United States v. Thomas Tanke

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, No. 12-10362

Plaintiff-Appellee,

D.C. No.

v. 2:09-cr-00293-EJG-1

THOMAS TANKE,

Defendant-Appellant. OPINION

Appeal from the United States District Court

for the Eastern District of California

Edward J. Garcia, Senior District Judge, Presiding

Argued and Submitted

September 10, 2013—San Francisco, California

Filed March 3, 2014

Before: J. Clifford Wallace, Raymond C. Fisher,

and Marsha S. Berzon, Circuit Judges.

Opinion by Judge Fisher;

Concurrence by Judge Wallace

2 UNITED STATES V. TANKE

SUMMARY*

Criminal Law

Affirming in part and vacating in part the district court’s

judgment, the panel held that mailings sent to avoid detection

or responsibility for a fraudulent scheme fall within the mail

fraud statute, 18 U.S.C. § 1341, when they are sent prior to

the scheme’s completion and that, to determine when a

scheme is completed, the court looks to the scope of the

scheme as devised by the perpetrator.

The panel affirmed the defendant’s mail fraud conviction

on count 2 of the indictment because a reasonable jury could

have found that the defendant’s September 16, 2004, letter

was sent before the completion of the embezzlement scheme

he devised.

The panel also held that the district court properly applied

sentencing enhancements for making a misrepresentation

during the course of a bankruptcy proceeding (U.S.S.G.

§ 2B1.1(b)(9)(B)) and for using sophisticated means

(U.S.S.G. § 2B1.1(b)(10)(C)).

In accord with the government’s concession, the panel

held that the district court plainly erred by including

$44,715.21 in restitution for fraudulent credit card charges

and $1,851.38 in restitution for wage overpayments that were

not part of the offenses of conviction and by failing to note

the waiver of interest on restitution on the judgment.

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

UNITED STATES V. TANKE 3

Concurring in the majority’s judgment, Judge Wallace

wrote separately to point out the opinion’s limited holding

and unnecessary reasoning. He wrote that the majority’s

narrow focus wrongly implies a “statute of limitations”

approach to mail fraud liability, and that the majority

incorrectly dismisses the weight of precedent from sister

circuits.

COUNSEL

John Balazs (argued), Sacramento, California, for Defendant-

Appellant.

Benjamin B. Wagner, United States Attorney, Camil A.

Skipper, Appellate Chief, and S. Robert Tice-Raskin

(argued), Assistant United States Attorney, Sacramento,

California, for Plaintiff-Appellee.

OPINION

FISHER, Circuit Judge:

We must decide when mailings sent to avoid detection or

responsibility for a fraudulent scheme are sent “for the

purpose of executing such scheme.” 18 U.S.C. § 1341. We

hold that such mailings fall within the mail fraud statute when

they are sent prior to the scheme’s completion and that, to

determine when a scheme is completed, we look to the scope

of the scheme as devised by the perpetrator. Because a

reasonable jury could have found that defendant Thomas

Tanke’s September 16, 2004 letter was sent before the

completion of the embezzlement scheme he devised, we

4 UNITED STATES V. TANKE

affirm his mail fraud conviction on count 2 of the indictment.

We also hold that the district court properly applied

sentencing enhancements under United States Sentencing

Guidelines Manual § 2B1.1(b)(9)(B) and (b)(10)(C).

I. BACKGROUND1

A. Tanke’s Embezzlement

Rafael Martin and his family operated two construction

businesses, Azteca Construction Company and Construction

Equipment Rental and Service (CERS). Defendant Thomas

Tanke worked for Azteca between 1999 and 2004, serving as

vice president of operations between 2000 and July 2004,

with authority to approve or issue checks from Azteca

accounts. He was not employed by CERS and had no

authority to receive CERS income or pay CERS’s

obligations. Tanke also maintained his own consulting

business, Cedar Creek Associates.

Over a 20-month period, Tanke embezzled more than

$192,000 from Azteca and CERS. From November 2002

through February 2004, Tanke caused the issuance of 21

Azteca checks, totaling $74,762.82, for his personal expenses.

The Azteca checks, most signed by Tanke, were paid to his

creditors or businesses he patronized, including General

Motors Acceptance Corporation (for an auto lease), Audi

Financial Services (financing for an Audi A4 Quattro),

Capital One Services (for a credit card), Household Credit

Services and HSBC Card Services, Inc. (for a credit card),

1

Because Tanke challenges the sufficiency of the evidence, we recite

the facts in the light most favorable to the government. See United States

v. Flyer, 633 F.3d 911, 917 (9th Cir. 2011).

UNITED STATES V. TANKE 5

Providian National Bank (for a credit card), Onyx Acceptance

Corporation (financing for a BMW), Steve Larsen’s Wheel

Works (a retail bicycle shop) and Kenny G. and Company (a

jeweler). Tanke was never authorized to use Azteca checks

to pay personal obligations or to pay these specific creditors

or businesses.

Tanke falsified records to conceal these payments. He

used at least six false invoices to make it appear that the

checks were issued for legitimate business expenses. For

example, a false invoice from “Onyx Corporation,” ostensibly

for “[p]igging of lines and testing of all pipe,” was actually a

$10,027.92 payment for a BMW Z4. Tanke also falsified

carbon copies of checks in Azteca’s check register on at least

10 occasions, also to conceal the true nature of the payments.

For example, a check made payable to “Providian” (to pay

Tanke’s personal Providian Visa card) contained no memo

notation, whereas the carbon copy falsely stated that the

check was paid to “Providian Products” and referenced

“02420-0046-M,” an existing Azteca job number and cost

code.

Between February and July 2004, Tanke also diverted

seven checks payable to CERS, Martin and Azteca, totaling

$117,486.25, into his Cedar Creek bank account. The four

checks payable to Martin and Azteca had a handwritten

endorsement making the check payable to Cedar Creek, a

forged signature and a printed endorsement making the check

payable to Cedar Creek. The three checks payable to CERS

had a printed endorsement making them payable to Cedar

Creek.

6 UNITED STATES V. TANKE

B. Cedar Creek Cover Story

Tanke left Azteca in July 2004. It appears that Martin at

least suspected Tanke’s embezzlement a short time later. In

an August 5, 2004 email, Martin asked Tanke about a missing

April 2004 check, in the amount of $39,330, from Southern

Quality Trucks to CERS. Tanke responded by email that he

did “not have any check from Southern Quality Trucks” and

that all checks he had received had been turned over to

accounting or used to pay outstanding vendors and debts. In

fact, Tanke had long since deposited the check into his Cedar

Creek account.

In an August 6 email, Martin told Tanke that he knew the

check had been deposited into the Cedar Creek account. In

an email response that day, Tanke acknowledged that he had

diverted the money into his account, but told Martin that this

and similar diversions were legitimate transactions to

compensate him for consulting work Cedar Creek had

allegedly performed for Azteca and CERS. Tanke’s email

attached what he claimed were three “very old invoices” from

Cedar Creek and asserted that his actions had “ensured that

Cedar Creek was paid for these long overdue invoices.” In

addition to casting the diversions as legitimate payments to

Cedar Creek, Tanke’s email also used thinly veiled threats to

discourage Martin from reporting the matter to authorities.

Tanke wrote that this was “purely a ‘business issue’” and that

he “hope[d Martin would] not try to expand it to anything

else.” Tanke warned that, if Martin pursued the matter

further, he would report Martin to federal and state agencies,

writing: “You do not want to see this happen, as it could

involve you personally in criminal or civil action that could

put you in prison or forfeit all of your personal holdings.”

UNITED STATES V. TANKE 7

On August 17, Tanke emailed Martin that he should have

received invoices by mail showing that over $98,000 was due

to Cedar Creek for consulting fees. Tanke noted that Martin

had filed documents leading to a hold on the Cedar Creek

account and that, if Martin did not lift that hold, he would

report Martin’s “numerous frauds and false claims” to

authorities. Tanke concluded the email by writing: “I just

want what has been and is due to me and we can part friends.

Please do not force me to take action that will cause you

harm.”

Martin replied by email on August 18 that the invoices

were “not real,” that Tanke was a salaried employee who

received wages and that Azteca did not owe Tanke or Cedar

Creek any consulting fees. Martin added, “[i]n response to

your threats, if you ha[d] knowledge of any wrongdoing by

Azteca . . . , you should have reported it.”

On September 16, Tanke caused a letter to be sent from

Cedar Creek to Martin by U.S. mail. This mailing, charged

as count 2 of the indictment, stated that Azteca and CERS had

previously paid some invoices due to Cedar Creek (again, an

apparent reference to Tanke’s diversion of checks into his

Cedar Creek account) and alleged that Azteca had provided

“false information” to Cedar Creek’s bank, which resulted in

reversal of these payments. The letter enclosed an invoice

from Cedar Creek that requested payment for the previous

invoices as well as interest, totaling $159,990.95.

In a letter dated September 23, Martin rejected the new

invoice and stated that Azteca had never paid any of the

previous fictitious invoices either. Martin later testified at

trial that Cedar Creek did not perform any of the claimed

services reflected on the September 16 Cedar Creek invoice.

8 UNITED STATES V. TANKE

He also testified that neither Tanke nor Cedar Creek had ever

consulted for CERS.

C. Criminal Proceedings

In 2009, a grand jury indicted Tanke on five counts of

bank fraud, for violation of 18 U.S.C. § 1344, and two counts

of mail fraud, for violation of 18 U.S.C. § 1341. The first

mail fraud count, charged as count 1 of the indictment, was

for a July 22, 2004 check from Industrial Tractor Co. to

CERS for approximately $33,000, delivered via Federal

Express from South Carolina to California. Tanke does not

challenge his conviction on count 1. The second mail fraud

count, charged as count 2 of the indictment, was for the

September 16, 2004 mailing.

A jury found Tanke guilty on all counts, and the district

court sentenced him to 70 months’ imprisonment, 60 months’

supervised release and $243,403.96 in restitution. The

Sentencing Guidelines range of 70–87 months reflected a 2-

level enhancement for use of sophisticated means and another

2-level enhancement for misrepresentation or fraud during the

course of a bankruptcy proceeding.

II. DISCUSSION

Tanke raises five issues on appeal. He contends that (1)

there was insufficient evidence to support his mail fraud

conviction on count 2 of the indictment; (2) the district court

erred by imposing a 2-level enhancement for making a

misrepresentation during a bankruptcy proceeding; (3) the

district court erred by imposing a 2-level enhancement for

sophisticated means; (4) the district court erred by including

$44,715.21 in restitution for credit card charges that were not

UNITED STATES V. TANKE 9

part of the offenses of conviction; and (5) the judgment

should be amended to show that interest on the restitution

award was waived. The government concedes error on the

fourth and fifth issues but urges us to affirm on the first three

issues, which we address in turn. We have jurisdiction under

28 U.S.C. § 1291.

A. Mail Fraud

Tanke argues that the evidence is insufficient to sustain

his conviction on count 2. He argues that the September 16,

2004 letter was not “for the purpose of executing” his

fraudulent scheme, as 18 U.S.C. § 1341 requires, because it

was mailed after he had received all of the money from the

embezzlement scheme, Martin had uncovered the fraud and

the scheme had been completed. We review claims of

insufficient evidence under Jackson v. Virginia, 443 U.S.

307, 319 (1979). Such a challenge can succeed only if,

viewing the evidence in the light most favorable to the

prosecution, no rational trier of fact could have found the

essential elements of the crime beyond a reasonable doubt.

See Flyer, 633 F.3d at 917.

1.

When do mailings sent to facilitate concealment of a

fraudulent scheme – to avoid detection, prosecution or

conviction – fall within the federal mail fraud statute?2 The

2

“The federal mail fraud statute does not purport to reach all frauds, but

only those limited instances in which the use of the mails is a part of the

execution of the fraud, leaving all other cases to be dealt with by

appropriate state law.” Kann v. United States, 323 U.S. 88, 95 (1944).

Consequently, “there is reason to be scrupulous in reviewing the evidence

10 UNITED STATES V. TANKE

statute makes it unlawful to devise a scheme to defraud and

then to use the mails for the purpose of executing such

scheme:

Whoever, having devised or intending to

devise any scheme or artifice to defraud, or

for obtaining money or property by means of

false or fraudulent pretenses, representations,

or promises, or to sell, dispose of, loan,

exchange, alter, give away, distribute, supply,

or furnish or procure for unlawful use any

counterfeit or spurious coin, obligation,

security, or other article, or anything

represented to be or intimated or held out to

be such counterfeit or spurious article, for the

purpose of executing such scheme or artifice

or attempting so to do, places in any post

office or authorized depository for mail

matter, any matter or thing whatever to be

sent or delivered by the Postal Service, or

deposits or causes to be deposited any matter

or thing whatever to be sent or delivered by

any private or commercial interstate carrier, or

takes or receives therefrom, any such matter

or thing, or knowingly causes to be delivered

by mail or such carrier according to the

direction thereon, or at the place at which it is

directed to be delivered by the person to

whom it is addressed, any such matter or

thing, shall be fined under this title or

imprisoned not more than 20 years, or both.

to assure that the mailing element is adequately proven.” United States v.

Lo, 231 F.3d 471, 477 (9th Cir. 2000).

UNITED STATES V. TANKE 11

18 U.S.C. § 1341 (emphasis added). Accordingly, we have

held that mail fraud includes two elements: “first, the

government must prove that a defendant devised or intended

to devise a scheme to defraud a victim of his money or

property; second, it must prove that in executing the scheme,

the defendant made use of or caused the use of the mails.”

Lo, 231 F.3d at 475.

In deciding when mailings designed to avoid detection or

responsibility for a fraudulent scheme fall within the mail

fraud statute, we begin with the general principle that the

mailing must be sent “prior to the scheme’s completion.”

United States v. Lane, 474 U.S. 438, 453 (1986) (emphasis in

original). But when is a scheme complete?

A partial answer is that it plainly does not end before the

perpetrator has obtained money or property from the victims.

Thus, before proceeds of the fraud have been obtained, a

mailing need only in some way further the scheme, as

mailings designed to avoid detection or responsibility clearly

do.

Once proceeds of the fraud have been obtained, it is

harder to say when a scheme ends. The only easy case is that

of an ongoing scheme, in which the perpetrator has received

some of the proceeds of the fraud but expects to receive

additional proceeds of the fraud in the future. It is well

settled that mailings sent in the midst of such a scheme,

including those designed to avoid detection or responsibility,

fall within the statute. See Schmuck v. United States,

489 U.S. 705, 711–12, 714 (1989); United States v. Jinian,

725 F.3d 954, 962–63 (9th Cir. 2013); Sun Sav. & Loan Ass’n

v. Dierdorff, 825 F.2d 187, 196 (9th Cir. 1987); United States

v. Price, 623 F.2d 587, 590 & n.2, 593 (9th Cir. 1980),

12 UNITED STATES V. TANKE

overruled on other grounds by United States v. De Bright,

730 F.2d 1255 (9th Cir. 1984).

The more difficult cases are those in which all the

intended proceeds of the scheme have been obtained, but the

perpetrator uses the mails to avoid detection or responsibility

for the scheme. To determine whether such mailings

occurred before or after the scheme’s completion, we have to

establish when the scheme ended. To do so, we have to look

to the scope of the scheme as devised by the perpetrator.

In United States v. Sampson, 371 U.S. 75 (1962), for

example, the defendants were charged with mail fraud based

on letters they sent to their victims after they obtained the

victims’ money. See id. at 78–79. The letters were designed

to lull the victims into a false sense of security in order to

postpone their ultimate complaint to authorities. See id. at 78.

The district court said there could be no liability because the

letters were sent after the money was received, but the

Supreme Court disagreed. See id. at 79. The Court explained

that the question was not whether the money had been

obtained but whether the defendants’ plan had been fully

executed. See id. at 80. The Court held that the defendants’

scheme had not been fully executed at the time the letters

were sent because the scheme had contemplated lulling

activities from the start:

[T]he indictment in this case alleged that the

defendants’ scheme contemplated from the

start the commission of fraudulent activities

which were to be and actually were carried

out both before and after the money was

obtained from the victims. The indictment

specifically alleged that the signed copies of

UNITED STATES V. TANKE 13

the accepted applications and the covering

letters were mailed by the defendants to the

victims for the purpose of lulling them by

assurances that the promised services would

be performed. We cannot hold that such a

deliberate and planned use of the United

States mails by defendants engaged in a

nationwide, fraudulent scheme in pursuance

of a previously formulated plan could not, if

established by evidence, be found by a jury

under proper instructions to be “for the

purpose of executing” a scheme within the

meaning of the mail fraud statute.

Id. at 80–81 (emphasis added).

We applied the same principle in United States v.

Lazarenko, 564 F.3d 1026 (9th Cir. 2009). The defendant, a

Ukranian politician, engaged in a series of fraudulent

business transactions that netted him millions of dollars. See

id. at 1029. By 1994, the defendant had obtained the

proceeds from the scheme and concealed them in bank

accounts in Switzerland and the Bahamas. See id. at 1036.

Some years later, in 1997 and 1998, the defendant transferred

the money to banks in California to hide his fraudulent

activity as he sought political office. See id. We held that the

1997 and 1998 transfers fell outside the wire fraud statute

because, in the absence of any evidence that subsequent

transfers were part of the scheme as it was originally

conceived, the scheme had been completed in 1994:

Under the facts of this case, we conclude

no rational trier of fact could find that these

transfers in 1997 and 1998 were “in

14 UNITED STATES V. TANKE

furtherance” of the Naukovy fraud, which

centered on allegedly shady agricultural and

personal purchases. The fraudulent activity

was completed, and the money concealed, in

1994, when the money reached Lazarenko’s

control and he deposited it into coded bank

accounts where it remained for three years.

Subsequent transfers were not part of the

scheme as it was originally conceived. Cf. Lo,

231 F.3d at 478. Nothing in the evidence

supports an inference, let alone a conviction,

on the grounds that the transfers were simply

a delayed link in the fraudulent chain.

Id. at 1037.3

These cases teach that mailings designed to avoid

detection or responsibility for a fraudulent scheme fall within

the mail fraud statute when they are sent prior to the scheme’s

completion and that the scope of the scheme as devised by the

perpetrator determines when that scheme is completed. If the

scheme, as conceived by the perpetrator, has been fully

executed, then the mailing, even if sent to facilitate

concealment of the scheme, falls outside the statute.

We recognize that some would extend liability further, as

the government urges us to do here. Some courts appear to

require only that the mails are used to avoid detection or

responsibility for the fraud, irrespective of whether the

mailings postdate completion of the scheme. See United

3

“It is well settled that cases construing the mail fraud and wire fraud

statutes are applicable to either.” United States v. Shipsey, 363 F.3d 962,

971 n.10 (9th Cir. 2004).

UNITED STATES V. TANKE 15

States v. Lopez, 71 F.3d 954, 961–62 (1st Cir. 1995),

abrogated on other grounds by United States v. Wells,

519 U.S. 482 (1997); United States v. Young, 955 F.2d 99,

108 (1st Cir. 1992). Because such a rule would be

inconsistent with Sampson and Lazarenko, and contrary to

Lane’s requirement that the use of the mails take place “prior

to the scheme’s completion,” 474 U.S. at 453 (emphasis in

original), we decline to follow that approach.

Other courts, relying on “the self-evident proposition that

the aim of virtually all criminal actors, including those who

commit mail fraud, is not only to accomplish their criminal

goals, but also to escape detection and liability for these

misdeeds,” would appear to make avoiding detection and

prosecution an implicit component of every scheme to

defraud. United States v. Hoffman, 229 F. App’x 157, 158

(3d Cir. 2007) (unpublished). Hoffman’s suggestion, that

every scheme to defraud inherently includes taking any

necessary step to avoid detection and prosecution, has

intuitive appeal. But it is in tension with Sampson, which

required an actual and specific plan to conceal, not a

generalized one that could be inferred from the mere

existence of a fraudulent scheme. See 371 U.S. at 80–81.

Nor do we see how that approach could be reconciled with

the outcome in Lazarenko. Under Sampson and Lazarenko,

it cannot be enough that the scheme included a general desire

not to get caught; the government must be required to prove,

at a minimum, that the already conceived scheme included a

specific plan for evading detection.

Under Hoffman, moreover, no scheme to defraud would

ever end so long as the perpetrator could take some action to

avoid detection, prosecution or conviction because any such

action would be treated as carrying out an implicit plan to

16 UNITED STATES V. TANKE

conceal that was part of the scheme from the outset. Such

open-ended liability is of great concern, as we recognized in

Lazarenko:

If the government’s theory were correct,

then it would be possible for an ordinary fraud

to be converted into wire fraud simply by the

perpetrator picking up the telephone three

years later and asking a friend if he can store

some fraudulently-obtained property in his

garage before the police execute a search

warrant or later taking the proceeds of fraud

and transferring them to another bank. The

government’s theory extends an already broad

statute too far.

564 F.3d at 1037. As the Supreme Court cautioned in

Grunewald v. United States, 353 U.S. 391 (1957), albeit in

the conspiracy context:

[A]fter the central criminal purposes of a

conspiracy have been attained, a subsidiary

conspiracy to conceal may not be implied

from circumstantial evidence showing merely

that the conspiracy was kept a secret and that

the conspirators took care to cover up their

crime in order to escape detection and

punishment. . . . [A]llowing such a conspiracy

to conceal to be inferred or implied from mere

overt acts of concealment would result in a

great widening of the scope of conspiracy

prosecutions, since it would extend the life of

a conspiracy indefinitely. Acts of covering

up, even though done in the context of a

UNITED STATES V. TANKE 17

mutually understood need for secrecy, cannot

themselves constitute proof that concealment

of the crime after its commission was part of

the initial agreement among the conspirators.

For every conspiracy is by its very nature

secret; a case can hardly be supposed where

men concert together for crime and advertise

their purpose to the world. And again, every

conspiracy will inevitably be followed by

actions taken to cover the conspirators’ traces.

Sanctioning the Government’s theory would

for all practical purposes wipe out the statute

of limitations in conspiracy cases . . . .

....

. . . We cannot accede to the proposition

that the duration of a conspiracy can be

indefinitely lengthened merely because the

conspiracy is kept a secret, and merely

because the conspirators take steps to bury

their traces, in order to avoid detection and

punishment after the central criminal purpose

has been accomplished.

Id. at 401–02, 405; see also Lutwak v. United States, 344 U.S.

604, 616 (1953) (distinguishing between an actual

“agreement to conceal” and “an afterthought by the

conspirator for the purpose of covering up”).

Because the government’s theory here would authorize

new charges, rather than merely belated charges, it is

arguably even more troubling than the theory proposed by the

government in Grunewald. In the conspiracy context,

18 UNITED STATES V. TANKE

recognizing an implied agreement to conceal would only

extend the limitations period; the same charges could be

brought, albeit later. In the mail fraud context, however,

recognizing an implied scheme to conceal would not only

extend the limitations period but also give rise to an

additional crime every time the mails were used to execute

that scheme. That is, because the “scheme” would be said to

continue after the embezzlement was completed, the period

during which additional substantive crimes could be

committed would also be indefinitely extended. The theory

broadens substantive liability and extends the limitations

period.

In sum, we hold that mailings designed to avoid detection

or responsibility for a fraudulent scheme fall within the mail

fraud statute when they are sent before the scheme is

completed. To determine when a scheme ends, we look to

the scope of the scheme as devised by the perpetrator.

A scheme may be devised over time, however. Not every

perpetrator “deliberately plan[s] and devise[s] a

well-integrated, long-range, and effective scheme” from the

outset. Sampson, 371 U.S. at 77. Allowance must be made

for the reality that embezzlements and other schemes to

defraud are often open-ended, opportunistic enterprises.

They may evolve over time, contemplate no fixed end date or

adapt to changed circumstances. Just as Lopez, Young and

Hoffman suggest too expansive a reading of the mail fraud

statute by covering any acts of concealment regardless of

when they occur, it would be overly restrictive to look only

at the scope of the plan as it was originally conceived. Lines

will have to be drawn between cases in which acts of

concealment can fairly be seen as part of the perpetrator’s

evolving plan devised during the life of the scheme and acts

UNITED STATES V. TANKE 19

of concealment that must be viewed as an after-the-fact event,

as in Lazarenko. Cf. Grunewald, 353 U.S. at 405 (making “a

vital distinction . . . between acts of concealment done in

furtherance of the main criminal objectives of the conspiracy,

and acts of concealment done after the central objectives have

been attained, for the purpose only of covering up after the

crime”).

2.

Applying these principles here, we conclude that a

reasonable jury could have found that Tanke sent the

September 16 letter prior to the scheme’s completion. To be

sure, one reasonable inference from the facts is that the

fraudulent scheme, as Tanke conceived it, was fully executed

by July 2004, when he obtained the last of the proceeds of his

embezzlement and terminated his employment with Azteca.

A jury could have found that the scheme ended at that time,

and that the efforts Tanke later made to intimidate Martin and

portray the diversions as legitimate payments for Cedar

Creek’s services were simply an after-the-fact coverup Tanke

conceived only after Martin discovered the embezzlement

and confronted Tanke in early August.

It is also plausible, however, that a reasonable jury could

have found that the Cedar Creek cover story was part of

Tanke’s embezzlement scheme from the outset or as it

evolved over time – just another misrepresentation to

facilitate diversion of Azteca’s and CERS’s funds into

Tanke’s bank accounts. Lazarenko held that no reasonable

jury could find that 1997 and 1998 wire transfers were part of

a scheme whose central objectives had been achieved three

years earlier. See Lazarenko, 564 F.3d at 1037. Grunewald

involved a similar three- to four-year time gap. See

20 UNITED STATES V. TANKE

Grunewald, 353 U.S. at 395–96. Here, by contrast, there was

no such gap, and the September 16 letter was just the tail end

of a series of false and misleading financial transactions and

statements that comprised the embezzlement scheme. Under

the totality of the circumstances, a reasonable jury could have

found that the Cedar Creek cover story was a link in the

fraudulent chain rather than a post-completion coverup. Cf.

Lazarenko, 564 F.3d at 1037.

We note that different jury instructions would have been

helpful. The district court could have instructed the jury that

it had to find that the mailings were sent prior to the scheme’s

completion and that completion of the scheme turned on the

scope of the scheme as devised by Tanke. Had the jury been

so instructed, it might have been more likely to find that the

scheme was completed in July and that the Cedar Creek cover

story was conceived and executed separately. No such

instructions were given, however, and Tanke does not

challenge the instructions provided to the jury. The only

question he raises is whether, judged by the statutory

requirements, a reasonable jury could have found that the

letter of September 16 was sent in furtherance of his

fraudulent scheme. We reject Tanke’s argument that his

conviction on count 2 must be reversed because the scheme

was completed before the September 16 letter was mailed.

3.

We also reject Tanke’s alternative argument that the

September 16 letter cannot support a conviction for mail

fraud because it was sent after Martin had uncovered the

fraud. First, as a factual matter, it is not clear that Martin had

uncovered the full extent of the fraud when the letter was

sent. Second, even if the fraud had been fully exposed, we

UNITED STATES V. TANKE 21

are not aware of any authority supporting the proposition that

a mailing cannot further a fraudulent scheme merely because

the scheme has already been uncovered. To be sure, mailings

that serve only to make detection more likely do not further

the scheme. See Lo, 231 F.3d at 479; United States v.

Manarite, 44 F.3d 1407, 1413 (9th Cir. 1995). But we have

never laid down a categorical rule that post-detection

mailings, if sent before the scheme’s completion, fall outside

the statute. Such mailings can further the scheme by, for

example, persuading the victim that the fraud did not in fact

occur, confusing the issues, discouraging the victim from

going to the authorities or establishing a cover story that

might be helpful at trial.

For the above reasons, we hold that sufficient evidence

supported Tanke’s mail fraud conviction on count 2 of the

indictment, and we affirm the conviction.

B. Bankruptcy Misrepresentation Enhancement

Tanke challenges the district court’s application of a 2-

level sentencing enhancement for making a misrepresentation

during the course of a bankruptcy proceeding. We review the

district court’s interpretation of the Sentencing Guidelines de

novo and its factual findings for clear error. United States v.

Swank, 676 F.3d 919, 921 (9th Cir. 2012). There is an

intracircuit split as to whether the standard of review for

application of the Guidelines to the facts is de novo or abuse

of discretion. See id. at 921-22. There is no need to resolve

this split where, as here, the choice of the standard does not

affect the outcome of the case. See id. at 922.

The United States Sentencing Guidelines Manual

(U.S.S.G.) provides: “If the offense involved . . . a

22 UNITED STATES V. TANKE

misrepresentation or other fraudulent action during the course

of a bankruptcy proceeding . . . , increase by 2 levels.”

U.S.S.G. § 2B1.1(b)(9)(B). Tanke argues that his offense did

not “involve” a misrepresentation because his fraudulent

scheme was completed in 2004, four years before he gave

false testimony in a bankruptcy proceeding.4 Under § 1B1.3,

however, relevant conduct for purposes § 2B1.1(b) includes

all acts committed “during the commission of the offense of

conviction, in preparation for that offense, or in the course of

attempting to avoid detection or responsibility for that

offense.” Id. § 1B1.3(a)(1) (emphasis added). Tanke’s false

testimony in the bankruptcy proceeding may not have

occurred in preparation for or during the commission of the

offense, but it plainly occurred “in the course of attempting

to avoid detection or responsibility for that offense.” Id.;

accord United States v. Rivera-Gomez, 634 F.3d 507, 513

(9th Cir. 2010) (concealing conduct that “occurred long after

the” initial offense is still covered by the Sentencing

Guidelines, because “nothing in the Guidelines establishes

that conduct ceases to be relevant after a specified period of

time”). The district court therefore did not err by applying

the enhancement.

C. Sophisticated Means Enhancement

We also reject Tanke’s argument that the district court

erred by imposing a 2-level enhancement for using

4

Azteca filed for bankruptcy protection in 2004. In 2006, the

bankruptcy trustee sued Tanke to recover embezzled funds. Tanke

testified in that proceeding in 2008, asserting that as vice president of

Azteca he had full authority to settle Azteca’s obligations and, because the

company allegedly owed Cedar Creek money on old invoices, his

diversion of checks was done with authority – testimony that the

bankruptcy court found not credible.

UNITED STATES V. TANKE 23

sophisticated means. Under U.S.S.G. § 2B1.1, “[i]f . . . the

offense . . . involved sophisticated means, increase by 2

levels.” Id. § 2B1.1(b)(10)(C). The commentary describes

sophisticated means as:

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 ordinarily indicates sophisticated

means. Conduct such as hiding assets or

transactions, or both, through the use of

fictitious entities, corporate shells, or offshore

financial accounts also ordinarily indicates

sophisticated means.

Id. § 2B1.1 cmt. n.9(B). The district court found that this

enhancement applied because “the trial testimony clearly

showed a high level of planning and concealment of

defendant’s theft, much more than simply diverting business

checks into the defendant’s company’s bank accounts for his

personal use as the defendant argues.” The court found that

Tanke, “as vice president of Azteca, carefully engaged in

dozens of various acts over a period of over 16 months to

execute and conceal three separate types of fraud on the

victim and his two business entities.”

Although Tanke did not use “fictitious entities, corporate

shells, or offshore financial accounts,” as the Sentencing

Commission’s commentary contemplates, he created at least

six false invoices and falsified carbon copies of checks in

Azteca’s check register on at least 10 occasions to conceal the

24 UNITED STATES V. TANKE

payments. These means as a whole were sufficiently

sophisticated to support the district court’s decision. See

United States v. Horob, 735 F.3d 866, 872 (9th Cir. 2013)

(per curiam) (affirming the application of the sophisticated

means enhancement because, among other things, the

defendant “fabricated numerous documents” and “the

complicated and fabricated paper trail made discovery of his

fraud difficult”); cf. United States v. Jennings, 711 F.3d 1144,

1145 (9th Cir. 2013) (applying U.S.S.G. § 2T1.1(b)(2))

(“Conduct need not involve highly complex schemes or

exhibit exceptional brilliance to justify a sophisticated means

enhancement.”).

III. CONCLUSION

We affirm Tanke’s conviction on count 2 of the

indictment. We hold that the district court did not err by

imposing sentencing enhancements under U.S.S.G.

§ 2B1.1(b)(9)(B) and (b)(10)(C). We hold, in accord with the

government’s concession, that the district court plainly erred

by including $44,715.21 in restitution for fraudulent credit

card charges and $1,851.38 in restitution for wage

overpayments that were not part of the offenses of conviction

and by failing to note the waiver of interest on restitution on

the judgment. The case is remanded to the district court for

appropriate proceedings.

AFFIRMED IN PART, VACATED IN PART AND

REMANDED.

UNITED STATES V. TANKE 25

WALLACE, Circuit Judge, concurring:

I concur in the majority’s judgment, but write separately

to point out the opinion’s limited holding and unnecessary

reasoning. First, though the majority uses the term “totality

of the circumstances” as the test to determine whether a

reasonable jury could conclude that a “lulling letter” was part

of the fraud, the opinion actually affirms Tanke’s conviction

based on just one circumstance, the limited period of time

between the completed fraud and the September 16, 2004

lulling letter. That narrow focus wrongly implies a “statute

of limitations” approach to mail fraud liability. Second, the

majority incorrectly dismisses the weight of precedent from

our sister circuits. The reasoning of those courts is more

persuasive than that of the majority, and regardless, rejecting

that reasoning is dicta.

The precise question before us is whether the letter Tanke

sent on September 16, 2004 to conceal his check diversion

scheme violated the federal mail fraud statute. In Section

II.A.1, the majority states that “mailings designed to avoid

detection or responsibility for a fraudulent scheme fall within

the mail fraud statute when they are sent before the scheme

is completed.” Infra at 18. To determine when a scheme is

completed, the majority “look[s] to the scope of the scheme

as devised by the perpetrator.” Id. The majority rejects out-

of-circuit decisions that the opinion says “extend liability

further.” Id. at 14. The majority concludes that the

September 16, 2004 letter was part of the scheme “as devised

by” Tanke because under the “totality of the circumstances”

a reasonable jury could plausibly conclude that the letter “was

a link in the fraudulent chain” of Tanke’s scheme. Id. at 20.

26 UNITED STATES V. TANKE

Although the majority uses the term totality of the

circumstances, plural, the opinion cites just one circumstance

to support its conclusion that the September 16, 2004 letter

was “the tail end” of Tanke’s fraud: “there was no such

[three- to four- year] gap” between the letter and the

achievement of the central objectives of scheme when Tanke

diverted the last check. Id. The majority affirms Tanke’s

conviction because only a few months passed between the

last diversion of checks in July 2004 and the September 16,

2004 letter.

I concur with the majority that a lulling letter, sent to

conceal a completed fraud, is mail fraud when under the

totality of the circumstances a reasonable jury could plausibly

conclude the letter was part of the scheme that a defendant

devised.

However, I do not accept two unnecessary aspects of the

majority’s opinion. First, the majority’s narrow focus on the

singular circumstance of the “time gap” between fraudulent

acts and the lulling letter is misleading, because it suggests a

“statute of limitations” approach to liability. Contrary to the

implication of the majority opinion, neither the mail fraud

statute nor our cases set an automatic cutoff date for liability.

The gap between the completion of the fraudulent acts and

the misleading letter is merely one circumstance in our

review of the jury’s decision. The majority offers no reason

why a gap of a few months, by itself, would make the letter

part of the fraud, while a gap of a few years would immunize

a defendant from mail fraud liability. Such line-drawing

immunity is inconsistent with our case law. See United States

v. Mitchell, 744 F.2d 701, 703 (9th Cir. 1984) (a letter is mail

fraud “if the completion of the scheme or the prevention of its

detection is in some way dependent upon the mailings”)

UNITED STATES V. TANKE 27

(emphasis added); Sun Sav. & Loan Ass’n v. Dierdorff,

825 F.2d 187, 196 (9th Cir. 1987) (affirming mail fraud

liability for a misleading letter designed “to prevent the

development of any suspicion” of the defendant, which was

sent on September 26, 1984, more than six months after he

made the final illicit cash deposit on March 15, 1984); cf.

United States v. Lazarenko, 564 F.3d 1026, 1037 (9th Cir.

2009) (reversing wire fraud conviction not simply because of

the three year gap, but because “[n]othing in the evidence

supports an inference, let alone a conviction, on the grounds

that the [concealment] were simply a delayed link in the

fraudulent chain”); accord United States v. Stinson, 647 F.3d

1196, 1215–16 (9th Cir. 2011) (interpreting Grunewald v.

United States, 353 U.S. 391 (1957), to mean that “recent acts

of concealment” can be “in furtherance” of the initial

conspiracy and thus properly part of the initial crime).

Second, the weight of out-of-circuit precedent may well

“extend liability further” than the majority would in certain

cases, because the out-of-circuit cases properly apply the

totality of the circumstances test. See United States v.

Hoffman, 229 F. App’x 157, 158 (3d Cir. 2007) (unpub.);

United States v. Lopez, 71 F.3d 954, 961–62 (1st Cir. 1995)

(affirming wire fraud conviction for deceptive faxes sent

within two years of the fraud), abrogated on other grounds by

United States v. Wells, 519 U.S. 482 (1997); United States v.

Young, 955 F.2d 99, 108 (1st Cir. 1992) (affirming mail fraud

conviction for a deceptive letter sent about one year after the

fraud); United States v. Tocco, 135 F.3d 116, 126 (2d Cir.

1998) (affirming mail fraud conviction for a deceptive letter

sent about four months after the fraud because “[a] factfinder

could reasonably conclude that the [] letter was designed to

. . . defer any complaint to the authorities about the defendant

. . . thus making his apprehension less likely”); United States

28 UNITED STATES V. TANKE

v. Bavers, 787 F.2d 1022, 1027 (6th Cir. 1985) (affirming

mail fraud conviction for letters sent about seven months after

the fraud); cf. United States v. Evans, 473 F.3d 1115, 1121

(11th Cir. 2006) (affirming a wire fraud conviction based on

a misleading fax where defendant’s “motivation [was] to

escape the legal consequences of [his] past frauds”).

Regardless, the majority’s rejection of those cases is dicta

given the actual holding of the opinion.

There are sufficient facts in the record to affirm Tanke’s

conviction under an actual totality of the circumstances

approach. Tanke used “sophisticated means” to conceal his

check diversions, infra at 22–23; he sent emails to justify the

diversions while disbursing money from the account, id. at

6–7; and there was also only a short gap between his last

check diversion and the September 16 letter. Coupled with

the “self-evident proposition that the aim of virtually all

criminal actors, including those who commit mail fraud, is

not only to accomplish their criminal goals, but also to escape

detection and liability for these misdeeds,” Hoffman, 229 F.

App’x at 158, there was sufficient evidence before the jury

that Tanke devised his scheme to “prevent the development

of any suspicion” of his fraud by sending the September 16,

2004 letter, which thus constituted mail fraud. Dierdorff,

825 F.2d at 196.