
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                FOR THE FIRST CIRCUIT                                 ____________________        No. 94-1922                              UNITED STATES OF AMERICA,                                      Appellee,                                          v.                                   LONDON EGEMONYE,                                Defendant, Appellant.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                     [Hon. Joseph L. Tauro, U.S. District Judge]                                            ___________________                                 ____________________                                        Before                                  Cyr, Circuit Judge,                                       _____________                            Bownes, Senior Circuit Judge,                                    ____________________                              and Boudin, Circuit Judge.                                          _____________                                 ____________________            Joan M. Griffin, by Appointment of  the Court, with whom  Casner &            _______________                                           ________        Edwards was on brief for appellant.        _______            James  F.  Lang,  Assistant  United  States  Attorney,  with  whom            _______________        Donald K. Stern, United States  Attorney, was on brief for  the United        _______________        States.                                 ____________________                                    August 3, 1995                                 ____________________                 BOUDIN, Circuit Judge.   London Egemonye was indicted in                         _____________            1993 under  a multi-count indictment charging  him and others            with conspiracy and other offenses relating to the possession            and  use  of  other people's  credit  cards.    18 U.S.C.                1029(a)(2)(trafficking,    fraud    and   use),    1029(a)(3)            (possession with intent to defraud), 1029(b)(2) (conspiracy).            On June  10,  1994,  Egemonye entered  guilty  pleas  to  all            counts,  and he now appeals from his sentence arguing that it            is flawed  by  the government's  manipulation  of  sentencing            factors and by an improper computation of loss.                 Because  there  was  no   trial,  we  derive  the  facts            primarily from the recitations at  the plea hearing, from the            presentence report,  and from  submissions at  the sentencing            hearing.  United States v. Connell, 960 F.2d 191, 192-93 (1st                      _____________    _______            Cir.  1992).     The  case arose  out  of  a sting  operation            conducted  by a joint  federal-state task force investigating            credit card and other financial fraud in  Massachusetts.  The            critical events took place in January and February 1993.                 Robert  Leslie,  who was  cooperating  with authorities,            introduced Egemonye  to an undercover state  trooper known to            both  only as "Kathy."   On January 21,  1993, Kathy supplied            Egemonye  with two  BayBank MasterCard  credit cards  and one            BayBank Visa  credit card with  an aggregate credit  limit of            $7,450  for all  three  cards.   Egemonye then  created false            driver's  licenses  in the  credit-card  names, each  license                                         -2-                                         -2-            bearing  Leslie's  photograph,  and  drove  Leslie  to  three            different banks to obtain cash advances of $6,900.                   Egemonye purchased four more  credit cards from Kathy on            January 29, 1993,  and four more  on February 2,  1993.   The            aggregate limits  on the cards  in the two  transactions were            $21,000  and   $14,000,  respectively.    In   between  these            transactions,  several  of  the  cards were  used  to  obtain            advances  from   banks,  and  Egemonye  and   others  in  the            conspiracy engineered  deposits  of some  stolen checks  into            accounts  of individual  card holders  to boost  the depleted            credit available for those cards.                 Until the fourth transaction,  Kathy made the "sales" in            exchange for a share of  the proceeds, but on February  5 she            proposed that  she be paid  a flat  $200 per card.   Egemonye            said, "I'm not going  to buy one card for two  hundred. . . .            It has to be like ten."  On February 10,  Kathy told Egemonye            that she expected to receive a number of cards that day, that            Egemonye should bring $2,000 for 10 cards, and that she would            "front" (finance) any additional cards and accept payment for            them later.   Egemonye agreed, subject to his  examination of            the cards.                 When Kathy  and Egemonye met later that  day, Kathy said            that  she had a bag full  of cards and asked Egemonye whether            he knew  of another buyer  if he did not  want them all.   He            said, "I  probably can  handle them,"  and proceeded to  give                                         -3-                                         -3-            Kathy $2,000 down, and a promise of $6,000 more later, for 40            Household  Bank  Visa and  MasterCard  credit  cards with  an            aggregate  limit   of  $200,000.     Egemonye  was   arrested            immediately thereafter, followed  by the indictment  and plea            already described.                 At  sentencing, the  district court  increased the  base            offense  level of 6 by 8 additional levels because the "loss"            attributed  by  the  court  to Egemonye  was  over  $200,000.            U.S.S.G.    2F1.1(a), (b)(1)(H).  The court computed the loss            at $242,950,  representing the aggregate credit  limit of the            51   credit  cards   purchased   from  Kathy   in  the   four            transactions.  The  offense level was then  adjusted in other            respects,  not here  in dispute,  and Egemonye  was sentenced            within the guideline range to 37 months' imprisonment.                 1. On appeal, Egemonye's first claim is directed  at the            40  cards supplied to him in the final transaction.  Egemonye            contends  that   including  these   40  cards  in   the  loss            calculation condones "blatant sentencing  factor manipulation            engaged in by the investigating agents" and is a violation of            constitutional due process.   He relies on several decisions,            including United  States v. Connell,  960 F.2d 191,  196 (1st                      ______________    _______            Cir. 1992).                 We have recently had occasion to discuss Connell and the                                                          _______            other  decisions   in  this  circuit   that  have   addressed            sentencing  factor manipulation.   United States  v. Montoya,                                               _____________     _______                                         -4-                                         -4-            No. 94-1666, et al.,  (1st Cir. July 27, 1995).   Summarizing                         ______            the prior cases,  we said that "where government  agents have            improperly enlarged  the scope  or scale  of the  crime," the            __________            sentencing  court   has  power   to   exclude  "the   tainted            transaction" from the guideline computations and for purposes            of  any mandatory  minimum  statute.   Montoya, slip  op. 6-7                                                   _______            (quoting in part Connell, 960 F.2d at 195).                               _______                 However, recognizing the  broad latitude allowed to  the            government  in   investigating  and  suppressing   crime,  we            stressed  that  it  was  only  "extraordinary  misconduct" by            agents that could give rise to such an exclusion, which would            occur  in the  teeth of  a statute  or guideline  approved by            Congress.   Montoya, slip op. at 7-8, (quoting in part United                        _______                                    ______            States v.  Gibbens, 25 F.3d 28,  31 (1st Cir. 1994)).   While            ______     _______            something less than a constitutional violation might suffice,            as  extraordinary misconduct,  Egemonye's  reference  to  due            process concepts is certainly in the ballpark.                 In Montoya, as in previous cases, we refused to lay down                    _______            fixed rules to define  sentence factor manipulation, but said            that the focus is normally upon the conduct of the government            rather  than the defendant.  Slip op. at 8.  Indeed, Egemonye            does not  claim that his will  was overborne or deny  that he            was predisposed to the offense.  What Egemonye claims is that            the  fourth transaction  had  no legitimate  law  enforcement            purpose and was designed solely to boost his federal sentence                                         -5-                                         -5-            because government agents were unhappy with lenient treatment            that Egemonye earlier received in state court.                  There is some  basis for the suggestion  that task force            agents  were  unhappy   with  Egemonye's  prior   record  and            believed,  in  the  words of  one  of  the  agents, "that  he            [earlier]  got off lightly for his  criminal activity."  That            criminal record, according to the agent just quoted, involved            a  history of  credit card  fraud by  Egemonye that  could be            traced back  to 1990 and  involved a number  of transactions.            On this appeal, the government is prepared to assume arguendo                                                                 ________            that the background  facts, "viewed collectively,  could call            the government's motives into question to some extent."                     Nonetheless,  the  government says  that  multiple sales            were clearly appropriate in  order to identify Egemonye's co-            conspirators, which they  did.  As  to the final  sale of  40            cards, the  government  insists  that it  too  "had  a  valid            investigatory purpose"  which was "to  explore the parameters            of  the defendant's criminality."  Egemonye's counsel replies            that this "parameters" explanation  has no real substance and            could  be used to enlarge a defendant's sentence to virtually            any height whatever.  We think that Egemonye's reply has some            force but overstates the matter.                 There  is, it  should  be stressed,  no indication  that            Egemonye was coerced or  pressured to achieve a new  level of            crime.   True,  the  fourth sale  was  much larger  than  the                                         -6-                                         -6-            earlier  ones; but agent Kathy did  not force the 40 cards on            Egemonye.   On the contrary, he  had insisted on  at least 10            cards for  the new $200 per  card payment ("I'm not  going to            buy one card for two hundred. . . .  It has to be like ten.")            And when offered a  bag full of cards--with the  request that            he  recommend another  buyer  for those  he did  not want--he            responded, "I probably can handle them," and took them all.                 Government  agents  are  not  limited to  replicating  a            suspect's largest  unsolicited crime.  In this case, the full            contours  of  the criminal  operation--its  size, techniques,            personnel--were,  like an iceberg, largely submerged; and the            means of exploration were additional and larger transactions.            The first three transactions  clearly served this purpose and            the fourth,  even though followed immediately  by the arrest,            provided  air-tight evidence  for trial  that Egemonye  was a            significant dealer and not a petty swindler.  While the sting            could not be endlessly prolonged and enlarged, nothing in the            objective facts  suggests  "misconduct"  at  all,  let  alone            "extraordinary misconduct."                 The question, then, is whether the fourth transaction is            tainted by  the agents'  subjective motives.   The  pallet in            such  matters contains  not blacks and  whites but  shades of            gray.   Motives may be mixed;  good and bad motives are often            matters of degree; and there can be multiple actors.  Whether            to consider subjective  motive at all  presents a problem  of                                         -7-                                         -7-            policy.  Compare  Harlow v. Fitzgerald,  457 U.S. 800  (1982)                     _______  ______    __________            (refusing  to  do  so  in the  qualified  immunity  context).            Still, we  would be  greatly concerned if  evidence otherwise            available  showed that a plainly improper subjective motive--            say,  racial hostility  or personal  animus--had  enlarged or            prolonged the sting.                 But this is not such a case.  About the most that can be            derived from the record, drawing all reasonable inferences in            favor of Egemonye, is  that the agents thought that  Egemonye            was an established and  unrepentant defrauder who had escaped            serious  punishment for  a  series of  past, similar  frauds.            With  this in  mind, they  conducted a  sting operation  that            involved no  pressure whatever  on Egemonye, lasted  for only            four transactions,  and  garnered several  other  defendants.            The first three transactions involved 11 cards; the last one,            40.  This is a sizeable jump but hardly extraordinary.                 That   agents  considered  Egemonye's   past  record  in            selecting  him  for  overtures   by  the  task  force  is   a            commonplace   of  law  enforcement.    Undercover  operations            frequently target those  who are suspected of crime,  and the            recent history of fraudulent  activities gave the agents some            reason to think  that Egemonye was  not only predisposed  but            actively   engaged.    Fed.   R.  Evid.  404(a),  restricting            character  evidence to show propensity, is  a rule for trials            and not the conduct of police investigations.  At  worst, the                                         -8-                                         -8-            agents went  too far if  and to the extent  that they thought            themselves entitled  to make  up for any  shortfall in  prior            punishments.  But the line is thin and blurred between such a            dubious  motive and  a  simple  desire  to  be  sure  that  a            committed  criminal is  caught  and tried  for a  substantial            offense  based on  unshakeable  evidence.   And,  as we  have            already  held, Egemonye  was  legitimately  targeted and  the            sting  objectively  reasonable   in  extent.    Under   these            circumstances,  even assuming that  the agents'  motives were            mixed  and  not of  crystalline purity,  we see  nothing that            would require a curtailment of the sentence.                 2.  Egemonye's second challenge to his sentence concerns            the district court's computation of loss.  As already  noted,            the governing  guideline keys the offense  level primarily to            "the loss" caused by the offense, U.S.S.G.   2F1.1(b)(1)(loss            table),  but goes  on to  provide (id.,  comment  (n.7)) that                                               ___            intended loss should  be used  if it is  greater than  actual            loss:                 Consistent  with the provisions of  2X1.1 (Attempt,                 Solicitation  or Conspiracy),  if an  intended loss                 that the defendant was attempting to inflict can be                 determined,  this  figure will  be  used  if it  is                 greater than the actual  loss. . . .   For example,                 if the fraud consisted  of selling or attempting to                 sell $40,000 in  worthless securities .  . . .  the                 loss would be $40,000.                 In  accord with  the  presentence  report, the  district            court  in this case  attributed to Egemonye  an intended loss            equal to the aggregate limits  of the purchased credit cards.                                         -9-                                         -9-            A reading of  the transcript indicates  that the judge  found            that Egemonye was capable of and intended to use the cards to            secure amounts at or virtually at their aggregate limits.  We            review  such a  factual determination  only for  clear error,            United  States v.  Pavao, 948  F.2d 74,  77 (1st  Cir. 1991),            ______________     _____            reserving for closer scrutiny a buried legal issue shortly to            be described.                 On the factual issue of intended use and capability, the            government bears the burden  of proof because an increase  in            the offense level was sought, see United States v. Sklar, 920                                          ___ _____________    _____            F.2d 107,  112  (1st Cir.  1990),  but the  guideline  itself            cautions  that a  reasonable estimate  of loss  will suffice.            U.S.S.G.   2F1.1 comment. (n.8).  Egemonye begins by pointing            out that he realized  only about 53 percent of  the aggregate            card limits  from  the  cards  involved in  the  first  three            transactions  and nothing  at all  from the  final  bagful of            cards since he was apprehended almost immediately.  He argues            that to predict a 100 percent recovery is simply unrealistic.                 Unfortunately  for  Egemonye,   there  was   affirmative            evidence  that he  instructed his  runners  at the  outset to            procure cash            from  the banks  at  or virtually  at the  card  limits.   In            addition, he arranged  for the deposit of  stolen checks into            some of the accounts, in  order to refresh their limits.   By            this means, some of  the accounts could have been  milked for                                         -10-                                         -10-            amounts  in excess of their aggregate limits.  The 53 percent            figure represented only the  amount that Egemonye had secured            at the time his scheme was interrupted by arrest.  See United                                                               ___ ______            States v. Strozier, 981 F.2d 281, 284 (7th Cir. 1992).            ______    ________                 In  sum, taking  the issue  purely as  a factual  one of            intent  and capability, we do  not think that  on this record            the use of the aggregate card limits as a measure of intended            and  potential loss was  clearly erroneous.   Where  there is            good evidence  of actual intent and some prospect of success,            we do not think that a court needs to engage  in more refined            forecasts of just how successful the scheme was likely to be.            See United States v. Lorenzo, 995 F.2d 1448, 1460 (9th Cir.),            ___ _____________    _______            cert. denied,  114 S. Ct. 225  (1993).  The  situation may be            _____ ______            quite difficult where intent must be inferred solely from the            likely effects of the scheme.  See United States v. Stern, 13                                           ___ _____________    _____            F.2d 489 (1st Cir. 1994).                 But there is a  wrinkle.  There is a  cross-reference in            U.S.S.G.     2F1.1's  application  note 7  (quoted  above  in            pertinent  part) to U.S.S.G.    2X1.1; and there  is a second            such cross-reference  in application note 9,  which reads (in            pertinent part):                  "In  the  case  of  a partially  completed  offense                 (e.g., an  offense involving a completed fraud that                 is part of a  larger, attempted fraud), the offense                 level is  to be  determined in accordance  with the                 provisions of   2X1.1 . . .  whether the conviction                 is  for  the  substantive  offense,   the  inchoate                 offense  . . ., or both."                                         -11-                                         -11-            Egemonye's  counsel  argues  that  section   2X1.1,  and  the            discount it makes available, apply in this case.                 U.S.S.G.     2X1.1  is  concerned  with  determining the            offense  level for an attempt or conspiracy; and this it sets                                  _______    __________            at  three  levels  less  than   the  offense  level  for  the            substantive  offense--unless   the  defendant  (or   his  co-            conspirators)  have  completed  all   of  the  acts  believed            necessary  for  the substantive  offense  or  were "about  to            complete all such acts"  when apprehended.  For cases  within            the   "unless"  clause--which  the  background  comment  says            represent   "most"   cases--there   is   no   such  discount.            Effectively, the  guideline gives the defendant a three-level            discount  if   he  is  some  distance   from  completing  the            substantive crime.                 Read  literally, section  2X1.1 is  not relevant  to the            present case  because 14  of the  15 counts against  Egemonye            involved   completed   substantive  offenses,   ranging  from            trafficking in unauthorized  credit cards to  producing false            driver's  licenses, and  the conspiracy  thus  embraced fully            completed  crimes.  On the other hand, the cross-reference to            section 2X1.1 in section 2F1.1 arguably connects the intended            loss  concept to  the  attempt guideline,  and section  2X1.1            blurs the matter further  with the following application note            (comment. (n.4)), providing (in pertinent part):                 In  certain  cases,   the  participants  may   have                 completed . . . . all of the acts necessary for the                                         -12-                                         -12-                 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 . . . or  the offense level for the part  of                 the offense  for  which  the  necessary  acts  were                 completed  . . . .  For example, where the intended                 offense  was   the  theft   of  $800,000  but   the                 participants   completed  .  .   .  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.                 Interpreting  these  provisions  is  a  matter  of  some            difficulty,  and the  only cases  in point  are in  conflict.            Compare United  States v. Watkins,  994 F.2d  1192 (6th  Cir.            _______ ______________    _______            1993)  with United States v. Strozier, 981 F.2d 281 (7th Cir.                   ____ _____________    ________            1992)  The problem, in a nutshell, is that section 2X1.1  has            on  its  face  nothing to  do  with  a  completed substantive            offense or a conspiracy that has  been carried to completion.            On the other hand, the notion of a discount could be extended                                                                 ________            from the case of an incomplete offense to that of a completed            offense where intended harm  is part of the calculus  and the            harm is only partly completed.                 Recognizing the question to be close, we are inclined to            stand by the  literal language of the guidelines that directs            section 2X1.1 to cases where the substantive  offense has not            been completed.  E.g., United States v. Sung, 51 F.3d 92 (7th                             ____  _____________    ____            Cir.  1995).  The argument for a discount for inchoate crimes            is  obvious; the defendant  has started down  the road toward            the  substantive crime  but  has not  gotten  there yet  and,                                         -13-                                         -13-            whatever his intention, might still turn back before crossing            the  line.   By  contrast, Egemonye  did  cross the  line and            commit  the  substantive crime  by  acquiring  the cards  and            making  the  false documents,  so  the basic  purpose  of the            section 2X1.1 discount has nothing to do with him.                 Where  a completed  offense  is involved,  it is  surely            rational to measure  culpability in part by the intended harm            and to refuse a  discount where the offense is  complete even            though  the intended  harm has  not yet been  fully realized.            From the standpoint of  moral guilt, and dangerousness, there            is  little to distinguish such  a defendant from  one who has            actually  inflicted  the same  amount of  harm.   And  we are            influenced  in part by the fact that the case law calculating            sentences  based  on intended  harm,  most  of it  admittedly            without making reference to section 2X1.1, is consistent with            this view.   E.g., United States v.  Guyon, 27 F.3d  723 (1st                         ____  _____________     _____            Cir. 1994); United States v. Resurreccion, 978  F.2d 759 (1st                        _____________    ____________            Cir. 1992).                   Of course, there would be nothing irrational in deciding            that  actual harm is worse than intended harm and providing a            three-level discount  wherever the  sentence for  a completed            offense is  measured in part by  intended harm.  But  this is            not  in general the philosophy of the guidelines; if it were,            possession  of  drugs  with  intent to  distribute  would  be            punished  less harshly than the  actual sale of an equivalent                                         -14-                                         -14-            amount.    The  wrinkle of  section  2X1.1  cannot be  ironed            completely smooth, but the pertinent language  already quoted            can in fact be squared with our result.                 Thus, the cross-references  in section 2F1.1  are easily            explained; they do invoke the discount, or the possibility of            a  discount, where the underlying crime  is merely an attempt            or conspiracy.  Application  note 4 in section 2X1.1  is less            easily reconciled; but we think the difference is that in the            theft  case, there  is no  completed crime  as to  the larger            amount  but  only  (in  substance)  an  attempt.    Here,  by            contrast, all 51 of  the cards were the subject  of completed            crimes.                 Egemonye's remaining  claim as to loss is  to argue that            no  consideration  should be  given to  the  40 cards  in the            fourth transaction,  or at least  to the unexpected  30 cards            (over and above the  ten cards Egemonye requested).   This is            largely  a restatement  of the  claim that  sentencing factor            manipulation occurred.  Having  rejected that claim, we think            that--from  the standpoint  of  intended  loss--Egemonye  can            fairly be charged with intending to inflict loss as to all of            the cards.                 Both issues  in this  case are difficult  and important.            We  are thus  especially  indebted to  counsel  for the  able            briefing  and   argument  presented  on  both   sides.    The            Sentencing  Commission's  attention  will  be  drawn  to  the                                         -15-                                         -15-            arguable  lack of  clarity in  the interplay  between section            2F1.1 and section 2X1.1.                 Affirmed.                 _________                                         -16-                                         -16-
