Summary
The Fourth Circuit Court of Appeals affirmed the convictions and sentence of Cory Sanders, who was convicted of wire fraud and submitting false claims related to fraudulent federal government contracts. Sanders appealed, challenging the district court's jury instruction on willful intent and the application of a sentencing enhancement for sophisticated means. The appellate court held that the jury instructions, when considered as a whole, correctly stated the law, and that the district court did not clearly err in applying the sophisticated means enhancement based on the complex and concealed nature of the multi-year fraud scheme.
Topics
Practice areas
Questions Presented
- Whether the district court's jury instructions, including the instruction that willful intent or guilty knowledge may be inferred from the secretive or irregular manner in which a transaction is carried out, misstated the law or confused the jury.
- Whether the district court clearly erred by applying the U.S.S.G. § 2B1.1(b)(10)(C) enhancement for use of sophisticated means.
- Whether the commentary defining 'sophisticated means' in U.S.S.G. § 2B1.1 cmt. n.9(B) is entitled to controlling deference under Kisor v. Wilkie.
Holdings
- The jury instructions, considered as a whole and in light of the entire record, adequately stated the controlling law regarding willfulness and mens rea and did not mislead or confuse the jury; therefore, the district court did not err.
- The district court properly applied the two-level sophisticated-means enhancement under U.S.S.G. § 2B1.1(b)(10)(C) because Sanders's fraud involved especially complex or intricate conduct beyond the minimum conduct necessary to establish fraud.
- The phrase 'sophisticated means' in the Guideline is genuinely ambiguous, and the commentary's definition falls within the zone of ambiguity and is entitled to controlling deference under Kisor.
Key quotations
“Although Sanders argues that the instructions were contradictory, we disagree, finding instead that the unchallenged instructions contextualized the challenged instruction, clarifying the required intent and specifying that, while circumstantial evidence could be considered, “conduct was not ‘willful’ if it was due to negligence, inadvertence, or mistake.”” (7)
“While the individual pieces of this scheme may appear to be, as Sanders argues, relatively straightforward and unsophisticated, the scheme’s ultimate sophistication is revealed by “the way all the steps were linked together.”” (13)
“This conduct went beyond the “minimum conduct required to establish [fraud] in its simplest form.”” (14)
Factual background
Sanders used SandTech, LLC, and later CyCorp Technologies, LLC, to obtain federal contracts for teleconference equipment, technical support, warranties, and maintenance services. He falsely represented that the companies and their suppliers were authorized Cisco or Polycom distributors, submitted falsified certification documents, supplied used or unauthorized equipment, and failed to provide contracted services. After SandTech developed a negative performance history, Sanders formed CyCorp and used alternate business names, usernames, and addresses to continue bidding on government contracts. The sentencing court determined that the loss amount was $899,150.65 and applied a sophisticated-means enhancement.
Procedural history
A jury in the United States District Court for the District of Maryland convicted Sanders of wire fraud, submitting false claims, and submitting a false document arising from a scheme involving federal government contracts. The district court applied a two-level sophisticated-means sentencing enhancement and imposed a forty-five-month sentence. Sanders appealed, challenging a jury instruction concerning willful intent and the sophisticated-means enhancement. The Fourth Circuit affirmed.