US v. Gordon
Filing
OPINION issued by Sandra L. Lynch, Appellate Judge; Norman H. Stahl, Appellate Judge and David J. Barron, Appellate Judge. Published. [15-2395]
Case: 15-2395
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Date Filed: 03/29/2017
Entry ID: 6080039
United States Court of Appeals
For the First Circuit
No. 15-2395
UNITED STATES OF AMERICA,
Appellee,
v.
MARCO GORDON,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. George Z. Singal, U.S. District Judge]
Before
Lynch, Stahl, and Barron,
Circuit Judges.
Jonathan Shapiro, with whom Molly Campbell and Shapiro,
Weissberg & Garin, LLP were on brief, for appellant.
Renée M. Bunker, Assistant United States Attorney, with whom
Thomas E. Delahanty II, United States Attorney, was on brief, for
appellee.
March 29, 2017
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LYNCH, Circuit Judge.
Date Filed: 03/29/2017
Entry ID: 6080039
This case, of first impression
for this circuit, involves the interpretation of a sentencing
guideline that is frequently used to enhance sentences for those
convicted of drug-related crimes, see U.S.S.G. § 2D1.1(b)(15)(E),
and is potentially applicable to a wide range of other offenses,
see id. § 4B1.3.
On July 7, 2015, Marco Gordon pled guilty to conspiracy
to possess with intent to distribute, and possession with intent
to distribute, more than 28 grams of cocaine base, see 21 U.S.C.
§§ 846, 841(a)(1), and 841(b)(1)(B), for his role in a drugtrafficking organization that operated primarily in Portland,
Maine from October 2013 to January 2015.
He does not dispute that
he held a leadership role in the illicit organization, which was
responsible for trafficking approximately 839 grams of cocaine
base during a fifteen-month period.
Gordon
appeals
only
his
sentence
of
132
months
of
imprisonment, arguing that the district court improperly applied
a two-level enhancement -- for offenses committed "as part of a
pattern of criminal conduct engaged in as a livelihood," U.S.S.G.
§§ 2D1.1(b)(15)(E), 4B1.3 -- both by misinterpreting the guideline
and by making erroneous predicate findings of fact.
In order to apply that criminal livelihood enhancement,
the court needed to find that over a twelve-month period, Gordon
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"derived income" in excess of $14,5001 from drug trafficking and
engaged in drug-trafficking as his "primary occupation."
Id.
§ 4B1.3 app. n.2. We affirm Gordon's sentence because the district
court did not commit legal error when it used Gordon's gross,
rather than net, income derived from drug trafficking to determine
that his income surpassed the $14,500 threshold, nor did the court
commit factual error when it concluded that drug trafficking was
Gordon's primary occupation.
I.
On January 9, 2015, Gordon was arrested in an apartment
in Portland, Maine in connection with a fifteen-month federal
investigation
into
a
drug-trafficking
organization
that
had
operated in "Michigan, Connecticut, and Portland, Maine, though
the primary location was in Portland."
During a search incident
to Gordon's arrest, officers found $990 and 0.31 grams of cocaine
base in his pockets, and they found an additional $3,425.46 and
183.6 grams of cocaine base in the apartment.
Gordon was indicted
on January 29, 2015, along with four co-defendants, for his role
in an interstate drug conspiracy.
Gordon pled guilty on July 7, 2015 to possessing with
the intent to distribute in excess of 28 grams of cocaine base, 21
1
This figure is equal to 2,000 times the hourly federal
minimum wage in effect during the time period relevant to this
case, per 29 U.S.C. § 206 -- the total called for in the guideline.
See U.S.S.G. § 4B1.3 app. n.2.
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U.S.C. § 841(a)(1), (b)(1)(B), and conspiring to do the same, id.
§ 846.
Gordon does not dispute that the money and drugs seized
during his arrest (with a street value of roughly $28,935) belonged
to him and that the conspiracy to which he belonged trafficked at
least 671 grams of cocaine base (with a street value of roughly
$89,480) during the twelve months preceding his arrest.
At a November 6, 2015 sentencing hearing, the district
court calculated Gordon's Guidelines Sentencing Range ("GSR") to
be 188 to 235 months.
That GSR included a two-level enhancement,
sought by the government, which applies when "[t]he defendant
committed [the relevant] offense as part of a pattern of criminal
conduct engaged in as a livelihood."
4B1.3.
U.S.S.G. §§ 2D1.1(b)(15)(E),
The court applied that enhancement over Gordon's objection
but ultimately sentenced him to 132 months of imprisonment, which
represented a 56-month downward variance from the low end of the
resulting GSR.
On November 18, 2015, Gordon appealed his sentence
to this court, limiting his challenge to whether the district court
erred in applying the criminal livelihood enhancement.
The criminal livelihood enhancement applies where the
government proves, by a preponderance of the evidence, that two
conditions have been met: (1) the defendant committed the relevant
offense as "part of a pattern of criminal conduct" and (2) the
defendant was engaged in that conduct "as a livelihood."
§§ 2D1.1(b)(15)(E), 4B1.3.
Id.
On appeal, Gordon argued only that the
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government
had
failed
to
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meet
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its
burden
as
to
Entry ID: 6080039
the
second
condition.
The Guidelines further divide that second condition into
two prongs.
A defendant was engaged in a pattern of criminal
conduct "as a livelihood" only if:
(A) the defendant derived income from the
pattern of criminal conduct that in any
twelve-month period exceeded 2,000 times the
then existing hourly minimum wage under
federal law[,] [meaning $14,500 in the instant
case]; and
(B) the totality of circumstances shows that
such criminal conduct was the defendant's
primary occupation in that twelve-month period
(e.g., the defendant engaged in criminal
conduct rather than regular, legitimate
employment; or the defendant's legitimate
employment was merely a front for the
defendant's criminal conduct).
Id. § 4B1.3 app. n.2.
Gordon argued on appeal, as he had before
the district court, that the government had failed to meet its
burden as to both prongs.
As to the first prong, Gordon argued that the court had
erred in finding that he had derived "income" in excess of $14,500
from drug trafficking during the relevant time period because the
court had considered his gross, rather than net, income, and that
if the court had properly deducted the expenses related to his
drug trafficking, it would have found that his earnings fell short
of
the
threshold.
Gordon
also
argued
that
the
court
had
overestimated his income by twenty percent because it had not
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identified
a
twelve-month
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period
to
consider
and
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had
thus
implicitly treated all of the income he had earned over the
fifteen-month life of the conspiracy as if he had earned it in a
year.
As to the second prong, Gordon argued that the court had
erred in finding that drug trafficking had been his primary
occupation because his primary occupation had actually been his
legitimate self-employment as a barber.
The premise of Gordon's first argument -- that in order
to apply the criminal livelihood enhancement, a district court
must, as a matter of law, find that a defendant's net, rather than
gross, income from criminal activity exceeded $14,500 -- raised an
issue of first impression in this circuit.
Gordon made that
argument, albeit for the first time, during the sentencing hearing.
But the prosecution did not take a position on that argument.
And
the district court determined that Gordon's income met the $14,500
threshold without explicitly stating "whether its finding was
based on the net [or] gross[] approach."
As a result, "we [were]
unable to address [a] key issue[] on appeal," and so we sought
clarification from the district court as to what exactly it had
decided.
On
December
12,
2016,
this
court
issued
an
order
remanding the case, requesting that the district court clarify its
findings relevant to Gordon's first argument on appeal. We invited
the district court to "take further evidence and make further
findings" if necessary.
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On January 27, 2017, the district court issued an order
in response to the remand clarifying that it had utilized the
gross-income approach and reiterating its conclusion that, under
that approach, the criminal livelihood enhancement applied.2
See
United States v. Gordon, No. 2:15-cr-27-GZS, 2017 WL 383349, at *2
(D. Me. Jan. 27, 2017).
The court explained that the "derived
income" language in § 4B1.3 app. n.2(A) allows a district court to
use a defendant's gross income. It reasoned that if the Guidelines
had meant to require a court to consider a defendant's net income,
then they would have provided "specific guidance . . . regarding
how to calculate net income for the many offenses covered by [the
enhancement]."
Id.
The court also noted that the parties disagreed as to
what constituted a "deductible expense" and as to what should be
viewed more properly as a distribution of profits.
Id.
For
example, the government argued that gross income should be used,
but that if net income were used, only the amount Gordon had paid
to acquire the cocaine base he sold could be netted out against
2
The court concluded, and Gordon does not contest, that
"during the twelve-month period measured from January 9, 2014 to
[the date of Gordon's arrest on] January 9, 2015, . . . Gordon
personally derived gross income in excess of $14,500" from drug
trafficking. United States v. Gordon, No. 2:15-cr-27-GZS, 2017 WL
383349, at *1 (D. Me. Jan. 27, 2017). As to Gordon's net income,
the court concluded that, on the limited evidence before it, given
the amount of money Gordon had paid to procure the cocaine base,
his net income from drug trafficking during that period was "less
than $14,500." Id. at *2.
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his gross earnings.
Id.
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Gordon, in contrast, argued that the
court should also deduct compensation he had purportedly paid
subordinate dealers to move product on his behalf, as well as the
cost of two televisions and a futon that he had purportedly
purchased for an associate in exchange for allowing Gordon to store
cocaine base at the associate's apartment.
Id. at *2-3.
The court also pointed out that it is the government's
burden to prove the application of a sentencing enhancement, United
States v. Alphas, 785 F.3d 775, 784 (1st Cir. 2015), but that the
government
will
"frequently
have
little
evidence
to
offer"
regarding the precise, idiosyncratic and potentially numerous
expenses attendant to a criminal enterprise, "especially when
those expenses are cash payments or cash purchases made with drug
proceeds," Gordon, 2017 WL 383349, at *3.
"Thus," the court
concluded, "assuming [a district court] were required to make a
net income finding . . . , it is not clear who [would] bear the
burden of production for any deductible amounts."
Id.
Finally, the court held that even if it had not applied
the criminal livelihood enhancement, and Gordon's GSR had been 151
to 188 months as a result, the court still would have varied
downward and imposed the same 132-month sentence on Gordon.
Id.
On January 30, 2017, Gordon filed a notice of his intent
to continue his appeal with this court in light of the district
court's January 27 order.
In his supplemental appellate brief,
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filed on February 17, 2017, Gordon renewed his claim that the
district court had erred, as a matter of law, in calculating his
derived income on a gross, rather than net, basis for purposes of
the criminal livelihood enhancement.
Of the other claims raised
in Gordon's original appellate brief, which all pertained to
purported factual errors underlying the court's application of the
same enhancement, only Gordon's claim that the court had erred by
finding that drug trafficking, rather than barbering, was his
primary occupation during the relevant time period remains a live
issue in this appeal.3
II.
A.
Appeal from the District Court's Use of the Gross-Income
Approach Under U.S.S.G. § 4B1.3 app. n.2(A)
Gordon appeals from the district court's thoughtful
holding that it was proper to apply § 4B1.3 app. n.2(A) of the
Guidelines based on evidence of Gordon's gross income alone.
Gordon argues that this was error, alleging that § 4B1.3 app.
n.2(A) required the court to consider his net income.4
The
3
Gordon's challenges to the district court's factfinding
regarding his income have been mooted. In its January 27, 2017
order, the district court clarified that its application of the
criminal livelihood enhancement was based on its finding that
Gordon derived gross income in excess of $14,500 from drug
trafficking between January 9, 2014 and January 9, 2015, see
Gordon, 2017 WL 383349, at *1 -- a finding that Gordon does not
contest.
4
At no time, here or in the district court, has Gordon's
able counsel argued that the rule of lenity should be applied to
this Guidelines interpretation question. As such, the government
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government denies that this was error but says that, if any error
occurred,
it
was
harmless
in
light
of
the
district
court's
statement that it would have imposed the same 132-month sentence
regardless of whether the criminal livelihood enhancement applied.
See Gordon, 2017 WL 383349, at *3.
We address first the question of whether there was any
error at all in the district court's use of the gross-income
approach, a recurring and logically antecedent question.
Then we
turn to the government's argument that, if there was any error,
that error was harmless.
For the reasons that follow, we hold
that there was no error.
The proper interpretation of a sentencing guideline is
a question of law that we review de novo.
595 F.3d 395, 399 (1st Cir. 2010).
United States v. Damon,
We interpret a guideline "by
applying familiar principles of statutory construction," id. at
400,
meaning
we
look
to
"its
text,
structure,
context,
and
purpose[]," id. at 401.
has not had the occasion to respond to any such argument, and it
has been waived. See United States v. Zannino, 895 F.2d 1, 17
(1st Cir. 1990). That alone distinguishes this case from United
States v. Santos, 553 U.S. 507 (2008), where the parties explicitly
addressed the applicability vel non of the rule of lenity in the
distinct context of statutory interpretation. Further, as is now
clear from Beckles v. United States, No. 15-8544, 2017 WL 855781
(U.S. Mar. 6, 2017), concerns about statutory vagueness, which
underlie the rule of lenity, do not give rise to similar concerns
regarding the Guidelines. Id. at *8.
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The guideline at issue provides that a court applying
the criminal livelihood enhancement must find that, in any twelvemonth period, the defendant "derived income" from his criminal
acts in excess of 2,000 times the then existing hourly minimum
wage under federal law.
U.S.S.G. § 4B1.3 app. n.2(A).
The plain
meaning of "income" does not resolve the question of whether a
defendant's earnings should be measured on a gross or net basis,
as the term is susceptible to both readings.
Compare Income,
Black's Law Dictionary (10th ed. 2014) (defining "income" as "[t]he
money . . . that one receives"), with Income, Merriam-Webster's
Collegiate Dictionary (10th ed. 1993) (defining "income" as the
money that one "gain[s]").
However, looking at the text of the guideline as a whole,
we find a sufficient basis for the district court's decision to
rely exclusively on evidence of Gordon's gross income in applying
§
4B1.3
app.
n.2(A).
By
its
terms,
the
guideline's
income
threshold is designed to approximate the annual income of an
employee earning the federal minimum wage, which is a gross
figure.5
See id.
It is reasonable to infer from this deliberate
linking of the income threshold to a specific level of gross income
5
Indeed, the threshold is not designed to approximate the
annual profits of a minimum wage worker after deducting the
potentially numerous expenses associated with his employment, such
as the taxes withheld from his paycheck, the gasoline or fare
expended on his commute, the clothing required by his workplace
dress code, and the child care he might need during working hours.
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that the guideline intends for a defendant's income to be measured
on a gross basis.
That
interpretation
is
reinforced
by
the
lack
of
discussion in the guideline of issues that would be key if courts
were required to use a net-income approach.
First, the guideline does not discuss how net income
should be measured.
As the district court observed, § 4B1.3 app.
n.2(A) can be applied to a wide range of offenses, and the types
of
"expenses"
potentially
associated
with
committing
those
offenses can vary greatly based on the particular circumstances of
a given case and the level of generality at which expenses are
viewed.
See Gordon, 2017 WL 383349, at *2.
Yet the guideline
provides no information to guide a court in determining, with any
degree
of
consistency
and
precision,
"what
qualifies
as
a
deductible expense" for purposes of calculating a defendant's net
income from criminal activity.6
Id.
Likewise, it provides no
guidance as to how a court should treat taxes paid on illegal
6
For example, in United States v. Kellams, the criminal
livelihood enhancement was applied to a defendant who had committed
mail fraud by sending invoices to local governments "demanding
payment for products that he [had] never provided." 26 F.3d 646,
647 (6th Cir. 1994). If the court had been required to calculate
the defendant's net income from the $15,917.41 he obtained, it is
not clear whether it would have needed to treat as deductible
expenses the postage he purchased, the paper and ink he used to
print the fraudulent invoices, the post office box he rented to
receive payments, and the gasoline he expended driving to and from
that post office box. See id.
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income or how it should distinguish between a defendant's expenses
and the manner in which he chooses to distribute, spend, or
reinvest his profits.
See id.
The guideline also makes no mention of how to allocate
the burden of proving a defendant's net income.
The burden of
establishing the applicability of an enhancement is generally on
the government.
See Alphas, 785 F.3d at 784.
But, like the
district court, we doubt that the Sentencing Commission intended
to put on the government the burden of providing evidence of a
defendant's expenses, which the government would often be unable
to access.
See Gordon, 2017 WL 383349, at *3.
Given that the purpose of "the Sentencing Guidelines
[is] to provide 'a framework . . . to guide the exercise of the
court's discretion,' which 'promotes uniformity and fairness in
sentencing,'" United States v. Hurley, 842 F.3d 170, 174 (1st Cir.
2016) (quoting United States v. Marchena–Silvestre, 802 F.3d 196,
200 (1st Cir. 2015)), this lack of guidance indicates that the
Commission did not intend for § 4B1.3 app. n.2(A) to mandate the
type of net-income accounting that Gordon envisions.
We hold that absent greater clarity in the Guidelines
-- which we urge the Commission to provide -- the district court
permissibly
considered
only
Gordon's
gross
trafficking in applying § 4B1.3 app. n.2(A).
income
drug
This holding is
consistent with opinions from several other circuits.
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from
See, e.g.,
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United States v. Cryer, 925 F.2d 828, 830 (5th Cir. 1991); United
States v. Quertermous, 946 F.2d 375, 378 (5th Cir. 1991); United
States v. Reed, 951 F.2d 97, 101-02 (6th Cir. 1991); United States
v. Morse, 983 F.2d 851, 853 (8th Cir. 1993); United States v.
Kellams, 26 F.3d 646, 647, 649 (6th Cir. 1994); United States v.
Nastri, 647 F. App'x 51, 54 (2d Cir.) (unpublished opinion), cert.
denied, 137 S. Ct. 232 (2016).
While none of those courts were
presented with the precise argument that the term "income" in
§ 4B1.3 app. n.2(A) requires a finding as to net income, they each
affirmed the application of that guideline based on evidence of
gross income alone.
And against the backdrop of this apparent
majority approach, the Commission amended § 4B1.3 in 2010 without
modifying the term "income" or altering the operative language of
the provision in any way, see U.S.S.G. Manual app. C, amend. 747
(2010), an issue we discuss further below.
The only circuit case to have decided that the criminal
livelihood enhancement requires a court to calculate a defendant's
net income dealt with a materially different version of § 4B1.3,
in effect between 1987 and 1989, which at that time required a
court to find that a defendant "derived a substantial portion of
his income" from criminal activity.
See Lee v. United States, 939
F.2d 503, 504 (7th Cir. 1991).7
The court reasoned that a
7
We reject Gordon's suggestion that the court in United
States v. Manuel, 912 F.2d 204 (8th Cir. 1990), which also applied
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sentencing court applying that guideline needed to consider a
defendant's criminal profits because it would be "absurd" to say
that an individual who "earn[ed] $20,000 in his lawful 'day job'
and net[ted] $10,000 on thefts of $1 million [in merchandise]" had
engaged in crime as a livelihood.8
Id.
the old version of § 4B1.3, implied a net-income requirement.
There, unlike here, the government "concede[d] the point and
admit[ted] there was no evidence . . . to suggest that [the
defendant] profited" enough to justify the enhancement, and so the
court did not state one way or another whether the guideline
required a finding as to a defendant's "profits." Id. at 208. In
any event, a subsequent Eighth Circuit case -- applying the current
version of the guideline -- suggests that no such requirement
exists. See Morse, 983 F.2d at 853.
In United States v. Taylor, which applied the current
version of the guideline, the court did cite Lee in passing for
the proposition that "livelihood is a matter of net rather than
gross income," but the court then proceeded to determine that the
defendant had met the income threshold based on "[in]direct
evidence" of his "receipts from stealing mail," without deducting
expenses associated with his mail theft. 45 F.3d 1104, 1106-07
(7th Cir. 1995) (emphasis added).
While it is true that Lee was decided after the guideline
was amended in 1989 (as well as after it was amended again in 1990
in an immaterial way), the court applied only the original version
of the guideline, which governed the conduct at issue in that case,
and so any statement reflecting that court's view of the amended
version amounts to dicta. See 939 F.2d at 504-05.
8
In Lee, a defendant who had pled guilty to a credit card
fraud through which he had acquired $8,178.90 in merchandise, which
he had subsequently chosen to sell for $1,000, was sentenced with
the enhancement on the ground that his income from the fraud
"greatly exceeded [the $750 he proved] he [had] earned from
legitimate gainful employment."
Id.
In a petition for habeas
relief, the defendant argued that he had received ineffective
assistance due to his counsel's failure to present evidence that
his legitimate income was actually $2,000. Id. In finding that
the defendant had been prejudiced by this failure, the court
concluded that only the $1,000 for which he had sold his $8,178.90
in stolen merchandise -- which the court deemed his "net income"
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But Lee does not help Gordon.
that
case
has
been
significantly
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The guideline at issue in
amended,
and
the
version
applicable here includes two prongs: A court must first find that
the defendant derived income from criminal activity in excess of
a specified sum (equal to $14,500 at present), U.S.S.G. § 4B1.3
app. n.2(A), and then separately find that the criminal activity
was the defendant's primary occupation, id. § 4B1.3 app. n.2(B).
The proper way of measuring the relative predominance of
a defendant's criminal and legitimate income -- the issue on which
Lee ruled -- has no bearing on the prong-one question of whether
the defendant's criminal income exceeded the $14,500 threshold,
the question at issue here.
the
prong-two
question
of
It is relevant, if at all, only to
whether
defendant's primary occupation.9
criminal
activity
was
the
Cf. United States v. Luster, 889
F.2d 1523, 1529 (6th Cir. 1989) ("A determination of whether a
pattern of criminal activity provides 'a substantial portion' of
one's income is a means of determining whether or not criminal
from the fraud -- should be measured against his $2,000 in
legitimate earnings, and that based on that comparison, his
legitimate earnings predominated. Id. The court did not indicate
any need to deduct expenses associated with executing the credit
card fraud or the resale.
9
Gordon has not argued, and we do not decide, that a court
must consider a defendant's net income in answering that distinct
question. In any event, such an argument would be moot because,
as we discuss below, Gordon was unable to establish that he derived
even gross income in any meaningful quantity through noncriminal
means during the relevant period.
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conduct is one's primary occupation."); Kellams, 26 F.3d at 649.
Moreover, commentary on the reason why § 4B1.3 was amended in 1989
to include two prongs supports our reading of the guideline.
See
Fed. Sent'g L. & Prac. § 4B1.3 cmt. n.5 (explaining that the
amendment intended to "simplif[y]" the analysis of a defendant's
income).
It is also telling that the Commission amended § 4B1.3
again in 2010, when, as we have noted, the majority approach to
the "income" issue was the gross-income approach.
At that time,
the Commission chose to leave the term "income," and therefore the
precedents we cite, entirely undisturbed.
See U.S.S.G. Manual
app. C, amend. 747 (2010) (explaining that the Commission made
merely cosmetic changes to the guideline in 2010 such as, inter
alia, "striking '(1)' and inserting '(A)'; [] striking '(2)' and
inserting
'(B)';
defendant's'").
and
[]
striking
'his'
and
inserting
'the
This amendment further supports our reading, and
at a minimum, there is certainly no reason to view it as having
adopted Lee, which addressed a meaningfully different version of
the guideline.
Finally, the cases cited by Gordon that interpret the
term "loss" in § 2B1.1 and the now-defunct § 2F1.1 as requiring a
court to consider a crime victim's net losses do not bear on the
meaning of the term "income" in § 4B1.3 app. n.2(A).
See United
States v. Schneider, 930 F.2d 555, 558 (7th Cir. 1991); United
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States v. Smith, 951 F.2d 1164, 1167-69 (10th Cir. 1991); United
States v. Moore, 55 F.3d 1500, 1502-03 (10th Cir. 1995).
Nothing
in the text or history of § 4B1.3 suggests that the magnitude of
the harm caused by a defendant's criminal activity is in any way
related to the question of whether he engaged in that activity as
a livelihood.
And no authority supports the proposition that the
meaning of a term in a guideline controls the definition of a
different term in an unrelated guideline.
We find no error in the district court's interpretation
of § 4B1.3 app. n.2(A), absent further clarification by the
Commission.
Even if we are wrong in reaching that conclusion, we
affirm anyway, as the government's harmless error argument is
correct.
See, e.g., United States v. Tavares, 705 F.3d 4, 27-28
(1st Cir. 2013).
B.
Appeal from the District Court's Finding as to Gordon's
Primary Occupation Under U.S.S.G. § 4B1.3 app. n.2(B)
We review a district court's application of a sentencing
guideline to the facts before it only for clear error.
United
States v. Martin, 749 F.3d 87, 92 (1st Cir. 2014). "[A] sentencing
enhancement must be supported by a preponderance of the evidence."
United States v. Burgos-Figueroa, 778 F.3d 319, 320 (1st Cir. 2015)
(citation omitted). Gordon's claim that the court erred in finding
that drug trafficking, rather than some legitimate endeavor, was
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his
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"primary
occupation
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[during
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the
relevant]
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twelve-month
period," U.S.S.G. § 4B1.3 app. n.2(B), easily fails on this record.
The uncontested evidence presented by the government
established that Gordon held a leadership role in a substantial
drug-trafficking organization while living in Maine during the
year preceding his arrest.
The operation was sufficiently large
to sell $89,480 in cocaine base over twelve months.
Gordon
actively participated in it, regularly communicating with his coconspirators
about
the
scheme
transactions in furtherance of it.
and
frequently
executing
Additionally, in statements
introduced by the government, an associate of Gordon's recounted
that Gordon had told the associate that Gordon had come to Maine
specifically to make money selling drugs in order to support
himself and family members still living in Detroit, Michigan.
See
Quertermous, 946 F.2d at 378 (holding that an investigator's
testimony that the defendant had admitted that he had resorted to
a criminal activity in order to provide for himself, along with
testimony regarding a co-defendant's statement that the defendant
"was
making
his
living
from"
that
activity,
supported
the
conclusion that the defendant's "primary occupation" was that
activity).
In rebuttal, Gordon offered little more than his own
attestations to support his contention that he had worked primarily
as a self-employed barber. Gordon claimed that he had made between
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$200 and $600 per week cutting hair, but he conceded that he had
no documentation of any sort to verify either that work or those
earnings.
See, e.g., Luster, 889 F.2d at 1531 (rejecting a
defendant's claim of legitimate employment at various part-time
jobs because he was unable to provide supporting documentation);
Quertermous, 946 F.2d at 378 (same, where the defendant claimed he
had been legitimately "self-employed as a roofer" but was "unable
to provide any records of employment").
The only evidence of legitimate employment that Gordon
could muster were statements taken from a few of the letters
submitted to the court in support of Gordon's character, which
mentioned that Gordon had engaged in barbering at some point,
sometimes for money, back when he had lived in Detroit.
These
statements did not indicate that Gordon had worked as a barber at
all,
let
alone
primarily,
during
the
relevant
time
period.
Meanwhile, an associate of Gordon's who had hosted Gordon at her
residence in Maine overnight "from time to time" stated that she
did not know what, if anything, he had done for legitimate work
there.
In
light
of
the
abundant
evidence
that
Gordon
had
actively participated in large-scale, lucrative drug-trafficking
activities during the twelve months at issue and the dearth of
evidence that he had performed any alternative work of comparable
frequency or profitability over that period, the district court
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was well justified in concluding that the primary-occupation prong
of the criminal livelihood enhancement was satisfied.
See Nastri,
647 F. App'x at 54 (affirming the district court's conclusion that
the primary-occupation prong was satisfied where the evidence
showed that the defendant had received "between $4,000 and $5,000"
in proceeds from drug sales "five to seven times" and "no facts
before the . . . court [showed] that [he had] held a primary
occupation
or
enterprise").
employment
other
than
his
criminal
drug
There was no error on these facts.
III.
Gordon's sentence is affirmed.
We direct the Clerk to
send a copy of this opinion to the Sentencing Commission.
-Concurring Opinion Follows-
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BARRON, Circuit Judge, concurring in the judgment.
The
facts of this case do not require us to decide whether the word
"income"
in
the
"criminal
livelihood"
sentencing
enhancement
refers to the gross or to the net receipts of a defendant's
criminal activity.
For, as the majority well explains, however
one construes the guideline, it would not affect the outcome in
this case.
Nevertheless, because the majority has weighed in on
the issue of what "income" means, I wish to explain why I come out
the other way.
The majority's reading of that word may be what the
Sentencing Commission had in mind.
It also might not be.
I can
see that there is room for debate about just how unclear the
guideline
is.
In
my
view,
though,
the
ambiguity
is
not
superficial, but grievous. And because the rule of lenity dictates
that enhancements in the United States Sentencing Guidelines may
not be read broadly when they are this unclear, see Muscarello v.
United States, 524 U.S. 125, 138–39 (1998) ("To invoke the rule
[of lenity], we must conclude that there is a grievous ambiguity
or uncertainty in the statute." (citation omitted)); see also
United States v. Luna-Díaz, 222 F.3d 1, 3 n.2 (1st Cir. 2000)
(noting that the rule of lenity applies to the interpretation of
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sentencing guidelines),10 I believe we have no choice but to opt
for the narrower "net" reading here.11
I.
To start, there is no doubt that the word "income" could
refer to either the gross or the net receipts of a defendant's
criminal activity.
As the majority acknowledges, no dictionary
-- legal or otherwise -- indicates to the contrary.
The guideline itself is of no help in resolving the
ambiguity.
It does not set forth a definition of "income" of its
10
The defendant did not invoke the rule of lenity in making
his case for the narrower, "net" reading that I would adopt. But
the only reason that we are offering a construction of the relevant
provision of the Guidelines is to clear things up going forward.
I thus see no reason to exclude from consideration this obviously
relevant tool of construction.
11
The rule of lenity serves a number of functions,
including the distinct one of ensuring that courts do not impose
punishments because rulemakers have prescribed them unless the
courts are certain that those punishments actually were
prescribed. See United States v. Bass, 404 U.S. 336, 348 (1971)
(explaining that the rule of lenity is justified by the idea that,
"because of the seriousness of criminal penalties, and because
criminal punishment usually represents the moral condemnation of
the community, legislatures and not courts should define criminal
activity. This policy embodies the instinctive distastes against
men languishing in prison unless the lawmaker has clearly said
they should." (citations omitted)). Thus, in my view, the rule of
lenity still applies to the Guidelines notwithstanding Beckles v.
United States, No. 15-8544, 2017 WL 855781 (U.S. Mar. 6, 2017),
which established that the vagueness doctrine does not apply to
the Guidelines because vagueness in the Guidelines does "not
implicate the twin concerns underlying vagueness doctrine -providing notice and preventing arbitrary enforcement." Id. at
*8.
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own.
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Nor does the guideline's application note make any direct
reference to the word that might settle the matter.
I have looked at how the word "income" is used elsewhere
in the Guidelines in hopes that such usage might clear things up.
It does not.
And it certainly does not show that "income" clearly
means "gross income."
The Guidelines mention the word "income"
only a handful of times. In only one instance is the word modified.
And, in that instance, the modifier is the word "gross."
U.S.S.G.
§ 2T1.1 (referring specifically to the underreporting of "gross
income").
That
another
guideline
specifies
"gross
income"
suggests, if anything, that the unmodified word "income" in this
guideline means something else.
In consequence, the case for leaning on the rule of
lenity seems to me to be quite strong.
And, adding strength to
that case is a Supreme Court precedent, United States v. Santos,
553 U.S. 507 (2008), that, though not controlling, is at least
instructive.
The word in question in Santos was not "income" but
"proceeds."
And the relevant provision was a criminal statute
(one that punishes money laundering), not a sentencing guideline.
But
the
issue
was
otherwise
virtually
identical:
whether
"proceeds" referred to the gross receipts that a defendant derived
from criminal activity or only to the net receipts.
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Five
Justices
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in
that
Date Filed: 03/29/2017
case
agreed
that
"proceeds" did not clearly refer to gross receipts.
Entry ID: 6080039
the
word
The plurality
opinion that Justice Scalia wrote for four Justices relied on the
rule of lenity in opting for a "net" reading of the term.12
at 514-25.
Id.
Justice Scalia's logic has resonance here.
Justice Scalia explained that dictionaries provided no
clarity as to whether the word "proceeds" referred to net or gross
proceeds.
Id. at 511-12.
He then explained that the word had not
"acquired a common meaning in the provisions of the Federal
Criminal Code."
Id. at 511-12.
And, finally, he explained that
context shed no light on the matter, because "[u]nder either of
the word's ordinary definitions, all provisions of the federal
money-laundering
provisions
are
redundant; and the statute is not rendered utterly absurd."
Id.
at 513-14.
statute
are
coherent;
no
He thus concluded that the statute was ambiguous, and
that the rule of lenity must therefore control.
Id. at 514.
In reaching this conclusion, Justice Scalia was well
aware
that
administer
the
--
"net"
much
receipts
tougher,
definition
that
12
is,
than
would
a
be
gross
tough
to
receipts
Justice Stevens declined to join the plurality opinion,
writing that "proceeds" may mean "net" in some circumstances and
"gross" in others.
Santos, 553 U.S. at 525 (Stevens, J.,
concurring in judgment). Justice Stevens did, however, agree with
the plurality that Congress would not have intended "proceeds" to
mean "gross" in the case at hand. Id. at 527-28.
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definition.
Id. at 519.
expenses counted?
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How, after all, would one decide which
And how would the government be in a position
to know what the true expenses of the criminal activity were?
Would the defendant's assertions in this regard just have to be
credited?
But while these were points that the government pressed
hard, id., they were not points that moved the plurality, even
though Congress had offered no guidance as to how net receipts
were to be determined. In rejecting the notion that such practical
concerns justified a broad reading of "proceeds," Justice Scalia
pointed out that there is no tie-breaking principle that counsels
judges to construe unclear statutes in the manner that best
facilitates the imposition of criminal punishment.
Rather, he
pointed out that the longstanding interpretive presumption is just
the opposite: that ambiguous criminal measures are to be construed
narrowly to protect defendants.
Id. ("We interpret ambiguous
criminal statutes in favor of defendants, not prosecutors.").
II.
Of course, even ambiguous words, in context, may acquire
a clear-enough meaning that it would be improper to apply the rule
of lenity.
appropriate
But we know that the plurality in Santos thought it
to
use
this
longstanding
interpretive
tool
to
determine whether "proceeds" referred to net or gross receipts.
To me, therefore, the question is simply whether there is any good
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In my view, there is not,
especially considering this guideline's history.
An
earlier
version
of
the
"criminal
livelihood"
guideline imposed an enhanced sentence if the defendant derived a
"substantial portion of his income" from his criminal conduct.
U.S.S.G. § 4B1.3 (amended 1988).
The Seventh Circuit, per Judge
Posner, read the word "income" in that iteration of the guideline
to refer to net rather than gross receipts.
Lee v. United States,
939 F.2d 503, 504 (7th Cir. 1991).
Judge Posner's reasons for doing so are persuasive to
me.
Judge Posner explained that the word "income" in that version
of the guideline "[s]urely" had to be read to refer to net income,
id., else the following absurd consequence would arise. He posited
a
defendant
who
grossed
$1
million
in
sales
a
year
from
a
legitimate business, but netted only $10,000, and who burgled
$20,000 by night with no expenses.
Judge Posner noted that such
a defendant would not be thought to have "derived a substantial
portion of his income" from his crimes if measured by comparing
his gross legal income ($1 million) against his gross illegal
income ($20,000).
Id. (quoting the version of § 4B1.3 in effect
at the time the defendant was sentenced).
In addition, Judge
Posner pointed out, if the defendant earned $20,000 from a lawful
day job and netted only $10,000 on thefts of goods worth $1 million
in
retail
value,
his
sentence
would
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enhanced
--
again,
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incongruously -- if his income were measured by comparing his gross
legal income ($20,000) to his gross illegal income ($1 million).
Id.
No such strange results would follow, however, if "income"
were simply read to refer to net receipts.
Judge
Posner
also
emphasized
that,
although
a
defendant's gross criminal income may be the more relevant figure
for purposes of measuring the amount of harm that the defendant's
criminal
activity
caused,
there
are
other
provisions
in
the
Guidelines that are intended to respond to the magnitude of the
harm caused by the offense.
Id.
As the criminal livelihood
enhancement, however, "Section 4B1.3 has the narrower office of
separating professionals from amateurs on the basis of the extent
to which a defendant derives his livelihood from his criminal as
distinct from his legal activities."
Id.
And, as Judge Posner
concluded, "livelihood is a matter of net rather than gross
income."
Id.13
13
I note that U.S.S.G. § 2T1.4 also uses the same
"substantial portion of his income" language as did the version of
the guideline Judge Posner construed.
Specifically, § 2T1.4
provides for an enhancement where a defendant provided "aid,
assistance, procurance, or advice" regarding tax fraud "as part of
a pattern or scheme from which he derived a substantial portion of
his income." As best I can tell, no cases have yet considered
whether "income" in this provision refers to gross or net receipts,
though it would appear that Judge Posner's analysis would have
equal force in construing the term.
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The majority does not take issue with Judge Posner's
explanation of why "income" had to mean net income in the first
iteration of this guideline.
The question is thus whether the
guideline has been changed in a way that indicates with sufficient
clarity that this word now must be understood to refer to gross
income.
I do not believe it has.
In
coming
to
this
conclusion,
I
recognize,
as
the
majority notes, that, in 1990, the Sentencing Commission did amend
the version of the guideline that Judge Posner was construing.
And the first set of those amendments was extensive.
The guideline no longer defines criminal activity as a
"livelihood" simply because the defendant "derived a substantial
portion of his income" from "a pattern of conduct" of which crime
was a part.
Rather, the guideline's definition of "livelihood"
now has two distinct parts.
The first part requires that the
defendant derived income from his criminal conduct "that in any
twelve-month period exceeded 2,000 times the then existing hourly
minimum wage under federal law."
U.S.S.G. § 4B1.3 app. n.2(A).
The second part requires that "the totality of circumstances shows
that such criminal conduct was the defendant's primary occupation
in
that
twelve-month
period
(e.g.,
the
defendant
engaged
in
criminal conduct rather than regular, legitimate employment; or
the defendant's legitimate employment was merely a front for the
defendant's criminal conduct)."
Id. § 4B1.3 app. n.2(B).
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But I do not see how these changes -- significant though
they are -- make it clear that "income" now refers to gross income,
given that it is most unlikely that this word did so before.
I
note in this regard that Judge Posner was well aware of these
amendments when he wrote his decision in Lee, in which he construed
"income" to mean net income.
He, too, did not conclude that the
amendments reflected a shift in the Commission's view.
Rather, he
concluded that these amendments "dispelled" "[a]ny doubts" about
whether the Commission intended "income" to refer to net rather
than gross earnings.
Id. at 504.
Judge Posner based that conclusion on the fact that the
amendments keyed the amount that a professional criminal must make
in a twelve-month period to the annual income of a minimum wage
worker, rather than to some other amount.
See id. at 504-05.
Presumably, Judge Posner thought such a choice by the Commission
-- by analogizing the criminal defendant to a lawful earner who
makes a minimum wage -- only served to underscore his basic point:
that the focus of this guideline is on whether the defendant makes
a livelihood from criminal activities, and not on whether those
activities cause great harm.
Thus, a reading of the word "income"
that ensures that the inquiry focuses on what a criminal defendant
takes home, rather than on merely what he takes in, makes the most
sense.
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That said, I would not go so far as Judge Posner and
conclude that the new guideline -- by referencing the annual income
of a minimum wage worker -- demonstrates beyond all doubt that the
Commission is focused on net rather than gross income.
I am
confident, however, that the amended guideline, by choosing to key
income to the annual earnings of a minimum wage worker, cannot be
said to have adopted in any clear way a "gross" view of income
that the earlier iteration of the guideline had declined to
embrace.
The new guideline, after all, uses the same word -"income" -- as did the previous version of the guideline.
And the
amendments added no modifier to clarify that otherwise ambiguous
word's meaning.
Nor does the application note to the amended
guideline provide any clarification.
In addition, because minimum wage workers, unlike many
criminals, usually incur few expenses, it seems quite plausible
that, in amending the guideline, the Commission still had in mind
the criminal's profit from his work rather than his gross income.
After all, a drug dealer who buys drugs and then sells them at,
say, a 30% mark-up, may surpass the guideline's threshold income
amount in gross earnings even if he will never succeed in earning
an actual livelihood from his net profits.
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Why, then, does it
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make sense to apply a "livelihood" enhancement to a defendant
simply because of the amount of his gross unlawful earnings?14
Moreover,
it
would
hardly
be
unthinkable
for
the
Commission to have chosen to target only those criminals who
actually succeed at making a living through crime.
Deterrence is
specially needed for that class of criminals, due to their special
propensity to persist in a life of crime.
And there is no doubt
that the guideline's raison d'être was to deter professional
14
It is true that the hourly minimum wage is a pre-tax
figure, but that hardly indicates that the Commission intended for
courts to ignore a defendant's expenses in determining whether a
defendant has made a living through crime.
Tellingly, this
guideline is "derived from" the (now repealed) Dangerous Special
Offender statutes, 18 U.S.C. § 3575(e)(2) and 21 U.S.C.
§ 849(e)(2), and was intended to "embody[] the same considerations"
as those statutes. See S. Rep. No. 98-225, at 176, 120 (1983).
Those statutes instructed courts to determine whether the
defendant derived a "substantial source of income" from criminal
activity as compared to the defendant's lawful "adjusted gross
income."
And "adjusted gross income" is a pre-tax figure that
takes account of business expenses.
Moreover, it would surely be a surprise if there are
many minimum wage workers who -- like many criminals, and those
involved in the drug trade in particular -- have expenses so
substantial that they may swallow up their earnings. In fact, the
Fair Labor Standards Act (FLSA) specifies that wages must be paid
"free and clear." 29 C.F.R. § 531.35. Thus, such expenses as
uniforms and, in some cases, even travel, cannot be charged to the
employee, if such expenses would drive the employee's pay below
minimum wage. See Arriaga v. Florida Pac. Farms, L.L.C., 305 F.3d
1228, 1236-37 (11th Cir. 2002) (explaining that the "free and
clear" provision requires employers to reimburse employees for
expenses that are primarily for the benefit of employers, including
tools and uniforms, and that employers cannot avoid this rule by
simply requiring employees to make such purchases on their own);
see also Rivera v. Peri & Sons Farms, Inc., 735 F.3d 892, 897 (9th
Cir. 2013) (requiring H-2A visa employees to pay for their own
inbound travel and visa expenses violates "free and clear" rule).
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criminals, given that this was the rationale of the Dangerous
Special Offender statutes from which the guideline was derived.
See United States v. Kerr, 686 F. Supp. 1174, 1178, 1180 (W.D. Pa.
1988) (noting that "Congress adopted [§ 4B1.3] from the Dangerous
Special Offender statutes," and that those statutes were intended
to "impos[e] enhanced punishment to incapacitate professional
criminals who may lack the prior convictions necessary to bring
them within recidivist statutes"); id. at 1180 ("The requirement
that [defendants] derive a substantial portion of their income
from
this
pattern
furthers
the
legitimate
purpose
of
incapacitating professional criminals . . . . The defendant who
has an income to which crime does not contribute a substantial
portion does not depend on crime; his prospects for returning to
a legitimate lifestyle may be better.").15
15
Those statutes applied additional punishment where a
defendant was convicted of a crime as part of a pattern of criminal
conduct "which constituted a substantial source of his income."
18 U.S.C. § 3575(e)(2); 21 U.S.C. § 849(e)(2).
The statutes
defined a "substantial source" as an amount which exceeds the
annual minimum wage and exceeds half of the defendant's declared
adjusted gross income (that is, net income by another name). Id.
The fact that Congress specified that lawful earnings should be
measured by "adjusted gross income," while unlawful earnings
should be measured by "income," left unclear just how "income" -full stop -- is to be measured. But, even if "income" meant gross
income, due to its contrast with the more specific "adjusted gross
income," the guideline in its initial form -- by using the word
"income" alone, and thus without any contrast to "adjusted gross
income" -- could only have been referring to net income for the
reasons that Judge Posner gives.
Thus, nothing in the way the
word "income" was used in the precursor statutes clears things up
with respect to what the word means in the guideline.
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Finally, I note that the Commission in 2010 actually
amended the guideline yet again.
And this time the Commission did
so with the benefit of the analysis of the word "income" that Judge
Posner had offered in his 1991 decision in Lee.
(amended 2010).
U.S.S.G. § 4B1.3
At that time, Lee was the only court of appeals
decision to have definitively construed the word "income" in
connection with the criminal livelihood guideline -- though, as
the majority points out, a number of circuits had applied the gross
income approach without having any need to consider whether the
gross or the net definition of "income" was intended in either the
earlier or the amended version of the guideline.
And, as I have
explained, Lee had not only construed the word "income" in the
first iteration of the guideline to mean net income but also had
concluded
that
the
1990
amendments
correctness of that narrow construction.
made
crystal
clear
the
Yet, in making the 2010
amendments, the Commission saw fit to retain the same word "income"
that had been there all along, and to do so without adding any
clarifying modifier.
In light of this history, I do not see how we could have
any confidence that the word "income" in the guideline, as it now
stands, refers to gross income.
To so conclude, we would have to
be confident that the Commission retained a word that is facially
ambiguous, but that the Commission nonetheless impliedly intended
to give that word a new meaning that is the opposite of what the
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only circuit court ever to have definitively construed that word
had read it to mean.
III.
A key idea behind the rule of lenity is that judges
should be wary of mistakenly imposing punishment on the basis of
rules that have been drawn up by others but that were never
intended to reach so far as judges may be asked to extend them.
And, in this context, that idea seems to me to have particular
force.
The Commission has already proved itself to be more than
capable of revising the guideline.
so again.
The Commission is free to do
It might even do what Congress did in response to Santos
-- expressly state that it had in mind the gross amount.
See 18
U.S.C. § 1956(c)(9) (clarifying that "the term 'proceeds' means
any property derived from or obtained or retained, directly or
indirectly, through some form of unlawful activity, including the
gross receipts of such activity").
response
to
the
practical
And it might take that step in
concerns
that
the
majority
quite
reasonably raises.
It may also be, however, that the Commission is not
troubled by such concerns.
In many cases, after all, a criminal's
expenses will not be hard to figure, if there are even any to be
calculated.
And courts have accepted that the Commission requires
them to make similar calculations under other guidelines -- namely
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Case: 15-2395
Document: 00117135716
Page: 36
Date Filed: 03/29/2017
Entry ID: 6080039
the guidelines that key sentences for crimes of theft, fraud, and
deceit to the amount of the victim's "loss."
See, e.g., United
States v. Smith, 951 F.2d 1164, 1167 (10th Cir. 1991); United
States v. Schneider, 930 F.2d 555, 558 (7th Cir. 1991).
big-time
but
unsuccessful
criminals
hardly
receive
Moreover,
lenient
treatment under the other guidelines that would apply to them.
Thus, it is not obvious that the Commission intends for this
particular guideline to apply to such criminals.
It seems quite
possible the Commission's focus here was on a distinct group -namely, those defendants for whom a life of crime pays.
And thus
it seems quite possible that the Commission did not intend to
impose this additional enhancement upon a defendant who made no
living off of crime at all.
But whatever the Commission's view actually is, the
basic point is this: the Commission has failed to speak with the
clarity that we demand before we construe legal texts in a manner
that would subject persons to additional criminal punishment.
As
a result, I would not apply the guideline as broadly as the
majority would.
I would instead leave the task of clarifying its
breadth to the Commission.
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