19 October 1998
Source: http://www.access.gpo.gov/su_docs/aces/aaces002.html

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[Federal Register: October 19, 1998 (Volume 63, Number 201)]
[Notices]
[Page 55912-55914]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19oc98-100]

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UNITED STATES SENTENCING COMMISSION


Sentencing Guidelines for United States Courts

AGENCY: United States Sentencing Commission.

ACTION: Notice of (1) promulgation of temporary, ``emergency''
guideline amendment increasing the penalties for (A) fraud offenses
involving sophisticated means; and (B) offenses involving a large
number of vulnerable victims; and (2) final action regarding amendments
to sentencing guidelines and policy statements effective November 1,
1998.

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SUMMARY: The United States Sentencing Commission hereby gives notice of
the following actions: (1) Pursuant to the Telemarketing Fraud
Prevention Act of 1998, Pub. L. 105-184, the Commission has promulgated
temporary, emergency amendments to Secs. 2F1.1 (Fraud and Deceit) and
3A1.1 (Hate Crime Motivation and Vulnerable Victim) and accompanying
commentary; (2) pursuant to its authority under 28 U.S.C. 994(a) and
(p), the Commission has promulgated amendments to commentary and the
statutory index.

SUPPLEMENTARY INFORMATION: The Telemarketing Fraud Prevention Act of
1998 directed the Commission generally to provide for substantially
increased penalties for persons convicted of an offense described in
section 2326 of title 18, United States Code, in connection with the
conduct of telemarketing fraud. The temporary, emergency amendments set
forth in this notice implement this general directive in a broader form
and also respond to a number of specific requirements in the Act.

DATES: The Commission has specified an effective date of November 1,
1998 for the emergency amendments increasing the penalties for fraud
offenses involving sophisticated means and offenses involving a large
number of vulnerable victims, and the amendments to the commentary and
the statutory index.

FOR FURTHER INFORMATION CONTACT: Michael Courlander, Public Affairs
Officer, Telephone: (202) 273-4590.

    Authority: 28 U.S.C. 994(a) and (p).
Richard P. Conaboy,
Chairman.

    1. Amendment: Section 2F1.1(b) is amended by striking subdivision
(3) and all that follows through the end of the subsection and
inserting the following:
    ``(3) If the offense was committed through mass-marketing, increase
by 2 levels.
    (4) If the offense involved (A) a misrepresentation that the
defendant was acting on behalf of a charitable, educational, religious
or political organization, or a government agency; or (B) violation of
any judicial or administrative order, injunction, decree, or process
not addressed elsewhere in the guidelines, increase by 2 levels. If the
resulting offense level is less than level 10, increase to level 10.
    (5) If (A) the defendant relocated, or participated in relocating,
a fraudulent scheme to another jurisdiction to evade law enforcement or
regulatory officials; (B) a substantial part of a fraudulent scheme was
committed from outside the United States; or (C) the offense otherwise
involved sophisticated means, increase by 2 levels. If the resulting
offense level is less than level 12, increase to level 12.
    (6) If the offense involved (A) the conscious or reckless risk of
serious bodily injury; or (B) possession of a dangerous weapon
(including a firearm) in connection with the offense, increase by 2
levels. If the resulting offense level is less than level 13, increase
to level 13.
    (7) If the offense--
    (A) Substantially jeopardized the safety and soundness of a
financial institution; or
    (B) Affected a financial institution and the defendant derived more
than $1,000,000 in gross receipts from the offense, increase by 4
levels. If the resulting offense level is less than level 24, increase
to level 24''.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is
amended by striking Application Note 14 and all that follows through
the end of the Application Notes and inserting the following:
    ``15. For purposes of subsection (b)(5)(B), `United States' means
each of the 50 states, the District of Columbia, the Commonwealth of
Puerto Rico, the United States Virgin Islands, Guam, the Northern
Mariana Islands, and American Samoa.
    For purposes of subsection (b)(5)(C), `sophisticated means' means
especially complex or especially intricate offense conduct pertaining
to the execution or concealment of an offense. For example, in a
telemarketing scheme, locating the main office of the scheme in one
jurisdiction but locating soliciting operations in another jurisdiction
would ordinarily indicate sophisticated means. Conduct such as hiding
assets or transactions, or both, through the use of fictitious
entities, corporate shells, or offshore bank accounts also ordinarily
would indicate sophisticated means.
    The enhancement for sophisticated means under subsection (b)(5)(C)
requires conduct that is significantly more complex or intricate than
the conduct that may form the basis for an enhancement for more than
minimal planning under subsection (b)(2)(A).
    If the conduct that forms the basis for an enhancement under
subsection (b)(5) is the only conduct that forms the basis for an
adjustment under Sec. 3C1.1 (Obstruction of Justice), do not apply an
adjustment under Sec. 3C1.1.
    16. `Financial institution,' as used in this guideline, is defined
to include any institution described in 18 U.S.C. 20, 656, 657, 1005-
1007, and 1014; any state or foreign bank, trust company, credit union,
insurance company, investment company, mutual fund, savings (building
and loan) association, union or employee pension fund; any health,
medical or hospital insurance association; brokers and dealers
registered, or required to be registered, with the Securities and
Exchange Commission; futures commodity merchants and commodity pool
operators registered, or required to be registered, with the Commodity
Futures Trading Commission; and any similar entity, whether or not
insured by the federal government. `Union or employee pension fund' and
`any health, medical, or hospital insurance association,' as used
above, primarily include large pension funds that serve many
individuals (e.g., pension funds of large national and international

[[Page 55913]]

organizations, unions, and corporations doing substantial interstate
business), and associations that undertake to provide pension,
disability, or other benefits (e.g., medical or hospitalization
insurance) to large numbers of persons.
    17. An offense shall be deemed to have `substantially jeopardized
the safety and soundness of a financial institution' if, as a
consequence of the offense, the institution became insolvent;
substantially reduced benefits to pensioners or insureds; was unable on
demand to refund fully any deposit, payment, or investment; was so
depleted of its assets as to be forced to merge with another
institution in order to continue active operations; or was placed in
substantial jeopardy of any of the above.
    18. `The defendant derived more than $1,000,000 in gross receipts
from the offense,' as used in subsection (b)(7)(B), generally means
that the gross receipts to the defendant individually, rather than to
all participants, exceeded $1,000,000. `Gross receipts from the
offense' includes all property, real or personal, tangible or
intangible, which is obtained directly or indirectly as a result of
such offense. See 18 U.S.C. 982(a)(4).
    19. If the defendant is convicted under 18 U.S.C. 225 (relating to
a continuing financial crimes enterprise), the offense level is that
applicable to the underlying series of offenses comprising the
`continuing financial crimes enterprise.'
    20. If subsection (b)(7)(A) or (B) applies, there shall be a
rebuttable presumption that the offense involved `more than minimal
planning.' ''.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is
amended by redesignating Notes 3 through 13 as Notes 4 through 14,
respectively; and by inserting after Note 2 the following new Note 3:
    ``3. `Mass-marketing,' as used in subsection (b)(3), means a plan,
program, promotion, or campaign that is conducted through solicitation
by telephone, mail, the Internet, or other means to induce a large
number of persons to (A) purchase goods or services; (B) participate in
a contest or sweepstakes; or (C) invest for financial profit. The
enhancement would apply, for example, if the defendant conducted or
participated in a telemarketing campaign that solicited a large number
of individuals to purchase fraudulent life insurance policies.''.
    The Commentary to Sec. 2F1.1 captioned ``Application Notes'' is
amended in Note 1 by striking ``Sec. 2F1.1(b)(3)'' and inserting
``Sec. 2F1.1(b)(4)''; in redesignated Note 5 (formerly Note 4), by
striking ``(b)(3)(A)'' and inserting ``(b)(4)(A)''; and in redesignated
Note 6 (formerly Note 5), by striking ``(b)(3)(B)'' and inserting
``(b)(4)(B)''.
    The Commentary to Sec. 2F1.1 captioned ``Background'' is amended by
inserting after the fifth paragraph the following new paragraph:
    ``Subsection (b)(5) implements, in a broader form, the instruction
to the Commission in section 6(c)(2) of Public Law 105-184.''.
    Section 3A1.1(b) is amended to read as follows:
    ``(b)(1) If the defendant knew or should have known that a victim
of the offense was a vulnerable victim, increase by 2 levels.
    (2) If (A) subdivision (1) applies; and (B) the offense involved a
large number of vulnerable victims, increase the offense level
determined under subdivision (1) by 2 additional levels.''.
    The Commentary to Sec. 3A1.1 captioned ``Application Notes'' is
amended in Note 2 in the first paragraph by striking ` ``victim''
includes any person'' before ``who is'' and inserting ``'vulnerable
victim'' means a person (A)''; and by inserting after ``(Relevant
Conduct)'' the following:
    ``; and (B) who is unusually vulnerable due to age, physical or
mental condition, or who is otherwise particularly susceptible to the
criminal conduct''.
    The Commentary to Sec. 3A1.1 captioned ``Application Notes'' is
amended in Note 2 in the second paragraph by striking ``where'' each
place it appears and inserting ``in which''.
    The Commentary to Sec. 3A1.1 captioned ``Application Notes'' is
amended in Note 2 in the third paragraph by striking ``offense
guideline specifically incorporates this factor'' and inserting
``factor that makes the person a vulnerable victim is incorporated in
the offense guideline''.
    The Commentary to Sec. 3A1.1 captioned ``Background'' is amended by
adding at the end the following additional paragraph:
    ``Subsection (b)(2) implements, in a broader form, the instruction
to the Commission in section 6(c)(3) of Public Law 105-184.''.
    The Commentary to Sec. 2B5.1 captioned ``Application Notes'' is
amended in Note 1 by inserting ``United States'' before ``Virgin
Islands''.
    Reason for Amendment: This amendment implements, in a broader form,
the directives to the Commission in section 6 of the Telemarketing
Fraud Prevention Act of 1998, Pub. L. 105-184 (the ``Act'').
    The Act directs the Commission to provide for ``substantially
increased penalties'' for telemarketing frauds. It also more
specifically requires that the guidelines provide ``an additional
appropriate sentencing enhancement, if the offense involved
sophisticated means, including but not limited to sophisticated
concealment efforts, such as perpetrating the offense from outside the
United States,'' and ``an additional appropriate sentencing enhancement
for cases in which a large number of vulnerable victims, including but
not limited to [telemarketing fraud victims over age 55], are affected
by a fraudulent scheme or schemes.''
    This amendment responds to the directives by building upon the
amendments to the fraud guideline, Sec. 2F1.1, that were submitted to
Congress on May 1, 1998. (See Amendment #2 in the Report of the
Commission entitled ``Amendments to the Sentencing Guidelines'' and
submitted to Congress on May 1, 1998.) Those amendments added a
specific offense characteristic for ``mass-marketing,'' which is
defined to include telemarketing, and a specific offense characteristic
for sophisticated concealment.
    This amendment broadens the ``sophisticated concealment''
enhancement to cover ``sophisticated means'' of executing or concealing
a fraud offense. In addition, the amendment increases the enhancement
under the vulnerable victim guideline, Sec. 3A1.1, for offenses that
impact a large number of vulnerable victims.
    This amendment also makes a conforming amendment to Sec. 2B5.1 in
the definition of ``United States''.
    In designing enhancements that may apply more broadly than the
Act's above-stated directives minimally require, the Commission acts
consistently with other directives in the Act (e.g., section 6(c)(4)
(requiring the Commission to ensure that its implementing amendments
are reasonably consistent with other relevant directives to the
Commission and other parts of the sentencing guidelines)) and with its
basic mandate in sections 991 and 994 of title 28, United States Code
(e.g., 28 U.S.C. 991(b)(1)(B) (requiring sentencing policies that avoid
unwarranted disparities among similarly situated defendants)).
    2. Amendment: The Commentary to Sec. 2C1.4 captioned ``Background''
is amended by striking the last sentence.
    The Commentary to Sec. 2J1.1 captioned ``Application Notes'' is
amended in Note 2 in the third sentence by inserting ``(a)(1) and to
any offense under 18 U.S.C. 228(a)(2) and (3)'' after ``228''; and in
the fourth sentence by inserting ``(a)(1)'' after ``228''.

[[Page 55914]]

    Reason for Amendment: This is a two-part amendment. First, this
amendment updates and corrects the background commentary of Sec. 2C1.4,
the guideline that covers offenses involving unlawful compensation for
federal employees and bank officials. Currently, the background
commentary states that 18 U.S.C. 209 (involving the unlawful
supplementation of the salary of various federal employees) and 18
U.S.C. 1909 (prohibiting bank examiners from performing any service for
compensation for banks or bank officials) both are misdemeanors for
which the maximum term of imprisonment is one year. In fact, however,
as a result of enacted legislation, the maximum term of imprisonment
for violations of 18 U.S.C. 209 is now five years if the conduct is
willful. The amendment deletes the sentence of the commentary that
describes the maximum term of imprisonment for these offenses.
    Second, this amendment amends the commentary in the contempt
guideline, Sec. 2J1.1, pertaining to offenses under 18 U.S.C. 228
involving the willful failure to pay court-ordered child support. The
commentary notes that the contempt guideline applies to second and
subsequent offenses under 18 U.S.C. 228 because a first offense is a
Class B misdemeanor not covered by the guidelines.
    However, in the Deadbeat Parents Punishment Act of 1998, Pub. L.
105-187, Congress amended 18 U.S.C. 228 to add two new violations of
that section (found at 18 U.S.C. 228(a)(2) and (3)) and to make even
the first offense under those new violations a felony that would be
subject to the guidelines. Accordingly, the commentary in the contempt
guideline is amended to reflect that it is only the first offense under
a violation of 18 U.S.C. 228(a)(1) that is not covered by the
guideline.
    3. Amendment: Appendix A (Statutory Index) is amended in the line
referenced to ``18 U.S.C. 924(i)'' by striking `` 2A1.1, 2A1.2'' and
inserting ``2K2.1'';

by striking:
  ``18 U.S.C. 924(j)-(n)...............  2K2.1'',
and inserting:
  ``18 U.S.C. 924(j)(1)................  2A1.1, 2A1.2'',
  ``18 U.S.C. 924(j)(2)................  2A1.3, 2A1.4'',
  ``18 U.S.C. 924(k)-(o)...............  2K2.1'';
and by inserting, after the line referenced to ``18 U.S.C. 2252'' the
 following new line:
  ``18 U.S.C. 2252A....................  2G2.2, 2G2.4''.

    Reason for Amendment: This amendment updates the Statutory Index by
adding a reference to a recently created offense (pertaining to the use
of a computer to commit certain child pornography offenses) and by
correcting the references to a number of firearms offenses in response
to congressional redesignations of those offenses.
    Specifically, Congress recently enacted 18 U.S.C. 2252A, which
makes it unlawful to traffic in, receive, or possess child pornography,
including by computer. The amendment references this offense to
Sec. 2G2.2 (trafficking in child pornography) and Sec. 2G2.4
(possession of child pornography).
    In addition, in the Violent Crime Control and Law Enforcement Act
of 1994, Pub. L. 103-322, and the Economic Espionage Act of 1996, Pub.
L. 104-294, Congress redesignated a number of firearms provisions in 18
U.S.C. 924. The amendment changes the references in the Statutory Index
to a number of these offenses in response to the congressional
redesignations.

[FR Doc. 98-27982 Filed 10-16-98; 8:45 am]
BILLING CODE 2210-40-P
