On Appeal from the United States District Court for the District of Delaware; D.C. Criminal Action No. 89-00091.
Hutchinson, Nygaard and Rosenn, Circuit Judges.
Appellant Dennis Astorri pleaded guilty to one count of wire fraud and one count of income tax evasion. The district court imposed two concurrent 54-month terms of imprisonment and ordered Astorri to make restitution in the amount of $361,317.77. On appeal, Astorri claims that the district court misapplied the United States Sentencing Guidelines. Although we agree with much of the district court's disposition, we will remand for resentencing as to one aspect of the sentence discussed below in part V.
Dennis Astorri was a stockbroker who lived extravagantly. He rented an expensive apartment, leased a Porsche automobile, totally supported his girlfriend, and used cocaine frequently. His living habits were not supported by honest enterprise but by a fraudulent stockbrokerage scheme. Astorri promised tremendous returns to gullible investors and pocketed their investment money. He defrauded twelve individuals, including his girlfriend's parents, John and Elvira Kronyak. The Kronyaks lost their life savings of $119,311. They invested by taking a second mortgage on their home. To pay off the second mortgage, Mr. Kronyak, an electrician, will be forced to forego his planned early retirement and work as long as possible. Astorri's other victims fared no better.
Mark McCurnin lost $48,000 he received in settlement for an injury he sustained. Melvin and Linda Brown lost $1,800, saved for their children's education. George and Grace Taylor, retirees in poor health, lost $160,000. They raised their investment by selling inherited stock, cashing a $35,000 certificate of deposit, and withdrawing $10,000 from an individual retirement account. The Taylors mortgaged their house just to pay income taxes on the stock they sold.
Lynn and David Ross lost $7,200 which represented a large part of their life savings. Joseph and Audrey Needles, both nearly sixty, lost $15,000, raised by selling stock. Vincent Moscarelli, a self-employed horse trainer who earns only $18,000 a year, lost his life savings of $9,500.
Astorri executed his scheme by getting customers to invest in the stock or bond market through his stockbrokerage, First Securities of America. Initially, Astorri would legitimately invest his victims' funds. After a short period, he would inform them of a great investment opportunity with an attractive rate of return. Astorri would then deposit his investors' money into his personal bank accounts. Some of this money was invested, but most Astorri spent. To avoid making payments to his investors, and to cover up his scheme, he persuaded the victims to reinvest their "profits."
Astorri was charged with a number of crimes, but in return for his pleas of guilty to one count of wire fraud, 18 U.S.C. § 1343, and one count of income tax evasion, 26 U.S.C. § 7201, the government dropped charges of mail fraud, 18 U.S.C. § 1341; failure to file income tax returns, 26 U.S.C. § 7203; perjury, 18 U.S.C. § 1623; and fraud, 18 U.S.C. § 2314. When sentencing Astorri, the district court made the following upward adjustments to Astorri's base offense level of six: (1) seven levels for the amounts of money involved in the fraud; (2) two levels because more than one person was defrauded; (3) two levels for vulnerable victims; (4) two levels for using a stockbroker's special skill to perpetrate his scheme; (5) two levels for Astorri's income tax evasion conviction; (6) two levels for more than minimal planning; and (7) two levels for the extreme psychological injury inflicted upon Astorri's victims. The district court credited Astorri with a downward adjustment of two levels for accepting responsibility. The total offense level calculated by the district court was twenty-three, which creates a guideline sentencing range of between 46 and 57 months.
The first issue before us is whether Fed. R. Crim. P. 32 entitled Astorri to advance notice that the district court might make upward sentencing adjustments. Astorri argues he must be given an opportunity to prepare for the sentencing hearing. We conclude that Rule 32 does not entitle Astorri to advance notice.
Rule 32(a)(1) provides, in pertinent part: "At the sentencing hearing, the court shall afford counsel . . . an opportunity to comment upon the probation officer's determination and on other matters relating to the appropriate sentence." Fed. R. Crim. P. 32(a)(1). According to the Rule, the purpose of a sentencing hearing is to provide the government and the defendant with an opportunity to present evidence to help the court to decide, among other things, whether and how it will adjust offense levels. The district court met the procedural requirements of Rule 32 by affording Astorri an opportunity to voice his objections after it found section 3A1.1 applicable, but before making an upward adjustment. The court gave Astorri an opportunity to be heard. That is all Rule 32 requires. See United States v. Cervantes, 878 F.2d 50, 56 (2d Cir. 1989); cf. United States v. Burns, 893 F.2d 1343, 1348 (D.C. Cir.), cert. granted, 497 U.S. 1023, 110 S. Ct. 3270, 111 L. Ed. 2d 780 (1990) ("Since the defendant had an opportunity to address the court before sentencing during his allocution and has a right to appeal his sentence, he has not been harmed by the trial court's lack of notice.").
Next, we must decide if the district court erred by making a two-level upward adjustment on the grounds that Astorri's victims were vulnerable. U.S.S.G. § 3A1.1 provides:
If the defendant knew or should have known that the victim of the offense was unusually vulnerable due to age, physical or mental condition, or that the victim was particularly susceptible to the criminal conduct, increase by 2 levels.
The relevant Application Note provides:
This adjustment applies to offenses where an unusually vulnerable victim is made a target of criminal activity by the defendant. The adjustment would apply, for example, in a fraud case where the defendant marketed an ineffective cancer cure or in a robbery where the defendant selected a handicapped victim. But it would not apply in the case where the defendant sold fraudulent securities by mail to the general public and one of the victims happened to be senile.
U.S.S.G. § 3A1.1, Application Note 1.
Questions of whether a victim is "particularly susceptible to . . . criminal conduct" inherently involve factual determinations. Such determinations are made by the sentencing judge who has the best opportunity to see the defendant and the victims. United States v. Mejia-Orosco, 868 F.2d 807, 809 (5th Cir.), cert. denied, 492 U.S. 924, 109 S. Ct. 3257, 106 L. Ed. 2d 602 (1989). We review the district court's factual findings in this context for clear error. 18 U.S.C. § 3742(e).
We find the district court did not err when applying section 3A1.1. The district court made findings that Astorri's victims were vulnerable on two grounds: the investors' ages and lack of sophistication; and Astorri's victimization of his girlfriend's parents. Since we decide the district court correctly applied section 3A1.1 based upon the way Astorri exploited his girlfriend's parents, the Kronyaks, we need not decide whether the district court's enhancement for the victims' ages was correct. The district court found that the relationship between Astorri, his girlfriend and the Kronyaks, rendered the Kronyaks unusually susceptible to Astorri's persistent requests for more investment funds. Astorri even went so far as to promise to marry the Kronyaks' daughter in order to get additional money from them. It was not erroneous to find that because of the close relationship between Astorri and his girlfriend, her parents were vulnerable and "particularly susceptible" to his fraudulent investment scheme. That finding provides a sufficient basis to enhance Astorri's offense level under section 3A1.1.
The next issue is whether the district court erred by enhancing Astorri's base offense level for his tax evasion conviction. The court gave alternate grounds for its two level enhancement. First, the court concluded that if Astorri's wire fraud and tax evasion convictions are grouped together under section 3D1.2, then the specific offense characteristic of the tax evasion offense would increase the offense level by two because Astorri evaded taxes due on money generated by a criminal activity. In the alternative, the district court reasoned that if the two offenses were not grouped together because they involved different victims, the court could nonetheless enhance the fraud conviction base offense level under section 3D1.4(a).
Exercising plenary review of the district court's construction and application of the guidelines, 18 U.S.C. § 3742(e), we will affirm the district court's alternative enhancement under section 3D1.4(a). ...