The opinion
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 20, 2023 Decided August 1, 2023
No. 21-3075
UNITED STATES OF AMERICA,
APPELLEE
v.
ELEANOR R. MILLIGAN,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 1:19-cr-00424-1)
George W. Hicks Jr., appointed by the court, argued the
cause and filed the briefs for appellant.
Bryan H. Han, Assistant U.S. Attorney, argued the cause
for appellee. With him on the brief were Chrisellen R. Kolb,
Nicholas P. Coleman, and Diane G. Lucas, Assistant U.S.
Attorneys.
Before: SRINIVASAN, Chief Judge, MILLETT, Circuit
Judge, and TATEL, Senior Circuit Judge.
Opinion for the Court filed by Chief Judge SRINIVASAN.
2
Opinion concurring in part, dissenting in part, and
dissenting from the judgment filed by Circuit Judge MILLETT.
SRINIVASAN, Chief Judge: Eleanor Milligan was
convicted of wire fraud and other offenses for embezzling over
one million dollars from her former employer, Global
Management Systems, Inc. In this appeal, Milligan seeks to set
aside both her convictions and her sentence.
With respect to her convictions, Milligan contends that the
district court erred in admitting evidence of her embezzling
from a different employer to prove her intent and lack of
mistake concerning the offenses charged in this case. With
respect to her sentence, Milligan challenges the district court’s
application of a sentencing enhancement for her use of
sophisticated means to conceal her scheme, and she submits
that her eight-year sentence of imprisonment is unreasonable.
We reject Milligan’s arguments and affirm her convictions and
sentence.
I.
A.
From 2009 to 2016, Milligan worked as a payroll specialist
and then as the human resources benefits administrator for
Global Management Systems, Inc. (GMSI), a firm that
provides technological services such as web development and
telecommunications to federal government agencies. Milligan
was responsible for maintaining and submitting payroll
information to a third-party company that paid GMSI
employees their salary. The third-party company directly
deposited paychecks into employees’ bank accounts or mailed
them physical checks.
3
During her employment, Milligan implemented a scheme
whereby she accessed GMSI’s payroll system and altered the
information of employees who had recently left the company.
Rather than removing the former employees’ information from
the system and shutting off their pay when they departed, as
she was supposed to do, Milligan left their information in the
system as if they remained on the payroll. GMSI’s third-party
vendor thus continued to issue paychecks to the departed
employees. But Milligan altered the former employees’ bank
account information so that their continued paychecks would
be deposited into an account she owned.
Milligan took several steps to conceal her embezzlement.
In 2011, the Internal Revenue Service contacted a former
GMSI employee, David Morgan, and informed him that he had
failed to submit a W-2 for wages he earned from the company
that year. Morgan in fact had stopped working for GMSI by
2010, but Milligan retained his information in the payroll
system and redirected his continuing paychecks into the bank
account she controlled. After the IRS reached out to Morgan,
he contacted Milligan to inquire about why the IRS believed he
was still getting paid by GMSI. Milligan responded by sending
Morgan a corrected W-2 that showed he had not worked for
GMSI in 2011. The IRS contacted Morgan again in 2012 for
the same issue, prompting Morgan again to contact Milligan,
which led Milligan to send him another corrected W-2 for
2012.
Milligan’s efforts to conceal her scheme did not stop there.
When her supervisor discovered that GMSI continued to pay
Morgan after he had left the company, Milligan told her
supervisor that she made a mistake and forgot to stop the
paychecks from issuing. Milligan later showed her supervisor
a message she received from the email address
“DavidMorgan647@Ymail.com.” The message, ostensibly
4
from Morgan, stated that Milligan had brought the erroneous
payments to Morgan’s attention and that he agreed to pay the
money back to GMSI. The “DavidMorgan647” account
subsequently exchanged a series of emails with Milligan and
Milligan’s supervisor to discuss the logistics of repayment. In
reality, all of the messages from “DavidMorgan647,” as well
as the account itself, had been created by Milligan without
Morgan’s knowledge.
Milligan later delivered checks, which she claimed she had
received from Morgan as repayment, to her supervisor. Those
checks bore the address of a supposed entity entitled “David
Morgan Rental Properties.” But those checks, like the email
messages from “DavidMorgan647,” came from Milligan
without Morgan’s knowledge. What is more, the business
“David Morgan Rental Properties” existed in name only—
Milligan had obtained a mailbox from a UPS store in that name.
Milligan ultimately obtained over $1.5 million from her
embezzlement scheme before GMSI fired her in 2016 for
unrelated performance issues.
B.
In December 2019, the government brought a thirteen-
count indictment against Milligan for her embezzlement
scheme, including eight counts of wire fraud. At trial, over
Milligan’s objection, the district court allowed the government
to introduce evidence of her alleged commission of a similar
scheme with a second employer as probative of her intent and
lack of mistake. The second employer was the payroll office
of the University of Maryland Medical System (UMMS),
where Milligan worked after GMSI fired her. While at UMMS,
Milligan allegedly altered the payroll information of several
employees to cause their payouts for sick leave or vacation
5
leave to be deposited into an account she controlled. The
district court later gave the jury a lengthy limiting instruction
directing the jury to consider the UMMS evidence only as
potentially probative of intent and lack of mistake, not as
reflective of Milligan’s character.
The jury convicted Milligan on all counts. At sentencing,
the district court imposed a sentence of 96 months of
imprisonment. For the eight counts of wire fraud, the court
applied a two-level sentencing enhancement for her use of
“sophisticated means” to conceal her offenses. U.S.S.G.
§ 2B1.1(b)(10)(C). The enhancement increased the Sentencing
Guidelines range for the wire fraud counts from 57 to 71
months to 70 to 87 months, and the district court sentenced
Milligan to 72 months on those counts.
II.
A.
Milligan first challenges her convictions, contending that
the district court erroneously admitted the UMMS evidence in
violation of Federal Rule of Evidence 404(b). We do not
decide whether the admission of that evidence contravened
Rule 404(b). Even assuming the district court erred in
admitting that evidence, any error was harmless.
The Federal Rules of Criminal Procedure require us to
“disregard[]” any “error, defect, irregularity, or variance that
does not affect substantial rights.” Fed. R. Crim. P. 52(a). For
nonconstitutional errors like the one Milligan asserts here, “an
error is harmless” and thus does not compel reversal “if it did
not have a ‘substantial and injurious effect or influence in
determining the jury’s verdict.’” United States v. Powell, 334
F.3d 42, 45 (D.C. Cir. 2003) (quoting Kotteakos v. United
6
States, 328 U.S. 750, 776 (1946)). Milligan asserts that the
UMMS evidence had an injurious effect because the evidence
was admitted to prove intent and lack of mistake, which she did
not contest at trial. As a result, she contends, the jury could
have drawn an inference prohibited by Rule 404(b): that she
stole money from UMMS so she likely also stole money from
GMSI. That risk of unfair prejudice was particularly
pronounced, Milligan maintains, due to the similar nature of
the UMMS and GMSI allegations.
True, “[t]he introduction of other crimes evidence to
illuminate intent carries an inherent risk of such prejudice.”
United States v. Mitchell, 49 F.3d 769, 777 (D.C. Cir. 1995).
But in this case, “the district court took caution to guard the
space between the permissible and impermissible inferences by
instructing the jury to consider the [UMMS] evidence only for
its proper purpose” under Rule 404(b)—as probative of
Milligan’s intent. See id. The district court issued a lengthy
and thorough limiting instruction, the substance of which
Milligan does not challenge. And our court has recognized that
a limiting instruction of that kind can help to cabin the potential
prejudicial impact of any erroneous admission of evidence for
purposes of harmless-error analysis. See United States v.
Sheffield, 832 F.3d 296, 308–09 (D.C. Cir. 2016); United States
v. Brown, 597 F.3d 399, 405–06 (D.C. Cir. 2010).
When applying harmless-error analysis, moreover, “[t]he
most significant factor that negates [an] error’s impact is the
weight and nature of the evidence against [the defendant].”
United States v. McGill, 815 F.3d 846, 886 (D.C. Cir. 2016)
(last alteration in original) (quotation marks omitted) (quoting
United States v. Williams, 212 F.3d 1305, 1311 (D.C. Cir.
2000)). Here, the UMMS evidence was a small piece of what
was otherwise an overwhelming case against Milligan. The
case against her included extensive testimonial and
7
documentary evidence that: she was the only person who
accessed the payroll system in which direct deposits could be
rerouted; payments made in the names of various former
employees were deposited into a bank account controlled by
her; and she took several steps to impersonate a former
employee to conceal that she was the recipient of payments
intended to go to him. The UMMS evidence, additionally, was
mentioned only once by the government in closing arguments.
And it is not at all apparent—and Milligan has not identified—
how the UMMS evidence could have borne on the finding of
guilt given her defense strategy, which was confined to
disputing whether the interstate commerce element of her
offense was met. Nor has she suggested that the admission of
the UMMS evidence affected her choice of that strategy in the
first place.
In short, in light of the detailed limiting instruction the
district court gave the jury about the purpose of the UMMS
evidence, the strength of the government’s case against
Milligan apart from that evidence, and the relatively small role
that evidence played at trial, we conclude that any error in
admitting the UMMS evidence was harmless.
B.
We now turn to Milligan’s challenge to the district court’s
application of the sophisticated-means sentencing
enhancement. The Sentencing Guidelines provide for a two-
level sentencing enhancement when an offense “involve[s]
sophisticated means and the defendant intentionally engaged in
or caused the conduct constituting sophisticated means.”
U.S.S.G. § 2B1.1(b)(10)(C). The commentary to the
Guidelines explains that “‘sophisticated means’ means
especially complex or especially intricate offense conduct
8
pertaining to the execution or concealment of an offense.” Id.
§ 2B1.1 cmt. n.9 (emphasis omitted).
The commentary also offers examples of conduct
constituting sophisticated means. For instance, “[c]onducting
an offense in multiple jurisdictions ‘ordinarily indicates
sophisticated means.’ So too does the use of ‘fictitious entities,
corporate shells, or offshore financial accounts’ to conceal the
fruits of an unlawful scheme.” United States v. McCants, 554
F.3d 155, 163 (D.C. Cir. 2009) (internal citations omitted)
(quoting U.S.S.G. § 2B1.1 cmt. n.9). That said, several of our
sister circuits agree that the enhancement can apply “to conduct
less sophisticated than the list articulated in the application
note.” United States v. Jennings, 711 F.3d 1144, 1147 (9th Cir.
2013) (collecting cases). After all, “the examples are by their
own terms simply illustrative, not exclusive.” United States v.
Lewis, 93 F.3d 1075, 1082 (2d Cir. 1996).
Because “[t]he district court’s conclusion that [Milligan’s]
offense warrants a sophisticated means enhancement is an
application of the Sentencing Guidelines to the facts,” we
“accord due deference” to that conclusion. McCants, 554 F.3d
at 163; United States v. Hunt, 25 F.3d 1092, 1097 (D.C. Cir.
1994). In the district court’s view, the “evidence at trial sp[oke]
for itself” as to the applicability of the sophisticated-means
enhancement. Sentencing Hr’g Tr. 13, J.A. 241. But the court
“note[d] in particular” several of what it considered to be
“sophisticated, concrete steps that [Milligan] took to conceal
what she had done.” Id. Those steps included Milligan’s
setting up an email account in Morgan’s name, sending
communications from that account that purported to be from
Morgan, and establishing a mailbox in the name of “David
Morgan Rental Properties.” Id.
9
Giving the district court the requisite “due deference”—
which falls “somewhere between de novo and clearly
erroneous,” McCants, 554 F.3d at 160 (internal quotation
marks omitted)—we sustain the court’s application of the
sophisticated-means enhancement. The evidence from
Milligan’s trial shows that she engaged in a sufficiently
sophisticated scheme to hide her embezzlement of funds from
GMSI. Once Morgan approached her about the IRS’s concern
that he had failed to report income ostensibly paid to him even
after his employment with GMSI had ended, Milligan sought
to deceive GMSI into thinking that Morgan had continued to
receive paychecks after he left the company. To carry out that
scheme, Milligan took several actions to impersonate Morgan.
Beyond creating an email account in Morgan’s name,
authoring and sending communications from that account, and
setting up a mailbox for a made-up company bearing Morgan’s
name, Milligan also returned some of her embezzled funds to
GMSI with checks ostensibly authored by Morgan. Those
checks in fact were linked to her own account but bore the
address of the mailbox that she had obtained for the fictitious
entity “David Morgan Rental Properties.”
Milligan’s actions in impersonation of Morgan lie in the
same zone of sophistication as the conduct deemed to qualify
as sophisticated means in McCants. There, McCants was
convicted of possessing implements used to make false
identifications and other counterfeit documents, and the district
court applied the sophisticated-means enhancement based on
his efforts to conceal his offense. He committed his offense in
multiple jurisdictions, he kept some of his false documents and
document-making devices in storage units rented under an
alias, and he used an allegedly legitimate business to hide his
possession of those implements. McCants, 554 F.3d at 163.
Over McCants’s objection that those efforts lacked sufficient
sophistication, we affirmed his sentence. Although we could
10
“imagine scenarios involving more elaborate means to avoid
detection or conviction,” that did “not render the district court’s
resolution of the question invalid.” Id.
The same is true here. Milligan insists that a sophisticated-
means enhancement was inappropriate because the “most
unsophisticated offender” could set up an email address or
obtain a mailbox. Milligan Br. 19–20. But we do not assess
the sophistication of a defendant’s concealment actions
piecemeal. Renting storage units under an alias, for instance,
may not seem especially complex considered in isolation.
McCants, 554 F.3d at 163. But that conduct, considered in the
broader context at play in McCants, supported application of
the sophisticated-means enhancement. See id.; cf. United
States v. Evano, 553 F.3d 109, 113 (1st Cir. 2009) (“[A]
scheme may be sophisticated even if the individual elements
taken alone are not.”).
Here, Milligan did not just set up an email address or a
mailbox. Rather, she took those actions as part of an overall
scheme to impersonate Morgan so as to enable concealing her
offense from GMSI: she set up an email address in Morgan’s
name and used that account to author and send several emails
to GMSI that purported to be from Morgan, and she obtained a
mailbox in the name of a fictitious entity bearing Morgan’s
name so that she could then obtain checks listing that address
for her use in writing checks that appeared to come from
Morgan’s business. We observed in McCants that the “use of
‘fictitious entities’ . . . to conceal the fruits of an unlawful
scheme” generally counts as sophisticated means, McCants,
554 F.3d at 163 (quoting U.S.S.G. § 2B1.1 cmt. n.9), and
Milligan did precisely that in this case.
Our affirmance of the sophisticated-means enhancement
also coheres with its central object: deterrence. As the Seventh
11
Circuit has explained, “[t]he more sophisticated the efforts that
an offender employs to conceal his offense, the less likely he is
to be detected, and so he should be given a heavier sentence to
maintain the same expected punishment, and hence the same
deterrence, that confronts the average offender.” United States
v. Kontny, 238 F.3d 815, 820 (7th Cir. 2001). For purposes of
the enhancement, then, sophistication “refer[s] not to the
elegance, the ‘class,’ [or] the ‘style’ of the defrauder . . . but to
the presence of efforts at concealment that go beyond . . . the
concealment inherent in [] fraud.” Id. at 821.
Considered in that light, Milligan’s impersonation of
Morgan reduced the chances that GMSI would learn of her
embezzlement, which in turn necessarily lessened the
likelihood that her scheme would be detected by law
enforcement (because GMSI presumably would have reported
her conduct to the relevant authorities). And unlike lies or
omissions inherently bound up in her embezzlement,
Milligan’s various measures to impersonate Morgan were not
inherent to her underlying offense. Rather, those efforts, as
they must to warrant the sentencing enhancement in the context
of this case, went well beyond her simply denying any
wrongdoing to GMSI or providing a false reason for why salary
payments continued to issue to departed employees.
Accordingly, the district court, in addressing deterrence
considerations when imposing Milligan’s sentence,
emphasized “the lengths she went to conceal” her offense—
which, to the court, amounted to “far more than . . . a simple lie
to cover [her] tracks.” Sentencing Tr. 11–12, 41, S.A. 227–28,
242. We thus uphold the district court’s application of the
sophisticated-means enhancement upon giving that decision
the due deference it is owed.
Our dissenting colleague, though, would reject the district
court’s judgment that Milligan’s concealment efforts warrant
12
application of the enhancement. Our colleague characterizes
Milligan’s measures to hide her fraud as an “ad hoc and one-
off” reaction to avoid detection rather than “a pre-planned
aspect of the fraud offense itself.” Dissenting Op. 7. The
enhancement, though, applies to “conduct pertaining to the
execution or concealment of an offense.” U.S.S.G. § 2B1.1
cmt. n.9(B) (emphasis added). And there is no indication that
“concealment” of fraud matters less than the design of its
“execution,” or that “concealment” measures taken in reaction
to risks of exposure that emerge after the fraud begins matter
less than “concealment” measures of like sophistication taken
proactively at the scheme’s outset.
Even if Milligan’s efforts to impersonate Morgan were a
“one-off”—i.e., an “effort[] to cover up one instance of fraud
in a decade-long scheme,” Dissenting Op. 8—exposing that
“one instance” would almost surely (and quickly) have
prompted discovery of the entire “decade-long scheme.” From
the perspective of the fraudster whose conduct is at issue, then,
concealing that one instance was concealing the full scheme.
And at any rate, if a defendant takes actions to conceal a given
instance of fraud, the applicability of the sentencing
enhancement does not turn on whether she engaged in other
instances of fraud too. Either way, the sophistication of the
actions taken to conceal the one instance of fraud is the same,
and the fact that the defendant may have also committed more
fraud does not make application of the enhancement against her
less appropriate. The Guideline’s applicability depends on the
sophistication of the execution and concealment of the offense,
not on whether the concealment actions were taken to conceal
all or only some of the offense conduct.
With respect to the sophistication of the concealment
actions taken, “[c]onduct such as hiding assets or transactions,
or both, through the use of fictitious entities, corporate shells,
13
or offshore financial accounts . . . ordinarily indicates
sophisticated means.” U.S.S.G. § 2B1.1 cmt. n.9(B). Our
colleague does not dispute that Milligan, among other
concealment measures, used a fictitious entity to hide her
transactions. But our colleague says that Milligan’s actions—
registering a UPS mailbox in the name of that entity to enable
“opening a checking account” in the entity’s name and writing
checks ostensibly issued by it—are “not the same
as . . . creating and registering a corporate or other formal
business entity, and then using that entity to conduct the fraud
or launder profits.” Dissenting Op. 8. True, but our sister
circuits have found the use of fictitious entities in ways akin to
Milligan’s actions to count as sophisticated means, without
requiring the creation and registration of a formal business
entity. See United States v. Allan, 513 F.3d 712, 715–16 (7th
Cir. 2008) (upholding sophisticated-means enhancement
because defendant enrolled in a company’s referral program in
the names of nonexistent, fictitious entities and faxed falsified
forms listing the entities as referral partners); Lewis, 93 F.3d at
1077, 1082 (applying sophisticated-means enhancement in part
because defendant wrote checks to nonexistent, fictitious
entities for deposit into accounts opened in the entities’ names).
The district court’s application of the sophisticated-means
enhancement is also in keeping with our decision in McCants.
In contending otherwise, our dissenting colleague envisions
that case to have involved circumstances quite different from
what our opinion in the case described. McCants’s offense was
unlawful possession of implements for making fake IDs. See
McCants, 554 F.3d at 163. Our colleague says that McCants,
unlike Milligan, “used specialized knowledge (in setting up a
multistate fraudulent operation).” Dissenting Op. 9. But there
is no indication in our opinion that McCants used any kind of
specialized knowledge to set up (or carry out) his possession of
fake ID implements at the two office sites of his business. And
14
although the two sites sat in different jurisdictions—D.C. and
Maryland, see 554 F.3d at 158—there is no reason to infer that
McCants possessed the implements in both locations as part of
some orchestrated, specialized scheme to avoid detection. If
anything, the more places a person possesses fake ID materials,
the more likely the unlawful possession would be discovered.
Our colleague further observes that McCants “exploited
the corporate form of a legitimate business entity to effectuate
his scheme.” Dissenting Op. 9. Again, though, our opinion in
McCants contains no hint of any such exploitation. And it is
far from clear how one would exploit an entity’s corporate form
to facilitate or conceal the possession of fake ID implements at
the entity’s premises. McCants’s offense was not tax evasion
or some such crime as to which a business’s corporate form
might be used to launder funds or otherwise hide the offense.
Rather, McCants kept his fake ID equipment and paraphernalia
at his business sites (and in storage units). See McCants, 554
F.3d at 158. Milligan similarly conducted her fraud at the
business where she worked.
In the end, there is little reason to suppose that McCants
employed appreciably greater specialized expertise in the
concealment arts than did Milligan. Indeed, among the
materials found in McCants’s offices was “a pamphlet titled
‘How to make driver’s licenses and other ID’s on your home
computer.’” Id. While possessing a rudimentary how-to guide
of that sort might not mark him as a criminal mastermind,
McCants still used sufficiently elaborate means to conceal his
offense to prompt the district court in his case to impose the
sentencing enhancement. We “accord[ed] due deference to the
court’s conclusion” and sustained it. Id. at 163. We did not
assess whether we would have reached the same decision in the
first instance but instead asked whether “the district court’s
15
resolution of the question [was] invalid.” Id. Applying the
same approach here, we reach the same conclusion.
C.
Milligan lastly argues that her eight-year sentence is
substantively unreasonable. Section 3553(a) requires the
district court to consider the “history and characteristics” of the
defendant before imposing a sentence. 18 U.S.C. § 3553(a)(1).
Relying on that provision, Milligan asserts that the district
court failed to adequately consider her age of 61 years at the
time of sentencing and certain hardships she has experienced.
The record from Milligan’s sentencing demonstrates
otherwise. The district court discussed “Ms. Milligan’s age”
and the “turmoil in [her] life,” and the court explained why it
believed an eight-year sentence was still appropriate for
protection of the public and deterrence—two of the purposes
set forth in Section 3553(a) with which federal sentences must
comply. Sentencing Hr’g Tr. 39–41, Supp. App. 240–42; see
18 U.S.C. § 3553(a)(2)(B), (C). Additionally, “[a] sentence
within [the] properly calculated Guidelines range,” like
Milligan’s sentence, “is entitled to a rebuttable presumption of
reasonableness.” United States v. Law, 528 F.3d 888, 902
(D.C. Cir. 2008) (quotation marks and citation omitted).
Milligan fails to rebut that presumption.
* * * * *
16
For the foregoing reasons, we affirm Milligan’s
convictions and sentence.
So ordered.
MILLETT, Circuit Judge, concurring in part, dissenting in
part, and dissenting from the judgment: I agree with the
majority opinion that Milligan’s challenge to her conviction, as
well as her substantive reasonableness challenge to her
sentence, do not succeed. I part company, though, with the
decision to affirm application of the sophisticated means
sentencing enhancement. The Sentencing Commission
explicitly confined the sophisticated means enhancement to
criminal activity that is “especially complex or especially
intricate[.]” U.S. SENT’G GUIDELINES MANUAL § 2B1.1 cmt.
n.9 (U.S. SENT’G COMM’N 2021) (emphases added). Creating
a fake email account and opening a UPS mailbox hardly even
count as complex or intricate, let alone “especially” so.
I
The United States Sentencing Guidelines provide for a
two-level sentencing enhancement when an offense “involved
sophisticated means.” U.S. SENT’G GUIDELINES MANUAL
§ 2B1.1(b)(10)(C) (U.S. SENT’G COMM’N 2021). The
accompanying commentary explains that “sophisticated
means” refers to “especially complex or especially intricate
offense conduct pertaining to the execution or concealment of
an offense.” Id. § 2B1.1 cmt. n.9. So the “sophisticated
means” enhancement “requires more than the concealment or
complexities inherent in fraud.” United States v. Adepoju, 756
F.3d 250, 257 (4th Cir. 2014). It requires much more: Not just
complex, but “especially complex.” Not intricate, but
“especially intricate.” Out of fidelity to the Commission’s own
words, sophistication must go above and beyond commonplace
criminal activity and cover-ups.
The Sentencing Guidelines themselves provide additional
guidance as to what constitutes “sophisticated means”:
If (A) the defendant relocated, or participated in
relocating, a fraudulent scheme to another
2
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[.]”
U.S. SENT’G GUIDELINES MANUAL § 2B1.1(b)(10) (U.S.
SENT’G COMM’N 2021) (emphasis added).
The structure of this Guideline requires us to read
“sophisticated means” in light of the examples that precede it.
That is because “sophisticated means” comes after the word
“otherwise” at the end of a list of entries that trigger the same
sentencing enhancement. The Supreme Court has read the
word “otherwise,” when used at the end of such a list, to
introduce a residual clause that names a category into which
conduct that parallels the preceding examples fall. See
Johnson v. United States, 576 U.S. 591, 598 (2015) (“By
asking whether the crime ‘otherwise involves conduct that
presents a serious potential risk,’ moreover, the residual clause
forces courts to interpret ‘serious potential risk’ in light of the
four enumerated crimes [that came before.]”) (quoting 18
U.S.C. § 924(e)(2)(B)); see also 2A N. SINGER, SUTHERLAND
ON STATUTES AND STATUTORY CONSTRUCTION § 47.17 (1991)
(“Where general words follow specific words in a statutory
enumeration, the general words are construed to embrace only
objects similar in nature to those objects enumerated by the
preceding specific words.”). In this way, sophisticated-means
offenses must be in the same realm of complexity as the
examples given. U.S. SENT’G GUIDELINES MANUAL § 2B1.1
cmt. n.9 (U.S. SENT’G COMM’N 2021); ANTONIN SCALIA &
BRYAN A. GARNER, READING LAW 195 (2012)
(“When * * * any words * * * are associated in a context
suggesting that the words have something in common, they
should be assigned a permissible meaning that makes them
3
similar. The canon especially holds that ‘words grouped in a
list should be given related meanings.’”) (quoting Third Nat’l
Bank in Nashville v. Impac Ltd., 432 U.S. 312, 322 (1977)).
This reading of the Guideline also comports with the
congressional directive that gave life to the sophisticated-
means provision. In the Telemarketing Fraud Prevention Act
of 1998, Congress directed the Sentencing Commission to
“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[.]”
Pub. L. No. 105-184, § 6, 112 Stat. 520, 521; see U.S. SENT’G
GUIDELINES MANUAL amend. 587, app. C, at 25 (Supp. 1998)
(“This amendment responds to the [congressional] directives
by * * * broaden[ing] the ‘sophisticated concealment’
enhancement to cover ‘sophisticated means’ of executing or
concealing a fraud offense.”). In citing the example of a fraud
committed from “outside the United States,” then, the
Sentencing Commission was giving effect to the very level of
sophistication called for by Congress.
In short, what counts as sophisticated means must be of a
piece with the two examples provided in the Guideline—(A)
relocating jurisdictions to avoid detection, or (B) committing
the fraud from foreign land. These illustrative examples are
variations on a theme in that they both involve operating or
relocating a criminal scheme across multiple jurisdictions “to
evade law enforcement or regulatory officials[.]” U.S. SENT’G
GUIDELINES MANUAL § 2B1.1(b)(10)(A) (U.S. SENT’G
COMM’N 2021). Such sophisticated manipulations use
specialized knowledge about regulatory schemes and law-
enforcement operations in different locations to make policing
and detection of the crimes more difficult.
4
The Guideline’s commentary reinforces that the use of
specialized knowledge or skills to conduct or cover up the
fraud sits at the heart of “sophisticated means”:
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.
U.S. SENT’G GUIDELINES MANUAL § 2B1.1 cmt. n.9 (U.S.
SENT’G COMM’N 2021); see also Stinson v. United States, 508
U.S. 36, 38 (1993) (Guidelines commentary “is authoritative
unless it violates the Constitution or a federal statute, or is
inconsistent with, or a plainly erroneous reading of, that
guideline.”).
For example, to structure a cross-jurisdictional fraud
scheme, one must (i) understand the utility of dividing offices
across jurisdictions, (ii) determine which jurisdictions’ laws
and law enforcement systems are most conducive to the
conduct of fraud or its cover up, and (iii) have the wherewithal
to act on that understanding. Likewise, to hide assets or
transactions using “fictitious entities, corporate shells, or
offshore financial accounts,” one must possess a fairly
technical understanding of legal and regulatory systems and the
ability to utilize those systems to the advantage of the
fraudulent scheme. Indeed, by employing the adverb
“especially”––by employing it twice over––the Commission
emphasized that “sophisticated means” reaches only those
measures that go beyond the run-of-the-mill fraudulent or
5
deceptive actions undertaken by an ordinary hustler. See
Especially, WEBSTER’S NEW INTERNATIONAL DICTIONARY 776
(3d ed. 1993) (def. 2) (“particularly, notably, exceptionally”);
MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 396 (10th ed.
1996) (def 2) (“in particular: particularly”); Especial,
WEBSTER’S NEW RIVERSIDE UNIVERSITY DICTIONARY 443 (2d
ed. 1994) (def. 1) (“Standing above or apart from others:
exceptional”); OXFORD ENGLISH DICTIONARY 395 (2d ed.
1989) (“In an especial manner; principally, chiefly”).
II
A
Eleanor Milligan’s fraud consisted of using her
employer’s payroll system to route paycheck funds into her
own bank account. Milligan would keep open profiles of
employees who had left GMSI’s employ, input her own bank
information, and collect the paychecks for herself.
One of those former employees was David Morgan.
Because Milligan’s fraud made it appear as though Morgan
continued to work for and get paid by GMSI, the IRS contacted
Morgan about missing W-2 forms for 2011 and 2012. Morgan
got in touch with Milligan, who sent him corrected W-2 forms
to resolve the problem.
Milligan’s supervisor soon discovered that GMSI had
continued to pay Morgan even after he left the company. To
cover her tracks, Milligan told her supervisor that she had
mistakenly failed to close out Morgan’s account, leading to the
extra paychecks. She then created an email address,
“DavidMorgan647@Ymail.com,” which she used to send
emails purportedly from Morgan arranging to repay the money.
To facilitate this repayment, Milligan opened a UPS mailbox
6
under the name “David Morgan Rental Properties.” She then
obtained checks bearing that name and mailbox address, which
she used to reimburse GMSI.
After Milligan was convicted at trial, the district court
concluded that Milligan’s offense conduct amounted to the use
of “sophisticated means,” enhancing her sentence under
Section 2B1.1(b)(10)(C) of the United States Sentencing
Guidelines from a 57–71 month range to a 70–87 month range.
The district court ultimately sentenced Milligan to 72 months
in prison on the wire fraud charges.
B
There was nothing especially complex or especially
intricate about Milligan’s fraud or its cover up.
Milligan created a fake email account, which any middle
schooler could do. See Sarah Perez, Yahoo Mail’s mobile app
now does Caller ID, syncs photos, TECHCRUNCH (Feb. 13,
2017, 2:08 PM), https://perma.cc/KFZ4-93B7 (placing just
Yahoo Mail at 225 million users). She opened a mailbox with
UPS, a routine errand. Sure, she made up a name of a company
for the mailbox and for some checks to mask the
reimbursements coming from her own account. In other
words, she used a fake name. That is Avoiding Detection 101.
How could she have covered her trail any more simply?
Nothing she did entailed specialized skill or knowledge. It
takes a stretch of the imagination even to call her steps
complex. But they certainly were not “especially” complex or
intricate. See United States v. Archuletta, 231 F.3d 682, 685–
686 (10th Cir. 2000) (use of fake name and checks were
“evidence of nothing more than the minimum conduct required
to establish a violation of [bank fraud statute] in its simplest
form”).
7
The record shows, moreover, that Milligan’s steps were an
ad hoc and one-off scramble in response to almost being found
out by her supervisor. She did not undertake similar measures
for any of her other fraudulent check diversions. Her actions
were isolated, and she simply reacted spontaneously when a
threat to her actions arose. The government points to nothing
suggesting this was a pre-planned aspect of the fraud offense
itself. Yet the examples in the Guideline and accompanying
commentary all involve sophistication in the form of foresight
or at least of design for the fraudulent offense itself: A
telemarketing scheme set up to operate in multiple jurisdictions
to evade detection, transactions hidden by corporate shells, or
offshore accounts set up in the first instance to obfuscate. The
very foundations of these operations are imbued with
sophisticated methods of concealment, complex enough to
require some degree of planning. Meanwhile, Milligan
scrambled to duct tape a leaky pipe.
That is not to say that after-the-fact steps at cover-up will
never rise to the level of sophisticated means. It is rather the
combination of run-of-the-mill measures slapped together with
no evidence of foresight, planning, specialized skills, or
technical knowledge that place Milligan’s rudimentary cover-
up far outside the realm of sophisticated means.
What is more, Milligan’s efforts were entirely focused on
escaping short-term scrutiny from her boss; they do not add up
to an “offense” designed to “evade law enforcement or
regulatory officials[.]” U.S. SENT’G GUIDELINES MANUAL
§ 2B1.1(b)(10) (U.S. SENT’G COMM’N 2021).
The majority opinion asserts that Milligan created a fake
entity in the name of “David Morgan Rental Properties” to
register the mailbox and to avoid issuing the reimbursement
8
checks in her own name. But making up a name and opening
a checking account is not the same as creating a fake entity, not
to mention creating and registering a corporate or other formal
business entity, and then using that entity to conduct the fraud
or launder profits, like the “corporate shells, or offshore
accounts” referenced in the Guideline. U.S. SENT’G
GUIDELINES MANUAL § 2B1.1 cmt. n.9 (U.S. SENT’G COMM’N
2021). The question under the Guideline is whether her
“offense conduct” was especially complex or especially
intricate, not whether routine efforts to cover up one instance
of fraud in a decade-long scheme meet that standard.
The former, in fact, is precisely the question the Seventh
and Second Circuits have answered in applying the Guidelines.
See United States v. Allan, 513 F.3d 712, 713–714, 715–716
(7th Cir. 2008) (conduct sophisticated where defendant
enrolled in a Hewlett-Packard affiliate program, sought out an
inside contact who provided information about Hewlett-
Packard customers that defendant then used to structure and
carry out a scheme that also involved the use of a falsified
business name); United States v. Lewis, 93 F.3d 1075, 1082 (2d
Cir. 1996) (defendant’s conduct was sophisticated where he
wrote “nearly 200 checks to non-existent businesses and
charities during an eight-year period” that were deposited into
“26 different bank accounts,” and the funds then transferred
from “these Satellite Accounts into Operational Accounts”);
contra Majority Op. at 13. The majority opinion, by contrast,
asks only whether Milligan’s far more rudimentary, isolated
concealment efforts involved anything beyond “lies or
omissions inherently bound up in her embezzlement[.]
Majority Op. at 11. It is no wonder the answer.
By contrast, consider United States v. McCants, 554 F.3d
155 (D.C. Cir. 2009). There, we affirmed imposition of the
sophisticated means sentencing enhancement where the
9
defendant “committed his [fraud] offense in multiple states and
kept some of his false documents and device-making
implements hidden in storage units rented under an alias. He
also admit[ted] to using an allegedly legitimate business to
conceal his offense from law enforcement.” Id. at 163.
McCants involves perennial signs of sophistication that
this case does not. McCants used specialized knowledge (in
setting up a multistate fraudulent operation) and exploited the
corporate form of a legitimate business entity to effectuate his
scheme. McCants, 554 F.3d at 163. These steps were baked
into the fabric of the operation; they were not ad hoc or limited
in duration. See id. As the majority notes, “we do not assess
the sophistication of a defendant’s concealment actions
piecemeal.” Majority Op. at 10. Thus, although McCants did
use an alias as part of his concealment efforts, that does not
mean any alias itself constitutes sophisticated means. Instead,
the fact that he operated across multiple jurisdictions and used
a legitimate business for cover from law enforcement do critical
work in the sophisticated means analysis.
Here, Milligan’s use of David Morgan’s name as an alias
to cover up her fraudulent diversion of checks issued in his
name is as sophisticated as her scheme got. She made up the
name of a business, but did not loop into her plan a real, live
business entity like McCants did. She reacted haphazardly to
questions from her boss, but she did not coordinate
concealment efforts from the start, like McCants did, or exploit
multi-jurisdictional barriers to law enforcement. To say these
efforts were “not inherent to her underlying offense[,]”
Majority Op. at 11, ignores that avoiding detection is inherent
in all frauds.
While the majority opinion (at 13) maintains that there is
“no indication in our opinion that McCants used any kind of
10
specialized knowledge to set up (or carry out) his possession of
fake ID implements,” we specifically noted that McCants
“committed his offense in multiple states,” McCants, 554 F.3d
at 163, which is what the Guideline itself uses to define
sophisticated conduct. The same goes for McCants’s use of his
“legitimate business” as a boon for his efforts at concealment.
Id. While the majority opinion downplays McCants’ use of his
own business in the fraud, our decision found it significant that
McCants has used “an allegedly legitimate business to conceal
his offense from law enforcement.” Id.
To be sure, when law enforcement finally discovered
McCants’s criminal activity, they found among his effects “a
pamphlet titled ‘How to make driver’s licenses and other ID’s
on your home computer.’” Majority Op. at 14 (quoting
McCants, 554 F.3d at 158). But they also found “passports,”
“birth certificates[,]” “unfinished Social Security cards[,]”
“and a paper file titled ‘Bank Fraud Issues.’” McCants, 554
F.3d at 158. Law enforcement in this case produced evidence
of an email account, a UPS mailbox, and some checks bearing
the latter’s address. There was no instruction manual,
presumably because Milligan’s tasks are not sophisticated
enough to justify the ink.
Neither does the goal of deterrence push Milligan’s
actions across the line. Even assuming that sophisticated
efforts at concealment necessitate heavier sentences to
maintain the same deterrent effect (Majority Op. at 10–11),
Milligan’s simplistic use of one alias in one cover-up effort
remains south of “especially complex.” All agree that, to
constitute sophisticated means, the defendant’s efforts must go
beyond routine cover-up measures. Oral Arg. Tr. at 28–29;
Milligan Opening Br. 20. Yet it is hard to think of what less
Milligan could have done to cover up her diversion of David
Morgan’s checks. By the same token, it is hard to imagine this
11
conduct made it any more difficult for law enforcement to sniff
out the fraud. Notably, the district court made no such finding
in applying the enhancement. So deterrence provides no
justification for the sentencing enhancement in Milligan’s
case—and it certainly cannot cover up for the lack of
sophistication in her means. Use of the enhancement here was
just more punishment for punishment’s sake.
We also must not forget that the Guidelines’ interest in
deterrence must be balanced against the equally important goal
of proportionality. United States v. Booker, 543 U.S. 220, 264
(2005) (citing U.S. SENT’G GUIDELINES MANUAL § 1A1.1,
cmt. n.3 (U.S. SENT’G COMM’N 2003)). Treating rudimentary
efforts like Milligan’s as “especially complex” threatens to
dilute the Guideline standard to, essentially, any effort to avoid
detection beyond a fib. While we owe the district court’s
determination due deference, we also must ensure that the
boundaries set by the Guidelines’ plain language—here, the
need for “especially complex” or “especially intricate”
conduct—are enforced. See generally McCants, 554 F.3d at
163.
As this court has said, the ability to “imagine scenarios
involving more elaborate means to avoid detection or
conviction does not render the district court’s resolution of the
question invalid.” McCants, 554 F.3d at 163. The corollary
must also be true. Just because one might be able to imagine a
scenario involving less elaborate means does not make the
steps Milligan employed especially complex, within the
meaning of the Sentencing Guidelines.
*****
Because I view the district court’s decision as misapplying
the “sophisticated means” enhancement, I would remand for
12
resentencing. For that reason, I respectfully concur in part,
dissent in part, and dissent from the judgment.