Case 1:15-cr-00058-CMA Document 128 Filed 11/17/16 USDC Colorado Page 1 of 9

 

 
 

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Criminal Case No. 15-cr-00058-CMA-1
UNITED STATES OF AMERICA,
Plaintiff,
v.
1. MICHAEL TODD OSBORN,
Defendant.
 

Government’s Memorandum Regarding the U.S.S.G. §3B1.1(c)
Role in Offense Adjustment
 

 

The United States of America hereby submits this memorandum in support of
its position that the §3B1.1(c) 2-level aggravating role adjustment applies in this case.
1. The government’s calculation of the guidelines sentence tracks its position as set

forth in the Plea Agreement. Doc. #76 at 12-16. In sum, the government’s position is that
the defendant’s adjusted offense level is 25 and criminal history category is III, resulting
in an advisory guidelines range of 70-87 months’ incarceration.
2. The government’s guideline calculation includes a 2-level enhancement pursuant
to §3B1.1(c), based on the fact that Defendant Osborn was an organizer, leader,
manager, and/or supervisor in connection with his violation of 18 U.S.C. §1957, Willfully
Causing Another to Engage in a Monetary Transaction in Property Derived from Specified
Unlawful Activity.
3. In the Plea Agreement, the government left open the possibility that additional
evidence could be discovered prior to sentencing that would render this adjustment
inapplicable. Doc.# 76 at 13-14. Since that evidence has not surfaced, the government’s

 

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position remains the same — the adjustment applies.
4. In its April 19, 2016 Presentence Investigation Report (“PSR”), the probation
department took the position that the §3B1.1(c) 2-level adjustment applies, but for
reasons other than those set forth by the government in the Plea Agreement. Doc. #86 at
Para. 43. In its May 6, 2016 Response to Presentence Investigation Report, the
government reiterated that its basis for seeking the adjustment was that “Defendant
Osborn was an organizer, leader, manager, or supervisor as to the co-defendant in
connection with the violation of 18 U.S.C. §1957.” Doc. #90 at 2.
5. However, in the same response, the government also stated:
The probation department’s analysis also appears to be correct:
Although the defendant’s intermediaries, (Quinn, Geisler, and Hruska)
were not “criminally responsible” for the commission of the wire fraud
offenses, and thus not “participants” under U.S.S.G. §3B1.1(a) or (b),
§3B1.1(c) does not require the involvement of “participants.”
Id. The government now realizes that this statement is incorrect and therefore retracts it.
It is clear from the commentary to §3B1.1 that “[t]o qualify for an adjustment under this
section, the defendant must have been the organizer, leader, manager, or supervisor of
one or more other participants,” U.S.S.G. §3B1.1, Appl. Note 2, and that a “participant” is
a person who is criminally responsible for the commission of the offense, even if not
convicted. U.S.S.G. §3B1.1 Appl. Note 1.
6. Thus, the government now recognizes that the probation department’s analysis
set forth in the PSR, Doc.# 86 at Para. 43, was misguided, as was the undersigned’s prior
endorsement of it. Doc.# 90 at 2. The aggravating role adjustment does not apply to
Mr. Osborn based on his interactions with the intermediaries in his wire fraud scheme,
because those individuals (Mr. Hruska, Mr. Quinn, and Mr. Geisler) were not criminally


 

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responsible for the commission of the wire fraud offense, and therefore not “participants”
under §3B1.1. The defendant took this position in his Objections to the Presentence
Report in Part 1 of his analysis stating, “Neither Quinn, Geisler, nor Hruska were
‘participants’ in the offense.” Doc. #91 at 3-4. He is correct as to that part of his analysis.
7. The only other “participant” for the purpose of determining a §3B1.1(c)
enhancement in either of the offenses to which Defendant Osborn has pled guilty is Codefendant Corey Engelen. Mr. Engelen has now admitted his guilt as to Count 13 of the
Indictment, Engaging in a Monetary Transaction in Property Derived from Specified
Unlawful Activity, a violation of 18 U.S.C. §1957. Doc.# 119. Mr. Osborn has admitted
his guilt to its counterpart, Count 10, Willfully Causing Another to Engage in a Monetary
Transaction in Property Derived from Specified Unlawful Activity, a violation of 18 U.S.C.
§§ 1957 and 2(b). Doc.# 76. It is in connection with this offense that the §3B1.1(c) role
adjustment applies. It follows that the adjustment must be determined based on the
money laundering offense, and not on the underlying offense from which the laundered
funds were derived. §2S1.1, Appl. Note 2(C). The probation report did not address this
conduct it its discussion of the §3B1.1(c) enhancement.
8. Mr. Osborn’s position that Mr. Engelen has not been shown to be a criminallyresponsible “participant”, Doc.# 91 at 6, can no longer stand because Mr. Engelen has
admitted his guilt in open court. The defendant’s only remaining objection is that there is
insufficient evidence to support the 2-point adjustment. Doc.#91 at 6-7. The government
disagrees.


 

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9. For the §3B1.1(c) adjustment to apply in this context, the government must
establish by a preponderance of the evidence that Defendant Osborn was an organizer,
leader, manager, or supervisor in connection with the criminal money laundering activity
carried out by Defendants Engelen and Osborn. United States v. Ramos, 695 F.3d 1035,
1039 (10th Cir. 2012) (preponderance of evidence standard). Under §3B1.1(c), the
criminal activity need not involve more than one other participant, nor need it be
“otherwise extensive”. §3B1.1 and §3B1.1 Appl. Note 2. In determining whether a
§3B1.1(c) adjustment applies, the Court is permitted to draw reasonable inferences from
circumstantial evidence. United States v. Brown, 298 F.3d 120, 123 (1st Cir.2002). The
government must show either that the defendant exercised some degree of control over
another who was involved in the commission of the offense, or that he was responsible
for organizing it. United States v. Valdez-Arieta, 127 F.3d 1267, 1270-71 (10th Cir. 1997).
Thus, it has been held that the key determinants of the applicability of §3B1.1 are control
or organization. Id.
10. Qualifying as a leader, manager, or supervisor requires a showing of some
element of control. United States v. Wardell, 591 F.3d 1279, 1304 (10th Cir. 2009); United
States v. Valdez-Arieta, 127 F.3d at 1270. The term “leader” implies the exercise of some
degree of dominance or power in a hierarchy, and also implies the authority to ensure
that the other participant will heed the leader’s commands. United States v. Wardell, 591
F.3d at 1304. As is made apparent by the structure of §3B1.1, managers and supervisors
occupy somewhat lesser roles than do leaders. (Compare §3B1.1(a) and §3B1.1(b). See
also §3B1.1 Appl. Note 4, “In distinguishing a leadership and organizational role from one
of mere management and supervision,” certain listed factors should be considered


 

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(emphasis added)1. In this case, however, since the adjustment being sought falls under
§3B1.1(c), a finding that any one of the four roles, including the lesser roles of manager
or supervisor would suffice. A defendant may properly be considered a supervisor if he
supervised another’s activities by directing him on what to do and how to do it, United
States v. Are, 590 F.3d 499, 518 (7th Cir. 2009), a manager/supervisor if he gave
instructions to or ordered and directed the participant’s conduct, United States v.
Gonzalez Edeza, 359 F.3d 1246, 1249 (10th Cir. 2004), or a manager or supervisor if he
exercised some degree of control over even one other person involved in the offense.
United States v. Al-Sadawi, 432 F.3d 419, 426-27 (2nd Cir. 2005).
11. Mr. Osborn qualifies for the §3B1.1(c) adjustment as a leader, manager, and/or
supervisor. He has pled guilty to willfully causing Mr. Engelen to engage in the monetary
transaction identified in Count 10. Doc. #76 at 5. Mr. Engelen has pled guilty to engaging
in the same transaction. Doc. #119, Doc. #3 at 6. By willfully causing Mr. Engelen to
perform the monetary transaction described in Counts 10 and 13, Mr. Osborn was
exercising the requisite degree of control over another participant in the offense.
12. Defendant Osborn controlled the timing and the amounts of investors’ funds being
deposited to the Infinite One account by directing his investors to wire their money directly
to the Infinite One account. Doc. #76 at 9-10. He controlled the balance in the Infinite
One account which made the transfer to Dream Motor Cars on June 2, 2010 possible.
Doc. #76 at 12. In addition, Mr. Engelen would not have known to whom, in what precise
amount, and when to transfer the funds for Osborn’s benefit but for Mr. Osborn’s giving

                                                            
1

 The issue in United States v. Sallis, 533 F.3d 1218 (10th Cir. 2008), upon which the defendant relies, was whether  
   the defendant qualified for the §3B1.1(a) enhancement as a leader or organizer, which he did.  The same facts  
   need not necessarily be present to support a lesser role of manager or supervisor. 


 

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him direction. These directions occurred in the greater context of Mr. Engelen being
aware that the funds had been unlawfully obtained by Osborn, such that Mr. Engelen was
willing to follow Mr. Osborn’s directions in order to be compensated. Mr. Osborn in fact
did compensate Mr. Engelen by permitting him to use a portion of the investors’ funds
that had been wired to the Infinite One account on June 1 and June 2, 2010 for Mr.
Engelen’s and his family’s personal benefit.
13. The §3B1.1(c) leadership role enhancement has been upheld in connection with
money laundering crimes. In United States v. Szur, 289 F.3d 200, 218-219 (2nd Cir. 2002),
the defendant was responsible for instructing the other participants as to how and to which
account the transfers were to be made. This evidence was found sufficient to support the
District Court’s finding that the defendant was the leader of the charged money laundering
activity. Id. Similarly, in United States v. Hetherington, 256 F.3d 788, 796-97 (8th Cir.
2001), the §3B1.1(c) role enhancement was upheld in connection with a violation of
18 U.S.C. §1957. In that case, the court found that the defendant acted as a supervisor
when he directed her to wire-transfer $15,000 to him.

Id.

The facts in Szur and

Hetherington are analogous to the facts of this case. The facts in United States v. Reed,
602 Fed. Appx. 43 (10th Cir. 2015) (unpublished), relied upon by the defendant, are
distinguishable in that the defendant in Reed pled guilty to a conspiracy, unlike the
defendant here.
14. While the adjustment for acting as a leader, manager, or supervisor requires
having some degree of control, the adjustment for acting as an organizer of an illegal
activity does not. United States v. Valdez-Arieta, 127 F.3d at 1270. Thus, the fact that
the other participant may even have been a co-partner rather than a subordinate of the


 

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defendant does not preclude an enhancement as an organizer under §3B1.1(c). Id. An
organizer arranges people engaged in separate activities into an orderly operation, but
need not have hierarchical control over the other participants. Id. at 1272. “The key to
determining whether a defendant qualifies as an organizer is not direct control but relative
responsibility.” United States v. Wardell, supra, citing United States v. Tejada-Beltran, 50
F.3d 105, 112 (1st Cir. 1995). See also United States v. Brown, 315 F.3d 929, 932 (8th
Cir. 2003)(role as organizer upheld where defendant recruited another’s assistance in
advance and then compensated him for his assistance).
15. Mr. Osborn also qualifies for the §3B1.1(c) adjustment as an organizer. He could
have committed his violation of §1957 without involving Mr. Engelen. He could have
simply instructed the investors to send their funds to an account over which he had
control, then wire-transferred those funds to purchase his Mercedes on June 2. He chose
not to commit the money laundering offense that way. He chose to organize the offense
in a way that involved another participant, Corey Engelen. That conduct is the basis of
the 2-level enhancement for his role as organizer. It aggravates his offense. The fact that
the organization of the crime was not complex does not alter the fact that it required
organization on Defendant Osborn’s part.
16. The defendant’s stated position is that the “simple act” of requesting that a
participant in a criminal offense transfer money from one account to another is not
sufficient to warrant an increase in the guidelines for an aggravated role in the money
laundering offense. Although he makes the same argument numerous times, he cites no
authority for it. Doc. #91 at 6-7. The fact that the defendant directed Mr. Engelen to
perform a simple act or organized the participants’ activities necessary to successfully


 

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complete the offense in a relatively simple way does not render him exempt from
occupying an aggravated role in the offense, particularly in connection with a violation of
18 U.S.C. §1957, in which the actus reas of the offense is simply “engaging in a monetary
transaction”. A monetary transaction can be as simple as a deposit, withdrawal, or
transfer of funds. 18 U.S.C. §1957 (f)(1). The knowing transfer of criminally derived funds
is the essence of the crime. The government is not seeking the 3-or 4- level enhancement
under §3D1.1(a) or (b), but rather the lowest level enhancement that applies, the 2-level
enhancement pursuant to §3B1.1(c).
17. The issue is not whether the other participant’s involvement in the crime was a
simple act, or whether the direction given to the other participant was simple, or whether
the organizational structure of the 2-participant crime was simple. The issue is whether
the defendant exercised some degree of control over the other person involved in the
commission of the crime, or was responsible for organizing the crime in a way that
included another participant to ensure its success. In this case, both scenarios apply, as
does the 2-level upward adjustment.
Respectfully submitted,

 
ROBERT C. TROYER
Acting United States Attorney
 

 
 
 

By: s/ Linda Kaufman
Linda Kaufman
Assistant United States Attorney
1225 Seventeenth Street, Suite 700
Denver, Colorado 80202
Telephone: (303) 454-0100
Facsimile: (303) 454-0404
E-mail: Linda.Kaufman@usdoj.gov

 

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s/ J. Bishop Grewell
J. Bishop Grewell
Assistant United States Attorney
1225 Seventeenth Street, Suite 700
Denver, Colorado 80202
Telephone: (303) 454-0100
Fax: (303) 454-0402
Email: Bishop.Grewell@usdoj.gov
 
 
 
 
 
 

CERTIFICATE OF SERVICE

 
I certify that on this 17th day of November, 2016, I electronically filed the
foregoing with the Clerk of the Court using the CM/ECF system which will send
notification of such filing to any and all counsel of record.
 
 
 

Mr. Matthew Belcher
Matthew_Belcher@fd.org
Mr. Jeffrey Pagliuca
jpagliuca@hmflaw.com
 

 

By: s/Maggie Grenvik
MAGGIE GRENVIK
Legal Assistant
United States Attorney’s Office
1225 - 17th Street, Suite 700
Denver, CO 80202
Telephone: (303) 454-0154
Fax: (303) 454-0402
e-mail: maggie.grenvik@usdoj.gov