United States v. Gagarin

• Decision Date: 13 February 2020
• Docket Number: No. 18-10026,18-10026
• Citation: 950 F.3d 596
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Karen GAGARIN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

950 F.3d 596

UNITED STATES of America, Plaintiff-Appellee,

v.Karen GAGARIN, Defendant-Appellant.

No. 18-10026

United States Court of Appeals, Ninth Circuit.

Argued and Submitted September 9, 2019 San Francisco, California

Filed February 13, 2020

GOULD, Circuit Judge:

Defendant Karen Gagarin was convicted of conspiracy to commit wire fraud, wire fraud, and aggravated identity theft. The district court sentenced her to a total of 36 months in prison, after concluding that a three-level "manager or supervisor" sentencing enhancement applied to Gagarin’s role in the scheme to defraud the American Income Life Insurance Company (AIL). It also imposed a restitution order, which held Gagarin jointly and severally liable with her convicted co-conspirators for the full loss suffered by AIL. On appeal, Gagarin challenges the district court’s denial of her post-trial motion for a judgment of acquittal on the aggravated identity theft count, its imposition of the three-level sentencing enhancement, and the restitution order. We affirm.

I.

In late 2011, Benham Halali devised a scheme to defraud AIL of millions of dollars. Halali ran the San Jose, Fresno, Roseville, and Concord offices of the Jatoft-Foti Agency (JFA), the exclusive California sales agent of AIL. Between September 2011 and Spring 2012, Halali and co-conspirators in those offices, all independent contractors of AIL, submitted hundreds of fraudulent insurance applications to AIL on behalf of individuals who, in general, did not intend to apply for life insurance or know that their identifying information was being used. Karen Gagarin was a General Agent with sales and managerial responsibility in JFA’s San Jose office, and she ran the office when Halali was away. It is undisputed that she knowingly participated in the fraudulent scheme.

The conspiracy took advantage of AIL’s system of compensating agents for insurance policy sales. For each policy an agent purportedly sold, the agent received advanced commissions and bonuses from AIL according to a specified percentage of the premiums that the policy would be expected to generate during the year. The conspirators then paid about four months of premiums on the fraudulent policies, from hundreds of different bank accounts opened for that purpose, before defaulting. According to AIL’s compensation structure, policies that lapsed before the end of four months resulted in the agents being "charged back" for their unearned advances, but policies that lapsed after four months would result in only a debit of the unearned value against the agents’ "back-end" accounts. These back-end accounts served as a retirement account of sorts, representing the net earnings an agent could anticipate collecting after leaving the agency, subject to certain conditions. By keeping the fraudulent policies active for four months, conspiring agents were able to pocket the difference between their advanced compensation and the premiums they paid on the policies. During the course of this conspiracy, the conspirators submitted about 700 fraudulent applications, although not all applications resulted in issued policies.

To convince AIL of the legitimacy of the fraudulent policies, the conspirators forged electronic signatures on the insurance applications and gave other identifying information of the purported applicants. The conspirators also misrepresented information about the applicants on the insurance applications to increase the likelihood that AIL would grant a policy. When AIL made phone calls to verify the applicant’s identity, the conspirators, including Gagarin, would impersonate the purported applicant from dozens of cell phones purchased for that purpose. When AIL requested a medical examination to determine eligibility for insurance, the conspirators engaged in a variety of tactics to accomplish the medical examination, including creating fake drivers’ licenses to impersonate applicants during the medical examinations. Halali also encouraged agents to sign up friends and family members for fraudulent policies by offering them the opportunity to get a free medical exam.

When Gagarin was not managing JFA’s San Jose office in Halali’s absence, her day-to-day responsibilities included selling policies for AIL and supervising certain agents within the office. On several occasions, Gagarin submitted insurance applications that falsely listed these agents as the "writing agent"—the agent who had executed the policy. Because the policy would then be registered officially in those agents’ names, Gagarin would ask them to reimburse her for the advanced commissions and bonuses they were paid on those policies.

In September 2011, AIL received an electronic insurance application from Melissa Gilroy, Gagarin’s cousin. Although not listed as the writing agent, by all accounts Gagarin was the agent who executed and submitted the application. The application contained false information about Gilroy’s employment status, salary, and the nature of her relationship with the intended beneficiary. Although the application contained Gilroy’s electronic signature indicating that she was the payor of the policy, the bank account connected to the policy actually belonged to Steven Nguyen—the brother of an admitted co-conspirator in the scheme—and was later replaced by a bank account held in Gagarin’s name. Elsewhere, the application contained Gilroy’s electronic signature, purportedly certifying that all information in the application was true and correct to the best of her knowledge. The requested policy coverage was for more than $300,000, at a monthly premium of $236.

Pursuant to a grant of immunity, Gilroy testified at trial that she had asked her cousin Gagarin to "sign [her] up for a policy" after experiencing a health scare. Gilroy further testified that she had asked Gagarin to state falsely that Metro PCS was her place of employment because she worried she would be denied insurance if AIL knew she was unemployed. At the same time, Gilroy testified that she had intended to pay for the policy herself and never asked Gagarin to pay for it through anyone else’s bank account. Nor had she asked Gagarin to lie about the nature of her relationship to the named beneficiary. Gilroy also stated that she never discussed the type of coverage, the coverage amount, or the premium amount with Gagarin. Although she had previously worked for AIL for a few months, she stated that she was not familiar with AIL’s new electronic application process and that she had never seen the application in question, let alone typed or otherwise electronically signed her name on it.

In December 2014, a grand jury indicted five people—Benham Halali, Ernesto Magat, Kraig Jilge, Karen Gagarin, and Alomkone Soundara—on charges of conspiracy to commit wire fraud under 18 U.S.C. § 1349 ; wire fraud under 18 U.S.C. § 1343 ; and aggravated identity theft under 18 U.S.C. § 1028A. Jilge and Soundara pleaded guilty pursuant to a cooperation agreement, while Halali, Magat, and Gagarin went to trial. At trial, the jury found Halali, Magat, and Gagarin guilty of all charges. Gagarin was found guilty of fourteen counts of wire fraud, including Count 10 in connection with the Gilroy insurance application. The Gilroy application also was the basis for Gagarin’s Count 24 conviction for aggravated identity theft.

Gagarin filed a post-trial motion for a judgment of acquittal, pursuant to Rule 29 of the Federal Rules of Criminal Procedure, contending that insufficient evidence supported her wire fraud conviction under Count 10 and her aggravated identity theft conviction under Count 24. The district court denied the motion on both counts.

At sentencing, the district court concluded that a three-level sentencing enhancement for having a "manager or supervisor" role applied to Gagarin on the underlying fraud counts, pursuant to § 3B1.1(b) of the United States Sentencing Guidelines. Finding, nonetheless, that Gagarin was "far less culpable than the other two," the court sentenced her to only 12 months of incarceration for the conspiracy and fraud counts. In addition, the court sentenced Gagarin to the mandatory minimum 24 months for the aggravated identity theft conviction, to run consecutively with the 12-month sentence, for a total of 36 months in prison.

The district court also held Gagarin jointly and severally liable with Halali and Magat for restitution to AIL for its losses, which the court assessed at $2,837,791.93, representing the total amount of advances AIL had paid out to the conspirators, less the money AIL had already recovered.

In this timely appeal, Gagarin challenges the district court’s denial of her post-trial motion for acquittal on the aggravated identity theft count, the court’s imposition of the three-level sentencing enhancement on the fraud claims, and the court’s order of restitution. We have jurisdiction pursuant to 28 U.S.C. § 1291.

II

We review de novo a district court’s denial of a Rule 29 motion for a judgment of acquittal. United States v. Grovo , 826 F.3d 1207, 1213 (9th Cir. 2016). Upon a defendant’s motion, the court "must enter a judgment of acquittal of any offense for which the evidence is insufficient to sustain a conviction." Fed. R. Crim. P. 29(a). In determining whether evidence was insufficient to sustain a conviction, we consider whether, "after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." United States v. Nevils , 598 F.3d 1158, 1163–64 (9th Cir. 2010) (en banc) (quoting Jackson v. Virginia , 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979) ).

Here, we consider whether, viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of aggravated identity theft beyond a reasonable doubt. In relevant part, "[w]hoever, during and in relation to any felony...