USA v. Syrax

• Decision Date: 13 December 2000
• Docket Number: No. 99-50753,99-50753
• Citation: 235 F.3d 422
• Parties: (9th Cir. 2000) UNITED STATES OF AMERICA, Plaintiff-Appellee, v. ROBERT LOUIS SYRAX, aka BOB JOHNSON, aka ROBERT L. SYRAX, Defendant-Appellant
• Court: U.S. Court of Appeals — Ninth Circuit

Page 422

235 F.3d 422 (9th Cir. 2000)

UNITED STATES OF AMERICA, Plaintiff-Appellee, v. ROBERT LOUIS SYRAX, aka BOB JOHNSON, aka ROBERT L. SYRAX, Defendant-Appellant.

No. 99-50753

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted October 11, 2000

Filed December 13, 2000

Ellyn Marcus Lindsay, Assistant United States Attorney, Los Angeles, California, for the plaintiff-appellee.

Korey House, Deputy Federal Public Defender, Los Angeles, California, for the defendant-appellant.

Appeal from the United States District Court for the Central District of California Gary L. Taylor, District Judge, Presiding. D.C. No. CR 99-47-GLT

Before: A. Wallace Tashima and Richard Tallman, Circuit Judges, and William Alsup, District Judge.^*

TASHIMA, Circuit Judge:

Robert Louis Syrax appeals the sentence imposed by the district court following his guilty pleas to one count each of violations of mail fraud, wire fraud, interstate transportation of property obtained by fraud, and money laundering. Syrax contends that the district court erred in failing to group his fraud and money laundering counts for sentencing, and in imposing a two-level enhancement for his role in the offense. We have jurisdiction pursuant to 18 U.S.C. 3742 and 28 U.S.C. 1291, and we affirm.

BACKGROUND

Syrax created a telemarketing business called Gecko Holdings, Inc., for the purpose of telephoning people throughout the United States, soliciting investments in Gecko. Syrax and his telemarketers falsely told victims that Gecko was an "Internet gambling company" about to make a stock offering on the NASDAQ exchange, and that they would receive large returns from their investments. Gecko telemarketers made numerous other false claims, eventually inducing victims to send Gecko over $4.5 million. Approximately $1.78 million of the funds was reinvested into the scheme. After learning he was being investigated by law enforcement, Syrax and his wife emptied Gecko's bank accounts, drove to Las Vegas, and were eventually arrested in Florida.

Syrax was charged in a 25-count indictment and a one count information with violations of 18 U.S.C. 1341, mail fraud, 18 U.S.C. 1343, wire fraud, 18 U.S.C. 1956(a)(1)(A)(i), money laundering, 18 U.S.C. 2314, interstate transportation of property obtained by fraud, and 18 U.S.C. 2326, which provides for enhanced penalties for telemarketing. Syrax pled guilty to one count each of mail fraud, wire fraud, money laundering, and interstate transportation of property obtained by fraud. The district court sentenced Syrax to 97 months' imprisonment, based on an offense level of 29, a criminal history category of II, and a guideline range of 97-121 months.¹ Syrax timely appeals his sentence.

DISCUSSION

I. Grouping Under U.S.S.G. 3D1.2

Syrax contends that the district court erred by failing to group his fraud and money laundering counts as a single group under U.S.S.G. 3D1.2(b) or (d). The district court's refusal to group offenses under the guidelines is subject to de novo review. See United States v. Hanley, 190 F.3d 1017, 1033 (9th Cir. 1999).

Section 3D1.2 provides in part that:

All counts involving substantially the same harm shall be grouped together into a single Group. Counts involve substantially the same harm within the meaning of this rule:

. . .

(b) When counts involve the same victim and two or more acts or transactions connected by a common criminal objective or constituting part of a common scheme or plan.

. . .

(d) When the offense level is determined largely on the basis of the total amount of harm or loss, the quantity of a substance involved, or some other mea sure of aggregate harm, or if the offense behavior is ongoing or continuous in nature and the offense guideline is written to cover such behavior.

U.S.S.G. 3D1.2.

Syrax's 97-month sentence consisted of 60 months each on counts 3 (mail fraud) and 4 (wire fraud), and 97 months each on count 25 (interstate transportation of property obtained by fraud) and the information (money laundering), all to be served concurrently. The district court declined to group Syrax's fraud and money laundering counts for sentencing, relying on United States v. Taylor, 984 F.2d 298 (9th Cir. 1993).

Syrax's contention that his fraud and money laundering counts should have been grouped together under 3D1.2(d) is foreclosed by Taylor, which held that "grouping under section 3D1.2(d) is not appropriate when the guidelines measure harm differently." Id. at 303. In Taylor, we noted that the offense level under the fraud guideline, 2F1.1, was determined based on the loss attributable to the scheme, while the money laundering guideline, 2S1.2, looked at the value of the funds attributable to the scheme. See id. Because "the guidelines for wire fraud and money laundering measure harm differently," we held that the district court erred in grouping a dismissed wire fraud count with a monetary transaction count under 3D1.2(d). Id.; see also Hanley, 190 F.3d at 1033-34 (reaffirming the holding in Taylor and rejecting the defendants' argument that their wire fraud and money laundering counts should have been grouped under 3D1.2(d)).

Syrax points out that the defendant in Taylor was charged with a violation of 18 U.S.C. 1957, for laundering money for personal use, rather than the so-called "promotion prong" of the money laundering statute, 18 U.S.C. 1956, under which Syrax was convicted.² While this is true, the holding in Taylor was based on the fact that the guidelines for wire fraud and money laundering measure harm differently. See Taylor, 984 F.2d at 303. The guideline for 1956, U.S.S.G. 2S1.1, measures harm in the same manner as the guideline for 1957, 2S1.2 -that is, the offense level is increased based on the value of the funds. The rationale underlying Taylor thus applies whether the defendant is charged underS 1956 or 1957.

In United States v. Rose, 20 F.3d 367 (9th Cir. 1994), in which the defendants were charged under 1956(a)(1)(A)(i), we distinguished Taylor in concluding that the district court did not err in grouping the defendant's fraud and money laundering counts. Rose drew no distinction between the "promotion" and the "personal use" money laundering statutes; instead, we distinguished Taylor based on the fact that, unlike Rose, there was complete identity between the laundered and the fraudulently obtained funds. See id. at 371-72. Thus, Rose does not control here.

Syrax further argues that the fraud and money laundering counts should have been grouped under 3D1.2(b), rather than (d), a question that was not addressed in Taylor, Rose, or Hanley. Subsection (d) looks to, inter alia , whether the offense level is determined on the basis of the total amount of harm or loss. By contrast, subsection (b) requires grouping when the counts "involve the same victim and two or more acts or transactions connected by a common criminal objective or constituting part of a common scheme or plan." U.S.S.G. 3D1.2(b). Syrax relies on the fact that he reinvested $1,779,980.95 of the fraudulently-obtained money into the scheme, in arguing that the fraud and the money laundering activities were so closely connected that the victims of the fraud were also the victims of the money laundering.

In order to group under 3D1.2(b), however, Syrax's offenses must both (1) involve the same victim and (2) be closely connected. See U.S.S.G. 3D1.2(b); United States v. Lopez, 104 F.3d 1149, 1150-51 (9th Cir. 1997) (discussing the two requirements of 3D1.2(b)). In Lopez , we concluded that the defendant's conspiracy and money laundering convictions satisfied the first requirement because both crimes were "victimless" and the " `societal interests that are harmed are closely related.' " See Lopez, 104 F.3d at 1150 (quoting U.S.S.G. 3D1.2, cmt. n.2).

By contrast, Syrax's offenses are not both "victimless crimes." While society is the victim of his money laundering activity, see id. at 1150-51, his conviction for fraud involved specific victims. Syrax's offenses therefore do not involve the same victim and so were properly not grouped under 3D1.2(b). The finding that his fraud and money laundering offenses should not be grouped under 3D1.2(b) is also in accord with decisions of the Second, Eighth, and Tenth Circuits. In United States v. Napoli, 179 F.3d 1 (2d Cir. 1999), cert. denied, 120 S. Ct. 1176 (2000), for example, the Second Circuit addressed whether a defendant's convictions for fraud and for money laundering under 1956(a)(1)(B) should be grouped together under 3D1.2(b). Reasoning that "[t]he `victims' of fraud counts are those persons who have lost money or property as a direct result of the fraud, " but that "[t]he `victim' of money laundering is, by contrast, ordinarily society at large," the court concluded that the defendant's fraud and money laundering counts "involved different harms to different victims" and so could not be grouped under 3D1.2(b). Id. at 7-8; see also United States v. O'Kane, 155 F.3d 969, 972 (8th Cir. 1998) (concluding that the district court erred in grouping the defendant's fraud and money laundering offenses under 3D1.2(b) because "[f]raud clearly harms the defrauded . . . [b]ut money laundering harms society's interest in discovering and deterring criminal conduct"); United States v. Kunzman, 54 F.3d 1522, 1531 (10th Cir. 1995) (affirming the district court's decision not to group fraud and money laundering counts under 3D1.2(b) because the victim of fraud is "the defrauded individual, " while the victim of money laundering is society in general (citing United States v. Johnson, 971 F.2d 562 (10th Cir. 1992))).

Syrax's reliance on out-of-circuit cases that permit grouping of fraud and money laundering offenses is unavailing. These cases are inapposite because they involved grouping under 3D1.2(d), not (b), and we have already held in Taylor that money laundering and fraud are not to be grouped under 3D1.2(d). See United States v....