Order Denying Petition for Rehearing and for Rehearing En Banc January 7, 2004.
LOKEN, Chief Judge.
A jury found Paul David Anderson guilty of forty-nine counts of mail fraud, money laundering, and engaging in transactions with property derived from unlawful activity. See 18 U.S.C. §§ 1341, 1956(a)(1)(A), and 1957. He appeals his 108-month sentence, arguing that the district court erred by increasing his sentence offense level for use of sophisticated means, exploiting a large number of vulnerable victims, and abuse of a position of private trust. The parties agree that these issues are governed by the Sentencing
I. Use of Sophisticated Means.
The applicable fraud guideline provided for a two-level increase to the base offense level if "the offense otherwise involved sophisticated means." U.S.S.G. § 2F1.1(b)(5)(C) (1998). The guideline commentary defined sophisticated means as "especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense," and explained that this enhancement "requires conduct that is significantly more complex or intricate than the conduct that [warrants] an enhancement for more than minimal planning." § 2F1.1, comment. (n.15) (1998). "We review the factual finding of whether a [fraud] scheme qualifies as `sophisticated' for clear error." United States v. Brooks, 174 F.3d 950, 958 (8th Cir.1999).
Anderson was a former insurance salesman who induced his fraud victims to invest more than one million dollars in what he called "private tender offers" in his company, The Premier Group. Anderson represented that these investments were risk-free and tax-free, and he guaranteed a twelve percent annual return. Anderson then commingled the investors' funds and invested a substantial portion in World Network Holdings, an undisclosed company controlled by Harry Plott, a secretive Florida resident who appealed to investors wishing to avoid government regulation and taxation through off-shore activities. After numerous confusing transactions, World Network Holdings morphed into Mali-Suisse Mining International Ltd., which issued "registered discounted accumulating debenture bonds" to replace investors' vanished stakes in World Network Holdings.
Anderson clearly defrauded his victims by diverting nearly two-thirds of their investments to his personal use, investing the remainder in the undisclosed and highly risky World Network Holdings, and using the commingled funds of later investors to pay interest to earlier investors. Anderson argues this was merely a simple Ponzi scheme. The government points to the complex off-shore activities of Harry Plott and his associates and argues they are attributable to Anderson and demonstrate the use of sophisticated means. Anderson responds that he was an unknowing victim of Plott's intricate frauds,
The district court did not make an explicit finding as to Anderson's knowledge of Plott's frauds. We conclude one is not needed to impose the sophisticated means enhancement. The trial record is replete with evidence that, when Anderson became convinced that his investments with Plott's entities might be worthless, Anderson advised his victims that their Premier Group investments would be replaced with Mali-Suisse bonds if they signed a release absolving Anderson of all liability. The victims were told that Mali-Suisse was organized under the laws of Anguilla, that its principal place of business was in London, England, and that the bonds would mature in four years and were guaranteed by First Mercantile Bank, Ltd., a Swiss bank chartered in Grenada, West Indies. These tactics helped conceal Anderson's fraud because, before finally contacting the authorities, many victims asked attorneys, financial advisors, and accountants for help in determining the value of the worthless Mali-Suisse bonds. Thus, whether or not a "simple" Ponzi scheme would amount to the use of sophisticated means — an issue we do not address — the district court's finding that Anderson used sophisticated means to conceal his more elaborate mail fraud is not clearly erroneous.
II. Exploiting Vulnerable Victims.
Anderson's appeal of the vulnerable victim increases poses far more difficult issues. The 1998 guidelines provided for a two-level enhancement if the defendant "knew or should have known that a victim of the offense was a vulnerable victim," and for an additional two-level enhancement if "the offense involved a large number of vulnerable victims." U.S.S.G. § 3A1.1(b)(1) and (2) (1998). Section 3A1.1(b)(1) applied if the defendant knew or should have known that his victims were "unusually vulnerable due to age, physical or mental condition, or [were] otherwise particularly susceptible to the criminal conduct." § 3A1.1, comment. (n.2) (1998). We review vulnerable victim determinations for clear error. United States v. Boult, 905 F.2d 1137, 1138-39 (8th Cir.1990).
Anderson's Presentence Report (PSR) recommended that both enhancements be imposed. After briefly summarizing each victim's investments, the PSR stated:
Anderson objected to this recommendation, arguing that age by itself was an insufficient basis for the vulnerable victim finding. At sentencing, the district court stated: "Having presided over the trial in this case and heard the evidence, I hereby make the factual findings implicit in my decision to overrule those objections."
On appeal, Anderson argues that a vulnerable victim enhancement should not be
The focus of § 3A1.1(b) changed somewhat when Congress, reacting to telemarketing fraud aimed at elderly victims, directed the Sentencing Commission to review whether the guidelines adequately protected elderly victims of fraud.
When a vigorous young defendant inflicts a crime of violence on an elderly person, the defendant's knowledge that the victim was unusually vulnerable to this crime due to age is often obvious for purposes of clear error review. See, e.g., United States v. Williams, 258 F.3d 669, 673 (7th Cir.), cert. denied, 534 U.S. 981, 122 S.Ct. 414, 151 L.Ed.2d 314 (2001). But when older persons are victims of fraud crimes, the issue is much less clear. As a group, older persons are more experienced investors, so it would be clear error to impose a § 3A1.1(b)(1) increase simply because some of the victims of a widespread investment scam were elderly. On the other hand, when a telemarketing scam is aimed at the elderly because they are believed to be lonely and susceptible, a § 3A1.1(b)(1) increase is obviously appropriate. See United States v. Washington, 255 F.3d 483, 486 (8th Cir.2001); United States v. Whatley, 133 F.3d 601, 607 (8th Cir.), cert. denied, 524 U.S. 940, 118 S.Ct. 2347, 141 L.Ed.2d 717 and 524 U.S. 945, 118 S.Ct. 2357, 141 L.Ed.2d 726 (1998). In this regard, evidence of targeting, while no longer required, may provide powerful proof of both the victim's unusual vulnerability and the defendant's knowledge of that vulnerability.
III. Abuse of a Position of Private Trust.
Anderson next appeals his two-level upward adjustment for abusing a position of private trust. See U.S.S.G. § 3B1.3 (1998). The 1998 guideline commentary explained that a position of private trust is "characterized by professional or managerial discretion" and gave as an example a defendant who "perpetrates a financial fraud by leading an investor to believe the defendant is a legitimate investment broker." § 3B1.3, comment. (n. 1 and 2). We review the legal component of the abuse of trust determination de novo and the district court's factual findings for clear error. See Baker, 200 F.3d at 563-64.
Anderson argues that he had "ordinary commercial relationships" with his victims and that such relationships do not qualify for the enhancement. In Baker, we agreed that "ordinary commercial relationships" do not have the requisite component of trust, but we held that "a licensed insurance agent with control over client funds may occupy a position of private trust," and we found no clear error in the district court's finding that the defendant occupied a position of trust with her clients. 200 F.3d at 564. Baker is controlling here. Anderson first sold many of his victims annuities offered by insurance companies and living or family trusts, transactions that acquainted him with their investable
The judgment of the district court is affirmed.