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U.S. v. SANGEMINO

April 3, 2001

UNITED STATES OF AMERICA
V.
DANIEL SANGEMINO, DEFENDANT.



The opinion of the court was delivered by: Chin, District Judge.

MEMORANDUM DECISION

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.

BACKGROUND

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.

A. The Facts

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.

1. The Conspiracy

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 Darlene Openshaw.

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:

Date Amount
5/7/98 $5,000 6/1/98 4,000 6/16/98 10,000 7/8/98 10,000 8/3/98 10,000 8/13/98 4,000 8/13/98 20,000 8/21/98 20,000 8/25/98 ...

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