U.S.A. v. Luca

• Decision Date: 07 July 1999
• Docket Number: No. 98-10041,98-10041
• Citation: 183 F.3d 1018
• Parties: (9th Cir. 1999) UNITED STATES OF AMERICA, Plaintiff-Appellee, v. FRANK A. M. LUCA, Defendant-Appellant
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1018

183 F.3d 1018 (9th Cir. 1999)

UNITED STATES OF AMERICA, Plaintiff-Appellee, v. FRANK A. M. LUCA, Defendant-Appellant.

No. 98-10041

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted February 8, 1999.

Filed July 7, 1999

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Dennis P. Riordan, Marc J. Zilversmit, Riordan & Rosenthal, San Francisco, California, for the defendant-appellant.

Stephen G. Winerip, Assistant United States Attorney, Pheonix, Arizona, for the plaintiff-appellee.

Appeal from the United States District Court for the District of Arizona; Stephen M. McNamee, District Judge, Presiding. D.C. No. Cr-96-00077-SMM.

Before: Betty B. Fletcher and A. Wallace Tashima, Circuit Judges, and James K. Singleton, Jr., District Judge.¹

SINGLETON, District Judge:

Frank Luca ("Luca") appeals his sentence imposed after he pleaded guilty to seventeen counts of mail fraud, interstate transport of stolen property and securities fraud in connection with a Ponzi scheme he ran. Luca contends that the district court erred in imposing three enhancements to his sentence. We have jurisdiction pursuant to 28 U.S.C. S 1291. We vacate Luca's sentence and remand for re-sentencing.

I. STANDARD OF REVIEW

This court reviews de novo the district court's interpretation and application of the sentencing guidelines. See United States v. Shrestha, 86 F.3d 935, 938 (9th Cir. 1996). Findings of fact regarding the application of the sentencing guidelines are reviewed for clear error. See United States v. Mares-Molina, 913 F.2d 770, 772 (9th Cir.1990).

II. DISCUSSION

Luca challenges a two-level enhancement based on United States Sentencing Guidelines ("U.S.S.G.")S 3C1.1,² applied as a result of the district court's conclusion that Luca had obstructed or impeded the investigation of his crimes; a fourlevel enhancement based on the district court's conclusion that Luca was an organizer or leader of a criminal enterprise that was "otherwise extensive" under U.S.S.G.S 3B1.1(a); and a two-level enhancement based on the district court's conclusion that Luca's victims were "vulnerable victims" under U.S.S.G. S 3A1.1(b).3 We affirm the obstruction of justice enhancement but conclude that the record does not contain sufficient evidence to uphold the "leader or organizer" or "vulnerable victim" enhancements.

A. U.S.S.G. S 3C1.1

[1] Section 3C1.1 of the sentencing guidelines provides for a two-level enhancement "[i]f the defendant willfully obstructed or impeded, or attempted to obstruct or impede, the administration of justice during the investigation, prosecution, or sentencing of the instant offense. . . ." The commentary to S 3C1.1 indicates that the enhancement is warranted for "providing a materially false statement to a law enforcement officer that significantly obstructed or impeded the official investigation or prosecution of the instant offense. " See U.S.S.G. S 3C1.1 n. ³(g). Luca challenges the obstruction enhancement on two grounds. First, he argues that even if the judge found that Luca submitted false or misleading documents during a state investigation, such activities should not support the obstruction of justice enhancement. He additionally attacks the sufficiency of the district court's findings. We reject both arguments.

While the commentary to S 3C1.1 does not explicitlyinclude false statements made to state administrative agencies within its examples of obstructive conduct, the examples set forth are not exhaustive. See id n. 3. "Obstructive conduct can vary widely in nature, degree of planning, and seriousness.. . . [C]omparison of the examples set forth in Application Notes 3 and 4 should assist the court in determining whether application of this adjustment is warranted in a particular case." Id. n. 2.

The district court determined that Luca had intentionally submitted false prospectuses in response to an investigative subpoena issued by the Arizona Securities Division of the Arizona Corporations Commission ("ACC"). The court concluded that "based on the documents given to the Arizona Corporations Commission, which were in fact false documents . . . it was [Luca's] intent to divert the Arizona Corporation Commission from beginning its preliminary investigation, and it allowed for additional investors to be procured during this time."

For the obstruction of justice enhancement to apply, the district court must find that the defendant willfully provided a materially false statement to law enforcement officers that actually obstructed or impeded the official investigation or prosecution of the instant federal offense. See U.S.S.G. S 3C1.1 & n. 3(g). See also United States v. Solano-Godines, 120 F.3d 957, 963-64 (9th Cir. 1997) (interpreting "statement" and "significant hindrance" requirements), cert. denied, 118 S. Ct. 722 (1998); United States v. Zagari, 111 F.3d 307, 329 (2d Cir.) (perjury in state civil environmental enforcement action could justify obstruction of justice enhancement where material to federal crime), cert. denied sub nom., Herzog v. United States, 118 S. Ct. 445 (1997) & cert. denied sub nom., Shay v. United States, -U.S.-,119 S. Ct. 1585, 143 L.Ed.2d 679(1999). It is important to stress that the state agency was investigating "the offense," namely the Ponzi scheme that Luca generated and which resulted in his conviction and sentence in this case. For purposes of applying the obstruction enhancement, we can find no convincing reason to distinguish between state and federal law enforcement officers who are investigating the same offense.

Luca's argument that an implicit distinction exists between obstruction of state and federal law enforcement officials misapprehends the focus of the obstruction enhancement, which addresses the effect of the obstructive conduct rather than the level of law enforcement that was obstructed. For example, the guideline's commentary indicates that some obstructive conduct, such as providing a false name or identification at arrest or making false unsworn statements to law enforcement officials, should not ordinarily result in an enhancement. Where "such conduct actually resulted in significant hindrance to the investigation or prosecution," however, the severity of the obstruction justifies a sentence enhancement. Compare U.S.S.G. S 3C1.1 n. 4(a) and (b), with id. n. 3(g). Under the obstruction guideline's commentary, it is immaterial which law enforcement agency was obstructed. So long as the defendant provided information that was materially false, with a willful intent to obstruct or attempt to obstruct the discovery of his or her scheme, and which had the effect of significantly impeding the investigation, the obstruction enhancement is appropriate.

Willfully providing material false statements to federal law enforcement officials undisputedly justifies the obstruction enhancement where actual obstruction occurs. See, e.g., United States v. McNally, 159 F.3d 1215, 1217 (9th Cir. 1998) (false statements to FBI denying whereabouts of kidnapped child constituted obstruction); United States v. Ancheta, 38 F.3d 1114 (9th Cir. 1994) (false statements to DEA agents denying involvement in drug transaction constituted obstruction); United States v. Benitez, 34 F.3d 1489, 1497 (9th Cir. 1994) (enhancement appropriate where defendant provided false date and place of birth to federal pretrial services and failed to disclose outstanding warrant). In Zagari, the Second Circuit held that perjury in a state regulatory suit could support the obstruction enhancement in a related federal criminal conviction. See 111 F.3d at 328. We agree with the Second Circuit: so long as the district court found that the defendant "willfully and materially impeded the search for justice in the instant offense ," the enhancement should apply, even if the obstruction occurred before state rather than federal law enforcement officials. See id. at 328-29 (emphasis added).

Certain types of crimes, for example securities crimes and violations of environmental laws, are commonly investigated jointly by state and federal agencies. Others, such as some drug offenses, are investigated initially by local or state law enforcement officials, and only later do federal officials join the investigation. In either circumstance, efforts made to obstruct a local or state investigation may also obstruct the federal investigation. To limit the application of the obstruction of justice enhancement to circumstances where the defendant directed his or her obstructive conduct to federal law enforcement officials would interfere with the guideline's goal of punishing more severely those whose actions "significantly obstruct or impede the official investigation" of the federal crime.

The Supreme Court has interpretedS 3C1.1 as requiring sentencing courts to "review the evidence and make independent findings necessary to establish a willful impediment to, or obstruction of, justice, or an attempt to do the same." See United States v. Dunnigan, 507 U.S. 87, 95 (1993). The enhancement is mandatory where the court finds that the defendant provided false testimony on a material matter with willful intent. See Ancheta, 38 F.3d at 1118. Here, the trial court's conclusion, which finds ample support in the record, justifies imposing the enhancement to Luca's sentence. First, he trial court found that Luca's submissions to the ACC were false. The court also found that Luca intentionally submitted the documents in order to forestall the investigation and that the obstruction was material since the documents diverted the ACC and gained Luca enough additional time to secure other victims. Finally, the court found that Luca's obstruction was related to the instant offense because the State was investigating the same scheme to which Luca eventually pled guilty in federal court. We affirm the two-level enhancement for obstruction of justice.

B. U.S.S.G. S 3B1.1(a)

The district...