FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MAINE [Hon. George Z. Singal, U.S. District Judge]
Jonathan Shapiro, with whom Molly Campbell and Shapiro,
Weissberg & Garin, LLP were on brief, for appellant.
Renée M. Bunker, Assistant United States Attorney,
with whom Thomas E. Delahanty II, United States Attorney, was
on brief, for appellee.
Lynch, Stahl, and Barron, Circuit Judges.
case, of first impression for this circuit, involves the
interpretation of a sentencing guideline that is frequently
used to enhance sentences for those convicted of drug-related
crimes, see U.S.S.G. § 2D1.1(b)(15)(E), and is
potentially applicable to a wide range of other offenses,
see id. § 4B1.3.
7, 2015, Marco Gordon pled guilty to conspiracy to possess
with intent to distribute, and possession with intent to
distribute, more than 28 grams of cocaine base, see
21 U.S.C. §§ 846, 841(a)(1), and 841(b)(1)(B), for
his role in a drug-trafficking organization that operated
primarily in Portland, Maine from October 2013 to January
2015. He does not dispute that he held a leadership role in
the illicit organization, which was responsible for
trafficking approximately 839 grams of cocaine base during a
appeals only his sentence of 132 months of imprisonment,
arguing that the district court improperly applied a
two-level enhancement -- for offenses committed "as part
of a pattern of criminal conduct engaged in as a livelihood,
" U.S.S.G. §§ 2D1.1(b)(15)(E), 4B1.3 -- both
by misinterpreting the guideline and by making erroneous
predicate findings of fact.
order to apply that criminal livelihood enhancement, the
court needed to find that over a twelve-month period, Gordon
"derived income" in excess of $14,
from drug trafficking and engaged in drug-trafficking as his
"primary occupation." Id. § 4B1.3
app. n.2. We affirm Gordon's sentence because the
district court did not commit legal error when it used
Gordon's gross, rather than net, income derived from drug
trafficking to determine that his income surpassed the $14,
500 threshold, nor did the court commit factual error when it
concluded that drug trafficking was Gordon's primary
January 9, 2015, Gordon was arrested in an apartment in
Portland, Maine in connection with a fifteen-month federal
investigation into a drug-trafficking organization that had
operated in "Michigan, Connecticut, and Portland, Maine,
though the primary location was in Portland." During a
search incident to Gordon's arrest, officers found $990
and 0.31 grams of cocaine base in his pockets, and they found
an additional $3, 425.46 and 183.6 grams of cocaine base in
the apartment. Gordon was indicted on January 29, 2015, along
with four co-defendants, for his role in an interstate drug
pled guilty on July 7, 2015 to possessing with the intent to
distribute in excess of 28 grams of cocaine base, 21 U.S.C.
§ 841(a)(1), (b)(1)(B), and conspiring to do the same,
id. § 846. Gordon does not dispute that the
money and drugs seized during his arrest (with a street value
of roughly $28, 935) belonged to him and that the conspiracy
to which he belonged trafficked at least 671 grams of cocaine
base (with a street value of roughly $89, 480) during the
twelve months preceding his arrest.
November 6, 2015 sentencing hearing, the district court
calculated Gordon's Guidelines Sentencing Range
("GSR") to be 188 to 235 months. That GSR included
a two-level enhancement, sought by the government, which
applies when "[t]he defendant committed [the relevant]
offense as part of a pattern of criminal conduct engaged in
as a livelihood." U.S.S.G. §§ 2D1.1(b)(15)(E),
4B1.3. The court applied that enhancement over Gordon's
objection but ultimately sentenced him to 132 months of
imprisonment, which represented a 56-month downward variance
from the low end of the resulting GSR. On November 18, 2015,
Gordon appealed his sentence to this court, limiting his
challenge to whether the district court erred in applying the
criminal livelihood enhancement.
criminal livelihood enhancement applies where the government
proves, by a preponderance of the evidence, that two
conditions have been met: (1) the defendant committed the
relevant offense as "part of a pattern of criminal
conduct" and (2) the defendant was engaged in that
conduct "as a livelihood." Id.
§§ 2D1.1(b)(15)(E), 4B1.3. On appeal, Gordon argued
only that the government had failed to meet its burden as to
the second condition.
Guidelines further divide that second condition into two
prongs. A defendant was engaged in a pattern of criminal
conduct "as a livelihood" only if:
(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[, ]
[meaning $14, 500 in the instant case]; 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).
Id. § 4B1.3 app. n.2. Gordon argued on appeal,
as he had before the district court, that the government had
failed to meet its burden as to both prongs.
the first prong, Gordon argued that the court had erred in
finding that he had derived "income" in excess of
$14, 500 from drug trafficking during the relevant time
period because the court had considered his gross, rather
than net, income, and that if the court had properly deducted
the expenses related to his drug trafficking, it would have
found that his earnings fell short of the threshold. Gordon
also argued that the court had overestimated his income by
twenty percent because it had not identified a twelve-month
period to consider and had thus implicitly treated all of the
income he had earned over the fifteen-month life of the
conspiracy as if he had earned it in a year. As to the second
prong, Gordon argued that the court had erred in finding that
drug trafficking had been his primary occupation because his
primary occupation had actually been his legitimate
self-employment as a barber.
premise of Gordon's first argument -- that in order to
apply the criminal livelihood enhancement, a district court
must, as a matter of law, find that a defendant's net,
rather than gross, income from criminal activity exceeded
$14, 500 -- raised an issue of first impression in this
circuit. Gordon made that argument, albeit for the first
time, during the sentencing hearing. But the prosecution did
not take a position on that argument. And the district court
determined that Gordon's income met the $14, 500
threshold without explicitly stating "whether its
finding was based on the net [or] gross approach." As
a result, "we [were] unable to address [a] key issue
on appeal, " and so we sought clarification from the
district court as to what exactly it had decided. On December
12, 2016, this court issued an order remanding the case,
requesting that the district court clarify its findings
relevant to Gordon's first argument on appeal. We invited
the district court to "take further evidence and make
further findings" if necessary.
January 27, 2017, the district court issued an order in
response to the remand clarifying that it had utilized the
gross-income approach and reiterating its conclusion that,
under that approach, the criminal livelihood enhancement
applied. See United States v.
Gordon, No. 2:15-cr-27-GZS, 2017 WL 383349, at *2
(D. Me. Jan. 27, 2017). The court explained that the
"derived income" language in § 4B1.3 app.
n.2(A) allows a district court to use a defendant's gross
income. It reasoned that if the Guidelines had meant to
require a court to consider a defendant's net income,
then they would have provided "specific guidance . . .
regarding how to calculate net income for the many offenses
covered by [the enhancement]." Id.
court also noted that the parties disagreed as to what
constituted a "deductible expense" and as to what
should be viewed more properly as a distribution of profits.
Id. For example, the government argued that gross
income should be used, but that if net income were used, only
the amount Gordon had paid to acquire the cocaine base he
sold could be netted out against his gross earnings.
Id. Gordon, in contrast, argued that the court
should also deduct compensation he had purportedly paid
subordinate dealers to move product on his behalf, as well as
the cost of two televisions and a futon that he had
purportedly purchased for an associate in exchange for
allowing Gordon to store cocaine base at the associate's
apartment. Id. at *2-3.
court also pointed out that it is the government's burden
to prove the application of a sentencing enhancement,
United States v. Alphas, 785 F.3d
775, 784 (1st Cir. 2015), but that the government will
"frequently have little evidence to offer"
regarding the precise, idiosyncratic and potentially numerous
expenses attendant to a criminal enterprise, "especially
when those expenses are cash payments or cash purchases made
with drug proceeds, " Gordon, 2017 WL 383349,
at *3. "Thus, " the court concluded, "assuming
[a district court] were required to make a net income finding
. . ., it is not clear who [would] bear the burden of
production for any deductible amounts." Id.
the court held that even if it had not applied the criminal
livelihood enhancement, and Gordon's GSR had been 151 to
188 months as a result, the court still would have varied
downward and imposed the same 132-month sentence on Gordon.
January 30, 2017, Gordon filed a notice of his intent to
continue his appeal with this court in light of the district
court's January 27 order. In his supplemental appellate
brief, filed on February 17, 2017, Gordon renewed his claim
that the district court had erred, as a matter of law, in
calculating his derived income on a gross, rather than net,
basis for purposes of the criminal livelihood enhancement. Of
the other claims raised in Gordon's original appellate
brief, which all pertained to purported factual errors
underlying the court's application of the same
enhancement, only Gordon's claim that the court had erred
by finding that drug trafficking, rather than barbering, was
his primary occupation during the relevant time period
remains a live issue in this appeal.
Appeal from the District Court's Use of the
Gross-Income Approach Under U.S.S.G. § 4B1.3 app.
appeals from the district court's thoughtful holding that
it was proper to apply § 4B1.3 app. n.2(A) of the
Guidelines based on evidence of Gordon's gross income
alone. Gordon argues that this was error, alleging that
§ 4B1.3 app. n.2(A) required the court to consider his
net income. The government denies that this was error
but says that, if any error occurred, it was harmless in
light of the district court's statement that it would
have imposed the same 132-month sentence regardless of
whether the criminal livelihood enhancement applied. See
Gordon, 2017 WL 383349, at *3.
address first the question of whether there was any error at
all in the district court's use of the gross-income
approach, a recurring and logically antecedent question. Then
we turn to the government's argument that, if there was
any error, that error was harmless. For the reasons that
follow, we hold that there was no error.
proper interpretation of a sentencing guideline is a question
of law that we review de novo. United States
v. Damon, 595 F.3d 395, 399 (1st Cir.
2010). We interpret a guideline "by applying familiar
principles of statutory construction, " id. at
400, meaning we look to "its text, structure, context,
and purpose, " id. at 401.
guideline at issue provides that a court applying the
criminal livelihood enhancement must find that, in any
twelvemonth period, the defendant "derived income"
from his criminal acts in excess of 2, 000 times the then
existing hourly minimum wage under federal law. U.S.S.G.
§ 4B1.3 app. n.2(A). The plain meaning of
"income" does not resolve the question of whether a
defendant's earnings should be measured on a gross or net
basis, as the term is susceptible to both readings.
Compare Income, Black's Law Dictionary (10th ed.
2014) (defining "income" as "[t]he money . . .
that one receives"), with Income,