United States v. Cox
| Decision Date | 20 March 2017 |
| Docket Number | No. 14-1033,14-1033 |
| Citation | 851 F.3d 113 |
| Parties | UNITED STATES of America, Appellee, v. Sirewl COX, Defendant, Appellant. |
| Court | U.S. Court of Appeals — First Circuit |
Leslie Feldman-Rumpler , Boston, MA, for appellant.
Ryan M. DiSantis , Assistant United States Attorney, with whom Carmen M. Ortiz , United States Attorney, was on brief, for appellee.
Before Howard, Chief Judge, Selya and Lipez, Circuit Judges.
Between 2006 and 2008, Sirewl Cox—a real estate developer, agent, and broker—orchestrated a mortgage fraud scheme in Massachusetts. After his scheme was exposed, Cox was charged with multiple counts of bank and wire fraud and money laundering. A jury subsequently found Cox guilty on some of the charged counts, and he was sentenced to a below-guidelines term of 150 months of imprisonment.
Cox now appeals his sentence on both procedural and substantive grounds. Specifically, he raises a flurry of objections related to the district court's use of uncharged and acquitted conduct to calculate his Guidelines Sentencing Range, and further contends that the length of his sentence was substantively unreasonable. Cox also challenges the district court's statutory authority to order the forfeiture of assets related to uncharged relevant conduct, an issue of first impression in this circuit. For the following reasons, we affirm.
We provide here only a brief synopsis of the essential facts of this case, reserving additional detail for the analysis that follows.1
To carry out his fraudulent scheme, Cox recruited nominal or "straw" buyers to purchase multi-family "triple-decker" homes for sale. Once Cox had control of the buildings, he would perform a "triple-decker flip"—that is, he would split the properties into condominium units and then sell those units to individual buyers, paying off the mortgages on the buildings with the proceeds. Cox promised the straw buyers a portion of the profits from the sale of condominium units.
To persuade people to purchase these units, Cox and his associates told potential buyers that they would help arrange mortgage financing for the deals. Cox also promised the buyers that they would not need to put down any of their own money for the purchase. Instead, Cox generally paid the buyers a cash "incentive fee" to purchase the condominium units. Once a buyer agreed to purchase a unit, Cox used his understanding of the mortgage industry to make the otherwise unqualified buyers appear eligible for loans. Specifically, Cox submitted false information—such as the purchase price of the properties, borrower income, borrower assets, intent to occupy the unit, down payments, and cash paid by borrowers at closing—to mortgage lenders.
Once these unqualified buyers received preliminary approval for loans, Cox worked with an associate, Rebecca Konsevick2 —who acted as both a real estate agent on building sales to straw buyers and a closing agent on unit sales—to close the deals. During the closing process, Cox had Konsevick submit additional false information to lenders. Cox further told Konsevick how to disperse the proceeds from the sale between himself, the straw buyers, or one of Cox's business entities.
In 2011, a federal grand jury in the District of Massachusetts returned a sixteen-count indictment charging Cox with wire and bank fraud, in violation of 18 U.S.C. §§ 1343 and 1344, and unlawful monetary transactions, in violation of 18 U.S.C. § 1957.3 Four triple-decker flips formed the basis of the counts in the indictment:
the Roxton, River, Stanwood, and 111 Fuller properties.4
After a twelve-day trial, a jury found Cox guilty on eight of the sixteen counts in the indictment: Counts One through Four (wire fraud), Counts Six, Seven, and Nine (bank fraud), and Count Eleven (unlawful monetary transaction). Cox was found not guilty on seven counts: Count Five (wire fraud), Counts Eight and Ten (bank fraud), and Counts Twelve, Thirteen, Fourteen, and Sixteen (unlawful monetary transactions).
The Probation Office subsequently prepared and issued a Presentence Investigation Report ("PSR"). The PSR concluded that Cox's total offense level was 37, his Criminal History Category ("CHC") was III, and his Guidelines Sentence Range ("GSR") was 262-327 months. The PSR's calculation of Cox's total offense level and GSR was based, among other information, on both the convicted and acquitted conduct related to the four triple-decker flips identified in the indictment, as well as on uncharged conduct related to seven additional triple-decker flips.5 Cox raised several objections to the PSR's conclusions, including the use of acquitted and uncharged conduct in the GSR calculation.
At sentencing, the district court adopted the PSR's base offense level calculation, but found that the GSR of 262-327 months was longer than necessary to satisfy the goals of sentencing as specified by 18 U.S.C. § 3553(a). The court thus imposed a below-Guidelines term of 150 months. The court also entered an order of forfeiture in the amount of $2,966,344.37. Cox now appeals both his sentence and the forfeiture amount.
"We review sentencing decisions imposed under the advisory Guidelines, whether outside or inside the applicable GSR, for reasonableness." United States v. Pantojas-Cruz , 800 F.3d 54, 58 (1st Cir. 2015). This review occurs in two phases. See Gall v. United States , 552 U.S. 38, 51, 128 S.Ct. 586, 169 L.Ed.2d 445 (2007). First, we "examine whether the district court committed any procedural missteps." United States v. Rossignol , 780 F.3d 475, 477 (1st Cir. 2015). Such missteps include "failing to calculate (or improperly calculating) the Guidelines range, treating the Guidelines as mandatory, failing to consider the § 3553(a) factors, selecting a sentence based on clearly erroneous facts, or failing to adequately explain the chosen sentence—including an explanation for any deviation from the Guidelines range." Gall , 552 U.S. at 51, 128 S.Ct. 586. "We have described our abuse of discretion standard in this context as ‘multifaceted,’ as we apply clear error review to factual findings, de novo review to interpretations and applications of the guidelines, and abuse of discretion review to judgment calls." United States v. Nieves–Mercado , 847 F.3d 37, 42 (1st Cir. 2017). Where a defendant failed to object in the district court on the ground asserted on appeal, however, we review only for plain error. United States v. Ruiz-Huertas , 792 F.3d 223, 226 (1st Cir. 2015).
In the second phase of our review, we appraise the substantive reasonableness of the sentence, "tak[ing] into account the totality of the circumstances, including the extent of any variance from the Guidelines range." United States v. Bermúdez–Meléndez , 827 F.3d 160, 163 (1st Cir. 2016) (alteration in original) (quoting Gall , 552 U.S. at 51, 128 S.Ct. 586 ). "In determining substantive reasonableness, substantial respect is due to the sentencing court's discretion." Bermúdez–Meléndez , 827 F.3d at 163. This deferential approach recognizes that although "[a] sentencing court is under a mandate to consider a myriad of relevant factors, ... the weighting of those factors is largely within the court's informed discretion." United States v. Clogston , 662 F.3d 588, 593 (1st Cir. 2011). Our review demands only "a plausible sentencing rationale and a defensible result." United States v. Martin , 520 F.3d 87, 96 (1st Cir. 2008). Hence, "we limit our review to the question of whether the sentence, in light of the totality of the circumstances, resides within the expansive universe of reasonable sentences." United States v. King , 741 F.3d 305, 308 (1st Cir. 2014).
Cox makes a multi-pronged attack on the district court's calculation of the advisory GSR, objecting to the district court's finding of facts by a preponderance of the evidence, as well as the imposition of three sentencing enhancements that significantly increased his GSR. We address each argument in turn.
Cox contends that the district court's finding of facts at sentencing by a preponderance of the evidence—rather than under a reasonable doubt standard—violated his Fifth Amendment right to due process and his Sixth Amendment right to trial by jury. Our law, however, is to the contrary: the preponderance-of-the-evidence baseline for considering sentencing facts has long been established in this circuit. See United States v. Lombard , 72 F.3d 170, 175-76 (1st Cir. 1995). Indeed, as Cox acknowledges, we have previously considered, and rejected, arguments that the Fifth Amendment's Due Process Clause and the Sixth Amendment right to a jury trial prohibit the finding of sentencing facts by a preponderance of the evidence. See , e.g. , United States v. Munyenyezi , 781 F.3d 532, 544 (1st Cir. 2015) ; see also United States v. Watts , 519 U.S. 148, 156, 117 S.Ct. 633, 136 L.Ed.2d 554 (1997). In short, the district court properly applied the preponderance of the evidence standard to its fact-finding at sentencing.
Cox's procedural objections are based on the district court's application of three Guidelines sentencing enhancements under U.S.S.G. § 2B1.1 : a two-level enhancement for deriving gross receipts of more than $1,000,000 from one or more financial institutions, see § 2B1.1(b)(16)(A) ; a two-level enhancement for an offense involving ten or more victims, see § 2B1.1(b)(2)(A) ; and a twenty-level enhancement for engendering losses of more than $7,000,000, see § 2B1.1(b)(1)(K).6 Cox argues that the district court's misapplication of these enhancements resulted in either a six or eight-level increase in his total offense level. At the core of Cox's objection to each of ...
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