United States v. Rory Bartley, A/K/A Roy Bailey

230 F.3d 667, 2000 U.S. App. LEXIS 26844, 2000 WL 1595706

• Court: Court of Appeals for the Fourth Circuit
• Decided: October 26, 2000
• Docket: 98-4317
• Status: Published

Opinions

Affirmed in part, reversed in part, vacated in part, and remanded by published opinion. Judge DIANA GRIBBON MOTZ wrote the majority opinion, in which Judge MICHAEL joined. Chief Judge WILKINSON wrote a dissenting opinion.

OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

Rory Bartley pled guilty to one count of conspiracy to distribute marijuana and one count of conspiracy to launder money. On appeal, Bartley challenges only his sentence. Because the district court erred in refusing to group Bartley’s offenses, but did not err in finding Bartley’s managerial role in the conspiracy justified an enhancement, we affirm in part, reverse in part, and vacate and remand for resentencing.

I.

Edwin Bruce recruited Bartley to participate in a marijuana distribution network based in Charleston, West Virginia. Bruce introduced Bartley to a number of interested buyers, including street dealers. Bartley regularly distributed marijuana to these dealers from Bruce’s supply and made wire transfers to California to purchase marijuana on Bruce’s behalf.

Bartley eventually disaffiliated from Bruce and located another marijuana supplier, but he maintained his associations with some of Bruce’s street dealers and at times obtained marijuana from Bruce’s distributors. Ultimately, Bartley expanded his drug distribution activities to Par-kersburg, West Virginia, and directed one of his street dealers to identify addresses there to which marijuana could be mailed.

Bartley’s street dealers would distribute the marijuana and wire transfer the proceeds on Bartley’s instruction, often to his uncle Claudius Pryce in New York. Bart-ley himself would also wire funds from his drug px-oceeds to various family members.

Bartley was charged with conspiracy to distifibute marijuana, distribution of marijuana, conspiracy to launder money, and two counts of money laundexing. After plea negotiations, he pled guilty to the two conspiracy counts and the district court proceeded to sentence him. In calculating Bartley’s offense level under the Sentencing Guidelines, the court began with the drug distribution conspiracy and assigned a base offense level of 28 predicated upon the amount of marijuana involved in the offense. See U.S. Sentencing Guidelines Manual § 2Dl.l(a), (c) (1998). The court then applied a three-level enhancement for Bartley’s role as a supervisor or manager in the conspiracy, see id. § 3Bl.l(b), resulting in an adjusted offense level of 31 for the drug distribution count. For the money laundering conspiracy, the district court assigned a base offense level of 23 under U.S.S.G. § 2S1.1(a)(1) and applied the same three-level enhancement based on Bartley’s role in the offense. The court then applied another three-level enhancement based on Bartley’s knowledge that the laundered funds were drug proceeds under U.S.S.G. § 2Sl.l(b)(l), resulting in an adjusted offense level of 29 for this count.

The district court did not group the two conspiracy counts together into a single “Group” under Part D of Chapter 3 of the Sentencing Guidelines. Instead, the court treated the two counts as distinct, and, in accordance with U.S.S.G. § 3D1.4(a), the court started with the greater of the two offense levels — 31, for the drug conspiracy — and then added two more levels because the adjusted offense level for the money laundering conspiracy was only two levels less serious than that for the drug conspiracy. This resulted in a combined adjusted offense level of 33. Finally, the court credited Bartley with a three-level downward adjustment for his acceptance of responsibility, see id. § 3E1.1, for a total offense level of 30, and sentenced him to 109 months imprisonment.

On appeal, Bartley contends that the district court erred in failing to group the two conspiracies for sentencing purposes. He also contends that the government offered insufficient evidence to support the district court’s imposition of the enhancements for his alleged role in the conspiracies. We review a district court’s legal interpretation of the Sentencing Guidelines de novo, see United States v. Williams, 152 F.3d 294, 302 (4th Cir.1998), and its underlying factual determinations in applying the Guidelines for clear error. See 18 U.S.C. § 3742(e); United States v. France, 164 F.3d 203, 209 (4th Cir.1998), cert, denied, 527 U.S. 1010, 119 S.Ct. 2351, 144 L.Ed.2d 247 (1999).

II.

Bartley first argues that the two conspiracy counts should have been grouped in calculating his combined adjusted offense level. Section 3D1.2 of the Sentencing Guidelines provides for the grouping of closely related counts, or those that “in-volv[e] substantially the same harm.” The Guidelines identify four situations in which counts should be grouped together for sentencing purposes:

(a) When counts involve the same victim and the same act or transaction.

(b) When counts involve the same victim and two or more acts or transactions connected by a common criminal objective or constituting part of a common scheme or plan.

(c) When one of the counts embodies conduct that is treated as a specific offense characteristic in, or other adjustment to, the guideline applicable to another of the counts.

(d) When the offense level is determined largely on the basis of the total amount of harm or loss, the quantity of a substance involved, or some other measure of aggregate harm, or if the offense behavior is ongoing or continuous in nature and the offense guideline is written to cover such behavior.

U.S.S.G. § 3D1.2.

In an addendum to Bartley’s Presen-tence Report (PSR), the probation officer cited subsection (b) and application note 2 to explain why he treated the two conspiracy counts as separate groups. In the officer’s opinion, the conspiracies harmed distinct societal interests and therefore did not involve “the same victim.” Bartley objected to the PSR. Although the government agreed with the probation officer’s analysis of subsection (b), it also brought to the district court’s attention the potential relevance of subsection (c) as a basis for treating the conspiracy counts as one group. Nonetheless, in refusing to group the offenses, the district court simply determined that each of the conspiracies harmed a distinct societal interest and did not involve “the same victim” as required by subsection (b); the court never reached the question of grouping on the basis of subsection (c).

For purposes of this appeal, we assume, without deciding, that the conspiracies impact different societal interests, and so grouping the counts under subsection (b) would be improper. See United States v. Harper, 972 F.2d 321, 322 (11th Cir.1992) (refusing to group under subsection (b)); United States v. Gallo, 927 F.2d 815, 824 (5th Cir.1991) (same). But see United States v. Lopez, 104 F.3d 1149, 1150-51 (9th Cir.1997) (grouping under subsection (b) proper); United States Sentencing Commission, Most Frequently Asked Questions About the Sentencing Guidelines, 20-21 (7th ed. 1994) (“Most Frequently Asked Questions”) (grouping under subsections (a), (b), or (c) proper).¹ The commentary to § 3D1.2, however, provides that “[cjounts are to be grouped ... if any one or more of the subsections provide for such grouping.” U.S.S.G. § 3D1.2, comment, (n.l) (emphasis added); see also id., comment, (backg’d.) (“Counts involving different victims (or societal harms in the case of ‘victimless’ crimes) are grouped together only as provided in subsection (c) or (d).”). Thus, even if grouping would be improper under subsection (b), it may be proper under another subsection.

To prevent “double counting,” subsection (c) requires offenses to be grouped when one count “embodies conduct that is treated as a specific offense characteristic in, or other adjustment to,” the offense level calculation of the other count. U.S.S.G. § 3D 1.2(c); see also id. § 3D1.2, comment, (n.5). In calculating Bartley’s offense level for the conspiracy to launder money, the district court, as recommended in the PSR, applied a three-level enhancement because Bartley “knew or believed that the funds were the proceeds of an unlawful activity involving the ... distribution of narcotics or other controlled substances.” U.S.S.G. § 2Sl.l(b)(l). In this case, grouping under subsection (c) was required. As the only circuit to consider grouping money laundering and drug distribution charges, explained:

Rice’s drug offenses were counted twice toward his sentence; once as the basis for his conviction on his drug counts, and again as a specific offense characteristic of the money laundering count. This had the effect of increasing Rice’s money laundering offense level by three pursuant to § 2Sl.l(b) because he knew or believed the funds he was receiving were the proceed[s] of the unlawful distribution of marijuana.... Therefore, we find that Rice’s offense behavior was impermissibly double counted. Accordingly, we hold that the district court erred in failing to group Rice’s counts for sentencing purposes as required by subsection (c).

United States v. Rice, 185 F.3d 326, 329 (5th Cir.1999).

In reaching this holding the Fifth Circuit relied on its earlier decision in United States v. Haltom, 113 F.3d 43, 46 (5th Cir.1997), which involved one count of mail fraud and four counts of tax evasion. The Haltom court held that subsection (c) required the counts to be grouped where the district court applied a two-level enhancement under U.S.S.G. § 2T1.1(b)(1) in calculating the offense level for the tax evasion counts because the defendant’s unreported income derived from criminal activity, i.e., mail fraud. The court explained that “[b]y requiring the grouping of Haltom’s[offenses], the guidelines spare him any incremental punishment for his tax crimes.... [T]he guidelines clearly forbid ... using the mail fraud count to enhance the offense level for tax evasion and then using the enhanced tax evasion offense level to increase the offense level for mail fraud.” 113 F.3d at 47 (emphasis added).

Bartley, like Rice, received the three-level enhancement under U.S.S.G. § 2Sl.l(b)(l) for his knowledge that the laundered funds were the proceeds of unlawful drug distribution activities. As such, here, as in Rice, conduct embodied by the conspiracy to distribute marijuana conviction was double counted: “the enhanced ... count was directly responsible for the ultimate 2-level increase in his total offense level” — from 31 to 33 — under U.S.S.G. § 3D1.4. Haltom, 113 F.3d at 46.² Of course, subsection (c) “applies only if the offenses are closely related.” U.S.S.G. § 3D1.2(c), comment, (n.5). Although the district court found that the counts were not “interrelated[ ]” for purposes of subsection (b) because each conspiracy caused a different societal harm, obviously the drug and money laundering conspiracies were “closely related” under subsection (c). Indeed, both the indictment and the PSR explicitly refer to the association of the two conspiracies, and the district court found that the money laundering “was to conceal and move the proceeds ... [and] to get those proceeds to other individuals who were in the consignment or fronting chain of command of the drugs.”

Nevertheless, the government and the dissent maintain that subsection (c) does not apply to Bartley’s case because the specific offense characteristic at issue does not punish for the actual distribution or transport of drugs, but rather for the knowledge that the laundered funds were drug proceeds. According to the government and the dissent, this knowledge is a separate act of criminal conduct not mirrored in the drug conspiracy count. To adopt this argument would promote an approach to the Sentencing Guidelines that would require district courts to unnecessarily “split hairs” or guess congressional intent in evaluating which specific offense characteristics or other adjustments are covered by subsection (c). Moreover, if we followed this approach, we could never group a money laundering offense with a drug offense. But see Most Frequently Asked Questions, supra, 21 (“§ 3D1.2 would call for grouping of related drug trafficking and money laundering counts under one or more of rulés (a), (b), or (c).”).

Furthermore, whatever the merit of this approach in a given case — and our good friend Judge Wilkinson in dissent makes about as good a case for this approach as possible — we cannot conclude it should be followed here. Subsection (c), after all, requires a court, when determining whether to group offenses, to consider the conduct embodied in each of a defendant’s multiple counts. In this case, the conduct embodied by the drug conspiracy count is extremely expansive. Indeed, the indictment specifically alleges that “[i]t was further a part of the [drug] conspiracy that in order to finance their ongoing illegal activity, the defendants ... would and did use Western Union money transfers, United Parcel Service, and other couriers” to transfer proceeds from marijuana sales “in order to finance their ongoing illegal activity.” In considering whether to group the offenses, we cannot treat the “conduct” embodied in the drug conspiracy count as constituting only acts of drug distribution when in fact the offense conduct the indictment actually charges in this conspiracy count includes laundering drug proceeds to facilitate illegal drug distribution activities.

The dissent contends that because “the guidelines use the words ‘counts’ and ‘offenses’ interchangeably,” post at 677, the Guidelines intend a court to confine its grouping analysis to the legal elements of an “offense” rather than the conduct charged in the indictment. Examination of the terms “count” and “offense” as used throughout the Guidelines, however, leads inevitably to the contrary conclusion that those terms encompass more than the elements of a crime. Indeed, Chapter Two of the Guidelines repeatedly uses the term “offense characteristics,” and a review of what the Commission considers “characteristics” of an “offense” makes clear that “offense” includes aspects of a crime other than its elements. For example, the Commission states that whether a defendant “knew” the source of laundered funds is a “characteristic” of the “offense” of money laundering. § 2S1.1. Since knowledge of the source of laundered funds is not an “element” of the “offense” of money laundering, the Commission obviously included more than the “elements” of a crime within its definition of “offense.”³

Nor does our holding that a court, when grouping, must examine the facts charged in the indictment cede power to prosecutors or allow them to “manipulate” a defendant’s sentence. Post at 677. Rather, by restricting the grouping analysis to the “elements” of an offense, the dissent would advance a one-size-fits-all scheme in which certain offenses, and only those offenses, can be grouped. Leaving aside the fact that the Commission likely would have provided such a list had it intended courts to apply the Guidelines in this manner (as it similarly did in § 3D1.2(d)), the dissent’s approach would rob a sentencing judge of any means to check a prosecutor’s power to manipulate the required grouping by picking and choosing under which statutes to indict. Moreover, preserving authority in the sentencing court to examine the specific conduct charged in the indictment does not create the “complexity” the dissent fears, post at 677; a judge ought to be familiar with the indictment whenever he imposes a sentence and should naturally consider the facts contained therein during sentencing.

This case thus significantly differs from United States v. Lombardi, 5 F.3d 568 (1st Cir.1993), on which the dissent heavily relies. Lombardi involved no conspiracy counts but charges of mail fraud and money laundering that were separable; Lombardi fraudulently secured insurance proceeds and then deposited the proceeds in a bank. There is no indication that Lombardi’s deposits in any way facilitated ongoing or future mail fraud, or that the indictment specifically charged that they did. The rationale of Lombardi simply does not apply here.⁴

Although there may be conceptual difficulty in some cases in characterizing “knowledge” that the laundered funds were drug proceeds as “conduct” embodied in a count charging drug violations, there is none here. Unlike Lombardi, in this case the indictment quite clearly charges a drug conspiracy that includes use of drug proceeds in money laundering to facilitate illegal drug distribution. Therefore, after the district court enhanced Bartley’s money laundering sentence because of his knowledge that laundered funds were proceeds of a drug conspiracy, the court should have grouped the two conspiracy counts.

The Sentencing Commission has explained that the Guidelines provisions governing the grouping of multiple counts are intended to enhance a defendant’s sentence only if the multiple counts “represent additional conduct that is not otherwise accounted for by the guidelines.” U.S.S.G. Ch. 3, Pt. D, intro, comment. Therefore, grouping is appropriate in Bartley’s case because the drug conspiracy count, as set forth in the indictment, “embodies conduct”- — money laundering of funds that were proceeds from illegal drug distribution (and knowledge of that conduct) — “that [wa]s treated as a specific offense characteristic in” calculating the offense level for the money laundering conspiracy count. U.S.S.G. § 3D1.2(e); see also id. § 2S1.1, comment, (backg’d). Accordingly, the district court' erred in failing to group the two conspiracy counts.

III.

Baftley contends that the district court also erred in finding that he exercised a managerial or supervisory role in the conspiracies, a finding the court used to justify a three-level enhancement in calculating the adjusted offense level for each count. See U.S.S.G. § 3Bl.l(b).

Section 3Bl.l(b) of the Guidelines provides for a sentencing enhancement “[i]f the defendant was a manager or supervisor (but not an organizer or leader) and the criminal activity involved five or more participants or was otherwise extensive.” U.S.S.G. § 3Bl.l(b). The commentary to this section also states that “[a]n upward departure may be warranted ... in the case of a defendaht who did not organize, lead, manage, or supervise another participant, but who nevertheless exercised management responsibility over the property, assets, or activities of a criminal organization.” Id. § 3B1.1, comment. (n.2); see also id. comment, (n.4) (identifying relevant factors to consider in evaluating the role of a defendant in criminal activity). In addition, the enhancement is justified if the defendant managed or supervised the activities of at least one other person in a scheme that involved five or more participants. See United States v. Capers, 61 F.3d 1100, 1108-09 (4th Cir. 1995); United States v. Brown, 147 F.3d 477, 485-86 (6th Cir.1998); United States v. Payne, 63 F.3d 1200, 1212 (2d Cir. 1995).⁵

The record supports the district court’s finding that Bartley was a manager or supervisor in each of the conspiracies. The government presented evidence that Bartley controlled the activities of other participants in the drug distribution conspiracy by directing one of his street dealers to identify addresses in Parkersburg, West Virginia, where the packages of marijuana could be sent, and by sending his girlfriend to West Virginia.on at least one occasion to transport the drugs. The record also indicates that from the time Bartley became involved in the conspiracy, he “exercised management responsibility” by setting prices and terms of payment, handling proceeds, arranging the logistics of the deliveries, and giving advice to his street dealers on how to market the product. With regard to the money laundering conspiracy, Bartley repeatedly directed others to wire transfer proceeds from the drug distribution activities or to receive such transfers of funds on his behalf.

This is not a case in which a defendant simply supplied drugs and negotiated their sale. Rather, the evidence clearly indicates that Bartley “arrang[ed] the logistics of [marijuana] deliveries or payments,” and at the very least “coordinate[d]” the activities of others. United States v. Vargas, 16 F.3d 155, 160 (7th Cir.1994). This alone is sufficient to warrant the enhancement. See, e.g., United States v. Harriott, 976 F.2d 198, 202 (4th Cir.1992).

Therefore, the district court did not clearly err in finding that Bartley’s role in the offenses justified a three-level enhancement under U.S.S.G. § 3Bl.l(b).

IV.

For the above reasons, we reverse the district court’s refusal to group the conspiracy counts, but we affirm the sentencing enhancements imposed for Bartley’s role in each conspiracy. We vacate the sentence and remand the case to the district court for resentencing consistent with this opinion.

AFFIRMED IN PART, REVERSED IN PART, VACATED IN PART, AND REMANDED

1 . Accordingly, we do not reach the issue addressed at length in Part I of the dissent.

2 . Had the three-level enhancement under U.S.S.G. § 2S1.1(b)(1) not been imposed, Bartley's offense level for the money laundering conspiracy would have been 26. His offense level for the drug distribution conspiracy would have remained at 31. According to U.S.S.G. § 3D1.4(b), the combined offense level would have been 32, not 33, because the money laundering conspiracy would have been counted as only one-half unit, thus requiring an increase of only one level rather than two.

3 . We also note that defining "offense" or "count” as the dissent suggests would contradict the commentary of the Guidelines pertaining to § 3D1.2(a) and (b). That commentary supports grouping of auto theft and alteration of a vehicle’s identification when those "counts involve ... a common scheme or plan.” § 3D 1.2, comment, (n.4). Were a court to limit analysis of those two offenses to their legal elements, and not look at the facts as established in an indictment, it would always be unable to find that these two crimes involved a common scheme or plan.

4 . We also note that although Bartley would have received the same enhancement for the money laundering count had he not been involved in the actual distribution of the marijuana but had come to know that the laundered funds were drug proceeds, that situation creates no "anomaly” in this case. See post at 678. Bartley will receive a longer sentence for participating in the drug conspiracy than he would have had he merely known the source of the laundered funds. If Bartley had been charged with (or pled guilty to) only the money laundering conspiracy, his total offense level would have been 26, assuming the district court would have applied the same adjustments for his role in the offense, knowledge that the funds were drug proceeds, and acceptance of responsibility. But, having pled guilty to both conspiracies, the drug distribution count results in a higher adjusted offense level, 31, which is the starting point for the calculation of the offense level for multiple counts. If the counts are grouped, the total offense level would be 28 (again assuming an adjustment for acceptance of responsibility); not grouping the counts results in a total offense level of 30. Either way, Bartley's greater degree of culpability for participating in both conspiracies is reflected in a higher total offense level.

5 . Bartley does not contest that the conspiracies involved five or more participants.