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Criminal – Sentencing – Fraud – Restitution Order – ‘Vulnerable Victim’

A defendant who was part of a fraudulent sweepstakes scheme operating out of a Costa Rican call center gets an “aggravating” role sentencing adjustment for his supervisory role, but the 4th Circuit vacates the district court’s $4.2 million restitution order and another sentence adjustment because there was no evidence defendant knew the operation was dealing with “vulnerable victims.”

Defendant contends first that the district court erred in applying the vulnerable victim adjustment, failing to explain sufficiently how he should have known of his victims’ unusual vulnerabilities. The government concedes the district court erred in this respect, but asks this court to rely on other aspects of the record to affirm the vulnerable victim adjustment.

The district court did not explain how defendant should have known that one identified victim was on medication for Alzheimer’s disease and that another one was waiting for a phone call from a doctor about her daughter’s health when she received the call in the fraudulent sweepstakes scheme. That the scheme’s call center may have purchased from “list brokers” lists of leads that included individuals with unusual vulnerabilities does not alone support application of the adjustment. Nor did the district court adopt the government’s theory that the scheme – which attempted to “reload” victims by pressing them for additional funds after they responded to the bait – preyed on individuals known to be especially susceptible.

We are unable to conclude that the court’s application of the vulnerable victim adjustment was procedurally reasonable.

Defendant also says that because he lacked supervisory authority over his coconspirators, the court improperly applied the aggravating role adjustment. However, the evidence in the sentencing.

proceedings supports the proposition that defendant exercised supervisory responsibility over the activities of the call center by controlling its operators. Defendant enforced the center’s rules, and even punished employees ho failed to abide by the rules. He coordinated the operators’ activities, determining who would act as “openers” and who would be “loaders” when contacting victims. He calculated each employee’s earnings, effectively deciding monetary shares of the fraud scheme’s proceeds. The district court did not clearly err in relying on this evidence to find that defendant was a supervisor of the center’s employees, rendering the three-level adjustment appropriate.

Finally, defendant challenges the restitution order of more than $4.2 million, asserting that the court erred in finding him jointly and severally liable for financial losses caused by other Costa Rican fraud schemes.

At the sentencing hearing, investigators testified that the call center caused approximately $1.7 million losses between March 2004 and April 2006. Yet, in applying the Mandatory Victims Restitution Act, the district court ordered to defendant to make restitution of $4.2 million, concluding that he was jointly and severally liable for losses caused not only by the center, but also by other Costa Rican call centers that used similar sweepstakes schemes. Because the restitution ordered was not limited to the center, the district court abused its discretion with respect to the restitution order, and we vacate it as well.

U.S. v. Llamas
(King, J.) No. 09-4045, March 17, 2010; USDC at Charlotte, N.C. (Whitney) Matthew Segal for appellant; Ellen R. Meltzer, USDOJ, for appellee. VLW 010-2-076, 16 pp.

VLW 010-2-076

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