10th Circuit orders resentencing in Sunset Mesa funeral home case due to “faulty” legal analysis

The U.S. Court of Appeals for the 10th Circuit vacated the sentences of two Western Slope women convicted of selling hundreds of body parts without the permission of grieving families.

A three-judge panel on the Denver-based court ruled the federal district court erred when it sentenced Megan Hess and Shirley Koch to 20 and 15 years in prison, respectively, for the eight-year scheme to defraud families.

In January 2023, U.S. District Judge Christine M. Arguello sentenced the mother-daughter pair to longer terms than allowed by the advisory guidelines outlined in their plea agreements, saying the scope of this “heinous offense” put her in “uncharted waters.” The judges did not say what length of sentence would have been appropriate.

The appeals court judges, in their July 2 decision, ruled Arguello erred in calculating monetary loss by refusing to offset the value of goods and services that the next of kin received at the time of the fraud. The court also erred by finding that body-part purchasers suffered financial loss through their dealings with Sunset Mesa, the 10th Circuit ruled.

“The district court’s legal analysis is faulty,” the judges wrote.

The appeals court’s decision also found the district court erred when it added sentence enhancers for a large number of vulnerable victims. The deceased individuals cannot be counted in this class, the court ruled, while grieving families do not fit the criteria.

Additionally, the district court erred on sentence enhancers for Koch based on crimes committed through “sophisticated means,” the justices wrote.

“That Hess could not have perpetrated her overall scheme (which included Hess’ sophisticated means) without Koch’s assistance does not mean that Koch caused the sophisticated conduct to occur,” the decision stated.

The case will now be remanded to the district court for resentencing. Court records indicate a new date has not yet been set.

The Sunset Mesa case became an international story in 2018 when Reuters found the Montrose facility to be the only business in the country that combined a funeral home with a crematorium and body broker company.

In February of that year, the FBI raided the funeral home. During an investigation dubbed “Operation Morbid Market,” federal agents ultimately tracked hundreds of bodies and body parts sold by Hess and Koch to places as far away as Saudi Arabia.