Ninth Circuit Affirms Sophisticated Means Enhancement In Scheme To Steal Federal Grant Money
The Ninth Circuit, in United States v. Augare, No. 14-30131, 2015 WL 5234789 (9th Cir. Sept. 9, 2015), recently affirmed the application of a “sophisticated means” sentencing enhancement under U.S.S.G. § 2B1.1(b)(10)(C) in a case where the defendant, Delyle Augare was convicted of conspiracy to defraud the United States, False Claims Act conspiracy, theft from an Indian tribe receiving federal funding and federal income tax evasion. In doing so, the court found that use of multiple bank accounts and making fraudulent transfers in those accounts was sufficient to invoke the sophisticated means enhancement.
Under the Sentencing Guidelines, a “sophisticated means” sentencing enhancement results in a two-level increase. Offense conduct is deemed sophisticated if it involves a greater level of planning or concealment than a typical fraud of that kind. The Guideline Application Notes provide examples of sophisticated means, such as telemarketing schemes in which the main office is located in one jurisdiction, while the solicitation operations are conducted in another, as well as offenses involving the hiding of assets and/or transactions through the use of shell corporations, fictitious persons or offshore accounts.
While serving as assistant director of the Po’Ka Project, an organization created to help Native American youth, Augare, the father of Montana state senator Shannon Augare, stole federal grant money intended for the project. According to prosecutors, Augare and one of his co-defendants devised a scheme to donate Po’Ka Project money to a charity controlled by the Po’Ka Project, which Augare then deposited into his personal account. He entered a plea of guilty in the district court to conspiracy to defraud the United States, False Claims Act Conspiracy, theft from an Indian tribe receiving federal funding and federal income tax evasion. In June 2014, the district court sentenced Augare to 33 months in prison and ordered him to pay over $1 million.
Augare appealed his sentence, specifically challenging the district court’s application of the “sophisticated means” sentencing enhancement. Augare argued that his crimes amounted only to simple fraud involving the use of government-funded fuel cards for personal travel and money transfers between different bank accounts.
The Ninth Circuit concluded that the district court did not abuse its discretion when it applied the “sophisticated means” enhancement to Augare’s offense conduct. The three-judge panel explained that the “sophisticated means” sentencing enhancement is applicable when a defendant employs coordinated and repetitive conduct to execute a criminal scheme. Relying on precedent from other federal circuit courts, the panel noted that even if the individual activities employed to carry out the scheme are not elaborate, a “sophisticated means” enhancement is warranted if the totality of the scheme is sufficiently coordinated and complex. In affirming the sentence, the Ninth Circuit determined that Augare’s use of various bank accounts and fraudulent transfers of money that was intended for the Po’Ka Project was sophisticated enough to trigger the two-level sentence guideline increase.