United States v. Rupp
| Decision Date | 24 January 2023 |
| Docket Number | 22-1240 |
| Parties | UNITED STATES OF AMERICA, Plaintiff-Appellee, v. JOSHUA LOUIS RUPP, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
NOT RECOMMENDED FOR PUBLICATION
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MICHIGAN
Before: STRANCH, MURPHY, and DAVIS, Circuit Judges.
Pretending to be a licensed securities broker, Joshua Rupp defrauded his in-laws and friends of a total of $2.7 million. Among other tricks, Rupp downloaded an app onto his victims' phones so that they could monitor "dummy" accounts showing excellent (but fictitious) gains. Rupp pleaded guilty to securities fraud. During plea negotiations, the government estimated that his guidelines range would be about 10 to 12 years' imprisonment. Yet the district court calculated his range to be significantly higher and sentenced him to 16 years.
Rupp argues that he entered an unknowing and involuntary plea because his decision to plead guilty turned on the government's mistaken estimate of his guidelines range. Rupp next argues that the district court should not have increased his guidelines range with an enhancement that covers those who use "sophisticated means" to commit fraud. He lastly argues that the court imposed a substantively unreasonable sentence. But his plea agreement and plea colloquy both show that Rupp knew that he could not void his plea simply because the district court chose a higher-than-expected guidelines range. Rupp also used plenty of "sophisticated" means, including the creation of the dummy accounts. And his plea agreement waived his right to bring a substantive-reasonableness challenge to his sentence. We affirm.
Rupp grew up in a loving home in western Michigan. By 2011, he appeared to be on a relatively successful path both personally and professionally. He had married his wife and had two kids. He had also obtained a builder's license and started a home-building company in Texas. In that year, Rupp and his family returned to Michigan. While back in his home state, he began working as an RV salesperson.
Things changed significantly in 2015 when Rupp turned to securities fraud. He swindled family and friends alike of millions of dollars over the next four years. Rupp targeted his wife's parents as his first victims. His in-laws initially gave him a small sum after he led them to believe that he had connections with a fictitious broker at an established financial-services firm. Rupp's father-in-law later allowed Rupp to manage the substantially more money in his IRA (about $465,000). Rupp's in-laws also helped to convince his wife's grandmother to invest with him. Rupp almost took $1.2 million from her, but the bank suspected Rupp of elder fraud and placed a hold on the check that she had written. When his in-laws went to the bank to discuss the situation, they learned that Rupp had withdrawn all of the funds from his father-in-law's IRA. Rupp wasted all of these funds, causing his wife's parents to suffer significant tax consequences in the process. His marriage did not survive his fraud.
That fraud soon expanded outside his family. He would promote his (fake) qualifications to people that he met at places like his family's church. Once these friends agreed to make investments with him, he would install a trading app on their phones to allow them to track their investments. The app showed extraordinary gains from week to week, which led his victims to spread the word about Rupp's investment prowess. Like Rupp's father-in-law, some of these investors gave Rupp access to their retirement accounts, including accounts worth over $400,000.
Apart from the app that he downloaded onto his victims' phones to monitor the "dummy accounts" that he had created, Rupp engaged in many other fraudulent acts to persuade them to invest with him. Plea Agreement, R.6, PagelD 15-17. He claimed to be a licensed broker. (He was not.) He claimed to work for established financial-service firms. (He did not.) He claimed that the victims could not lose the principal that they entrusted to him because of the nature of his investments. (They lost nearly all of it.) And he showed his victims many authentic-looking documents, including a broker's license and account statements with letterhead and logos from the established financial-service firms. (He had forged these documents.)
Ultimately, Rupp's mounting investment losses and growing addiction to cough syrup took a toll on his mental health. His fraud scheme unraveled when he suffered a mental breakdown one day in late July 2019. After overconsuming cough syrup, a naked Rupp trespassed into the homes of strangers, assaulted the residents, and engaged in other bizarre behavior. He fled in his car from one of the homes, swerved into an approaching vehicle, and hit its trailer. The police had to use a taser to subdue him. While in custody, Rupp admitted to his fraud.
All told, Rupp took more than $2.7 million from 19 people. He spent at least $500,000 of this money on vacations, groceries, and other personal expenses. He frittered away the rest on bad stock trades.
The government charged Rupp with securities fraud in violation of 18 U.S.C. § 1348(1). He pleaded guilty. As part of his plea agreement, Rupp acknowledged that the parties had not reached a consensus on how to calculate his guidelines range. He also recognized that neither the government nor his counsel nor even the court could make a "binding prediction or promise" concerning the length of the court's sentence and that he could not withdraw his plea even if the court imposed the statutory maximum. Plea Agreement, R.6, PageID 22. And he agreed to waive his right to appeal except on a few specified grounds, including that his plea was unknowing and involuntary and that the district court had miscalculated his guidelines range.
At Rupp's plea hearing, a magistrate judge found that he had entered a knowing and voluntary guilty plea. Before doing so, the judge confirmed that Rupp understood the nature of the charges and the potential punishment. Rupp recognized that only the district court could determine his guidelines range. He also conceded that nobody had promised him what sentence the court would choose. And he agreed that he could not withdraw his plea if it turned out that the court chose a sentence longer than he anticipated.
Rupp's presentence report recommended that the court impose four enhancements to his base offense level. It recommended a two-level enhancement because Rupp had used "sophisticated means" to commit the fraud. U.S.S.G. § 2B1.1(b)(10)(C). It recommended an 18-level enhancement because of the amount of the loss. Id. § 2B1.1(b)(1)(J). It recommended a four-level enhancement because Rupp's crime had caused "substantial financial hardship" to at least five victims. Id. § 2B1.1(b)(2)(B). And it recommended a four-level enhancement because Rupp's crime had involved "securities law" and he qualified as an "investment adviser." Id. § 2B1.1(b)(20)(A)(iii).
At sentencing, Rupp's counsel argued against the sophisticated-means enhancement on the ground that its application, when combined with the other enhancements, would result in improper "double counting" by punishing him twice for the same conduct. Sentencing Hr'g Tr., R.45, PageID 213. He reasoned that violation of the securities laws is always sophisticated. The court disagreed. It found that Rupp had used sophisticated means by creating "false documents" to defraud his victims. Id., PageID 222. It further noted that this enhancement did not overlap with his enhancement for violating the securities laws because not all such frauds are sophisticated. Id.
Adopting the presentence report's calculations, the court concluded that Rupp's guidelines range was 168 to 210 months' imprisonment. When speaking to the court, Rupp suggested that the report's recommended range had caught him "off guard" because the government in plea negotiations had predicted that his range would be 10 to 12 years. Id., PageID 237. The court nevertheless chose a sentence of 192 months' imprisonment. This choice led Rupp to interrupt: "I just don't agree with your sentence." Id., PageID 247. He opined that "child sex molesters and rapists" serve shorter sentences and that his victims had asked him to invest their money. Id. Describing the sentence as "ridiculous," Rupp added: Id., PageID 248. When the court told him he would have the opportunity to appeal, he responded: "Oh, I will." Id.
Rupp raises three arguments on appeal. He argues that his guilty plea was not knowing and voluntary. He argues that the district court should not have used the sophisticated-means enhancement. And he argues that the court imposed a substantively unreasonable sentence.
Rupp first claims that he entered an unknowing and involuntary plea. Specifically, he says that his decision to plead guilty rested on the government's prediction during their plea negotiations that his guidelines range would fall between 10 and 12 years-well below the range that the district court determined (14 to 17.5 years).
We start with two procedural issues. The first: our standard of review. Generally, we review de novo a district court's conclusion that a defendant knowingly pleaded guilty, and we review for clear error any factual findings underlying this conclusion. See United States v. Catchings, 708 F.3d 710, 716 (6th Cir. 2013...
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