Sentencing – Enhancement

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7^th Circuit Court of Appeals

Case Name: United States of America v. Julius Peterson

Case No.: 17-2062

Officials: BAUER, MANION, and ROVNER, Circuit Judges.

Focus: Sentencing – Enhancement

On June 24, 2015, a grand jury indicted Julius Peterson on two counts of financial institution fraud, one count of making a false statement to a financial institution, and one count of bankruptcy fraud. Specifically, Counts One and Two alleged a violation of 18 U.S.C. § 1344 by submitting false documents in relation to his sale of 7931 S. Union Avenue and 6821 S. Dante Avenue in Chicago, Illinois, Count Three alleged a violation of 18 U.S.C. § 1014 by making a false statement to a financial institution that influenced a mortgage loan for one of those properties, and Count Four alleged that he violated 18 U.S.C. § 152(3) by making false statements in his bankruptcy petition.

Peterson pled guilty to one count of financial institution fraud and one count of bankruptcy fraud. The district court sentenced him to 24 months’ imprisonment, as well as five years of supervised release, and ordered him to pay restitution in the amount of $166,936. On appeal, Peterson raises two challenges to that sentence. First, he asserts that the district court erred in imposing a two‐level enhancement under U.S.S.G. § 2B1.1(b)(10)(C) because Peterson used “sophisticated means.” Second, he argues that the district court erred in failing to provide reasons for the imposition of the terms of supervised release. We consider these issues in turn.

Peterson argues that the district court erred in imposing a two‐level enhancement for the use of sophisticated means, because the facts demonstrated only a garden‐variety mortgage fraud scheme. He points to the language of the enhancement and the Application Note to that provision. Guideline §2B1.1(b)(10)(C) provides for a two‐level enhancement “[i]f the offense otherwise involved sophisticated means,” and Application Note 9(B) states that sophisticated means includes especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense.

Peterson contends that the conduct in this case does not fall within that definition. He argues that a “genuine U.S. corporate account” was used to undertake the relevant transactions, and therefore this case is not equivalent to the illustrative items such as fictitious entities, corporate shells, or offshore accounts. According to Peterson, the district court erred in crediting the government’s argument that the conduct involved hidden transactions. Peterson contends that the district court was required to make findings that established that his offense conduct involved something akin to the use of fictitious entities, corporate shells, or other offshore accounts.

Peterson cannot demonstrate that the district court committed a procedural error in failing to identify the reasons and apply the § 3553(a) factors. The required procedures were met by adopting the reasons in the PSR. Whether the reasons in the PSR were sufficiently specific to justify any particular discretionary condition is not before us. This case does not involve any substantive challenge. In his opening brief, Peterson never claimed that the reasons provided in the PSR and adopted by the district court were insufficient to support a particular discretionary condition.

We hold only that here, where the defendant had knowledge of the conditions and the reasons in the PSR prior to sentence, and an opportunity to object to those conditions before and at sentencing but raises no claims related to any specific supervised release condition, the court’s adoption of those unchallenged conditions as well as the reasons in the PSR were sufficient to satisfy the procedural requirements.

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.