U.S. v. Calozza, 95-30393
Decision Date | 25 August 1997 |
Docket Number | No. 95-30393,95-30393 |
Citation | 125 F.3d 687 |
Parties | 97 Cal. Daily Op. Serv. 6771, 97 Daily Journal D.A.R. 11,047 UNITED STATES of America, Plaintiff-Appellee, v. Michael CALOZZA, Defendant-Appellant. |
Court | U.S. Court of Appeals — Ninth Circuit |
Jo Ann Oliver, Assistant Federal Public Defender, Seattle, WA, for defendant-appellant.
Thomas M. Gannon, United States Department of Justice, Washington, DC, for plaintiff-appellee.
Appeal from the United States District Court for the Western District of Washington; William L. Dwyer, District Judge, Presiding. D.C. No. CR-95-00327-WLD.
Before: SCHROEDER and KLEINFELD, Circuit Judges, and BREWSTER, District Judge. *
Opinion by Judge KLEINFELD; Partial Concurrence and Partial Dissent by Judge BREWSTER.
We construe the grouping provisions of the sentencing guidelines, U.S.S.G. §§ 3D1.1, 3D1.4, to determine whether the proper base offense level was selected and whether there was impermissible double counting.
Calozza sold insurance for the Sons of Norway to its members. He fabricated a letter purporting to be from the Sons of Norway to staff. The letter offered staff members, but not their clients, an opportunity for a tax-advantaged high-yield secure investment. Then Calozza showed the fake letter to his insurance clients, told them it did not seem fair to deprive them of this opportunity, and offered to help them get into it. His scheme was that his clients would borrow against their insurance and give him their money in exchange for his personal high-interest promissory note. He would supposedly invest the money in the staff opportunity and pass the returns through to his clients, the Sons of Norway members whose money he had taken. Because the fake letter made it look as though the Sons of Norway sought to limit the nonexistent investment to staff, Calozza advised his clients to keep his pass-through scheme and their participation secret.
What Calozza was really doing was taking his clients' money, and paying off the earlier investors with the later investors' money. It was a Ponzi scheme. Calozza stole about $8.8 million this way, and paid back about $2.3 million to the more fortunate "investors." He used the profits to pay off his gambling debts and to build his $1.6 million, 6700 square foot house with full gymnasium, swimming pool and tennis court.
After Calozza got caught, he was very cooperative in the criminal process and a related civil action by his victims. He pleaded guilty to eleven counts of mail, wire and bank fraud under 18 U.S.C. §§ 1341, 1343, 1344, transporting stolen money under 18 U.S.C. § 2314, and money laundering to conceal the scheme under 18 U.S.C. §§ 1956, 1957. He was sentenced November 27, 1995.
The district court imposed a vulnerable victim adjustment under U.S.S.G. § 3A1.1, because most of the victims were retired and elderly. It also imposed an abuse of position of trust enhancement under U.S.S.G. § 3B1.3, because Calozza had known many of his victims for years or decades and had become close to their families as a representative of their fraternal order.
Here is how the district court computed the sentence:
Money Laundering guideline subject levels § 2S1.1(a) money laundering 23 § 2S1.1(b)(2) amount laundered 6 ------ FIRST SUBTOTAL 29 § 3A1.1 vulnerable victim 2 § 3B1.3 abuse of trust 2 § 3D1.4 ungrouped fraud 2 ------ SECOND SUBTOTAL 35 § 3E1.1(b) acceptance of responsibility -3 ------ TOTAL 32 Guideline range--121 to 151 months Sentence imposed--121 months Analysis
Calozza claims that there was double counting of the vulnerable victim and abuse of position of trust adjustments. We disagree with his argument in one respect, and agree in another. We conclude that the district court did not err in applying the adjustments to both groups when it selected which group was to be the base for the sentence computation. The guidelines enhance the most serious group's level with an adjustment for equally or less serious groups, and the more serious the other groups, the longer the sentence. Counting the same adjustments in the enhancing group and the base group does, as Calozza argues, mistakenly punish him twice for the same conduct.
Calozza also argues that the district court mistakenly concluded that it could not grant him a downward departure, an argument we reject. We need not decide whether grouping the fraud and money laundering counts separately, cf. United States v. Lopez, 104 F.3d 1149 (9th Cir.1997); United States v. Edmonds, 103 F.3d 822, 826 (9th Cir.1996), or imposing adjustments for vulnerable victim and abuse of position of trust, were appropriate, because those decisions are not challenged in this appeal.
Calozza's sentencing was pursuant to the Guidelines Manual incorporating amendments effective November 1, 1995.
The combined offense level calculation starts with a base, "the offense level applicable to the Group with the highest offense level." U.S.S.G. § 3D1.4. That base is increased by units from other groups with the same or fewer points. Id. This is analogous to starting with the most serious crime, and then looking to the equally or less serious crimes to enhance the sentence.
Calozza argues that the district court should have selected the base by applying the vulnerable victim and abuse of position of trust adjustments only to the fraud group, not the money laundering group. That would have made the fraud group the one with the highest offense level, so it would be the base. Calozza's proposed sentence calculation would have worked like this:
Fraud guideline subject levels § 2F1.1(a) fraud 6 § 2F1.1(b)(1)(O) amount of loss 14 § 2F1.1(b)(2) more than minimal planning 2 § 2F1.1(b)(6) affecting financial inst. 4 ------ FIRST SUBTOTAL 26 § 3A1.1 vulnerable victim 2 § 3B1.3 abuse of trust 2 § 3D1.4 ungrouped money laundering 2 ------ SECOND SUBTOTAL 32 § 3E1.1(b) acceptance of responsibility -3 ------ TOTAL 29
Guideline range--87--108 months.
The principles in the grouping guidelines are that (1) counts involving substantially the same harm are grouped together, to prevent prosecutors from enhancing sentences by multiplying charges for substantially the same harm; (2) the group with the highest offense level, that is, the worst crimes, furnishes a base; (3) additional crimes add units to the base, so that punishment will be greater for those who commit more crimes.
The rules in this Part seek to provide incremental punishment for significant additional criminal conduct. The most serious offense is used as the starting point. The other counts determine how much to increase the offense level.
...
In order to limit the significance of the formal charging decision and to prevent multiple punishment for substantially identical offense conduct, this Part provides rules for grouping offenses together. Convictions on multiple counts do not result in a sentence enhancement unless they represent additional conduct that is not otherwise accounted for by the guidelines. In essence, counts that are grouped together are treated as constituting a single offense for purposes of the guidelines.
U.S.S.G. Ch. 3, Pt. D, intro. comment. The Sentencing Commission wrote its grouping provisions "with an eye toward eliminating unfair treatment that might result from count manipulation." U.S.S.G. Ch. 1, Pt. A, § 4(a).
The rule for choosing which group furnishes the base is to use "the offense level applicable to the Group with the highest offense level." U.S.S.G. § 3D1.4. If adjustments such as vulnerable victim and abuse of position of trust apply to all groups, it does not matter whether they are added to all the alternatives, or not added to any of them, in making this comparison. If X is greater than y, then X plus 4 is greater than y plus 4. But if the adjustments could properly be added only to one and not the other, then it could matter a great deal. It may be that X is greater than y, but less than y plus 4. For the judge to have erred in a way that affected Calozza's sentence, Calozza would have to show that the adjustments were only appropriate for fraud, not for money laundering.
In that contention, he is incorrect. The adjustments could properly be applied to both groups to determine which had the highest offense level. Defrauding victims of more than $5 million yields a base offense level of 20, raised to 26 for "more than minimal planning" and "affected a financial institution." U.S.S.G. §§ 2F1.1(b)(1)(O), (b)(2)(A), and (b)(6)(B). Money laundering more than $2 million (that this is the correct amount for the money laundering computation has not put at issue by the parties) yields a base offense level of 29. U.S.S.G. § 2S1.1. If the four level adjustment for vulnerable victim and abuse of position of trust can properly be added to both, yielding 30 and 33, money laundering remains the group with the highest level.
Calozza argues that fraud rather than money laundering should have been used as the...
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