UNITED STATES of America, Plaintiff-Appellee, v. David LYLES and Sylvester Knight, Defendants-Appellants.
Nos. 11-5774, 11-5818
United States Court of Appeals, Sixth Circuit
Nov. 26, 2012
Guerrero-Davalos does not clearly challenge his sentence as substantively unreasonable. “The essence of a substantive-reasonableness claim is whether the length of the sentence is ‘greater than necessary’ to achieve the sentencing goals set forth in
Accordingly, we AFFIRM Guerrero-Davalos‘s sentence.
MERRITT, Circuit Judge.
This identity theft case arises from a scheme in which participants obtained stolen credit card numbers, encoded retailers’ gift cards with those numbers, and then used the fraudulent gift cards to purchase legitimate gift cards and merchandise. Defendants David Lyles and Sylvester Knight appeal their sentences after each pleaded guilty to one count of Conspiracy to Commit Access Device Fraud,
On appeal, each defendant challenges the district court‘s calculation of these enhancements. Lyles argues that the district court should have determined the amount of loss by using the actual loss caused through use of 192 stolen credit card numbers to make purchases. Knight also argues that the district court‘s loss calculation was erroneous, but under the theory that the commentary for U.S.S.G. § 2B1.6 precludes sentence enhancements when a defendant is charged with both Access Device Fraud and Aggravated Identity Theft. Using the same reasoning, Knight challenges his sentence enhancements for the number of victims involved and for relocation to evade law enforcement and use of sophisticated means. In
In addition to their challenges to the district court‘s Guidelines calculations, the defendants argue that their sentences were procedurally and substantively unreasonable. Lyles further claims that the imposition of punishment under both
After considering these arguments, we find no reversible error in the district court‘s decision. We therefore affirm each defendant‘s sentence.
I. Background
In February 2010, Knight, Lyles, and co-defendants were arrested at the Nashville airport after law enforcement discovered over 1,600 gift cards in their luggage, 977 of which were found to be encoded with credit information stolen from the customers of twenty-eight separate financial institutions. The remaining cards were authentic and contained a value of approximately $61,419. The authentic cards were the fruits of a scheme in which participants obtained stolen credit information and encoded this information onto retailers’ gift cards. They then used the fraudulent gift cards to purchase legitimate gift cards and other items at thirteen Wal-Mart stores in the Nashville area. In total, participants used 192 stolen credit card numbers to make purchases. Knight was found to have used forty-one stolen numbers to purchase seventy-eight gift cards worth $7,969.22. Lyles was found to have bought $96.68 worth of merchandise using two stolen numbers.
Lyles and Knight were each charged with Conspiracy to Commit Access Device Fraud under
Defendants timely appealed, and we exercise jurisdiction under
II. Guidelines Calculations
Lyles and Knight offer a number of challenges to the district court‘s use of sentence enhancements. We review the district court‘s interpretation of the Sentencing Guidelines de novo and its findings of fact for clear error. United States v. Greeno, 679 F.3d 510, 514 (6th Cir.2012). “‘[R]eliance on the [presentence report] is insufficient when the facts are in dispute.’ Rather, the district court must actually find facts, and it must do so by a preponderance of the evidence.” United States v. White, 492 F.3d 380, 416 (6th Cir.2007) (first alteration in original) (quoting United States v. Treadway, 328 F.3d 878, 886 (6th Cir.2003)). At sentencing, the district court may consider any relevant evidence so long as it is supported by sufficient indicia of reliability. U.S.S.G. § 6A1.3(a).
A. Lyles‘s Enhancement for Amount of Loss
To calculate the amount of loss attributable to the defendants, the district court followed U.S.S.G. § 2B1.1 cmt. n. 3(F)(i). This comment provides that where, as here, a crime involves a counterfeit or unauthorized access device, “loss includes any unauthorized charges made with the counterfeit access device or unauthorized access device and shall not be less than $500 per access device.” The district court read this language to impose an automatic $500 minimum loss for each of the 977 stolen credit card numbers possessed by the defendants. Multiplying $500 by 977, it reached a total loss of $488,500, resulting in a fourteen-level enhancement. Lyles argues that, under the correct interpretation of the Guidelines, the district court should have based its sentencing cal-
This court rejected this interpretation in United States v. Gilmore, 431 Fed.Appx. 428 (6th Cir.2011), an unpublished opinion decided a month after Lyles‘s sentencing. In Gilmore, the defendant possessed 2,747 stolen Social Security and bank account numbers. The district court multiplied 2,747 by $500 even though the defendant never used any of the numbers. Id. at 429. We agreed and held that the Guidelines comment does not limit loss calculation to actual loss when the crime involves access devices. Rather, in this situation the comment provides a special rule for calculating loss. Under this special rule, loss is at least the number of access devices involved in the crime multiplied by $500. Only if the actual loss exceeds this number is it used to determine amount of loss for the purpose of the enhancement. Id. at 430. This is what the Guidelines specify, and we follow it here in rejecting Lyles‘s argument.
Lyles appears to concede that Gilmore‘s interpretation of the special rule for access devices is correct. See Lyles Br. at 15. However, he points out that the district court in Gilmore found that the “overly harsh” sentence resulting from the $500 multiplier warranted a downward variance. See Gilmore, 431 Fed.Appx. at 429-30. He argues that a similar variance is warranted here. This is a claim about the substantive reasonableness of Lyles‘s sentence. As we discuss in Section III below, the reasonableness of a sentence is an individual determination over which the district court has a significant amount of discretion. We note, however, what Lyles has not argued—that the $500 fictional amount is beyond the authority of the Sentencing Commission to impose because it is in conflict with the overarching “parsimony” provision of the Sentencing Reform Act. The $500 rule first appeared in the Guidelines in 2000. The Commission added what is now § 2B1.1 cmt. n. 3(F)(i) after the Wireless Telephone Protection Act instructed it to “provide an appropriate penalty for offenses involving the cloning of wireless telephones.” Pub. L. No. 105-172, § 2(e), 112 Stat. 53, 55 (1998). The Commission did not limit its change to wireless-telephone cloning, but amended the commentary to encompass all access devices. It explained that “the Commission‘s research and data supported increasing the minimum loss amount, previously provided only in § 2B1.1 (Larceny, Embezzlement, and Other Forms of Theft), from $100 to $500 per access device,” U.S.S.G. Supp. App. C, Amend. 596, but the Commission did not elaborate upon the substance of its “research and data.”6
Theoretically, the $500 fictional amount should have to pass muster under the parsimony provision of
B. Knight‘s Enhancement for Amount of Loss
Conceding that our Gilmore opinion correctly interpreted the Guidelines, Knight has a different basis for contending that the district court incorrectly calculated amount of loss. He claims that the district court improperly ignored U.S.S.G. § 2B1.6 cmt. n. 2. Section 2B1.6 provides that sentencing for Aggravated Identity Theft under
Knight‘s interpretation of the comment is far broader than either precedent or reason will permit. The comment became part of the Sentencing Guidelines in 2005 to reflect the addition of
Courts interpreting § 2B1.6 cmt. n. 2 have understood the application of the comment to depend on the language of a given specific offense characteristic. For example, in United States v. Sharapka, 526 F.3d 58 (1st Cir.2008), the First Circuit considered the comment in relation to U.S.S.G. § 2B1.1(b)(10). The court found that the comment “applies to certain enhancements under § 2B1.1(b)(10), but not to all.” Id. at 62. Specifically, it found that the district court was correct to impose both a two-year sentence for Aggravated Identity Theft and an enhancement under U.S.S.G. § 2B1.1(b)(10)(A)(i), which covers “the possession or use of any device-making equipment.” Because the specific offense characteristic involved only device-making equipment and not a means of identification, the comment did not forbid the enhancement. Id. The opinion also stated that had the government sought additional punishment under U.S.S.G. § 2B1.1(b)(10)(C)(i), which covers “the unauthorized transfer or use of any means of identification unlawfully to produce or obtain any other means of identification,” then the comment would have barred the enhancement. Id.
This court used similar reasoning in United States v. Wiley, 407 Fed.Appx. 938,
In essence, Knight argues that when a defendant is convicted of violating a statute that prohibits the transfer, possession, or use of a means of identification, no enhancements can be added to his sentence if he is also charged with Aggravated Identity Theft. In light of the foregoing analysis, we decline to interpret § 2B1.6 cmt. n. 2 so broadly. Rather, we hold what the plain language of the Guidelines suggests: When a defendant is convicted of both
C. Knight‘s Enhancement for an Offense Involving over Fifty Victims
Knight similarly argues that § 2B1.6 cmt. n. 2 required the district court to count as victims only the twenty-eight financial institutions that actually suffered a loss. This interpretation would reduce the four-level enhancement he received under U.S.S.G. § 2B1.1(b)(2) to a two-level enhancement. We apply our analysis above and reject this argument. The specific offense characteristic for number of victims under § 2B1.1(b)(2) punishes the impact of the crime, not the transfer, possession, or use of a means of identification.
D. Knight‘s Enhancement for Evading Law Enforcement and Sophisticated Means
We also reject Knight‘s argument that § 2B1.6 cmt. n. 2 prevents an enhancement under U.S.S.G. § 2B1.1(b)(9)(A) and (C). Section 2B1.1(b)(9)(A) imposes a penalty if “the defendant relocated, or participated in relocating, a fraudulent scheme to another jurisdiction to evade law enforcement or regulatory officials.” Section 2B1.1(b)(9)(C) imposes a penalty if “the offense otherwise involved sophisticated means.” These specific offense characteristics punish multi-jurisdictional criminal enterprises and criminal methods that prevent detection by law enforcement. They do not punish the transfer, possession, or use of a means of identification.
In the alternative, Knight argues that there was insufficient proof for the district court to impose this enhancement. Because the defendants were just as likely to be detected by airport security in Tennessee as they were in California, he contends, the relocation of the scheme to Tennessee could not have been for the purpose of evading law enforcement. Rather, the
E. Lyles‘s and Knight‘s Enhancements for Use of Device-Making Equipment
Lyles and Knight next argue that the district court had insufficient evidence to impose a two-level enhancement under U.S.S.G. § 2B1.1(b)(10)(A)(i). This enhancement applies if “the offense involved
Because we understand the defendants to argue that a § 2B1.1(b)(10)(A)(i) enhancement is impermissible unless they are shown to have actually used or possessed device-making equipment themselves, we turn first to the proper interpretation of the Guidelines. Section 2B1.1(b)(10)(A)(i) requires that the “offense involved the possession or use” of device-making equipment. To obtain the enhancement, the Government may not rest on the mere fact that the defendants possessed or used counterfeit gift cards, the creation of which necessarily required the use of device-making equipment at some point. However, the Government need not show that the defendant personally used the device-making equipment. This is because under U.S.S.G. § 1B1.3, the defendant‘s sentence must account for “relevant conduct“—both his own and that of others.
The commentary to the relevant-conduct Guideline provides that “[t]he principles and limits of sentencing accountability under this guideline are not always the same
Lyles‘s conduct easily falls within the scope of § 1B1.3(a)(1)(A). At Lyles‘s sentencing hearing, co-defendant Garrison testified that “him [Lyles] and his wife” encoded the gift cards with stolen credit information using a machine. Tr. of Sentencing Hr‘g as to David Clay Lyles, Jr. at 13. Though Garrison admitted she never saw the machine, she testified that Lyles told her that he had used the machine before, but that he let his wife use it most of the time because she was better at it. Id. at 28-29. This testimony established that Lyles aided and abetted his wife in using the device-making equipment that created the cards at issue here—indeed, it shows that Lyles used the encoder himself. We thus cannot say that the district court clearly erred in applying the enhancement for device-making equipment to Lyles‘s sentence.
Moreover, we reject Lyles‘s claim that Garrison‘s testimony did not have sufficient indicia of reliability. Lyles‘s cross-examination of Agent Riley elicited the fact that Garrison had previously reported to law enforcement that Lyles‘s wife encoded the cards for Lyles‘s use. Id. at 39-40. Given that the reliability of Garrison‘s testimony has not otherwise been called into question, this consistency is sufficient to meet the “low reliability threshold” of U.S.S.G. § 6A1.3. United States v. Stout, 599 F.3d 549, 558 (6th Cir.2010) (stating that the minimum-indicia-of-reliability standard imposes a “relatively low hurdle“).
As for Knight, the indictment charged Lyles, Knight, and others in count one with participating in a conspiracy in Tennessee between February 1 and 3, 2010. The indictment also charged Lyles and Knight in counts two and three with substantive counts of Access Device Fraud and in count four with a substantive count of Aggravated Identity Theft, all of which were committed in Tennessee during the same time period. In each of the three substantive counts, the indictment alleged that Lyles and Knight aided and abetted each other in committing the criminal conduct.
The evidence the Government presented at Knight‘s sentencing established that Knight and Lyles were jointly involved in similar criminal activity in other jurisdictions starting in October 2009. Lyles used, or had his wife use, device-making equipment to encode gift cards with stolen credit card numbers. Lyles then provided encoded cards to Knight, who used them to make retail purchases of legitimate gift cards. Knight turned over to Lyles some of the legitimate gift cards that he purchased with the fraudulent access devices, and he also kept some of the cards for himself. Lyles‘s conduct in using device-making equipment to produce encoded gift cards aided and abetted Knight‘s use of the fraudulent cards in retail stores, and by using the fraudulent cards to make purchases, Knight aided and abetted Lyles‘s ongoing fraudulent scheme, which eventually ended in Tennessee. Without Lyles‘s use of device-making equipment to encode gift cards, Knight could not have committed the offenses to which he pled guilty. It was reasonably foreseeable to Knight that Lyles or his wife used device-making equipment in furtherance of the jointly undertaken criminal activity, and that such equipment was used in preparation for his offenses of conviction in Tennessee. See U.S.S.G. § 1B1.3 cmt. n. 2.
The district court properly based its conclusion on the evidence presented. It imposed the two-level enhancement under § 2B1.1(b)(10)(A)(i) because “everyone knew” that device-making equipment was used to perpetrate the fraudulent scheme, because Knight was present on occasions when Lyles called his wife to make sure the equipment was working properly, and because use of the device-making equipment was “jointly undertaken criminal activity that was foreseeable reasonably” to Knight. Tr. of Sentencing Hr‘g as to Sylvester Knight, Jr. at 70-71. The enhancement was not applied to Knight in error.
In sum, neither Lyles nor Knight can show that the enhancement for device-making equipment was clearly erroneous. Their contentions on this issue fail.
Knight next argues that U.S.S.G. § 2B1.1 cmt. n. 17 and U.S.S.G. § 2X1.1(b)(2) entitle him to a three-level reduction. Section 2B1.1 cmt. n. 17 applies to “partially completed offenses” and states:
In the case of a partially completed offense (e.g., an offense involving a completed theft or fraud that is part of a larger, attempted theft or fraud), the offense level is to be determined in accordance with the provisions of § 2X1.1 (Attempt, Solicitation, or Conspiracy) whether the conviction is for the substantive offense, the inchoate offense (attempt, solicitation, or conspiracy), or both. See Application Note 4 of Commentary to § 2X1.1.
Section 2X1.1(b)(2) provides that a conviction for conspiracy is to be reduced by three levels from the substantive offense unless
the defendant or a co-conspirator completed all the acts the conspirators believed necessary on their part for the successful completion of the substantive offense or the circumstances demonstrate that the conspirators were about to complete all such acts but for apprehension or interruption by some similar event beyond their control.
Section 2X1.1 cmt. n. 4, referenced in § 2B1.1 cmt. n. 17, states:
In certain cases, the participants may have completed (or have been about to complete but for apprehension or interruption) all of the acts necessary for the successful completion of part, but not all, of the intended offense. In such cases, the offense level for the count (or group of closely related multiple counts) is whichever of the following is greater: the offense level for the intended offense minus 3 levels (under § 2X1.1(b)(1), (b)(2), or (b)(3)(A)), or the offense level for the part of the offense for which the necessary acts were completed (or about
to be completed but for apprehension or interruption). For example, where the intended offense was the theft of $800,000 but the participants completed (or were about to complete) only the acts necessary to steal $30,000, the offense level is the offense level for the theft of $800,000 minus 3 levels, or the offense level for the theft of $30,000, whichever is greater.
The background section of § 2X1.1 provides additional guidance:
In most prosecutions for conspiracies or attempts, the substantive offense was substantially completed or was interrupted or prevented on the verge of completion by the intercession of law enforcement authorities or the victim. In such cases, no reduction of the offense level is warranted. Sometimes, however, the arrest occurs well before the defendant or any co-conspirator has completed the acts necessary for the substantive offense. Under such circumstances, a reduction of 3 levels is provided under § 2X1.1(b)(1) or (2).
Knight and the Government draw opposing conclusions from these provisions. Knight argues that they warrant a reduction because he and his co-defendants achieved only some of the conspiracy‘s aims. The offense was only “partially completed” because the co-defendants intended to steal much more than they did, and thus the § 2X1.1 reduction should apply. The Government counters that, because Knight pleaded guilty to the completed offense of Access Device Fraud, his offense was not “partially completed.” Though he and his co-defendants did not steal as much money as intended, Knight‘s guilty plea establishes that he performed all the acts required for conviction under
Resolution of this issue is not helped by the Sentencing Guidelines themselves, which fail to define the term “partially completed offense” except through the examples given in § 2B1.1 cmt. n. 17 and § 2X1.1 cmt. n. 4. In light of this confusion, courts have split on how to define a “partially completed offense.” In United States v. John, 597 F.3d 263 (5th Cir.2010), the defendant fraudulently obtained information for seventy-six bank accounts, but used the information to access only four of the accounts. Id. at 269. She was convicted of Access Device Fraud under
The most relevant precedent from this court is United States v. DeSantis, 237 F.3d 607 (6th Cir.2001). In DeSantis, the defendant‘s attempt to commit bankruptcy fraud was thwarted by the United States trustee. Id. at 611. The defendant subsequently pleaded guilty to bankruptcy fraud. Id. at 609. The district court provided a reduction under § 2X1.1(b)(1), and
DeSantis is not completely on point in this case. Unlike John and Tulaner, it did not interpret § 2B1.1 cmt. n. 17. Nevertheless, we find its reasoning to be convincing. Similar to the attempt-reduction provision interpreted in DeSantis, the conspiracy-reduction provision of § 2X1.1(b)(2) does not apply if “the defendant or a co-conspirator completed all the acts the conspirators believed necessary on their part for the successful completion of the substantive offense ...” (emphasis added). Because § 2B1.1 cmt. n. 17 does not provide sufficient reason to interpret “partially completed offense” otherwise, we concur with DeSantis that “courts should turn to the statutory definition of the offense to determine” whether an offense was complete for the purpose of applying § 2X1.1. DeSantis, 237 F.3d at 613. If the defendant pleads guilty to a substantive offense and in fact performed the acts needed to complete the offense, then a reduction under § 2X1.1 is unavailable. This understanding is consistent with the background comment of § 2X1.1, which suggests that the reduction is only to be applied when “the arrest occurs well before the defendant or any co-conspirator has completed the acts necessary for the substantive offense.”
Returning to this case, Knight pleaded guilty to
III. Procedural and Substantive Reasonableness
Lyles and Knight challenge the procedural and substantive reasonableness of their sentences. We review this claim for abuse of discretion, keeping in mind a split in the circuits and that in this circuit a sentence within the Guidelines range is afforded a rebuttable presumption of reasonableness. United States v. Evers, 669 F.3d 645, 661 (6th Cir.2012). A sentence is procedurally unreasonable if the district court improperly calculates the Guidelines range, treats the Guidelines as mandatory, fails to adequately consider the sentencing factors under
We reject the defendants’ procedural reasonableness claims. The district court correctly calculated the Guidelines, addressed each of the
The defendants address the bulk of their arguments to substantive unreasonableness. Lyles claims that the district court failed to consider mitigating circum-
These arguments provide an inadequate basis for finding substantive unreasonableness. Assuming the validity of U.S.S.G. § 2B1.1 cmt. n. 3(F)(i), discussed in Section II.A above, the discretion we afford the district court‘s decision means that a within-Guidelines sentence is presumed reasonable, and that “an appellate court should not overturn a sentence just because it believes that another sentence would be appropriate.” United States v. Young, 553 F.3d 1035, 1055 (6th Cir.2009). In theory, at least, we may disturb a within-Guidelines sentence if the defendant rebuts the presumption of reasonableness. Our cases have not adequately explained how a defendant might successfully rebut the reasonableness of a sentence within the Guidelines range. Indeed, we search in vain for a case where a defendant has successfully rebutted the reasonableness of a within-Guidelines sentence. Cf. United States v. Pruitt, 502 F.3d 1154, 1166 (10th Cir.2007) (McConnell, J., concurring) (“[I]t seems to me that the rebuttability of the presumption is more theoretical than real.“). Whatever the standard, though, Lyles and Knight have not shown that the district court abused its discretion.
The district court noted Lyles‘s mitigating circumstances but determined that the sentence was warranted because of Lyles‘s leadership role and the serious nature of the crime. Tr. of Sentencing Hr‘g as to David Clay Lyles, Jr. at 57-60. The district court also discussed Knight‘s mitigating circumstances, but found the sentence justified by the seriousness of the offense and the need for general deterrence. Tr. of Sentencing Hr‘g as to Sylvester Knight, Jr. at 79-83. Though the district court did not afford the defendants’ mitigating circumstances the weight they would have preferred, it did not place inappropriate weight on any factor such as to make the sentences substantively unreasonable.
None of the defendants’ other arguments makes out a case for substantive unreasonableness. If the Guidelines are to be attacked as the defendants wish to attack them, this should be done through a claim rooted in the fictional $500 loss enhancement. On substantive reasonableness review, we examine the sentencing court‘s treatment of the defendant, not an argument about the $500 enhancement that has not been raised. As to the lenient sentence handed down in Gilmore, neither defendant argues that the district court failed to consider “the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct,” as required by
In sum, we reject the defendants’ procedural and substantive reasonableness challenges.
IV. Double Jeopardy
Lyles contends that his conviction for both Access Device Fraud under
V. Conclusion
For the reasons discussed above, we affirm the sentences in these cases.
McKEAGUE, Circuit Judge, concurring in part and dissenting in part.
I am in agreement with practically all of the majority opinion. I write separately to state my disagreement with that portion of Section II.A. that discusses the parsimony provision of