US v. Walton, Seventh Circuit Court of Appeals, Filed October 25, 2018: Mail Fraud and Preserving the Record

Marcel Walton, a “Grand Sheik” of the Moorish Science Temple of America in Chicago, pled guilty to mail fraud based on filing fraudulent tax returns and helping others to file fraudulent tax returns.

On appeal, he argued that the district court relied on inaccurate information at his sentencing hearing, violating his due process rights.

The Seventh Circuit Court of Appeals found that there were no due process violations, and, if there were any inconsistencies in Walton’s sentencing enhancements, they were not preserved for appeal because he did not object to the information that the Court relied upon at his sentencing hearing and he did not present any evidence to show that the information was inaccurate.

Although other defendants in similar cases had received significantly lower sentences, the district court relied on Walton’s leadership role in the tax return scheme, the fact that there were vulnerable victims, and the total loss amount that was attributed to him to sentence him to more time than the other defendants.

What is Mail Fraud?

Although Walton’s alleged crime was filing fraudulent tax returns, he pled guilty to mail fraud. Why?

It is illegal to file fraudulent tax returns, but mail fraud, defined in 18 U.S.C. 63, is a more commonly charged offense that is often accompanied by conspiracy charges – making the defendant responsible for the harm done by co-conspirators and, in many cases, increasing the potential sentencing range.

What Type of Crimes are Included in Mail Fraud?

Mail fraud consists of a fraud, scheme, deceit, trickery, or scam that is committing using the US postal service or a private mail carrier. It can include:

• Tax fraud as in the Walton case;
• Employment fraud like scams offering fake jobs or fake work-at-home opportunities;
• Credit card fraud;
• Ponzi schemes;
• Health insurance fraud; or
• Sweepstakes fraud.

What are the Elements of Mail Fraud?

Although the list above contains some of the more common types of mail fraud, any fraud or scam can result in mail fraud charges where:

1. The person intended to defraud a person or entity;
2. The scheme involved material misrepresentations or omissions;
3. The scheme resulted in (or would have resulted in) the loss of property, services, or money; and
4. The person used the postal service in some way as part of the scheme.

In Walton’s case, he admitted at his guilty plea hearing that he intended to defraud the United States by filing fraudulent tax returns for himself and others and that he used the US postal service as part of the scheme.

Sentencing Enhancements

The basis for Walton’s appeal was that, although he received a sentence below the guidelines range, he was denied due process because the district court relied on inaccurate information when considering sentencing enhancements for his role as a leader and for targeting vulnerable victims.

Other defendants charged in the same or similar schemes had received sentences ranging from probation to 28 months. Although Walton’s pre-sentence investigation report (PSR) calculated a sentencing range of 70-87 months based on Walton’s criminal history category, offense level, and an agreed-upon loss amount of just over $16 million, Walton asked the court for a sentence 12 months.

The Court sentenced Walton to 68 months in prison – although this was below the recommended guidelines range, the Court based the sentence in part on Walton’s leadership role in the scheme and Walton’s exploitation of vulnerable victims.

Leadership Role

Based on statements by the government, the presentence investigation report, and Walton’s plea agreement, the Court found that Walton was a leader in the scheme because:

• He was a religious leader who encouraged his followers to engage in the fraudulent tax scheme;
• He either prepared the tax returns for his followers or caused them to be prepared for his followers; and
• He received a 10% “tithe” from his followers who participated in the scheme.

Vulnerable Victims

The Court also based Walton’s sentence, in part, on the allegation that he targeted vulnerable victims in his scheme, pointing out that:

• He “used his religious clout to persuade his followers to commit crimes;” and
• Some of his co-conspirators were elderly or homeless.

Total Loss Attributed to the Defendant

As in many federal cases, Walton’s sentencing range was driven by the total “loss amount” that was attributed to him – in this case, over $16 million.

In the cases of other defendants charged in the same scheme who received significantly lower sentences, the loss amounts that were attributed to those defendants were also significantly lower.

Preserving the Record

Walton’s argument was that the Court’s sentence was based on inaccurate information.

The allegations that Walton was a leader in the scheme, that he targeted vulnerable victims, and that the loss amount was too high may have been accurate or may have been untrue. It doesn’t matter for purposes of appeal, because Walton did not object to the sentencing enhancements at his sentencing hearing and he did not present any evidence that the allegations were untrue.

Walton agreed to the loss amount in his plea agreement. The information about his leadership role and targeting of vulnerable victims were also contained in his plea agreement and presentence investigation report.

If the information contained in a plea agreement is not true – do not sign the plea agreement. Discuss it with your attorney and continue negotiations until you reach an agreement that is truthful and that you agree with.

Similarly, if the information in your presentence investigation report is incorrect, your attorney should:

• Contact the probation officer who completed the report and attempt to correct it before your sentencing hearing;
• Contact your prosecutor and attempt to correct the PSR before your sentencing hearing; or
• Object to the PSR at the sentencing hearing and present evidence as to why the PSR contained incorrect information.

Federal Appeals and White-Collar Criminal Defense Lawyer in Columbia, SC

Elizabeth Franklin-Best is a federal criminal defense and federal appellate lawyer in Columbia, SC.

For more information, call us at (803) 331-3421 or send us a message through our website to set up a consultation.