresented to be investment programs. The premiums and applications from these senior citizens were mailed to Coonce, who in turn mailed them to Inter-state, who returned them to Coonce if approved, who did whatever else was necessary to complete his fraudulent scheme. For example, he allowed an agent with a suspended insurance license to use "Randy Coonce" as an alias and continue to sell policies. In other cases the agents found it necessary to promise that interest would be paid on the "investment program" and Coonce went along by sending "interest checks" out of his own business account, perpetuating the agents' misrepresentation.

                was delivered to the customer.   Applications processed in this way were known as "C.O.D." policies, which were not effective until the receipt of the initial premium, after Inter-state had approved the application and sent a policy to the customer.   When customers sent their premium checks and applications to Coonce for delivery to Inter-state, he would deposit the check in his own account.   Next, he would mark the application "C.O.D." without telling his client and send it to Inter-state.   When the application was approved and returned to Coonce for delivery to the customer, he would forward the premium payment.   At first he made payments from his own account, having used the converted funds in the interim to pay his gambling debts.   Later on he was unable to keep current on his debts, and he began to pay off the C.O.D. policies with stolen funds of more recent date, "robbing Peter to pay Paul."   On some policies he took the money and never made any payment to Inter-state.   Besides this "C.O.D. policy" scam, Coonce also collected annual premium payments from customers without Inter-state's knowledge or consent, depositing them into his own account.   In January of 1988, Coonce told Inter-state of his activities, and the company terminated his contract
                

After Coonce admitted his misdeeds regarding the C.O.D. policies to Inter-state the company initiated civil proceedings, seeking to recover the premiums he had stolen to pay his debts. Consulting with his attorney, Coonce realized that he might also face criminal charges and had his lawyer contact the United States Attorney to discuss the matter. After reviewing the case the U.S. Attorney called Coonce's attorney and proposed a plea bargain requiring that Coonce admit that he had conspired with his sales agents to misrepresent insurance policies as investment programs for senior citizens. Coonce denied having been part of a conspiracy or misrepresenting his products, and refused the guilty plea offer. A few months later the government proffered a new plea agreement alleging misrepresentation of products but not conspiracy, which Coonce refused to accept, adamantly denying any misrepresentation. With negotiations at an impasse, the government obtained a thirty-six count indictment, leaving out any charge of conspiracy, but continuing to allege misrepresentation of products. Faced with this Coonce resumed plea negotiations and subsequently agreed to plead guilty to a four-count information alleging mail fraud but not conspiracy or misrepresentation. He further agreed to cooperate with the government in investigating other matters arising out of or related to his conduct. The government, in turn, agreed to withdraw the indictment so that Coonce would only have to plead guilty to a four-count information. ¹ The plea agreement clearly stated that at sentencing the defendant could present evidence mitigating the seriousness The Probation Office then prepared the PSR, which gave a detailed chapter and verse description of the entire scheme to defraud senior citizens through misrepresentation of the insurance policies as investments. Coonce objected to this and filed a "Motion to Strike Presentence Report and for Order Requiring Redrafting of the Presentence Report." Coonce's argument was that he pled guilty to neither conspiracy nor misrepresentation, and thus was of the opinion that it could not be considered in his sentencing. The court denied the motion, prompting Coonce to move to withdraw his plea as being unintelligently given because he did not know that the uncharged conduct could be used against him. This motion was also denied. Next, Coonce filed a pleading pursuant to Fed.R.Crim.P. 32, ² alleging that the PSR contained factual inaccuracies. Specifically, he claimed that the PSR was inaccurate when it described his behavior as a "criminal enterprise" that misrepresented products and targeted senior citizens. The court considered these charges at the close of the sentencing hearing. As to the PSR's use of the term "criminal enterprise" to describe Coonce's scheme, the court said that it "need make no finding about the factual accuracy of it since it is an opinion." Sentencing Tr. at 173. Importantly, however, the court also made statements indicating that it agreed with this opinion: "The probation officer's assessment is correct. I agree with the statements that the probation officer makes about the defendant and the way he should be viewed by the court." Sentencing Tr. at 175. Next the court concluded that the scheme targeted senior citizens, taking account of the fact that the defendant obtained a customer list from NARP and directed his sales program at older people. Further, the court took judicial notice of testimony from the guilty plea proceedings of Coonce's agents, who stated that Coonce actively participated in their scheme to bilk the elderly, providing the list of names, mailing the applications to Inter-state, and allowing an agent with a suspended insurance license to use his (Coonce's) name as an alias. Finally, the court held that the allegations of misrepresentation were justified in light of testimony by case agents, statements of the victims, and the defendant's history of shady dealings. ³ Coonce testified at the sentencing hearing, denying any conspiracy or misrepresentation, but the court found his testimony unbelievable. Having found the PSR was accurate and reliable, the court imposed its sentence of three consecutive five-year terms followed by five years' probation.

                of his offense, while the government could present evidence in aggravation of his crime.   The information Coonce pled guilty to was crafted to include only that conduct

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