                      United States Court of Appeals
                            FOR THE EIGHTH CIRCUIT
                                  ___________

                                  No. 08-2306
                                  ___________

United States of America,              *
                                       *
            Appellee,                  *
                                       * Appeal from the United States
      v.                               * District Court for the
                                       * District of Minnesota.
Edward Arnold Septon,                  *
                                       *
            Appellant.                 *
                                  ___________

                             Submitted: February 12, 2009
                                Filed: March 12, 2009
                                 ___________

Before WOLLMAN, HANSEN, and BYE, Circuit Judges.
                          ___________

BYE, Circuit Judge.

      Edward Septon pleaded guilty to bank fraud in violation of 18 U.S.C. § 1344,
and conspiring to commit mail and bank fraud in violation of 18 U.S.C. §§ 371, 1341
& 1344. The district court1 sentenced him to 70 months of imprisonment. He appeals
challenging two sentencing enhancements the district court used to calculate the
advisory guideline range. We affirm.




      1
      The Honorable Joan N. Ericksen, United States District Judge for the District
of Minnesota.
                                           I

       Septon was a mortgage broker and loan officer. He owned and managed First
Rate Mortgage Group, a mortgage brokering business in the Minneapolis, Minnesota,
metropolitan area. Beginning in 2000 and continuing through August 2004, Septon
directed his employees to submit fraudulent loan applications and other documents to
banks and mortgage lending companies. The fraudulent applications concealed the
fact that Septon – through the use of subsidiaries of First Rate Mortgage and other
associated businesses controlled by Septon2 – was providing "bridge loans" to buyers
for their down payments. Septon also sometimes used his associated businesses to act
as sham employers for borrowers in order to falsely verify and substantiate their
sources of income. In addition, the loan applications falsely inflated borrowers' assets
and income, falsely described borrowers' employment, and contained forged
signatures as well as falsified or altered tax returns, pay stubs, gift letters, bank
statements, and bank notes. Between sixty-five and eighty percent of all loans
brokered by First Rate were fraudulent.

      Septon profited from this scheme by collecting interest on the bridge loans. He
also obtained commissions and fees for brokering the loans ultimately approved by
banks or mortgage lending companies. Many of the fraudulent loans went into
default, causing losses in excess of $2 million.

      After a lengthy investigation, the United States filed a two-count information
charging Septon and five others with conspiring to commit mail and bank fraud, and
bank fraud. Septon pleaded guilty to both counts of the information pursuant to a


      2
       The various entities associated with the fraud scheme included New Millenium
Capital Corporation, New Millenium Financial Corporation, New Millenium Homes,
New Millenium Construction, Melioration Corporation, Interumfund, Inc., New
Perspective Realty, Innovatuity, Tospen Consulting LLC, Tospen Marketing, and First
World Corporation.

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negotiated plea agreement. In the plea agreement, the parties agreed to a base offense
level of seven pursuant to U.S. Sentencing Guidelines (U.S.S.G.) § 2B1.1, a sixteen-
level enhancement under U.S.S.G. § 2B1.1(b)(1) based on the amount of loss, a four-
level enhancement under U.S.S.G. § 3B1.1 based on Septon's role in the offense, and
a three-level reduction for acceptance of responsibility under U.S.S.G. § 3E1.1,
resulting in a stipulated guideline range of 51-63 months under Criminal History
Category I.

       Septon was the last of the five conspirators to plead guilty, and his plea
agreement did not contain an agreement for the government to file a downward
departure motion under U.S.S.G. § 5K1.1 based on Septon providing substantial
assistance. The parties also agreed the district court would make its own
determination regarding the applicable guideline factors, and Septon could not
withdraw from the agreement if the district court's calculations differed from the
parties' stipulations.

      At the time of sentencing, the district court determined two additional
enhancements should apply in calculating the advisory guideline range: 1) a two-level
enhancement under U.S.S.G. § 2B1.1(b)(9)(C) based on the offense involving the use
of sophisticated means; and 2) a two-level enhancement under U.S.S.G. § 3B1.3 based
on the defendant abusing a position of trust. As a result of these two additional
enhancements, the district court determined the advisory guideline range to be 78-97
months. The district court then varied downward and imposed a sentence of 70
months, concluding such a sentence was "sufficient to punish this defendant and
[protect] the interests of the public."




                                         -3-
      Septon filed a timely appeal challenging the district court's enhancements for
sophisticated means and abuse of position of trust.3

                                           II

       The legal conclusions a district court reaches in order to apply an enhancement
for purposes of calculating an advisory guidelines range are reviewed de novo, while
the factual findings underpinning the enhancement are reviewed for clear error.
United States v. Blankenship, 552 F.3d 703, 707 (8th Cir. 2009).

      Septon first contends the district court erred by including an enhancement for
use of sophisticated means when calculating the advisory guideline range. The
enhancement for sophisticated means applies when the offense involves "especially
complex or . . . intricate offense conduct pertaining to the execution or concealment
of an offense." U.S.S.G. § 2B1.1 cmt. 8(b). One of the examples specifically
mentioned by the Sentencing Commission is when a defendant "hid[es] . . .
transactions . . . through the use of fictitious entities [or] corporate shells." Id.

       Septon used a variety of business entities to facilitate his fraudulent scheme and
to hide from lenders the fact that he was providing bridge loans to borrowers. He also
sometimes used those same entities to act as sham employers for borrowers in order
to falsely verify and substantiate their sources of income. This is similar to hiding
transactions through the use of fictitious entities – the type of conduct specifically


      3
         On appeal, Septon also complains the district court was obliged to hold an
evidentiary hearing on a belated motion he filed challenging the government's failure
to file a motion under U.S.S.G. § 5K1.1. This issue was not properly preserved for
appellate review, see United States v. Murphy, 248 F.3d 777, 779-80 (8th Cir. 2001)
(explaining the circumstances in which a defendant waives the right to challenge the
government's failure to file a motion for downward departure based on substantial
assistance), and we therefore do not address it.

                                          -4-
mentioned by the Sentencing Commission as justifying a sophisticated means
enhancement. In addition, Septon's scheme involved submitting numerous loan
applications to lenders containing forged signatures, forged notary stamps, and
falsified or altered tax returns, pay stubs, gift letters, bank statements, and bank notes.
In United States v. Halloran, 415 F.3d 940 (8th Cir. 2005), we held a district court did
not commit error by imposing an enhancement for sophisticated means where the
scheme involved "a complex series of false property transfers using false
identifications, a corporate front, forged notary stamps, fraudulent documents, forged
signatures, [and] fraudulently filed documents." Id. at 945. Similarly, in this case,
the district court did not err in applying the sophisticated means enhancement.

       Septon next contends the district court erred in imposing an enhancement for
abuse of a position of trust. Septon contends an arms-length commercial relationship
between a defendant and a victim, such as the broker/lender relationship involved
here, does not constitute a trust relationship sufficient to apply the enhancement. See,
e.g., United States v. Koehn, 74 F.3d 199, 201 (10th Cir. 1996) (explaining courts
"must carefully distinguish between those arms-length commercial relationships
where trust is created by the defendant's personality or the victim's credulity, and
relationships in which the victim's trust is based on defendant's position in the
transaction" and holding that an enhancement for abuse of a position of trust should
only apply in the latter situation). Septon further contends a relationship akin to a
fiduciary relationship is required between the defendant and the victim for the
enhancement to apply, and that there was no fiduciary relationship between Septon
and the lending institutions.

       While we agree an arms-length commercial relationship will ordinarily not
suffice for the enhancement to apply, in United States v. Baker, 200 F.3d 558 (8th Cir.
2008), we explained that the issue of whether an abuse-of-trust enhancement applies
"is fact intensive because it turns on the precise relationship between the defendant
and [his] victims and therefore cannot be decided on the basis of generalities such as

                                           -5-
lawyers and doctors occupy positions of trust but bank tellers and insurance agents do
not." Id. at 564 (internal quotation marks omitted). We have upheld the application
of the enhancement in situations involving arms-length commercial relationships. See
United States v. Fazio, 487 F.3d 646, 659 (8th Cir. 2007) (involving the relationship
between an insurance agent and out-of-state mortgage companies); United States v.
Erhart, 415 F.3d 965, 972 (8th Cir. 2005) (involving the relationship between a
chiropractor and the insurance companies to which he submitted claims for
reimbursement). We have also held there can be an abuse of a position of trust even
in the absence of a traditional fiduciary relationship between a defendant and a victim.
See. e.g., United States v. Goldman, 447 F.3d 1094, 1096 (8th Cir. 2006) (involving
an attorney's false testimony in bankruptcy proceedings).

       In United States v. Wright, 496 F.3d 371 (5th Cir. 2007), the Fifth Circuit
affirmed a district court's application of the abuse-of-trust enhancement to the
relationship between a mortgage broker and lenders. The court explained:

      Although there is no legally recognized-relationship of trust between
      brokers and lenders, such legal recognition is not required, and the
      undisputed record in this case reveals that lenders often rely to some
      degree on statements by brokers in evaluating applications. That lenders,
      who are generally distrusting and like to verify information for
      themselves, would do so makes more sense given that brokers
      independently verify all relevant information before submitting
      applications and that brokers deal repeatedly with the same lenders and
      multiple lenders, unlike the average borrower. The relationship here is
      not lender-borrower, which we agree will seldom be a relationship of
      trust. It's lender-middleman, and there is a difference. We inquire if
      there is a position of trust against the background reality that, wherever
      there is fraud the victim relies on the defendant's statements, so there
      must be more than just reliance based on factors idiosyncratic to the case
      at hand. Here there is reliance that flows from the structure of the
      mortgage industry itself, which sets a patterned process for loan
      application that over time cultivates trust between brokers and lenders.


                                          -6-
      In sum, on the facts before it the district court did not clearly err in
      concluding that Wright abused his position of trust as a mortgage broker.

Id. at 377.

       We agree with the Wright court. Given the particular characteristics involved
in the relationship between a mortgage broker and a lender, the district court did not
err in applying the abuse-of-trust enhancement.

                                         III

      We affirm the judgment of the district court.
                      ______________________________




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