Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 99-CR-883--William J. Hibbler, Judge.
Before Coffey, Diane P. Wood, and Williams, Circuit Judges.
The opinion of the court was delivered by: Coffey, Circuit Judge.
Peter J. Rumsavich was charged and found guilty of five counts of mail fraud, in viola- tion of 18 U.S.C. § 1341, and two counts of perjury, in violation of 18 U.S.C. § 1623. The district court sentenced Rumsavich to 75 months in prison followed by a 3-year term of supervised release and ordered the sentences and subsequent periods of supervision be served concurrently with each other, as well as ordering restitution totaling $571,700 to the victims and payment of a special assess- ment of $550. We affirm.
Beginning in the summer of 1979, Peter Rumsavich embarked upon the first of his numerous failed business ventures that tended to be funded by a selected group of naïvely trusting investors both in the city and suburbs of Chicago, Ill. Rumsavich incorporated three businesses-- D'Martine Financial, D'Martine Food, G.P. Services, and Goo-Cheese Pizza--none of which was profitable for more than a short period of time. In May 1988, when Rumsavich was faced with the imminent collapse of the Goo-Cheese Pizza and D'Martine Financial enterprises, he sought to raise cash with the selling of $750,000 of so-called "D'Martine Food Services, Inc. Zero Coupon Corporate Bonds."
Rumsavich devoted extensive time and energy to mak- ing contact with thousands of individuals, and thereaf- ter proceeded to identify and persuade certain unknowl- edgeable investors to purchase these bonds. He began by mailing more than 150,000 brochures and postcards to a targeted selection of people in neighborhoods known as being inhabited with an unusually large number of sen- ior citizens with fixed incomes. The brochures invited the recipients to attend "financial seminars" conducted by Rumsavich at libraries and hotels in the nearby suburbs of Chicago. The brochures recited that Rumsavich was a former vice president for the investment firm of Dean Witter with impressive credentials as a "registry financial planner," a "certified financial planner," and a "registered financial planner." These claims were false: the position of a "registered financial planner" does not exist within the investment banking industry, Rumsavich never was a certified financial planner, and Rumsavich's only experi- ence with managing portfolios was acquired during sev- eral years at Dean Witter where he was employed as a low- level office manager rather than a vice president of the company as represented.
However, according to the record, a large number of people, acting in reliance upon Rumsavich's misrepresen- tations, attended his seminars and listened (with dreams and hopes) to his promises of helping them take advan- tage of the supposedly low-risk, high-yield investment opportunities he represented to them. He presented each of the attendees with carefully crafted questionnaires de- signed to elicit specific information about their experi- ence and knowledge of investing, their levels of income and wealth, and their financial histories. After collecting the completed questionnaires during his opening contact session with this select group of people, Rumsavich next engaged in a process of "cherry picking," weeding out and focusing only on those individuals whom he described as "suitable" investors and inviting them to his private office for one-on-one meetings where he promoted the D'Martine Food Services zero-coupon bond.
The record reflects that during these meetings, Rumsavich conducted himself like "a pitchman at a coun- ty fair," advising his soon-to-be victims that the bonds would pay an inflated annual interest rate of 12 percent, mature in six years, and repay each investor two-fold upon maturation. Just as Rumsavich had made misleading statements in his earlier brochures about his investment experience, so did he mislead investors during his individ- ual meetings about the nature of the bonds. Rumsavich claimed, for example, that D'Martine Food was an Illinois corporation when, in fact, D'Martine has never been in- corporated in any state. Rumsavich also referred to the bonds as "zero-coupon bonds" despite the fact that they resembled interest-bearing bonds in the sense that they were sold at face value rather than at a discount rate. Rumsavich further misled investors when talking to sen- ior citizens and stating that "he would invest in something with security" and that his bonds in the food ser- vices industry were "a sure thing" with "no risk involved."
Rumsavich's "no-fail" bond-selling statements were clever but at the same time somewhat misleading, for at no time did he ever disclose, much less even infer that his prior track record when acting as the manager of pizza restau- rants was miserable and/or that his D'Martine enterprise had been plagued with financial troubles and significant debt since its incorporation. In addition, Rumsavich never did make known that the proceeds from the bond sales were being used mainly to pay off his debts to Goo-Cheese Pizza and D'Martine Financial, in addition to his paying himself and his wife substantial salaries, despite the fact that she was neither an employee nor a member of the board of directors of D'Martine Food Services. He also found it to his benefit to use his client-investors' funds to help pay off his personal debts as well as the creditors of his failed limited partnership, G.P. Services.
After a federal grand jury indicted him on five counts of mail fraud in violation of 18 U.S.C. § 1341, and two counts of perjury in violation of 18 U.S.C. § 1623, Rumsavich entered pleas of not guilty on each count and the case went to trial before a jury for some seven days before the jury found him guilty on all of the seven counts.
Some three months after the entry of the judgment of guilty on all counts, U.S. District Judge William Hibbler conducted a lengthy sentencing hearing and heard testi- mony from a number of witnesses appearing on behalf of both the defendant and the Government. Many of the Government's witnesses were the investors whom Rumsavich had swindled. They testified that Rumsavich gained their trust and ultimately convinced them to purchase the bonds after he assured them that he was acting in their best interests and was committed to offer- ing them prudent financial advice. Rumsavich's sales pitch lulled the victims into a sense of false confidence, and he also saw fit to send them fraudulent, pre-printed federal 1099 tax forms reflecting that they were earning tax-deferred interest income that was not payable until the bonds matured six years from the date of issuance. In the minds of the unsuspecting investors, according to the record, the pre-printed tax forms legitimized the investments by reflecting that the investments were doing well and that Rumsavich was complying with Inter- nal Revenue Service guidelines of reporting taxable in- come. In reality, Rumsavich was "borrowing from Peter to pay Paul," for his "investments" operated like a pyra- mid scheme funded entirely by the sale of bonds to other investors rather than any growth in corporate revenue or contributions from outside sources.
After receiving this testimony at the sentencing hear- ing and analyzing the arguments of the Government and the defendant, Judge Hibbler adopted the recommen- dation in the presentence report and imposed a 2-level sentencing enhancement, reasoning that Rumsavich "knew or should have known that many of the people who ulti- mately purchased the bonds were vulnerable victims because of their advanced age, their need to get sol- id retirement planning advice, and their overwhelm- ing unsophistication in financial matters." U.S.S.G. § 3A1.1(b)(1). The judge also enhanced Rumsavich's sen- tence with a second 2-level enhancement after finding that he had abused a position of private trust as a finan- cial planner by misleading his customers and using their money for improper purposes. § 3B1.3. Thus, after applying the relevant guideline limits for "vulnerable victim" and "abuse of trust" enhancements, the judge sen- tenced Rumsavich to a total of 75 months' imprisonment for committing five acts of mail fraud in violation of 18 U.S.C. § 1341 and two acts of perjury in violation of 18 U.S.C. § 1623. Each of the sentences imposed was ordered to run concurrent with each other, to be followed by three years of supervised release, with each period of supervised release also to run concurrent with each other. *fn1
Rumsavich surrendered to the U.S. Marshals in June 2001 and presently is incarcerated at a minimum security ...