UNITED STATES OF AMERICA, Plaintiff-Appellee, v. KAREN GAGARIN, Defendant-Appellant.
No. 18-10026
United States Court of Appeals, Ninth Circuit
February 13, 2020
D.C. No. 3:14-cr-00627-SI-4
Before: Ronald M. Gould, Carlos T. Bea, and Michelle T. Friedland, Circuit Judges.
Opinion by Judge Gould; Concurrence by Judge Friedland
FOR PUBLICATION
Appeal from the United States District Court for the Northern District of California Susan Illston, District Judge, Presiding
Argued and Submitted September 9, 2019 San Francisco, California
Filed February 13, 2020
SUMMARY*
Criminal Law
The panel affirmed a conviction for aggravated identity theft under
The panel rejected the defendant‘s challenges to the district court‘s denial of her motion for judgment of acquittal on the aggravated identity theft count.
The panel held that the defendant “used” a means of identification under the meaning of
The panel rejected the defendant‘s contention that in order to show that she acted “without lawful authority” as required by the statute, the Government must show that her use of the means of identification was “itself illegal.” The panel explained that the defendant‘s use of her cousin‘s identity during and in relation to the wire fraud was sufficient.
The panel wrote that the Seventh Circuit‘s interpretation of “another person” in United States v. Spears, 729 F.3d 753 (7th Cir. 2013) (en banc), to mean “a person who did not consent to the use of the means of identification” contradicts this court‘s holding in United States v. Osuna-Alvarez, 788 F.3d 1183, 1185-86 (9th Cir. 2015) (per curiam). The panel thus held that even if the defendant had her cousin‘s consent to file an insurance application for her, the panel would follow this circuit‘s precedent to hold that the defendant used the means of identification of “another person” by using the identification of another “actual person.”
The panel held that the district court did not abuse its discretion and commit significant procedural error by imposing a three-level “manager or supervisor” enhancement under
Upholding the restitution order, the panel wrote that there is no indication that the district court employed an erroneous valuation methodology that focused on a criterion other than the actual losses of the victim, and held that the district court did not abuse its discretion by declining to deduct the purported value of “back-end” accounts from the restitution award. The panel declined to second-guess the district court‘s imposition of joint and several liability, and rejected as unavailing the defendant‘s contention that the restitution schedule is internally inconsistent.
Concurring except as to the penultimate paragraph of Part II.C, Judge Friedland wrote that she is disinclined to criticize the analysis of the unanimous en banc Seventh Circuit decision in Spears “on its own terms,” as the majority does.
COUNSEL
Carmen A. Smarandoiu (argued), Chief, Appellate Unit; Candis Mitchell, Assistant Federal Public Defender; Steven G.
Kirstin M. Ault (argued), Assistant United States Attorney; Merry Jean Chan, Chief, Appellate Section, Criminal Division; David L. Anderson, United States Attorney; United States Attorney‘s Office, San Francisco, California; for Plaintiff-Appellee.
OPINION
GOULD, Circuit Judge:
Defendant Karen Gagarin was convicted of conspiracy to commit wire fraud, wire fraud, and aggravated identity theft. The district court sentenced her to a total of 36 months in prison, after concluding that a three-level “manager or supervisor” sentencing enhancement applied to Gagarin‘s role in the scheme to defraud the American Income Life Insurance Company (AIL). It also imposed a restitution order, which held Gagarin jointly and severally liable with her convicted co-conspirators for the full loss suffered by AIL. On appeal, Gagarin challenges the district court‘s denial of her post-trial motion for a judgment of acquittal on the aggravated identity theft count, its imposition of the three-level sentencing enhancement, and the restitution order. We affirm.
I.
In late 2011, Benham Halali devised a scheme to defraud AIL of millions of dollars. Halali ran the San Jose, Fresno, Roseville, and Concord offices of the Jatoft-Foti Agency (JFA), the exclusive California sales agent of AIL. Between September 2011 and Spring 2012, Halali and co-conspirators in those offices, all independent contractors of AIL, submitted hundreds of fraudulent insurance applications to AIL on behalf of individuals who, in general, did not intend to apply for life insurance or know that their identifying information was being used. Karen Gagarin was a General Agent with sales and managerial responsibility in JFA‘s San Jose office, and she ran the office when Halali was away. It is undisputed that she knowingly participated in the fraudulent scheme.
The conspiracy took advantage of AIL‘s system of compensating agents for insurance policy sales. For each policy an agent purportedly sold, the agent received advanced commissions and bonuses from AIL according to a specified percentage of the premiums that the policy would be expected to generate during the year. The conspirators then paid about four months of premiums on the fraudulent policies, from hundreds of different bank accounts opened for that purpose, before defaulting. According to AIL‘s compensation structure, policies that lapsed before the end of four months resulted in the agents being “charged back” for their unearned advances, but policies that lapsed after four months would result in only a debit of the unearned value against the agents’ “back-end” accounts. These back-end accounts served as a retirement account of sorts, representing the net earnings an agent could anticipate collecting after leaving the agency, subject to certain conditions. By keeping the fraudulent policies active for four months, conspiring agents were able to pocket the difference between their advanced compensation and the premiums they paid on the policies. During the course of this conspiracy, the conspirators submitted about 700 fraudulent applications, although not all applications resulted in issued policies.
When Gagarin was not managing JFA‘s San Jose office in Halali‘s absence, her day-to-day responsibilities included selling policies for AIL and supervising certain agents within the office. On several occasions, Gagarin submitted insurance applications that falsely listed these agents as the “writing agent“—the agent who had executed the policy. Because the policy would then be registered officially in those agents’ names, Gagarin would ask them to reimburse her for the advanced commissions and bonuses they were paid on those policies.
In September 2011, AIL received an electronic insurance application from Melissa Gilroy, Gagarin‘s cousin. Although not listed as the writing agent, by all accounts Gagarin was the agent who executed and submitted the application. The application contained false information about Gilroy‘s employment status, salary, and the nature of her relationship with the intended beneficiary. Although the application contained Gilroy‘s electronic signature indicating that she was the payor of the policy, the bank account connected to the policy actually belonged to Steven Nguyen—the brother of an admitted co-conspirator in the scheme—and was later replaced by a bank account held in Gagarin‘s name. Elsewhere, the application contained Gilroy‘s electronic signature, purportedly certifying that all information in the application was true and correct to the best of her knowledge. The requested policy coverage was for more than $300,000, at a monthly premium of $236.
Pursuant to a grant of immunity, Gilroy testified at trial that she had asked her cousin Gagarin to “sign [her] up for a policy” after experiencing a health scare. Gilroy further testified that she had asked Gagarin to state falsely that Metro PCS was her place of employment because she worried she would be denied insurance if AIL knew she was unemployed. At the same time, Gilroy testified that she had intended to pay for the policy herself and never asked Gagarin to pay for it through anyone else‘s bank account. Nor had she asked Gagarin to lie about the nature of her relationship to the named beneficiary. Gilroy also stated that she never discussed the type of coverage, the coverage amount, or the premium amount with Gagarin. Although she had previously worked for AIL for a few months, she stated that she was not familiar with AIL‘s new electronic application process and that she had never seen the application in question, let alone typed or otherwise electronically signed her name on it.
In December 2014, a grand jury indicted five people—Benham Halali, Ernesto Magat, Kraig Jilge, Karen Gagarin, and Alomkone Soundara—on charges of conspiracy to commit wire fraud under
Gagarin filed a post-trial motion for a judgment of acquittal, pursuant to
At sentencing, the district court concluded that a three-level sentencing enhancement for having a “manager or supervisor” role applied to Gagarin on the underlying fraud counts, pursuant to
The district court also held Gagarin jointly and severally liable with Halali and Magat for restitution to AIL for its losses, which the court assessed at $2,837,791.93, representing the total amount of advances AIL had paid out to the conspirators, less the money AIL had already recovered.
In this timely appeal, Gagarin challenges the district court‘s denial of her post-trial motion for acquittal on the aggravated identity theft count, the court‘s imposition of the three-level sentencing enhancement on the fraud claims, and the court‘s order of restitution. We have jurisdiction pursuant to
II
We review de novo a district court‘s denial of a
Here, we consider whether, viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of aggravated identity theft beyond a reasonable doubt. In relevant part, “[w]hoever, during and in relation to any felony violation enumerated in subsection (c),” including wire fraud, “knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person” is guilty of aggravated identity theft.
A
After oral arguments in this appeal, another panel of our court addressed the meaning of “use” under the aggravated identity theft statute. See United States v. Hong, 938 F.3d 1040, 1049–51 (9th Cir. 2019). Drawing on previous treatment of this term in the context of
Here, Gagarin purported to take action on behalf of her cousin Melissa Gilroy, and in so doing used Gilroy‘s identity to further the fraudulent insurance application. As Gilroy testified, Gilroy never asked Gagarin to sign an insurance application in her name, nor did the two ever discuss specifics, such as the type or amount of coverage Gilroy wanted or the premium she would be willing to pay. Instead, they discussed in a general sense Gilroy‘s desire that Gagarin help her find an insurance policy, and Gilroy never saw, let alone signed, the particular application that was submitted to AIL. Viewing the facts in the light most favorable to the prosecution, Nevils, 598 F.3d at 1163–64, the inescapable inference is that Gagarin forged Gilroy‘s signature in two places on that application. The application contained falsehoods and constituted the basis of Gagarin‘s Count 10 wire fraud conviction, which is unchallenged on appeal. At the same time, Gagarin‘s forgery of Gilroy‘s signature falsely conveyed the impression that Gilroy herself certified that “the answers set forth above are full, complete
Unlike Hong, in which the defendant submitted documents about his own eligibility for certain benefits, 938 F.3d at 1049–51, Gagarin “attempt[ed] to pass [herself] off” as her cousin through forgery and impersonation. Id. at 1051; see also United States v. Blixt, 548 F.3d 882, 886 (9th Cir. 2008) (holding “that forging another‘s signature constitutes the use of that person‘s name and thus qualifies as a ‘means of identification’ under
B
Gagarin also contends that she did not act “without lawful authority,” a required element of aggravated identity theft. We disagree. We have held that “despite its title,
Gagarin acknowledges that, in light of Osuna-Alvarez, even if Gilroy consented to the submission of the insurance application, this would not mean that Gagarin had “lawful authority.” Gagarin argues that, in order to show that she acted “without lawful authority,” the Government must show that her use of the means of identification was “itself illegal.”
We disagree. Whether a particular use was “itself illegal” relates to the degree of connection between the use of the identity and the predicate felony. But the statute already contains language about the required nexus: the use must be “during and in relation to” specified unlawful activity. Here, for the reasons stated above, Gagarin used Gilroy‘s identity during and in relation to the wire fraud that Gagarin does not challenge occurred here. Gagarin has not shown that use “without lawful authority” required more in this case.
C
Next, Gagarin invites us to adopt the Seventh Circuit‘s interpretation of “another person.” The Seventh Circuit has construed the phrase “another person” in the aggravated identity theft context to mean “a person who did not consent to the use of the ‘means of identification.‘” United States v. Spears, 729 F.3d 753, 758 (7th Cir. 2013) (en banc). The Seventh Circuit found ambiguous the question of whether “another person” refers to a “person other than the defendant” or a “person who did not consent to the information‘s use” and therefore resorted to several tools of statutory interpretation to resolve the perceived ambiguity. Id. at 756–58. It was concerned that a broad construction of the phrase “would convert most identity fraud into identity theft and add a mandatory, consecutive, two-year term to every conviction,”
Gagarin argues that because Gilroy requested that Gagarin file an insurance application for her, under Spears the “another person” element of aggravated identity theft is not satisfied here.2 But following Spears to so hold would conflict with our precedent in Osuna-Alvarez. Interpreting “another person” to mean “a person who did not consent to the use of the means of identification” contradicts our holding that, “regardless of whether the means of identification was stolen or obtained with the knowledge and consent of its owner, the illegal use of the means of identification alone violates
Nor are we convinced by the interpretive analysis of Spears on its own terms. The phrase “another person” does not appear particularly ambiguous on its face, especially when we have already determined the phrase refers to another “actual person.” Maciel-Alcala, 612 F.3d at 1101. The plain reading of “another person” seems to us to be an actual “person other than the defendant.” Contra Spears, 729 F.3d at 756 (rejecting this reading). Since “[a] statute‘s caption . . . cannot undo or limit its text‘s plain meaning,” Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 242 (2004),
In summary, even if Gagarin had Gilroy‘s consent, we follow our circuit precedent to hold that Gagarin used the means of identification of “another person” by using the identification of another “actual person.”
Gagarin challenges the district court‘s application of a three-level “manager or supervisor” role sentencing enhancement, pursuant to
To qualify for a three-level sentencing enhancement under
[who] need not have been convicted.” Id. (internal quotation marks and citation omitted). In determining by a preponderance of the evidence whether the enhancement applies, the district court considers factors such as:
the exercise of decision making authority, the nature of participation in the commission of the offense, the recruitment of accomplices, the claimed right to a larger share of the fruits of the crime, the degree of participation in planning or organizing the offense, the nature and scope of the illegal activity, and the degree of control and authority exercised over others.
The district court did not abuse its discretion because “evidence in the record supports an inference that [Gagarin] exercised the requisite degree of control” over at least one criminally responsible participant, Reza Zabihi. Gadson, 763 F.3d at 1222. There is no dispute that Zabihi, who joined the San Jose office of JFA as an intern a few months before the initiation of the conspiracy, was a criminally responsible participant in the fraudulent scheme. At the time of the offenses, Zabihi served as a sales agent of AIL policies and as an unofficial personal assistant to Halali, even as Zabihi held the “joke” title of HR manager. On many occasions, Zabihi complied with Halali‘s instructions to “Go get me two free accounts,” which Zabihi knew meant unused bank accounts that could be used to pay fraudulent policies.
IV
The legality of a restitution order is reviewed de novo, United States v. Galan, 804 F.3d 1287, 1289 (9th Cir. 2015), as is the district court‘s “valuation methodology,” United States v. Berger, 473 F.3d 1080, 1104 (9th Cir. 2007). If “the order is within statutory bounds,” then the restitution calculation is reviewed for abuse of discretion, with any underlying factual findings reviewed for clear error. Galan, 804 F.3d at 1289. We also review a district court‘s decision to impose joint and several liability for abuse of discretion. United States v. Booth, 309 F.3d 566, 576 (9th Cir. 2002).
A
Under the Mandatory Victims Restitution Act (MVRA), which applies “in all sentencing proceedings for convictions of . . . an offense against property under this title . . . including any offense committed by fraud or deceit,”
A district court is to resolve disputes as to the proper amount of restitution by a preponderance of the evidence.
Gagarin asserts that the district court employed an unlawful valuation methodology or at least abused its discretion by choosing not to deduct the value of Defendants’ “back-end” accounts from the restitution award. As described earlier, these accounts contained the ongoing earnings from commissions not yet paid through advances, minus the value of any advances that exceeded the agents’ actual earnings, e.g., because the policyholder stopped paying premiums before the end of the period for which the advance was made. Agents were permitted to collect from these back-end accounts upon leaving the company, so long as they were not fired for cause, their interest had vested, and payments continued to be made on the policies that the agents had sold. Gagarin contends that these back-end accounts were real, vested assets, to which Defendants would have been entitled had they acted lawfully, and therefore that the value of the accounts should be deducted from the restitution amount in accordance with Bussell, 504 F.3d at 965.
There is no indication, however, that the district court employed an erroneous valuation methodology that focused on a criterion other than the actual losses of the victim. Rather, the court chose not to deduct the value of the back-end accounts because of its conclusion that the accounts were only “estimates which do not affect the calculation of the loss here,” relying in part on the conclusions of the Presentence Report. Since the district court applied the proper standard, we review its determination of the amount of loss for only clear error. Galan, 804 F.3d at 1289.
Because “it appears that the district court placed [the] burden [of establishing the right to a deduction] on the defendant,” Crawford, 169 F.3d at 593 n.2, Defendants had to prove by a preponderance of the evidence that they would have been entitled to the value of the back-end accounts had they acted lawfully. See Bussell, 504 F.3d at 965. Although Defendants’ counsel elicited an isolated acknowledgment that an agent could be paid the value of the back-end accounts upon termination if “customers continue to pay premiums” and “if the agent was vested,” the weight of the evidence characterized the back-end accounts not as actual, vested entitlements, but rather as projections of the present value of future commissions, “if all necessary criteria were met.” Defendants did not show that all necessary criteria were met. For example, it is far from clear that, had Defendants not committed the crimes that caused them to be fired for cause, they would have eventually left AIL in good standing and would have met the necessary criteria to be paid from the back-end accounts. See Serawop, 505 F.3d at 1127 (holding that a defendant could not prove entitlement to a deduction based on speculative assumptions). The district court did not commit clear error by finding that Defendants had not met their burden
B
Gagarin‘s remaining claims lack merit. The MVRA expressly permits the imposition of joint and several liability,
Gagarin‘s contention that the restitution schedule is internally inconsistent is also unavailing. Gagarin relies on United States v. Holden, in which we vacated and remanded a restitution order because the restitution schedule‘s requirement of both a “[l]ump sum payment” due immediately and a schedule of small payments to be made during the defendant‘s period of incarceration was internally inconsistent. 908 F.3d at 403. But in Holden, the imposition of installment payments during incarceration was not contingent, by the schedule‘s terms, on non-payment of the lump sum. The restitution schedule in this case, in contrast, is implicitly conditional: It specifies that a lump sum payment is “due immediately,” but that the “balance“—i.e., any portion of that single restitution amount that is not in fact paid “immediately“—is “due . . . in accordance with” an installment plan. Gagarin contends that the restitution schedule in Holden used the same “balance due” conditional language as the district court used here with respect to the defendant‘s post-incarceration payment schedule. But Holden vacated the restitution schedule on account of the “unconditional schedule of payments during the period of incarceration.” Id. at 404 (emphasis added). And unlike in Holden, where the district court expressly found that the defendant lacked ability to pay according to the schedule, id., here there has been no such finding. We conclude that there was no error in the district court‘s restitution order.
For the foregoing reasons, we affirm the aggravated identity theft conviction, the sentencing enhancement, and the restitution order.
AFFIRMED.
FRIEDLAND, Circuit Judge, concurring except as to the penultimate paragraph of Part II.C:
I concur in Judge Gould‘s thoughtful opinion as to all issues but one: I am disinclined to criticize “on its own terms” the analysis of the unanimous en banc Seventh Circuit in United States v. Spears, 729 F.3d 753 (7th Cir. 2013).
I agree that Spears‘s holding is irreconcilable with this court‘s holding in United States v. Osuna-Alvarez, 788 F.3d 1183 (9th Cir. 2015). I also agree that, under a faithful application of our court‘s precedent, Gagarin‘s conviction must be affirmed. In my view, however, Spears adopts a reasonable limiting interpretation of a statute that could otherwise be stretched to cover situations far afield from what its title says it is about: aggravated identity theft, not mere identity fraud.
Spears explains that there is a risk, in reading the ambiguous text of
If this appeal had arisen on a blank slate, I would have given serious consideration to adopting Spears‘s holding. And for the reasons expressed in Spears, I believe there may be a need in future cases to adopt interpretations of the identity theft statute that help prevent it from being read to impose harsh sentences for offenses that do not actually involve identity theft. I therefore refrain from criticizing our sister circuit‘s sensible attempt to interpret this puzzling statute.