United States v. Vernado Malone

815 F.3d 367, 2016 U.S. App. LEXIS 4404, 2016 WL 890972
CourtCourt of Appeals for the Seventh Circuit
DecidedMarch 9, 2016
Docket15-2400
StatusPublished
Cited by23 cases

This text of 815 F.3d 367 (United States v. Vernado Malone) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Vernado Malone, 815 F.3d 367, 2016 U.S. App. LEXIS 4404, 2016 WL 890972 (7th Cir. 2016).

Opinion

KANNE, Circuit Judge.

Appellant Vernado Malone pled guilty to mail fraud and aggravated identity theft pursuant to a written plea agreement. In the factual basis of his plea agreement, he admitted that he “committed numerous instances of access device fraud” and “misused the means of identification of employees of several companies,” specifically identifying three companies and one individual he defrauded. At sentencing, the government presented evidence that there were twenty-eight victims of Malone’s scheme.

Despite having waived his right to appeal, Malone argues that the government materially breached the plea agreement by presenting evidence of twenty-eight victims when only four were referred to by name in the agreement. Because the plea agreement made clear that the named victims were either an “example” or just “[o]ne of’ the companies he defrauded, the government did not commit a material breach by introducing evidence that there were more victims than those specifically named. Accordingly, we enforce the appellate waiver and dismiss this appeal.

I. Background

On September 11, 2013, a grand jury indicted Malone on three counts — mail fraud, wire fraud, and aggravated identity theft — stemming from his multi-year scheme to fraudulently obtain and use credit cards.

A Plea Agreement

Malone entered into a written plea agreement in which he agreed to plead guilty to counts one and three of the indictment for mail fraud, 18 U.S.C. § 1341, and aggravated identity theft, § 1028A. The factual basis for his guilty plea provided the following:

I have been convicted of fraud before, including in federal court. In this instance, I committed numerous instances of access device fraud and used the mails to do so. In 2011, for example, I pretended to be an employee with Modi-neer Co. and changed the Company’s Citgo credit card account to an online account that I could control. Once I did that, I ordered 14 fleet credit cards and had them mailed to locations in the South Bend, Indiana area where I could receive them. Some of these locations were abandoned houses. • Then, without proper authorization, I used these credit cards to buy gift cards, gasoline, and other merchandise for myself and persons that I knew. I also defrauded Wright Express Fleet Services (WEX) in 2012. During this time, I misused the means of identification of employees of several companies that had credit card accounts with WEX. One of these companies was J & C Ambulance Service Inc. I misused the means of identification of Rick Reed at J & C Ambulance Service Inc. and with intent to defraud I ordered on March 15, 2013 1 ordered [sic] several credit cards be sent to 419 S. 26th Street, South Bend, Indiana via Federal Express (FED EX tracking no. 527759742018). I received these cards *369 and began using them fraudulently on March 17, 2012. I did the same type of thing with WEX and a company called Rural Metro. In this instance, on March 28, 2012, I fraudulently ordered credit cards and they were sent at my request to 419 S. 26th Street, South Bend, Indiana via FED EX (FedEx tracking number 528981371819). On March 30, 2013, I started using the cards fraudulently!.]

With respect to sentencing, the plea agreement provided that the district court would “determine the applicable sentencing guideline range” and “determine all matters, whether factual or legal, relevant to the application of the sentencing guidelines including, but not limited to, ... victim-related adjustments” after considering input “from the government.” Malone expressly waived his right to appeal his conviction or “all components of [his] sentence, or the manner in which ... [his] sentence was determined or imposed, to any Court on any ground.”

In exchange for his guilty plea, the government agreed to dismiss the wire-fraud count and recommend either a 2 or 3-level reduction for acceptance of responsibility, depending on Malone’s applicable offense level and the timeliness of his guilty plea. The government stipulated that the amount of the loss was $120,000, but the agreement contained no other stipulations.

On August 13, 2014, the district court held a change of plea hearing. Malone entered a plea of guilty on counts one and three of the indictment. After reviewing the plea agreement, the district court accepted it and found that it was made knowingly and voluntarily.

B. Sentencing

The presentence investigation report (PSR) recommended a 2-level enhancement for an offense involving more than ten victims. U.S.S.G. § 2Bl.l(b)(2)(A)(i). The basis for the enhancement, the PSR explained, was because “Modineer and WEX sustained actual loss” yet “10 additional corporations/companies who were customers of WEX are also considered victims as they were initially charged and incurred liability for the charges, although the credit card company ultimately absorbed the losses.” Malone objected, arguing that only Modineer and WEX, the companies that suffered unreimbursed financial losses, should count as victims.

At the sentencing hearing, the government called St. Joseph County Police Officer Philip Williams. Williams testified that WEX reported that twenty-eight of its clients “were subject to fraudulent charges on their credit accounts as a result of the Malone fraud.” The government sought to admit affidavits from ten of those clients, but Malone objected, contending that “in our plea agreement we agreed on the number of victims.” Explaining further, Malone pointed to the plea agreement’s factual basis, describing it as a stipulation and arguing that because the section only refers to WEX, J & C Ambulance, and Rural Metro, “those are the only people that [he] was acknowledging that were victims in this case.”

The district court disagreed that the factual basis in the plea agreement was a stipulation that there were only three victims of mail fraud. It held, however, that the additional twenty:eight companies did not qualify as “victims” for purposes of the victim-related enhancement because they did not sustain “actual loss.” Instead, the district court took Officer Williams’s testimony into account when considering the sentencing factors under 18 U.S.C. § 3553(a).

The district court determined that Malone had a total adjusted offense level of 15 *370 and a criminal history category of IV, resulting in a guideline range of 30 to 37 months’ imprisonment. The district court granted Malone a 4-level downward variance for cooperation with the government in other matters. But, the district court imposed a 4-level upward variance due to several aggravating factors, specifically noting “that while not characterized as victims for purposes of the guidelines, you defrauded 28 -credit card cardholders over a three-year period.” Ultimately, the district court imposed 37 months for mail fraud and 24 consecutive months for aggravated identity theft as required by 18 U.S.C. § 1028A

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Bluebook (online)
815 F.3d 367, 2016 U.S. App. LEXIS 4404, 2016 WL 890972, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-vernado-malone-ca7-2016.