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Circuit Adopts Expansive Reading of the Criminal Livelihood Sentencing Enhancement

In United States v. Moran, the Second Circuit (Calabresi, Cabranes, Chin) affirmed the sentence of Lamont Moran, who was convicted of conspiracy to distribute heroin. On appeal, Moran challenged the application of two sentencing enhancements, one for acting as a supervisor in the course of his criminal activities (the “Aggravating Role Enhancement” of U.S.S.G. § 3B1.1) and one for engaging in criminal activities as his livelihood (the “Criminal Livelihood Enhancement” of U.S.S.G. § 4B1.3). In affirming, the Court clarified several elements of the Criminal Livelihood Enhancement. While the Guidelines are only advisory, they remain an important part of federal criminal sentencing, although as we will see here, the particular Guidelines enhancement addressed by the panel may not have made a difference in the sentence imposed.

Background

In 2016, the Federal Bureau of Investigation and the New York City Police Department launched an investigation into a street gang in Jamaica, Queens, known as “Get it in Stacks” or “GI$.” During the course of their investigation, officers intercepted communications on Moran’s cellphones related to heroin trafficking. Subsequently, Moran sold heroin and fentanyl to a confidential source working with law enforcement.

The investigation also uncovered that Moran supervised others in his drug trafficking activities, including two individuals—Dennis Pristell and David Young—who sold heroin in Queens, and one—William Parker—who sold heroin on Long Island. Parker also supervised a further subordinate—Michael Singletary. The communications intercepted by law enforcement showed that Moran supplied heroin to Pristell and Young and that he monitored and directed their sales activities, including criticizing them for bad performance.

Officers arrested Moran in September 2016. They found heroin on Moran’s person and pictures on his cell phone showing him counting money and posing with other members of GI$. While in custody, Moran admitted to selling heroin, but said that he only did it to support his family and that he was “not a kingpin.”

In April 2017, Moran pleaded guilty to conspiracy to distribute and possess with intent to distribute 100 grams or more of heroin. According to the presentence report prepared by the Probation Office, Moran was accountable for at least 700 grams of heroin and 4.37 grams of fentanyl. The report also identified Pristell, Young, Parker, and Singletary as participants in Moran’s criminal activities.

During sentencing, the District Court (Glasser, J.) applied two sentencing enhancements over Moran’s objections. First, it added two levels for the Criminal Livelihood Enhancement[1] because it found that Moran had “committed [the] offense as part of a pattern of criminal conduct engaged in as a livelihood.” Second, it added three levels for the Aggravating Role Enhancement[2] because it found that Moran was a supervisor in the criminal conspiracy. The District Court sentenced Moran principally to 84 months’ imprisonment. The District Court also explained that whether the two sentencing enhancements applied would “not make a great deal of difference” because the 84-month sentence imposed was less than 97 months, which was the bottom of the Guidelines range that would have applied without those enhancements.

The Court’s Decision

On appeal, Moran challenged application of both the Criminal Livelihood Enhancement and the Aggravating Role Enhancement. The Second Circuit affirmed. 

With respect to the Aggravating Role Enhancement, the Court quickly dispatched Moran’s arguments, noting that the enhancement applies so long as the defendant supervised at least one person in the criminal activity, and the criminal activity involved at least five members (or is otherwise extensive). The Court held that Moran qualified as a supervisor based on the numerous messages between him and Pristell and Young, including instances where Moran gave instructions or chastised them for various shortcomings in their work. It also found that the criminal activity consisted of five members: Moran, Pristell, Young, Parker, and Singletary, each of whom had pleaded guilty to federal charges related to selling heroin.

With respect to the Criminal Livelihood Enhancement, the Court noted that it had not yet construed certain provisions of the enhancement. The enhancement applies if two elements are met: (1) the defendant committed the offense as part of a pattern of criminal conduct occurring over a substantial period of time and (2) the defendant engaged in the criminal conduct as a livelihood, meaning that (a) the defendant derived at least $14,500 from the criminal conduct in a 12-month period and (b) the criminal conduct was the defendant’s primary occupation. It is meant to “distinguish[] the professional criminal from the mere dabbler in crime[.]”

The Court first turned to the requirement that the pattern of criminal activity have occurred over a “substantial period of time.” Moran argued that he had engaged in his crimes only for nine months and that a “substantial period” must be at least 12 months because the income requirement referenced a 12-month period. The Court rejected this argument, noting that the 12-month requirement only pertains to the second element of the enhancement—whether the defendant engaged in the criminal conduct as a livelihood—not the first element concerning whether the offense was part of a pattern of criminal conduct. The Court also noted that other Courts of Appeals had found periods as short as five months to be a “substantial period of time” for purposes of the enhancement. Because Moran had engaged in trafficking heroin for at least six months, the Court found this element satisfied.

The Court then addressed the income requirement. Moran contended that the Government had not established that he made more than $14,500 from his criminal activities. The Court pointed out that, according to the PSR, Moran had sold between 700 and 1,000 grams of heroin in a six-month period, with each gram selling for between $14.00 and $17.50. Moran also sold approximately $10,000 of heroin to a single customer, the confidential source. Because the record indicated that Moran sold heroin for at least nine months, the Court held that the District Court did not clearly err in finding the income requirement satisfied. The Court also rejected Moran’s contention that the proper inquiry was net, rather than gross, income. On this point, there is a split amongst the Circuits, with the majority using gross income. The panel reasoned that gross income is the more logical point of comparison to someone earning the federal minimum wage, which is calculated on a gross basis. 

Finally, the Court addressed the requirement that the criminal activity have been Moran’s “primary occupation.” Moran argued that selling heroin was not his primary occupation, and instead he was primarily employed as a part-time youth counselor at the Jacob Riis Settlement House during a portion of the period in which he engaged in his criminal conduct. The PSR indicated that Moran earned between approximately $10,000–$12,300 while working at his legitimate job, less than the amount he made from selling heroin. The record also showed that Moran made daily deliveries of heroin and communicated with his co-conspirators on a regular basis. Considering the totality of the circumstances, the Court held that the District Court did not err in finding that Moran’s primary occupation had been selling heroin.

Judge Guido Calabresi concurred, stating that, because the District Court would have imposed the same below-Guidelines sentence even if the Criminal Livelihood Enhancement had not apply, the Court should not have addressed Moran’s arguments pertaining to that enhancement.

Analysis

In this case, the Court adopted an expansive reading of the Criminal Livelihood Enhancement of section 4B1.3 of the Sentencing Guidelines. By construing “substantial period of time” to include periods as short as six months, the Court has opened the door to applying this enhancement to defendants who engage in criminal activity for only half a year, or potentially even a shorter period. The Court also shut the door on the argument that net income should be analyzed in determining whether the income requirement had been met. This issue can be significant, as drug dealing is often a low-margin business, with most of the money received from drug sales owed to another drug dealer who is higher in the supply chain. The roughly $14,500 received by Moran for selling heroin was doubtless not all or even mostly retained by Moran. Finally, the Court’s reasoning suggested that defendants who earned more money from criminal activities than from legitimate employment will likely satisfy the element that criminal activity is their “primary occupation.” This will be the case even where the defendant apparently had a legitimate day job at which he made approximately the same earnings. Taken together, these holdings interpret the enhancement in a light quite favorable to the Government. 

Given that the Court could have avoided the Criminal Livelihood Enhancement issues entirely, it appears two members of the panel felt it prudent to provide additional guidance to lower courts when applying the enhancement. It may have been that the Circuit split on the gross income/net income question in particular prompted the panel’s decision to proceed. 

To be sure, Judge Calabresi is right that in cases where the sentencing judge says that the Guidelines issue would not have mattered to the selection of his sentence, the district court need not resolve the issue. Even under the mandatory Guidelines regime, the Second Circuit held in United States v. Bermingham, 855 F.2d 925 (2d Cir. 1988) that “a dispute as to which of two overlapping guidelines ranges is applicable need not be resolved where the sentence imposed would have been selected under either guideline range.” This rule continues in the post-Booker system. See United States v. Mandell, 752 F.3d 544, 553 (2d Cir .2014) (holding that sentencing error may be harmless where the district court indicates clearly that it would have imposed the same sentence even with the correct Guidelines range). Here, the District Court signaled something akin to this, although in somewhat more tentative language, saying that the correct range would “not[] make a great deal of difference” to his determination of what sentence to impose.

In any event, going forward, now with the panel’s guidance in Moran, it would not be surprising to see the Criminal Livelihood Enhancement applied with greater frequency.


[1] The Criminal Livelihood Enhancement applies “[i]f the defendant committed an offense as part of a pattern of criminal conduct engaged in as a livelihood.” 

“‘Engaged in as a livelihood’ means that (A) the defendant derived income from the pattern of criminal conduct that in any twelve-month period exceeded 2,000 times the then existing hourly minimum wage under federal law [$14,500 as of Moran’s sentencing]; and (B) the totality of circumstances shows that such criminal conduct was the defendant’s primary occupation in that twelve-month period (e.g., the defendant engaged in criminal conduct rather than regular, legitimate employment; or the defendant’s legitimate employment was merely a front for the defendant’s criminal conduct).” U.S.S.G. § 4B1.3.

[2] The Aggravating Role Enhancement applies if “the defendant was a manager or supervisor (but not an organizer or leader) and the criminal activity involved five or more participants or was otherwise extensive.” U.S.S.G. § 3B1.1(b).