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United States v. Blount

United States District Court, W.D. Louisiana, Lake Charles Division

March 28, 2017

UNITED STATES OF AMERICA
v.
JOHN STEVEN BLOUNT

          KAY JUDGE

          MEMORANDUM RULING

          DEE D. DRELL, CHIEF JUDGE UNITED STATES DISTRICT COURT.

         Before the court is a Motion to Vacate under 28 U.S.C. § 2255 (Rec. Doc. 26) filed by the petitioner, John Blount, a Response in Opposition (Rec. Doc. 30) filed by the government, and a Reply (Rec. Doc. 32) filed by Blount. For the following reasons, the Petitioner's motion will be GRANTED. His sentence will be vacated and reset for sentencing.

         I. FACTS & PROCEDURAL HISTORY

         In 2015, Blount was indicted for wire fraud in violation of 18 U.S.C. § 1343. Between 2007 and 2014, Blount defrauded more than 50 people as part of a Ponzi scheme he orchestrated. From 1992 to 2003, Blount had been a securities broker licensed by the Financial Industry Regulatory Authority (FINRA). However, in 2004, after he made unsuitable annuities and mutual funds sales, FINRA banned him from working in the securities industry and ordered him to pay $1.5 million in restitution and $6 million in interest to ten customers. In 2014, FINRA notified the Louisiana Office of Financial Institutions (OFI) it had received an anonymous tip that Blount was selling securities in violation of the FINRA order. An investigation revealed that Blount had orchestrated a Ponzi scheme in which he had fraudulently represented that he was an investment broker, and that investors could earn high rates of return by investing their money with him. Blount had received almost $5.5 million to invest from more than 50 investors.

         More than half of Blount's victims were over the age of 60. Most of his victims had known little or nothing about investments, and had relied solely on Blount's purported skills in making the investment. For many of the victims, he had had a long-term relationship with them and their family, and he had used his position of trust to encourage them to invest with him. He also had used his position as a volunteer coach for Moss Bluff Buddy Ball program for disabled children to gain his victims' trust. At least 25 of the victims had invested their life savings, including their retirement funds, with Blount.

         Blount had provided his victims with false account balance information which had misled his investors into believing that their money had been properly invested and was earning a profit. However, instead of investing the money, he had used it to pay fake interest payments, to give to non-investor individuals, to pay bank loans and credit card bills, to pay business expenses and income taxes, to make charitable contributions, and to pay personal attorney's fees.

         Blount pleaded guilty to wire fraud in violation of 18 U.S.C. § 1343 and was sentenced to 235 months. His presentence report (PSR) calculated his total offense level as 36 with criminal history score of I. The following is the United States Sentencing Guidelines (Guidelines) calculation that was adopted by the court:

Base Offense Level (USSG § 2B1.1)

7

Specific Offense Characteristics-Loss of more than $2, 500, 000 (USSG § 2Bl.l(b)(1)(J))

Specific Offense Characteristics-Offense involving 50 or more victims (USSG § 2B 1.1 (b)(2)(B))

Specific Offense Characteristics-Offense involved a violation of previous order (USSG § 2B 1.1 (b)(9)(C))

Specific Offense Characteristics-Offense involved violation of securities law by a securities advisor (USSG § 2Bl.l(b)(19)(A))

Victim Related Adjustment-the defendant knew or should have known that the victim was a vulnerable victim (USSG § 3Al.l(b)(1))

Adjustment for Role in the Offense-the defendant abused a position of trust or used a special skill (USSG § 3B1.3)

Acceptance of Responsibility (USSG § 3E1.1 (a), (b))

-3

Total Offense Level

36

         Based on these calculations, the Guidelines range for his sentence is 188 to 235 months. During the sentencing hearing, the court heard nine victim impact statements. Those victims explained how Blount gained their trust, manipulated them, and drained them of their retirement funds and savings. After hearing from the defendant, the defendant's witnesses, and the victims, the court stated:

There's not much I can say that hasn't already been said, but it's amazing how one man could devastate so many lives. And the word rape was well-spoken because that's what you did. You ruined these people's lives. And if you didn't totally ruin them, you almost ruined them. And for that you must pay the piper.[1]

         The court then imposed the maximum Guidelines sentence, and concluded the proceedings by stating, "For all of you out in the audience, I'm so sorry for what you had to go through. In case you didn't know, that was the maximum sentence."[2]

         The defendant now points out, and the government agrees, that the Guidelines calculation was incorrect. The defendant should not have received a two point increase for abusing a position of trust under USSG § 3B1.3 because Application Note 15(C) to USSG § 2B1.1 specifically states that if subsection § 2Bl.l(b)(19) applies, section 3B1.3 does not apply.

         Therefore, the correct offense level should have been 34, resulting in a ...


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