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United States v. Neuman

United States District Court, Ninth Circuit

December 10, 2013


S. AMANDA MARSHALL, United States Attorney, District of Oregon, SETH D. URAM, DONNA M. MADDUX, Assistant United States Attorneys, Portland, OR, Attorneys for Plaintiff.

JANET LEE HOFFMAN, CARRIE MENIKOFF, Janet Hoffman & Associates LLC, Portland, OR, Attorneys for Defendant Larkin.

JOHN S. RANSOM, Ransom Blackman, LLP, Portland, OR, MATTHEW A. SCHINDLER, Lake Oswego, OR, Attorneys for Defendant Lyons.

EMILY SIMON, Portland, OR, TODD H. GROVER, Ward Grover, LLP, Bend, OR, Attorneys for Defendant Neuman.


ANNA J. BROWN, District Judge.

On July 3, 2013, following a 17-day jury trial, Defendants Mark A. Neuman, Timothy D. Larkin, and Lane D. Lyons were each found guilty of one count of Conspiracy to Commit Wire Fraud in violation of 18 U.S.C. § 1349 and one count of Conspiracy to Commit Money Laundering in violation of 18 U.S.C. § 1956(h). In advance of individual sentencing hearings set for December 16, 2013, the United States Probation Office (USPO) completed a Presentence Report (PSR) for each Defendant that includes a contested recommendation as to the correct loss calculation under § 2B1.1 of the United States Sentencing Guidelines (USSG or Guidelines).

In particular, the USPO recommends for each Defendant a 20-level enhancement to Base Offense Level 7 premised on a proposed factual finding that the 91 victims of Defendants' crimes sustained reasonably foreseeable financial losses of approximately $13.7 million. USSG § 2B1.1(b)(1)(10. The government supports the 20-level enhancement (#439, #452), but Defendants object to it as stated in their Memoranda (#440, #441, #444, #449, #451, #453) and at the November 25, 2013, hearing that the Court conducted to receive evidence and to hear argument on this specific Guideline application.

For the reasons that follow, the Court ADOPTS the PSR recommendation to apply a 20-level enhancement to Base Offense Level 7 for each Defendant pursuant to USSG § 2131.1.


I. Standard of Proof

The Guidelines require the Court to calculate the amount of loss caused by the offenses of conviction (the conspiracies to commit fraud and money laundering) and "to correlate the severity of the sentence to the amount of the loss." United States v. Treadwell, 593 F.3d 990, 1000 (9th Cir. 2010). Section 2131.1 governs loss amounts for the offenses of conspiracy to commit wire fraud and conspiracy to commit mail fraud.

In general the district court makes factual findings related to sentencing issues based on a preponderance of evidence standard. Treadwell, 593 F.3d at 1000. The government bears the burden of proof to demonstrate the amount of loss a victim has suffered. 18 U.S.C. § 3664(e). See also United States v. Cossi, 608 F.3d 574, 579 (9th Cir. 2010). When an extremely disproportionate impact on the sentence results from application of the loss enhancement, however, the government may have to satisfy a "clear and convincing" standard of proof. Treadwell, 593 F.3d at 1000 (quoting United States v. Zolp, 479 F.3d 715, 718 (9th Cir. 2007)). Six factors should be considered to determine whether a clear and convincing standard applies:

(1) whether the enhanced sentence falls within the maximum sentence for the crime alleged; (2) whether the enhanced sentence negates the presumption of innocence for the crime alleged in the indictment; (3) whether the facts offered in support of the enhancement create new offenses requiring separate punishment; (4) whether the increase in sentence is based on the extent of a conspiracy; (5) whether the increase in the number of offense levels is four or less; and (6) whether the length of the enhanced sentence more than doubles the length of the sentence authorized by the initial sentencing guideline range where the defendant would otherwise have received a relatively short sentence.

United States v. Riley, 335 F.3d 919, 926 (9th Cir. 2003). Accord Treadwell, 593 F.3d at 1000; United States v. Jordan, 256 F.3d 922, 928 (9th Cir. 2001). Due process is the primary consideration when determining which standard to apply and may require the clear and convincing standard for sentencing enhancements based on uncharged or acquitted conduct. Treadwell, 593 F.3d at 1000.

Relying on United States v. Booker, Defendant Lyons argues evidence at sentencing should be established beyond a reasonable doubt. 543 U.S. 220, 232-234 (2005)(federal sentencing guidelines are subject to jury-trial requirements). The Ninth Circuit, however, has rejected this argument. See, e.g., United States v. Gonzalez, 492 F.3d 1031, 1039 n.5 (9th Cir. 2007)(noting ...

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