United States Court of Appeals For the First Circuit
No. 19-1325
UNITED STATES OF AMERICA,
Appellee,
v.
KIMBERLY KITTS,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Denise J. Casper, U.S. District Judge]
Before
Lynch, Lipez, and Thompson, Circuit Judges.
Vivian Shevitz for appellant. Sara Miron Bloom, Assistant United States Attorney, with whom Andrew E. Lelling, United States Attorney, was on brief, for appellee.
March 3, 2022 LIPEZ, Circuit Judge. Appellant Kimberly Kitts, an
investment adviser, pleaded guilty to one count of investment
adviser fraud, four counts of wire fraud, and one count of
aggravated identity theft. On appeal, Kitts argues that her plea
was not knowing and voluntary, that her conduct, as described at
the change-of-plea hearing, did not constitute wire fraud and
aggravated identity theft, that several sentencing enhancements
were improperly applied, and that her counsel was ineffective.
Hence, she asks that her guilty plea, the judgment of conviction,
and the sentence relating thereto all be vacated. If those
contentions are rejected, Kitts argues that her sentence should at
least be reduced from eighty-seven to eighty-four months to accord
with the district court's oral ruling. We affirm.
I.
Kitts's arguments on appeal primarily target her change-
of-plea hearing and sentencing, and we therefore only briefly
recount the facts concerning her criminal activity before
describing those two proceedings. Because Kitts pleaded guilty,
"we draw the essential facts from the change-of-plea colloquy and
the uncontroverted portions of the presentence investigation
report." United States v. Jimenez, 512 F.3d 1, 2 (1st Cir. 2007).
Kitts worked as an investment adviser at Royal Alliance,
a financial services firm in Massachusetts. She also operated a
"purported financial consulting" company named Marquis Consulting,
- 2 - LLC. In approximately 2011, she began misappropriating client
funds by directing her clients' money into an account (the "Marquis
Consulting Account"), which she used to pay personal expenses.
From 2011 through mid-2017, Kitts appropriated approximately
$3,454,138, primarily from three clients (referred to as Clients
A, B, and C),1 before her conduct was discovered.
In an information filed in September 2018, Kitts was
charged with investment adviser fraud in violation of 15 U.S.C.
§§ 80b-6 and 80b-17 (Count One), wire fraud in violation of 18
U.S.C. § 1343 (Counts Two through Five), and aggravated identity
theft in violation of 18 U.S.C. § 1028A (Count Six). Although
Kitts initially pleaded not guilty to all counts, she subsequently
entered a guilty plea, without a plea agreement, and waived
indictment.
Throughout the proceedings in the district court, Kitts
was represented by attorney Michael Mattson, who had previously
represented Kitts in "local matters." According to Kitts, Mattson
had no prior experience in federal criminal matters.
A. The Change-of-Plea Hearing
At the outset of her change-of-plea hearing, the
district court confirmed with Kitts that she was in an appropriate
mental state to participate in the proceeding. The court then
The Presentence Report primarily focuses on Clients A, B, 1
and C, but Kitts had seven total victims.
- 3 - asked whether she had received a copy of the information,
understood that she was charged with six counts, and had an
opportunity to discuss the charges with counsel. Kitts answered
yes to these questions.
The court advised her that, by pleading guilty, she would
be waiving her constitutional right to be indicted by a grand jury.
Again, Kitts confirmed that she understood. In response to another
inquiry from the court, Kitts stated that she had discussed the
waiver with her attorney. Neither party raised any objections
during this portion of the proceeding.
The district court then proceeded with the plea
colloquy. Kitts affirmed that she was neither forced to plead
guilty nor had she received any assurances that induced her to
plead guilty. Then, as directed by the court, the government
detailed the maximum statutory penalties applicable to the
charges. In relevant part, the government explained that the
aggravated identity theft charge carried a "mandatory term of
incarceration of two years, which shall not be concurrent with any
other term of imprisonment imposed under any other provision of
law." The government also reported the maximum five-year sentence
for investment adviser fraud and the maximum twenty-year sentences
that accompanied the wire fraud counts.
When asked if she understood that the district court had
the authority to impose a term of imprisonment of up to five years
- 4 - on Count One, charging investment adviser fraud; up to twenty years
on Counts Two through Five, the wire fraud counts; and a "minimum
mandatory sentence of two years" on the identity theft charge,
Kitts said yes. Noting that Kitts was upset, the district court
confirmed that she still understood the court's questions.
After informing Kitts of the role of the sentencing
guidelines in the court's sentencing decision, the court explained
the rights she would forfeit by pleading guilty, including the
right to a trial by jury, the right to a trial in which she would
have been presumed innocent, the right to assistance of counsel in
her defense during the trial, and the right to confront the
witnesses against her. The court then asked the government to
summarize the facts that would have been offered at trial. Kitts
agreed with the prosecutor's summary of the facts as they related
to the essential elements of the charges, although she disputed
the exact monetary amounts involved.
The district court then accepted Kitts's guilty plea,
finding that it was knowing and voluntary, and that she understood
the charges against her and the consequences of her plea.
B. Sentencing
The Presentence Report ("PSR") calculated a total
offense level of twenty-eight for Counts One through Five and a
criminal history category of I, corresponding to a guideline
sentencing range of seventy-eight to ninety-seven months. That
- 5 - calculation began with a base offense level of seven, which was
increased by sixteen levels to reflect losses of more than $1.5
million but less than $3.5 million attributable to her crimes.
See U.S.S.G. § 2B1.1(b)(1). The offense level was further
increased by a two-point enhancement for the victims' substantial
financial hardship, a two-point enhancement for sophisticated
means, and a four-point enhancement "because the offense involved
a violation of securities law and . . . the defendant was an
investment adviser, or a person associated with an investment
adviser." See U.S.S.G. § 2B1.1(b)(2)(A)(iii), (b)(10)(c),
(b)(20)(A). The offense level was then decreased by three to
credit Kitts's acceptance of responsibility. See
U.S.S.G. § 3E1.1(a), (b). For the sixth count -- aggravated
identity theft -- the PSR reported the mandatory, consecutive two-
year sentence. Thus, the total guideline range was 102 to 121
months.2
Kitts's attorney, Mattson, lodged several objections to
the PSR, including an objection to the application of the
sophisticated means enhancement. Although he did not submit a
2The guideline range of seventy-eight to ninety-seven months refers only to Counts One through Five. As to Count Six, "the guideline sentence is the term of imprisonment required by statute," U.S.S.G. § 2B1.6(a), which, here, was two years consecutive to the sentence on the other charges. As the court explained during sentencing, this scheme led to a total guideline sentencing range of 102 to 121 months.
- 6 - sentencing memorandum before the sentencing hearing, Mattson did
provide additional documentation at the hearing, including medical
records,3 documentation that Kitts had surrendered her passport,
and at least one letter in support of Kitts. Mattson also raised
an objection at the hearing to the application of the substantial
financial hardship enhancement. In addition, two victims made
oral statements at the sentencing hearing.
The district court overruled Kitts's objections and
orally imposed a sentence of eighty-seven months, three years of
supervised release, and restitution in the amount of $3,085,939.
The eighty-seven-month sentence included sixty-three months for
Counts One through Five and the consecutive two years for the
aggravated identity theft count. The sentence imposed was thus a
substantial downward variance from the guideline range of 102 to
121 months for all six counts.
II.
As noted, Kitts challenges on appeal the validity of her
guilty plea, the judgment of conviction, and her sentence. We
start our analysis with her ineffective assistance of counsel
claim.
3 Kitts suffered from cancer beginning in 2011. As of 2016, she was in remission. She also had been diagnosed with Crohn's disease. The court considered Kitts's medical conditions, as well as the fact that she was caring for her mother, in imposing its sentence.
- 7 - A. Ineffective Assistance of Counsel
Generally, "[w]e have held with a regularity bordering
on the monotonous that fact-specific claims of ineffective
assistance cannot make their debut on direct review of criminal
convictions, but, rather, must originally be presented to, and
acted upon by, the trial court" in post-conviction proceedings.
United States v. Mala, 7 F.3d 1058, 1063 (1st Cir. 1993). On
direct appeal of an ineffective assistance of counsel claim, we
have three options: "(1) decline to hear the claim, permitting the
appellant to raise the issue as part of a subsequent § 2255
petition; (2) remand the claim to the district court for necessary
fact-finding; or (3) decide the claim on the record before us."
United States v. Colón-Torres, 382 F.3d 76, 85 (1st Cir. 2004)
(quoting United States v. Leone, 215 F.3d 253, 256 (2d Cir. 2000)).
Ordinarily, we will only reach the merits if the factual record is
sufficiently developed to allow consideration of the claim or
remand for further factual development if there are significant
indicia of ineffectiveness in the record. See id. On this record,
we find no basis for departing from our usual practice of requiring
that the claim be first raised in post-conviction proceedings.
Hence, we dismiss Kitts's ineffective assistance of counsel claim
without prejudice.
- 8 - B. The Guilty Plea
When a defendant pleads guilty, she "effectively waives
several constitutional rights. For that waiver to be valid, due
process requires that the plea amount to a voluntary and
'intentional relinquishment . . . of a known right.'" United
States v Cotal-Crespo, 47 F.3d 1, 4 (1st Cir. 1995) (quoting
McCarthy v. United States, 394 U.S. 459, 466 (1969)). The entry
of a guilty plea is governed by Federal Rule of Criminal Procedure
11, which was designed "to ensure that a defendant who pleads
guilty does so with full comprehension of the specific attributes
of the charge and the possible consequences of the plea." United
States v. McDonald, 121 F.3d 7, 11 (1st Cir. 1997). We have
explained that our review of a challenge to a guilty plea is
animated by the "core concerns" of Rule 11: "(1) absence of
coercion, (2) understanding of the charges, and (3) knowledge of
the consequences of the plea." United States v. Pimentel, 539
F.3d 26, 29 (1st Cir. 2008) (quoting United States v. Rodríguez-
León, 402 F.3d 17, 24 (1st Cir. 2005)). "Rule 11 also requires
the district court to determine whether there is a factual basis
for a guilty plea." Id.
Kitts challenges the validity of her guilty plea on three
grounds: (1) that she did not understand the full consequences of
her plea, (2) that she did not understand the nature of the
charges, and (3) that the government provided an inadequate factual
- 9 - basis for the wire fraud and aggravated identity theft charges at
the change-of-plea hearing. These arguments are raised for the
first time on appeal. Hence, they are subject to plain error
review. United States v. Borrero-Acevedo, 533 F.3d 11, 15 (1st
Cir. 2008). To establish plain error, Kitts must demonstrate that
(1) an error occurred; (2) the error was "clear or obvious"; (3)
the error affected her substantial rights; and (4) the error
"seriously affect[ed] the fairness, integrity or public reputation
of [the] judicial proceedings." Puckett v. United States, 556
U.S. 129, 135 (2009) (quoting United States v. Olano, 507 U.S.
725, 736 (1993)); see also United States v. Rabb, 5 F.4th 95, 101
(1st Cir. 2021). For the reasons given below, we find no error in
the district court's acceptance of Kitts's guilty plea.
1. The Alleged Failure to Inform Kitts of the Consecutive Sentence
Kitts contends that her plea was invalid because she was
not informed of the mandatory, consecutive two-year sentence that
attached to the aggravated identity theft count. At the change-
of-plea hearing, the district court asked the government to state
the maximum statutory penalties that applied to Kitts. The
prosecutor recited as follows:
With respect to investment adviser fraud in violation of 15, United States Code, Section 80b, incarceration for five years; supervised release for three years; a fine of $250,000 or twice the gross gain or loss, whichever is greater; a mandatory special
- 10 - assessment of $100; restitution; and forfeiture to the extent charged in the information. With respect to wire fraud in violation of 18, United States Code, Section 1343, incarceration for 20 years, a five-year term of supervised release, and the same fine and restitution and forfeiture and special assessment I just mentioned. With respect to aggravated identity theft in violation of 18, United States Code, 1028A, mandatory term of incarceration of two years, which shall not be concurrent with any other term of imprisonment imposed under any other provision of law; one year of supervised release; a special assessment of $100 per count; restitution; and forfeiture to the extent charged in the information.
(Emphasis added).
The court then asked Kitts if she understood
that as to each of the counts I have the authority to give you a term of imprisonment of[,] on Count One, the investment adviser fraud, of up to five years; on Counts Two through Five, the wire fraud counts, up to 20 years; and as to the identity theft charge, a minimum mandatory sentence of two years?
Kitts replied in the affirmative. Thereafter, the district court
again referred to the "minimum mandatory sentence of two years on
Count Six" when explaining the role of the sentencing guidelines.
Kitts was thus expressly told by the prosecutor that
the sentence attached to Count Six was both mandatory and
consecutive. As we have previously held, the fact that the maximum
possible penalties are communicated to the defendant by the
prosecutor, rather than the court, is not an error. See United
States v. Yazbeck, 524 F.2d 641, 643 (1st Cir. 1975) (per curiam)
("To satisfy [Rule 11], the record must show that the defendant
- 11 - was personally advised of the sentence provided by law . . . .
This does not mean that a judge may never rely on the prosecutor
. . . to state in open court the relevant statutory provision or
to conduct portions of the required inquiry." (citations
omitted)); see also United States v. Raineri, 42 F.3d 36, 40 (1st
Cir. 1994) (noting that "district judges often rely heavily . . .
on the prosecutor to provide the court with a description of
statutory penalties").4 There was no error here.
2. The Alleged Failure to Inform Kitts of Elements of the Charges
Kitts argues that her guilty plea was deficient because
she was not adequately informed of the elements of the wire fraud
and aggravated identity theft charges.5 This claim is belied by
the record.
4 Kitts also claims that she was not informed that she "would be responsible in all cases for 'losses' not in fact suffered by [her] investor-clients." Presumably, Kitts refers to the fact that her clients would be reimbursed by an insurance policy. It is evident from the record, however, that Kitts was informed several times that the charges carried the possibility of restitution and that, in response to inquiry from the district court, Kitts averred that she understood that prospect. Moreover, the law on this point is unmistakable. See 18 U.S.C. § 3664(f)(1)(B) ("In no case shall the fact that a victim has received or is entitled to receive compensation with respect to a loss from insurance or any other source be considered in determining the amount of restitution."). 5 It is unclear if Kitts also intends this argument as a challenge to the information or as part of her ineffective assistance of counsel theory. Any challenge to the information has been waived. We have held "with monotonous regularity that an unconditional guilty plea effectuates a waiver of any and all independent non-jurisdictional lapses." United States v. Cordero,
- 12 - Under Rule 11, the court must "ensure that the defendant
understands 'the nature of each charge' to which [she] is pleading
guilty." United States v. Cruz-Rivera, 357 F.3d 10, 13 (1st Cir.
2004) (quoting Fed. R. Crim. P. 11(b)(1)(G)). In certain
circumstances, the reading of the indictment may be sufficient to
fulfill this obligation. Id. During the plea colloquy, the
district court recited the list of counts charged in the
information, stating the count number, statutory section, and
nature of the charge, and asked whether Kitts understood the
charges against her. She stated that she did. In addition, the
district court ascertained that Kitts had received a copy of the
information and had an opportunity to discuss the charges with her
attorney. The information itself contains the statutory language
setting forth the elements of the wire fraud and aggravated
identity theft charges and a statement of the relevant facts:
On or about the dates below, in the District of Massachusetts and elsewhere, the defendant, [Kimberly Kitts], having devised and intending to devise a scheme and artifice to defraud, and for obtaining money and property by means of materially false and fraudulent pretenses, representations and promises, did transmit and cause to be transmitted by means of wire communication in interstate commerce, writings, signs, signals, pictures, and sounds, for the purpose of executing the scheme and artifice, as follows:
42 F.3d 697, 699 (1st Cir. 1994). Such a waiver includes alleged defects in the information. See United States v. Urbina-Robles, 817 F.3d 838, 842 (1st Cir. 2016). As we have already addressed Kitts's ineffective assistance of counsel claim, we address this argument under Rule 11 only.
- 13 - Count Date (on From To Item No. or about) 2 6/25/2013 Financial Marquis Wire transfer of Consulting Acct, TD $75,000 from account Firm Bank, MA of Client A to Account, Marquis Consulting NJ Account 3 7/2/2013 Financial Marquis Wire transfer of Consulting Acct, TD $87,500 from account Firm Bank, MA of Client A to Account, Marquis Consulting NJ Account 4 10/4/2013 Financial Marquis Wire transfer of Consulting Acct, TD $50,000 from account Firm Bank, MA of Client A to Account, Marquis Consulting NJ Account 5 5/22/2017 Financial Marquis Wire transfer of Consulting Acct, TD $125,000 from Firm Bank, MA account of Clients B Account, and C to Marquis NJ Consulting Account
. . .
On or about May 22, 2017, in the District of Massachusetts and elsewhere, the defendant, [Kimberly Kitts], did knowingly possess and use, without lawful authority, a means of identification of another person, to wit, the name[] and brokerage account number of Client[] B, during and in relation to the crime of wire fraud . . . .
The terms of the information are clear, the court
satisfied itself that Kitts was competent to plead, Kitts confirmed
that she had an opportunity to discuss the charges with her
attorney, and, after hearing the charges against her, Kitts stated
that she understood them. In these circumstances, we reject
Kitts's claim that she was not adequately informed of the elements
- 14 - of the wire fraud and aggravated identity theft charges. See
United States v. Ramirez-Benitez, 292 F.3d 22, 27 (1st Cir. 2002)
(finding no error where "[t]he terms of the indictment alone
sufficed to put [defendant] on notice of the charge . . . .
[Defendant] admitted he understood the charge and the court found
him competent to plead"); see also United States v. Díaz-
Concepción, 860 F.3d 32, 36-37 (1st Cir. 2017) (holding that the
fact that the district court did not explain a specific element of
the charged crime was not an error in violation of Rule 11).
3. The Factual Sufficiency of the Charges
Kitts asserts that her conduct, as described at the
change-of-plea hearing, "arguably . . . did not violate" 18 U.S.C.
§ 1343 (wire fraud) and 18 U.S.C. § 1028A (aggravated identity
theft), and hence the court should not have accepted her plea. We
disagree.
a. Wire Fraud
Kitts argues that the theft charged in Count Five was
complete when she received the $125,000 check from her clients'
account6 and, therefore, the fact that she subsequently initiated
an interstate wire transfer to deposit the check does not amount
to wire fraud.7 To prove wire fraud, the government must "show
6 This was a joint account of Clients B and C. Kitts purports to offer a similar argument about Counts Two, 7
Three, and Four, but she develops the argument only with respect to Count Five. Accordingly, we focus only on those facts
- 15 - . . . [defendant's] knowing and willful participation in a scheme
to defraud and the use of interstate wires to further that scheme."
United States v. Tum, 707 F.3d 68, 72 (1st Cir. 2013).
In support of her theory that her conduct did not amount
to wire fraud, Kitts relies on Kann v. United States, 323 U.S. 88
(1944), in which the Supreme Court overturned a conviction for
mail fraud after concluding that "[i]t cannot be said that the
mailings in question were for the purpose of executing the scheme."
Kann, 323 U.S. at 94. In that case, the defendants had cashed
several checks at banks different from the drawee banks, triggering
the depository banks (those that had cashed the checks) to mail
the checks to those drawee banks to collect the funds. Id. at 90-
92. The mailings between the banks were the basis for the mail
fraud charge. Id. at 90-91. The Court rejected this theory of
mail fraud, explaining that the mailings at issue occurred after
"[t]he persons intended to receive the money had received it
irrevocably. . . . It was immaterial to them, or to any
consummation of the scheme, how the bank which paid or credited
the check would collect from the drawee bank." Id. at 94.
Here, as the government notes, "[t]he interstate wiring
of $125,000 . . . was an integral part of the fraudulent scheme
. . . as the fraud was not complete until at least when Kitts
underlying Count Five. See, e.g., Rodríguez v. Mun. of San Juan, 659 F.3d 168, 175 (1st Cir. 2011).
- 16 - received the stolen funds into her own Marquis Consulting account."
Kitts's conduct, as recounted at the change-of-plea hearing,
clearly satisfied the statutory requirements for wire fraud.
b. Aggravated Identity Theft
The aggravated identity theft statute requires that
Kitts, "during and in relation to a felony violation enumerated in
subsection (c), knowingly transfer[red], possesse[d], or use[d],
without lawful authority, a means of identification of another
person." 18 U.S.C. § 1028A(a)(1). The list of felonies in
subsection (c) includes "any provision in chapter 63 (relating to
mail, bank, and wire fraud)." Id. at § 1028A(c)(5). Although the
broader identity theft statute proscribes the same type of identity
theft, that is, "knowingly transfer[ing], possesses[ing], or
us[ing], without lawful authority, a means of identification of
another person," id. at § 1028(a)(7), that statute only requires
that the identity theft be "in connection with[] any unlawful
activity that constitutes a violation of Federal law, or that
constitutes a felony under any applicable State or local law," id.
Therefore, the charge of aggravated identity theft, in contrast to
simple identity theft, applies when the theft is connected to a
specific felony from the statutory list in subsection (c).
Given that we have already rejected Kitts's claim that
her conduct did not constitute wire fraud, a crime listed in
subsection (c), the key inquiry here is whether Kitts "knowingly
- 17 - transfer[red], possesse[d], or use[d], without lawful authority,
a means of identification of" one of her clients. Id. at
§ 1028A(a)(1) (emphasis added). Kitts argues that, as she had
signing authority for her clients, her use of her client's
signature cannot constitute identity theft.
We confronted a similar argument in United States v.
Ozuna-Cabrera, 663 F.3d 496, 497-99 (1st Cir. 2011), where we
considered the requirements of aggravated identity theft in
relation to a defendant who had purchased a passport and social
security card and attempted to use them to apply for a new
passport. Ozuna-Cabrera claimed that, because he had purchased
the "means of identification" from a willing seller, he was not
using it "without lawful authority." Id. at 498. We rejected
that argument, concluding that "Congress intended § 1028A to
address a wide array of identity crimes, and not only those
iterations involving conventional theft." Id. at 500.
Significantly, we explained that "regardless of how the means of
identification is actually obtained, if its subsequent use breaks
the law . . . it is violative of § 1028A(a)(1)." Id. at 499.
In light of our holding in Ozuna-Cabrera, Kitts's
conduct clearly constituted aggravated identity theft. The basis
for the aggravated identity theft charge is the $125,000 theft
- 18 - from Clients B and C.8 Kitts used Client B's name and account
number to request a $125,000 check from Clients B and C's brokerage
account, payable to her own account. She then deposited these
funds into her Marquis Consulting Account, which she used to pay
her personal expenses -- conduct well beyond any lawful authority
given to her by her clients to use their accounts. Thus, her
challenge to the factual basis for her plea to the aggravated
identity theft charge fails.9
C. Sentencing
Kitts challenges several aspects of her sentence.
1. Loss Calculation
Kitts contends that the loss figure calculated in the
PSR overstated her culpability -- an error she did not raise in
8 Kitts also argues that she should have been charged with simple identity theft, rather than aggravated identity theft, under § 1028(a)(7). She contends that the "scheme to defraud" was actually investment adviser fraud, not wire fraud. But, the information plainly specifies that the aggravated identity theft count is tied to a specific instance of wire fraud charged as Count Five. 9 In connection with the aggravated identity theft charge, Kitts alludes in her briefing to a proportionality argument, claiming that the prosecutor "unfairly 'upped the ante'" by charging wire fraud as a predicate for aggravated identity theft, which comes with a mandatory, two-year consecutive sentence, 18 U.S.C. § 1028A(a)(1), (b)(2), instead of charging her with simple identity theft under § 1028(a)(7), which does not carry a mandatory sentence. For the reasons explained above, Kitts was plainly chargeable under the aggravated identity theft statute and it is well established that the choice of charge is a matter of prosecutorial discretion. See Bordenkircher v. Hayes, 434 U.S. 357, 364 (1978).
- 19 - the district court. Accordingly, we review the district court's
acceptance of the calculation for plain error.
The PSR reported that the loss sustained by Kitts's
victims totaled $3,085,939, which resulted in a sixteen-level
increase in her offense level. This figure did not include an
additional $368,199 that was already repaid.10 Kitts argues that
the district court also should have excluded amounts that were not
"losses" because they were covered by an insurance policy. She
notes that "individuals were made whole by the broker-dealer, which
was in turn compensated by an Errors & Omissions insurance policy
into which Kitts had paid."
We have explained that reimbursement by an insurance
policy merely "shifts the loss to another victim (the insurance
company)." United States v. Alegria, 192 F.3d 179, 191 (1st Cir.
1999). Therefore, regardless of whether Kitts's clients were
subsequently reimbursed by an insurance policy, it was appropriate
to include the full amount of misappropriated funds in the loss
calculation. See United States v. Stepanian, 570 F.3d 51, 55-57
(1st Cir. 2009) (holding that "victims" of crime include those
whose losses were reimbursed).
As to Kitts's suggestion that the loss calculation
should be reduced because her theft impacted only wealthy
10The PSR states that this money "was credited and/or repaid to the victims," but it unclear by whom or with what funds.
- 20 - clients,11 that is a woefully misguided argument. As we have
previously explained, the guidelines "suggest[] that 'loss' refers
primarily to the value of what was taken, not the harm suffered by
the victim." United States v. Walker, 234 F.3d 780, 783 (1st Cir.
2000). The guidelines provide no offset for choosing victims who
arguably would suffer less from the financial harm. The district
court was correct to consider the full value of the misappropriated
funds in its loss calculation.
2. Sentencing Enhancements
Our review of sentencing enhancements consists of "clear
error review [of] factual findings, de novo review [of]
interpretations and applications of the guidelines, and abuse of
discretion review [of] judgment calls." United States v. O'Brien,
870 F.3d 11, 15 (1st Cir. 2017) (quoting United States v. Cox, 851
F.3d 113, 119 (1st Cir. 2017)).
First, Kitts challenges the application of the
sophisticated means enhancement. Undisputed portions of the PSR
indicate that, after her employer began an investigation, Kitts
attempted to cover up the misappropriation of her clients' funds
by creating a fake company and fake Schedule C tax forms. Kitts
11 In her brief, Kitts states that "the 'loss' figure overstated Kitts'[s] culpability. Kitts was aware . . . her clients were wealthy enough to weather the use of some of their funds (which she told herself was temporary)."
- 21 - also "altered the Marquis Consulting Account statements to
disguise the source and amounts of the deposits into that account."
The commentary to the guidelines defines "sophisticated
means" as follows:
For purposes of subsection (b)(10)(C), "sophisticated means" means especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense. For example, in a telemarketing scheme, locating the main office of the scheme in one jurisdiction but locating soliciting operations in another jurisdiction ordinarily indicates sophisticated means. Conduct such as hiding assets or transactions, or both, through the use of fictitious entities, corporate shells, or offshore financial accounts also ordinarily indicates sophisticated means. U.S.S.G. § 2B1.1 cmt. n.9(B). Kitts argues that the unauthorized
use of a client's signature and creating a fake company are not
complex or sophisticated. The guidelines and our jurisprudence
disagree. See, e.g., United States v. Pacheco-Martinez, 791 F.3d
171, 179 (1st Cir. 2015) (upholding application of the
sophisticated means enhancement where the defendant "set up
multiple corporate entities in order to facilitate his fraudulent
schemes"); United States v. Foley, 783 F.3d 7, 26 (1st Cir. 2015)
(upholding application of the enhancement where, inter alia, the
defendant used fake checks and "directed his paralegal to draw and
then redeposit a check . . . to create the appearance that the
borrower's funds had been received"). The record plainly supports
the application of the enhancement.
- 22 - Kitts also objects to the two-point enhancement for
substantial financial hardship. The PSR connects the application
of the enhancement to the losses suffered by Client A. In total,
Kitts fraudulently obtained approximately $2,014,887 from Client
A. As a result, the PSR reports, "[Client A's] savings w[ere]
nearly depleted and she was forced to liquidate her apartment in
order to generate funds to support herself." Kitts argues that
the victims who spoke at her sentencing hearing -- not including
Client A, who submitted a victim impact letter instead -- were
more upset about being deceived by a friend than about their
financial losses. And, in another misguided argument, Kitts
suggests in her brief that her clients did not suffer financial
hardship because they were "well-off."12
It is the impact on the victims' financial situation,
not their distress when speaking at the sentencing hearing, that
is relevant to the substantial financial hardship enhancement.
See United States v. George, 949 F.3d 1181, 1185-86 (9th Cir. 2020)
(interpreting the term "substantial financial hardship"). Client
A's experience, including the loss of her savings and the
liquidation of her apartment, inescapably constitutes substantial
financial hardship within the ambit of the guidelines. See
Kitts 12 argues that "while what she did to [her] clients was wrong, none of [her] well-off clients suffered particularly 'substantial financial hardship.'" She does not make any specific arguments as to the impact on Client A.
- 23 - U.S.S.G. § 2B1.1 cmt. n.4(F) (listing "suffering a substantial
loss of a . . . savings or investment fund" and "making substantial
changes to his or her living arrangements" as examples of
substantial financial hardship). Accordingly, the district court
did not abuse its discretion in applying the substantial financial
hardship enhancement.
D. Written Judgment
Lastly, Kitts argues that the eighty-seven-month term of
incarceration in the judgment entered against her must be reduced
to eighty-four months. During the sentencing hearing, the district
court initially stated that it was "impos[ing] a sentence of 87
months, that's 63 months on Counts One through Five and on-and-
after time of 24 months for a total of 87 months." However, later
in the hearing, when formally imposing sentence, the district court
appeared to make a misstatement:
[I]t is the judgment of this [c]ourt that you're hereby committed to the custody of the Bureau of Prisons for a term of 84 months. This term shall consist, as I said, of 63 months on Counts One through Five to be served concurrently with each other, and a term of 24 months on Count Six to be served consecutively to the term imposed on Counts One through Five.
The written judgment contains a sentence of eighty-seven months.
Kitts contends that the discrepancy between the court's second
statement referencing an eighty-four-month sentence and the
- 24 - written judgment requires that her term of incarceration be amended
to eighty-four months.
Kitts relies on United States v. Rosario, 386 F.3d 166,
168 (2d Cir. 2004) for the general proposition that "in the event
of variation between an oral pronouncement of sentence and a
subsequent written judgment, the oral pronouncement controls." As
the Second Circuit explained, "[t]his rule implements the
requirement that a defendant is entitled to be present at all
critical stages of his trial, including sentencing." Id. at 168-
169. We adhere to the same rule. See, e.g., United States v.
Ortiz-Torres, 449 F.3d 61, 74 (1st Cir. 2006).
However, our analysis typically focuses on whether a
defendant had appropriate notice of the terms of the written
judgment at the sentencing. Id. Kitts does not argue that she
lacked notice of the sentence contained in the written judgment.
She simply argues that her sentence must be amended to correspond
with the court's statement during the formal imposition of her
sentence, when the court made the mathematical error.
This argument fails. The district court first explained
that it was imposing a sentence of eighty-seven months, divided
into the two segments it identified (sixty-three months on Counts
One through Five and twenty-four months on Count Six), and it
subsequently recorded that sentence in the written judgment. The
district court's isolated reference to eighty-four months, in its
- 25 - second reference to the prison term, was clearly a simple
misstatement. Following that misstatement, the court again
referenced the separate terms of sixty-three months and twenty-
four months (totaling eighty-seven months). In light of the first
reference to an eighty-seven-month sentence and the subsequent
correct recitation of the months attached to each count, Kitts had
notice of the terms of the written judgment, and we see no basis
to amend the judgment based on an isolated misstatement.
Affirmed, except that Kitts's ineffective assistance of
counsel claim is dismissed without prejudice.
- 26 -