UNITED STATES OF AMERICA,

Plaintiff-Appellee, No. 05-1492

v. (D. of Colo.)

WENDEL ROBERT WARDELL, JR.,

Defendant-Appellant.

(D.C. No. 03-CR-415-REB)

Before MURPHY, ANDERSON, and TYMKOVICH, Circuit Judges. **

While incarcerated in a Colorado state prison, Wendel R. Wardell and other

prisoners engaged in a scheme to obtain fraudulent tax refunds by submitting

false tax returns. The scheme involved submitting false tax returns in their own

names, and in the names of other inmates, to obtain refunds to which they were

not entitled. Wardell was eventually convicted of seventeen counts of tax fraud

Pursley separately appealed his conviction, which we affirmed in United 1

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and one count of conspiracy. The district court sentenced him to a total of ninetysix

months imprisonment: (1) sixty months for the conspiracy charge, and (2)

thirty-six months for each tax fraud count, each to be served concurrently. On

appeal, Wardell challenges three sentence enhancements applied by the district

court: (1) the use of sophisticated means to commit the crimes; (2) Wardell’s role

as a leader or organizer; and (3) Wardell’s obstruction of justice by submitting a

false document during the prosecution.

We affirm.

On August 20, 2003, Wardell was indicted on 20 counts related to tax

fraud: (1) one count of conspiring to defraud the United States, in violation of 18

U.S.C. § 371; (2) four counts of making false statements in tax returns, in

violation of 26 U.S.C. § 7206(1); and (3) fifteen counts of aiding and assisting the

presentation of false tax returns, in violation of 26 U.S.C. § 7206(2). Carl W.

Pursley, Jr., a fellow prisoner, was also indicted on the conspiracy charge and two

counts of aiding and assisting the preparation of false tax returns.

After a jury trial, Wardell was acquitted on two counts of presenting false

tax returns and was convicted on the remaining eighteen counts. Pursley, who

was tried at the same time, was convicted of three counts brought against him. 1

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Prior to the court’s sentencing hearing, the probation department filed a

presentence report (PSR) and addendum with the district court. Based upon an

intended tax loss to the Internal Revenue Service of $74,916, the PSR computed a

base offense level of 14. The PSR also recommended three enhancements: (1) a

two-level enhancement because the offense involved “sophisticated means,”

USSG § 2T1.4(b)(2) (2004); (2) a two-level enhancement because the defendant

total offense level of 20. Based upon the 30 criminal history points, the PSR

concluded the defendant was in criminal history category VI, with a resulting

imprisonment range of 70–87 months. Wardell objected to the three

enhancements. The government responded by citing trial evidence that supported

the enhancements.

At sentencing, the district court adopted the PSR’s recommendations.

Addressing Wardell’s criminal history, the court found that he “has adopted and

cultivated essentially a philosophy characterized by a life of crime, involving

fraudulent behavior of many kinds, evincing, frankly, a total disrespect for the

law and an absolute disregard for the rights and property of others.” ROA, vol X,

at 36. The court noted Wardell’s criminal record was “so extensive that it earns

criminal history points of 30, which is essentially off the chart for purpose of the

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to impose the maximum sentences permitted by law.

In justifying its sentence, the court considered the sentencing factors set in

18 U.S.C. § 3553(a)(1)–(7) and the applicable advisory Sentencing Guidelines.

On the conspiracy conviction, the court sentenced Wardell to sixty months

imprisonment, the statutory maximum. On the seventeen convictions for making

or assisting in the making of false tax returns, the court sentenced Wardell to

thirty-six months on each count to be served concurrently, but consecutive to the

conspiracy conviction, yielding a total sentence of ninety-six months

imprisonment.

Wardell challenges the district court’s upward adjustment of his sentence

U.S. 220 (2005), we review sentence calculations made pursuant to applicable

1054 (10th Cir. 2006). Reasonableness is presumed if “the district court

considered the applicable Guidelines range” and “sentences the defendant within

district court’s factual findings for clear error and its legal conclusions de novo.

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The Guidelines provide for a two-level sentence enhancement when

“sophisticated means” are used to conceal the tax offense. USSG § 2T1.4(b)(2)

(2004). The commentary to the Guidelines defines “sophisticated means” as

“especially complex or especially intricate offense conduct pertaining to the

district court imposed this enhancement after agreeing with the government’s

contention that this was not a routine tax evasion case.

Wardell argues that defining this tax fraud scheme as complex or intricate

would make virtually every fraudulent tax return eligible for the sophisticated

means enhancement. He suggests that because his scheme lacked shell

corporations, offshore accounts, dummy boards of directors, blind paper trails, or

multi-national transactions (in addition to the fact that his actions were patently

detectable), his tax scheme was routine and conventional. Based on the

applicable precedents, we disagree.

To begin with, Wardell’s fraudulent conduct was not a garden variety

fraud. His was not simply a case of claiming to have paid withholding taxes not

281–283 (5th Cir. 1993), two situations where courts have overturned

sophisticated means enhancements. Instead, Wardell’s conduct reflects a much

more elaborate scheme.

While prison authorities normally open and scan ordinary outgoing mail, 2

“legal mail” is unopened by the Colorado Department of Corrections.

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Wardell was incarcerated in a state prison. Nonetheless, he was able to use

numerous individuals and fictitious entities, addresses, and paperwork to create

the illusion that he earned income and was entitled to multiple tax refunds. He

filed a large number of false returns in the names of inmates without their

knowledge, used false addresses outside of the Colorado prison system, and

intentionally mislabeled his mail as “legal mail” in order avoid detection. 2

Wardell also sent false returns to multiple IRS service centers around the country,

created and used false W-2 Forms and other paperwork to legitimize his and

Pursley’s claims. He conspired with other inmates to further the scheme.

Wardell’s conduct fits well within our precedent applying the enhancement.

(defendant had fraudulent checks made payable to a bank, not her, to avoid

detection; structured transactions to avoid filing of currency reports; and stashed

405 F.3d 1109, 1120 (10th Cir. 2005) (defendant offered tax seminars on how to

avoid making tax returns easily traceable by withholding a proper address and

social security numbers).

We find Wardell’s fallback argument equally unpersuasive. He contends

that since he deposited the refund checks into his own account which were easily

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traceable, his scheme was simplistic and easily detectable, negating a finding of

sophisticated means. Again, we disagree. His tax scheme was far “more complex

or demonstrates greater intricacy or planning than a routine tax-evasion case,”

within the type of conduct targeted by the enhancement.

In sum, the district court did not err in applying the sophisticated means

enhancement.

Wardell’s next argument is that the district court erred in making a twolevel

enhancement for his role as “an organizer, leader, manager, or supervisor in

any criminal activity.” USSG § 3B1.1 (2004). According to the adopted findings

of the court, Wardell “supplied the addresses and W-2s used to perpetrate the

fraud, filled out the false returns, recruited Jessie Cluff and likely Carl Pursley,

and appeared likely to receive the bulk of the refunds associated with the refunds

filed in the names of other inmates.” Government’s Sentencing Statement at 12.

Wardell challenges both these factual findings and whether the findings support

an enhancement under § 3B1.1.

Under the clear error standard, we affirm the district court’s findings of

fact. The record indicates that two witnesses identified Wardell’s handwriting on

Pursley’s 1040 forms, revealing that Wardell filled out the tax forms in the

scheme. Furthermore, Pursley’s fraudulent W-2 forms claim income from

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Cimarron Farms, a farm purportedly owned by Wardell. Pursley would not have

known this information had Wardell not supplied it. While this evidence does not

prove that Wardell recruited Pursley for the criminal enterprise, it does lead to the

inference that Wardell played an organizing role as far as Pursley was concerned.

Jessie Cluff also testified at trial that he received direction from Wardell in

submitting his fraudulent tax return. Cluff testified that Wardell initiated their

conversations about obtaining tax refunds, and Cluff later agreed to submit tax

prepared them in Cluff’s name, and that they claimed income from Cimarron

Farms, again an enterprise only knowable through Wardell. Cluff also testified

that the explanation section of his tax return was prepared by Wardell. According

to Cluff, he and Wardell agreed that if a refund was received that Wardell would

receive half of the proceeds. This testimony strongly supports the conclusion that

Wardell recruited Cluff into this tax scheme.

Taken together, we agree that the district court was justified in finding

Wardell to be an “organizer” of the tax fraud scheme. Wardell supplied the

addresses, information, and tax forms to the enterprise. He recruited others to

participate in the scheme and received a larger share of the proceeds. Wardell’s

role in this case fits comfortably with cases which have upheld a § 3B1.1(c)

(10th Cir. 1997) (arranging the drug supply, directing the time and place of the

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delivery of the drugs, and deciding the financial arrangement was sufficient for a

1997) (devising scheme, recruiting accomplices, serving as main participant in

offense, and receiving largest share of benefit of criminal enterprise qualified

21, 24 (5th Cir. 1997) (recruiting accomplices and providing money necessary for

a drug transaction constitutes acting as an organizer under § 3B1.1(c)).

Wardell contends that because Cluff engaged in some action independent of

him that he could not have served as an “organizer” of the operation. Yet

absolute dominion over subordinates is not a requirement of a § 3B1.1(c)

as an organizer under § 3B1.1(c) for devising a criminal scheme, providing the

wherewithal to accomplish the criminal objective, and coordinating and

overseeing the implementation of the conspiracy even though the defendant may

not have any hierarchical control over the other participants.”).

Considering this record, we find that the district court’s findings under this

enhancement was not “without factual support in the record, . . . [nor are we] left

reverse a district court’s finding under the clearly erroneous standard).

Accordingly, the district court did not err in applying this enhancement.

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Wardell’s last argument is that the enhancement for obstruction of justice

was not warranted. According to the Guidelines, this enhancement is appropriate

if “(A) the defendant willfully obstructed or impeded, or attempted to obstruct or

impede, the administration of justice during the course of the investigation,

prosecution, or sentencing of the instance offense of conviction, and (B) the

obstructive conduct related to (i) the defendant’s offense of conviction and any

relevant conduct; or (ii) a closely related offense.” USSG § 3C1.1 (2004).

exclude any references at trial to his association with the Aryan Brotherhood. He

attached to his motion an internet article describing himself as “an Aryan Brother

assoc.” and Pursley as a “suspected top general of the Aryan Brotherhood.” The

article mentioned that both were being indicted for tax fraud. It was subsequently

determined that the article had been altered to include the reference to the two

defendants. In an affidavit from IRS Special Agent Arleta Moon, the government

showed that the article attached to Wardell’s motion was changed to contain false,

additional language when compared to the original internet article. Furthermore,

the article’s dateline was 2002, a patent error given that Wardell’s and Purlsey’s

indictments did not occur until 2003.

At sentencing, Wardell’s defense counsel conceded that the article was

false, but argued that Wardell did not willfully submit the misinformation. First,

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his counsel contended that Wardell had no access to computer equipment to

manufacture the false article and that Wardell might have felt that the 2002 date

was a typographical error. In fact, Wardell changed the date of the article to

“200[3]” in his motion in limine to emphasize the problematic date of the article.

In making its determination, the district court expressly adopted the

government’s findings and legal analysis from (1) the PSR, and (2) arguments

made at Wardell’s sentencing hearing. Accordingly, we treat the government’s

n.18 (5th Cir. 1993). The court appeared to rely heavily on the government’s

contention that Wardell’s submission of the article,

merits applying the obstruction of justice enhancement because it is

substantially similar to several examples listed in the commentary to

N.4(b), producing a false or altered document during a judicial

Second Addendum, PSR.

And at the sentencing hearing, responding to the argument that

Wardell did not willfully submit the altered article, counsel for the

government contended:

The argument . . . from the defense that this [enhancement]

shouldn’t apply is that . . . this was simply a mistake. That Mr.

Wardell didn’t realize that this document had been altered, and

was submitting it in good faith.

In the government’s sentencing statement, it alleged that Wardell 3

attempted to prevent Cluff from talking to government investigators. [Gov’t

Sentencing Statement, PSR at 12.]. The government conceded that this would not

be enough to support an independent enhancement for obstruction of justice.

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And the government does take the position described already by

[Wardell’s defense counsel], that the fact that in the text of his

motion, that Mr. Wardell had noticed the discrepancy in the

date and changed it within the text of his motion to eliminate

the impossibility that otherwise existed with respect to that

added text, shows that Mr. Wardell knew, or at a minimum

should have known, that there was something wrong with this

document and that it was not a document that he should have

been submitting with the intent that the court rely on it in ruling

on a motion he had made to the court. . . .

[T]he government does argue that in considering what Mr.

Wardell’s state of mind was at the time this altered document

was submitted, that it is relevant for the court to consider that,

on previous occasions, Mr. Wardell had taken efforts to try to

prevent the discovery of accurate information from the

government with respect to . . . the activities he had been

engaged in, not just the various efforts he had taken during the

course of the scheme to prevent its discovery, but the efforts he

took after he became aware that he was under investigation to

keep the truth from being known to the government, such as

him telling Mr. Cluff to keep his mouth shut when any

investigators came to talk to him. 3

ROA, vol. X at 24–25. Sentencing Hearing Transcript 24–25.

For the “willful obstruction” provision of USSG § 3C1.1 to apply, we have

held that “the defendant must consciously act with the purpose of obstructing

quotations omitted). Accordingly, if Wardell knowingly submitted the altered

article to influence the court’s proceedings, then this requirement is satisfied.

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The district court’s adopted findings on this enhancement, while not detailed,

supports a conclusion that Wardell knew or should have known that the article’s

authenticity was suspect, and that he submitted it to the court in order to deceive

it.

The government produced no evidence to show how Wardell manufactured

or obtained the false document. Circumstantial evidence, however, shows his

knowledge of the document’s falsity. The government’s affidavit demonstrates

that the article clearly does not appear on the internet in the form presented by

Wardell and that the date on the article was a full year before his indictment (a

fact obviously known to Wardell because of the bracketing in his motion). As

Wardell’s defense counsel argued at sentencing, only two possible explanations

exist: (1) Wardell knew that the article was altered and attempted to cover up the

alteration by changing the “2002” to “200[3]” in his motion in limine, or (2)

Wardell thought the date was a typographical error and simply intended to correct

it in his motion. The district court chose to believe the former theory and Wardell

offers no compelling reason to overturn that decision. For the reasons articulated

in the district court’s adopted findings, we hold that the district court’s

determination that Wardell’s conduct was “willful” under § 3C1.1 was not clearly

erroneous.

Wardell argues that the altered article was immaterial to the case and does

not warrant an obstruction of justice enhancement. Although “the threshold for

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1326 (internal quotations omitted), we agree that some question exists as to the

materiality of the document because of the lack of district court findings. In this

case, the purpose of the motion in limine was to exclude any reference to

Pursley’s and Wardell’s Aryan Brotherhood or racist ties. Without more, it is not

self-evident to us that an article naming Wardell as a member of the Aryan

Brotherhood would have affected the disposition of this motion. Reference to

Wardell’s and Pursley’s Aryan affiliation would be seemingly irrelevant to the

prosecution of the case whether or not Wardell’s name appeared in an obscure

Cir. 2001) (holding that a false affidavit submitted to a magistrate judge was

material whether or not it affected the judge’s decision).

Nevertheless, considering the multiple, cumulative grounds on which the

district court based this enhancement, we find no error. In contrast to other types

of obstructive conduct listed in the Guidelines, the submission of false or altered

documents (Note 4(c)) does not contain any qualifier that the documents

Guidelines’ purpose in the incongruent treatment of a false statement to a judgeunder Note 4(f) (requiring materiality) and a false

Note 4(c), we see no reason to wander from the plain text of the Guidelines.

Accordingly, since Wardell’s conduct plainly fits into the fact pattern

Wardell’s appointed counsel, Mark D. Jarmie, filed a motion to withdraw 4

as his appellate counsel. We hereby grant the motion. Mr. Wardell filed a pro se

combined motion on July 24, 2006, and two further pro se motions on August 31,

2006 and September 18, 2006. We deny those three motions. To the extent that

Wardell asks that Judge Tymkovich recuse himself from this case based on his

service as Colorado’s solicitor general during Wardell’s initial state convictions,

Judge Tymkovich has reviewed the matter and has determined that no conflict

exists. The request is denied.

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