Eleventh Circuit Finds Failure to Appear in FTC Proceeding Insufficient to Establish “Willful Blindness”

In United States v. Mathauda, No. 11-13558 (Jan. 21, 2014), the Eleventh Circuit considered whether willful blindness to a court order satisfies the knowing requirement of United States Sentencing Guideline § 2B1.1(b)(8)(C), which provides a two-level sentence enhancement for violating a “prior, specific judicial . . . order.”  This case involved the conviction of Mathauda for conspiracy to commit mail fraud and wire fraud for selling fraudulent business opportunities.  Prior to the criminal case, Mathauda was the subject of an FTC complaint for unfair or deceptive acts or practices that resulted in an order for default judgment.  The Eleventh Circuit was charged with deciding several issues on appeal, but the only issue the court addressed in its opinion was whether the Southern District of Florida erred in applying the sentence enhancement for a knowing violation of a prior court order.

In a per curiam opinion, the Eleventh Circuit agreed with the Court of Appeals for the D.C. Circuit’s formulations of “willful blindness” in United States v. Bisong, 645 F.3d 384 (D.C. Cir. 2011), which are “when a defendant purposely contrived to avoid learning all the facts, or the defendant was aware of a high probability of the fact in dispute and consciously avoided confirming that fact.”  In this case, Mathauda received the FTC complaint and retained an attorney in the matter. However, Mathauda never appeared in court; his attorney never filed anything in response to the complaint; and default judgment was entered, but Mathauda never received the final order and heard nothing about the case until his sentencing for the matter at issue in the current case.

The Eleventh Circuit found that Mathauda’s lack of participation in the FTC proceeding would not have created a “high probability” in his mind that an order would issue, and because he did not fail to appear at a hearing he requested there was no demonstration that he purposely avoided learning all of the facts.  While the Eleventh Circuit noted that a defendant who does nothing may still be “willfully blind,” the government has the burden of proving by a preponderance of the evidence that the defendant satisfied one of the two formulations for willful blindness, which the government failed to do in this case.  Mathauda’s sentence was vacated and remanded to the Southern District of Florida for resentencing.

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