The White Collar Appeal: Eleventh Circuit Vacates Sentence Based on the Distinction Between “Conspiracy” and “Jointly Undertaken Criminal Activity”

• United States v. Barry seems to set a difficult standard for the government to show “jointly undertaken activity” for purposes of the Sentencing Guidelines.
• In a case where a defendant made fraudulent transactions at the same stores, using the same stolen credit cards as his coconspirators, a split Eleventh Circuit panel vacated a sentence where the district court failed to make explicit individualized findings regarding the defendant’s conduct.
• Barry reinforces that the loss amount for which an individual defendant can be punished is not necessarily coterminous with the loss amount attributable to the overall conspiracy.  And given the seemingly substantial evidence of joint conduct in this case, the Eleventh Circuit appears to impose a high burden for the government.

Background

Over the course of numerous transactions, Abdoulaye Barry and a handful of coconspirators purchased more than $2 million in cigarettes using stolen credit cards.  They purchased the cigarettes from a membership warehouse store with business membership accounts they opened in the name of fake tobacco shops.  Barry himself was the primary account holder for two such memberships and was a secondary member on two others.  Other coconspirators also made purchases through the membership accounts Barry accessed, and they used some of the same stolen credit cards Barry used.  For example, on multiple occasions, Barry and other coconspirators made fraudulent purchases at the same stores within minutes of each other and using the same stolen cards.

A jury convicted Barry of conspiracy and multiple substantive fraud counts.  In its Sentencing Guidelines analysis, the district court determined that the applicable loss amount was approximately $540,000, which represented the losses incurred for every card that Barry used, regardless of whether Barry or one of his coconspirators personally conducted the transaction.  The district court stated that Barry should not “be held accountable [only] for the count reflecting his own conduct, because I do find that the government did prove a conspiracy existed and the jury obviously did agree to that.  So I find that, in this case, conspiracy, which I find equates to jointly undertaking criminal activity, leads us to the conclusion” that Barry’s Guidelines calculation should reflect the total losses those cards incurred.

Holding

The Eleventh Circuit vacated Barry’s sentence in a split decision.  The majority held that the district court incorrectly conflated the scope of the conspiracy with Barry’s “jointly undertaken criminal activity.”  According to the majority, “the scope of the defendant’s jointly undertaken activity is not necessarily the same as the scope of the entire conspiracy, so the relevant conduct for each coconspirator likewise is not necessarily the same.”  And because the district court failed to make individualized findings concerning the scope of Barry’s criminal activity, it was not possible for the Court of Appeals to determine the scope of the jointly undertaken criminal activity that could be considered for Guidelines purposes. 

In reaching that conclusion, the majority acknowledged (and reaffirmed) Eleventh Circuit caselaw holding that a sentencing court’s failure to make individualized findings will not require vacatur if the record supports the imputation of coconspirators’ unlawful conduct to a defendant.  Here, however, the majority held that the record did not support that conclusion. For example, the fact that the coconspirators used shared membership accounts did not require that they physically visited a store together, nor did the fact that they used the same stolen cards, sometimes within one day of each other, lead to a reasonable inference that Barry knew about the other users and what they were doing with the cards.

The dissent found the record more than sufficient to support the sentence.  It found Barry’s explanation that he was an isolated node in a hub-and-spoke conspiracy with no clue about what his coconspirators were doing to be incredible and contrary to the evidence.  In addition to the geographic and temporal proximity of the transactions described above, the dissent noted that Barry and one of the coconspirators were arrested together inside Barry’s car not long after these transactions.  In the face of such evidence, according to the dissent, “Barry does not come close to showing reversible error.”

Key Takeaways

Mind the difference between “conspiracy” and “jointly undertaken activity.”  The Sentencing Guidelines instruct sentencing courts to hold individual defendants responsible for conduct that was (1) “within the scope of the jointly undertaken criminal activity,” (2) “in furtherance of that criminal activity,” and (3) “reasonably foreseeable in connection with that criminal activity.”  U.S.S.G. § 1B1.3(a)(1)(B)(i)–(iii).  In many cases, the scope of the conspiracy will align with this definition, but in hub-and-spoke or other large conspiracies, there may be a material difference between the two.  Defendants thus should challenge the government’s efforts to conflate the two.

Barry sets a very high bar for inferring jointly undertaken activity.  The central debate between the majority and the dissent about the inferences to be drawn from the evidence illustrates just how high the government’s burden is.  Barry was at the same store and at the same time as his coconspirators; he used the same cards that his coconspirators used; and he was arrested with one of his coconspirators.  The majority’s refusal, notwithstanding this evidence, to infer that this conduct was “jointly undertaken” is useful precedent for defendants seeking to rebut that inference in future cases.

Defense counsel must carefully balance any effort to rebut the inference of jointly undertaken activity with acceptance of responsibility.  The defendant bears the burden of “clearly demonstrat[ing] acceptance of responsibility” under Section 3E1.1, and judges may construe efforts to minimize the scope of a defendant’s role in a conspiracy as inconsistent with such acceptance.  Defendants who plead guilty and seek a Guidelines reduction for acceptance of responsibility must understand the risk that, by seeking to limit the scope of their jointly undertaken activity, the sentencing judge might withhold credit for acceptance of responsibility. 

Defense counsel should insist on individualized findings at sentencing in conspiracy cases.  Although Barry acknowledges that the absence of individualized findings will not always result in vacatur, defendants would be wise to request such findings, at a minimum to preserve the issue.  Barry might well have come out differently if the court had applied plain-error review.