Erroneous Relevant Conduct Finding Requires Vacation of Sentence, Even Though Defendant Received Downward Departure

United States v. Ekanem, No. 06-11407 (5th Cir. Jan. 7, 2009) (Wiener, Garza, DeMoss)

As this case nicely illustrates, relevant conduct liability is broad, but not unlimited, and must be supported by reliable evidence. But perhaps more importantly, the case shows that a sentence may be vacated due to a guidelines calculation error---a "significant procedural error" according to Gall---even though the defendant received a downward departure to a point falling within what would have been the correctly calculated range.

Ekanem, who owned and operated a medical supplies company, "engaged in a fraudulent scheme to provide patients with motorized scooters while billing Medicare for more expensive motorized wheelchairs." For that, he was convicted of five counts of health care fraud, in violation of 18 U.S.C. § 3147.

In determining the Guidelines loss-amount at sentencing, the district court found Ekanem responsible not only for the losses he directly caused, but also for the losses caused by a similar scheme orchestrated by the man who, among other things, helped Ekanem set up his supply business:

Here, the district court found that Ekanem entered into “a jointly undertaken criminal activity with Mendus Medical which is owned by Mr. Usanga.” Thus, the court determined that the financial losses caused by Mendus Medical were relevant conduct attributable to Ekanem and increased Ekanem’s offense level accordingly. . . . The government points to the following record evidence in support of the district court’s finding: (1) Usanga helped Ekanem set up and establish Rooster; (2) Usanga allowed Ekanem to use Mendus Medical’s supplier number when Rooster’s was temporarily revoked; (3) Rooster issued checks to Usanga for “appreciation,” “finder’s fee,” and “assistance” totaling approximately $18,000; (4) Rooster and Mendus Medical used some of the same doctors in their schemes; and (5) on at least one occasion the two companies “swapped” Certificates of Medical Necessity (“CMN’s”).

Ekanem successfully challenged that relevant conduct finding on appeal:

Our review of these facts and the record as a whole persuades us that the district court erred in determining that Ekanem entered into a jointly undertaken criminal activity regarding Mendus Medical. At most, the evidence establishes that Usanga provided start-up and operational support to Rooster, for which Ekanem compensated Usanga with “appreciation” fees, and that Rooster and Mendus Medical ran similar schemes. However, there is no indication that Ekanem agreed to jointly undertake in the distinct business of Mendus Medical. There is no evidence that Ekanem assisted in the planning, provided material support, or shared in the profits of Mendus Medical. No payments were made from Mendus Medical to Ekanem. Moreover, the investigating agent specifically acknowledged that the government lacked any evidence that Ekanem was “in anyway responsible for the operation of Mendus or of Mr. Usanga.”

As a nearly identical example from the relevant conduct guideline's commentary explains, mere knowledge of another's identical criminal scheme is not sufficient to hold the defendant responsible for that other person's actions. Thus, the district court's finding was erroneous.

And now for the "perhaps more importantly" part that I mentioned at the beginning. The district court's findings produced an advisory Guidelines range of 121 to 151 months. Ekanem was the beneficiary of a downward departure to 120 months, which fell within the correctly calculated range of 97 to 121 months. So, no harm no foul, right? Wrong: "as we cannot 'discern from the record whether the sentencing judge would have imposed the same sentence had he been departing from the [properly calculated] range,' we are required to remand." (alteration in Ekanem). Or, to put it in Gall terms, the district court's erroneous Guidelines calculation was a "significant procedural error" that prevented the court of appeals from being able to review the substantive reasonableness of the sentence, thus requiring remand.