by Douglas Ankney

In a case of first impression, the U.S. Court of Appeals for the Ninth Circuit held that issues not raised in a prior appeal are not waived in a subsequent appeal following de novo resentencing. The Court also held that a defendant’s position as an “essential member” of a criminal group has no bearing on the organizer/leader sentencing enhancement under U.S. Sentencing Guideline Section 3B1.1 (“Section 3B1.1”), and a scheme to launder $25,000 in a single transaction involving four participants and one victim was not “otherwise extensive.”

In 2009, bank branch manager Vivian Tat participated in a scheme to launder approximately $25,000 in a single transaction. She was later convicted of one count of conspiring to launder money, 18 U.S.C. § 1956(h), and two counts of making false entries in bank records, 18 U.S.C. § 1005.

At Tat’s first sentencing in 2019, the U.S. District Court for the Central District of California overruled Tat’s objections to the four-­level enhancement of Section 3B1.1, resulting in a Guidelines range of 33 to 41 months. The District Court imposed a sentence of 24 months’ imprisonment followed by two years of supervised release. On appeal, Tat did not challenge the Section 3B1.1 enhancement. But the Ninth Circuit reversed one of the false entry convictions, vacated the original sentence, and remanded for de novo resentencing. United States v. Tat, 15 F.4th 1248 (9th Cir. 2021) (“Tat I”).

At resentencing in September 2021, the District Court again overruled Tat’s objections to the four-­level enhancement of Section 3B1.1. The District Court reasoned that Tat’s position as branch manager of the bank qualified her for the enhancement and found that the money laundering scheme was “otherwise extensive.” The District Court then found that Tat’s Guidelines range remained 33 to 41 months and sentenced Tat to 18 months’ imprisonment.

Once again, Tat timely appealed, arguing, inter alia, that the District Court abused its discretion in applying the Section 3B1.1 enhancement. The Government countered that the issue was waived because Tat did not raise it in her Tat I appeal.

The Court observed “[w]aiver is the intentional relinquishment or abandonment of a known right.” United States v. Mercado-­Moreno, 869 F.3d 942 (9th Cir. 2017). But when the court remands for resentencing, it is a “‘settled principle’ that vacating an appellant’s original sentence ‘legally wipe[s] the slate clean.’” United States v. Merrell, 37 F.4th 571 (9th Cir. 2022). On remand in such a case, “the defendant is placed in the same position as if he [or she] had never been sentenced.” Id. In such cases, the District Court is “free to consider any matters relevant to sentencing, even those that may not have been raised at the first sentencing hearing, as if it were sentencing de novo.” United States v. Matthews, 278 F.3d 880 (9th Cir. 2002). Resentencing on remand is de novo absent limiting language. United States v. Klump, 57 F.3d 801 (9th Cir. 1995).

The court in Tat I did not direct a limited resentencing on remand. As such, the District Court was “free to rewrite the script with respect to Tat’s sentencing,” according to the Court. Consequently, her “failure to challenge certain aspects of her initial sentence on appeal in Tat I cannot amount to an ‘intentional relinquishment or abandonment’ of her right to challenge similar aspects of her second sentence in the present appeal,” the Court explained.

The Court’s holding aligns with the Second and Third Circuits. United States v. Quintieri, 306 F.3d 1217 (2d Cir. 2002) (holding that where “a case is remanded for de novo resentencing, the defendant may raise in the district court and, if properly preserved there, on appeal to the court of appeals, issues that he or she had previously waived by failing to raise them”); United States v. Miller, 594 F.3d 172 (3d Cir. 2010) (“when the resentencing is de novo rather than limited, issues concerning the first sentence that were previously waived may be raised in the first instance if warranted by the second sentence”).

Turning to the merits of Tat’s argument, Section 3B1.1 permits a District Court to apply a four-­level enhancement when “the defendant was an organizer/leader of a criminal activity that involved five or more participants or was otherwise extensive.”

“To impose such an enhancement, ‘there must be evidence that the defendant exercised some control over others involved in the commission of the offense or was responsible for organizing others for the purpose of carrying out the crime.’” United States v. Avila, 95 F.3d 887 (9th Cir. 1996). The Court added: “Under this circuit’s clear articulation of Section 3B1.1, even a defendant with an important role in an offense cannot receive an enhancement unless there is also a showing that the defendant had control over others.” United States v. Whitney, 673 F.3d 965 (9th Cir. 2012). “It is insufficient for purposes of the organizer/leader enhancement to show that ‘but for’ a defendant’s participation, the crime could not have occurred.” United States v. Harper, 33 F.3d 1143 (9th Cir. 1994).

The Court concluded that Tat’s position as branch manager of the bank had no bearing on whether the Section 3B1.1 enhancement is applicable, and the District Court’s conclusion to the contrary was error.

The Government conceded that the crime involved only four participants. And in United States v. Rose, 20 F.3d 367 (9th Cir. 1994), the court explained that whether criminal activity is extensive depends on (1) “the number of knowing participants and unwitting outsiders,” (2) “the number of victims,” and (3) “the amount of money fraudulently obtained or laundered.” In the present case, the scheme to launder $25,000 in a single transaction with four participants and one victim was not extensive, the Court ruled. Rose.

Accordingly, the Court vacated and remanded for resentencing without application of the Section 3B1.1 enhancement. See: United States v. Tat, 97 F.4th 1155 (9th Cir. 2024).  

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