United States District Court, Eastern District of North Carolina, Eastern Division
LOUISE W. FLANAGAN United States District Judge
This matter comes before the court in furtherance of oral rulings made on defendant’s objections to her offense conduct level calculation at time of sentencing December 9, 2014.
On June 12, 2014, defendant pleaded guilty, pursuant to a written plea agreement, to a one count criminal information, wherein she was charged with mail fraud in violation of 18 U.S.C. § 1341. The United States Probation Office calculated defendant’s criminal history category as level I and her offense level as 32. Based on the foregoing calculations, the advisory United States Sentencing Guidelines recommended a term of imprisonment of 121-151 months.
As pertinent here, beginning in or around 2005, defendant, then the chief financial officer of her family’s now-defunct business, East Carolina Equipment Company (“ECE”), began using the names and social security numbers of family members and ECE customers to open fraudulent lines of credit with Kubota Credit Corporation (“KCC”). KCC, a captive financing company, is a wholly owned subsidiary of Kubota Tractor Corporation and provides financing for such tractors, parts, and other farm equipment.
ECE was an authorized retailer of Kubota tractors. KCC loaned money to purchasers of Kubota equipment from authorized retailers. In particular, KCC allowed borrowers to obtain financing through use of Retail Installment Contracts (“RIC”). An RIC operates much like a credit card. ECE customers would apply for an RIC and, if approved, would be extended a line of credit on which they could make purchases of Kubota equipment. ECE collected the borrower’s initial information and forwarded that information to KCC. KCC would then approve or deny the application, and ECE would become the initial lender on the loan. Thereafter, KCC purchased the loans from ECE.
In her position as ECE’s chief financial officer, defendant had access to the names and social security numbers of ECE customers who previously had applied for an RIC. Over the span of four years, defendant created a sophisticated fraud scheme affecting not only KCC but one other financial institution and sixty-three individual victims. In large part, the scheme involved opening an accounts in existing customers’ names and submitting fraudulent invoices to KCC for parts not sold or services not rendered. Occasionally, defendant would submit an invoice to KCC, receive payment on behalf of ECE, and subsequently cancel the original invoice as being sent “in error.” However, defendant thereafter would resubmit the invoice, causing KCC to pay ECE twice for the same fraudulent transaction.
Defendant went to great lengths to conceal her fraud. Defendant made payments on fraudulent RICs in an attempt to defray KCC’s attention. The fraud operated similarly to a Ponzi scheme, each time payment was due on a fraudulently establish RIC, defendant would use money obtained from another RIC to satisfy the debt. Additionally, defendant took steps to prevent her victims from learning of the RICs opened in their names. After opening a United States Post Office box, defendant changed the address associated with each account to the P.O. box. As a result, all correspondence regarding the RICs was routed through defendant’s P.O. box rather than to individual victims. Defendant intended to cause KCC a loss of $1, 726, 772.06.
During the same four year span, defendant also used the name and social security number of an ECE customer to defraud Wells Fargo Bank (“Wells Fargo”). Defendant submitted a loan application to Wells Fargo using a fraudulently obtained identity, which was approved. Through defendant’s actions, Wells Fargo suffered a loss of $86, 136.55.
Defendant objects to her offense conduct level calculation on four grounds. The court addresses each of these objections in turn.
A. Abuse of a Position of Trust
Defendant contends a two level enhancement for abuse of a position of trust (the “Trust adjustment”), under U.S.S.G. § 3B1.3, constituted impermissible double counting as the conduct punished by the Trust adjustment is already covered by a four-level enhancement for an offense involving “50 or more victims but less than 250" under U.S.S.G. § 2B.1(b)(2)(B). The Trust adjustment may not be applied if another enhancement punishes the relevant aspect of defendant’s conduct. Id. § 3B1.3.
Defendant’s offense affected more than 50 victims. Under the sentencing guidelines, “victim” means “any person who sustained any part of the actual loss” caused by the offense. U.S.S.G. § 2B1.1 n.1. In addition, where “means of identification” are involved, “victim” also includes “any individual whose means of identification was used unlawfully or without authority.” Id. at n.4(E). A “means of identification” is any name or number that may be used, alone or in conjunction with any other information, to identify a specific individual. 18 U.S.C. § 1028(d)(7).
In the instant case, KCC and Wells Fargo properly are considered victims because they shared the “actual loss” caused by defendant’s conduct. Additionally, the 66 individuals whose names and Social Security numbers fraudulently were used by defendant to obtain loans are ...