United States v. Ellis

• Court: Court of Appeals for the Fifth Circuit
• Decided: July 15, 2002
• Docket: 01-11017
• Status: Unpublished

Opinion

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT _____________________

No. 01-11017

_____________________

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

LARRY WAYNE ELLIS,

Defendant-Appellant.

_________________________________________________________________

Appeal from the United States District Court for the Northern District of Texas (3:01-CR-20-1-X) _________________________________________________________________

July 11, 2002

Before HIGGINBOTHAM, JONES, and BARKSDALE, Circuit Judges.

PER CURIAM:*

Pursuant to a written agreement, Larry Wayne Ellis pled

guilty to one count of securities fraud. In this appeal, Ellis

raises two objections to the district judge’s application of the

* Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. federal sentencing guidelines in determining his sentence. We

reject both objections and AFFIRM Ellis’s sentence.

Ellis solicited persons to invest money in investment

contracts and promissory notes with his companies. He represented

to these investors that their money would be used to buy and

operate automatic teller machines (ATMs) from which they would get

the profits and that this ATM investment program had already

successfully generated significant returns. After obtaining

investor funds on the basis of these and other representations,

Ellis diverted a substantial amount of investor funds to his own

use. To disguise the diversions, he sent statements to some

investors that falsely represented the condition of their

investments and used the funds of new victims to pay “profits” to

earlier investors. The fraudulent scheme involved no fewer than 57

investors who sustained combined losses of over $700,000 on an

aggregate investment of about $1.12 million.

Pursuant to Ellis’s guilty plea, Ellis and the Government

agreed to a stipulation recommending that the court not impose the

sentencing enhancements that Ellis attacks in this appeal. Ellis’s

presentence report made the same recommendations. The district

court rejected these recommendations. On appeal, Ellis argues that

the district court was wrong to do so. For the reasons stated

2 below, we are not persuaded that the district court committed

reversible error with respect to these matters.

First, Ellis objects to the district court’s decision to

reject the stipulation’s recommendation that the court grant a

decrease in Ellis’s guidelines score pursuant to U.S.S.G. § 3E1.1,

which provides for such a decrease “[i]f the defendant clearly

demonstrates acceptance of responsibility for his offense.”

Because “[t]he sentencing judge is in a unique position to evaluate

the defendant’s acceptance of responsibility,” we review the

district court’s decision on this issue with “great deference.”

U.S.S.G. § 3E1.1 cmt. n.5. This standard of review is even more

deferential than the “clear error” standard; we affirm unless the

decision was “without foundation.” United States v. Brenes, 250

F.3d 290, 292 (5th Cir. 2001); United States v. Pierce, 237 F.3d

693, 694-95 (5th Cir. 2001).

One of the factors that the district court may consider

in determining whether to grant a reduction for acceptance of

responsibility is whether the defendant “truthfully admitt[ed] the

conduct comprising the offense of conviction, and truthfully

admitt[ed] or [did] not falsely deny[] any additional relevant

conduct for which the defendant is accountable under § 1B1.3

(Relevant Conduct).” U.S.S.G. § 3E1.1 cmt. n.1(a). “[A] defendant

who falsely denies . . . relevant conduct that the court determines

to be true has acted in a manner inconsistent with acceptance of

3 responsibility.” Id. See United States v. Patino-Cardenas, 85

F.3d 1133, 1135 (5th Cir. 1996). There was evidence from which the

district court could have concluded that Ellis had not truly

accepted responsibility for his conduct because he had falsely

denied that his ATM “business” was a fraudulent scheme from the

beginning. Because the district court’s decision was not without

foundation, we affirm it. See Pierce, 237 F.3d at 695; United

States v. Galan, 82 F.3d 639, 640 (5th Cir. 1996); United States v.

Vital, 68 F.3d 114, 120-21 (5th Cir. 1995).

Second, Ellis objects to the district court’s decision to

disregard another recommendation contained in the stipulation and

to impose a two-level enhancement under former U.S.S.G. §

2F1.1(b)(3) for using “mass-marketing” in the commission of his

offense.1 “Mass-marketing,” as used in the guidelines provision,

“means a plan, program, promotion, or campaign that is conducted

through solicitation by telephone, mail, the Internet, or other

means to induce a large number of persons to (A) purchase goods or

services; . . . or (C) invest for financial profit.” U.S.S.G. §

2F1.1 cmt. n.3. Ellis used brochures and other printed materials,

an Internet World Wide Web site, a newspaper advertisement, and

five contract salespersons to attract investors. Ellis argues that

1 Former U.S.S.G. § 2F1.1(b)(3) has since been repealed and replaced by current U.S.S.G. § 2B1.1(b)(2)(A)(ii). See U.S.S.G., supplement to app. C (Nov. 2001), amendment 617.

4 these solicitation methods did not amount to “mass-marketing”

because they did not actually induce large numbers of persons to

invest in his fraudulent scheme. We disagree. The application

note does not define mass-marketing as “a plan, program, promotion

or campaign that is conducted through solicitation . . . and

induces a large number of persons” to purchase, invest, or the

like. Mass-marketing efforts can be mass-marketing efforts even if

they are ineffectual. See generally United States v. Pirello, 255

F.3d 728, 732 (9th Cir. 2001), cert. denied, 122 S.Ct. 577 (2001).

Judgment AFFIRMED.