United States v. Thomas Jennings
711 F.3d 1144
9th Cir.2013Background
- Jennings and Feuerborn owned Environmental Soil Sciences, Inc. (ESS) and claimed a technology to separate oil from dirt, soliciting investors and raising about $16 million.
- ESS paid Eco-Logic Environmental Engineering approximately $2.5 million; the defendants opened and used a separate bank account named Ecologic to move funds.
- Funds were deposited from ESS into the Ecologic account and used for personal expenses, while ESS investors and ESS records were not informed.
- The company generated no substantial revenue; the Ecologic account payments were not reported as income to the IRS.
- Defendants were convicted of conspiracy to defraud the United States; Jennings was convicted of four counts of subscribing false tax returns and Feuerborn of four counts of tax evasion; district court applied a two-level sophisticated means enhancement in sentencing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the sophisticated means enhancement was properly applied. | United States contends the conduct was sufficiently sophisticated. | Jennings/Feuerborn argue the scheme was not as sophisticated as listed in the note. | Yes; application affirmed; enhancement proper despite not matching every listed example. |
| Whether opening Ecologic under Jennings's name affected the enhancement. | United States asserts concealment was sophisticated regardless of name. | Jennings argues partial concealment but contends sophistication still lacking. | Yes; concealment through Ecologic account constitutes sophisticated means despite using real name. |
Key Cases Cited
- United States v. O’Doherty, 643 F.3d 209 (7th Cir. 2011) (affirms enhancement for corporate-sounding concealment schemes)
- United States v. Clarke, 562 F.3d 1158 (11th Cir. 2009) (supports applying sophistication beyond explicit examples)
- United States v. Lewis, 93 F.3d 1075 (2d Cir. 1996) (applies enhancement to fake bank accounts of non-existent businesses)
- United States v. Fife, 471 F.3d 750 (7th Cir. 2006) (noting sophistication not equivalent to brilliance)