The opinion of the court was delivered by: Chin, District Judge.
In this case, defendant Daniel Sangemino has pled guilty to
conspiracy to commit securities fraud, mail fraud, and wire
fraud in violation of 18 U.S.C. § 341. He is before the Court
for sentencing. The sole issue with respect to his sentencing
range is whether he should receive a two-level increase in his
offense level pursuant to Sentencing Guidelines § 3A1.1(b)(1)
because one of the victims — an elderly widow — was a
"vulnerable victim." Sangemino objects to the enhancement; he
contends that because he was engaging in "cold calling" when he
contacted her, he did not know that she was elderly or a widow
or that she was in any way "vulnerable."
I held an evidentiary hearing on the issue of the proposed
enhancement on March 19, 2001. For the reasons set forth below,
Sangemino's objection is overruled. I will apply the two-level
increase. The following constitute my findings of fact and
conclusions of law.
The indictment in this case charged Sangemino and seventeen
co-defendants with conspiracy, securities fraud, and wire fraud.
Sixteen of the defendants, including Sangemino, pled guilty. The
only two defendants to go to trial — Greg Murray and Carlton
Crawford — were convicted by a jury, although Crawford was
acquitted on one count.
The facts set forth below are drawn from the evidence
presented at the March 19th hearing, Sangemino's presentence
report, the parties' submissions, and the evidence presented at
the trial of Murray and Crawford.
Beginning in 1997, Sangemino, his codefendants, and others not
named in the indictment engaged in a broad conspiracy to
fraudulently sell securities. Operating a series of "boiler
rooms" on Wall Street and Broadway in lower Manhattan, the
defendants and others sold purported stock in First Fidelity
Financial Corporation ("First Fidelity"), Exchange On-Line, and
other companies to investors all over the country. Using "lead"
cards and lists of potential investors, Sangemino and others
made "cold calls" to solicit investments. In the telephone
calls, defendants falsely represented that the companies were
about to engage in IPO's (initial public offerings) or were
"going public," and they used high pressure tactics to induce
prospective investors to invest. The typical pitch falsely
represented that time was of the essence and that if the
potential investor did not act immediately, he or she would lose
the opportunity to make a quick
and substantial profit. The calls wer made by individuals
(including Sangemino) who were not licensed and who falsely
identified themselves as the chief executive officer of the
company. To give the transactions an appearance of legitimacy,
defendants sent interested individuals brochures, subscription
agreements, and sham private placement memoranda.
In fact, the transactions were not legitimate. There were no
public offerings, and the companies in question never went
public. Indeed, the companies had no legitimate business at all.
Nonetheless, the defendants and their co-conspirators succeeded
in inducing customers to invest more than $3 million. Dozens of
individuals — members of the general public with no ties, for
the most part, to the defendants — made investments in amounts
ranging from $500 to $50,000, with most of the investments in
the range of $1,000 to $2,000. The proceeds were then simply
used to pay, in addition to expenses of the operation, illegal
commissions to the unlicensed "brokers" or "cold callers," with
the balance going to the principals of the purported companies.
2. Sangemino's Sales to Openshaw
Sangemino was a member of the conspiracy and a cold caller
from approximately April 1998 until approximately October 1998.
He obtained "leads" from lists provided by a "lead company." He
would call one lead after another, until a "lead" would show
some interest in his sales pitch. He was able to obtain
investments from only two investors. One of those investors was
Sangemino first reached Openshaw in late April or early May
1998. He told her that he was "Bruce Follick," the president of
First Fidelity, a company in New York. He represented (falsely)
that the company had $50 million in assets. He said that he
could sell her private placement stock for $10 a share, that the
stock was already worth $12 a share, and that it was a "great
deal." He started calling her often, at times virtually every
day. (Tr. at 8).*fn1
Eventually, Sangemino persuaded Openshaw to make eleven
separate investments for a total of $149,000, as follows: