Financial Vulnerability and Fraud: Fifteen Exploited Victims Support the Large-Number Enhancement

1. Introduction

This decision clarifies when financial hardship makes a fraud victim “unusually vulnerable” under the federal Sentencing Guidelines. The Tenth Circuit held that vulnerability need not impair a victim’s ability to detect or thwart fraud. It is sufficient that the defendant exploited an individualized vulnerability in a way that enabled or facilitated the particular offense.

Applying that principle, the court affirmed the sentences of Megan Hess and her mother, Shirley Koch, for their involvement in a funeral-home scheme involving the unauthorized procurement, dismemberment, and sale of human remains. Their promises of inexpensive or free cremation services induced financially vulnerable customers to entrust relatives’ bodies to them, providing the access necessary to carry out the fraud.

The opinion also establishes that fifteen qualifying victims suffice for the additional “large number of vulnerable victims” enhancement in this mail-fraud case. It does not establish a universal numerical minimum. Separately, the court confirmed that the enhancement reaches victims of conduct a defendant aided and abetted, even without personal interaction with every victim.

The remaining issues concerned Hess’s post-sentencing rehabilitation and the substantive reasonableness of Koch’s substantial upward variance. The court rejected both challenges and affirmed Hess’s 240-month sentence and Koch’s 180-month sentence.

2. Background and Procedural History

The underlying scheme

Hess operated Sunset Mesa Funeral Directors and a nonprofit organization doing business as Donor Services. Although the nonprofit ostensibly assisted people unable to afford funeral services, its principal business involved selling human remains to research, educational, plastination, and body-broker companies. Koch assisted in dealing with families, dismembering bodies, and preparing remains for sale.

Families frequently paid for cremations that never occurred. Some authorized limited donations after misleading representations; others expressly refused donation. Defendants nevertheless sold bodies or body parts beyond any authorization obtained and, in many instances, returned cremated remains falsely represented as those of the families’ loved ones. They also misrepresented the legitimacy and disease status of remains sold to purchasers.

Records documented sales involving 811 individuals. Investigators determined that the bodies or body parts of 560 decedents were almost certainly obtained and sold fraudulently. Income from those sales enabled Sunset Mesa to offer unusually low cremation prices, attracting additional customers and supplying more bodies for the scheme.

The first appeal and remand

Both defendants pleaded guilty to mail fraud and aiding and abetting. Their original sentences included four additional offense levels under U.S.S.G. § 3A1.1(b): two for an offense involving a vulnerable victim and two more for an offense involving a large number of vulnerable victims.

In United States v. Hess, 106 F.4th 1011 (10th Cir. 2024), the Tenth Circuit identified errors in the loss calculations, reversed a sophisticated-means enhancement applied to Koch, and rejected the district court’s original vulnerable-victim reasoning. Deceased individuals could not qualify as vulnerable victims on the theory used below, and the court could not assume that all grieving relatives were unusually susceptible to this fraud. Resentencing required particularized findings connecting individual vulnerabilities to the offense.

On remand, the Government supplied additional victim statements and expert testimony from Dr. Doug Shadel concerning stressful life events and susceptibility to fraud. The district court identified twenty-one particular victims whose vulnerabilities, it found, facilitated the scheme. It then imposed the same prison terms despite lower advisory ranges:

The present appeals challenged the renewed large-number enhancement. Hess also raised an unpreserved objection to the treatment of her rehabilitation evidence; Koch challenged the length of her sentence.

3. Summary of the Opinion

• Individual vulnerability was adequately established: The appellate court upheld findings concerning fifteen victims whose circumstances were connected to the defendants’ acquisition of their loved ones’ bodies.
• Reduced fraud-detection ability was unnecessary: The relevant inquiry was whether vulnerability enabled or facilitated the particular fraud, not whether victims were unusually unable to recognize deception.
• Fifteen victims were enough here: The court declined to decide the minimum number required in every fraud case.
• Koch’s lack of direct contact was immaterial: The enhancement encompassed victims of relevant conduct she aided and abetted, subject to the Guidelines’ accountability rules.
• Hess failed plain-error review: Assuming an error in weighing rehabilitation, she showed neither a clearly established legal violation nor a reasonable probability of a lower sentence.
• Koch’s sentence was substantively reasonable: The district court adequately explained why the offense’s exceptional harm and seriousness outweighed her mitigating circumstances.

4. Analysis

A. The Guideline Framework and Standards of Review

Section 3A1.1(b) contains two distinct steps:

1. Section 3A1.1(b)(1): A two-level increase applies if the defendant knew or should have known that a victim was vulnerable.
2. Section 3A1.1(b)(2): If the first enhancement applies and the offense involved a large number of vulnerable victims, two additional levels apply.

Neither defendant contested the first step in this appeal. The dispute concerned the additional two levels.

The commentary defines a vulnerable victim as someone harmed by the offense or relevant conduct who is unusually vulnerable because of age, physical or mental condition, or particular susceptibility to the criminal conduct. Its examples distinguish an ineffective cancer cure marketed to cancer patients from fraudulent securities marketed indiscriminately to the public. A vulnerability must relate to the crime, rather than merely coexist with victimization.

Precedents governing interpretation and review

• United States v. Rocha, 145 F.4th 1247 (10th Cir. 2025): Supplies the general framework: legal conclusions about the Guidelines receive de novo review, factual findings receive clear-error review, and sentencing decisions receive deferential abuse-of-discretion review. It also anchors the opinion’s later discussion of substantive reasonableness.
• United States v. Tony, 121 F.4th 56 (10th Cir. 2024): Directs courts interpreting the Guidelines to determine the Sentencing Commission’s intent from the provision and its explanatory commentary. The opinion applies Tony’s rule that commentary governs unless constitutionally or statutorily invalid, plainly erroneous, or inconsistent with the Guideline.
• United States v. Sumka, 81 F.4th 1153 (10th Cir. 2023): Distinguishes factual identification of vulnerable victims from legal questions about whether established facts support an enhancement. Following Sumka, the panel declined to resolve the parties’ disagreement over the precise review standard because the enhancement survived either standard.

B. Precedents Cited: Vulnerability Requires a Connection to the Particular Fraud

The controlling starting point: United States v. Hess

The 2024 decision required a nexus between vulnerability and fraud. It rejected the proposition that grieving relatives necessarily qualified simply because grief can be emotionally debilitating.

The present opinion preserves that rule rather than retreating from it. The difference was evidentiary. Originally, the district court assumed that grief explained susceptibility. On remand, it identified particular circumstances explaining why particular customers entrusted bodies to these defendants.

This distinction resolves an apparent tension between the two appeals. Unsupervised custody remained the immediate condition enabling the unauthorized sales. The new findings explained how defendants obtained that custody from financially constrained customers through fraudulent promises of affordable services.

United States v. Proffit: incidental opportunity versus direct exploitation

In United States v. Proffit, 304 F.3d 1001 (10th Cir. 2002), a rancher diagnosed with cancer advertised his ranch for sale. The defendant approached as a prospective purchaser but ultimately defrauded him through a supposed cattle-futures investment. Although the illness created the opportunity for their meeting, the investment decision appeared driven by the ordinary attraction of a quick financial return.

The enhancement therefore failed: the illness was too indirectly connected to the fraud actually committed. Significantly, Proffit suggested that the outcome might differ if the defendant had exploited the illness to defraud the victim of the ranch he wished to sell.

That distinction supported affirmance here. Financial hardship did not merely introduce victims to the defendants before an unrelated fraud occurred. Affordable cremation was the very service falsely promised, and the need for that service induced the transfer of custody that the scheme exploited.

United States v. Fosher: no mandatory detection-and-prevention test

Hess relied on United States v. Fosher, 124 F.3d 52 (1st Cir. 1997), to frame vulnerability in terms of whether a victim was less able to detect or thwart a crime. The Tenth Circuit declined to adopt that formulation as the controlling test.

The Guideline does not require diminished investigative ability or unusual credulity. A cancer patient may be particularly susceptible to a falsely advertised cancer cure without being less capable of identifying false statements generally. Similarly, a financially constrained customer may be particularly susceptible to a fraudulent offer of low-cost cremation without any cognitive impairment.

The resulting rule recognizes constrained circumstances as a potential source of vulnerability, while still requiring proof that those circumstances facilitated the particular offense.

United States v. Brunson and United States v. Creech: targeting alone does not prove vulnerability

In United States v. Brunson, 54 F.3d 673 (10th Cir. 1995), a defendant believed foreign companies would be easier to defraud. The court held that neither that subjective belief nor the success of the fraud established unusual vulnerability. Objective evidence was necessary.

In United States v. Creech, 913 F.2d 780 (10th Cir. 1990), the district court assumed newlyweds were unusually vulnerable to threats against their spouses. The appellate court rejected the assumption because concern for a threatened spouse was not shown to be greater among newlyweds than among other married people.

Both decisions guard against substituting stereotypes for proof. They did not defeat the enhancement here because the resentencing court relied on evidence of individual financial pressures and the offers used to exploit them.

United States v. Tissnolthtos and United States v. Drapeau: limits on class-based inference

United States v. Tissnolthtos, 115 F.3d 759 (10th Cir. 1997), rejected reliance on an assault victim’s age of seventy-one without findings showing actual vulnerability. By contrast, it favorably discussed United States v. Drapeau, 110 F.3d 618 (8th Cir. 1997), where the vulnerability of a one-year-old assault victim followed compellingly from the child’s inability to protect himself or report the abuse.

These authorities recognize that a class characteristic can sometimes support an exceptionally strong inference. Ordinarily, however, age or another shared characteristic cannot replace individualized analysis. Neither grief nor poverty automatically established the necessary nexus in this case.

C. Applying the Nexus Requirement to Financial Hardship

Hess did not contest five vulnerability findings associated with terminal illness or hospice-related circumstances. The appellate court also sustained ten findings involving financial vulnerability.

The examples show why the court considered the findings particularized:

• M.C.-P. had serious health problems and little income. Defendants offered a cheaper cremation instead of her planned embalming, inducing a change that enabled them to sell her grandmother’s body.
• J.D. could not immediately afford his grandfather’s cremation. Koch offered a supposedly cost-covering brain donation for Alzheimer’s research, but the entire body was sold to a plastination company.
• T.F. faced debts from her husband’s prolonged cancer treatment and selected Sunset Mesa because her local funeral home cost more.
• N.H. was elderly, disabled, managing debt, and required borrowed money for funeral expenses. Defendants’ prices and assurances induced her to entrust her husband’s body to them.
• K.B. faced financial strain after caregiving while working full-time. Hess offered a special price associated with her husband’s veteran status.

The court similarly upheld findings concerning M.B., D.Mc., D.W., A.S.J., and R.B. Their particular financial situations explained their need for the lower-cost services defendants promised.

This was not a conclusion that everyone choosing an inexpensive service is vulnerable. The evidence connected actual financial constraints, the defendants’ offers, and the customers’ decisions to surrender custody. Nor did the enhancement require proof that the overall scheme could succeed only against vulnerable people. A scheme capable of defrauding many customers can still exploit particular vulnerabilities among a qualifying subset.

Shared characteristics do not invalidate individualized findings

United States v. Caballero, 277 F.3d 1235 (10th Cir. 2002), supported this distinction. There, defendants exploited undocumented immigrants’ language barriers, unfamiliarity with American law, cultural backgrounds, and immigration status. Multiple victims shared vulnerabilities, but that did not make supported findings an impermissible class presumption.

The same reasoning applied here: what matters is the evidentiary connection, not whether every victim’s vulnerability is unique.

Blameworthiness explains the enhancement but does not replace its elements

United States v. Scott, 529 F.3d 1290 (10th Cir. 2008), quoting United States v. Castaneda, 239 F.3d 978 (9th Cir. 2001), explains that the enhancement addresses conduct more blameworthy because it exploits particular victims. Scott itself upheld an enhancement involving a minor trafficking victim’s small stature and unusual naivety.

The present court considered defendants’ exploitation of financially distressed, bereaved customers comparably deserving of enhanced punishment. Importantly, moral condemnation supplemented the established nexus; it did not substitute for proof of unusual susceptibility.

D. How Many Vulnerable Victims Constitute a “Large Number”?

The district court found twenty-one vulnerable victims. The appellate court upheld findings concerning fifteen and expressly left the remaining findings unresolved because fifteen sufficed.

United States v. Kaufman: a contextual, not universal, benchmark

In United States v. Kaufman, 546 F.3d 1242 (10th Cir. 2008), the offenses included forced labor and involuntary servitude involving mentally ill residents of an unlicensed group home. The court used the offense-specific Guideline’s departure provision to conclude that ten victims constituted a large number in that context.

Kaufman quoted United States v. Anderson, 349 F.3d 568 (8th Cir. 2003), in describing “large number” as largely uninterpreted. Its solution was to consult the relevant offense framework, not announce a ten-victim rule governing every crime.

Here, the court examined the fraud Guideline’s victim-based provisions, which reference five, ten, and twenty-five victims. It also relied on United States v. Caballero, which upheld the enhancement in a fraud case involving sixteen particularly vulnerable victims.

The holding is deliberately narrow: fifteen qualifying victims suffice in this mail-fraud case. The court did not select five or ten as the minimum, require twenty-five, or endorse a universal threshold derived from Kaufman.

E. Relevant Conduct, Personal Contact, and the Government’s Position

Why Koch did not need to interact with every victim

The commentary to § 3A1.1 includes victims of relevant conduct under § 1B1.3. Section 1B1.3(a)(1)(A), in turn, includes acts a defendant committed, aided, abetted, counseled, induced, procured, or willfully caused.

The court distinguished the two enhancement stages. Section 3A1.1(b)(1) expressly requires knowledge or constructive knowledge of a victim’s vulnerability. Section 3A1.1(b)(2) contains no separate requirement that the defendant know every victim’s vulnerability. Once the first step applies, the second focuses on the offense’s qualifying victims.

Because Koch aided and abetted the fraudulent scheme, her relevant conduct included Hess’s conduct that she aided and abetted. Personal meetings with all qualifying victims were unnecessary. This does not create automatic responsibility for everything any codefendant does: accountability remains bounded by the relevant-conduct provisions.

Koch’s reliance on United States v. Boll, 3 F.4th 1099 (8th Cir. 2021), was misplaced. Boll assessed the offense of conviction and all relevant conduct, asking whether the vulnerable-victim count exceeded the typical number for offenses of that kind. Its reference to context concerned the type of offense, not a restriction to the defendant’s personal encounters.

The Government’s recommendation did not control the legal calculation

Consistent with its understanding of Koch’s plea agreement, the Government asked the district court not to apply the additional enhancement and recommended 78 months. That position did not bind the court.

United States v. Ronquillo, 94 F.4th 1169 (10th Cir. 2024), supplied the governing principle: courts are not bound by parties’ stipulations on questions of law. In Ronquillo, that principle permitted independent review of a warrant’s scope despite a government concession below.

The Government also could defend the judgment on appeal despite its earlier legal position. Richison v. Ernest Grp., 634 F.3d 1123 (10th Cir. 2011), distinguishes arguments supporting affirmance from arguments seeking reversal. Together with the first United States v. Hess decision, it supported the Government’s ability, as appellee, to defend the judgment on a record-supported ground.

Koch separately suggested that the Government’s participation might have breached the plea agreement, but she did not develop that argument. Under LaFevers v. Gibson, 182 F.3d 705 (10th Cir. 1999), perfunctory references without developed argument are waived. The court therefore did not decide whether a breach occurred. Its ruling on appellate advocacy should not be read as resolving that separate contractual issue.

F. Post-Sentencing Rehabilitation: Permission to Consider Is Not a Requirement to Reduce

Hess submitted evidence of educational work, support from inmates and staff, religious and self-improvement activities, and service as a suicide-watch companion. The district court described her conduct as commendable but also expected, noted the availability of good-time credit, and concluded that the offense’s seriousness outweighed mitigating considerations.

Pepper v. United States

In Pepper v. United States, 562 U.S. 476 (2011), the Supreme Court held that resentencing courts may consider post-sentencing rehabilitation and may grant a downward variance on that basis in appropriate cases. Such evidence can illuminate the defendant’s characteristics, deterrence needs, public-safety risk, and treatment needs.

Pepper rejected both a categorical prohibition on considering rehabilitation and the proposition that good-time credits make sentencing consideration inappropriate. Those mechanisms serve different penological interests. But Pepper also expressly declined to require a sentence reduction whenever rehabilitation is shown.

The significance of plain-error review

Because Hess did not object at resentencing, United States v. Kee, 129 F.4th 1249 (10th Cir. 2025), required her to establish an error that was plain, affected substantial rights, and seriously impaired the fairness, integrity, or public reputation of the proceeding.

Under United States v. Booker, 63 F.4th 1254 (10th Cir. 2023), an error must be obvious under well-settled law, and prejudice requires a reasonable probability of a different outcome.

The panel assumed, without deciding, that an error occurred. It nevertheless rejected the claim on two independent grounds:

1. No plainly established violation: Pepper does not require a reduction, nor does it clearly prohibit considering good-time credit when deciding the weight of rehabilitation evidence.
2. No demonstrated prejudice: The sentencing court expressly found the offense’s nature and circumstances sufficiently serious to outweigh mitigating factors. Hess did not establish a reasonable probability of a lower sentence under a different articulation of the rehabilitation analysis.

The district court also distinguished constructive prison behavior from acknowledgment of victims’ suffering. It found continuing minimization and a lack of remorse. Thus, the appellate holding should not be overstated: it does not authorize categorical exclusion of rehabilitation evidence or definitively approve every aspect of the district court’s reasoning.

G. Koch’s Upward Variance and Substantive Reasonableness

Koch argued that a fifteen-year sentence was effectively a life sentence given her age of seventy-one and serious health problems. She stressed her lesser role, limited criminal history, and the substantial increase above the 78–97-month advisory range.

The district court considered those circumstances but found them outweighed by the offense’s extraordinary harm. It also noted an earlier, unscored fraud-related felony and virtually no remorse. Although Koch was less culpable than Hess, she was a willing participant whose conduct included physically dismembering bodies. The court reflected their relative culpability by imposing a sentence five years shorter than Hess’s.

Deferential review does not permit appellate reweighing

United States v. Peña, 963 F.3d 1016 (10th Cir. 2020), limits reversal to sentences that are arbitrary, capricious, whimsical, or manifestly unreasonable. United States v. Holt, 161 F.4th 1253 (10th Cir. 2025), similarly asks whether the sentence exceeds the bounds of permissible choice.

Under United States v. Rocha, an outside-Guidelines sentence carries no presumption of unreasonableness. The reviewing court must give due deference to the district court’s determination that the § 3553(a) factors justify both the variance and its extent.

Precedents supporting substantial upward variances

These cases did not establish a mathematical rule validating comparable percentage increases. They supported the broader proposition that unusually serious harm, inadequately reflected in the Guidelines, can justify a substantial and carefully explained variance.

Here, monetary loss did not capture the betrayal of trust, desecration of remains, loss of meaningful burial or cremation, and enduring distress. The appellate court concluded that the district court’s individualized explanation fell within its permissible sentencing discretion.

5. Potential Impact

Financial hardship can matter without cognitive impairment

The decision provides a clear route for applying the enhancement where defendants exploit a need for affordable essential services. The legal focus is not limited to impaired judgment. Financial constraints can create unusual susceptibility when the fraudulent offer directly addresses those constraints.

The limiting principle remains important: neither poverty nor choosing the cheapest provider automatically establishes vulnerability. Future cases will require evidence connecting an individual’s circumstances to the specific fraudulent mechanism.

Evidence must explain access, inducement, or facilitation

Victim statements showing why a particular offer was accepted may be more important than generalized descriptions of distress. Expert evidence can provide context, but the district court’s selective use of Dr. Shadel’s testimony illustrates that a list of risk factors does not itself establish the required nexus.

The remand also demonstrates that a factual deficiency may be cured where the appellate mandate permits further findings and additional evidence. It does not establish that every sentencing remand allows unrestricted reopening of the record.

The numerical threshold remains flexible

Fifteen qualifying victims now have direct support in the mail-fraud context. Courts must still justify smaller counts rather than treating this opinion as a universal minimum or importing Kaufman’s involuntary-servitude benchmark mechanically into unrelated offenses.

Peripheral participation does not necessarily narrow the victim count

A defendant’s personal contact with victims does not define the outer boundary of the enhancement. Courts must assess the relevant conduct for which that defendant is accountable. The distinction between the initial knowledge requirement and the additional offense-wide count will matter in aiding-and-abetting cases.

Preservation and sentencing explanations remain decisive

Hess’s unsuccessful plain-error claim highlights the importance of identifying a rehabilitation-related legal objection at resentencing. Koch’s appeal, meanwhile, shows the difficulty of overturning a substantial variance when the sentencing judge expressly addresses mitigation and explains why exceptional harm outweighs it.

The affirmation of identical prison terms after reduced Guidelines calculations does not make those calculations optional. Rather, the court approved the sentences after correction of the ranges and a renewed, individualized explanation under § 3553(a).

6. Complex Concepts Simplified

Vulnerable victim

A person unusually susceptible to the particular offense because of individual circumstances—not simply someone experiencing difficulty or someone who was successfully defrauded.

Nexus

The connection showing how a vulnerability helped the crime occur. Here, financial hardship made fraudulent offers of affordable cremation particularly effective in obtaining custody of bodies.

Particularized findings

Evidence-based explanations about individual victims, rather than assumptions that everyone who is elderly, grieving, or poor must be unusually vulnerable.

Relevant conduct

Conduct counted at sentencing under the Guidelines’ accountability rules, including acts the defendant aided and abetted even without performing every act personally.

Scienter

A required mental state. The first vulnerable-victim enhancement requires actual or constructive knowledge; the additional large-number enhancement contains no separate knowledge requirement concerning every victim.

Enhancement versus variance

An enhancement changes the calculated advisory Guidelines range. A variance is a sentence outside that range based on the statutory sentencing factors.

Plain error

A demanding appellate standard generally applicable to an unpreserved objection. The defendant must establish a clear legal error, resulting prejudice, and serious harm to the proceeding’s fairness or integrity.

Substantive reasonableness

Whether the sentence’s length falls within the permissible range of choices given the circumstances and statutory sentencing purposes—not whether appellate judges would select the same sentence themselves.

7. Conclusion

United States v. Hess clarifies that unusual vulnerability is offense-specific, not confined to an inability to detect deception. Individualized financial hardship can support the enhancement when defendants exploit it to secure access essential to their fraud.

The court held fifteen qualifying victims sufficient in this mail-fraud case and included victims of conduct Koch aided and abetted despite her lack of personal contact. Its sentencing rulings also preserve the distinction between considering rehabilitation and requiring leniency, while affirming substantial discretion to address exceptional nonfinancial harm.

The central safeguard remains individualized proof: shared hardship alone is insufficient, but demonstrated exploitation of that hardship can justify enhanced punishment.