Criminal Practice – Scam “reloader” targeted vulnerable victims

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The district court did not err in applying a “vulnerable victim” sentencing enhancement to a defendant who worked at a fraudulent telemarketing center as a “reloader,” targeting individuals who had already fallen for the scheme at least once, in the hopes that they will fall for it again.

Background

From 2007 through February 2015, Appellant Darra Lee Shephard “participated in, and otherwise facilitated,” a sweepstakes telemarketing call center in Costa Rica for the purpose of defrauding U.S. residents by convincing them to pay money in order to claim a fake sweepstakes prize.

The call center required “openers” to call residents in the United States and inform them that they had won second prize in a sweepstakes. These “openers” — often falsely representing themselves as federal employees — would explain that in order to receive the prize money, the recipient must pay a “refundable insurance fee.”

Once someone fell prey to the scam and made an initial payment, a “loader” would call again and convince the victim to send more money. The “loader” would tell the victim that a mistake had been made and he had actually won first prize. Of course, the victim would first need to pay thousands of additional dollars to claim the larger prize. If the victim fell for the scheme again and made another payment, the “loader” would continuously raise the sweepstakes prize and ask for more money from the same victim. This process is known as “reloading.”

Shephard pleaded guilty to all 14 counts of her indictment and agreed to a written factual basis for her plea, which described the sweepstakes scheme and her involvement. The district court adopted the presentence report’s Sentencing Guidelines calculation, for a range of 151 to 188 months’ imprisonment. The court then varied downward to arrive at a sentence of 96 months’ imprisonment and $7.2 million in restitution.

Shephard appeals two sentencing enhancements: (1) a two-level enhancement because the offense involved vulnerable victims, and (2) an 18-level increase for a loss amount of more than $3.5 million but less than or equal to $9.5 million.

Vulnerable victim enhancement

The practice of “reloading” involves targeting people who have already fallen victim to a scheme at least once, if not repeatedly. Although the 4th Circuit has not yet addressed this question, other circuits have concluded that evidence of reloading may support the vulnerable-victim enhancement.

As those courts have explained, a victim’s decision to wire money in response to the initial fraudulent phone call is evidence that they are “particularly susceptible to the criminal conduct,” and that is why fraudsters then repeatedly target that victim through the process of “reloading.” The reloading process was thus sufficient to support a finding that the victims were unusually vulnerable and that the defendants targeted them because of their vulnerability.

This reasoning is sound and applies here. The record shows that the more experienced telemarketers in this fraudulent sweepstakes scheme, including Shephard, were specifically designated as “loaders.” The “loaders” called victims who had already fallen for the scheme and tried to get them to make additional payments. Shephard and her co-conspirators “would reload the victim as long as the victim was willing and able to continue to transfer funds,” and “many victims sent tens of thousands of dollars” in response to these calls. The individual victim impact statements attached to the presentence report further demonstrate that the victims were in fact unusually vulnerable.

Thus, there is no clear error in the district court’s determination that some victims were particularly vulnerable, and their vulnerability was why Shephard and her coconspirators purposefully targeted such victims again and again.

The district court here overruled Shephard’s objection to the vulnerable victim enhancement “based on responses from the government, consistent with my other rulings in other [related] call center cases that there were vulnerable victim enhancements were appropriate in the nature of how this fraud activity worked.” Although this explanation was terse, it was sufficient to satisfy this court’s review.

Actual losses

The district court also did not err in finding a loss amount of $7,215,695.

Shephard’s argument that the loss amount shouldn’t have included MoneyGram wire transfers, when only Western Union transfers were listed in the indictment, fails because her written statements clearly establish that MoneyGram transfers were part of the conspiracy.

In addition, even if she stopped working at the call center in December 2012, she stipulated that she participated in the conspiracy through February 2015. There is also no evidence that she acted to defeat or disavow the purposes of the conspiracy. Thus, losses through that date are properly included in the calculation.

Finally, no particularized findings that the MoneyGram transfers or post-2012 Western Union transfers were within the scope of the conspiracy were necessary because the face of the indictment and factual basis make clear that the conspiracy involved MoneyGram transfers and that Shephard was involved in the conspiracy through February 2015.

Affirmed.

Dissent

(Wynn, J.) I agree with the majority’s approach to calculating the loss amount in this case, and I join fully in that portion of the majority opinion. However, I disagree with the majority’s holding regarding the vulnerable victim enhancement. I do not believe the district court sufficiently explained its rationale for imposing that enhancement.

Our binding precedent in United States v. Llamas, 599 F.3d 381 (4th Cir. 2010), required the district court to identify at least one specific victim who served as the basis for applying the vulnerable victim enhancement and to explain why the defendant knew or should have known of that particular victim’s unusual vulnerability. The district court did not do so in this case. Therefore, I would vacate the sentence and remand her case for resentencing.

United States v. Shephard (Lawyers Weekly No. 001-103-18, 27 pp.) (Diza, J.) No. 17-4148; June 15, 2018; from WDNC at Charlotte (Conrad, J.) Chiege Ojugo Kalu Okwara for Appellant; Joanna Katherin Woodo Bowman for Appellee. 4th Cir.