United States v. Cox
851 F.3d 113
1st Cir.2017Background
- Between 2006–2008, Sirewl Cox ran a mortgage-fraud scheme using straw buyers to buy multi‑family properties, convert them to condos, and sell units, funding mortgages with false loan applications and incentive payments.
- A federal jury convicted Cox on 8 of 16 counts (wire fraud, bank fraud, unlawful monetary transaction); acquitted on several other counts.
- The PSR attributed convicted, acquitted, and additional uncharged transactions to Cox as "relevant conduct," calculating loss > $7.8M and a Guidelines offense level of 37 (GSR 262–327 months).
- The district court adopted the PSR findings by a preponderance of the evidence, imposed three §2B1.1 enhancements (loss, number of victims, gross receipts), but varied downward and sentenced Cox to 150 months.
- The court ordered criminal forfeiture of $2,966,344.37, which included proceeds from uncharged relevant conduct. Cox appealed contesting: (1) use of acquitted/uncharged conduct in Guidelines and forfeiture, (2) loss calculation method, (3) sentencing reasonableness.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Preponderance standard for sentencing findings | Government: preponderance is proper for sentencing/factfinding | Cox: sentencing facts affecting Guidelines must meet higher (due process/jury) standard | Court: preponderance is constitutional and appropriate for sentencing facts (Watts/Lombard/Munyenyezi) |
| Use of acquitted/uncharged conduct as "relevant conduct" for Guidelines | Government: court may consider uncharged/acquitted acts that are part of same scheme by preponderance | Cox: PSR relied on unsupported/unreviewed materials; inclusion of such conduct improperly inflated Guidelines | Court: uncharged and acquitted conduct may be relevant if part of common scheme; district court's factual findings supported and not clearly erroneous; Cox offered no genuine rebuttal |
| §2B1.1 enhancements and loss calculation method | Government: enhancements and loss estimate were supported by trial record and documentary binders; short loan lifespan justified using original loan amounts | Cox: loss should be based on outstanding balances or measured differently; principal repayments may reduce loss below enhancement thresholds | Court: Appolon and Guidelines permit reasonable loss estimates; short duration of loans makes difference immaterial; enhancements and methodology upheld |
| Forfeiture of proceeds from uncharged conduct | Government: statutes permit forfeiture of proceeds "derived from" offenses and thus of broader scheme, not limited to counts of conviction | Cox: criminal forfeiture statute does not authorize forfeiture based on unconvicted conduct | Court: criminal forfeiture is part of sentencing and governed by preponderance; forfeiture may include proceeds from uncharged relevant conduct that are part of same fraudulent scheme |
| Substantive reasonableness of 150‑month sentence | Government: recommended 180 months; court varied downward to avoid disparities | Cox: 150 months was substantively unreasonable compared to other fraud sentences | Court: sentence within the expansive universe of reasonableness, substantial downward variance supports reasonableness; Cox failed to show an unwarranted disparity |
Key Cases Cited
- United States v. Pantojas-Cruz, 800 F.3d 54 (1st Cir. 2015) (standard of review for sentencing reasonableness)
- Gall v. United States, 552 U.S. 38 (2007) (procedural and substantive reasonableness framework for sentencing)
- United States v. Lombard, 72 F.3d 170 (1st Cir. 1995) (preponderance standard for sentencing factfinding)
- United States v. Watts, 519 U.S. 148 (1997) (acquitted conduct may be considered at sentencing)
- United States v. Munyenyezi, 781 F.3d 532 (1st Cir. 2015) (preponderance standard applies when sentencing findings do not affect statutory max/min)
- United States v. Appolon, 695 F.3d 44 (1st Cir. 2012) (approach to calculating actual loss where collateral was pledged for fraudulent loans)
- United States v. Eisom, 585 F.3d 552 (1st Cir. 2009) (relevant conduct in an extended scheme; course of conduct analysis)
- United States v. Cyr, 337 F.3d 96 (1st Cir. 2003) (district court may rely on PSR absent specific rebuttal evidence)
- United States v. Foley, 783 F.3d 7 (1st Cir. 2015) (declining to credit speculative adjustments to loss without evidence)
- United States v. Venturella, 585 F.3d 1013 (7th Cir. 2009) (forfeiture may reach proceeds of an overall fraudulent scheme beyond specific counts)
- United States v. Lo, 839 F.3d 777 (9th Cir. 2016) (statutory forfeiture can include proceeds from uncharged executions of a fraudulent scheme)
- United States v. Fruchter, 411 F.3d 377 (2d Cir. 2005) (proceeds from acquitted conduct countable for forfeiture under RICO)