United States v. Meadows

• Citation: 866 F.3d 913
• Decision Date: 08 August 2017
• Docket Number: No. 16-3241,16-3241
• Parties: UNITED STATES of America, Plaintiff–Appellee v. Sean M. MEADOWS, Defendant–Appellant
• Court: U.S. Court of Appeals — Eighth Circuit

866 F.3d 913

UNITED STATES of America, Plaintiff–Appellee

v.Sean M. MEADOWS, Defendant–Appellant

No. 16-3241

United States Court of Appeals, Eighth Circuit.

Submitted: March 10, 2017

Filed: August 8, 2017

Rehearing and Rehearing En Banc Denied September 28, 2017

David Genrich, Assistant U.S. Attorney, Benjamin Langner, Melinda Williams, Assistant U.S. Attorney, U.S. Attorney's Office, District of Minnesota, Minneapolis, MN, for Plaintiff–Appellee.

Sean M. Meadows, Pro Se.

Lisa Lodin Peralta, Robins & Kaplan, Minneapolis, MN, for Defendant–Appellant.

Before WOLLMAN, COLLOTON, and SHEPHERD, Circuit Judges.

SHEPHERD, Circuit Judge.

Sean Meadows orchestrated a seven-year Ponzi scheme during which he stole more than $10 million dollars from at least 69 victims. He pled guilty to eleven different counts, and the district court sentenced him to 300 months imprisonment. Thereafter, he appealed to this court arguing that the district court erred in applying certain sentencing enhancements and asserting that his sentence was substantively unreasonable. United States v. Meadows , 637 Fed.Appx. 255, 255 (8th Cir. 2016) (per curiam). Without reaching Meadows's substantive arguments, we reversed and remanded for resentencing because the district court failed to consider the factors presented in 18 U.S.C. § 3553(a) in determining whether Meadows's sentence on the different counts should be consecutive or concurrent. Id. at 256. On remand, the district court¹ addressed the concerns we noted in Meadows's first appeal, and again imposed a 300–month sentence. Meadows now reasserts the substantive arguments he advanced in his first appeal, and we affirm.

I. Background

Meadows began working as a financial adviser in Minnesota in the late 1990s. Around 2002, he opened Meadows Financial Group. From 2002 through 2014, he amassed more than 100 clients, primarily from Minnesota, Arizona, and Indiana. Meadows marketed himself as a full-service financial adviser, but his primary business concerned the sales of annuities, stocks, and bonds.²

In the annuity business, a broker receives a commission from the annuity provider after every sale of that provider's product. Annuity providers also offer customers bonus incentives that vest at a predetermined number of years into the life of the annuity. Early on, Meadows began "churning" his clients' annuity accounts—transferring the clients' accounts from one annuity to another after a short period of time in order to receive multiple commissions from the same investment. Although Meadows received immediate payments from these transfers, his clients often faced surrender fees of up to ten percent of the value of the annuity. Meadows appeased his clients by telling them that the bonus payments they would receive from the new annuities would more than offset the fees for the transfer. Given that his clients were not, by and large, savvy investors, they continued to trust Meadows's advice.

Around 2007, Meadows announced a high-interest bond held by Meadows Financial Group, and he began soliciting investments from his clients. He assured his clients that the bond was safe, liquid, and guaranteed a high rate of return. In reality, however, the bond did not exist. Over the next seven years, his clients invested over $13 million in this sham bond. During this period, Meadows used about $3.6 million to make Ponzi payments to certain investors who needed the money for one reason or another, but he spent the rest on himself or his family. He used it for personal expenses and salary payments to himself. He made payments to his wife and purchased a new car. He bought investment properties and paid personal credit card bills. He used it to take extravagant trips and spent large sums of money on adult entertainment on multiple occasions. All in all, Meadows spent just over $10.2 million of his clients' money.

In August of 2014, Meadows was indicted on twelve counts: Counts 1 through 3 alleged mail fraud in violation of 18 U.S.C. § 1341 ; Counts 4 through 10 alleged wire fraud in violation of 18 U.S.C. § 1343 ; Count 11 alleged money laundering in violation of 18 U.S.C. § 1956(a)(1)(B)(i) ; and Count 12 alleged a transaction involving fraud proceeds in violation of 18 U.S.C. § 1957. Meadows pled guilty to Counts 1 through 10 and Count 12.

At the original sentencing hearing, the district court imposed a sentence of 300 months imprisonment.³ According to the presentence investigation report (PSR), Meadows had a base offense level of seven. The PSR recommended application of five enhancements: (1) a 20–level enhancement for a total loss amount between $7 million and $20 million; (2) a 4–level enhancement for an offense involving more than 50 but less than 250 victims; (3) a 2–level enhancement for using sophisticated means in furtherance of the crime; (4) a 4–level enhancement for an offense involving a violation of securities law; and (5) a 2–level enhancement for vulnerable victims.

Prior to the hearing, Meadows conceded the applicability of the enhancements for loss amount and number of victims, but he contested those for sophisticated means and violation of securities law. The court overruled Meadows's objections and applied the enhancements. First, noting that the sophisticated means enhancement is only appropriate when the offense conduct as a whole is more intricate than the garden-variety offense, the court found that Meadows's conduct satisfied the standard because he was able to continue the fraud for such a long period of time by repeatedly lying to the victims and making Ponzi payments. Second, the court found that the enhancement for violation of securities law was appropriate because Meadows was an investment adviser at the time and, notwithstanding the fact that the bonds never actually existed, he was recommending the purchase of the securities to his clients.

After application of the enhancements, Meadows's total offense level rose to 39, leading to an advisory imprisonment range of 262 to 327 months. Accounting for the § 3553(a) factors, the court stated that it decided on a 300–month sentence primarily as a result of the egregiousness of Meadows's actions. "My biggest concern," the court noted, "is that you pose a great danger to the public, and that is why you are serving a very long sentence." Additionally, the court stated that, in its opinion, Meadows had shown very little remorse for his actions. The original sentence consisted of 300 months imprisonment on Counts 1 through 10 and 120 months imprisonment on Count 12, all to be served concurrently.

On resentencing, the court again imposed a 300–month sentence, reiterating much of its original reasoning. It clarified, however, that Meadows was sentenced to 240 months for Counts 1 through 10, all to be served concurrently, and 60 months for Count 12, to be served consecutively to the sentence on the rest of the counts. Accounting for the concerns we expressed in Meadows's first appeal about the court's failure to explain its reasoning for imposing concurrent or consecutive sentences, the court stated that concurrent sentencing on all counts would fail to achieve adequate punishment. Thus, the court concluded, a consecutive sentence was "necessary to produce a combined sentence equal to the total punishment."

II. Discussion

Meadows argues that the district court committed procedural error when it applied sentencing enhancements for the use of sophisticated means and violation of securities law, and he also argues that his sentence is substantively unreasonable. Our first task is to " ‘ensure that the district court committed no significant procedural error, such as failing to calculate (or improperly calculating) the Guidelines range, treating the Guidelines as mandatory, failing to consider the [ 18 U.S.C.] § 3553(a) factors, selecting a sentence based on clearly erroneous facts, or failing to adequately explain the chosen sentence.’ " United States v. Beckman , 787 F.3d 466, 494 (8th Cir. 2015) (alteration in original) (quoting Gall v. United States , 552 U.S. 38, 51, 128 S.Ct. 586, 169 L.Ed.2d 445 (2007) ). In so doing, "[w]e review the district court's factual findings for clear error and its construction and application of the Guidelines de novo." Id. (alteration in original) (internal quotation marks omitted). If we find no procedural errors, we "then consider the substantive reasonableness of the sentence imposed under an abuse-of-discretion standard." Gall , 552 U.S. at 51, 128 S.Ct. 586.

We reject each of Meadows's contentions, and address his arguments in turn.

A. Sophisticated Means

Under USSG § 2B1.1(b)(10)(C), a two-level enhancement applies if "the offense ... involved sophisticated means and the defendant intentionally engaged in or caused the conduct constituting sophisticated means." The commentary to this section defines "sophisticated means" as "especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense." Id. § 2B1.1, comment. (n.9(B)). "The sophisticated-means enhancement is proper when the offense conduct, viewed as a whole, was notably more intricate than that of the garden-variety [offense]." United States v. Jenkins , 578 F.3d 745, 751 (8th Cir. 2009) (alteration in original) (internal quotation marks omitted). "Repetitive and coordinated conduct, though no one step is particularly complicated, can be a sophisticated scheme." United States v. Finck , 407 F.3d 908, 915 (8th Cir. 2005). That a scheme involved "sophisticated means" is a factual finding reviewed for clear error.⁴ Beckman , 787 F.3d at 496 (internal quotation marks omitted).

Although there is no mechanical test to determine whether a scheme is sufficiently sophisticated to qualify for the enhancement, we have in the past looked at the following factors: (1) the overall length of the scheme, see Jenkins , 578 F.3d at 752 ("[T]he temporal and geographic reach of this scheme demonstrate [r]epetitive and coordinated...