U.S. v. Mullens, 93-4855

• Decision Date: 10 October 1995
• Docket Number: No. 93-4855,93-4855
• Citation: 65 F.3d 1560
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Thomas R. MULLENS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1560

65 F.3d 1560

64 USLW 2288

UNITED STATES of America, Plaintiff-Appellee, v. Thomas R. MULLENS, Defendant-Appellant.

No. 93-4855.

United States Court of Appeals Eleventh Circuit.

Oct. 10, 1995.

Richard C. Klugh, Asst. Federal Public Defender, James R. Gailey, Federal Public Defender, Miami, FL, for appellant.

Roberto Martinez, U.S. Atty., Miami, FL, Anthony P. Gonzalez, Linda Collins Hertz, Anne Ruth Schultz and Marc Fagelson, Asst. U.S. Attys., West Palm Beach, FL, for appellee.

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

Before EDMONDSON and BARKETT, Circuit Judges, and DYER, Senior Circuit Judge.

DYER, Senior Circuit Judge:

Appellant Thomas Mullens challenges his sentence after pleading guilty to charges of wire fraud under 18 U.S.C. Sec. 1343, mail fraud under 18 U.S.C. Sec. 1341, money laundering under 18 U.S.C. Secs. 1956 and 1957, and nolo contendere to conspiracy in violation of 18 U.S.C. Sec. 371. The district court sentenced Mullens to imprisonment for a total term of 405 months, ordered restitution, and denied a reduction for acceptance of responsibility. On appeal Mullens contends the court erred in (1) grouping the money laundering counts with the fraud counts pursuant to U.S.S.G. Sec. 3D1.2(d); (2) increasing the money laundering offense by ten levels; (3) denying acceptance of responsibility; (4) assigning a criminal history category of IV; (5) awarding restitution of over $27 million; and (6) adding two levels for abuse of a position of private trust pursuant to U.S.S.G. Sec. 3B1.3. We affirm on all issues except restitution and the enhancement for abuse of trust.

I. Background ¹

In April 1989 Mullens formed and began operating Omni Capital Group in Boca Raton, Florida. Mullens was the president and sole shareholder. He employed commissioned salespeople, secretaries, and receptionists for the corporate office in Boca Raton and sales offices in New Jersey, California, and Ohio. Omni purportedly sold investment opportunities in the form of shares, contract rights, and participation rights in limited partnerships. Mullens told investors the limited partnerships were formed to purchase and sell small, privately held companies for a profit. In reality, Omni was a ponzi scheme.

Mullens, assisted by some of his employees, caused 150 victims to invest $27,032,811 in the ponzi by means of false pretenses and promises. Mullens told the probation department during a presentence interview that he founded Omni intending to operate a legitimate business, but the department later learned Mullens admitted his true intent during the course of Omni's bankruptcy proceedings. Notably, Omni had no assets other than the money invested by the victims; it generated no business profits except for some minimal rental revenue.

The demise came in April 1992 when an investigation by the Securities and Exchange Commission prompted investors to liquidate their holdings. Omni eventually filed bankruptcy. All but approximately $7.4 million of the funds invested were traced through reconstruction of Omni's books and bank records. ² To expand the scheme and keep investors involved in the limited partnerships as long as possible, Mullens spent some of the money on false account statements reflecting annual rates of return of twenty to thirty percent. As with the typical ponzi scheme, he used some of the contributions from later investors to pay off returns promised to earlier investors, thus perpetuating the scheme by leading investors to believe Omni was a successful, profitable enterprise. Mullens spent some of the fraudulently acquired money on symbols of success, such as an airplane, fictional glossy brochures, staffed offices, and a country club membership.

A federal grand jury returned an indictment charging Mullens with eight counts of wire fraud in violation of 18 U.S.C. Sec. 1343, and twenty counts of mail fraud in violation of 18 U.S.C. Sec. 1341. A superseding indictment was returned recharging the original counts, and adding twelve counts of money laundering by participating in financial transactions with proceeds from and to promote a fraudulent scheme, in violation of 18 U.S.C. Sec. 1956(a)(1)(A)(i); seven counts of money laundering by participating in financial transactions in criminally derived property, in violation of U.S.C. Sec. 1957; and one count of conspiracy in violation of 18 U.S.C. Sec. 371.

Mullens pled guilty to all counts except conspiracy, as to which he pled nolo contendere. Adopting the factual findings and applying the guidelines as recommended in the PSI, the district court imposed a sentence of 405 months imprisonment in accordance with an offense level of thirty nine and a criminal history category of IV. ³ The sentencing range was 360 months to life. The PSI grouped all counts of conviction pursuant to U.S.S.G. Sec. 3D1.2(d) and took the highest offense, money laundering in violation of 18 U.S.C. Sec. 1956(a)(1)(A)(i), to compute the base offense level of twenty three under U.S.S.G. Sec. 2S1.1(a). The court added ten levels upon finding that the value of the investments fraudulently obtained was at least $20 million. The base offense was further enhanced by four levels pursuant to Sec. 3B1.1(a) for Mullens' role as founder and president of Omni, and by two additional levels pursuant to Sec. 3B1.3 for abuse of a position of private trust. The court denied a decrease for acceptance of responsibility because Mullens failed to assist the government in recovering the $7.4 million and failed to admit that Omni was a fraudulent business from inception. The court also ordered restitution of the $27 million. On appeal Mullens challenges the correctness of his sentence.

II. Calculation of the Base Offense Level and the Value of Laundered Funds

The legal questions presented by Appellant's argument are a matter of first impression in this Circuit. Mullens contends the district court misapplied U.S.S.G. Sec. 3D1.2(d) by grouping the fraud and money laundering counts to calculate the base offense level. He also contends the district court erred in determining the value of funds laundered by (1) using the measure of harm for fraud, rather than the amounts charged in the indictment for money laundering, to enhance the base offense by 10 levels; and (2) failing to deduct from the fraud receipts the money returned to investors. We disagree.

The district court's factual findings are accepted, including the amount involved in a money laundering offense, unless clearly erroneous. United States v. Yount, 960 F.2d 955, 956 (11th Cir.1992); and United States v. Barrios, 993 F.2d 1522, 1524 (11th Cir.1993). A factual finding is not clearly erroneous unless the court "is left with the definite and firm conviction that a mistake has been committed." United States v Edmondson, 791 F.2d 1512, 1514-15 (11th Cir.1986). We review application of the guidelines to the facts de novo. Yount, 960 F.2d at 956.

Section 3D1.2(d) provides that counts involving substantially the same harm shall be grouped "when the offense level is determined largely on the basis of the total amount of harm or loss ... or some other measure of aggregate harm...." The main purpose of U.S.S.G. Sec. 3D1.2 is "to combine offenses involving closely related counts." United States v. Harper, 972 F.2d 321, 322 (11th Cir.1992) (emphasis in original). The relevant guideline provision for the money laundering offense is Sec. 2S1.1; the relevant fraud provision is Sec. 2F1.1. Both of these offenses may be grouped under Sec. 3D1.2(d), although grouping under that subsection is not automatic. Id. "Counts involving offenses to which different offense guidelines apply are grouped together under subsection (d) if the offenses are of the same general type and otherwise meet the criteria for grouping under this subsection." U.S.S.G. Sec. 3D1.2, comment. (n. 6); Harper, 972 F.2d at 322.

The money laundering and fraud convictions in this ponzi scheme are closely related. They are the same general type of offense because both the fraud and the money laundering were integral cogs in continuing the scheme. Without the fraud there would have been no funds to launder. Laundering money by returning false profits to some investors and paying expenses to maintain a facade of success enabled Mullens to attract new investors and keep old investors from discovering his deceit. These convictions were properly grouped under Sec. 3D1.2(d). But see United States v. Johnson, 971 F.2d 562, 575-76 (10th Cir.1992).

The value of funds involved in a money laundering offense is a specific offense characteristic. U.S.S.G. Sec. 2S1.1(b). Specific offense characteristics are determined by relevant conduct, defined as "all acts and omissions committed ... induced, procured or willfully caused by the defendant ... that occurred during the commission of the offense of conviction, in preparation for ... or in the course of attempting to avoid detection or responsibility for that offense." U.S.S.G. Sec. 1B1.3(a)(1). Provided an offense can be grouped under U.S.S.G. Sec. 3D1.2(d), all acts and omissions that were part of the same common scheme or plan as the offense of conviction are considered in sentencing; a conviction is not required to be factored into the determination. U.S.S.G. Sec. 1B1.3, comment. (n. 3); Barrios, 993 F.2d at 1522. A sentencing court is "required to consider the total amount of funds that it believed was involved in the course of criminal conduct." Id. at 1524. See also U.S.S.G. Sec. 3D1.3(b) (the offense level for a group corresponds to the aggregate quantity involved); United States v. Tansley, 986 F.2d 880, 884 (5th Cir.1993) (holding that the amount intended to be laundered is the determining factor under Sec. 2S1.1(b), not the amount actually laundered); United States v. Fuller, 974 F.2d 1474, 1484 (5th Cir.1992) (no clear error committed by setting offense level under Sec. 2S1.1 with reference to...