U.S. v. AIHE

Full title: UNITED STATES OF AMERICA, Plaintiff, v. MICHAEL EDIALE AIHE, Defendant

Court: United States District Court, D. Minnesota

Date published: Oct 15, 2004

Crim. No. 01-162 (2) (JRT/FLN) (D. Minn. Oct. 15, 2004)

Opinion

Crim. No. 01-162 (2) (JRT/FLN).

October 15, 2004

Michelle E. Jones, Assistant United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Minneapolis, MN 55415, for plaintiff.

Leon A. Trawick, TRAWICK SMITH, Minneapolis, MN 55401, for defendant.

MEMORANDUM OPINION ON RESOLUTION OF DISPUTED SENTENCING ISSUES

JOHN TUNHEIM, District Judge

Defendant Michael Ediale Aihe, along with co-defendant Olusoji Michael Agboola, was charged in a multi-count indictment alleging a real estate "flipping" scheme. On January 22, 2003, Aihe pleaded guilty to Counts 1 through 9 and 44 of the superceding indictment. Count 1 charges Conspiracy to Commit Mail Fraud and Wire Fraud, in violation of 18 U.S.C. § 371. Counts 2 and 3 charge Mail Fraud, in violation of 18 U.S.C. § 1341. Counts 4 through 7 are for Wire Fraud, in violation of 18 U.S.C. § 1343. Counts 8 and 9 charge Money Laundering with the Intent to Promote Aiding and Abetting, in violation of 18 U.S.C. § 1956(a)(1)(A)(i) and (2)(a). Count 44 charges Obstruction of Justice, in violation of 18 U.S.C. § 1503.

The Court reviewed the Presentence Report prepared by the United States Probation Office, as well as the parties' sentencing memoranda, and held a sentencing hearing on August 13, 2004, at which both parties were present and argued. The Court articulated a sentence at that hearing, and now issues this memorandum opinion in support of the sentence.

I. Impact of Blakely v. Washington

On June 24, 2004, the United States Supreme Court handed down its decision in Blakely v. Washington, 542 U.S. ___, 124 S. Ct. 2531 (2004). In Blakely, the Supreme Court held that a sentence that was enhanced pursuant to the Washington state sentencing guidelines violated the rule of Apprendi v. New Jersey, 530 U.S. 466 (2000), that, "[o]ther than the fact of a prior conviction, any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt." Blakely, 124 S. Ct. at 2536 (quoting Apprendi, 530 U.S. at 490). Washington state argued that the enhancement of Blakely's sentence did not violate Apprendi "because the relevant `statutory maximum' is not 53 months [as provided by the state sentencing guidelines], but the 10-year maximum for class B felonies [as provided by the state statute]." Id. at 2537. However, the Supreme Court held:

Our precedents make clear . . . that the "statutory maximum" for Apprendi purposes is the maximum sentence a judge may impose solely on the basis of the facts reflected in the jury verdict or admitted by the defendant. In other words, the relevant "statutory maximum" is not the maximum sentence a judge may impose after finding additional facts, but the maximum he may impose without any additional findings.

Id. (citations omitted) (emphasis in original).

Although the Supreme Court expressly stated that "[t]he Federal Guidelines are not before us, and we express no opinion on them," id. at 2538 n. 9, courts have struggled to discern the impact of Blakely on the federal sentencing scheme, reaching a number of different conclusions. The Supreme Court has recently granted certiorari in two cases to resolve this issue. United States v. Booker, 542 U.S. ___, 2004 WL 1713654 (Aug. 2, 2004); United States v. Fanfan, 542 U.S. ___, 2004 WL 1713655 (Aug. 2, 2004). Due to the age of this case, however, this Court does not feel that it can further postpone sentencing the defendant while waiting for the Supreme Court's guidance.

Numerous other courts, district and appellate, have issued detailed opinions addressing Blakely, and there is no need to replicate their substantial efforts. Based on careful review of the various arguments and conclusions, this Court is most persuaded by those courts that have found the rule of constitutional law announced in Blakely applicable to the federal Sentencing Guidelines ("Guidelines"). See, e.g., United States v. Booker, 375 F.3d 508 (7^th Cir. 2004); United States v. Ameline, 376 F.3d 967 (9^th Cir. 2004); United States v. Mueffleman, 327 F. Supp. 2d 79 (D. Mass. 2004); United States v. Croxford, 324 F. Supp. 2d 1230 (D. Utah 2004) ("Croxford I"); United States v. Croxford, 324 F. Supp. 2d 1255 (D. Utah 2004) ("Croxford II").

Thus, if, as in this case, the Guidelines would require the Court to enhance a sentence by finding facts beyond those reflected in a jury verdict or admitted in a plea, the Guidelines are unconstitutional as applied. Blakely, 542 U.S. at ___, 124 S. Ct. at 2537 (emphasis removed); Croxford I, 324 F. Supp. 2d at 1242. However, the Guidelines can be constitutionally applied when there is no judicial factfinding that increases a defendant's sentence beyond the range dictated by the facts found by the jury or admitted by the defendant. See Blakely, 542 U.S. at ___, 124 S. Ct. at 2541; Booker, 375 F.3d at 515; United States v. Thompson, 324 F. Supp. 2d 1273, 1274 (D. Utah 2004).

In a case where the Guidelines are inapplicable because they are unconstitutional as applied under Blakely, the Court, pursuant to 18 U.S.C. § 3553(b)(1),¹ will sentence the defendant under 18 U.S.C. § 3553(a).² Under 18 U.S.C. § 3553(a), the Court's sentence is informed by the factors contained therein and by the Sentencing Guidelines, but is indeterminate so long as it does not exceed the statutory maximum or fall below the statutory minimum. The Court therefore will continue to address all Guidelines issues, will consider the Guidelines as guidelines, in the strict sense of the word, and will also consider relevant factors including those identified in 18 U.S.C. § 3553(a).

1 Section 3553(b)(1) provides that "[i]n the absence of an applicable sentencing guideline, the court shall impose an appropriate sentence, having due regard for the purposes set forth in subsection [ 18 U.S.C. § 3553](a)(2)."

2 Section 3553(a) directs the Court to consider:

(1) the nature and circumstances of the offense and the history and characteristics of the defendant;

(2) the need for the sentence imposed —

(A) to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense;

(B) to afford adequate deterrence to criminal conduct;

(C) to protect the public from further crimes of the defendant; and

(D) to provide the defendant with needed educational or vocational training, medical care, or other correctional treatment in the most effective manner;

(3) the kinds of sentences available;

(4) the kinds of sentence and the sentencing range established [under the Sentencing Guidelines];

(5) any pertinent policy statement issued by the Sentencing Commission . . . that is in effect on the date the defendant is sentenced;

(6) the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct; and

(7) the need to provide restitution to any victims of the offense.

II. Guidelines

Prior to the sentencing hearing, the Probation Office submitted a Presentence Report ("PSR") to the Court. The PSR first noted that counts 1-7, the fraud counts, and counts 8 and 9, the money laundering counts, respectively, are grouped under United States Sentencing Guidelines ("U.S.S.G.") § 3D1.2(d). The aggregate quantity of loss is used to determine the offense level for each group. U.S.S.G. § 3D1.3. With respect to the fraud counts, the base offense level for violations of 18 U.S.C. §§ 1341 and 1343 is 6. U.S.S.G. § 2B1.1(a). However, the $335,990 amount of loss attributed to Aihe requires a twelve level increase. U.S.S.G. § 2B1.1(b)(1)(G). The PSR recommended a further two level increase for having involved more than ten victims, U.S.S.G. § 2B1.1(b)(2)(A), and an additional two level increase for obstruction of justice, U.S.S.G. § 3C1.1, to arrive at a final offense level of 22.

With respect to the money laundering charges, the base offense level is the offense level for the underlying offense from which the laundered funds were derived, that is, the fraudulent activity described in counts 1-7. U.S.S.G. § 2S1.1. Thus, the base offense level for the money laundering counts is base level six from the fraud counts. As previously discussed, the Guidelines add twelve levels due to the quantity of loss, an additional two levels due to the number of victims, and a further two level enhancement for obstruction of justice, resulting in an offense level of twenty-two. The PSR also noted that a conviction under 18 U.S.C. § 1956 requires an additional two level enhancement, § 2S1.1(b)(2)(B). The total adjusted offense level for counts 8 and 9 under the Guidelines would therefore be twenty-four.

Finally, with respect to count 44, the obstruction of justice charge, the base offense level is fourteen. U.S.S.G. § 2J1.2(a). The PSR noted that where the obstruction resulted in substantial interference with the administration of justice, a three level increase is warranted, creating an offense level of seventeen. U.S.S.G. § 2J1.2(b)(2). Additionally, if the conduct involved obstructing the investigation or prosecution of a criminal offense, § 2X3.1 is to be considered, and the greater offense level applied. § 2J1.2(c)(1). Pursuant to § 2X3.1(a), the base offense level for the obstruction of justice offense is to be six levels lower than the offense level for the underlying offense, which in this case was the conduct of Aihe's co-defendant. The total offense level computed for Aihe's co-defendant was thirty-one, resulting in a base offense level for obstruction of justice for Aihe of twenty-five. As twenty-five is higher than seventeen, twenty-five is the resulting base offense level and, in this case, the final adjusted offense level under the Guidelines for count 44.

The highest group offense level of the fraud counts, money laundering counts, and obstruction of justice count is taken as the final adjusted offense level. U.S.S.G. § 3D1.3(a). In this case, level twenty-five is the highest of the group offense levels. The PSR recommends that a three level reduction for acceptance of responsibility be applied, two in the discretion of the Court and one upon motion of the government. This would result in a total offense level of twenty-two. Aihe's criminal history score is zero, placing him in a criminal history category of I. Based on a total offense level of twenty-two and a criminal history category of I, the Guidelines range for imprisonment is 41 to 51 months. Guidelines Manual, Chapter 5, Part A.

The parties each objected to certain portions of the PSR, which the Court now discusses.

A. Amount of Loss

The PSR indicated that Aihe should be held responsible for $335,990 of loss to 18 victims. The government argued that Aihe should be held liable for $563,785, the same amount of loss that was attributed to Agboola, Aihe's co-defendant. $335,990 represents the loss suffered by the victims due to fraudulent real estate transactions that involved an appraisal of their property by Aihe. The figure is based on the difference between the price at which the properties were purchased, and the fraudulently inflated price at which they were sold. The additional loss attributed to Agboola resulted from fraudulent transactions involving property appraisals by third parties.

As the Court determined in sentencing Agboola, this property flipping scheme clearly resulted in victims with tangible losses. However, it is also clear that Aihe was not involved in all of the fraudulent transactions that comprised the scheme. As Aihe did not provide appraisals for the third-party transactions that resulted in the additional loss attributed to Agboola, the Court finds that Aihe should not be responsible for that additional amount. The loss attributable to Aihe, therefore, is properly calculated at $335,990, as detailed in the PSR.

B. Sophisticated Means

The government sought an enhancement for use of sophisticated means pursuant to U.S.S.G. § 2B1.1(b)(8)(C). Under the Guidelines, this enhancement applies when a defendant uses "especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense." See U.S.S.G. § 2B1.1 (n. 6). "Conduct such as hiding assets or transactions, or both, through the use of fictitious entities [or] corporate shells . . . ordinarily indicates sophisticated means." Id. The Court finds that, even if this enhancement were available in this case, Aihe's participation in the flipping scheme was not sophisticated. Agboola was found to have used sophisticated means by creating and using a fictitious half-brother to conceal his interests in the companies involved in the scheme, and to have used inflated appraisals to help convince relatively unsophisticated buyers to purchase overvalued properties. Aihe's participation in the scheme, in contrast, was limited to providing inflated appraisals on certain properties.

C. Obstruction of Justice

Aihe contends that the Guidelines calculation for the obstruction of justice count was incorrectly computed in the PSR. Specifically, Aihe argues that the base offense level should be calculated under § 2X3.1(a)(3)(B), which provides for a base offense level of not more than 20, because Aihe's conduct was limited to harboring Agboola when he was a fugitive. As the Guidelines are not applicable in this case, the Court need not definitively answer this question. However, the Court notes that, in addition to harboring Agboola, Aihe was also charged with, and pled guilty to, significant other criminal activity related to the flipping scheme.

III. Statutory Provisions

18 U.S.C. §§ 371, 1341, and 1343 provide that the maximum term of imprisonment for counts 1 through 7 is five years. Counts 8 and 9 can result in a sentence of up to twenty years. 18 U.S.C. § 1956. Finally, the maximum term of imprisonment for count 44 is ten years. 18 U.S.C. § 1503.

IV. Sentence

At the sentencing hearing, the Court imposed a sentence taking into account the Guidelines, the Court's findings articulated above, and the particular circumstances of this case and of this defendant, as discussed below. For the following reasons, the Court believes that this is a fair and just sentence.

A. Imprisonment

Determination of the appropriate sentence obviously starts with the seriousness of Aihe's offenses and the harm caused by Aihe's actions. See 18 U.S.C. § 3553(a)(1) and (a)(2)(A). By providing inflated appraisals of property, Aihe helped Agboola convince the victims of this scheme to pay far more than the properties were worth, in some cases forcing them into bankruptcy or other financial difficulties. The Court concludes that the eighteen people listed in the PSR were victims of the flipping scheme that Aihe participated in, and were harmed by Aihe's actions. The Court further concludes that Aihe impeded the proper administration of this case by harboring Agboola despite his knowledge that Agboola was wanted by the FBI. Such behavior deserves punishment, and the Court believes that a period of incarceration is appropriate. The Court must now determine, based on a number of factors, the appropriate length of that incarceration. See 18 U.S.C. § 3553(a).

Aihe admitted during the sentencing hearing that his actions broke the law and resulted in harm to a number of unsuspecting victims. Aihe also expressed remorse for the harm that his actions caused, and stated that, at the time, he did not know that his actions were illegal. Aihe is no longer involved in the real estate business. The Court believes that Aihe's statements and behavior indicate that Aihe is unlikely to commit such criminal action in the future, and that the need for Aihe's sentence to act as a deterrent to, or protect the public from, future crimes is relatively low. See 18 U.S.C. § 3553(a)(2)(B) and (C).

The Court also considers Aihe's conduct in relation to his co-defendant's conduct. See 18 U.S.C. 3553(a)(6) (reminding courts to avoid unwarranted disparities for similar defendants). Aihe's conduct pales in comparison to his co-defendant's conduct. Agboola developed the scheme, set up numerous businesses and an alias in order to facilitate that scheme, and actively involved numerous innocent people in the execution and aftermath of that scheme. Further, Agboola refused to accept responsibility for his actions, challenging until the very last whether there were any victims of his behavior. Agboola appropriately received a substantial sentence of 108 months. Aihe, on the other hand, prepared a number of inflated reports, which advanced Agboola's scheme. Aihe accepted responsibility for his actions early on in this case, and has expressed sincere remorse for the harm he caused. In light of this differing behavior, the Court finds that differing sentences are warranted, and that a significantly reduced period of incarceration appropriately reflects Aihe's relative conduct and participation in the scheme. See also U.S.S.G. § 3B1.2 (permitting downward adjustment for reduced role in conspiracy or scheme); United States v. O'Malley, 364 F.3d 974, 983 (8^th Cir. 2004) (a relatively less culpable participant in the conspiracy appropriately receives a lower sentence than a relatively more culpable participant).

Additionally, as noted above, the base offense level for counts 1 through 9 is six and the base offense level for count 44 is fourteen. Application of the additional levels added to these base offense levels would require the Court to make determinations with respect to quantity of loss and the degree of obstruction of justice. As expressed previously, it is the Court's view that Blakely prohibits such judicial factfinding in the absence of a waiver by the defendant of his right to have a jury determine these facts. However, Blakely does not prevent the Court from applying either a two level upward adjustment for obstruction of justice, to which Aihe pleaded guilty, or a two level downward adjustment for Aihe's acceptance of responsibility. Thus, the offense level under the Guidelines, without considering the impermissible enhancements, would be twelve. The sentence recommended by the Guidelines where the offense level is twelve, with criminal history category I, is 10-16 months.

Finally, Aihe has presented evidence to this Court of the precarious situation of his family. Of Aihe's four children, two are significantly disabled. One has sickle cell anemia, requiring chronic blood transfusions or a bone marrow transplant; the other is autistic. Aihe has been his children's primary caregiver. These circumstances alone would likely merit significant consideration. In United States v. Spero, ___ F.3d ___, 2004 WL 1945526, *1 (8^th Cir. 2004), the court upheld a significant downward departure that resulted in a sentence of probation, six months community confinement, and six months home detention due to exceptional family circumstances. In Spero, one of the defendant's four young children was autistic, the defendant played a significant role in the child's stability, and the defendant was his family's sole breadwinner. Id. The instant situation resembles and, arguably, goes beyond that found in Spero. In addition to the difficulties associated with his children, Aihe's wife recently suffered a miscarriage of twins and continues to suffer from resulting depression. She is therefore unlikely to be able to take on the significant demands of two disabled children. In addition, Aihe's elderly parents, who are ill, live with Aihe and his family and rely on Aihe for their care.

The Court believes that the proper sentence in response to Aihe's conduct is five months imprisonment, five months home detention, and three years of supervised release. This sentence provides substantial restriction of Aihe including imprisonment, while taking into account factors, including acceptance of responsibility, extraordinary family circumstances, and the differences between Aihe's conduct and that of his co-defendant, which have been considered relevant both under indeterminate sentencing and under the Guidelines. Additionally, this sentence is within the Guidelines range, absent any enhancements.

Based on the foregoing, the Court sentences Aihe to five months' imprisonment, followed by five months' home detention and three years supervised release. The first five months of imprisonment are to be served in the custody of the Bureau of Prisons. The Court recommends that Aihe be permitted to serve this time in a facility close to his home in Florida. Aihe is to serve the second five months at home, under electronic home monitoring. Aihe is responsible for the costs associated with the electronic home monitoring.

B. Restitution

As noted previously, the Court finds that the eighteen victims listed in the PSR were directly harmed by Aihe's participation in the flipping scheme, and that the amount of loss is appropriately calculated in the PSR. The Mandatory Victims Restitution Act requires the Court to order "the defendant [to] make restitution to the victim[s] of the offense." 18 U.S.C. § 3663A; see also 18 U.S.C. § 3553(a)(7). The Eighth Circuit has observed that a court's determination of the quantity of restitution does not violate Apprendi because the statute directing an order of restitution does not set an upper limit on the amount. United States v. Ross, 279 F.3d 600, 608-09 (8^th Cir. 2002); see also United States v. Wooten, 377 F.3d 1134, 1144 n. 1 (10^th Cir. 2004) (citing Ross and noting that a restitution order does not violate Blakely for the same reason). The Eighth Circuit requires only that a restitution order fall within the scope of the indictment. Ross, 279 F.3d at 609. In this case, the indictment alleged and Aihe pleaded guilty to participation in a fraudulent scheme to which each of the victims named in the PSR fell victim. Thus, the Court orders Aihe to make restitution to the victims listed in the PSR, in the amounts detailed, totaling $335,990, a responsibility that is joint and several with co-defendant Agboola.