United States v. Penny S. Davis

• Court: Court of Appeals for the Fourth Circuit
• Decided: October 18, 2018
• Docket: 18-4080
• Status: Unpublished

Opinion

UNPUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 18-4080

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

v.

PENNY S. DAVIS,

Defendant - Appellant.

Appeal from the United States District Court for the Middle District of North Carolina, at Greensboro. Catherine C. Eagles, District Judge. (1:17-cr-00069-CCE-1)

Submitted: September 28, 2018 Decided: October 18, 2018

Before KEENAN and HARRIS, Circuit Judges, and HAMILTON, Senior Circuit Judge.

Affirmed by unpublished per curiam opinion.

Stacey D. Rubain, QUANDER & RUBAIN, PA, Winston-Salem, North Carolina, for Appellant. Matthew G.T. Martin, United States Attorney, Frank J. Chut, Jr., Assistant United States Attorney, K.P. Kennedy Gates, Special Assistant United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Greensboro, North Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit. PER CURIAM:

Penny S. Davis appeals from her 41-month sentence imposed pursuant to her

guilty plea to mail fraud. 1 On appeal, she challenges the district court’s determination

that her Sentencing Guidelines range should be enhanced based upon her use of

sophisticated means and the exploitation of a vulnerable victim. She also asserts that the

district court failed to properly consider her arguments for a lower sentence and failed to

provide proper reasoning for the imposed within-Guidelines sentence. We affirm.

I.

Davis first challenges her enhancement for use of sophisticated means. Because

she objected in the district court, we review this issue for clear error. A clear error occurs

when the reviewing court is “left with a firm and definite conviction that a mistake has

been committed.” United States v. Adepoju, 756 F.3d 250, 258 (4th Cir. 2014) (citation

omitted). “[U.S. Sentencing Guidelines Manual § ] 2B1.1(b)(10)(C) [2017] directs the

sentencing court to increase the offense level by two levels if ‘the offense otherwise

involved sophisticated means.’” United States v. Wolf, 860 F.3d 175, 199 (4th Cir. 2017)

(quoting USSG § 2B1.1(b)(10)(C)). “‘[S]ophisticated means’ means especially complex

or especially intricate offense conduct pertaining to the execution or concealment of an

offense.” USSG § 2B1.1 cmt. n.9(B). “The commentary to the Guideline provides

examples warranting application of the sophisticated-means enhancement, including

1 She was also sentenced to a (mandatory) 2-year term of imprisonment pursuant to her guilty plea to aggravated identity theft. She does not challenge this sentence on appeal.

2 ‘[c]onduct such as hiding assets or transactions, or both, through the use of fictitious

entities, corporate shells, or offshore financial accounts.’” Wolf, 860 F.3d at 199 (quoting

USSG § 2B1.1 cmt. n.9(B)). A second example given is “locating the main office of [a

telemarketing] scheme in one jurisdiction but locating soliciting operations in another.”

USSG § 2B1.1 cmt. n.9(B).

“The enhancement applies where the entirety of a scheme constitutes sophisticated

means, even if every individual action is not sophisticated.” Adepoju, 756 F.3d at 257

(citing United States v. Jinwright, 683 F.3d 471, 486 (4th Cir. 2012)). “A sentencing

court should consider the cumulative impact of the criminal conduct, for the ‘total

scheme’ may be ‘sophisticated in the way all the steps were linked together.’” Jinwright,

683 F.3d at 486 (citations omitted). “The enhancement requires some means of

execution that separates the offenses . . . from the ordinary or generic.” Wolf, 860 F.3d

at 199; see also Adepoju, 756 F.3d at 257 (noting “sophistication requires more than the

concealment or complexities inherent in fraud,” and “[t]hus, fraud per se is inadequate for

demonstrating the complexity required for [the] enhancement”).

Here, the district court determined the offense involved sophisticated means,

because Davis, a paralegal who worked at two different law firms entrusted with the

management of various estates, created a multilayered scheme, whereby she stole money

and property from the estates. Her crime involved shuffling money between estates

handled by the firms and choosing estates where clients were less likely to discover the

thefts. To prevent discovery of her scheme, Davis used her knowledge of estates, probate

and court procedures to file different accountings in court than those in the law firms’

3 files. In addition, the district court noted that Davis needed to hide her fraud from

lawyers and court officials who were sophisticated themselves, which required

specialized knowledge. Further, Davis used numerous means to conceal the fraud,

including forgery, altering documentation, transferring money between accounts, and

omitting property from certain accountings.

We find that the district court did not clearly err in finding the use of sophisticated

means. The court noted several ways the offense conduct was more sophisticated than

fraud per se; and we conclude that the “total scheme” was also “sophisticated in the way

all the steps were linked together.” See United States v. Savage, 885 F.3d 212, 228-29

(4th Cir. 2018) (finding that sophisticated means were used in bank fraud conspiracy

when defendant, among other actions, used insider information to “circumvent the bank’s

fraud countermeasures”), cert. filed (July 8, 2018) (No. 18-5225).

II.

The Guidelines mandate that “[i]f the defendant knew or should have known that a

victim of the offense was a vulnerable victim, increase by 2 levels.” USSG

§ 3A1.1(b)(1). The commentary to § 3A1.1 defines a “vulnerable victim” as “a person

(A) who is a victim of the offense of conviction and any conduct for which the defendant

is accountable under § 1B1.3 (Relevant Conduct); and (B) who is unusually vulnerable

due to age, physical or mental condition, or who is otherwise particularly susceptible to

the criminal conduct.” USSG § 3A1.1, cmt. n.2. Application of the enhancement entails

a two-part inquiry: (1) a sentencing court must determine that a victim was unusually

vulnerable; and (2) the court must then assess whether the defendant knew or should have

4 known of such unusual vulnerability. United States v. Etoty, 679 F.3d 292, 294 (4th Cir.

2012).

Here, there is no question that the victim identified by the district court was

vulnerable and that Davis knew of his vulnerability. Instead, Davis contends that (1) the

victim did not suffer a loss under USSG § 2B1.1 (defining victim for purposes of

calculating loss amount); and (2) the victim had a legal guardian to protect his interests,

rendering him not vulnerable. However, a victim need not suffer a pecuniary loss to be

considered a vulnerable victim for purposes of the Guidelines. United States v.

Salahmand, 651 F.3d 21, 29 (D.C. Cir. 2011) (holding that, although individuals

qualified as victims under § 3A1.1, but not § 2B1.1, there is nothing illogical about the

Sentencing Commission providing different definitions for different guidelines); United

States v. Kennedy, 554 F.3d 415, 423–24 (3d Cir. 2009) (holding that, although elderly

account holders from whom defendant stole did not satisfy the definition of “victim”

under USSG § 2B1.1(b)(2) because they were reimbursed, they were not precluded from

being “vulnerable victims” under USSG § 3A1.1(b)(1) because “victims” under § 2B1.1

and § 3A1.1(b) are separate definitions); see also United States v. McCall, 174 F.3d 47,

51-52 (2d Cir. 1998) (holding that, although the bank rather than the account holder is

liable for an embezzlement, account holders are nevertheless victims of such an

embezzlement, and noting that such an account holder may be a particularly vulnerable

victim where there is a substantial chance that he or she will never discover or realize that

the account has been depleted).

5 Moreover, the Guidelines do not define vulnerable victims with reference to

whether their interests are otherwise being protected, even though many fitting the

“vulnerable victim” definition, such as children and those who are mentally incompetent,

would likely have guardians. In addition, we find it illogical to negate the vulnerability

of a victim, merely because, as here, he had a guardian who did not adequately protect

him. Accordingly, we conclude that the district court’s imposition of a two-level

enhancement based on its finding that the victim qualified as a vulnerable victim was

warranted.

III.

Finally, Davis contends that the district court did not adequately consider and

address her claims for a shorter sentence. In evaluating a sentencing court’s explanation

of a selected sentence, we have consistently held that, although the district court must

consider the statutory factors and explain the sentence, “it need not robotically tick

through the § 3553(a) factors.” United States v. Helton, 782 F.3d 148, 153 (4th Cir.

2015) (internal quotation marks omitted). “Regardless of whether the district court

imposes an above, below, or within-Guidelines sentence, it must place on the record an

‘individualized assessment’ based on the particular facts of the case before it.” United

States v. Carter, 564 F.3d 325, 330 (4th Cir. 2009) (quoting Gall, 552 U.S. at 50).

“Where the defendant or prosecutor presents nonfrivolous reasons for imposing a

different sentence than that set forth in the advisory Guidelines, a district judge should

address the party’s arguments and explain why he has rejected those arguments.” United

States v. Bollinger, 798 F.3d 201, 220 (4th Cir. 2015) (internal quotation marks omitted).

6 However, it is sometimes possible to discern a sentencing court’s rationale from the

context surrounding its decision. United States v. Montes-Pineda, 445 F.3d 375, 381 (4th

Cir. 2006).

Here, the district court explicitly considered most of Davis’s arguments,

concluding that her emotional, physical and financial difficulties; her dysfunctional

family situation; and her mental health limitations were not unusual when compared to

other defendants. Indeed, the court noted that Davis had stable employment and an

education that many other defendants lacked. The court also noted that the Guidelines

range took into account Davis’s abuse of trust, targeting of vulnerable victims, the

amount of loss, and that sophisticated means were used. The court also recognized that it

was legally unable to consider the consecutive sentence in determining the proper

sentence, a conclusion that Davis agrees with on appeal. The court accepted Davis’s

remorse as genuine, but noted that the crime was serious and ongoing. The court then

stated that, despite the significant need to punish and deter, it would impose a sentence at

the low end of the Guidelines based upon the mitigating circumstances argued by

counsel.

We find that the court’s reasoning was individualized, detailed and sufficient. 2

Accordingly, we affirm the district court’s judgment. We dispense with oral argument

2 Davis contends that the district court failed to address her drug dependency and the effect her incarceration would have on her son. However, the court’s consideration of Davis’s family situation and her physical and emotional health sufficiently covered these factors.

7 because the facts and legal conclusions are adequately presented in the materials before

this court and argument would not aid the decisional process.

AFFIRMED