Sentencing Enhancement for Number of Victims Permissible for Identity Theft Conviction Even if Victims Did Not Suffer Financial Loss

Fraud - Law Offices of Hope C. Lefeber

The Tenth Circuit recently found it was permissible to add a sentencing enhancement based on the number of victims, even if not all of those victims had suffered financial loss. In United States v. Gonzales, No 16-2022 (10th Cir. 2016), defendant Gonazales pleaded guilty to four counts of mail fraud, one count of conspiracy to commit mail fraud, and one count of aggravated identity theft. Defendant and co-defendant had registered fake companies with unemployment agencies in Texas, Colorado, and New Mexico, and paid unemployment taxes for them, listing real people, along with their actual social security numbers and other personal information, as employees of the companies. They then submitted unemployment benefit claims on behalf of the persons whose identities they stole. The unemployment agencies mailed the debit cards to post office boxes rented by the two co-defendants, who then used the cards for their personal spending. Defendant Gonzales’ Pre-Sentence Report recommended a four level sentence enhancement pursuant to §2B.1(b)(2)(B) because the number of victims exceeded 50. The Report calculated that there were 107 victims. It calculated this number by interpreting victim to mean “any individual whose means of identification was used unlawfully or without authority.” Defendant Gonzales objected, arguing that the victims were only the three state agencies because they were the only ones who suffered financial losses. The district court rejected this argument and adopted the Report’s recommendation for a sentencing enhancement. It then departed downward for a final sentence of 111 months.

On appeal, defendant argued that the trial court had erred in calculating his sentence by including in its assessment of the number of victims those whose identities had been stolen even though they suffered no financial loss. He asserted that the sentencing judge could not apply the sentencing enhancement because of a note in the sentencing guidelines, which concerned crimes of aggravated identity theft. The note provides:

if a sentence under this guideline is imposed in conjunction with a sentence for any underlying offense, do not apply any specific offense characteristic for the transfer, possession, or use of a means of identification when determining the sentence for the underlying offense.

The defendant read this note to mean that his sentence could not count the persons whose identities were stolen because counting them would be a prohibited application of a “special offense characteristic for the transfer, possession, or use of means of identification.” The Tenth Circuit disagreed, finding that this argument was already foreclosed by circuit precedent, specifically United States v. Manatau, 647 F.3d 1048 (10th Cir. 2011). The court also pointed out that every other circuit to rule on this issue had permitted the enhancement. Thus, defendant’s sentence was affirmed.

Categories: Fraud