United States v. Egemonye

• Court: Court of Appeals for the First Circuit
• Decided: August 3, 1995
• Docket: 94-1922
• Status: Published

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS
                            UNITED STATES COURT OF APPEALS

                                FOR THE FIRST CIRCUIT
                                FOR THE FIRST CIRCUIT

                                 ____________________



        No. 94-1922



                              UNITED STATES OF AMERICA,



                                      Appellee,



                                          v.



                                   LONDON EGEMONYE,



                                Defendant, Appellant.



                                 ____________________



                     APPEAL FROM THE UNITED STATES DISTRICT COURT



                          FOR THE DISTRICT OF MASSACHUSETTS



                     [Hon. Joseph L. Tauro, U.S. District Judge]
                                            ___________________



                                 ____________________



                                        Before



                                  Cyr, Circuit Judge,
                                       _____________



                            Bownes, Senior Circuit Judge,
                                    ____________________



                              and Boudin, Circuit Judge.
                                          _____________



                                 ____________________



            Joan M. Griffin, by Appointment of  the Court, with whom  Casner &
            _______________                                           ________

        Edwards was on brief for appellant.
        _______

            James  F.  Lang,  Assistant  United  States  Attorney,  with  whom
            _______________

        Donald K. Stern, United States  Attorney, was on brief for  the United
        _______________

        States.


____________________



                                    August 3, 1995

                                 ____________________



BOUDIN, Circuit Judge.   London Egemonye was indicted in
                         _____________



            1993 under  a multi-count indictment charging  him and others



            with conspiracy and other offenses relating to the possession



            and  use  of  other people's  credit  cards.    18 U.S.C.    



            1029(a)(2)(trafficking,    fraud    and   use),    1029(a)(3)



            (possession with intent to defraud), 1029(b)(2) (conspiracy).



            On June  10,  1994,  Egemonye entered  guilty  pleas  to  all



            counts,  and he now appeals from his sentence arguing that it



            is flawed  by  the government's  manipulation  of  sentencing



            factors and by an improper computation of loss.



                 Because  there  was  no   trial,  we  derive  the  facts



            primarily from the recitations at  the plea hearing, from the



            presentence report,  and from  submissions at  the sentencing



            hearing.  United States v. Connell, 960 F.2d 191, 192-93 (1st
                      _____________    _______



            Cir.  1992).     The  case arose  out  of  a sting  operation



            conducted  by a joint  federal-state task force investigating



            credit card and other financial fraud in  Massachusetts.  The



            critical events took place in January and February 1993.



                 Robert  Leslie,  who was  cooperating  with authorities,



            introduced Egemonye  to an undercover state  trooper known to



            both  only as "Kathy."   On January 21,  1993, Kathy supplied



            Egemonye  with two  BayBank MasterCard  credit cards  and one



            BayBank Visa  credit card with  an aggregate credit  limit of



            $7,450  for all  three  cards.   Egemonye then  created false



            driver's  licenses  in the  credit-card  names, each  license


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bearing  Leslie's  photograph,  and  drove  Leslie  to  three



            different banks to obtain cash advances of $6,900.  



                 Egemonye purchased four more  credit cards from Kathy on



            January 29, 1993,  and four more  on February 2,  1993.   The



            aggregate limits  on the cards  in the two  transactions were



            $21,000  and   $14,000,  respectively.    In   between  these



            transactions,  several  of  the  cards were  used  to  obtain



            advances  from   banks,  and  Egemonye  and   others  in  the



            conspiracy engineered  deposits  of some  stolen checks  into



            accounts  of individual  card holders  to boost  the depleted



            credit available for those cards.



                 Until the fourth transaction,  Kathy made the "sales" in



            exchange for a share of  the proceeds, but on February  5 she



            proposed that  she be paid  a flat  $200 per card.   Egemonye



            said, "I'm not going  to buy one card for two  hundred. . . .



            It has to be like ten."  On February 10,  Kathy told Egemonye



            that she expected to receive a number of cards that day, that



            Egemonye should bring $2,000 for 10 cards, and that she would



            "front" (finance) any additional cards and accept payment for



            them later.   Egemonye agreed, subject to his  examination of



            the cards.



                 When Kathy  and Egemonye met later that  day, Kathy said



            that  she had a bag full  of cards and asked Egemonye whether



            he knew  of another buyer  if he did not  want them all.   He



            said, "I  probably can  handle them,"  and proceeded to  give


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Kathy $2,000 down, and a promise of $6,000 more later, for 40



            Household  Bank  Visa and  MasterCard  credit  cards with  an



            aggregate  limit   of  $200,000.     Egemonye  was   arrested



            immediately thereafter, followed  by the indictment  and plea



            already described.



                 At  sentencing, the  district court  increased the  base



            offense  level of 6 by 8 additional levels because the "loss"



            attributed  by  the  court  to Egemonye  was  over  $200,000.



            U.S.S.G.    2F1.1(a), (b)(1)(H).  The court computed the loss



            at $242,950,  representing the aggregate credit  limit of the



            51   credit  cards   purchased   from  Kathy   in  the   four



            transactions.  The  offense level was then  adjusted in other



            respects,  not here  in dispute,  and Egemonye  was sentenced



            within the guideline range to 37 months' imprisonment.



                 1. On appeal, Egemonye's first claim is directed  at the



            40  cards supplied to him in the final transaction.  Egemonye



            contends  that   including  these   40  cards  in   the  loss



            calculation condones "blatant sentencing  factor manipulation



            engaged in by the investigating agents" and is a violation of



            constitutional due process.   He relies on several decisions,



            including United  States v. Connell,  960 F.2d 191,  196 (1st
                      ______________    _______



            Cir. 1992).



                 We have recently had occasion to discuss Connell and the
                                                          _______



            other  decisions   in  this  circuit   that  have   addressed



            sentencing  factor manipulation.   United States  v. Montoya,
                                               _____________     _______


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No. 94-1666, et al.,  (1st Cir. July 27, 1995).   Summarizing
                         ______



            the prior cases,  we said that "where government  agents have



            improperly enlarged  the scope  or scale  of the  crime," the
            __________



            sentencing  court   has  power   to   exclude  "the   tainted



            transaction" from the guideline computations and for purposes



            of  any mandatory  minimum  statute.   Montoya, slip  op. 6-7
                                                   _______



            (quoting in part Connell, 960 F.2d at 195).  
                             _______



                 However, recognizing the  broad latitude allowed to  the



            government  in   investigating  and  suppressing   crime,  we



            stressed  that  it  was  only  "extraordinary  misconduct" by



            agents that could give rise to such an exclusion, which would



            occur  in the  teeth of  a statute  or guideline  approved by



            Congress.   Montoya, slip op. at 7-8, (quoting in part United
                        _______                                    ______



            States v.  Gibbens, 25 F.3d 28,  31 (1st Cir. 1994)).   While
            ______     _______



            something less than a constitutional violation might suffice,



            as  extraordinary misconduct,  Egemonye's  reference  to  due



            process concepts is certainly in the ballpark.



                 In Montoya, as in previous cases, we refused to lay down
                    _______



            fixed rules to define  sentence factor manipulation, but said



            that the focus is normally upon the conduct of the government



            rather  than the defendant.  Slip op. at 8.  Indeed, Egemonye



            does not  claim that his will  was overborne or deny  that he



            was predisposed to the offense.  What Egemonye claims is that



            the  fourth transaction  had  no legitimate  law  enforcement



            purpose and was designed solely to boost his federal sentence


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because government agents were unhappy with lenient treatment



            that Egemonye earlier received in state court. 



                 There is some  basis for the suggestion  that task force



            agents  were  unhappy   with  Egemonye's  prior   record  and



            believed,  in  the  words of  one  of  the  agents, "that  he



            [earlier]  got off lightly for his  criminal activity."  That



            criminal record, according to the agent just quoted, involved



            a  history of  credit card  fraud by  Egemonye that  could be



            traced back  to 1990 and  involved a number  of transactions.



            On this appeal, the government is prepared to assume arguendo
                                                                 ________



            that the background  facts, "viewed collectively,  could call



            the government's motives into question to some extent."    



                 Nonetheless,  the  government says  that  multiple sales



            were clearly appropriate in  order to identify Egemonye's co-



            conspirators, which they  did.  As  to the final  sale of  40



            cards, the  government  insists  that it  too  "had  a  valid



            investigatory purpose"  which was "to  explore the parameters



            of  the defendant's criminality."  Egemonye's counsel replies



            that this "parameters" explanation  has no real substance and



            could  be used to enlarge a defendant's sentence to virtually



            any height whatever.  We think that Egemonye's reply has some



            force but overstates the matter.



                 There  is, it  should  be stressed,  no indication  that



            Egemonye was coerced or  pressured to achieve a new  level of



            crime.   True,  the  fourth sale  was  much larger  than  the


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earlier  ones; but agent Kathy did  not force the 40 cards on



            Egemonye.   On the contrary, he  had insisted on  at least 10



            cards for  the new $200 per  card payment ("I'm not  going to



            buy one card for two hundred. . . .  It has to be like ten.")



            And when offered a  bag full of cards--with the  request that



            he  recommend another  buyer  for those  he did  not want--he



            responded, "I probably can handle them," and took them all.



                 Government  agents  are  not  limited to  replicating  a



            suspect's largest  unsolicited crime.  In this case, the full



            contours  of  the criminal  operation--its  size, techniques,



            personnel--were,  like an iceberg, largely submerged; and the



            means of exploration were additional and larger transactions.



            The first three transactions  clearly served this purpose and



            the fourth,  even though followed immediately  by the arrest,



            provided  air-tight evidence  for trial  that Egemonye  was a



            significant dealer and not a petty swindler.  While the sting



            could not be endlessly prolonged and enlarged, nothing in the



            objective facts  suggests  "misconduct"  at  all,  let  alone



            "extraordinary misconduct."



                 The question, then, is whether the fourth transaction is



            tainted by  the agents'  subjective motives.   The  pallet in



            such  matters contains  not blacks and  whites but  shades of



            gray.   Motives may be mixed;  good and bad motives are often



            matters of degree; and there can be multiple actors.  Whether



            to consider subjective  motive at all  presents a problem  of


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policy.  Compare  Harlow v. Fitzgerald,  457 U.S. 800  (1982)
                     _______  ______    __________



            (refusing  to  do  so  in the  qualified  immunity  context).



            Still, we  would be  greatly concerned if  evidence otherwise



            available  showed that a plainly improper subjective motive--



            say,  racial hostility  or personal  animus--had  enlarged or



            prolonged the sting.



                 But this is not such a case.  About the most that can be



            derived from the record, drawing all reasonable inferences in



            favor of Egemonye, is  that the agents thought that  Egemonye



            was an established and  unrepentant defrauder who had escaped



            serious  punishment for  a  series of  past, similar  frauds.



            With  this in  mind, they  conducted a  sting operation  that



            involved no  pressure whatever  on Egemonye, lasted  for only



            four transactions,  and  garnered several  other  defendants.



            The first three transactions involved 11 cards; the last one,



            40.  This is a sizeable jump but hardly extraordinary.



                 That   agents  considered  Egemonye's   past  record  in



            selecting  him  for  overtures   by  the  task  force  is   a



            commonplace   of  law  enforcement.    Undercover  operations



            frequently target those  who are suspected of crime,  and the



            recent history of fraudulent  activities gave the agents some



            reason to think  that Egemonye was  not only predisposed  but



            actively   engaged.    Fed.   R.  Evid.  404(a),  restricting



            character  evidence to show propensity, is  a rule for trials



            and not the conduct of police investigations.  At  worst, the


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agents went  too far if  and to the extent  that they thought



            themselves entitled  to make  up for any  shortfall in  prior



            punishments.  But the line is thin and blurred between such a



            dubious  motive and  a  simple  desire  to  be  sure  that  a



            committed  criminal is  caught  and tried  for a  substantial



            offense  based on  unshakeable  evidence.   And,  as we  have



            already  held, Egemonye  was  legitimately  targeted and  the



            sting  objectively  reasonable   in  extent.    Under   these



            circumstances,  even assuming that  the agents'  motives were



            mixed  and  not of  crystalline purity,  we see  nothing that



            would require a curtailment of the sentence.



                 2.  Egemonye's second challenge to his sentence concerns



            the district court's computation of loss.  As already  noted,



            the governing  guideline keys the offense  level primarily to



            "the loss" caused by the offense, U.S.S.G.   2F1.1(b)(1)(loss



            table),  but goes  on to  provide (id.,  comment  (n.7)) that
                                               ___



            intended loss should  be used  if it is  greater than  actual



            loss:



                 Consistent  with the provisions of  2X1.1 (Attempt,

                 Solicitation  or Conspiracy),  if an  intended loss

                 that the defendant was attempting to inflict can be

                 determined,  this  figure will  be  used  if it  is

                 greater than the actual  loss. . . .   For example,

                 if the fraud consisted  of selling or attempting to

                 sell $40,000 in  worthless securities .  . . .  the

                 loss would be $40,000.



                 In  accord with  the  presentence  report, the  district



            court  in this case  attributed to Egemonye  an intended loss



            equal to the aggregate limits  of the purchased credit cards.


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A reading of  the transcript indicates  that the judge  found



            that Egemonye was capable of and intended to use the cards to



            secure amounts at or virtually at their aggregate limits.  We



            review  such a  factual determination  only for  clear error,



            United  States v.  Pavao, 948  F.2d 74,  77 (1st  Cir. 1991),
            ______________     _____



            reserving for closer scrutiny a buried legal issue shortly to



            be described.



                 On the factual issue of intended use and capability, the



            government bears the burden  of proof because an increase  in



            the offense level was sought, see United States v. Sklar, 920
                                          ___ _____________    _____



            F.2d 107,  112  (1st Cir.  1990),  but the  guideline  itself



            cautions  that a  reasonable estimate  of loss  will suffice.



            U.S.S.G.   2F1.1 comment. (n.8).  Egemonye begins by pointing



            out that he realized  only about 53 percent of  the aggregate



            card limits  from  the  cards  involved in  the  first  three



            transactions  and nothing  at all  from the  final  bagful of



            cards since he was apprehended almost immediately.  He argues



            that to predict a 100 percent recovery is simply unrealistic.



                 Unfortunately  for  Egemonye,   there  was   affirmative



            evidence  that he  instructed his  runners  at the  outset to



            procure cash



            from  the banks  at  or virtually  at the  card  limits.   In



            addition, he arranged  for the deposit of  stolen checks into



            some of the accounts, in  order to refresh their limits.   By



            this means, some of  the accounts could have been  milked for


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amounts  in excess of their aggregate limits.  The 53 percent



            figure represented only the  amount that Egemonye had secured



            at the time his scheme was interrupted by arrest.  See United
                                                               ___ ______



            States v. Strozier, 981 F.2d 281, 284 (7th Cir. 1992).
            ______    ________



                 In  sum, taking  the issue  purely as  a factual  one of



            intent  and capability, we do  not think that  on this record



            the use of the aggregate card limits as a measure of intended



            and  potential loss was  clearly erroneous.   Where  there is



            good evidence  of actual intent and some prospect of success,



            we do not think that a court needs to engage  in more refined



            forecasts of just how successful the scheme was likely to be.



            See United States v. Lorenzo, 995 F.2d 1448, 1460 (9th Cir.),
            ___ _____________    _______



            cert. denied,  114 S. Ct. 225  (1993).  The  situation may be
            _____ ______



            quite difficult where intent must be inferred solely from the



            likely effects of the scheme.  See United States v. Stern, 13
                                           ___ _____________    _____



            F.2d 489 (1st Cir. 1994).



                 But there is a  wrinkle.  There is a  cross-reference in



            U.S.S.G.     2F1.1's  application  note 7  (quoted  above  in



            pertinent  part) to U.S.S.G.    2X1.1; and there  is a second



            such cross-reference  in application note 9,  which reads (in



            pertinent part): 



                 "In  the  case  of  a partially  completed  offense

                 (e.g., an  offense involving a completed fraud that

                 is part of a  larger, attempted fraud), the offense

                 level is  to be  determined in accordance  with the

                 provisions of   2X1.1 . . .  whether the conviction

                 is  for  the  substantive  offense,   the  inchoate

                 offense  . . ., or both."


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Egemonye's  counsel  argues  that  section   2X1.1,  and  the



            discount it makes available, apply in this case.



                 U.S.S.G.     2X1.1  is  concerned  with  determining the



            offense  level for an attempt or conspiracy; and this it sets
                                  _______    __________



            at  three  levels  less  than   the  offense  level  for  the



            substantive  offense--unless   the  defendant  (or   his  co-



            conspirators)  have  completed  all   of  the  acts  believed



            necessary  for  the substantive  offense  or  were "about  to



            complete all such acts"  when apprehended.  For cases  within



            the   "unless"  clause--which  the  background  comment  says



            represent   "most"   cases--there   is   no   such  discount.



            Effectively, the  guideline gives the defendant a three-level



            discount  if   he  is  some  distance   from  completing  the



            substantive crime.



                 Read  literally, section  2X1.1 is  not relevant  to the



            present case  because 14  of the  15 counts against  Egemonye



            involved   completed   substantive  offenses,   ranging  from



            trafficking in unauthorized  credit cards to  producing false



            driver's  licenses, and  the conspiracy  thus  embraced fully



            completed  crimes.  On the other hand, the cross-reference to



            section 2X1.1 in section 2F1.1 arguably connects the intended



            loss  concept to  the  attempt guideline,  and section  2X1.1



            blurs the matter further  with the following application note



            (comment. (n.4)), providing (in pertinent part):



                 In  certain  cases,   the  participants  may   have

                 completed . . . . all of the acts necessary for the


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successful completion of part,  but not all, of the

                 intended offense.  In such cases, the offense level

                 for the count (or group of closely related multiple

                 counts) is  whichever of the following  is greater:

                 the offense level for  the intended offense minus 3

                 levels . . . or  the offense level for the part  of

                 the offense  for  which  the  necessary  acts  were

                 completed  . . . .  For example, where the intended

                 offense  was   the  theft   of  $800,000  but   the

                 participants   completed  .  .   .  only  the  acts

                 necessary to  steal $30,000,  the offense  level is

                 the offense level for the theft of $800,000 minus 3

                 levels,  or  the offense  level  for  the theft  of

                 $30,000, whichever is greater.



                 Interpreting  these  provisions  is  a  matter  of  some



            difficulty,  and the  only cases  in point  are in  conflict.



            Compare United  States v. Watkins,  994 F.2d  1192 (6th  Cir.
            _______ ______________    _______



            1993)  with United States v. Strozier, 981 F.2d 281 (7th Cir.
                   ____ _____________    ________



            1992)  The problem, in a nutshell, is that section 2X1.1  has



            on  its  face  nothing to  do  with  a  completed substantive



            offense or a conspiracy that has  been carried to completion.



            On the other hand, the notion of a discount could be extended
                                                                 ________



            from the case of an incomplete offense to that of a completed



            offense where intended harm  is part of the calculus  and the



            harm is only partly completed.



                 Recognizing the question to be close, we are inclined to



            stand by the  literal language of the guidelines that directs



            section 2X1.1 to cases where the substantive  offense has not



            been completed.  E.g., United States v. Sung, 51 F.3d 92 (7th
                             ____  _____________    ____



            Cir.  1995).  The argument for a discount for inchoate crimes



            is  obvious; the defendant  has started down  the road toward



            the  substantive crime  but  has not  gotten  there yet  and,


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whatever his intention, might still turn back before crossing



            the  line.   By  contrast, Egemonye  did  cross the  line and



            commit  the  substantive crime  by  acquiring  the cards  and



            making  the  false documents,  so  the basic  purpose  of the



            section 2X1.1 discount has nothing to do with him.



                 Where  a completed  offense  is involved,  it is  surely



            rational to measure  culpability in part by the intended harm



            and to refuse a  discount where the offense is  complete even



            though  the intended  harm has  not yet been  fully realized.



            From the standpoint of  moral guilt, and dangerousness, there



            is  little to distinguish such  a defendant from  one who has



            actually  inflicted  the same  amount of  harm.   And  we are



            influenced  in part by the fact that the case law calculating



            sentences  based  on intended  harm,  most  of it  admittedly



            without making reference to section 2X1.1, is consistent with



            this view.   E.g., United States v.  Guyon, 27 F.3d  723 (1st
                         ____  _____________     _____



            Cir. 1994); United States v. Resurreccion, 978  F.2d 759 (1st
                        _____________    ____________



            Cir. 1992).  



                 Of course, there would be nothing irrational in deciding



            that  actual harm is worse than intended harm and providing a



            three-level discount  wherever the  sentence for  a completed



            offense is  measured in part by  intended harm.  But  this is



            not  in general the philosophy of the guidelines; if it were,



            possession  of  drugs  with  intent to  distribute  would  be



            punished  less harshly than the  actual sale of an equivalent


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amount.    The  wrinkle of  section  2X1.1  cannot be  ironed



            completely smooth, but the pertinent language  already quoted



            can in fact be squared with our result.



                 Thus, the cross-references  in section 2F1.1  are easily



            explained; they do invoke the discount, or the possibility of



            a  discount, where the underlying crime  is merely an attempt



            or conspiracy.  Application  note 4 in section 2X1.1  is less



            easily reconciled; but we think the difference is that in the



            theft  case, there  is no  completed crime  as to  the larger



            amount  but  only  (in  substance)  an  attempt.    Here,  by



            contrast, all 51 of  the cards were the subject  of completed



            crimes.



                 Egemonye's remaining  claim as to loss is  to argue that



            no  consideration  should be  given to  the  40 cards  in the



            fourth transaction,  or at least  to the unexpected  30 cards



            (over and above the  ten cards Egemonye requested).   This is



            largely  a restatement  of the  claim that  sentencing factor



            manipulation occurred.  Having  rejected that claim, we think



            that--from  the standpoint  of  intended  loss--Egemonye  can



            fairly be charged with intending to inflict loss as to all of



            the cards.



                 Both issues  in this  case are difficult  and important.



            We  are thus  especially  indebted to  counsel  for the  able



            briefing  and   argument  presented  on  both   sides.    The



            Sentencing  Commission's  attention  will  be  drawn  to  the


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arguable  lack of  clarity in  the interplay  between section



            2F1.1 and section 2X1.1.



                 Affirmed.
                 _________


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