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United States v. Espejo

United States District Court, E.D. Arkansas, Western Division

October 27, 2017

UNITED STATES OF AMERICA PLAINTIFF
v.
LYNN ESPEJO DEFENDANT

          TENTATIVE FINDINGS

          KRISTINE G. BAKER, UNITED STATES DISTRICT JUDGE.

         The Court has received and reviewed the Presentence Investigation Report (“PSR”) for defendant Lynn Espejo. The Court also has received and reviewed Ms. Espejo's objections to the PSR, the Probation Office's responses to those objections, and Ms. Espejo and the United States' sentencing memoranda (Dkt. Nos. 180, 181). Further, the Court heard argument at the initial sentencing hearing conducted in this matter on September 22, 2017 (Dkt. No. 182). Based on the Court's consideration of those items, as well as the testimony and evidence presented at the trial, the Court issues the following Tentative Findings. The Court advises the parties that these Tentative Findings are issued with the understanding that, pursuant to United States v. Booker, 543 U.S. 220 (2005), the sentencing guidelines are advisory.

         I. Objection to Loss Calculation

         Ms. Espejo objects to the loss calculation and resulting 14-level enhancement set forth in the PSR pursuant to the United States Sentencing Guideline (“USSG”) § 2B1.1(b)(2), (Dkt. No. 180, at 2). Ms. Espejo asserts that the amount of loss is the actual loss of $285, 459.86 for which she was charged in the indictment and ultimately convicted (Id., at 3).

         As a general rule, the amount of loss under the USSG is the greater of actual loss or intended loss. See United States Sentencing Commission, Guidelines Manual, § 2B1.1 cmt. n. 3(A) (Nov. 2016) (“USSG Manual”); United States v. Parish, 565 F.3d 528, 534 (8th Cir. 2009). Actual loss is defined as the reasonably foreseeable pecuniary harm that resulted from the offense, and intended loss is defined as the pecuniary harm that was intended to result from the offense. USSG Manual § 2B1.1 cmt. n. 3(A)(i)-(ii). Because it is often difficult to calculate the precise amount of loss in a fraud case, “a district court's determination of loss need not be precise, although it must reflect a reasonable estimate of the loss.” United States v. Boesen, 541 F.3d 838, 851 (8th Cir. 2008); USSG Manual § 2B1.1 cmt. n. 3(C). The burden of proving the extent of the loss at sentencing falls on the government; the government must prove the extent of loss by a preponderance of the evidence. United States v. Mills, 987 F.2d 1311, 1315 (8th Cir. 1993).

         A sentencing court must include in its calculation any losses caused by “relevant conduct.” United States v. Quevedo, 654 F.3d 819, 823 (8th Cir. 2011). This includes charged and uncharged conduct that was “part of the same course of conduct or common scheme or plan as the offense[s] of conviction.” Id. (citing United States v. McIntosh, 492 F.3d 956, 960-61 (8th Cir. 2007)). Relevant conduct under the USSG need not be charged to be considered in sentencing, and it includes all acts and omissions that were part of the same course of conduct or common scheme or plan as the offense of conviction. United States. v. Radtke, 415 F.3d 826, 841 (8th Cir. 2005). Courts are not limited to loss amounts proven at trial in their calculation. United States v. Jokhoo, 806 F.3d 1137, 1141 (2015). Relevant conduct may include conduct that predates that charged in the indictment and conduct that is committed outside the relevant statute of limitations period. See e.g., United States v. Cousineau, 929 F.2d 64, 68 (2d Cir. 1991); United States v. Silkowski, 32 F.3d 682, 688 (2d Cir. 1994); United States v. Lokey, 945 F.2d 825, 840 (5th Cir.1991).

         In her presentence memorandum, Ms. Espejo objects to the PSR loss calculation of $611, 099.41; she claims this figure is the result of erroneously adding the money laundering amounts to the wire fraud amounts (Dkt. No. 180, at 3). At the sentencing hearing, Ms. Espejo objected to the incorporation of funds transferred from PMSI and BMSI to her personal accounts prior to November 2009 as outside the statute of limitations period. However, the Court concludes that $611, 099.41 is the sum of the amounts transferred from PSMSI and BMSI to Ms. Espejo's personal accounts over the course of her employment at PMSI and not the result of double counting funds to arrive at a loss amount. The Court further finds that it can include the pre-indictment transfers from PSMSI and BMSI to Ms. Espejo's personal accounts as relevant conduct.

         As such, the Court tentatively determines that the government has proven by a preponderance of the evidence that the amount of loss is $611, 099.41. The testimony of Internal Revenue Service (“IRS”) Agent John Shortway, and corresponding audit trail and certified bank records, presented at trial showed that Ms. Espejo transferred the following amounts from PMSI and BMSI accounts to her personal accounts: $148, 371.97 in 2007, $103, 267.21 in 2008, $149, 034.45 in 2009, and $210, 425.41 in 2010 (Dkt. No. 160, at 661). Evidence at trial, which the jury found credible, further showed that Ms. Espejo was at no time authorized to transfer money from PMSI and BMSI accounts to her personal accounts.

         The Court concludes that all of the transfers are relevant conduct for this Court to consider in sentencing Ms. Espejo. The Court tentatively determines that the government has proven by a preponderance of the evidence that the 14-level enhancement is warranted pursuant to U.S.S.G. § 2B1.1(b)(1)(H) and overrules Ms. Espejo's objections related to loss amount.

         II. Objection to Tax Calculation

         Ms. Espejo objects to the tax loss calculation set forth in paragraph 26 of the PSR. She argues that the tax loss calculation is erroneous and should be calculated based on the amount she was convicted of defrauding PMSI, or $285, 459.86.

         Tax fraud convictions under 26 U.S.C. § 7206(1) are addressed in U.S.S.G. § 2T1.1. Section 2T1.1 provides a base offense level obtained from the tax tables at § 2T4.1 based upon the tax loss. The offense level is based on the tax loss attributable to the defendant's conduct. “Relevant conduct for sentencing is viewed broadly: ‘In determining the total tax loss attributable to the offense . . ., all conduct violating the tax laws should be considered as part of the same course of conduct or common scheme or plan unless the evidence demonstrates that the conduct is clearly unrelated.'” United States v. Ervasti, 201 F.3d 1029, 1042 (8th Cir. 2000) (quoting USSG Manual § 2T1.1(c)(1), cmt. n.2). Tax loss is “the total amount of loss that was the object of the offense.” U.S.S.G. § 2T1.1(c)(1). The government has the burden at sentencing to prove tax loss by a preponderance of the evidence. United States v. Tucker, 217 F.3d 960, 961 (8th Cir. 2000). The amount of the tax loss may be made based on a reasonable estimate from the available facts. Ervasti, 201 F.3d at 1042.

         Here, the United States has submitted evidence, including the testimony of IRS Agent Kim Johnson who reviewed Ms. Espejo's tax filings for the years 2007 through 2010. Agent Johnson concluded that the total additional tax due from Ms. Espejo was $207, 941.00 (Dkt. No. 160, at 663). Further, the Court determines that all of the transfers from PMSI and BMSI to Ms. Espejo's personal accounts are relevant conduct. A tax loss of greater than $100, 000.00 and less than $250, 000.00 results in an offense level of 16. USSG Manual § 2T4.1. The Court determines that the government has proven by a preponderance of the evidence that the tax loss calculation set forth in the PSR is correct. The Court tentatively overrules Ms. Espejo's objection to the tax loss calculation and imposes an offense level of 16 for the offense of filing false or fraudulent tax returns.

         III. Objection To Obstruction Of Justice Enhancement

         Ms. Espejo objects to the two-level enhancement for obstruction of justice set forth in paragraphs 23 and 30 of the PSR pursuant to USSG § 3C1.1. In addition, Ms. Espejo objects to the factual allegations set forth in paragraphs 11 and 15 of the PSR related to the adjustment for obstruction of justice. When a defendant objects to specific factual allegations contained in the PSR that the government relies on to establish a sentencing enhancement, the government must then prove by a preponderance of the evidence those allegations. United States v. Razo-Guerra, 534 F.3d 970, 975 (8th Cir. 2008). Assuming that the specific factual allegations to which Ms. Espejo objects are relied on by the government to establish a sentencing enhancement, the Court turns to determining whether the government has proven those allegations by a preponderance of the evidence.

The two-level sentencing enhancement for obstruction of justice applies if the defendant willfully obstructed or impeded, or attempted to obstruct or impede, the administration of justice with respect to the investigation, prosecution, or sentencing of the instant offense of conviction, and (2) the obstructive conduct related to (A) the defendant's ...

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