United States v. Kirilyuk

29 F.4th 1128

UNITED STATES of America, Plaintiff-Appellee,

v.Ruslan KIRILYUK, Defendant-Appellant.

No. 19-10447

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 18, 2021 San Francisco, California

Filed April 1, 2022

Gene D.Vorobyov (argued), San Francisco, California, for Defendant-Appellant.

Matthew G. Morris (argued), Assistant United States Attorney; Camil A. Skipper, Appellate Chief; Phillip A. Talbert, Acting United States Attorney; United States Attorney's Office, Sacramento, California; for Plaintiff-Appellee.

Before: Daniel A. Bress and Patrick J. Bumatay, Circuit Judges, and Douglas L. Rayes,^* District Judge.

BUMATAY, Circuit Judge:

Ruslan Kirilyuk was sentenced to 27 years' imprisonment for his part in a complex fraud conspiracy spanning multiple countries and involving over 120,000 stolen American Express cards. Kirilyuk was charged and convicted of 28 felonies, the bulk of which were wire and mail fraud counts. To reach the 27-year sentence, the district court relied on multiple sentencing enhancements under the U.S. Sentencing Guidelines ("U.S.S.G.").

In this opinion, we turn our attention to two of these enhancements: (1) the calculation of "loss" as $500 per stolen credit card under U.S.S.G. § 2B1.1(b)(1)(L) and Application Note 3(F)(i); and (2) the two-level enhancement for use of an "authentication feature" under U.S.S.G. § 2B1.1(b)(11)(A)(ii). We conclude that the district court erred in applying the enhancements. We also hold that the district court erred when it imposed a prison term of 264 months for each of the fraud counts—two years above their 240-month statutory maximum. See 18 U.S.C. §§ 1341, 1343. We therefore vacate Kirilyuk's sentence and remand for resentencing.¹

I.

For three years, Kirilyuk and his associates engaged in a massive, international fraud scheme. The operation involved layers of sophistication.

First, the conspirators stole account information from nearly 120,000 American Express credit and debit cards.

Second, the group created dozens of fake online businesses using stolen identities and opened merchant accounts for the sham businesses. In setting up these businesses, the enterprise used identities pilfered from three Russian nationals who traveled to the United States on student visas and 220 California high school students whose transcripts had been stolen.

Third, one of Kirilyuk's Russian partners used the false merchant accounts to make fraudulent charges on the stolen AMEX cards. Typically, the charges were in small amounts, between $15 and $30, to avoid detection by the accountholders. The schemers even set up phone lines for the fake businesses to field complaints from AMEX customers seeking refunds for the illicit charges. By refunding the fraudulent charges, they would deter the customers from notifying AMEX.

Next, after being credited for fraudulent charges, the conspirators would transfer the funds from the merchant accounts to nominee bank accounts. They would then withdraw the money from ATMs, wire the funds overseas, or make purchases from other companies.

In total, Kirilyuk's fraud scheme involved more than five conspirators, over 70 shell companies, over 220 stolen identities, almost 120,000 fraud victims, and over 190,000 fraudulent transactions, including 84,000 transfers of funds to fake merchant accounts. Altogether, according to the Probation Office, Kirilyuk and his associates stole over $1.4 million and the intended loss was found to be more than $3.4 million.

By Fall 2015, the FBI unraveled the fraud scheme and arrested Kirilyuk and his co-conspirators. Kirilyuk was indicted on 24 counts of wire fraud, two counts of mail fraud, and one count of aggravated identity theft. See 18 U.S.C. §§ 1028(a)(1), 1341, 1343. Following his arrest and release on bond, Kirilyuk failed to appear for his February 2017 trial and the government added a failure-to-appear charge after he was apprehended in Mexico City, Mexico. See 18 U.S.C. § 3146(a)(1), (b)(1)(A)(i). A jury convicted Kirilyuk on all 28 counts.

The presentence investigation report ("PSR") determined that Kirilyuk's offense level reached the maximum of 43. As part of its calculations, the Probation Office recommended several sentencing enhancements and adjustments, including:

• ÷22 levels for the 119,913 AMEX credit card numbers used, multiplied by $500 each, resulting in a loss of $59,956,500, U.S.S.G. § 2B1.1(b)(1)(L) & cmt. n.3(F)(i).

• ÷2 levels for ten or more victims, U.S.S.G. § 2B1.1(b)(2)(A)(i) ;

• ÷2 levels for sophisticated means, U.S.S.G. § 2B1.1(b)(10)(C) ;

• ÷2 levels for the use of an authentication feature, U.S.S.G. § 2B1.1(b)(11)(A)(ii) ;

• ÷4 levels for aggravated role, U.S.S.G. § 3B1.1(a) ;

• ÷2 levels for obstruction of justice, U.S.S.G. § 3C1.1 ; and

• ÷3 levels for commission of an offense while on pretrial release, U.S.S.G. § 3C1.3.

The resulting Guideline range for Kirilyuk's offense level was life, limited by the charges' maximum terms of imprisonment. The maximum term of imprisonment for both wire and mail fraud is 20 years for each count. The identify theft and failure-to-appear counts have maximum terms of two years and ten years, respectively. The district court accepted the PSR's offense level recommendations and sentenced Kirilyuk to 324 months' total imprisonment. The district court's sentence was based on a 264-month, concurrent sentence on each of the wire and mail fraud counts, and consecutive terms of 24 months on the aggravated identity theft count and 36 months on the failure-to-appear count.

On appeal, Kirilyuk only challenges his sentence. We review the district court's interpretation of the Sentencing Guidelines de novo, its application of the Guidelines to the facts of the case for abuse of discretion, and its factual findings for clear error. United States v. Gasca-Ruiz , 852 F.3d 1167, 1170 (9th Cir. 2017) (en banc). We review whether a sentence exceeds the maximum term of imprisonment de novo. United States v. Gementera , 379 F.3d 596, 612 n.5 (9th Cir. 2004).

II.

Kirilyuk appeals his sentence on several grounds. In this opinion, we tackle three issues: (1) whether the district court erred in calculating loss based on a $500-per-card multiplier under Application Note 3(F)(i) to § 2B1.1 ; (2) whether the district court properly applied the "authentication feature" enhancement under § 2B1.1(b)(11)(A)(ii) ; and (3) whether the district court imposed an illegal sentence.

We find merit in all three claims, vacate the sentence, and remand for resentencing.

A. Section 2B1.1's $500-Per-Card Multiplier

We first address Kirilyuk's challenge to the district court's application of Application Note 3(F)(i) of § 2B1.1. The Application Note mandates that "loss" for use of "[c]ounterfeit [c]redit [c]ards" must be calculated at "not less than $500" per credit card used. See U.S.S.G. § 2B1.1 cmt. n.3(F)(i). The effect of the Application Note was enormous. Although Kirilyuk's offense only caused an actual loss of $1.4 million and had an intended loss of only $3.4 million, the Application Note's multiplier skyrocketed the "loss" to nearly $60 million and led to a 22-level enhancement. See U.S.S.G. § 2B1.1(b)(1)(L).

Kirilyuk contends that Application Note 3(F)(i)'s mandatory $500-per-card minimum conflicts with the plain meaning of "loss" under § 2B1.1, and he asks us to find it non-binding under Stinson v. United States , 508 U.S. 36, 38, 113 S.Ct. 1913, 123 L.Ed.2d 598 (1993). We agree and do not consider the Application Note authoritative.

1.

Before turning to the merits of Kirilyuk's claim, we address two important housekeeping issues. First, we look to see whether our prior precedent forecloses Kirilyuk's challenge to Application Note 3(F)(i). Second, we determine whether Kirilyuk properly raised this argument on appeal.

On the question of precedent, we conclude that no Ninth Circuit case has considered whether Application Note 3(F)(i)'s $500-per-card multiplier conflicts with the meaning of "loss" in § 2B1.1. So it remains an open question in our circuit. To be sure, in two published cases, we interpreted and applied Application Note 3(F)(i) or its predecessor. See United States v. Yellowe , 24 F.3d 1110 (9th Cir. 1994) ; United States v. Gainza , 982 F.3d 762 (9th Cir. 2020). But neither case analyzed the Note's validity under Stinson , so neither case binds us on this question.

Prior precedent that does not "squarely address" a particular issue does not bind later panels on the question. Brecht v. Abrahamson , 507 U.S. 619, 631, 113 S.Ct. 1710, 123 L.Ed.2d 353 (1993). As we have repeatedly stated, "[q]uestions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to constitute precedents." United States v. Ped , 943 F.3d 427, 434 (9th Cir. 2019) (simplified). Thus, cases are "not precedential for propositions not considered," United States v. Pepe , 895 F.3d 679, 688 (9th Cir. 2018), or for matters that are "simply assumed," Sonner v. Premier Nutrition Corp. , 971 F.3d 834, 842 n.5 (9th Cir. 2020). Indeed, if a prior case does not "raise or consider the implications" of a legal argument, it does "not constrain our analysis." United States v. Cassel , 408 F.3d 622, 633 n.9 (9th Cir. 2005).

In Yellowe , we considered the applicability of Application Note 3(F)(i)'s $500-per-card multiplier's predecessor, former Application Note 4's $100-per-card multiplier, in a particular context.² In his briefing, Yellowe argued that the Application Note's multiplier only applied to offenses involving stolen credit cards , not to cases merely using credit card numbers. When only credit card numbers are used, Yellowe asserted that another Application Note—former Application Note 7—required the court to determine "loss" using "intended loss." See U.S.S.G. § 2F1.1 cmt. n.7 (1993). Yellowe contended that the multiplier's use of a "presumed loss" figure conflicted with the plain meaning of Note...