John M. Ronning appeals a four-level sentence enhancement under U.S.S.G. 3B1.1(a) following his guilty plea to mail fraud. The district court found Ronning to be the leader of a fraudulent scheme operated with his partner J.D. Wimple through their business, WESTPAC Financial Group, Inc., which defrauded over 100 clients out of $1,134,852 in advance fees. Ronning objected to the enhancement, asserting that he and Wimple were equals in the scheme, thus lacking the requisite hierarchy for the adjustment. The court, however, maintained that Ronning’s role as Vice President and control over corporate assets justified the enhancement.
Upon review, the appellate court determined that there was no evidence indicating that Ronning exerted control over Wimple, as the two were the only participants in the scheme. The court emphasized that for the enhancement to apply, there must be a clear leader or organizer and a minimum of five participants or an extensive scheme, neither of which was substantiated in this case. Consequently, the appellate court vacated Ronning's sentence and remanded for resentencing, underscoring that the factual findings of leadership under 3B1.1 must be supported by the record.
An upward departure in sentencing may be appropriate for a defendant who, while not organizing or supervising another participant, nonetheless managed the property, assets, or activities of a criminal organization. This interpretation addresses a circuit split regarding the necessity of controlling another participant under U.S.S.G. 3B1.1. To qualify for a four-level enhancement under 3B1.1(a), a defendant must be an organizer or leader of at least one other participant, as established in cases like Valencia and Gross. An exception exists for the three-level enhancement under 3B1.1(b), where management responsibility over a criminal organization’s resources is sufficient without needing to control individuals. The Seventh Circuit's decision in United States v. Carson vacated a 3B1.1(a) enhancement due to insufficient evidence of control over any participant, while confirming that control is not necessary under 3B1.1(b) if management responsibilities are demonstrated. The Sentencing Commission's amendment stemmed from the Fourth Circuit's ruling in Chambers, which allowed management of property without direct supervision of individuals to satisfy 3B1.1(b). The definitions of "manager," "leader," and "organizer" suggest that while a manager may manage things, a leader or organizer must influence or control people. Consequently, for a 3B1.1(a) enhancement to be applicable, the record must show that the defendant organized or led another participant, as exemplified in the case of Ronning, where mere control of assets does not fulfill the requirements for a four-level enhancement.
The district court concluded that Ronning was more culpable than Wimple, leading to a less favorable plea agreement for Ronning. However, relative culpability alone does not meet the requirement of controlling another participant, as established in United States v. Harper. Testimony from Fred Delin indicated Wimple was the one in charge, being President and directing Ronning. Truman Heddins preferred communicating with Wimple, doubting Ronning's ability to assist him, while Thomas Rex Franklin noted that Wimple was aware of most office projects, unlike Ronning. The Government argued Ronning was the controlling figure due to his client interactions, portraying Wimple as merely a bookkeeper. However, the record shows that both were referred to as partners, and Ronning's greater client contact did not equate to control over Wimple. Wimple's reluctance to engage with clients seemed intentional, stemming from his temperament issues. Ultimately, despite Ronning's client interactions, he did not control Wimple. The court found no plausible basis for believing Ronning organized or led Wimple and therefore vacated the sentence for resentencing.
