No.

97-5095
United States Court of Appeals, Sixth Circuit

U.S. v. Brown
147 F.3d 477 (6th Cir. 1998)
Decided Jun 8, 1998

No. 97-5095. Continental Distributing Company ("CDC") was a

telemarketing company based in Chattanooga,
Argued: April 29, 1998.
Tennessee. The company targeted its
Decided and Filed: June 8, 1998. Pursuant to Sixth telemarketing schemes at elderly people because
478 Circuit Rule 24 *478 the elderly tend to be most vulnerable to the
various telemarketing tricks and ploys used by
Appeal from the United States District Court for
CDC.1 J.A. at 259-60 (Craig W. Heaps, Pres. of
the Eastern District of Tennessee at Chattanooga.
CDC, Test.). The company operated a one-in-four
No. 96-00003 — R. Allan Edgar, District Judge.
scheme whereby a telemarketer would call a
479 *479
victim and tell the victim that she had won one of
Howell G. Clements (argued and briefed), Spears, four fabulous awards. J.A. at 230-31. The awards
Moore, Rebman Williams, Chattanooga, TN, for were usually stated in order of the least expensive
Defendant-Appellant. to the most expensive. J.A. at 250 (Heaps Test.).
For example, the telemarketer, when speaking to a
Richard A. Quaresima (argued and briefed),
potential victim, would list the awards in the
Lawrence Hodapp (briefed), Federal Trade
following order: a 1994 car, a speed boat, the open
Commission, Washington, DC, John p. MacCoon,
481 *481 award, and cash. The telemarketers purposely
Asst. U.S. Attorney, Chattanooga, TN, for
listed the awards in this manner to disguise the
Plaintiff-Appellee.
fact that the "open award" (also known as the
Before: KENNEDY, CONTIE, and MOORE, "gimmie") was worth substantially less than the
Circuit Judges. other awards. J.A. at 234. Typically, the open
award was a very inexpensive piece of
480 *480 merchandise such as a lithograph, JFK coin set, or
cheap sculpture. J.A. at 232; 250; 453 (Product
OPINION List).
1 Ninety-nine percent of the calls CDC made

MOORE, Circuit Judge were to people over the age of 60, and
ninety percent of the calls were made to
Defendant-Appellant Terrance Daniel Brown
people over the age of 70. J.A. at 259
appeals his conviction and sentence, following a (Heaps Test.).
jury trial, for conspiracy and wire and mail fraud
in connection with a telemarketing scheme. For The object of the scheme was to convince the
the reasons that follow, we affirm. victim that she had won some really fabulous
award and then get the victim to pay substantially
I. BACKGROUND
more for the award than CDC had paid for it.2 J.A.

@ casetext 1
 U.S. v. Brown 147 F.3d 477 (6th Cir. 1998)

at 265. In fact, CDC would deduct the cost of the with them to CDC. Those leads lists contained the
award, known as the "pad," from the commission names of elderly people who had previously
of the telemarketer. J.A. at 232. For example, a purchased products over the telephone from
telemarketer would tell the elderly victim that she another company, usually spending large amounts
had won one of four great awards and then try to of money to do so. CDC, like most telemarketing
convince her to send CDC a large amount of companies, organized its telemarketers into
money for the award (often as much as $15,000 or "fronters" and "reloaders." J.A. at 293-94. The
more). If the victim sent the money, then the fronters called the leads, told them about the one-
telemarketer would ensure that the victim received in-four promotion and that they had been selected
a sculpture for which CDC might have paid $200. as winners. On the first call, the fronters normally
The owners of CDC would then deduct the $200 pushed to have the customers send in an amount
from the sales price and the telemarketer would under $1000 in exchange for the open award
receive a commission on $14,800 ($15,000 minus which would be a lithograph or coin set that only
the $200). Thus, telemarketers at CDC had a great cost CDC $50 to purchase.3 Once the fronter sold
incentive to provide victims with cheap the customer, the fronter would then pass the lead
merchandise rather than a car, motor home, sail card containing the customer's information
boat, or some other expensive award. This was so (address, telephone number, what the person had
because the more expensive the award, the less purchased, and sales price) on to the reloader. J.A.
commission the telemarketer would receive on the at 238-40 (Heaps Test.). The reloader would then
money sent by the victim to CDC. J.A. at 295 call the victim and try to sell them again and again
(Jeffrey J. Hutchinson, a CDC employee, Test.). on succeeding promotions for larger and larger
2 For example, one victim received 130 amounts of money until the victim was totally
space pens and other miscellaneous items without funds. J.A. at 298 (Hutchinson Test.).
for $21,000. J.A. at 277. 3 For awards under $50, CDC did not deduct

this cost from a telemarketer's commission.

Telemarketers at CDC did not have much to worry
about because the odds were three in three Brown joined CDC as a reloader in January of
thousand that a victim would win a major award; 1994 and worked there until October of 1994. J.A.
that is, 2,997 victims would definitely receive the at 328 (Kennedy Test.). Brown had accumulated a
open award, and the open award could be any wealth of experience as a reloader from having
cheap item the telemarketer wanted it to be. J.A. at worked eight years in the telemarketing industry at
179 (Brown Test.); 295 (Hutchinson Test.). In companies using fraudulent schemes comparable
addition to the open award, CDC also sent victims to the one used by CDC. J.A. at 176-78 (Brown
a "mixed box of products," which were essentially Test.). In fact, Brown was proud of the fact that he
worthless trinkets or products like letter openers, had been the top reloader at almost every company
space pens, and frisbees. Accordingly, CDC made 482 where he had worked. *482 J.A. at 213 (Brown
its money sending open awards and the mixed box Test.). Things were no different at CDC where he
of products to victims in exchange for enormous quickly rose to become the top reloader,
sums of money by convincing the victims that generating over $443,209 in the nine months he
they had a real chance at winning a house or car. worked at CDC. J.A. at 327-28 (Kennedy Test.).
CDC found its victims, often referred to as Brown also operated his own telemarketing
"mooches," by buying what were known as company known as "Smokey Mountain
"leads" lists from lead brokers in Las Vegas. J.A. Distributing" ("SMD"). J.A. at 147 (Brown Test.).
at 238; 266 (Heaps Test.). Additionally some SMD was a one-person operation, but the object
telemarketers, such as Brown, brought leads lists

@ casetext 2
 U.S. v. Brown 147 F.3d 477 (6th Cir. 1998)

was the same: Brown focused on elderly leads After his sentencing, Brown filed a timely notice
who had previously purchased products over the of appeal. On appeal, Brown raises the following
telephone and thus were especially vulnerable to five issues: (1) the district court improperly
his nefarious tactics. J.A. at 337-38 (Kennedy admitted evidence of Brown's activities at SMD
Test.). under Federal Rule of Evidence 404(b); (2) the
district court erred in failing to suppress the
In January of 1995, a telemarketing task force
evidence found at Brown's home; (3) the district
comprised of the Federal Bureau of Investigation,
court improperly imposed a two-level upward
Internal Revenue Service, Secret Service, and
departure and a three-level enhancement in
local law enforcement raided CDC's operations
sentencing Brown; (4) the district court erred in
and closed it. J.A. at 323 (Kennedy Test). Six
denying Brown's motion for a judgment of
people, including Brown, were eventually indicted
acquittal on the mail fraud count of the indictment;
for conspiracy, wire fraud, mail fraud, use of
and (5) there was insufficient evidence to support
fictitious name, and money laundering. Also, the
the guilty verdict.
government moved to forfeit assets. J.A. at 32
(Indictment). Everyone pleaded guilty except II. ANALYSIS
Brown, who demanded and received a jury trial.
A. Federal Rule of Evidence 404(b)
Prior to his trial, but while under indictment,
Brown argues that, under Federal Rule of
Brown continued to operate SMD, although he
Evidence 404(b), the district court erred in
had ostensible employment as a salesperson for
admitting evidence concerning the following: (1)
Advanced Cellular and Paging. J.A. at 174; 388-
his activities at SMD and other telemarketing
91, 398 (Burns Test.). Based on a tip from a
agencies; (2) conversation between Brown and
confidential informant, an FBI agent obtained a
Dorothy Schlaikjer, one of his victims at SMD;
search warrant for Brown's home. J.A. at 393
and (3) IRS agent Scott Kennedy's testimony
(Burns Test.). The task force executed the search
regarding Brown's activities at Quality Home
warrant and found numerous materials indicating
Health Care, a telemarketing concern, which were
that Brown had been operating a fraudulent
outside of the indictment's time frame.
telemarketing agency from his home.
Subsequently, Brown filed a motion to suppress In reviewing a district court's decision to admit
the evidence found in his home, a motion the court evidence of "other crimes, wrongs, or acts" under
denied. J.A. at 108 (Mot.); 79 (Mem. and Order). Rule 404(b), we first review for clear error the
district court's factual determination that the other
At trial, two of Brown's co-conspirators and
483 acts occurred.4 *483 Second, we examine de novo
several of his victims testified against him.
the district court's legal determination that the
Nevertheless, at the close of the government's
evidence was admissible for a legitimate purpose.
case, Brown moved for a judgment of acquittal,
Finally, we review for abuse of discretion the
which the district court denied. J.A. at 416. The
district court's determination that the probative
jury convicted Brown on all of the counts in the
value of the other acts evidence is not substantially
indictment for which he was charged. J.A. at 140
outweighed by its unfairly prejudicial effect.
(Verdict Form). The district court sentenced him to
United States v. Myers, 123 F.3d 350, 362-63 (6th
120 months' incarceration (including a two-level
Cir.), cert. denied, ___ U.S. ___, 118 S.Ct. 611,
upward departure and a three-level enhancement),
139 L.Ed.2d 498 (1997).
three years' supervised release, $450 special
assessment, and $2,677,161.68 in restitution. J.A.
at 82-89 (Judgment in a Criminal Case).

@ casetext 3
 U.S. v. Brown 147 F.3d 477 (6th Cir. 1998)

4 Federal Rule of Evidence 404(b) provides: The district court properly admitted this evidence
(b) Other crimes, wrongs, or acts. Evidence under Rule 404(b) to show Brown's specific intent
of other crimes, wrongs, or acts is not on the mail and wire fraud charges. We have held
admissible to prove the character of a that "where there is thrust upon the government,
person in order to show action in either by virtue of the defense raised by the
conformity therewith. It may, however, be defendant or by virtue of the elements of the crime
admissible for other purposes, such as
charged, the affirmative duty to prove that the
proof of motive, opportunity, intent,
underlying prohibited act was done with a specific
preparation, plan, knowledge, identity, or
criminal intent, other acts evidence may be
absence of mistake or accident, provided
introduced under Rule 404(b)." United States v.
that upon request by the accused, the
prosecution in a criminal case shall provide
Myers, 123 F.3d at 363 (quotation omitted). In this
reasonable notice in advance of trial, or case, not only did the government have the
during trial if the court excuses pretrial affirmative duty to prove specific intent, but
notice on good cause shown, of the general Brown defended by arguing that he had no intent
nature of any such evidence it intends to to defraud. See J.A. at 166, 168, 170, 173 (Brown
introduce at trial. Test.). Moreover, Brown's attorney admitted that
because he argued that Brown was a legitimate
Brown does not challenge that the other acts
salesman who left it up to CDC's owners and
occurred. Instead, he raises challenges to the
managers to ensure that the customers received the
second and third prongs. Brown was convicted of
appropriate merchandise, the government could
violations of 18 U.S.C. § 371 (conspiracy), 1341
introduce evidence from SMD to show that Brown
(mail fraud), and 1343 (wire fraud). The elements
was defrauding people on his own. J.A. at 329.
of mail fraud are: (1) a scheme to defraud, and (2)
Thus, the district court correctly admitted the
use of the mails in furtherance of the scheme.
evidence for a proper purpose.
United States v. Smith, 39 F.3d 119, 121 (6th Cir.
1994) (citing Pereira v. United States, 347 U.S. 1, As for the third prong, the district court found that
8, 74 S.Ct. 358, 98 L.Ed. 435 (1954)). The the probative value of the evidence outweighed its
prosecution must prove that the defendant prejudicial effect. As previously noted, we review
possessed the specific intent to deceive or defraud this finding for abuse of discretion. In conducting
in order to convict him; the issue of fraudulent this review, we consider (1) whether the other act
intent is an issue reserved for the trier of fact. Id. evidence was unduly prejudicial; (2) the
at 121-22. The elements of wire fraud are: (1) availability of other means of proof; (3) when the
scheme to defraud, and (2) use of an interstate other acts occurred; and (4) whether the district
electronic communication in furtherance of the court gave a limiting instruction. See Myers, 123
scheme. Id. at 122 (citing United States v. Morelli, F.3d at 363-64. Here, the other acts evidence was
643 F.2d 402, 411-12 (6th Cir.), cert. denied, 453 not unduly prejudicial. As the district court noted,
U.S. 912 101 S.Ct. 3143, 69 L.Ed.2d 994 (1981)). these were just additional calls. J.A. at 375. See
The government bears the responsibility of Myers, 123 F.3d at 363 (evidence of other drug
proving specific intent to defraud. Id. The district sales not prejudicial because they are simply other
court determined that Brown's activities at SMD sales). There was no alternative for the
(including the conversation with Dorothy government to prove intent other than through
Schlaikjer), Quality, and the other telemarketing telephone calls that Brown made at CDC and
agencies all went to intent. J.A. at 330, 333, 335, elsewhere to show similarity of the sales pitches,
and 374. the promotional schemes, and other actions that
indicate Brown had the specific intent to defraud

@ casetext 4
 U.S. v. Brown 147 F.3d 477 (6th Cir. 1998)

people when he worked at CDC. Furthermore, the information, there is a fair probability that
district court found that the other acts were closely contraband or evidence of a crime will be found in
related in time to and in some cases overlapped a particular place." 462 U.S. at 238, 103 S.Ct.
the activity charged in the indictment. J.A. at 343. 2317.
Finally, each time such evidence was introduced,
The affidavit in this case meets that test. J.A. at
the district court gave a special instruction. J.A. at
115-17. Special Agent Earl Burns of the FBI had
484 353-54; 375-76. *484 This record amply
conducted investigations into telemarketing fraud
demonstrates that the district court did not abuse
for the previous four years. He knew that a grand
its discretion in concluding that the probative
jury had indicted Brown on mail and wire fraud
value of the other acts evidence outweighed its
charges in connection with telemarketing
prejudicial effect. Accordingly, because the district
activities. He also knew that Brown had worked at
court's decision to admit this evidence under Rule
several other telemarketing agencies that had been
404(b) satisfies all three prongs of the test, this
investigated by law enforcement, including one in
assignment of error fails.
Chattanooga, Tennessee. A cooperating witness
B. Denial of Motion to Suppress ("CW") provided information that Brown was
renting a residence at a certain street address and
When reviewing decisions on motions to suppress,
working at Advanced Cellular in Chattanooga, all
this court will uphold the factual findings of the
of which the agent verified. The CW observed,
district court unless clearly erroneous, while legal
firsthand, that Brown had two telephone lines with
conclusions as to the existence of probable cause
caller identification boxes and separate answering
are reviewed de novo. United States v. Leake, 998
machines, had lead sheets scattered about (with
F.2d 1359, 1362 (6th Cir. 1993). In Illinois v.
dollar amounts of prior illegal telephone sales next
Gates, the Supreme Court established that a
to each victim's name), and held himself out as
warrant must be upheld as long as the "magistrate
being "self-employed" doing business as SMD.
had a `substantial basis for . . . conclud[ing]' that a
The CW also provided, and Burns confirmed,
search would uncover evidence of wrongdoing . . .
information that Brown maintained three post
." Illinois v. Gates, 462 U.S. 213, 236, 103 S.Ct.
office boxes for SMD and used a false social
2317, 76 L.Ed.2d 527 (1983) (quotation omitted);
security number in his business dealings. From
United States v. Pelham, 801 F.2d 875, 877-78
this information, having verified most of what the
(6th Cir. 1986), cert. denied, 479 U.S. 1092 107
CW told him, and based on his four years of
S.Ct. 1305, 94 L.Ed.2d 160 (1987). This court
investigating telemarketing fraud, Burns
pays great deference to the determinations of
concluded that Brown's SMD had all of the indicia
probable cause made by a magistrate, whose
of a "rip and tear" operation whereby the person
findings "should not be set aside unless arbitrarily
operating the business simply convinces people to
exercised." Pelham, 801 F.2d. at 877 (quotation
send him money in exchange for some award or
omitted).
prize and never sends them anything. This kind of
In a case involving an anonymous tip, the Gates a business necessarily relies on anonymity, hence
Court established a "totality of the circumstances" utilizing caller identification boxes, a fake social
test for determining probable cause: "The task of security number, and post office boxes.
the issuing magistrate is simply to make a
A practical, common-sense reading of this
practical, common-sense decision whether, given
affidavit based on the totality of the
all the circumstances set forth in the affidavit
circumstances, including the veracity and basis of
before him, including the `veracity' and `basis of
knowledge of the person supplying the
knowledge' of persons supplying hearsay
information, compelled the conclusion that there

@ casetext 5
 U.S. v. Brown 147 F.3d 477 (6th Cir. 1998)

was a fair probability that contraband or evidence omissions of his co-conspirators that are
of a crime would be found at Brown's home. reasonably foreseeable and in furtherance of the
Accordingly, probable cause existed for issuance conspiracy. See United States v. Sanders, 95 F.3d
of the search warrant, and the district court 449, 454-55 (6th Cir. 1996).
properly denied Brown's motion to suppress. 5 Brown's attorney does not contest these

Even if we were to conclude that the affidavit did numbers. J.A. at 423.

not provide probable cause for the search of

In this case, the total loss was reasonably
Brown's residence, we would uphold the search
foreseeable to Brown because CDC's salespeople
under the Supreme Court's holding in United
had access to each other's sales logs. J.A. at 581.
States v. Leon, 468 U.S. 897 104 S.Ct. 3405, 82
Furthermore, Brown occasionally led sales
L.Ed.2d 677 (1984). In Leon, the Supreme Court
meetings at CDC, the obvious purpose of which
held that the exclusionary rule "should be
was to increase "sales," i.e., the loss to the victims
485 modified so as not to bar the admission of *485
of the telemarketing scheme. J.A. at 308. Brown
evidence seized in reasonable, good-faith reliance
also created a particular promotion for all
on a search warrant that is subsequently held to be
salespeople to use, the purpose of which was to
defective." Id. at 905. Only where the evidence is
generate more victims and more revenue, i.e., loss
"so lacking in indicia of probable cause as to
to the victims. J.A. at 310-11. Therefore, the total
render official belief in its existence entirely
loss for the time Brown worked at CDC was
unreasonable," will the evidence be suppressed.
reasonably foreseeable to him.
Id. at 923,104 S.Ct. 3405 (quotation omitted).
There is nothing in the affidavit that suggests that Brown also challenges the inclusion of additional
it was wholly deficient so that Agent Burns's sales from the previous companies where he
reliance on it could be said to be "entirely worked as relevant conduct in this case. Relevant
unreasonable." Thus, the district court properly conduct includes acts "that were part of the same
declined to suppress the evidence found in course of conduct or common scheme or plan as
Brown's home. the offense of conviction." U.S.S.G. § 1B1.3(a)(2).
"For two or more offenses to constitute part of a
C. Relevant Conduct, Enhancement, and Upward
common scheme or plan, they must be
Departure
substantially connected to each other by at least
We review the district court's factual one common factor, such as common victims,
determinations at sentencing for clear error, but common accomplices, common purpose, or
we review de novo the district court's similar modus operandi." Id. at commentary,
interpretation of the United States Sentencing applic. note 9(A). The testimony is clear that
Guidelines ("U.S.S.G."). United States v. Flowers, Brown worked at several telemarketing agencies,
55 F.3d 218, 220 (6th Cir.), cert. denied, 516 U.S. including his own, that had the same modus
901, 116 S.Ct. 261,133 L.Ed.2d 185 (1995). First, operandi and purpose. J.A. at 176-78; 302-03;
Brown challenges the amount of sales the district 307. Brown took the same leads with him from
court included as relevant conduct in sentencing job to job and victimized the same people on
him. The district court included the total sales for several occasions. J.A. at 244-45; 306-07; 347-50;
the time Brown worked at CDC — $2,677,000, 564 (Repeat Victim List). Thus, the district court
and included additional $1,173,647 in sales for properly included the additional amounts from the
Brown's work at other companies. J.A. at 420-23; other telemarketing agencies as relevant conduct.6
57.5 It is clear under U.S.S.G. § 1B1.3(a)(1)(B)
that a conspirator is liable for the acts and

@ casetext 6
 U.S. v. Brown 147 F.3d 477 (6th Cir. 1998)

6 Under U.S.S.G. § 2F1.1(b)(1)(N), the victims. J.A. at 310-11 (Hutchinson Test.). Brown
district court added 13 levels to Brown's also helped rig a drawing from one promotion in
sentence because the amount of the loss order to keep the FBI at bay when a potential
was between $2,500,000 and $5,000,000.
victim complained. J.A. at 272-73 (Heaps Test.).
Thus, the additional $1,173,647, which
All of these activities demonstrate by a
brought the total loss to approximately
preponderance of the evidence that Brown was
$3,800,000, did not affect Brown's
more than a mere participant in the scheme, but
sentencing guideline range.
rather assumed a managerial role over one or more
Second, Brown challenges the district court's other participants. See United States v. Kraig, 99
imposition of a three-level enhancement for his F.3d 1361, 1369 (6th Cir. 1996) (three-level
role in the offense under U.S.S.G. § 3B1.1(b). increase appropriate for managerial role where the
When "an enhancement provision is contested, the defendant helped recruit people into the scheme
government bears the burden of establishing the and rendered other substantial assistance in
enhancement factors by a preponderance of the furtherance of the scheme).
evidence." United States v. Feinman, 930 F.2d
Third, Brown complains that the district court
495, 500 (6th Cir. 1991). A district court's factual
improperly imposed a two-level upward departure
finding under § 3B1.1 is subject to review for
in sentencing him, and that this departure was
clear error. Id. U.S.S.G. § 3B1.1(b) provides: "If
motivated by the fact that he decided to go to trial
the defendant was a manager or supervisor (but
while his co-conspirators all pleaded guilty. We
not an organizer or leader) and the criminal
review for abuse of discretion a district court's
486 activity involved *486 five or more participants or
decision to depart upward. See, e.g., United States
was otherwise extensive, increase by 3 levels."
v. Dobish, 102 F.3d 760, 763 (6th Cir. 1996)
(emphasis in original). "To qualify for an
(quoting Koon v. United States, ___ U.S. ___, 116
adjustment under this section, the defendant must
S.Ct. 2035, 2047 (1996)). A district court abuses
have been the organizer, leader, manager, or
its discretion when it commits an error of law in
supervisor of one or more other participants."
the interpretation or application of the guidelines.
Commentary, applic. note 2. Even if the defendant
United States v. Wright, 119 F.3d 390, 392 (6th
did not organize, lead, manage or supervise, he
Cir. 1997).
may still qualify for an upward departure if he
"nevertheless exercised management U.S.S.G. § 5K2.0 and 18 U.S.C. § 3553(b) allow a
responsibility over the property, assets, or district court to impose a sentence outside of the
activities of a criminal organization." Id. applicable guideline range if the court finds "that
there exists an aggravating or mitigating
Here, the government met its burden, and the
circumstance of a kind, or to a degree, not
district court did not commit clear error in so
adequately taken into consideration by the . . .
finding. Brown does not dispute that the criminal
guidelines that should result in a sentence different
activity at CDC involved five or more people or
from that described." Section 5K2.0 (quoting 18
that it was extensive. Brown trained other
U.S.C. § 3553(b)). The district court provided five
salespeople by occasionally running sales
reasons for departing upward in this case: (1) the
meetings when CDC's president was absent. J.A.
number of victims, 336, because U.S.S.G. §
at 307-08 (Hutchinson Test.). Brown authored an
2F1.1(b)(2)(B) does not adequately take into
advertisement using his own name to attract new
account such a large number of victims; (2) the
salespeople to the organization. J.A. at 268 (Heaps
financial and psychological damage that Brown
Test.). Brown created a new promotion for the
inflicted upon his victims; (3) the fact that he
company to use which was designed to solicit new
continually "reloaded" his victims; (4) Brown

@ casetext 7
 U.S. v. Brown 147 F.3d 477 (6th Cir. 1998)

showed no remorse and did not think he did simply no support for Brown's argument that the
anything wrong; and (5) the Senior Citizens relevant conduct and role in the offense guidelines
Against Marketing Scams Act of 1994 adequately address his fraudulent conduct so as to
("SCAMS"), 18 U.S.C. § 2325-2327 manifests proscribe an upward departure in this case.
Congress's view that the Guidelines do not
Brown also challenges the upward departure on
adequately punish defendants who target the
the grounds that the vulnerable victim guideline, §
elderly. J.A. at 444-46 (Sentencing Hr'g).
3A1.1(b), adequately addresses his conduct in this
Brown focuses on the SCAMS Act factor, arguing case. In United States v. Smith, 133 F.3d 737 (10th
that the Guidelines already adequately punish his Cir. 1997), pet. for cert. filed ___ U.S.L.W. ___
conduct as reflected in the relevant conduct, role (U.S. May 4, 1998) (No. 97-8969), the Tenth
in the offense, and vulnerable victim guidelines. Circuit considered and rejected a similar argument
The SCAMS Act came into effect on September in a case involving a telemarketing scheme very
13, 1994. It provides as follows: similar to the one engaged in by Brown. After
Smith's convictions for wire and mail fraud, the
A person who is convicted of an offense under
Tenth Circuit rejected a challenge to the upward
section 1028, 1029, 1341, 1342, 1343, or 1344 in
departure on the grounds that the guidelines for
connection with the conduct of telemarketing —
vulnerable victim, U.S.S.G. § 3A1.1(b), and
(1) may be imprisoned for a term of up to 5 years multiple victims, U.S.S.G. § 2F1.1(b)(2)(B),
in addition to any term of imprisonment imposed adequately addressed his conduct, holding that
under any of those sections, respectively; and
The foci of the vulnerable victim enhancement
(2) in the case of an offense under any of those and the SCAMS Act differ on two key
sections that — dimensions. The SCAMS Act is directed toward
criminal telemarketing conduct targeted at or
(A) victimized ten or more persons over the age of
actually victimizing a certain class of individuals,
487 55; or *487
statutorily defined as those over the age of fifty-
(B) targeted persons over the age of 55, may be five. The Act requires the offense target the
imprisoned for a term of up to 10 years in addition elderly as a class. In contrast, the vulnerable
to any term of imprisonment imposed under any victim enhancement does not require a finding the
of those sections, respectively. defendant targeted the victim because of his
vulnerability. Moreover, the vulnerable victim
18 U.S.C. § 2326. Congress passed the SCAMS enhancement cannot be based solely on the
Act because "[m]any Americans, but particularly victim's membership in a certain class; the
older men and women, have been targeted and sentencing court is required to make particularized
victimized by illicit telemarketers. Some of these findings of vulnerability, focusing on the
seniors are victimized repeatedly, losing large individual victim and not the class of persons to
amounts of their hard earned savings." 139 Cong. which the victim belonged. A single vulnerable
Rec. S10015-01, *S10016 (daily ed. July 30, victim is sufficient to support application of the
1993) (Purpose of the SCAMS Act). Accordingly, enhancement. Thus, the focus of the SCAMS Act
the Act "criminaliz[es] telemarketing fraud and and that of the vulnerable victim enhancement
enhances penalties for these crooked acts when differ in key respects and are sufficiently distinct
senior citizens are the principal victims." 139 to avoid double counting the same offense
Cong. Rec. S15146-01, *S15148 (daily ed. conduct.
November 5, 1993) (statement of Senator Hatch).
Given the purpose of the SCAMS Act, there is Id. at 749 (citations omitted).

@ casetext 8
 U.S. v. Brown 147 F.3d 477 (6th Cir. 1998)

We agree with the analysis of the Tenth Circuit. reprehensible conduct, and the district court
The SCAMS Act is specifically designed to properly gave him an additional two years in
combat and punish severely the conduct in which prison to think about it.
Brown engaged, conduct which falls outside of the
With respect to Brown's claim that his sentence
"heartland" of cases addressed by the vulnerable
was enhanced because he chose to go to trial, there
victim guideline, U.S.S.G. § 3A1.1(b). In this
is simply no evidence in the record to support that
case, the SCAMS Act authorized the district court
claim. See, e.g., United States v. Frost, 914 F.2d
to impose an additional ten-year sentence upon
756, 774 (6th Cir. 1990) (rejecting a similar claim
Brown. Instead of imposing a ten-year sentence
because nothing in the record supported the
under the SCAMS Act, the district court noted that
defendants' claims). However, there is ample
the SCAMS Act signaled Congress's view that
evidence that Brown engaged in fraudulent
U.S.S.G. § 3A1.1(b) did not adequately address
telemarketing schemes for eight years, took leads
Brown's conduct. Accordingly, the district court
with him to each new location, repeatedly
used the SCAMS Act as a basis for merely
victimized the same individuals, and took pride in
departing upward by two levels, increasing
being the top "reloader" at each fraudulent
Brown's Guidelines range from 78-97 months to
telemarketing location. This is the record evidence
97-121 months.
upon which the district court relied in sentencing
We conclude that the district court could properly Brown. There is nothing in the record that
depart upward based on the SCAMS Act even indicates that the district court considered Brown's
though Brown also received a two-level decision to go to trial in fashioning Brown's
enhancement for vulnerable victims under § sentence. Accordingly, this claim of error fails.
3A1.1(b). As noted in the Congressional Record,
D. Denial of Rule 29 Motion
"older Americans are increasingly targeted and
victims of these scams. . . . Telemarketers [target Brown argues that the district court should have
the elderly] because the elderly are easily granted his motion for a judgment of acquittal at
accessible by phone, usually intent on enlarging the close of the government's case on the mail
their savings for the benefit of grandchildren, fraud count, Count 54, on which he was ultimately
often less suspicious, sometimes possess poor convicted. Brown relies on the fact that the alleged
memories, and usually too embarrassed to inform fraudulent mailing occurred after his departure,
family or law enforcement once they recognize the and he argues he could not be held liable for it. Id.
488 deceit." 139 Cong. Rec. *488 S10015-01, *S10016 The elements of mail fraud are: (1) a scheme to
(daily ed. July 30, 1993). Then-Senator William S. defraud; and (2) use of the mails in furtherance of
Cohen (R-Me.) remarked, "[w]e heard compelling the scheme. United States v. Smith, 39 F.3d 119,
testimony from elderly victims who had lost 121 (6th Cir. 1994) (citing Pereira v. United
significant portions of their life savings to con States, 347 U.S. 1, 8 (1954)). We review a denial
artists. These scams take a variety of forms such of a motion for judgment of acquittal by
as prize giveaway schemes which dupe consumers considering the evidence in the light most
into purchasing merchandise or paying handling favorable to the prosecution. See United States v.
fees with the promise that they will receive Reed, 821 F.2d 322, 324 (6th Cir. 1987).
substantial cash awards or other valuable prizes.
On November 14, 1994, CDC mailed a bond to
Of course, the prize never materializes and the
Ethelyn Henrich based, in part, on the
customer's money is long gone." Id. at *S10017.
conversations she had with Brown. J.A. at 556-58;
The SCAMS Act speaks directly to Brown's
529, 531-32. The bond had a face value of $3000,
but it did not mature until the year 2014, so its

@ casetext 9
 U.S. v. Brown 147 F.3d 477 (6th Cir. 1998)

value in 1994 was $300. J.A. at 540-41. Brown court did not abuse its discretion in denying
had represented to Henrich that the bond was Brown's motion for judgment of acquittal on the
currently worth $3000. J.A. at 529, 531-32. By so mail fraud count.
doing, he clearly was a part of the scheme to
E. Sufficiency of the Evidence
defraud. Therefore, the only issue is use of the
mails in furtherance of the scheme. A defendant On appeal, we review a challenge to the
may commit mail fraud even if he personally has sufficiency of the evidence by determining
not used the mails. See United States v. Griffith, "whether, after viewing the evidence in the light
17 F.3d 865, 874 (6th Cir.), cert. denied, 513 U.S. most favorable to the prosecution, any rational
850 (1994). A mail fraud conviction requires only trier of fact could have found the essential
a showing that the defendant acted with elements of the crime." United States v. Jones, 102
knowledge that use of the mails would follow in F.3d 804, 807 (6th Cir. 1996) (quotation omitted).
the ordinary course of business, or that a Circumstantial evidence alone is sufficient to
reasonable person would have foreseen use of the sustain a conviction, and such evidence need not
mails. See United States v. Oldfield, 859 F.2d 392, "remove every reasonable hypothesis except that
400 (6th Cir. 1988) (citing Pereira v. United of guilt." Id. (internal quotation omitted).
States, 347 U.S. 1, 8-9 (1954)). "In sum, the
Brown was convicted of conspiracy in violation of
`mailing need only be closely related to the
18 U.S.C. § 371, wire fraud in violation of 18
scheme and reasonably foreseeable as a result of
U.S.C. § 1343, and mail fraud in violation of 18
the defendant's actions.'" Id. (quoting United
U.S.C. § 1341. As previously explained, the
States v. Silvano, 812 F.2d 754, 760 (1st Cir.
government met its burden of proof on the mail
1987)).
fraud conviction. Similarly the government met its
In this case, Brown knew that the bond would be burden on the wire fraud counts. The elements of
mailed to Henrich because it was closely related to wire fraud are: (1) scheme to defraud, and (2) use
and a reasonably foreseeable consequence of his of an interstate electronic communication in
actions inducing her to send $3000 to CDC in furtherance of the scheme. United States v. Smith,
order to get the bond. Indeed, Jeffrey J. 39 F.3d at 122 (citing United States v. Morelli, 643
Hutchinson, a fellow telemarketer at CDC, F.2d 402, 411-12 (6th Cir.), cert. denied, 453 U.S.
testified that the bond scheme was a "gimmie" or 912 (1981)). There clearly was a scheme to
"open award." J.A. at 309. He further testified that defraud, about which both Hutchinson and Heaps
he and Brown used to joke about how worthless testified, and in which Brown participated. J.A. at
the gimmies were. Finally, he testified that Brown 233, 235, 259, 295, 300, 309, 313-14, 315, 316.
was the primary user of the bond scheme. Thus, This a telemarketing scheme, so there is no
under the foregoing test, Brown could be held question that the telephone was used in
liable for the mailing of the bond even though he furtherance of the scheme. The government has
had left the company by the time it was mailed. tapes of Brown calling Elsie Clark, who lives in
489 See also *489 United States v. Brighton Bldg. Oregon, to try to entice her into sending $15,000
Maintenance Co., 598 F.2d 1101, 1104 (7th Cir. to CDC in furtherance of the scheme. J.A. at 463-
1979) (withdrawal from conspiracy did not shield 495. Thus, there is sufficient evidence of wire
defendants from mail fraud convictions based on fraud.
items mailed after they withdrew because the
Finally, the government met its burden of proof on
mailings were the "virtually inevitable results" of
the conspiracy count of the indictment. Under 18
their earlier actions). Accordingly, the district
U.S.C. § 371, the government must prove the
following:

@ casetext 10
 U.S. v. Brown 147 F.3d 477 (6th Cir. 1998)

(1) the conspiracy described in the indictment was CONCLUSION

willfully formed, and was existing at or about the
Having rejected all of Brown's challenges to his
time alleged; (2) that the accused willfully became
conviction and sentence, we AFFIRM the
a member of the conspiracy; (3) that one of the
judgment of the district court.
conspirators thereafter knowingly committed at
least one overt act charged in the indictment at or 490 *490
about the time and place alleged; and (4) that such
overt act was knowingly done in furtherance of
some object or purpose of the conspiracy as
charged.

United States v. Kraig, 99 F.3d 1361, 1368 (6th

Cir. 1996).

Viewing the evidence in the light most favorable

to the government, we hold that the evidence
overwhelmingly supports Brown's conviction for
conspiracy. Brown's co-conspirators Heap and
Hutchinson testified as to the willful formation of
the conspiracy with the intent to defraud elderly
people. J.A. at 233-236; 259; 316. Brown
willingly joined this conspiracy having worked at
several similar types of companies in the past. J.A.
at 176-78; 455-56 (Employment Application). All
of the conspirators, including Brown, undertook
overt acts as charged in the indictment by calling
elderly people, misleading them, and taking their
money. J.A. at 224-227; 358-59; 378-79; 536-38.
From the testimony there is no doubt that all of
these acts were knowingly undertaken in
furtherance of the object of the conspiracy.

@ casetext

11