Direct Exploitation of Financial Hardship Supports the Large-Number-of-Vulnerable-Victims Enhancement

1. Introduction

This published opinion clarifies when financial hardship makes a fraud victim “unusually vulnerable” under the federal Sentencing Guidelines. The essential requirement is a demonstrated connection between the victim’s individual circumstances and the particular fraud. A victim need not be unusually incapable of detecting or resisting deception if the defendant directly exploited that victim’s vulnerability to facilitate the offense.

The consolidated appeals arose from a funeral-home scheme operated by Megan Hess with assistance from her mother, Shirley Koch. Rather than providing promised cremations, the defendants fraudulently obtained and sold human bodies and body parts, frequently returning purported cremated remains that did not belong to customers’ loved ones.

Following an earlier appellate reversal of several sentencing determinations, the district court again imposed twenty years’ imprisonment on Hess and fifteen years on Koch. The principal question was whether newly developed, individualized evidence justified the additional two-level enhancement for an offense involving a “large number of vulnerable victims” under U.S.S.G. § 3A1.1(b)(2). The appeals also raised questions about accomplice accountability, post-sentencing rehabilitation, and the reasonableness of a substantial upward sentencing variance.

2. Background and Summary of the Opinion

The underlying scheme

Hess operated Sunset Mesa Funeral Directors and a nonprofit organization doing business as Donor Services. The nonprofit ostensibly assisted people who could not afford funeral services, but its principal activity was obtaining human remains and marketing them to research, educational, plastination, and body-broker businesses.

The defendants sometimes obtained limited donation authorizations through misrepresentations and then exceeded those authorizations. In other instances, they sold remains without permission or despite an express refusal to donate. Koch helped dismember bodies, prepare remains for sale, and communicate with families. The scheme also involved falsified disease-testing information supplied to purchasers.

Records documented sales involving 811 individuals. Investigators concluded that the remains of 560 decedents were almost certainly obtained and sold fraudulently. Revenue from these transactions enabled Sunset Mesa to advertise unusually inexpensive cremations, attracting additional customers and supplying more bodies for the scheme.

Each defendant pleaded guilty to one count of mail fraud and aiding and abetting. Their sentences therefore arose from fraud convictions, although the sentencing court considered the broader conduct and its consequences.

The first appeal and resentencing

In United States v. Hess, 106 F.4th 1011 (10th Cir. 2024), the Tenth Circuit rejected the original vulnerable-victim analysis. Deceased individuals could not qualify as vulnerable victims in the circumstances presented, and the district court could not simply presume that every grieving relative was unusually susceptible to the fraud. The court required particularized findings explaining how an individual vulnerability enabled or facilitated the offense.

On remand, the district court received additional victim statements and testimony from fraud expert Dr. Doug Shadel about the relationship between stressful life events and susceptibility to fraud. It identified twenty-one victims whose circumstances, in its assessment, satisfied the required connection. The government also conceded that a lower loss enhancement applied.

The appellate holdings

1. Individual vulnerability: The record supported vulnerable-victim findings for fifteen victims. Financial hardship qualified where the defendants exploited it through promises of inexpensive or free services to obtain custody of loved ones’ remains.
2. Number of victims: Fifteen vulnerable victims constituted a “large number” for this mail-fraud offense. The court did not establish a universal numerical minimum.
3. Koch’s accountability: The enhancement encompassed relevant conduct she aided and abetted, even where she had not personally dealt with particular victims.
4. Hess’s rehabilitation argument: Assuming an error occurred, Hess failed to establish either an obvious error under settled law or a reasonable probability of a different sentence.
5. Koch’s sentence: The fifteen-year sentence was substantively reasonable given the exceptional harm, the defendants’ conduct, and the district court’s explanation.

3. Analysis: Legal Reasoning

A. Vulnerability must facilitate the particular offense

Section 3A1.1(b) creates two successive adjustments. Subsection (b)(1) adds two levels when the defendant knew or should have known that a victim was vulnerable. If that adjustment applies and the offense involved a large number of vulnerable victims, subsection (b)(2) adds another two levels. Neither defendant challenged the initial adjustment in this appeal.

The Guidelines commentary defines a vulnerable victim by reference to unusual vulnerability arising from age, physical or mental condition, or other particular susceptibility to the criminal conduct. The inquiry is therefore relational: vulnerability must be assessed against the specific offense, not as a general personal characteristic.

Hess argued that a victim should qualify only if the victim was unusually unable to detect or thwart the fraud. Because the defendants could deceive anyone once entrusted with a body, she maintained that financial hardship did not make the disputed victims more vulnerable to the actual scheme.

The court rejected that restrictive formulation. Nothing in the Guidelines makes impaired fraud detection indispensable. The commentary’s example of marketing an ineffective cancer cure illustrates the point: cancer patients may be especially susceptible because the fraudulent offer exploits their medical condition, not because they necessarily possess inferior investigative or reasoning abilities.

The operative question was whether the defendants directly exploited an individual vulnerability to advance the fraud. Here, their access to bodies did not arise independently of the victims’ circumstances. For the victims whose financial vulnerability was established, promises of affordable services induced the very entrustment that made the fraudulent sale possible.

B. The record established individual connections, not a poverty-based presumption

The distinction between individualized evidence and a class-based assumption was central. The district court could not reason that all poor people, all elderly people, or all grieving relatives necessarily qualified. It could, however, find multiple victims vulnerable for similar reasons if the evidence demonstrated the required connection for each.

The appellate court highlighted several examples:

• M.C.-P. had serious health problems and very little income. The defendants persuaded her to abandon planned embalming in favor of cheaper cremation, then sold her grandmother’s body.
• J.D. could not afford an immediate cremation payment. Koch offered free cremation in exchange for a purported brain donation for Alzheimer’s research; the entire body was instead sold to a plastination company.
• N.H. was managing debt and had to borrow money for funeral expenses. She chose the defendants because they offered affordable prices and promised careful treatment of her husband.
• T.F. faced financial difficulty after her husband’s prolonged cancer treatment. She selected Sunset Mesa rather than her local funeral home because of its lower prices.

These circumstances connected financial hardship to the transaction through which the defendants acquired unsupervised custody. They were not merely background facts about people who happened to suffer a crime.

Hess did not contest five findings associated with terminal illness or hospice-related circumstances. Together with ten supported findings involving financial vulnerability, those findings established fifteen qualifying victims. The appellate court did not decide whether the other six identified by the district court also qualified.

The opinion consequently does not hold that seeking an inexpensive service automatically establishes unusual vulnerability. Its conclusion depends on evidence of actual financial constraint and the defendants’ exploitation of that constraint in this particular scheme.

C. Fifteen victims suffice, but the numerical boundary remains open

The Guidelines do not expressly define “large number” for § 3A1.1(b)(2). The court approached that language contextually, considering the offense category and relevant precedent.

For fraud, § 2B1.1(b)(2) includes victim-related adjustments using thresholds of five, ten, and twenty-five victims. Earlier circuit authority had also upheld the vulnerable-victim enhancement in a fraud involving sixteen particularly vulnerable victims. Those sources supported treating fifteen as sufficient here.

The holding is deliberately limited. The court did not choose between five and ten as a possible lower threshold, nor did it convert a ten-victim rule from an involuntary-servitude case into a rule governing every offense. Future cases involving fewer than fifteen vulnerable fraud victims remain open to further analysis.

D. An aider and abettor need not personally encounter every vulnerable victim

Koch argued that her limited contact with many victims prevented application of the enhancement. The court rejected that argument through the Guidelines’ relevant-conduct provisions.

The commentary to § 3A1.1 includes victims of conduct for which a defendant is accountable under § 1B1.3. That provision encompasses acts the defendant committed, aided, or abetted. Because Koch’s relevant conduct included the fraudulent conduct she assisted, personal communication with every victim was unnecessary.

The distinction between the two enhancements also mattered. Subsection (b)(1) expressly requires actual or constructive knowledge of a victim’s vulnerability. Subsection (b)(2) contains no additional requirement that the defendant know about each vulnerable victim. Once the first adjustment applies, the additional adjustment focuses on whether the relevant offense involved a large number of vulnerable victims.

This is not unlimited responsibility for another person’s misconduct. The victims must still fall within the defendant’s properly attributable relevant conduct. Here, that connection followed from Koch’s participation in and assistance with the scheme.

E. Rehabilitation: permission to consider is not an entitlement to reduction

Hess presented evidence of educational activity, assistance to other prisoners, supportive letters, and other claimed rehabilitative efforts. The district court described productive prison conduct as commendable but also expected, observed that good behavior could earn good-time credit, and found the offense’s severity overwhelmingly important.

Because Hess did not object to the challenged reasoning at resentencing, the appellate court applied plain-error review. It assumed, without deciding, that an error occurred.

The challenge nevertheless failed for two independent reasons. First, settled law did not obviously prohibit the district court from considering the availability of good-time credit when weighing rehabilitation. Second, Hess did not establish a reasonable probability of a lower sentence: the district court had expressly found the offense’s nature and consequences sufficient to outweigh the mitigating considerations.

The narrow procedural holding matters. The court did not approve a categorical prohibition on considering rehabilitation, and it did not hold that good-time credit replaces an individualized sentencing assessment.

F. Extraordinary harm justified Koch’s substantial upward variance

Koch emphasized her age of seventy-one, serious health conditions, limited criminal history, and lesser responsibility compared with Hess. The district court considered those matters, including a prior fraud-related felony that carried no criminal-history points, but concluded that the offense’s seriousness outweighed the mitigation.

The appellate court accepted the distinction between an ordinary financial fraud and this offense. The victims lost not only money but also the assurance that their loved ones’ remains had been treated as promised. The district court identified enduring emotional injury, desecration of bodies, repeated deception, and virtually no remorse.

Koch’s characterization of her participation as largely passive also did not capture her physical role in dismembering remains and preparing them for sale. Her lower relative culpability was reflected in a sentence five years shorter than Hess’s.

The governing question was not whether the appellate judges would have selected fifteen years themselves. It was whether the district court’s reasoned application of § 3553(a) remained within permissible discretion. The court held that it did.

4. Precedents Cited and Their Influence

A. Establishing the vulnerability–offense connection

United States v. Hess, 106 F.4th 1011 (10th Cir. 2024)

The earlier appeal supplied the controlling mandate. It rejected reliance on deceased victims and generalized grief, required a nexus between vulnerability and fraud, and permitted further proceedings to develop particularized findings. The present opinion treats the new evidence as curing the earlier deficiency, not as abandoning the earlier rule. The first appeal also required correction of the loss calculation and reconsideration of Koch’s sophisticated-means enhancement.

United States v. Proffit, 304 F.3d 1001 (10th Cir. 2002)

A rancher diagnosed with cancer advertised his ranch for sale. The defendant approached him as a prospective purchaser but ultimately defrauded him through a purported cattle-futures investment. The cancer diagnosis created an opportunity for contact, yet the investment decision reflected the ordinary attraction of quick financial returns. The connection between illness and the actual investment fraud was insufficient.

Crucially, that decision suggested a different result might follow if the defendant had exploited the illness-related decision to sell the ranch and fraudulently obtained ranch ownership. The present court used this distinction to separate incidental access from direct exploitation. Here, the financially induced funeral transaction itself delivered the bodies that were fraudulently sold.

United States v. Fosher, 124 F.3d 52 (1st Cir. 1997)

Hess relied on this First Circuit decision’s language concerning whether a victim was less likely to detect or thwart a crime. The Tenth Circuit declined to adopt that language as an exclusive test. It found no support in the Guidelines or its own precedents for requiring impaired detection or resistance in every case.

United States v. Brunson, 54 F.3d 673 (10th Cir. 1995)

This decision rejected an enhancement based on a successful fraud against a foreign company and the defendant’s belief that foreign businesses were easier to deceive. Successful victimization did not itself establish unusual susceptibility, and the defendant’s subjective assumption did not prove objective vulnerability.

The present opinion distinguished that unsupported assumption from evidence showing how financial constraints actually influenced the victims’ decisions. It also drew on the earlier decision’s explanation that the enhancement addresses especially blameworthy exploitation.

B. Rejecting unsupported class assumptions

United States v. Tissnolthtos, 115 F.3d 759 (10th Cir. 1997), and United States v. Drapeau, 110 F.3d 618 (8th Cir. 1997)

The former required individualized findings rather than assuming that a seventy-one-year-old assault victim was unusually vulnerable. It favorably discussed the latter’s treatment of a one-year-old assault victim, whose inability to protect himself or report the incident made vulnerability apparent.

Together, these decisions recognize that class characteristics can occasionally support a compelling inference, but ordinarily require closer examination. They explain why neither advanced age nor bereavement automatically resolves the present inquiry.

United States v. Creech, 913 F.2d 780 (10th Cir. 1990)

This extortion case rejected the assumption that newlyweds were unusually susceptible to threats against their spouses. Concern for a spouse was not shown to be meaningfully greater among newlyweds than among other married people. The precedent reinforced the requirement for evidence rather than intuitive stereotypes.

United States v. Caballero, 277 F.3d 1235 (10th Cir. 2002)

This decision upheld an enhancement involving sixteen vulnerable victims of immigration fraud. The defendants exploited language barriers, unfamiliarity with American law, cultural circumstances, and immigration status.

It served two important functions here: multiple victims may share a vulnerability without turning supported individual findings into an impermissible class presumption, and sixteen victims had already been sufficient in a fraud case. The present court found fifteen sufficient on comparable numerical reasoning.

United States v. Scott, 529 F.3d 1290 (10th Cir. 2008), and United States v. Castaneda, 239 F.3d 978 (9th Cir. 2001)

The former, quoting the latter, explained that exploiting particular vulnerabilities can make conduct more blameworthy and deserving of greater punishment. It also upheld an enhancement involving exploitation of a minor’s small stature and unusual naivety in a trafficking offense. The present court used that reasoning to support the enhancement’s purpose, while grounding its application in the demonstrated vulnerability–fraud connection.

C. Interpreting “large number” and relevant conduct

United States v. Kaufman, 546 F.3d 1242 (10th Cir. 2008)

This case involved the exploitation of mentally ill residents in an unlicensed group home, including forced labor and involuntary servitude. To interpret “large number,” the court consulted the offense-specific guideline’s treatment of victim numbers and held that ten victims were sufficient in that setting.

Its influence here was methodological rather than mechanically numerical: the meaning of “large number” should be informed by the kind of offense involved. The present opinion did not establish ten as a universal threshold.

United States v. Anderson, 349 F.3d 568 (8th Cir. 2003)

Quoted through United States v. Kaufman, this decision supplied the observation that “large number” was largely uninterpreted. It provided background for the contextual approach rather than an independently controlling numerical rule.

United States v. Boll, 3 F.4th 1099 (8th Cir. 2021)

Koch invoked this decision’s reference to offense “context.” The Tenth Circuit explained that its context was the type of offense and the number of victims typical of like offenses—not merely the defendant’s personal contacts. Its express inclusion of the offense of conviction and all relevant conduct undermined Koch’s proposed limitation.

D. Rehabilitation and plain-error review

Pepper v. United States, 562 U.S. 476 (2011)

The Supreme Court held that resentencing courts may consider post-sentencing rehabilitation and that such evidence may support a downward variance. It rejected categorical restrictions, including a rationale treating rehabilitation-based sentencing relief as inconsistent with prison good-time credits. Those mechanisms serve different penal purposes.

However, the Supreme Court did not require a sentence reduction whenever rehabilitation is shown. The present opinion relied on that limitation and found no clearly established rule making good-time credits irrelevant to the weight a resentencing court assigns rehabilitation.

United States v. Kee, 129 F.4th 1249 (10th Cir. 2025)

This decision supplied the four requirements of plain-error review: error, obviousness, an effect on substantial rights, and a serious effect on the fairness, integrity, or public reputation of judicial proceedings.

United States v. Booker, 63 F.4th 1254 (10th Cir. 2023)

This circuit decision supplied the standards governing obviousness and prejudice. Hess needed settled law clearly establishing the asserted error and a reasonable probability that correcting it would change the result. Her challenge failed both requirements.

E. Review standards, preservation, and legal concessions

• United States v. Rocha, 145 F.4th 1247 (10th Cir. 2025): Supplied the general reasonableness framework, differentiated legal and factual review, and emphasized deference to a sentencing court’s weighing of § 3553(a). It also illustrated a permissible upward variance for extraordinary conduct not adequately captured by the Guidelines.
• United States v. Tony, 121 F.4th 56 (10th Cir. 2024): Directed the court to ascertain the Sentencing Commission’s intent through guideline text and commentary. The opinion applied its rule that commentary governs unless constitutionally or statutorily defective, plainly erroneous, or inconsistent with the provision interpreted.
• United States v. Sumka, 81 F.4th 1153 (10th Cir. 2023): Distinguished clear-error review of vulnerability findings from de novo review of legal interpretation or legal sufficiency. As in that decision, the court declined to resolve the parties’ disagreement over the applicable standard because the enhancement survived either approach.
• United States v. Ronquillo, 94 F.4th 1169 (10th Cir. 2024): Established that courts are not bound by parties’ concessions on legal questions. The government’s position against applying the enhancement to Koch therefore did not control the sentencing court.
• Richison v. Ernest Grp., 634 F.3d 1123 (10th Cir. 2011): Supported the distinction between seeking reversal and defending an existing judgment. The government could defend the judgment on a record-supported ground notwithstanding its different position below.
• LaFevers v. Gibson, 182 F.3d 705 (10th Cir. 1999): Supported waiver of undeveloped appellate arguments. Koch suggested a possible plea-agreement breach but did not develop the claim, so the court did not adjudicate its merits.

F. Substantial upward variances

The following decisions supported deferential review and the permissibility of substantial variances when justified by the individual record:

• United States v. Peña, 963 F.3d 1016 (10th Cir. 2020): Required substantial deference and reversal only for an arbitrary, capricious, whimsical, or manifestly unreasonable sentence.
• United States v. Holt, 161 F.4th 1253 (10th Cir. 2025): Framed the question as whether the sentencing decision exceeded the bounds of permissible choice.
• United States v. Doty, 150 F.4th 1351 (10th Cir. 2025): Upheld a variance from 33–41 months to 96 months for atypical, extraordinarily harmful conduct.
• United States v. Lawless, 979 F.3d 849 (10th Cir. 2020): Upheld a variance from 60 to 144 months in an unusually serious arson case and cautioned that appellate courts do not reweigh the sentencing factors.
• United States v. Walker, 74 F.4th 1163 (10th Cir. 2023): Upheld a variance from 84–105 months to 300 months based partly on severe physical and psychological harm.
• United States v. Vazquez-Garcia, 130 F.4th 891 (10th Cir. 2025): Upheld a variance from 24–30 months to 48 months based partly on lack of remorse.

These authorities did not supply a formula making Koch’s sentence automatically reasonable. They supported the district court’s authority to impose a substantial, specifically explained variance for exceptional harm and other pertinent sentencing considerations.

5. Potential Impact

Financial vulnerability must be proved, but need not impair judgment

The opinion is significant for frauds involving necessities, urgent services, or constrained choices. It confirms that financial hardship can create unusual susceptibility when the fraudulent offer directly exploits that hardship. Prosecutors need not prove cognitive impairment or exceptional inability to uncover deception.

Nevertheless, the individualized-nexus requirement remains an important limit. Ordinary price sensitivity, poverty in the abstract, advanced age, and grief do not automatically justify the enhancement.

Shared characteristics do not defeat individualized findings

Future sentencing courts may identify a recurring vulnerability across numerous victims, provided that evidence explains how it operated for the individuals counted. Victim statements linking circumstances to transactional choices may be especially important. Expert evidence can assist that inquiry, but this opinion does not make expert testimony mandatory or sufficient by itself.

Accomplice liability extends beyond personal contact

Participants cannot avoid the additional adjustment merely by dividing customer-facing duties. The relevant question is which conduct is attributable to the defendant, not which victims the defendant personally met. The initial knowledge requirement and relevant-conduct limits still apply.

The numerical and rehabilitation holdings remain bounded

Fifteen vulnerable victims are sufficient in this fraud setting; the minimum remains unresolved. Likewise, the rehabilitation ruling is constrained by plain-error review. It should not be read as broadly authorizing courts to disregard rehabilitation simply because prison rules require good behavior.

Lower Guidelines ranges do not guarantee lower sentences on remand

The unchanged sentences demonstrate the distinction between calculating the advisory range and selecting a sentence under § 3553(a). A corrected range must be considered, but an adequately supported variance may still produce the same sentence. Here, the district court explained why financial calculations did not adequately capture the offense’s enduring human consequences.

6. Complex Concepts Simplified

Vulnerable victim

A person whose individual circumstances make that person unusually susceptible to the particular crime—not simply someone experiencing hardship.

Nexus

The connection showing how the vulnerability helped the defendant commit or advance the offense. Here, financial need made fraudulent promises of affordable cremation especially effective.

Class-based presumption

An unsupported assumption that everyone in a group is vulnerable. Multiple victims may share a trait, but evidence must explain why it mattered to the offense.

Relevant conduct

Conduct considered at sentencing beyond the narrow wording of the conviction, including acts the defendant aided or abetted, within the Guidelines’ accountability rules.

Scienter

A required mental state, such as knowledge. The first vulnerable-victim adjustment requires knowledge or reason to know; the additional large-number adjustment adds no separate knowledge requirement for each victim.

Upward variance

A sentence above the advisory Guidelines range based on the statutory sentencing factors.

Plain error

A demanding appellate standard generally applicable to an unpreserved objection. Identifying a possible mistake is insufficient without showing obviousness, prejudice, and the remaining requirements.

Substantive reasonableness

Whether the sentence’s length is permissible considering the circumstances and statutory factors, rather than whether an appellate court would have chosen the same sentence.

7. Conclusion

The opinion’s central contribution is to distinguish direct exploitation of vulnerability from impaired ability to detect fraud. Financial hardship supported the enhancement because individualized evidence showed how the defendants used it to obtain the remains they fraudulently sold.

The decision also establishes that fifteen vulnerable victims suffice in this mail-fraud setting and that an aider and abettor’s accountability is not confined to personal victim contacts. Its sentencing rulings preserve substantial district-court discretion while leaving intact the requirements of individualized findings, accurate Guidelines calculations, and reasoned consideration of mitigation.