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Media Alerts - United States v. Stinson - Third Circuit
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August 22, 2013
  United States v. Stinson - Third Circuit
Headline: Fraud enhancement under federal sentencing guidelines requires a showing that the funds defrauded came from a financial institution.

Area of Law: Federal Sentencing Guideline, Fraud Enhancement

Issue(s) Presented: Whether the District Court improperly applied a fraud enhancement under U.S.S.G. § 2B1.1(b)(15)(A) by failing to consider whether the petitioner specifically derived $1,000,000 or more from a financial institution through the fraud.

Brief Summary: Robert Stinson created a fake investment company and defrauded over 250 people of their retirement funds. Stinson also fraudulently induced two other financial institutions to refer clients to his scheme. Stinson pled guilty to his charges and the District Court sentenced him to 400 months of imprisonment and ordered him to make a restitution of $14,051,246. Stinson appealed his sentence on the grounds that the District Court erred in applying a fraud enhancement under U.S.S.G. § 2B1.1(b)(15)(A), arguing that the guideline allows enhancement only where more than $1,000,000 is derived from a financial institution. The Third Circuit remanded the case for resentencing.

Extended Summary: Robert Stinson pled guilty to a twenty-six count indictment that arose out of a fraud scheme that he operated from 2006 to 2010. Stinson created Life's Good S.T.A.B.L. Mortgage Fund, LLC ("Life's Good") and proceeded to defraud investors of their independent retirement accounts. Stinson promised investors a 16% return, when in reality, the fund made no money or investments. In addition, he used false information to convince Morningstar, an independent investment rating agency, to give Life's Good funds a favorable rating. Stinson also communicated with two independent financial advisory firms, Brentwood Financial ("Brentwood") and Total Wealth Management ("TWM"), in 2009. Both firms entered into agreements with Stinson to refer investors to Life's Good in exchange for referral fees.

Stinson was caught and pled guilty and the District Court ignored his plea for leniency. The Court compounded his sentencing points because of various fraud enhancements, including one that is at issue on appeal, an increase of two offense levels because "the defendant derived more than $1,000,000 in gross receipts from one or more financial institutions as a result of the offense." In total, Stinson was sentenced to 400 months of imprisonment and ordered to make a restitution of $14,051,246. Stinson appealed that the District Court erred in applying the statutory enhancement under U.S.S.G. § 2B1.1(b)(15)(A).

On appeal, Stinson argued that U.S.S.G. § 2B1.1(b)(15)(A) did not apply because the statute uses the term "derived." Stinson argued that the money he defrauded came from individuals, not financial institutions. The Third Circuit noted that the statute was amended in 2001. The pre-amendment statute stated there was grounds for enhancement "If the offense ... affected a financial institution and the defendant derived more than $1,000,000 in gross receipts from the offense." That statute was read to include even minimal impacts on financial institutions. The Court held that the 2001 amendments to the language altered the source that would trigger application of the enhancement. Before, a defendant need only have derived $1 million from the offense conduct. Now, however, the amount must be derived from a financial institution. Therefore, the Third Circuit held that the District Court erred in failing to consider whether the facts supported a finding that Stinson derived $1,000,000 from a financial institution through his fraud. The Court remanded the case for resentencing.

To read the full opinion, see http://www2.ca3.uscourts.gov/o...ch/122012p.pdf.


Panel: FUENTES, CHAGARES, and BARRY, Circuit Judges

Argument Date: March 20, 2013

Date of Issued Opinion: August 21, 2013

Docket Number: No. 12 - 2012

Decided: Remand for Resentencing

Case Alert Author: Tien Cheng

Counsel: Leigh M. Skipper, Brett G. Sweitzer, Keith M. Donoghue, Counsel for Appellant; Zane David Memeger, Robert A. Zauzmer, David L. Axelrod, Counsel for Appellee.

Author of Opinion: Judge Chagares

Circuit: Third Circuit

Case Alert Circuit Supervisor: Susan L. DeJarnatt

Edited: 08/22/2013 at 03:18 PM by Media Alerts Moderator

    Posted By: Susan DeJarnatt @ 08/22/2013 11:46 AM     3rd Circuit  

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