930 F. 2d 30 - United States v. Nishinaka

MEMORANDUM*

Defendant James Nishinaka entered a plea of guilty to two counts of securities fraud under 15 U.S.C. Secs. 77q(a) and 77x, and to two counts of mail fraud under 18 U.S.C. Sec. 1341. He was sentenced to twenty-one months imprisonment on one count of mail fraud under the Sentencing Guidelines. On the other three counts, the district court did not apply the Sentencing Guidelines because the conduct charged in those counts occurred before the effective date of the Sentencing Reform Act of 1984, i.e., November 1, 1987. On those three counts, Nishinaka was sentenced to five years imprisonment. Nishinaka appeals only the sentence imposed under the Guidelines. He contends that the district court erred in increasing his sentence based on the vulnerable victim adjustment and in denying him the acceptance of responsibility reduction.

In or around April 1987, Nishinaka falsely told the Wheelers that he was a stockbroker at Shearson Lehman Hutton, Inc. ("Shearson") and gave them a false business card substantiating his claim. The Wheelers gave Nishinaka $41,000 to invest to build up their savings for retirement. Instead of investing the Wheelers' money, however, Nishinaka spent it for his personal use. According to Mrs. Wheeler, after Nishinaka told her that he had spent all their money, he threatened to kill her and her husband because Nishinaka believed that they were the source of his problem.

On July 5, 1989, the defendant went to an office of the F.B.I. and confessed to his fraudulent conduct. On September 1, 1989, he entered a plea of guilty to two counts of securities fraud and to two counts of mail fraud. Three of the four counts to which Nishinaka pleaded guilty are not covered by the Guidelines because they occurred before the effective date of the Sentencing Reform Act of 1984, i.e., November 1, 1987. On the remaining count, Nishinaka was sentenced under the Guidelines.

The base offense level for the Guidelines count, a violation of 18 U.S.C. Sec. 1341, is 6. The probation officer recommended a four level increase from the base offense level based on the amount of loss to the Wheelers under Sec. 2F1.1(b)(1), a two level increase for the amount of planning involved in the offense under Sec. 2F1.1(a)(2)(A), and a two-level "vulnerable victim" increase under Sec. 3A1.1. The officer also rejected a two-level reduction for acceptance of responsibility under Sec. 3E1.1. Using the probation officer's recommendations (adjusted offense level of 14) and the defendant's criminal history category of "I," the resulting guideline range is 15 to 21 months.

The district court sentenced Nishinaka to concurrent sentences of 5 years imprisonment on the three non-Guidelines counts and 21 months imprisonment on the single Guidelines count. Before imposing sentence, the district court stated:

[T]he Court, as I said, has read Mr. Nishinaka's letter and other correspondence, and has read and considered the pre-sentence report, and had the benefit in this case of viewing the Wheelers and listening to the testimony of Mr. Wheeler. So certainly the Court has been given, because of that exercise, perhaps a firsthand view of the victims in this case. And I'm convinced that the Wheelers were not sophisticated people.

They developed a relationship with the defendant which the defendant exploited, and the result of that exploitation was essentially to rob the Wheelers of, if not all but substantially all of their savings, which was dissipated by the defendant and apparently there is nothing left to return to the Wheelers.

Obviously, the Wheelers are not young people and Mr. Wheeler was disabled in some fashion. They have to start again to accumulate what little nest egg they lost at the hands of this defendant. I think the fraud was egregious. I think that society needs protection from people like Mr. Nishinaka, and the only way we can give society protection is to settle upon an appropriate term of incarceration.

On the Guideline count, the district court sentenced the defendant at the maximum of the sentencing range recommended in the presentence report. The court did not make specific findings regarding the vulnerable victim and acceptance of responsibility adjustments, but adopted the conclusions made by the probation officer. Nishinaka appeals the district court's application of the vulnerable victim and acceptance of responsibility adjustments.

This court reviews the district court's determination on the vulnerability of a victim for clear error. United States v. Skillman, No. 89-50203, slip op. 11313, 11327-28 (9th Cir.1990). Whether a defendant has accepted responsibility for his criminal conduct is a factual determination also reviewed for clear error. United States v. Gonzalez, 897 F.2d 1018, 1019 (9th Cir.1990).

The Guidelines provide that an offense level shall be increased by two levels "[i]f the defendant knew or should have known that a victim of the offense was unusually vulnerable due to age, physical or mental condition, or that a victim was otherwise particularly susceptible to the criminal conduct." United States Sentencing Commission, Guidelines Manual, Sec. 3A1.1 [hereinafter Guidelines].

Nishinaka contends that the district court committed clear error in increasing his base offense level by two levels under the vulnerable victim adjustment. Nishinaka argues that the Wheelers have "no unusual vulnerability or particular susceptibility" to the criminal conduct. A sentencing court is permitted to adopt the conclusions of the presentence report. See United States v. Rigby, 896 F.2d 392, 394 (9th Cir.1990). We hold that it was not clear error for the district court to have found that the victims in this case were "unusually vulnerable" or "particularly susceptible" to the defendant's fraud. There is sufficient evidence in the record to support the finding that Mrs. Wheeler was a vulnerable victim under Sec. 3A1.1 because of her age and financial status.

Section 3E1.1(a) of the Guidelines provides for a two-level reduction in base offense level "[i]f the defendant clearly demonstrates a recognition and affirmative acceptance of personal responsibility for his criminal conduct." Guidelines Sec. 3E1.1(a). The version of Application Note 4 to Sec. 3E1.1(a) in effect at the time of defendant's sentencing states that the adjustment is not warranted "where the defendant ... obstructs the trial or the administration of justice (see Sec. 3C1.1), regardless of other factors." Guidelines Sec. 3E1.1, comment. (n. 4) (Nov. 1987). The presentence report referred to Application Note 4 when it recommended that the adjustment be denied:

Although it is questionable as to whether the defendant recognizes and accepts total responsibility for his criminal conduct, as well as recognizes the degree of harm he has inflicted on the victims in this case, he has admitted to the criminal conduct alleged in the Indictment and states that he intends to make restitution to the victims in this case. According to Application Note No. 4 for Section 3E1.1, an adjustment for acceptance of responsibility is not warranted where a defendant "otherwise obstructs the trial or the administration of justice (see 3C1.1), regardless of the factors." The defendant's intimidation of the victims prior to the investigation makes this adjustment seem inappropriate.

November 9, 1989 Addendum to the Presentence Report (emphasis added).1

The presentence report may have incorrectly interpreted Application Note 4. Under Application Note 4, a district court is precluded from increasing a defendant's base offense level by two levels under Sec. 3C1.1 because the defendant obstructed justice, and at the same time decreasing the offense level by two levels because the defendant accepted responsibility for his criminal conduct.2 United States v. Avila, 905 F.2d 295, 297-98 (9th Cir.1990); United States v. Rafferty, No. 89-10257, slip op. 8695, 8702-03 (9th Cir. August 10, 1990). The "obstruction of justice" adjustment applies, however, only if the defendant obstructed justice "during the investigation or prosecution of the instant offense." Guidelines Sec. 3C1.1.

Here Nishinaka's alleged threat to kill the Wheelers occurred before the investigation began. The presentence report correctly concluded that the obstruction of justice adjustment is inapplicable in this case because the threat did not take place "during the investigation or prosecution of the instant offense." Absent a finding that defendant obstructed justice under Sec. 3C1.1, Application Note 4 does not preclude the district court from reducing a defendant's offense level if the defendant accepted responsibility for his criminal conduct. The presentence report is therefore incorrect to the extent that it assumes that the district court could not apply the acceptance of responsibility adjustment if the defendant obstructed justice prior to the investigation of the offense.

In this case, the district court did not make specific findings regarding the acceptance of responsibility adjustment, but adopted the recommendation made by the probation officer in the presentence report. Thus, we cannot determine whether the district court denied the acceptance of responsibility reduction based on the erroneous conclusion that the reduction was inapplicable because Nishinaka obstructed justice by intimidating the Wheelers before the investigation began. We therefore remand for specific findings of fact. See United States v. Carlisle, 907 F.2d 94 (9th Cir.1990) (per curiam); United States v. Rigby, 896 F.2d 392 (9th Cir.1990). If, after making the appropriate factual findings, the district court determines that Nishinaka is entitled to the acceptance of responsibility reduction, he should be resentenced.