Reported / Citable
Background
Michael and Tiffany Fullerton participated in a scheme that submitted six fraudulent Paycheck Protection Program loan applications and obtained $3,027,526.11 from five of them. The applications used fabricated employment and tax records, defunct entities, stolen identities, and false supporting documents. The proceeds were moved through personal and business accounts, cashier’s checks, bank credits, casinos, and out-of-state ventures, and were spent on property, vehicles, luxury goods, debts, and other purchases.
Michael pleaded guilty to eleven fraud, conspiracy, money-laundering, monetary-transaction, and aggravated-identity-theft counts and received 286 months in prison. Tiffany went to trial, was convicted of conspiracy to commit bank fraud and conspiracy to commit money laundering, and received 108 months. Michael challenged four sentencing enhancements. Tiffany challenged the denial of her newly discovered-evidence motion, an obstruction enhancement for procuring Michael’s perjury, and the inclusion of the first PPP loan in her intended-loss calculation.
The Court’s Holding
The Fifth Circuit affirmed all four enhancements imposed on Michael. His use of shell entities, forged records, stolen identities, fake professionals, and false email addresses supported the sophisticated-means enhancement. Separate, multilayered transfers supported sophisticated laundering without impermissible double counting. The district court also could find that a worker who spent weeks entering false information was the fifth knowing participant and that Michael committed perjury at Tiffany’s trial as part of his plan to take responsibility for the scheme.
The court also rejected Tiffany’s challenges. Evidence that Michael had involved an ex-wife in fraud without her knowledge about 25 years earlier was unlikely to produce an acquittal, could have been discovered with diligence, and was likely inadmissible. Circumstantial evidence supported the finding that Tiffany procured Michael’s perjury by arranging testimony from a witness she knew planned to take the fall and by helping formulate questions designed to elicit exonerating falsehoods. Any error in that enhancement also would have been harmless because the district court said it would impose the same 108-month sentence either way.
Reviewing Tiffany’s new relevant-conduct argument for plain error, the court upheld inclusion of the Starx loan in intended loss. The unrebutted presentence report placed her in the conspiracy when that loan was submitted, and the record supplied indicia of reliability for that finding. The court nevertheless remanded under Federal Rule of Criminal Procedure 36 because Tiffany’s written judgment incorrectly stated that she was convicted of conspiracy to commit wire fraud, a charge on which she was acquitted.
Key Takeaways
- Different conduct may support sophisticated-means and sophisticated-laundering enhancements when the fraud itself uses concealment devices and the proceeds are separately layered through multiple transactions.
- A person need not be charged or convicted to count as a participant under the leadership enhancement; knowing assistance with part of the criminal enterprise is sufficient.
- Procuring perjury does not require an express instruction to lie when the evidence shows the defendant induced or arranged testimony known to be false.
- An unrebutted presentence report bearing indicia of reliability may establish when a defendant joined a conspiracy for relevant-conduct purposes.
Why It Matters
The decision illustrates the broad range of conduct that can justify cumulative fraud, laundering, leadership, and obstruction enhancements in a complex financial-crime prosecution. It also underscores the importance of making specific sentencing objections in the district court and rebutting factual assertions in the presentence report with evidence.
The limited remand does not disturb either defendant’s sentence or Tiffany’s convictions. It requires only correction of the written judgment so that it no longer identifies wire-fraud conspiracy as an offense of conviction.