U.S. v. Coscarelli

• Decision Date: 03 February 1997
• Docket Number: No. 96-20264,96-20264
• Citation: 105 F.3d 984
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. Craig Michael COSCARELLI, also known as John Coscarelli, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 984

105 F.3d 984

UNITED STATES of America, Plaintiff-Appellant, v. Craig Michael COSCARELLI, also known as John Coscarelli Defendant-Appellee.

No. 96-20264.

United States Court of Appeals Fifth Circuit.

Feb. 3, 1997.

Jeffery Alan Babcock, Paula Camille Offenhauser, Assistant U.S. Attorney, U.S. Attorney's Office, Houston, TX, for plaintiff-appellant.

Ray Christopher Goldsmith, Houston, TX, for defendant-appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before REYNALDO G. GARZA, JONES and DeMOSS, Circuit Judges.

DeMOSS, Circuit Judge:

Craig Michael Coscarelli pleaded guilty to an indictment charging him in Count I with conspiracy to commit wire fraud, mail fraud, money laundering, and the use of fictitious names in a mail fraud scheme. The government appeals from the sentence imposed upon Coscarelli, contending that the district court improperly applied United States Sentencing Guidelines (U.S.S.G.) § 2F1.1, the provision for offenses involving fraud or deceit, in calculating the term of Coscarelli's imprisonment. The government argues that the district court should have used U.S.S.G. § 2S1.1, the money laundering and monetary transaction reporting provision, to calculate Coscarelli's offense level in this case. For the forthcoming reasons, we VACATE the sentence imposed by the district court and REMAND for repleading and, if necessary, resentencing in accordance with this opinion.

BACKGROUND

Beginning in 1993, Coscarelli and others were involved in a telemarketing-fraud scheme. Using fictitious business monikers, the co-conspirators purchased lists of names, telephone numbers, and addresses of persons who had previously participated in telemarketing "sweepstakes." The co-conspirators used telephone banks operating out of sham telemarketing businesses or "reload rooms" from various addresses in and around Houston. These reload rooms were used to make calls to potential victims. The telemarketers contacted potential victims and told them that they had won a contest and that they were to receive various awards. A telemarketer would explain that the award would be sent after the "winner" mailed a check, payable to one of the fictitious companies, to a "mail drop" address in California, Florida or Texas, allegedly to cover taxes and other shipping costs necessary to send the prize.

Coscarelli was responsible for collecting the cash from the money orders and checks cashed in California, Florida, and Texas and routing the money back to himself. Coscarelli then distributed the proceeds to the other co-conspirators. The record reflects that victims sent $915,143.56 to the fictitious companies of this telemarketing scheme. The indictment alleged that Coscarelli encouraged the telemarketers to use fictitious names in order to conceal their identities from the victims and law enforcement agencies. Coscarelli further concealed and frequently changed the locations of the reload rooms. He also changed the telephone numbers of the fictitious companies.

Furthermore, Coscarelli and others were responsible for distributing the proceeds of the fraud to themselves, to the individual telemarketers, and to pay for the operating expenses of the reload rooms. Coscarelli was the person who executed applications for mail drops, filed records with the Secretary of the State of Texas for at least one of the fictitious companies, and executed lease agreements for the reload rooms.

This scheme ended in late 1994 with the arrest and indictment of Coscarelli and other co-conspirators. In an 11-count indictment, Coscarelli was charged in Count I with conspiracy to commit wire fraud, mail fraud, using fictitious names in a scheme to defraud, and money laundering in violation of 18 U.S.C. §§ 371, 1341, 1342, 1343, and 1956(a)(1)(A)(i). Each of counts two through 11 contained a substantive offense for all but one of those offenses stated in the conspiracy count. Money laundering, included as an offense in the conspiracy count, was not the subject of a separate substantive count in the indictment.

In June 1995, Coscarelli pleaded guilty to all 11 counts. There was no written plea agreement prepared. At the Rule 11 plea hearing, the district court explained that "on each of the 11 counts to which you've indicated you wish to plead guilty the maximum penalty is imprisonment for up to five years and a fine of not more than $250,000...."

After Coscarelli pleaded guilty, the probation department prepared its presentence investigation report ("PSI"). The probation department calculated Coscarelli's base offense level in the PSI using the money laundering guideline, U.S.S.G. § 2S1.1, for this multiple-object conspiracy. The PSI used U.S.S.G. § 3D1.2(d), ¹ comment. (ns. 4 & 8), § 2X1.1, and § 2S1.1 in arriving at a base offense level of 27. Section 2S1.1 scored Coscarelli's offense level at 23, adjusted upward by four levels under 2S1.1(b)(2)(E) because the amount of money involved exceeded $600,000 but was less than $1 million. The probation department recommended that Coscarelli also receive a four-level upward adjustment for his aggravated role in the offense under U.S.S.G. § 3B1.1(a) to reach a total offense level of 31. He did not receive a downward adjustment for acceptance of responsibility. With a total offense level of 31 and a criminal history category II, the Guidelines called for a punishment range of 121-151 months.

Coscarelli's objection to the PSI stated that:

Mr. Coscarelli was not charged with money laundering as a substantive count and Mr. Coscarelli did not knowingly or intentionally commit money laundering. Any money laundering that occurred was incidental to the main misconduct of wire and mail fraud via telemarketing.

As a result, Coscarelli argued that U.S.S.G. § 2X1.1 requires that the district court use U.S.S.G. § 2F1.1, instead of U.S.S.G. § 2S1.1, to calculate his base offense level.

At the sentencing hearing, the district court sustained Coscarelli's objection, concluding that the fraud guideline, U.S.S.G. § 2F1.1, rather than the money laundering guideline, U.S.S.G. § 2S1.1, should govern the calculation of Coscarelli's base offense level. Over the government's objection, the district court ruled that Coscarelli had not been charged with a substantive count of money laundering and he "did not knowingly commit money laundering." The district court found that the fraud guidelines more accurately described the conduct in this case than did the money laundering guidelines.

The district court, applying the fraud guidelines, found Coscarelli's base offense level to be 23. With a criminal history category of II, Coscarelli's Sentencing Guideline calculation showed a punishment range of 51-63 months. The district court then imposed a sentence of 63 months. The government filed a timely notice of appeal.

DISCUSSION

Challenges to the district court's application of the sentencing guidelines are reviewed de novo. United States v. Brown, 54 F.3d 234, 240 (5th Cir.1995). The district court's factfindings in support of its application of the guidelines are reviewed for clear error. Id.

1. The Application of U.S.S.G. § 2S1.1 to a Multiple-Object Conspiracy

The government contends that the district court erred by sustaining Coscarelli's objection to the use of U.S.S.G. § 2S1.1, the money laundering guideline, in calculating his base offense level. The government specifically charged Coscarelli in Count I of the indictment with conspiracy to commit money laundering in violation of 18 U.S.C. § 1956(a)(1)(A)(i). ² The government contends that the district court erred by focusing on the government's decision not to charge Coscarelli with a substantive count of money laundering and by relying on the absence of money laundering allegations in the indictment to rule that the fraud guideline should be used in sentencing Coscarelli. The government argues that it is not required to allege a substantive money laundering count for § 2S1.1 to apply. See U.S.S.G. § 3D1.2 comment. (n.8); 18 U.S.C. § 1956(h); see also United States v. Acanda, 19 F.3d 616, 617-20 (11th Cir.1994) (applying § 2S1.1 to a conspiracy conviction under 18 U.S.C. § 371 where the substantive count of money laundering under § 1956(a)(1)(A) was dismissed pursuant to a plea agreement). As such, the government maintains that the district court misapplied the guidelines because Coscarelli's guilty plea to the allegations of conspiracy to commit money laundering in the indictment was sufficient to show his involvement in the money-laundering object of the conspiracy.

Coscarelli contends that U.S.S.G. § 2X1.1 requires us to look to the base offense level of the substantive count to determine the base offense level for a conspiracy (18 U.S.C. § 371) arising from that substantive offense. Section 2X1.1, Application Note 2, states that the substantive offense is the offense that the defendant was convicted of soliciting or conspiring to commit. Coscarelli did not plead guilty to the substantive offense of money laundering because that substantive offense was not included in the indictment. As such, Coscarelli contends that the district court correctly concluded that the fraud guideline, § 2F1.1, was the appropriate guideline to apply.

Coscarelli also notes that the district court correctly determined which purpose or purposes of the conspiracy were supported by the evidence and which offenses were proven beyond a reasonable doubt. Based on Coscarelli's plea, the district court properly concluded that the fraud guideline more appropriately applies to the conduct at issue for sentencing purposes.

Further, Coscarelli argues that the district court did not base its decision solely on the lack of a substantive money laundering count. Coscarelli contends that the district court also relied on his objection which noted that the object of the conspiracy was unclear. The district court's findings implied that insufficient...