915 F.3d 1009
5th Cir.2019Background
- Michael A. Lord and Randall B. Lord pleaded guilty to conspiracy to operate an unlicensed money services business (Count One); Michael also pleaded guilty to conspiracy to distribute Alprazolam (Count Fifteen).
- The indictment alleged the Lords operated a bitcoin exchange starting in 2013, failed to obtain Louisiana money-transmitter licensing, and failed to timely register with FinCEN until November 2014 after exchanging ≈ $2.6M in funds.
- After pleading, the Lords learned Louisiana did not require a license for virtual-currency exchangers and sought to withdraw their guilty pleas, arguing the plea was not knowing and asserting legal defenses; the government conceded no state-license theory but relied on the FinCEN-registration theory.
- The district court denied the motion to withdraw and sentenced Randall to 46 months (below guidelines) and Michael to 46 months (Count One) + 60 months consecutive (Count Fifteen).
- At sentencing the court applied guideline enhancements: (a) §2S1.3 using the value of exchanged funds; (b) no acceptance-of-responsibility reduction; (c) for Michael, a §2D1.1(b)(12) premises enhancement and a §3B1.3 special-skill enhancement (both contested).
- On appeal the Fifth Circuit affirmed denial of plea withdrawal and most sentencing rulings, but reversed and remanded as to Michael’s premises and special-skill enhancements.
Issues
| Issue | Lord(s) Argument | Government / District Court Argument | Held |
|---|---|---|---|
| Withdrawal of guilty pleas | Learned after plea Louisiana did not require MSB license; plea therefore not knowing | Plea was knowing: indictment alleged alternative FinCEN-registration basis; delays, lack of factual innocence, and other Carr factors oppose withdrawal | Affirmed denial of plea withdrawal |
| Use of value of exchanged funds (§2S1.3 / §2B1.1) | No actual pecuniary loss; clients did not lose money so table loss inapplicable | §2S1.3 applies to value of funds involved in reporting/structuring conduct regardless of victim loss | Enhancement proper; affirmed |
| Acceptance of responsibility (§3E1.1) | Lords claimed remorse and cooperation | Repeated objections to PSR facts, attempts to withdraw plea, and inconsistent statements show lack of acceptance | Denial of reduction affirmed |
| Premises enhancement (§2D1.1(b)(12)) | Michael lacked ownership, control, or unrestricted access to the storage room; visited once | Stored pill press and materials there; manufactured thousands of pills there in furtherance of scheme | Reversed as to premises enhancement (insufficient evidence of control/access) |
| Special-skill enhancement (§3B1.3) | Michael’s computer/darknet skills were self-taught and common for his cohort; not sufficiently sophisticated | Michael used technical skills to facilitate concealment/sales on darknet; testimony described him as technologically adept | Reversed as to special-skill enhancement (skills not shown to be particularly sophisticated) |
Key Cases Cited
- United States v. Carr, 740 F.2d 339 (5th Cir. 1984) (factors for plea-withdrawal motions)
- United States v. Powell, 354 F.3d 362 (5th Cir. 2003) (standard of review for denial of plea withdrawal)
- United States v. Still, 102 F.3d 118 (5th Cir. 1996) (burden to show fair and just reason to withdraw plea)
- United States v. Marek, 238 F.3d 310 (5th Cir. 2001) (factual basis required for guilty plea)
- United States v. Beras, 183 F.3d 22 (1st Cir. 1999) (application of §2S1.3 without a showing of victim loss)
- United States v. Guzman-Reyes, 853 F.3d 260 (5th Cir. 2017) (premises enhancement can apply absent formal ownership but requires control/access)
- United States v. Petersen, 98 F.3d 502 (9th Cir. 1996) (affirming special-skill enhancement for highly sophisticated computer hacking)
- United States v. Green, 962 F.2d 938 (9th Cir. 1992) (reversing special-skill enhancement where computer/printing skills not sufficiently special)
- United States v. Reichert, 747 F.3d 445 (6th Cir. 2014) (self-taught, sustained, and specialized technical skill supports special-skill enhancement)