United States v. Thomas M. O'brien, United States of America v. Edward B. Gallup, United States of America v. Patrick W. Lyon

Thomas M. O’Brien, Edward B. Gallup, and Patrick W. Lyon appeal the district court’s imposition of a two-level enhancement of their sentences based on victim vulnerability under United States Sentencing Guidelines (“U.S.S.G.”) § 3A1.1. A jury had convicted appellants on charges of conspiracy, mail fraud, wire fraud, interstate transmission of money obtained by fraud, and money laundering in connection with their operation of a fraudulent health insurance scheme. We have jurisdiction under 28 U.S.C. § 1291 and we affirm.

I. BACKGROUND

Appellants sold underfunded health insurance to employer associations and misrepresented that the health plan was backed by a legitimate insurance carrier. Several of the employer associations to whom appellants sold insurance were not able to find health insurance elsewhere because of their members’ ages and poor health.

Appellants’ plan consisted of a trustee who theoretically held sufficient premium dollars from a given group of insured individuals to self-insure all the claims up to a $50,000 limit. Any claim above that limit was supposed to be covered by a stop-loss policy from a nationally known insurance company. The stop-loss insurance…