USA vs Daniel Stephen

FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
SEPTEMBER 12, 2011
JOHN LEY
CLERK
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 10-12493
Non-Argument Calendar
________________________
D.C. Docket No. 1:09-cr-20729-JEM-1
UNITED STATES OF AMERICA,
lllllllllllllllllllll Plaintiff-Appellee,
versus
DANIEL STEPHEN,
lllllllllllllllllllll Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(September 12, 2011)
Before EDMONDSON, CARNES and KRAVITCH, Circuit Judges.
PER CURIAM:
Daniel Stephen appeals his conviction and 240-month sentence for

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conspiracy to commit mail fraud, in violation of 18 U.S.C. § 1349. Stephen, as the
sole corporate officer of First Loan Solution, Inc., sold tracts of land in northern
Florida. He advertised the land primarily to members of the Haitian community in
South Florida and falsely informed the victims that First Loan Solution owned the
land. Stephen hired the law firm of Estime-Thompson, P.A. to conduct real estate
closings. Patricia De Pons, who managed Estime-Thompson’s title operation,
conducted the fraudulent closings purporting to transfer title of land tracts from
First Loan Solution to the buyers. She also provided buyers with fabricated,
unrecorded warranty deeds.1
Stephen was charged with one count of conspiracy to commit mail fraud in
violation of 18 U.S.C. §§ 1341 and 1349, and eighteen counts of substantive mail
fraud in violation of 18 U.S.C. §§ 1341 and 2. He entered into a written plea
agreement with the government, in which he agreed to plead guilty to count one of
the indictment and the government agreed to seek dismissal of the remaining
eighteen counts. In the plea agreement Stephen acknowledged that the district
court would consider the sentencing guidelines and that the court had “the
authority to impose any sentence within and up to the statutory maximum” of 20
De Pons and Clotilde Jean, who managed the daily operations of First Loan Solution,1
were Stephen’s co-defendants, but they are not parties in this appeal. De Pons was sentenced at
the same time as Stephen.
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years. The government agreed to seek a reduction in Stephen’s offense level
based on his acceptance of responsibility, and the parties agreed to jointly
recommend three enhancements to Stephen’s base offense level: a 20-level
increase under U.S.S.G. § 2B1.1(b)(1)(K) for a loss of more than $7,000,000 but
less than $20,000,000; a 6-level increase under U.S.S.G. § 2B1.1(b)(2)(C) for 250
or more victims; and a 4-level increase under U.S.S.G. § 3B1.1(a) for Stephen’s
role as an organizer or leader of the criminal activity. Those were the only three
sentencing guidelines enhancements that the plea agreement mentioned.
In addition to those three enhancements, the presentence investigation
report recommended a 2-level increase under U.S.S.G. § 3B1.3 because Stephen
“abused a position of public or private trust . . . in a manner that significantly
facilitated the commission or concealment of the offense.” U.S.S.G. § 3B1.3. The
PSI also recommended a 2-level increase under U.S.S.G. § 2B1.1(b)(9)(C)
because the offense involved the use of sophisticated means. Stephen’s base
offense level was 7, but with all of the enhancements the PSI set his adjusted base
offense level at 41. With a 3-level downward adjustment for acceptance of
responsibility, his total offense level was 38. The PSI assigned Stephen zero
criminal history points and a criminal history of I, and his recommended
guidelines range was 235 to 293 months. Because a statutory maximum of 20
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years applied, however, the PSI set Stephen’s guidelines range at 235 to 240
months. See U.S.S.G. § 5G1.1(c)(1).
Stephen filed objections to the PSI based on, among other things, the
recommended enhancements for abuse of a position of trust and for sophisticated
means. At the sentence hearing the district court questioned both sides about the
facts related to those enhancements. The court thereafter imposed a sentence of
240 months followed by three years of supervised release. It later ordered
$6,804,736.08 in restitution, based on the claims filed by victims.
Stephen contends that (1) the government breached the plea agreement by
arguing in favor of an abuse of trust enhancement and seeking a sentence above
the guidelines range that was indicated by the plea agreement; and (2) even if the
government did not breach the plea agreement, it contains an unenforceable
sentence appeal waiver. He also contends that the district court erred by (1)
applying the 2-level abuse of trust enhancement under U.S.S.G. § 3B1.3; (2)
applying the 2-level sophisticated means enhancement under U.S.S.G.
§ 2B1.1(b)(9)(C); and (3) applying a 20-level enhancement based on its
calculation the amount of the loss under U.S.S.G. § 2B1.1(b)(1). Stephen asserts
that he should be permitted to withdraw his guilty plea, or he should be re-
sentenced by a different district court judge.
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I.
The only argument Stephen makes that, if successful, would allow him to
withdraw his guilty plea is his contention that the government breached the plea
agreement. See United States v. Rewis, 969 F.2d 985, 988–89 (11th Cir. 1992)
(“There are two remedies available when a plea agreement is breached: (1) remand
the case for resentencing according to the terms of the agreement before a different
judge, or (2) permit the withdrawal of the guilty plea.”). Because Stephen did not
argue to the district court that the government allegedly breached the plea
agreement, we review only for plain error. United States v. Romano, 314 F.3d
1279, 1281 (11th Cir. 2002). “Before an error is subject to correction under the
plain error rule, it must be plain under controlling precedent or in view of the
unequivocally clear words of a statute or rule; it must have adversely affected the
outcome of the proceedings; and it must be such that the failure to correct it would
seriously affect the fairness, integrity or public reputation of judicial proceedings.”
United States v. Lett, 483 F.3d 782, 790 (11th Cir. 2007).
The government is bound to a material promise that induces a defendant to
plead guilty. Santobello v. New York, 404 U.S. 257, 262, 92 S.Ct. 495, 499
(1971). “Whether the government violated the agreement is judged according to
the defendant’s reasonable understanding at the time he entered the plea.” Rewis,
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969 F.2d at 988. In the present case, although some of the government’s
statements at the sentence hearing could be construed as arguments in favor of
imposing the abuse of trust enhancement, the government repeatedly emphasized
that it intended to honor the plea agreement, and it never specifically asked the
district court to impose the enhancement.
The district court asked counsel for both parties whether there was a factual
dispute about Stephen’s abuse of a position of trust with the victims of the
fraudulent scheme. The court told Stephen’s counsel that it did not “care about”
the plea agreement and asked for an explanation of “why, factually,” the abuse of
trust enhancement was “not applicable.” Stephen’s arguments on that subject did
not persuade the court, which concluded that the enhancement was “appropriate.”
The court stated that it intended to impose the enhancement despite the
government’s decision to “continue with [its] position as stated in the plea
agreement.” Thus, Stephen’s substantial rights were not affected because the
district court was going to impose the enhancement even though the government
did not agree to it.
The government complied with its promise in the plea agreement to
recommend a sentence “within the advisory sentencing guideline range produced
by application of the Sentencing Guidelines.” At the sentence hearing, the
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government stated that in light of the district court’s decision to set the guidelines
range at 235 to 240 months, it recommended a sentence of 235 months, at the low
end of that range. Counsel for Stephen acknowledged that there was not “much
wiggle room between 235 and 240.” Stephen’s counsel also recognized that the
parties had entered the plea agreement based on the understanding that the
guidelines range would be between 151 and 188 months, which would be
“hopefully satisfactory to the Court,” but because the court was not satisfied with
that guidelines range, counsel asked for a “variance down to 151 months.” Just
because the district court decided to impose a higher guidelines range does not
mean that the government breached the plea agreement. In the plea agreement
itself Stephen acknowledged that “the court ha[d] the authority to impose any
sentence within and up to the statutory maximum” of twenty years. Stephen has
not shown that the government breached the plea agreement, and he is not entitled
to withdraw his guilty plea or to be resentenced by a different judge.
II.
Having determined that the plea agreement was not breached, we now turn
to the issue of whether Stephen waived his right to challenge his sentence. The
plea agreement contained a sentence appeal waiver, which is enforceable if
Stephen agreed to it knowingly and voluntarily. United States v. Bushert, 997
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F.2d 1343, 1350 (11th Cir. 1993). To establish that Stephen waived his appeal
rights knowingly and voluntarily, “[t]he government must show that either (1) the
district court specifically questioned [Stephen] concerning the sentence appeal
waiver during the Rule 11 colloquy, or (2) it is manifestly clear from the record
that [Stephen] otherwise understood the full significance of the waiver.” Id. at
1351.
As the government concedes, Stephen’s sentence appeal waiver is not
enforceable. The district court failed to question him about it during the plea
colloquy, and it is not manifestly clear from the record that he otherwise
understood its full significance. Because the waiver is unenforceable, we will
consider the merits of Stephen’s challenge to his sentence.
III.
Stephen first contends that the district court erred by applying a § 3B1.3
enhancement for abuse of a position of trust. When considering a district court’s
application of the sentencing guidelines, we review its findings of fact for clear
error and its application of the guidelines to those facts de novo. United States v.
Humber, 255 F.3d 1308, 1311 (11th Cir. 2001). The sentencing guidelines
provide for a 2-level enhancement if “the defendant abused a position of public or
private trust . . . in a manner that significantly facilitated the commission or
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concealment of the offense.” U.S.S.G. § 3B1.3. The § 3B1.3 commentary defines
“[p]ublic or private trust’” as “a position of public or private trust characterized by
professional or managerial discretion (i.e., substantial discretionary judgment that
is ordinarily given considerable deference).” U.S.S.G. § 3B1.3 cmt. n.1. “The
enhancement . . . requires that the offender occupy a position of trust in relation to
the victim, not another party.” United States v. Louis, 559 F.3d 1220, 1226 (11th
Cir. 2009).
Because every instance of fraud involves an element of misplaced trust, “a
sentencing court must be careful not to be overly broad in imposing the
enhancement for abuse of a position of trust.” United States v. Ghertler, 605 F.3d
1256, 1264 (11th Cir. 2010) (quotation marks omitted). The government must
show “that the victim placed a special trust in the defendant beyond ordinary
reliance on the defendant’s integrity and honesty that underlies every fraud
scenario.” United States v. Williams, 527 F.3d 1235, 1250–51 (11th Cir. 2008);
see also United States v. Mullens, 65 F.3d 1560, 1567 (11th Cir. 1995) (holding
that district court erred by applying abuse of trust enhancement based on the
defendant’s exploitation of friendships he cultivated with investors by virtue of his
membership in a country club).
The abuse of trust enhancement in the present case was based on only two
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findings of fact by the district court: (1) Stephen was the sole corporate officer of
First Loan Solution; and (2) Stephen, who is of Haitian descent, marketed to the
Haitian community in South Florida. Both facts are true, but neither fact supports
the district court’s application of the abuse of trust enhancement.
Stephen’s role as sole corporate officer at First Loan Solution meant that he
had a fiduciary relationship with the company, but § 3B1.3 requires a showing that
the defendant held a position of trust in relation to the victims. See Louis, 559
F.3d at 1226. “[T]he abuse of trust enhancement applies only where the defendant
has abused discretionary authority entrusted to the defendant by the victim;
arm’s-length business relationships are not available for the application of this
enhancement.” United States v. Garrison, 133 F.3d 831, 839 (11th Cir. 1998)
(quotation marks omitted). As a seller of land Stephen simply had a buyer-seller
relationship with the victims, not a fiduciary relationship.
As for the national origin Stephen shared with the victims of his fraudulent
scheme, at the sentence hearing one victim told the district court that Stephen and
his co-defendant “did something very bad to the Haitian population.” The witness
explained: “He’s Haitian, they were trusted with the money from the Haitian
people.” In its brief to this Court, however, the government does not argue that
the victims placed special trust in Stephen because of their common Haitian
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heritage, so that argument has been abandoned. See United States v. Campa, 529
F.3d 980, 989 (11th Cir. 2008) (arguments not made in a party’s brief are
abandoned). In any event, even if the victims were inclined to do business with
Stephen because he was of Haitian descent, that would be more akin to a social
relationship than a close personal or fiduciary relationship. See Mullens, 65 F.3d
at 1567.
Although Stephen may have gained his victims’ trust by lying to them about
safely placing their money in an escrow account, his false promise does not
establish that the victims placed any special trust in him beyond the ordinary
reliance that underlies every fraud scenario. See Williams, 527 F.3d at 1250–51.
The district court erred by applying the § 3B1.3 enhancement.
IV.
Stephen also contends that the district court erred by applying a
sophisticated means enhancement. The sentencing guidelines provide for a two-
level increase in the defendant’s base offense level if “the offense . . . involved
sophisticated means.” U.S.S.G. § 2B1.1(b)(9)(C). The commentary describes
“sophisticated means” as “especially complex or especially intricate offense
conduct pertaining to the execution or concealment of an offense,” including
“[c]onduct such as hiding assets or transactions, or both, through the use of
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fictitious entities, corporate shells, or offshore financial accounts.” U.S.S.G.
§ 2B1.1, cmt. n.8(B). Every one of the defendant’s individual actions does not
have to be sophisticated; instead, it is enough if “the totality of the scheme was
sophisticated.” Ghertler, 605 F.3d at 1267.
The undisputed facts set forth in the PSI establish that Stephen’s offense
was more complex than a simple real estate transaction. Stephen arranged bus
trips for prospective buyers to view vacant land that First Loan Solutions
purportedly owned, hired the Estime-Thompson law firm to serve as closing and
escrow agent, and sent letters to victims offering false explanations for closing
delays and falsely reassuring the victims that their deposits were being held in an
escrow account. Stephen’s co-defendant De Pons conducted fraudulent closings
and provided victims with fabricated, unrecorded warranty deeds. All of these
actions were instrumental in the execution or continued concealment of the
offense. They were intended to reassure the buyers that the transactions were
legitimate and that their deposits were safe. The district court did not clearly err in
finding that the offense involved the use of sophisticated means.
V.
Stephen contends that the district court erred by increasing his offense level
20 levels based on a loss amount of more than $7,000,000 but less than
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$20,000,000. See U.S.S.G. § 2B1.1(b)(1)(K). He argues that at the restitution
hearing, which was conducted after the sentence hearing, the actual amount of loss
claimed by the victims was less than $7,000,000. Based on that amount of
restitution, Stephen asserts that his offense level should be lower under § 2B1.1.
See U.S.S.G. § 2B1.1(b)(1)(J) (providing for an 18-level increase for a loss
amount over $2,500,000 but not more than $7,000,000).
Stephen failed to object to the loss amount in the PSI, so he admitted for
sentencing purposes that his offense involved a loss amount of $10,600,000. See
United States v. Wade, 458 F.3d 1273, 1277 (11th Cir. 2006) (“[A] failure to
object to allegations of fact in a PSI admits those facts for sentencing purposes.”).
Not only that, but Stephen agreed in the plea agreement that a 20-level increase for
a loss amount of more than $7,000,000 but less than $20,000,000 was appropriate.
The district court did not err by sentencing him based on a loss amount that he had
admitted and had agreed was applicable.
VI.
Stephen failed to show that the government breached the plea agreement.
Thus, we affirm his conviction. Because the district court erred by imposing an
abuse of trust enhancement under U.S.S.G. § 3B1.3, however, we vacate Stephen’s
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sentence and remand for re-sentencing.2
AFFIRMED IN PART; VACATED AND REMANDED IN PART.
Stephen also contends that the district court failed to satisfy the requirements of 182
U.S.C. § 3553(c)(1). Because we are remanding for resentencing, that issue is moot.
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