United States v. Brown, Jr., No. 12-10227 (9th Cir. 2014)
Annotate this CaseDefendant Robert Brown pleaded guilty to one count of wire fraud and Brown's partner, Duane Eddings, was convicted of six counts of mail fraud, one count of wire fraud, three counts of money laundering, and three counts of tax evasion. Defendants' convictions stemmed from their operation of a Ponzi scheme. The court concluded that the denial of the government's motion to reduce Brown's sentence under U.S.S.G. 5K1.1 was proper; Brown's 188-month sentence is not substantively unreasonable under 18 U.S.C. 3553(a); Eddings's mail fraud convictions related to the bankruptcy fraud were based on a legally valid theory; the evidence was sufficient to sustain Eddings's convictions on the Ponzi scheme mail fraud charges; Eddings's bankruptcy fraud convictions were properly grouped for sentencing with his Ponzi scheme convictions; applying a leadership role adjustment to Eddings's sentence under U.S.S.G. 3B1.1(c) was erroneous; increasing both defendants' sentences under U.S.S.G. 2B1.1(b)(15)(B)(iii) for endangering the solvency or financial security of 100 or more victims was erroneous; increasing Eddings's sentence under U.S.S.G. 2B1.1(b)(2)(C) for having 250 or more victims was erroneous; remand will be to the same district court judge; and, therefore, the court affirmed in part, vacated in part, and remanded.
Court Description: Criminal Law. The panel affirmed Duane Allen Eddings’s convictions, affirmed in part and vacated in part the district court’s sentencing determinations concerning Eddings and Robert Cephas Brown, Jr., and remanded for resentencing in a case arising from a Ponzi scheme and bankruptcy fraud. The panel held that the district court’s denial of the government’s motion pursuant to U.S.S.G. § 5K1.1 to reduce Brown’s sentence on account of his assistance was proper, and that Brown’s 188-month sentence is not substantively unreasonable. Regarding Eddings’s mail fraud charges related to bankruptcy fraud, the panel held that even assuming Eddings was charged under an improperly overbroad theory of defrauding the bankruptcy court and trustee in addition to creditors, there was no plain error because he was tried under the valid theory that he committed mail fraud by filing schedules that failed to disclose certain assets and artificially inflated his debts in order to enable him to obtain a “no asset discharge” without paying his creditors, and the government never argued that the bankruptcy court or the trustee was defrauded. The panel held that there was sufficient evidence to support Eddings’s convictions on Ponzi scheme mail fraud charges. The panel held that Eddings’s bankruptcy fraud convictions were properly grouped for sentencing with his Ponzi scheme convictions pursuant to U.S.S.G. § 3D1.2(d). The panel held that application of a leadership role adjustment to Eddings’s sentence pursuant to U.S.S.G. § 3B1.1(c) was erroneous, where the district court noted that it was not “really made clear” whether Eddings controlled a particular participant, and the record does not indicate that he controlled any other criminally responsible participant in the scheme. The panel held that the district court erroneously imposed on both defendants an enhancement under U.S.S.G. § 2B1.1(b)(15)(B)(iii) for endangering the solvency or financial security of 100 or more victims, where the government did not provide evidence of the impact of the crimes on the requisite number of victims. The panel left it to the district court to decide whether to take new evidence on this adjustment on remand. The panel held that increasing Eddings’s sentence under U.S.S.G. § 2B1.1(b)(2)(C) for having 250 or more victims was erroneous, where the district court relied on 148 victims who were not included in the loss calculation under U.S.S.G. § 2B1.1(b)(1). The panel rejected the defendants’ arguments that remand should be to a new judge.
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