United States v. McClaflin

939 F.3d 1113

• Court: Court of Appeals for the Tenth Circuit
• Decided: September 20, 2019
• Docket: 18-1217
• Status: Published

Opinion

FILED United States Court of Appeals PUBLISH Tenth Circuit

UNITED STATES COURT OF APPEALS September 20, 2019

Elisabeth A. Shumaker FOR THE TENTH CIRCUIT Clerk of Court _________________________________

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

v. No. 18-1217

KAREN LYNN MCCLAFLIN,

Defendant - Appellant. _________________________________

Appeal from the United States District Court for the District of Colorado (D.C. No. 1:17-CR-00168-CMA-1) _________________________________

Ann Marie Taliaferro, Brown, Bradshaw & Moffat, L.L.P., Salt Lake City, Utah, for Defendant-Appellant.

James C. Murphy, Assistant United States Attorney (Jason R. Dunn, United States Attorney, with him on the brief), Denver Colorado, for Plaintiff-Appellee. _________________________________

Before MATHESON, SEYMOUR, and BACHARACH, Circuit Judges. _________________________________

SEYMOUR, Circuit Judge. _________________________________

Defendant Karen McClaflin pled guilty to two counts stemming from the

operation of a residential Ponzi scheme which defrauded investors of more than

$14.5 million dollars. At sentencing, the district court calculated the advisory

sentencing guidelines at 135 to 168 months’ imprisonment, applied a 6-level enhancement for substantial financial hardship to more than twenty-five victims, and

then determined that a downward variant sentence of 96 months was appropriate. On

appeal, Ms. McClaflin argues the district court: (1) abused its discretion by denying

her motion for an additional continuance of the sentencing hearing, (2) procedurally

erred by imposing the 6-level enhancement based upon victim impact statements, and

(3) failed to consider all of the requisite 18 U.S.C. § 3553(a) factors. We affirm.

I.

Between March 2011 and early 2017, Ms. McClaflin operated a “fix and flip”

real estate Ponzi scheme in which she made false promises to investors. On June 21,

2017, Ms. McClaflin entered into a plea agreement with the government for wire

fraud and money laundering. The plea deal included a 2-level enhancement for a

crime involving more than ten victims. The government indicated that it did not have

the evidence at that time to support a 6-level enhancement for substantial financial

hardship to more than twenty-five victims.

The parties jointly filed a motion to continue on September 1, 2017, and the

district court moved the sentencing hearing set for January 17, 2018 to March 14 to

give the parties more time to analyze documents regarding loss and restitution. On

March 5, counsel for Ms. McClaflin requested another continuance due to Ms.

McClaflin’s poor health and hip problems. The district court moved the sentencing

hearing to May 10, nearly an entire year after Ms. McClaflin pled guilty to the

2 charges. The week of the hearing Ms. McClaflin again requested her sentencing be

continued on the grounds of her ill health. The district court denied the motion and it

repeated this denial when Ms. McClaflin’s counsel urged a continuance at the

sentencing hearing.

At sentencing, the court questioned the government’s decision not to pursue

the 6-level enhancement. Notwithstanding the government’s reticence and in order to

implement the enhancement, the district court conducted an extensive review of the

sworn victim impact statements attached to the presentence Report (“PSR”). The

court made independent findings of fact regarding Ms. McClaflin’s scheme and

specifically found that Ms. McClaflin’s offense resulted in substantial financial

hardship to twenty-five or more victims. See U.S.S.G. § 2B1.1(b)(2)(C).

Prior to passing sentence, the district court heard testimony from victims of

Ms. McClaflin’s scheme from the Receiver who had been appointed by the court to

recover assets related to the scheme, and from Ms. McClaflin herself. Finding that

Ms. McClaflin committed a level 33 offense with a criminal history category of I,

resulting in an advisory imprisonment range between 135 and 168 months, the court

determined a downward variant sentence of 96 months was warranted. Ms.

McClaflin appeals.

II.

We review the denial of a motion for continuance for abuse of discretion and

will only find error if the district court’s decision was “arbitrary or unreasonable and

3 materially prejudiced” the defendant. Rogers v. Andrus Transp. Services, 502 F.3d

1147, 1151 (10th Cir. 2007). In determining whether the denial of a continuance

constitutes an abuse of discretion, we look to the individual circumstances of the

case. Id.

The framework for reviewing the denial of a motion for a continuance

“involves an examination of four factors: (1) the diligence of the party seeking the

continuance; (2) the likelihood the continuance, if granted, would have accomplished

the stated purpose; (3) the inconvenience to the opposing party, witnesses, and the

court; and (4) the need for the continuance and any harm resulting from its denial.”

United States v. Glaub, 910 F.3d 1334, 1345 (10th Cir. 2018). “The final factor is

the most important.” United States v. Orr, 692 F.3d 1079, 1100 (10th Cir. 2012).

Of those four factors, Ms. McClaflin has not clearly satisfied any of them. Ms.

McClaflin’s counsel admitted that he was not prepared for the sentencing hearing,

that he had not sufficiently talked to witnesses, and that he had not explained the

extent of Ms. McClaflin’s medical condition or ascertained proper facilities through

the BOP. Nor had he filed a motion for a variant sentence. There was not a high

likelihood that if a continuance were granted, Ms. McClaflin’s health would improve

much more than it already had. The district court noted that Ms. McClaflin was not

undergoing an imminent medical procedure, and Ms. McClaflin’s counsel conceded

that her hip infection was “as low as it can be right now.” Rec., vol. IV at 11.

Conversely, granting the continuance would have greatly inconvenienced the

4 opposing party and the court. Ms. McClaflin requested the continuance a mere five

days before the hearing was set to commence, and it is likely that the victims and

witnesses had previously made preparations to attend. The district court already had

granted Ms. McClaflin and the government almost a year to review financial

information and to prepare for sentencing, and it would have been required to

rearrange its calendar even further in order to grant Ms. McClaflin a new hearing

date.

Significantly, Ms. McClaflin has failed to demonstrate prejudice. In United

States v. West, 828 F.2d 1468, 1471 (10th Cir. 1987), we held that the district court

abused its discretion in denying the requested continuance because it precluded the

defendant from calling “the only eyewitness who might have presented directly

exculpatory testimony.” 1 There,“the testimony was important and the prejudice

resulting from the denial of a continuance was severe.” Id. Here, however, the

continuance would merely allow Ms. McClaflin to accumulate additional mitigating

evidence. The district court did not abuse its discretion in denying the motion for a

continuance.

1 In West, 828 F.2d at 1470, the defendant’s primary defense to a first-degree murder charge was that he did not strike the victim and was therefore innocent. The court denied the defendant’s continuance motion until the next day, even when a subpoenaed witness who would testify that the defendant did not strike the victim did not appear on the day he was called and a reasonable possibility existed he would voluntarily appear the next day. Id. at 1470–71.

5 III.

Ms. McClaflin also contends that the district court made two procedural errors:

first, by relying on sworn victim impact statements to sua sponte impose the 6-level

enhancement; and second by failing to consider the requisite § 3553(a) factors. The

parties disagree on the relevant standard of review.

“Fairness and judicial efficiency demand that litigants notify the district court

of a procedural sentencing error with reasonable specificity, thereby providing that

court the opportunity to correct its action in the first instance.” United States v.

Robertson, 568 F.3d 1203, 1209 (10th Cir. 2009). We require timely objections so

the district court can consider and resolve them at the time they are raised and

because “[i]n the case of an actual or invited procedural error, the district court can

often correct or avoid the mistake so that it cannot possibly affect the ultimate

outcome.” Puckett v. United States, 556 U.S. 129, 134 (2009). It is Ms. McClaflin’s

position that she properly objected to the procedural errors and any failure to

preserve the issues was excused because it was plain that further objection would

have been futile. On the other hand, the government contends these claims were not

properly objected to and should only be reviewed for plain error, which requires there

be an “(1) error, (2) that is plain, which (3) affects substantial rights, and which (4)

seriously affects the fairness, integrity, or public reputation of judicial proceedings.”

United States v. Wright, 848 F.3d 1274, 1278 (10th Cir. 2017).

A. 6-level enhancement

6 Prior to sentencing, the government filed a written objection to the 6-level

enhancement recommended in the PSR for substantial financial hardship to twenty-

five or more victims. The only ground stated for the objection was that the

government elected to stand by the plea agreement’s offense level calculation of a 2-

level enhancement based on more than ten victims. Ms. McClaflin joined the

government’s objection. At sentencing, the district court explained its process for

applying the 6-level enhancement and walked through its underlying findings of fact.

When the court prompted Ms. McClaflin’s counsel to make any statement in regards

to the written objection to the 6-level enhancement, defense counsel merely stated,

“[i]t is the Government’s objection . . . not the defendant’s.” Rec., vol. IV at 22. The

judge prompted counsel a second time “to make any statement for purposes of your

record on appeal” and counsel reiterated that he did not have a statement. Id. Ms.

McClaflin’s claim that further objection would have been futile is thus unconvincing.

We require that parties object with specificity so that the district court can

correct its actions in the first instance. See, e.g., United States v. Holloway, 826 F.3d

1237, 1251 (10th Cir. 2016); Robertson, 568 F.3d at 1209. Ms. McClaflin did not

object to the accuracy of the sworn victim impact statements nor to the district

court’s reliance upon them. “We have repeatedly held that if a defendant fails to

object to his presentence report, he waives his right to challenge the district court’s

reliance on it, unless the district court’s decision to do so amounts to plain error.”

Holloway, 826 F.3d at 1251; see also United States v. Figueroa-Labrada, 720 F.3d

7 1258, 1266 (10th Cir. 2013). Because Ms. McClaflin did not properly preserve the

issue at sentencing, we review for plain error.

The district court did not err by using the sworn victim impact statements to

make its own independent findings of fact. “The sentencing judge remains ultimately

responsible for determining the facts and must establish the relevant facts even if all

the parties argue to the contrary.” United States v. Aragon, 922 F.3d 1102, 1109

(10th Cir. 2019) (internal brackets omitted). In determining the number of victims

and calculating loss, a district court must make independent findings supporting its

conclusions. Holloway, 826 F.3d at 1251. In doing so, the court can look beyond

admissible evidence at trial as long as the information has a sufficient indica of

reliability to support its probable accuracy. See, e.g., United States v. Caiba-Antele,

705 F.3d 1162, 1165 (10th Cir. 2012); see also United States v. Sunmola, 887 F.3d

830, 836–37 (7th Cir. 2018); U.S.S.G. § 6A1.3(a).

Here, the district court made independent factual findings by relying upon

victim impact statements that were submitted under penalty of perjury and whose

accuracy was not disputed by any party. The court heard testimony from the

government’s IRS agent who likewise relied upon the victim impact statements.

Speaking in allocution, Ms. McClaflin referred to the statements, indicating she had

“read them over and over and over . . ..” Rec., vol. IV at 101. At no point did Ms.

McClaflin raise any concerns or objection or otherwise contend that these sworn

victim impact statements were unreliable. Accordingly, the victim impact statements

were properly considered by the court.

8 In calculating the number of victims who suffered substantial financial

hardship2, the district court first determined that there were over ninety investors who

were defrauded by Ms. McClaflin, counting husband and wife couples together as

one victim. Of those ninety, sixty-three filed victim impact statements under penalty

of perjury. Twenty-eight of these indicated that they had to make substantial changes

to their employment or substantial changes to their living arrangements as a direct

result of Ms. McClaflin’s fraudulent scheme. At the very least the twenty-eight

sworn statements meet the standard for substantial financial hardship laid out in the

Sentence Guidelines Application Note. See U.S.S.G. § 2B1.1, cmt. n.4(f) (iv), and

(v). Because the district court’s consideration of this evidence was well within its

discretion, the district court did not procedurally err in relying on the sworn victim

impact statements.

B. § 3553(a) factors

2 “Substantial Financial Hardship.—In determining whether the offense resulted in substantial financial hardship to a victim, the court shall consider, among other factors, whether the offense resulted in the victim— (i) becoming insolvent; (ii) filing for bankruptcy under the Bankruptcy Code (title 11, United States Code); (iii) suffering substantial loss of a retirement, education, or other savings or investment fund; (iv) making substantial changes to his or her employment, such as postponing his or her retirement plans; (v) making substantial changes to his or her living arrangements, such as relocating to a less expensive home; and (vi) suffering substantial harm to his or her ability to obtain credit.”

U.S.S.G. § 2B1.1, cmt. n.4(f).

9 Ms. McClaflin also claims the district court failed to properly consider all of the

relevant § 3553(a) factors before imposing its sentence. But, once again, she never

objected to the district court’s sentencing process at trial. We therefore review only

for plain error.

Ms. McClaflin contends that the court did not ask to hear from counsel or the

defendant until after it had already made up its mind. She relies on the court’s

statement prior to sentencing that “I am inclined to grant a variant sentence

somewhere within that adjusted advisory guideline range . . . . However, I have not

decided where within that range of 87 to 108 months the sentence should actually

be.” Rec., vol. IV at 85-86. But Ms. McClaflin takes a single statement out of the

context of the entire sentencing process. Overall that process shows that the district

court proceeded properly and considered the requisite factors. For example, when

the court began it’s sentencing, it stated:

I will tell you where I am going, in terms of my inclinations, so that you can target any arguments you have to what my concerns are, and to persuade me otherwise, or to persuade me to go the way I have indicated, if that is what you want. I will hear from [defense counsel], then [the government], and finally, if Ms. McClaflin wishes to make any statement to me on her own behalf, I will hear from her.

Id. at 73–74. The court thus clearly demonstrated that, although it had a general idea

based upon the PSR, it would hear from the parties involved before making the final

decision.

Ms. McClaflin further contends the district court failed to consider other

relevant mitigating factors besides Ms. McClaflin’s cooperation with the government

10 when imposing her sentence. We disagree. While the court put an emphasis on Ms.

McClaflin’s cooperation, this was not the only factor it considered. For example, the

court clearly considered the nature and circumstances of the offense by noting the

impact of Ms. McClaflin’s scheme on her victims. It also noted that Ms. McClaflin

did not act in a manner entirely consistent with a woman who was truly sorry for her

conduct, expressing concerns about Ms. McClaflin’s failure to account for personal

assets and her divorce from her husband to secure his assets. With respect to the

§ 3553(a) factors, “[w]e do not require a ritualistic incantation to establish

consideration of a legal issue, nor do we demand that the district court recite any

magic words to show us that it fulfilled its responsibility to be mindful of the factors

that Congress has instructed it to consider.” United States v. Lopez-Flores, 444 F.3d

1218, 1223 (10th Cir. 2006) (citation omitted); see also United States v. Rines, 419

F.3d 1104, 1107 (10th Cir. 2005) (“It is true that the district court did not march

through § 3553(a)’s sentencing factors, but we have never imposed such a

requirement.”).

Although Ms. McClaflin specifically alleges that the district court did not

consider her medical circumstances, the record reveals that in fact it did do so before

determining that the Bureau of Prisons was better suited to decide which facilities

and treatments were necessary. Rec., vol. IV at 115 (“I think the Bureau of Prisons

can sort out whether she really does have serious medical issues that are different

from any of the other defendants that they see on a regular basis who have medical

11 issues.”). The court was clearly aware of and considered Ms. McClaflin’s medical

needs at sentencing, but it did not deem them determinative, noting that Ms.

McClaflin was not at risk of undergoing a major procedure in the imminent future.

Because the district court clearly considered the relevant § 3553(a) factors, it did not

plainly err when it sentenced Ms. McClaflin.

We AFFIRM the judgment of the district court.