U.S. v. Osborne, 02-4119.

• Decision Date: 18 June 2003
• Docket Number: No. 02-4167.,No. 02-4171.,No. 02-4119.,02-4119.,02-4167.,02-4171.
• Citation: 332 F.3d 1307
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Dale Walter OSBORNE, Defendant-Appellant, United States of America, Plaintiff-Appellee, v. Darrell Wayne Reese, Defendant-Appellant, United States of America, Plaintiff-Appellee, v. Brad Lee Gordon, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

332 F.3d 1307

UNITED STATES of America, Plaintiff-Appellee, v. Dale Walter OSBORNE, Defendant-Appellant, United States of America, Plaintiff-Appellee, v. Darrell Wayne Reese, Defendant-Appellant, United States of America, Plaintiff-Appellee, v. Brad Lee Gordon, Defendant-Appellant.

No. 02-4119.

No. 02-4167.

No. 02-4171.

United States Court of Appeals, Tenth Circuit.

June 18, 2003.

Submitted on the briefs:^* G. Fred Metos, Salt Lake City, Utah for Defendant-Appellant Dale W. Osborne.

Julie George, Salt Lake City, Utah for Defendant-Appellant Brad Lee Gordon.

Robert Breeze, Salt Lake City, Utah for Defendant-Appellant Darrell Wayne Reese.

Paul M. Warner, United States Attorney, and Diana Hagen, Assistant United States Attorney, Salt Lake City, Utah for the Plaintiff-Appellee United States of America.

Before KELLY, BRISCOE, and LUCERO, Circuit Judges.

LUCERO, Circuit Judge.

Each defendant, Dale Walter Osborne, Darrell Wayne Reese, and Brad Lee Gordon, pled guilty to one count of bank fraud in violation of 18 U.S.C. § 1344, in connection with a check-counterfeiting scheme. All defendants appeal their sentences, arguing that the district court erred in calculating the amount of loss for the purpose of determining relevant conduct. Because these appeals arise from common facts and raise similar arguments, we consolidate them for disposition. Exercising jurisdiction under 28 U.S.C. § 1291, and 18 U.S.C. § 3742(a), we affirm.

I

Defendants were involved in a three-tiered check-counterfeiting scheme that operated from January 2001 until November 2001. Gordon and his girlfriend, Candice Eppard, were known as the "bosses" of the organization. (2 Osborne R. at 6.) They employed Osborne, Reese, and others as "front-runners," who in turn recruited "cashers." (2 id. at 7-8.) Testifying as a government witness, Eppard explained that front-runners acted as buffers between cashers and bosses, to protect the bosses in the event a casher was apprehended.

The organization worked as follows. Individuals stole checks from the mail and gave them to the bosses. Using a computer program, the bosses would scan the stolen checks, alter the payee and amount, and print counterfeit checks. Although only thirty percent of the stolen checks were usable for counterfeiting, the bosses would counterfeit a single stolen check several times, and increase the amount payable in multiples of up to forty times the original amount. Unused stolen and counterfeit checks were destroyed.

Front-runners provided the bosses with the names of their cashers, to be printed as the payee on the counterfeit check. Once produced, the bosses handed the counterfeit checks to the front-runners, who in turn gave them to cashers to tender at banks. Upon negotiating a check, the casher gave the proceeds to the front-runner, who kept a third for himself, gave a third to the casher, and gave a third to the bosses. Front-runners operated independent cells. They retained discretion to hire their own cashers and chose the banks where the checks would be tendered, and they did not pool their proceeds. Nonetheless, they generally knew the other front-runners in the operation and knew that they were all involved in the same scheme. Osborne, in his capacity as a front-runner, employed three cashers, who obtained a total of $45,325 for the organization by negotiating counterfeit checks. Reese, another front-runner, did not join the organization until after August 6, 2001. He primarily employed only one casher although he sometimes worked with two others. Eppard testified that Reese also assisted in stealing checks from the mail in September 2001.

The scheme ended abruptly when the bosses, Eppard and Gordon, were arrested on November 29, 2001. During its operation the organization obtained proceeds totaling $157,019 from counterfeit checks. After arresting Eppard and Gordon, the police found in their home stolen and counterfeit checks, with face values totaling $708,519. Some of these checks were defective and unusable.

Gordon, Eppard, Osborne, Reese, and another front-runner were charged with one count of conspiracy in violation of 18 U.S.C. § 371, one count of bank fraud in violation of 18 U.S.C. § 1344, and one count of mail theft in violation of 18 U.S.C. § 1708. In addition, Gordon and Eppard were charged with one count of passing counterfeit checks kept in their possession in violation of 18 U.S.C. § 472, and one count of possession of counterfeit checks in violation of 18 U.S.C. § 513. Gordon, Osborne, and Reese each pled guilty to the bank-fraud count, and the remainder of the charges were dismissed.

At sentencing, after hearing testimony from Eppard and Postal Inspector Randy Griffin, the district court concluded that the intended loss for the entire organization totaled over $825,000, reflecting (1) actual losses of $157,019 obtained from counterfeit checks during the length of the operation, in addition to (2) potential losses of $708,519, the face value of stolen and counterfeit checks seized from the Gordon-Eppard residence, minus $40,000, the estimated value of the unusable checks found discarded outside their former residence.

Based on this calculation of loss, the sentencing court enhanced the criminal offense level for each defendant. Gordon and Osborne were severally held accountable for the intended loss of the entire organization — approximately $825,000. Reese, on the other hand, had not entered the organization until after August 6, 2001. Thus, the district court attributed to Reese the intended loss of the organization during the time period when he was found to be an active participant, from August 6, 2001, until the scheme ended in November 2001. This amount included actual losses incurred during this time period in the amount of $67,648, in addition to potential losses in the amount of the face value of the checks seized from the Gordon-Eppard residence. For each defendant, the intended loss was greater than $400,000 but less than $1,000,000, and the sentencing court accordingly enhanced the offense level for each by fourteen pursuant to U.S.S.G. § 2B1.1(b)(H). The sentencing court then granted defendants' requests for a three-level reduction for attempt pursuant to U.S.S.G. § 2X1.1(b)(1), on the basis that considerable steps needed to be performed before the intended losses could have been realized.

Osborne was sentenced to seventy months of imprisonment to be followed by sixty months of supervised release, and was required to pay $157,019 in restitution, jointly and severally with the other defendants. Reese was sentenced to the same length of imprisonment and supervised release as Osborne, and was jointly and severally responsible for paying $67,648 in restitution.¹ Gordon was sentenced to eighty-four months of imprisonment to be followed by sixty months of supervised release, and was jointly and severally responsible for paying $157,019 in restitution with the other defendants. On appeal, each defendant argues that error occurred in calculating the amount of loss.

II

At sentencing, the government bears the burden to prove by a preponderance of the evidence that the conduct of others is to be attributed to the sentenced defendant. United States v. Melton, 131 F.3d 1400, 1403 (10th Cir.1997). Osborne, who acted as a front-runner in the organization, argues that the district court erred in holding him accountable for the intended loss of the entire organization, rather than limiting loss to the amount obtained by the three cashers whom he personally employed. We review the district court's factual findings to determine whether there was clear error, and we review the ultimate determination of relevant conduct de novo. United States v. Tran, 285 F.3d 934, 938 (10th Cir.2002).

U.S.S.G. § 2B1.1 provides a base offense level of six for crimes involving altered or counterfeit instruments, and includes an enhancement based on the dollar value of loss. When the amount of loss exceeds $400,000, but is less than $1,000,000, the offense level increases by fourteen. § 2B1.1(b)(H). Amount of loss is defined as the greater of "actual loss" or "intended loss," where actual loss includes "the reasonably foreseeable pecuniary harm that resulted from the offense," and intended loss "(I) means the pecuniary harm that was intended to result from the offense; and (II) includes intended pecuniary harm that would have been impossible or unlikely to occur." Id. cmt. 2(A)(i), (ii).

U.S.S.G. § 1B1.3 provides that in the case of a jointly undertaken criminal activity, the base offense level shall be determined on the basis of "all reasonably foreseeable acts and omissions of others in furtherance of the jointly undertaken criminal activity." Thus, a defendant will be held accountable for the conduct of others when that conduct is (1) "in furtherance of the jointly undertaken criminal activity," and (2) "reasonably foreseeable in connection with that criminal activity." § 1B1.3, cmt. n. 2.

In determining relevant conduct in Osborne's case, the sentencing court held Osborne accountable for the $825,000 of losses intended by the entire organization, rejecting Osborne's argument that the amount of loss should be limited to the $45,325 generated by his individual cell, that is, by the three cashers he personally employed. This decision was based on the finding that the aggregate losses of the entire scheme were foreseeable to Osborne because he knew the other front-runners and the "general outlines and what was done by all the cells." (4 Osborne R. at 37.) The sentencing court concluded that the entire scheme was within the scope of Osborne's agreement because: (a) Osborne knew the other front-runners and agreed to protect the bosses by acting as a buffer between them and the cashers, and (b) because each cell shared a common source of counterfeit checks, common modus operandi, common purpose, and common victims. Thus, Osborne was held accountable for the...