US v. Michael Harris, No. 13-4536 (4th Cir. 2014)

Annotate this Case

Download PDF

UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 13-4536 UNITED STATES OF AMERICA, Plaintiff - Appellee, v. MICHAEL F. HARRIS, Defendant - Appellant. Appeal from the United States District Court for the Eastern District of Virginia, at Richmond. Henry E. Hudson, District Judge. (3:12-cr-00170-HEH-1) Submitted: April 18, 2014 Decided: June 27, 2014 Before SHEDD, KEENAN, and THACKER, Circuit Judges. Affirmed by unpublished per curiam opinion. David B. Hargett, HARGETT LAW, PLC, Glen Allen, Virginia, for Appellant. Dana J. Boente, Acting United States Attorney, Alexandria, Virginia, Michael R. Gill, Assistant United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Richmond, Virginia, for Appellee. Unpublished opinions are not binding precedent in this circuit. PER CURIAM: Michael Harris ( Appellant ) was charged in an eightcount indictment with securities fraud, wire fraud, and mail fraud arising out of a fraudulent investment scheme. After a jury of trial, Appellant was convicted of three counts wire fraud and one count of mail fraud and was sentenced to 108 months imprisonment. On appeal, Appellant challenges the sufficiency of the evidence at trial as well as the district court s calculation of his Sentencing Guidelines range. reviewed the record and find no reversible error. We have Accordingly, we affirm. I. On October 15, 2012, a grand jury in the Eastern District of Virginia returned an eight-count indictment charging Appellant with several crimes in connection with an investment fraud scheme. According to the indictment, Appellant solicited investor funds by representing to investors that the funds would be used to conduct human treatment for HIV/AIDS. purposes, the trials and develop patents on a Instead of using the money for those indictment alleged that Appellant misappropriated/converted a vast majority of the money for his personal use and that he concealed his fraud from investors. The specific charges against Appellant were: securities fraud, in violation of 15 U.S.C. §§ 77q(a) and 77x (Counts 1-4); wire 2 fraud, in violation of 18 U.S.C. § 1343 (Counts 5-7); and mail fraud, in violation of 18 U.S.C § 1341 (Count 8). A. Appellant pled not guilty to all charges. Before trial, Appellant filed a motion to dismiss Counts 1 and 2 on statute of limitations grounds, which the district court granted. Appellant proceeded to a jury trial on the remaining Counts. 1 The following facts are based on the testimony at trial, which took place between February 25, 2013 and March 4, 2013. Appellant was the president, CEO, and principal shareholder of M.F. Harris Research ( MFH ), a company that was allegedly involved in researching a cure for HIV/AIDS. According to the evidence presented at trial, Appellant claimed that MFH was developing a treatment for HIV/AIDS that involved using a hyperbaric chamber to introduce nitrogen into a patient s cells, which would combat the HIV/AIDS virus. Between 2005 and 2011, Appellant solicited investments by selling shares of MFH stock for $1.00 a share. In soliciting these investments, Appellant made a number of presentations in which he told potential investors that their money would be used 1 As explained below, Counts 3 and 4 were dismissed posttrial for lack of venue. Therefore, this section focuses only on the facts relating to Counts 5 through 8. 3 by MFH to obtain the necessary patents, begin human trials of the hyperbaric chamber treatment, and continue research. From October 2005 through July 2011, Appellant received approximately $900,000.00 in investments. Of that amount, no money was used for HIV/AIDS research, and only $54,787.24 was used to pay for patent fees. The Government presented evidence that the remaining investor funds were spent by Appellant on personal expenses, including mortgage payments, vehicles, a gun collection, farm and horse expenses, 2 child support, and other personal purchases. 1. Count Five The trial evidence relating to the wire fraud charge in Count 5 was based on the circumstances surrounding a single $200,000.00 of discovered that positive. At the end of August 2006, Dr. T.M. was joined by he and by his Dr. T.M. 3 investment former In 2006, Dr. T.M. partner, M.B., were HIV M.B. and S.B., a friend who was also HIV positive, on a trip 2 Appellant was involved in competitive steeplechase horse racing, and the evidence at trial revealed that he spent investor funds on horse boarding and other farm-related expenses. In addition, Appellant met several MFH investors at horse shows. 3 To protect the confidentiality of several victims in this case, we refer to them by their initials. 4 from California several days, to the Virginia three to men meet with discussed Appellant. with Over Appellant research of HIV treatment using hyperbaric chambers. his At trial, witnesses testified that Appellant represented to Dr. T.M. that if he invested in MFH, his investment dollars would go toward HIV research and that Dr. T.M., M.B., and S.B. would be the first patients to receive the treatment. Dr. T.M. agreed to invest $200,000.00 in MFH. The Government presented evidence that between October 3, 2006 and February 7, 2007, almost all of Dr. T.M. s investment was used by Appellant for his personal expenses, including $107,974.74 to purchase and maintain a home. Only $6,000.00 was used to pay patent expenses and none of the money went to HIV research. On October 31, 2006, Dr. T.M. died of causes unrelated to HIV. Dr. T.M. s brother, John M., served as executor of Dr. T.M. s estate and tried to obtain information from Appellant about his brother s $200,000.00 investment. John M. sent letters to Appellant requesting information about MFH s future plans and asking for Dr. T.M. s stock certificates. After these letters went unanswered, John M. attempted to contact other MFH investors and made complaints to several state and federal agencies. On March 12, 2008, Appellant sent John M. an email in which Appellant alleged that John M. was falsely impersonating 5 an investor of MFH and that if he continued to do so, he would be contacted by authorities with a restraining order. 1001. 4 J.A. John M. responded, explaining that he was acting on Dr. T.M. s behalf and that he needed the stock certificates for the $200,000.00 investment. John M. also wanted to know how the investment money was being spent. Appellant replied to this email, telling John M. that MFH shares are non-transferable. Appellant still did not provide the requested financial information to John H. 2. Count Six With respect to the wire fraud charge in Count 6, the Government introduced evidence that in 2008, Appellant went to the home of David Evans to present Mr. Evans and his wife with an opportunity to invest in MFH. Mr. Evans testified that Appellant told him and his wife that their investment would be used to obtain patent approval and to finish clinical trials of the HIV/AIDS treatment that MFH was developing. Mr. Evans, there was no discussion According to during Appellant s presentation regarding Appellant using investment money to pay his own salary or to pay for any personal expenses. 4 At trial, Citations to the J.A. refer to the Joint Appendix filed by the parties in this appeal. 6 Mr. Evans testified, [i]f I thought he was going to use my money for salary, I wouldn t have given him any of my money. J.A. 53. After invest the $5,000.00, presentation, and on Mr. August 4, Evans 2008, decided Appellant he would sent Mr. Evans an email welcoming him to the project and providing him with wire transfer information. As Appellant s counsel pointed out at trial, the August 4, 2008 email also attached several documents, including referenced an annual a request salary for of government $100,000.00, funding plus that another $22,400.00 in annual benefits, for the CEO of MFH. On August, 15, 2008, Mr. Evans followed Appellant s instructions and wired $5,000.00 to the MFH bank account. Just before Mr. Evans s investment arrived in MFH s bank account, the account s balance was $40.87. was overdrawn. By August 21, 2008, the account The Government s evidence at trial demonstrated that Appellant used Mr. Evans s investment to pay for a number of personal expenses. 3. Count Seven Count 7 was a wire fraud charge based on an investment from Diane Desch in 2011. Ms. Desch testified that she went to Appellant s home in early 2011 and Appellant presented her with information regarding MFH and its research. 7 With respect to MFH s progress in developing a cure for HIV/AIDS, Appellant told Ms. Desch that he was very close. He finished Stage I. He was in Stage II, and all he had to do was go to Stage III. 97. J.A. Then, on June 13, 2011, Appellant called Ms. Desch and told her that he needed $2,500.00 by noon to pay patent fees in Europe or MFH was dead in the water. Id. at 100. Later that day, Ms. Desch went to the bank and sent $2,500.00 to Appellant via wire transfer. that only Financial analysis presented at trial showed $2,100.00 of this money was used to pay patent expenses and the remainder was used by Appellant for personal expenses. Shortly thereafter, Appellant asked Ms. Desch to invest additional money into MFH, telling her that she could receive a block of shares at $5,000.00 per block. Appellant told Ms. Desch that she could purchase shares of MFH for $1.00 per share but that those shares would eventually be worth $22.00 or $23.00 per share. On June 28, 2011, Ms. Desch wire transferred $7,500.00 to MFH to secure two full bocks of shares. This wire transfer formed the basis for the wire fraud charge in Count 7. Appellant never told Ms. Desch that any of her investment would be used for Appellant s personal expenses. Ms. Desch testified that she understood her investment would be used to research the cure for AIDS and she would not have invested in MFH had she known her money would 8 be used for Appellant s personal expenses. Financial analysis presented at trial demonstrated that Appellant spent Ms. Desch s entire $7,500.00 investment on personal expenses. 4. Count Eight Count November 2010 8, the mailing mail sent fraud by charge, Appellant was to based MFH on a investors notifying them of a November 20, 2010 shareholder meeting in McLean, Virginia. Nicole Gentry, an investor who had invested $5,000.00 in MFH in 2005, testified at trial that she received the notification of the shareholder meeting in the United States mail. Several investors attended the meeting, including Ms. Gentry, Mr. Evans, and Rusty Carrier. Mr. Carrier made an audio-recording of the meeting, which was played for the jury. At the meeting, Appellant made a number of representations about the financial and business status of MFH, including the following: patent expenses were costing MFH approximately $9,000.00 per quarter; MFH was the owner of the patent; Appellant was actively working on financial reports to show investors how MFH dollars were being spent; and Appellant had won money through steeplechase horse racing and used the winnings trial to which investors at fund MFH. contradicted the The Government Appellant s shareholder evidence representations meeting. 9 presented In at to the particular, the Government presented the following evidence: Appellant spent only $6,972.42 for patent fees in 2010 and patent expenditures for the entire $54,787.24; period Appellant between -- not 2005 MFH and -- 2011 owned totaled the only patent and Appellant transferred ownership of the patent to MFH just weeks before trial; Appellant had never provided investors with any of the promised financial information concerning MFH; and an analysis of Appellant s horse income and expenses revealed a net loss rather than a gain. shareholder Appellant meeting was Appellant also told investors at the that concerned MFH that needed a rival more money company was and that developing similar science as MFH. B. At the close of the Government s case-in-chief, Appellant moved for a judgment of acquittal pursuant to Federal Rule of Criminal Procedure 29, challenging the sufficiency of the evidence. The district court denied Appellant s motion. Appellant renewed his Rule 29 motion for judgment of acquittal at the conclusion of the trial evidence, which the district court also denied. The case was presented to the jury, and on March 4, 2013, the jury found Appellant guilty of securities fraud (Counts 3-4), wire fraud (Counts 5-7), and mail fraud (Count 8). With respect to Counts 3 and 4, Appellant filed a post-trial 10 motion for judgment of acquittal, arguing that the Government failed to establish venue. The district court granted the motion. C. Appellant proceeded to sentencing on the remaining counts of conviction (Counts 5-8) on July 10, 2013. sentencing hearing, the district court calculated At the Appellant s total offense level at 29 with a criminal history category of I, which yielded Sentencing an advisory Guidelines imprisonment. range under ( U.S.S.G. ) of the 87 United States 108 months to Included in the total offense level calculation was a two-level increase because a victim of the offense was a vulnerable victim, increase for U.S.S.G. § see U.S.S.G. Appellant s 3B1.3. objections to Thereafter, the The each abuse § of district of these district court 3A1.1, a and position court of overruled offense-level imposed a a two-level trust, see Appellant s enhancements. within-Guidelines sentence of 108 months imprisonment on Counts 5 through 8, all to be served concurrently. The district court also imposed a three-year period of supervised release for each Count, also to run concurrently. On July 12, 2013, convictions and sentence. on sufficiency of Appellant timely appealed his Appellant challenges his convictions evidence grounds 11 and, in the alternative, challenges the district court s Sentencing Guidelines calculation, arguing that he should not have been subject to the vulnerable victim or abuse of a position of trust enhancements. We possess jurisdiction pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a). II. A. Appellant contends that the evidence was insufficient to support his convictions for wire fraud and mail fraud. It is well settled that [a] defendant challenging the sufficiency of the evidence faces a heavy burden. 507 F.3d 233, 245 (4th Cir. 2007). United States v. Foster, We review such challenges de novo. United States v. Kelly, 510 F.3d 433, 440 (4th Cir. 2007). In so doing, we view the evidence on appeal in the light most favorable to the government in determining whether any rational trier of fact could find the essential elements of the crime beyond a reasonable doubt. 714 F.3d 197, 212 (4th Cir. 2013) United States v. Cone, (citing Collins, 412 F.3d 515, 519 (4th Cir. 2005)). United States v. We do not weigh the evidence or review the credibility of the trial witnesses, and we assume that the jury resolved testimony in favor of the government. all See id. discrepancies in We will uphold the jury s verdict if substantial evidence supports it and will reverse only in those rare cases 12 of clear failure by the prosecution. is that Id. which a As we have explained, substantial evidence reasonable finder of fact could accept as adequate and sufficient to support a conclusion of a defendant s guilt beyond a reasonable doubt. F.3d 390, 394 (4th Cir. 2006) United States v. Moye, 454 (en banc) (internal quotation marks omitted). B. Appellant was convicted of wire fraud and mail fraud. Sections 1341 and 1343 of Title 18 punish anyone who, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, uses the mails or electronic wires for the purpose of executing such scheme or artifice. United States v. Wynn, 684 F.3d 473, 477 (4th Cir. 2012) (quoting 18 U.S.C. §§ 1341, 1343). Therefore, the offenses of mail fraud and wire fraud require the Government to prove beyond a reasonable doubt that the defendant: (1) devised or intended to devise a scheme to defraud and (2) used the mail or wire communications in furtherance of the scheme. Id. Proof of a scheme to defraud requires proof of the specific intent to deprive one of something of value through a misrepresentation or other indeed would cause him harm. similar dishonest Id. at 478. 13 method, which When Government, viewed we are in the satisfied light that most favorable the evidence substantial to was presented at trial for a rational jury to conclude beyond a reasonable doubt that Appellant committed the offenses of wire fraud and mail fraud. 1. We begin with the Count 5 wire fraud conviction. Appellant argues there was insufficient evidence to support this conviction because the March 12, 2008 email from Appellant to John M. did not communicate any false information. As Appellant notes, any the email did not provide John M. with of the requested financial information and simply stated that shares of MFH were non-transferable, shareholder subscription Therefore, according which was agreement to consistent that Appellant, Dr. this with T.M. email the signed. could not constitute wire fraud because the email did not communicate a falsehood. Appellant s argument misses the point, as it seems to contend establish However, that all 18 the wire of the U.S.C. § communication essential 1343 at issue elements requires only of must itself wire fraud. that the wire communication be used in furtherance of the scheme to defraud. See Wynn, 684 F.3d at 477. Thus, the existence of the scheme to 14 defraud, as well as Appellant s specific intent to defraud, can be established through other evidence. Throughout the trial, the Government presented overwhelming evidence of Appellant intentionally depriving MFH investors of investment deceit. This evidence funds through included misrepresentations Appellant s solicitation and of funds from Dr. T.M. through assurances that the money would be used for HIV research and that Dr. T.M., M.B., and S.B. would be the first patients to receive the treatment. Yet, despite these promises, Dr. T.M. s $200,000.00 investment was largely spent by Appellant on personal expenses. Appellant s intent to defraud MFH investors was established well before he sent the March 12, 2008 email to John M. The Government s theory with respect the specific wire communication referenced in Count 5 was that it was used in furtherance of Appellant s scheme to defraud because it was sent for the purpose of concealing executor of Dr. T.M. s estate. the fraud from John M., the It is of no consequence whether the information communicated in Appellant s email to John M. was consistent with the shareholder subscription agreement that Dr. T.M. had signed. The jury was entitled to consider the email communication in the context of all the evidence and conclude that the email s purpose was to further Appellant s fraud. Accordingly, there was substantial evidence from which the jury 15 could conclude that Appellant was guilty beyond a reasonable doubt of wire fraud, as charged in Count 5. 2. Turning next to Counts 6, 7, and 8, Appellant argues that there was insufficient evidence to support these convictions because the Government did not establish a specific intent to defraud. Specific intent is required to convict an individual of wire fraud or mail fraud. This means, a defendant must Wynn, 684 F.3d at 478. specifically intend to lie or cheat or misrepresent with the design of depriving the victim of something of value. Id. A defendant s specific intent to defraud may be inferred from the totality of the circumstances. United States v. Godwin, 272 F.3d 659, 666 (4th Cir. 2001). With this standard in mind, we turn to the evidence presented to support the specific intent to defraud in Counts 6, 7, and 8. a. Counts 6 and 7 can be analyzed together because Appellant raises virtually the same argument for each -- namely, that any evidence of misrepresentations or an intent to defraud was negated by documentation received by investors that referenced an annual salary of $100,000.00 for the CEO of MFH. According to Appellant, Mr. Evans, the investor referenced in Count 6, knew or should have known . . . that most if not all of the investment would go toward [Appellant s] salary, negating 16 any intent to defraud. See Appellant s Br. at 19. Similarly, Appellant notes that Ms. Desch, the investor referenced in Count 7, did not specifically information about a salary. deny that the Id. at 20. paperwork contained Essentially, Appellant claims that he was entitled to draw a salary and, as a result, he did not defraud investors because they should have known that their money would be used by Appellant to pay for his personal expenses. In Appellant investment contrast, assured dollars the Government investors, would presented evidence that that their time and again, used for obtaining be conducting research, or conducting clinical trials. patents, Both Mr. Evans and Ms. Desch testified that they would not have invested in MFH if Appellant had told them that he was going to use their investments to pay for personal expenses. Yet, within a week of receiving Mr. Evans s $5,000.00 investment, Appellant spent that money on farm and horse expenses, housing costs, and bank fees. Likewise, in less than a month after having received Ms. Desch s $7,500.00 investment, Appellant also spent those funds on personal expenses. The jury was entitled to consider the dichotomy between Appellant s promises to Mr. Evans and Ms. Desch on the one hand, and his subsequent use of their investment funds on the other hand, to conclude that Appellant specifically intended 17 to misrepresent with the design of depriving [Mr. Evans and Ms. Desch] of something of value. See Wynn, 684 F.3d at 478. Moreover, the jury was entitled to reject -- and apparently did reject -- Appellant s contention that the documents referencing a salary Evans somehow and Ms. negated Desch. his specific Accordingly, intent there to defraud was Mr. substantial evidence from which the jury could conclude that Appellant was guilty beyond a reasonable doubt of wire fraud, as charged in Counts 6 and 7. b. Finally, Appellant challenges the sufficiency of the evidence with respect to his mail fraud conviction in Count 8. Appellant argues that the Government failed to prove that the November 2010 mailing sent by Appellant to MFH investors notifying them of a November 20, 2010 shareholder meeting was sent with the intent to defraud the investors. We disagree. The evidence at trial demonstrated that Ms. Gentry, an MFH investor, received the notice of the shareholder meeting in the United States mail and subsequently attended the meeting. At the meeting, Appellant made a number of representations about the financial status of MFH and about how investment funds were being used. The Government presented evidence at trial that contradicted these representations. to consider the Government s 18 The jury was thus entitled evidence and conclude that Appellant s false. representations Further, the at jury the was shareholder entitled to meeting were conclude that Appellant held the shareholder meeting, and sent the mailing that formed the basis for Count 8, with the intent to lull MFH investors into believing that their funds were being used for legitimate business purposes when in fact they were not. Accordingly, there was substantial evidence from which the jury could conclude that Appellant was guilty beyond a reasonable doubt of mail fraud, as charged in Count 8. III. A. As an alternative to his sufficiency of evidence arguments, Appellant challenges the district court s calculation of his Sentencing Guidelines range. We review a sentence for reasonableness, applying an abuse of discretion standard. v. United whether a States, 552 district U.S. court 38, 51 properly (2007). applied Gall In considering the Sentencing Guidelines, we review the court s factual findings for clear error and its legal conclusions de novo. United States v. Osborne, 514 F.3d 377, 387 (4th Cir. 2008) (internal quotation marks omitted). Clear error exists only if, on the entire evidence, we are left with the definite and firm conviction that a mistake has been committed. 19 United States v. Manigan, 592 F.3d 621, 631 (4th Cir. 2010) (internal quotation marks and alterations omitted). B. 1. Appellant challenges the two-level enhancement to his Sentencing Guidelines range resulting from the district court s conclusion that Dr. T.M. qualified as a vulnerable victim. Pursuant to U.S.S.G. § 3A1.1(b)(1), a defendant s Guidelines range increases by two levels [i]f the defendant knew or should have known victim. victim that a victim of the offense was a vulnerable The commentary to the Guidelines defines a vulnerable as a conviction person and any (A) who is conduct a for victim of which the the offense defendant of is accountable under § 1B1.3 (Relevant Conduct); and (B) who is unusually vulnerable due to age, physical or mental condition, or who is otherwise particularly susceptible to the criminal conduct. apply, U.S.S.G. § 3A1.1 cmt. n.2. the district court must For the enhancement to determine that a victim was unusually vulnerable and assess whether the defendant knew or should have known of such unusual vulnerability. United States v. Llamas, 599 F.3d 381, 388 (4th Cir. 2010). Appellant contends that Dr. T.M. cannot be considered an unusually status. vulnerable victim simply by virtue of his HIV Appellant makes the following arguments in an attempt 20 to support his contention: the fraud for which Appellant was convicted involved treatment of an HIV/AIDS; investment the opportunity, science supporting not the the actual investment opportunity was not challenged by the Government at trial; Dr. T.M. was a physician at the time of his investment; Dr. T.M. was not under any disability or impairment due to his HIV status; there is no record of Dr. T.M. himself raising any concerns regarding how his investment funds were being used; and Appellant did not specifically target Dr. T.M. because of his HIV status. We are unpersuaded by these arguments. During Appellant s sentencing hearing, the district court made detailed findings before concluding that a vulnerable victim enhancement was warranted in this case: The defendant argues that the investor, Dr. [T.M.], was not unusually vulnerable. He was a board certified anesthesiologist. They contend that he was not suffering from any active disability or impairment. However, the evidence was clear that he was HIV positive and seeking a cure for his condition. The testimony of his brother, who probably knew him better than any other witness in the case, indicated that his brother was very anxious for a cure, and saw the concept offered by [Appellant], Mr. Harris, as a possible avenue toward either relieving him of the symptoms or curing his disease. And it was in reliance upon that that Dr. [T.M.] invested $200,000. But also the evidence at trial and today indicated that Dr. [T.M] had clear expectations that he would be afforded an opportunity to participate in some of the research, and some of the human trials supposedly being conducted by [Appellant], and that he was anxious to do so. However, there was no research ever 21 conducted in this case, and there was no money invested whatsoever in human trials for research. The Court finds that Dr. [T.M] was an unusually vulnerable victim, seeking treatment and cure for his medical condition, which was exploited when he invested the $200,000 to Mr. Harris based upon false representations, and therefore all the requirements for the 2-level enhancement are satisfied under 3A1.1. J.A. 1205-06. Appellant has not offered any argument that the district court s factual findings were clearly erroneous. In this case, Dr. T.M. had been recently diagnosed with HIV and was actively seeking a cure. His $200,000.00 investment in MFH was based, at least in part, on Appellant s promise that Dr. T.M. would be among the first patients to participate in human trials. The promise of these human trials as a possible cure for T.M. s Dr. HIV made him particularly susceptible, U.S.S.G. § 3A1.1 cmt. n.2, to Appellant s fraud. the district court did not err in applying see Accordingly, this two-level enhancement to Appellant s Sentencing Guidelines range. 2. Appellant also argues that the district court erred by applying a two-level trust by Appellant. enhancement for abuse of a position of Pursuant to U.S.S.G. § 3B1.3, a defendant s Guidelines range increases by two levels [i]f the defendant abused a position of public or private trust, or used a special skill, in a manner that significantly facilitated the commission 22 or concealment of the offense. The commentary to the Guidelines further defines public or private trust as follows: a position of public or private trust characterized by professional or managerial discretion (i.e., substantial discretionary judgment that is ordinarily given considerable deference). Persons holding such positions ordinarily are subject to significantly less supervision than employees whose responsibilities are primarily non-discretionary in nature. For this adjustment to apply, the position of public or private trust must have contributed in some significant way to facilitating the commission or concealment of the offense (e.g., by making the detection of the offense or the defendant's responsibility for the offense more difficult). U.S.S.G. § 3B1.3 cmt. n.1. As we have explained, [w]hether a defendant held a position of trust must be approached from the perspective of the victim. United States v. Bollin, 264 F.3d 391, 415 (4th Cir. 2001) (internal quotation marks omitted). Moreover, [i]n every case of fraud, the defendant will have created confidence and trust in the victim. enhancement. Id. But fraud alone does not justify the Therefore, this enhancement will apply where the victim s trust is based on the defendant s position in the transaction defendant s rather than personality where or the trust victim s is created by credulity. the Id. (internal quotation marks omitted). Here, the district court explained the applying the abuse of a position of trust enhancement: 23 basis for Enhancement under 3B1.3 applies where the defendant has broad discretion to act on behalf of the victim, and the victim believes the defendant will act in the victim s best interest. In this case, [Appellant], based upon his purported experience, training, convinced scores of investors to entrust money to him for research and development of an unproven theory for treating HIV and AIDS. He maintained complete control over the management decisions, marketing, funding, investment of funds, and bank accounts. He exercised unbridled discretion without supervision or consultation with others. This degree of management autonomy allowed him to convert the investors funds to his own use and benefit without accountability or investor oversight. And in addition, he concealed assets from the accountant and others, and did not reveal the purpose for which it was being used to any of the investors. J.A. 1206-07. We agree with the enhancement was warranted here. district court that the Appellant held himself out to investors as being highly experienced in the field of HIV/AIDS research. Through this claimed experience, Appellant created an impression to investors that he would manage MFH in a way that was consistent with the best interests for the company and its investors. In entrusting Appellant with their money, the investors provided Appellant with the discretion to use their investment to advance MFH s purported goals and its supposed HIV/AIDS research. Appellant did not do so, however. Instead, he utilized his position as CEO of MFH to conceal his fraud from investors for years. err in applying this Accordingly, the district court did not two-level Sentencing Guidelines range. 24 enhancement to Appellant s IV. For convictions the and reasons sentence. stated, We we dispense affirm with Appellant s oral argument because the facts and legal contentions are adequately presented in the materials before this Court and argument would not aid the decisional process. AFFIRMED 25

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.