United States v. Kent
| Decision Date | 16 May 2016 |
| Docket Number | No. 14-2082-cr (L),No. 14-2874-cr (CON),14-2082-cr (L),14-2874-cr (CON) |
| Parties | UNITED STATES OF AMERICA, Appellee, v. THOMAS JEFFERSON KENT, ALSO KNOWN AS SEALED DEFENDANT 1, ALSO KNOWN AS DARYL WALKER, SANFORD GOTTESMAN, ALSO KNOWN AS SEALED DEFENDANT 2, Defendants-Appellants, BRAD ROBINSON, ALSO KNOWN AS SEALED DEFENDANT 3, BENO MATTHEWS, ALSO KNOWN AS SEALED DEFENDANT 4, Defendants. |
| Court | U.S. Court of Appeals — Second Circuit |
Before: HALL, LIVINGSTON, Circuit Judges, and HELLERSTEIN, District Judge.*
Defendant Thomas Jefferson Kent appeals from a judgment of the United States District Court for the Southern District of New York (Forrest, J.), entered on July 28, 2014, following his guilty plea. At sentencing, the district court found that Kent was the leader or organizer of an "otherwise extensive" criminal scheme and was thus subject to a four-level enhancement under U.S.S.G. § 3B1.1(a). We conclude that the district court's application of the enhancement was not supported by sufficient factual findings. Accordingly, the sentence is VACATED and the case REMANDED as to Kent with instructions that he be resentenced. Defendant Sanford Gottesman also appeals from a judgment of conviction in the United States District Court for the Southern District of New York (Forrest, J.), entered on June 10, 2014, following a jury trial. A summary order issued concurrently with this opinion addresses Gottesman's claims on appeal.
FOR APPELLEE:
PAUL M. MONTELEONI, Karl Metzner, Assistant United States Attorneys, for Preet Bharara, United States Attorney for the Southern District of New York, New York, NY, for the United States of America.
FOR DEFENDANTS-APPELLANTS:
YUANCHUNG LEE, Federal Defenders of New York, New York, NY, for Thomas Jefferson Kent.
LAWRENCE H. SCHOENBACH, Law Offices of Lawrence H. Schoenbach, PLLC, New York, NY, for Sanford Gottesman.
This appeal by Thomas Jefferson Kent arises from a wire fraud conspiracy case against Kent, Sanford Gottesman, Brad Robinson, and Beno Matthews,1who were each convicted in connection with their participation in an "advance fee" scheme—a scheme in which supposed lending companies operated by the defendants falsely promised loans to small businesses and collected fees for fraudulent expenses, while never issuing any loans. Following their arrests and indictment in February 2014, Kent, Robinson, and Matthews entered guilty pleas.2 Kent now appeals from a sentence of, inter alia, 78 months' imprisonment, which was imposed after he pleaded guilty on February 19, 2014, to conspiring to commit wire fraud in violation of 18 U.S.C. § 1349. On appeal, Kent contends that the district court erred in determining that he was a leader or organizer of an "otherwise extensive" criminal activity and was thus subject to a four-level sentencing enhancement under § 3B1.1(a) of the United States Sentencing Guidelines ("U.S.S.G."). For the reasons set forth below, we vacate the sentence and remand for resentencing.
The scheme began in 2007, when Kent formed FDP Capital, LLC, to pose as a private investment banking firm willing to provide funding for small businesses. Through FDP Capital, Kent would contact small businesses seeking funding and represent that FDP Capital could provide them with loans. After collecting so-called advance fees from these businesses for various expenses, however, FDP Capital never issued any loans.
Kent recruited Robinson to work for FDP Capital as a broker. Robinson would find and contact prospective customers, solicit and review a "quick information form" submitted from interested businesses, and in turn send those businesses a "letter of intent" setting forth FDP Capital's intent to extend a loan. The letter of intent explained that, before wiring the funds for the loan, FDP Capital would need to conduct certain due diligence. in order to do so, FDP Capital asked the businesses to pay an advance fee to cover expenses, oftenincluding the cost of a "site visit" to meet the principals, review the loan proposal, and discuss repayment expectations. Kent and Robinson would conduct those visits themselves.
Through FDP Capital, Kent and Robinson obtained more than $325,000 in advance fees from more than 60 businesses. None of the businesses, however, ever received a loan. After securing the advance fee, FDP Capital would end all contact with the defrauded business, which would find itself unable to reach FDP Capital to inquire about its loan. As a result, many so-called customers filed online complaints about FDP Capital and Kent.
Following the posting of internet complaints, Kent started a new company, Phoenix Global Holdings, Inc., to perform the same scheme as FDP Capital. He began using aliases—all variations of his name such as Tom Kent, Jeff Kent, and Thomas Jefferson—when communicating with prospective customers. Although Kent still conducted site visits and interacted with customers himself, he no longer did so without using an alias. He also no longer signed any customer documents.
In or around the summer of 2009, Robinson stopped working for Kent for a time, and Kent met and recruited Gottesman to assist in the fraudulent scheme.They agreed to go into business together in September 2009. Gottesman took on the role of conducting the site visits. Kent then enlisted Robinson once more and tasked him with maintaining the mass marketing e-mail server and signing letters of intent. Robinson would also keep Gottesman apprised of the status of client contacts for those businesses Gottesman had visited or was to visit.
During this time the scheme grew, with the co-conspirators sometimes demanding not only advance fees, but also additional fees for fictitious bonds to secure the purported loans. Kent, under new aliases such as "Dan Green" or "Mike Ryan," spoke with businesses about acquiring those additional payments to secure "investments" from one of the Wilshire entities.
In June 2010, Kent and Gottesman had a falling out. The two men nevertheless continued the same scheme, individually, at Wilshire Financial, Inc., Wilshire Capital, Inc., and subsequently at other entities. Kent recruited Matthews, who had previously helped with technology services, and continued substantially the same scheme through three new companies: Vouyer Capital LLC, Midwest Global Partners, Inc., and Northeast, Inc.
Kent pleaded guilty on February 19, 2014, pursuant to a plea agreement that calculated a Guidelines total offense level of 22.4 Based on a criminal history category of I, Kent's stipulated Guidelines range was 41 to 51 months' incarceration. The United States Probation Office subsequently prepared a PSR that arrived at the same Guidelines range. On July 15 and 18, 2014, Kent and the Government filed submissions with the district court in anticipation of sentencing. Kent requested a downward deviation from the Guidelines range, asking that the court impose a 36-month prison sentence. The Government requested that the court impose an incarceration period within the Guidelines range of 41 to 51 months.
The district court issued an order dated July 23, 2014, two days before sentencing, giving the parties notice of its belief that two additional sentencing enhancements were applicable: a two-level increase for employing "sophisticatedmeans," U.S.S.G. § 2B1.1(b)(10), and a four-level increase for Kent's leadership role in a "criminal activity that involved five or more participants or was otherwise extensive," id. § 3B1.1(a).5 The same day, Kent filed a letter in response to the district court's order in which, inter alia, he sought a continuance of his sentencing hearing so that he might be able to respond to the proposed enhancements. The district court denied Kent's request for an adjournment, stating that Kent would "have ample opportunity to respond at sentencing." K.A. 73.
On July 25, 2014, the district court held Kent's sentencing hearing. As relevant to the § 3B1.1(a) enhancement, the district court found, by a preponderance of the evidence, that Kent was the "mastermind behind the fraudulent schemes," that he had established the corporate entities and the modus operandi, that his scheme had a particularly "high degree of contact with the victims," that he had "obtained the most money" among the co-conspirators, and that his scheme "spread over the country, and spread over dozens and dozens and dozens of different people." K.A. 99. On that basis, the district court noted its belief that "there is far more than a preponderance of the evidence uponwhich to base [a] finding of fact as to the aggravating role for leader, organizer of criminal conduct that was otherwise extensive," so as to support a four-level enhancement under § 3B1.1(a). K.A. 100.
At that point, the district court invited argument from the parties. As relevant here, the Government disagreed with the court's calculations and questioned whether the court should apply the § 3B1.1(a) enhancement. The Government stated that "consistent with the plea agreement, [it] respectfully disagree[d] with the court's guidelines calculation" and "ask[ed] the court to follow the calculations set forth in the presentence report and the plea agreement." K.A. 101. Concerning the proper interpretation of § 3B1.1(a), which sets forth an enhancement for leading a criminal activity that involves five or more people or is "otherwise extensive," the Government explained that the scheme here involved "a small number of people just doing the same thing over and over to a lot of victims and that [was], in the lay sense of the word . . . pretty extensive." K.A. 106. But given that "there [was] an adjustment for number of victims and there [was] an adjustment for loss amount," the Government took the position that those factors did not "necessarily support the otherwise extensive finding." Id. Kent then argued, relying on United...
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