United States v. Throne , 702 F. App'x 765 ( 2017 )

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS July 31, 2017
Elisabeth A. Shumaker
TENTH CIRCUIT Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
No. 16-1296
v. (D.C. No. 1:16-CR-00073-CMA-1)
D. Colo.
JASON TIMOTHY THRONE,
Defendant - Appellant.
ORDER AND JUDGMENT *
Before HOLMES, MURPHY, and PHILLIPS, Circuit Judges **.
I. INTRODUCTION
Jason Throne embezzled money from his employer and did not report the
income to the IRS. Pursuant to an agreement with the government, Throne
pleaded guilty to one count of mail fraud, 18 U.S.C. § 1341, and one count of
making a false tax return, 26 U.S.C. § 7206(1). In arriving at an advisory
*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
**
After examining the briefs and the appellate record, this three-judge panel
has determined unanimously that oral argument would not be of material
assistance in the determination of this appeal See Fed. R. App. P. 34(a); 10th Cir.
R. 34.1(G). The cause is therefore ordered submitted without oral argument.
sentencing range under the Sentencing Guidelines, the district court increased
Throne’s offense level on the mail-fraud conviction by two because Throne
“abused a position of . . . private trust . . . in a manner that significantly
facilitated the commission or concealment of the offense.” See U.S.S.G. § 3B1.3.
Throne asserts the district court erred in applying § 3B1.3 to increase his offense
level, thus rendering his sentence procedurally unreasonable. See United States v.
Hildreth, 485 F.3d 1120, 1127 (10th Cir. 2007) (“To impose a procedurally
reasonable sentence, a district court must calculate the proper advisory Guidelines
range . . . .” (quotation omitted)). Exercising jurisdiction pursuant to 28 U.S.C. §
1291, this court affirms.
II. BACKGROUND
A. Factual Background
All the record facts and evidence relevant to the applicability of § 3B1.3
are set out in Throne’s plea agreement with the government. The plea agreement
provides as follows:
Hunter Douglas, Inc. (HDI) and its affiliate, Hunter Douglas Window
Fashions, Inc. (HDWFI), [are] in the business of designing,
manufacturing, and fabricating window coverings . . . . HDWFI’s
place of business was Broomfield, Colorado.
The defendant Jason Timothy Throne, a lawyer, joined HDI as
an intellectual property counsel in 1993. He was promoted to
intellectual property general counsel in 2001 and remained in that
position until his HDI employment was terminated in June 2014.
Until 2015, Throne was licensed to practice law in New Hampshire
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and registered to practice in patent cases before the United States
Patent and Trademark Office.
Throne’s duties during the relevant times included managing
and overseeing patents and trademarks for HDI and HDWFI;
managing outside patent attorneys and outside inventors; evaluating
and licensing inventors’ technologies; the day-to-day management of
patent and trademark litigation; advising senior management on
patent and trademark issues; formulating, negotiating, and
implementing licensing strategies; tracking the development of new
products and processes within HDI’s North American companies;
establishing patent and trademark strategies for HDI; keeping
inventors abreast of new technologies and inventions in the window
coverings industry; advising in-house tax counsel on patent and
trademark issues; and “brainstorming” with inventors and other
company employees to assess the possibility of patenting new
inventions, to enhance inventions, and to respond to competitive
threats. In addition, Throne is listed as an inventor in forty-two of
HDI’s United States patents.
In September 2007, HDI provided Throne with a written policy
statement that said full-time employees, such as him, could not have
outside employment without approval. Throne . . . acknowledged
that he understood that policy and signed an HDI form on which he
checked a box next to the words, “No; I do not have a 2nd Job.”
Throne resided in Colorado from the time he joined HDI until
July 2004, when he moved to Maine. Beginning in 1995, while he
lived in Colorado, and continuing until his employment ended,
Throne worked primarily from his home . . . . His supervisors
approved that arrangement.
....
On December 29, 1999, Throne arranged for Patent Services
Group, Inc. (PSG) to be incorporated in Colorado. At about the same
time, he opened post office box 2019 in Boulder, Colorado, stating
on a Postal Service application that the box would be used by PSG.
In early 2000, Throne opened an account in the name of PSG at
Vectra Bank in Steamboat Springs, Colorado.
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Beginning in early 2000 and continuing to April 2014, Throne
prepared 162 false PSG invoices, each addressed, “Jason T. Throne
Hunter Douglas Inc.,” and each showing the Boulder post office box
as PSG’s address. Throne stated on each invoice that PSG had
performed patent searches for Hunter Douglas and that Hunter
Douglas owed money to PSG for those services. After writing “OK
to pay” and his initials on each of the invoices, Throne submitted
them on a monthly basis to the accounting department at the HDWFI
office in Colorado.
Relying on Throne’s approvals, the accounting department
paid the invoices by mailing HDWFI checks to the Boulder post
office box between April 18, 2000, and April 25, 2014. . . . The total
amount of the checks was $4,841,146.09.
After retrieving the checks from the post office, Throne
deposited them into the PSG account at Vectra Bank. He then caused
the money to be moved from that account to personal bank accounts
and used it for . . . personal expenses.
Other than submitting the invoices to the HDWFI accounting
department, Throne never mentioned PSG to anyone at HDI or
HDWFI. Neither his supervisors nor any other Hunter Douglas
employee was aware of any services provided by PSG. Physical
searches of Hunter Douglas’s files produced no memoranda, reports,
summaries, analyses, or other materials documenting patent searches
or any other services provided by PSG. . . .
On November 22, 2013, HDWFI’s accounting department
prepared a summary of the year’s legal charges, including the
payments to PSG, and emailed it to two company employees. One of
the recipients was N.H., a patent engineer whom Throne . . .
supervised . . . and who had assisted him in investigating patents and
evaluating the enforceability of the company’s intellectual
property. . . . N.H. sent an email to the accounting department and to
Throne, saying, “I have NO idea what all of the ‘Patent services
group’ astronomical charges are.” She asked Throne, “Jason, do you
know what those are? I have never heard of that.” Throne
immediately contacted N.H. by telephone and told her that PSG was
a patent search service and the payments had been approved. Later
that day, Throne sent an email to N.H. and other HDWFI employees,
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misrepresenting that PSG “is a patent search service that I use that
tracks a number of different developments throughout the
organization.” He claimed that he used PSG “to conduct state of the
art searches for different inventors and to conduct validity searches
for are [sic] lawsuits, which for this year have been very high.” In
that email and in his earlier call to N.H., Throne continued to hide
his relationship to PSG.
On June 3, 2014, two Hunter Douglas supervisors . . . , having
determined there was a connection between Throne and PSG,
confronted him about it. Throne responded by misrepresenting that
his wife, as the owner of PSG, performed patent searches under his
guidance. . . .
The government’s position is that the patent searches described
in the PSG invoices were not conducted and that Throne knew they
were not conducted. The defendant’s position is that he conducted
the searches. . . .
The defendant agrees that, assuming he did the patent searches
described in the PSG invoices, he nevertheless defrauded HDI and
HDWFI out of $4,841,146.09 because arranging for such searches
was his responsibility as a paid HDI employee.
R. Vol. I at 17-22 (footnote omitted).
B. Procedural Background
A United States Probation Officer prepared a Presentence Investigation
Report (“PSR”) that recommended a two-level enhancement to Throne’s offense
level because Throne’s position of private trust significantly facilitated the
commission and/or concealment of his mail fraud offense. See U.S.S.G. § 3B1.3.
The PSR’s recommendation was based exclusively on the stipulated facts set out
in the plea agreement entered into by Throne and the United States. Both the
government and Throne objected to the proposed § 3B1.3 enhancement, asserting
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Throne’s position as an attorney was not a significant factor allowing him to carry
out the fraud. At the sentencing hearing, both the prosecutor and defense counsel
repeated their previously lodged objections to the § 3B1.3 enhancement.
The district court overruled the objections, concluding the enhancement
was appropriate. In so doing, the district court specifically recognized the
substantial managerial discretion placed in Throne as Hunter Douglas’s
intellectual property general counsel:
Essentially, I agree with the probation officer. The stipulated facts
here are that his duties included managing and overseeing patent and
trademarks for [Hunter Douglas and a subsidiary]. He managed the
outside patent attorneys, the outside inventors, the day-to-day
management of patents and trademark litigation, tracking and
development of new products, et cetera.
The district court also found that Throne utilized that managerial discretion to
facilitate the embezzlement: “He had authority to both approve and submit
invoices for patent searches, which were then paid by the firm's accounting
department without any further scrutiny. And it appears to me that if he weren’t
in this position of trust as their patent attorney, this couldn’t have gone on for 15
years.” The district court calculated the total offense level to be twenty-five and
the criminal history category to be I, which yielded an advisory guideline range of
fifty-seven to seventy-one months as to the mail fraud conviction. The court
sentenced Throne to seventy-one months’ imprisonment on the mail fraud count
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and thirty-six months’ imprisonment on the tax count and ordered the sentences to
run concurrently.
III. ANALYSIS
A. Standard of Review
Whether a defendant occupied a position of trust under U.S.S.G. § 3B1.3 is
“generally a factual matter” this court reviews for clear error. United States v.
Spear, 491 F.3d 1150, 1153 (10th Cir. 2007) (quotation omitted). “Nevertheless,
this court review[s] a district court’s interpretation of the Guidelines de novo to
see if the correct standard was applied to the factual findings.” United States v.
Arreola, 548 F.3d 1340, 1345 (10th Cir. 2008) (quotation omitted).
B. Discussion
Section 3B1.3 provides for an enhancement of a defendant’s sentence if the
defendant abuses a position of private trust “in a manner that significantly
facilitated the commission or concealment of the offense.” Thus, for this
sentencing enhancement to apply, the record must demonstrate: (1) the defendant
occupied a position of trust; and (2) the position of trust was used to facilitate
significantly the commission or concealment of the crime. U.S.S.G. § 3B1.3;
Spear, 491 F.3d at 1153.
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1. Position of Private Trust
The commentary to § 3B1.3 makes clear that the defining characteristic of a
position of public or private trust is the presence of professional or managerial
discretion:
“Public or private trust” refers to a position of public or private trust
characterized by professional or managerial discretion (i.e.,
substantial discretionary judgment that is ordinarily given
considerable deference). Persons holding such positions ordinarily
are subject to significantly less supervision than employees whose
responsibilities are primarily nondiscretionary in nature.
U.S.S.G. § 3B1.3, cmt. n.1. “Our cases interpreting the guideline make clear that
the term ‘position of trust’ is a bit of a misnomer. It actually has little to do with
trustworthiness and everything to do with authority and discretion.” Spear, 491
F.3d at 1154; see also United States v. Edwards, 325 F.3d 1184, 1187 (10th Cir.
2003) (holding that the lack of “any . . . authority to make substantial
discretionary judgments” is key in determining whether the enhancement applies).
“The discretion necessary to qualify for the enhancement exists where the person
charged had the authority to make broad case-by-case decisions for the
organization.” Spear, 491 F.3d at 1155. 1
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Throne asserts the district court erred in analyzing the applicability of
§ 3B1.3 to his conduct by focusing on his trustworthiness, rather than on whether
his position as intellectual property general counsel was characterized by
managerial or professional discretion. Although some isolated statements on the
part of the district court at the sentencing hearing refer to Throne being a trusted
employee of Hunter Douglas, the transcript of the sentencing hearing, when
(continued...)
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The district court did not err in concluding Throne occupied a position of
private trust as Hunter Douglas’s intellectual property general counsel. The
stipulated facts make clear Throne had authority to make substantial discretionary
judgments. His authority included, among other duties, managing and overseeing
Hunter Douglas’s patents and trademarks; managing outside patent attorneys and
inventors; formulating, negotiating, and implementing licensing strategies;
tracking the development of Hunter Douglas products and processes; and
“brainstorming” with inventors and company employees to assess the possibility
of patenting new inventions, to enhance inventions, and to respond to competitive
threats. Furthermore, given these undisputed facts, along with a further
stipulation that Throne could have Hunter Douglas vendors paid via his signature
authority, it was reasonable for the district court to infer that Throne had the
power to choose necessary vendors and set those vendors’ rates of compensation.
In light of these facts, there is simply no doubt Throne occupied a position of
private trust. See Arreola, 548 F.3d at 1346-47 (holding that an employee with
authority to activate new vendors on employer’s procurement system, together
1
(...continued)
considered as a whole, leaves no doubt the district court applied the correct legal
test in concluding Throne occupied a position of private trust. That is, the district
court specifically focused on Throne’s exceedingly broad authority and discretion
in managing all aspects of Hunter Douglas’s intellectual property.
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with authority to purchase goods and services valued up to $100,000, occupied a
position of trust).
2. Significant Facilitation
Having determined the district court did not err in concluding Throne
occupied a position of private trust, this court moves on to determine if that
position was used in a “manner that significantly facilitated the commission or
concealment of the offense.” U.S.S.G. § 3B1.3. “That step is satisfied where the
person’s duties allow the more effective commission of the crime by ‘making the
detection of the offense or the defendant’s responsibility for the offense more
difficult.’” Spear, 491 F.3d at 1155-56 (quoting U.S.S.G. § 3B1.3, cmt. n.1).
In light of this standard, there is simply no doubt the district court correctly
concluded Throne’s position of private trust (i.e., intellectual property general
counsel) significantly facilitated his embezzlement of funds from Hunter Douglas.
Based on Throne’s management of Hunter Douglas’s intellectual property
portfolio, the record strongly supports an inference that Throne could (1) choose
vendors for critical goods/services and (2) purchase necessary/desirable patents.
From this it is quite easy to infer it would be necessary to do due diligence on
acquisitions of intellectual property, including the use of a patent search entity.
The record here makes clear Throne could use any such vendor he chose,
including a fictitious vendor he created to siphon funds away from Hunter
Douglas. These actions would not have been possible if the position Throne
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occupied were merely ministerial. See United States v. Chee, 514 F.3d 1106,
1118 (10th Cir. 2008) (“The primary concern of § 3B1.3 is to penalize defendants
who take advantage of a position that provides them freedom to commit or
conceal a difficult-to-detect wrong.” (quotation omitted)).
IV. CONCLUSION
For those reasons set out above, the sentence imposed by the United States
District Court for the District of Colorado is hereby AFFIRMED.
ENTERED FOR THE COURT
Michael R. Murphy
Circuit Judge
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