Submitted: September 27, 2019
from United States District Court for the Northern District
of Iowa - Waterloo
SMITH, Chief Judge, WOLLMAN and ERICKSON, Circuit Judges.
2017, Darrell Smith pleaded guilty to wire fraud, in
violation of 18 U.S.C. § 1343. The district
court sentenced him to a term of 151 months'
imprisonment. On appeal, Smith challenges the district
court's calculation of his criminal history score. Smith
contends that the district court erred by counting his prior
tax-related conviction. We affirm.
many years, Smith worked as a broker and an investment
advisor at several investment firms. In 2008, Smith and his
partner formed an Iowa-based investment partnership-named
Energae, LP ("Energae")-to invest in various
biofuel companies. Energae bought a 49 percent interest in an
ethanol production plant called Permeate Refining, LLC
("Permeate"), which was owned by Randy Less.
Permeate's majority holder, Less delegated some
management and control over Permeate's corporate payroll
to Smith. The law required Permeate to withhold employment
taxes from the taxable wages of its employees and to file the
appropriate tax returns with the Internal Revenue Service
(IRS). Smith and Less withheld employment taxes from the
taxable wages of Permeate's employees, but Smith and Less
did not pay those taxes to the IRS in the fiscal quarters for
2011 and 2012. In total, they failed to account for and pay
over $502, 683.
January 2016, Smith and Less were indicted for various
crimes. Smith pleaded guilty to one count of failure to
account for and pay over employment taxes and was sentenced
to 13 months' imprisonment.
Offense of Conviction
2013, a client for Smith's former employer,
Multi-Financial Services Corporation, filed a complaint
against Smith, alleging that Smith had purchased investments
without the client's authorization. An investigation
revealed that Smith had intentionally devised and executed a
scheme to defraud several of his investment clients beginning
in 2010 and continuing through at least April 2013. He stole
money from his investment clients' accounts and
transferred the stolen funds to Energae. Energae, in turn,
used the stolen funds to pay expenses related to
Permeate's operations and to invest in other entities.
various times, Smith used pre-signed, blank authorization
forms or forged his clients' signatures in order to
effectuate the unauthorized transfer of funds. He also
diverted funds from his investment clients' accounts
using checks. He often used wire and mail transfer to send
and deposit the stolen funds into Energae's accounts.
During the course of Smith's fraudulent scheme, he stole
over $2.4 million from 10 investment clients.
2017, the government charged Smith with wire fraud. Shortly
thereafter, he pleaded guilty to the charge pursuant to a
plea agreement. Smith's plea agreement reserved the right
to contest the probation office's determination of his
criminal history and relevant category under the Guidelines.
In the presentence investigation report (PSR), the probation
office recommended adding two criminal history points for
Smith's prior ...