US v. Castaneda-Pozo, 11th Cir., filed 12/19/17; Sentencing Issues for Fraud Convictions; Intended Loss and Substantial Financial Hardship

The Eleventh Circuit finds not-entirely-credible testimony of co-defendants sufficient to support making defendant entirely liable for intended loss, and substantial financial hardship applies even when victims don’t have to sell their Rolexes. 

The appellant in this case, Mr. Castaneda-Pozo appealed two aspects of his sentence.  First, he argued that the district court erred in finding him responsible for the scheme’s entire intended loss amount for purposes of calculating his offense level.  He also argued the district court erred by finding that five or more of the victims of the scheme suffered substantial financial hardship. It looks like the scheme here was to still checks from mailboxes and then deposit them.

The Court found, reviewing the claim under the highly deferential abuse of discretion standard that Castaneda-Pozo was responsible for the scheme’s entire intended loss amount even though he had co-defendants. (“Intended loss” is “the pecuniary harm that defendant purposely sought to inflict” including pecuniary harm “that would have been impossible or unlikely to occur”). See USSG 2B1.1(b)(1)(G), cmt. 3(A).  The Court found Castaneda-Pozo’s relevant conduct included renting cars, stealing money orders from drop boxes, and depositing money orders into co-conspirators’ accounts.  The Court also credited his co-defendants’ statements that Castaneda-Pozo was the one of the ringleaders and that he was paid to deposit between 50-55 money orders. Castaneda-Pozo’s disputed his co-defendants’ inculpatory statements. The Court found that the district court was essentially left with a credibility determination it had to make– believe C-P, or his co-defendants. The Court found the district court had discretion to find the co-defendants’ testimonies at least more credible, if not entirely credible, than C-P’s.  Claim denied.

As to the second issue on appeal, Amendment 792 to the Sentencing Guidelines provides a four-level enhancement to a defendant’s offense level if a fraud offense “resulted in substantial financial hardship to five or more victims.” Although substantial financial hardship is not defined, Application Note 4(F) provides that courts shall consider, among other factors whether the offense resulted in the victim: 1) becoming insolvent, 2) filing for bankruptcy under the Bankruptcy Code, 3) suffering substantial loss of a retirement, education, or other savings or investment fund, 4) making substantial changes to his or her employment, such as postponing his or her retirement plans, 5) making substantial changes to his or her living arrangements, such as relocating to a less expensive home; and 6) suffering substantial harm to his or her ability to obtain credit.  Here, the Court found the district court did not abuse its discretion in finding substantial financial hardship when the victims were made insecure in life’s basic necessities. The parties agreed that one victim suffered hardship.  As to the others, the Court found it sufficient when the other victims had to repay $400- $800. Because the stolen checks were rent payments, three victims had to borrow money from friends and family; one had to take out a loan at 29% interest, two fell behind on their bills, one had to take an extra part-time job, and one had to work extra shifts.  Two were threatened with eviction. The district court clearly did not think it necessary to drain a retirement account to hold a defendant responsible when preying on less financially secure victims.  The Court upheld the district court’s finding on this point, too.

All and all, an interesting fraud sentencing case.

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