U.S. v. Shepard, Fourth Circuit Court of Appeals, Filed June 15, 2018: Re-Loading and the Vulnerable Victim Enhancement

In US v. Shepard, the Fourth Circuit Court of Appeals upheld the district court’s application of the “vulnerable victim sentencing enhancement” and its calculation of the total loss amount, which resulted in a total four-level enhancement to Shepard’s offense level.

Shepard pled guilty to her role in a wire and mail fraud scheme that was operated from Costa Rica, including:

• Conspiracy to commit wire and mail fraud;
• Conspiracy to commit money laundering;
• Wire fraud;
• Aiding and abetting wire fraud;
• Money laundering; and
• Aiding and abetting money laundering.

The only issue on appeal was whether the district court properly applied the sentencing enhancements.

Why Do Sentencing Enhancements Matter?

If you’ve ever been involved in the federal criminal system, you know that the sentencing guidelines determine the length of time that a person is sentenced to. In this case, the total enhancement to Shepard’s offense level was four levels – that may not sound like much, but an increase of four levels can result in years of incarceration…

In some cases, the fight is over whether a person is guilty or not guilty.

In other cases, the fight is over how long a person will spend in jail. When you are facing years in prison, you realize just how precious each day of your life is, and you will fight to get back as many of those days as you can…

What is Re-Loading and How Does It Affect the Vulnerable Victim Enhancement?

The vulnerable victim enhancement applies when:

1. The alleged victim was unusually vulnerable; and
2. The defendant knew or should have known about the alleged victim’s vulnerability.

In this case, some defendants were “openers,” who would call the alleged victims and tell them that they had won prize money, but that they must pay a “refundable insurance fee” to collect their winnings.

When someone falls for it and pays, a “loader” then calls them again and tells them that they won a larger amount than was thought, but they must pay additional money to increase their insurance. When the person falls for it a second time and continues to pay, they would continue “re-loading” until the alleged victim caught on and stopped payments.

In this case, the Court found that Shepard was a “loader,” and that the practice of “re-loading” is, by its very nature, targeting vulnerable victims.

What this means for future cases is that courts will automatically approve the vulnerable victim enhancement in cases where the defendant acted as a loader, regardless of the defendant’s actual knowledge of whether a victim was unusually vulnerable…

Why Does the Loss Amount Matter at Sentencing?

The district court found that there was a loss amount of $7,215,695.20, which resulted in an 18-level enhancement to Shepard’s offense level. Shepard argued that the actual loss amount was less than $3,500,000, which should have resulted in a 16-level enhancement.

The Fourth Circuit found that the district court’s calculation of the loss amount was appropriate, because:

• The government properly included loss amounts from all sources of money transfers;
• Although Shepard stopped working at the call center for over two years, she did not take affirmative steps to withdraw from the conspiracy; and
• Shepard was liable for all losses inflicted by her co-conspirators, even after she stopped working at the call center.

Like a federal drug conspiracy case, the defendant’s sentencing guidelines range is determined in part by the amount of loss (total amount of drugs in a drug conspiracy), and the defendant is saddled with the total amount from all co-conspirators, whether the defendant was directly involved in every transaction or not…

The government must prove the loss amount by a preponderance of the evidence – more likely than not, and the estimate must be reasonable, not perfect.