United States v. Edwards ( 2003 )

UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff - Appellee, No. 02-2045
v.
JENNIFER EDWARDS,
Defendant - Appellant.
ORDER
Filed April 9, 2003
Before LUCERO , HOLLOWAY , and ANDERSON , Circuit Judges.
Appellant’s motion to publish the order and judgment dated
March 13, 2003, is granted. A copy of the published opinion is attached.
Entered for the Court
PATRICK FISHER, Clerk of Court
By:
Deputy Clerk
F I L E D
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS MAR 13 2003
TENTH CIRCUIT PATRICK FISHER
Clerk
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v. No. 02-2045
JENNIFER EDWARDS,
Defendant - Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
(D.C. NO. CR-01-399-LH)
Susan Bronstein Dunleavy, Assistant Federal Public Defender (Stephen P.
McCue, Federal Public Defender), Albuquerque, New Mexico, for Defendant-
Appellant.
Norman Cairns, Assistant United States Attorney (David C. Iglesias, United
States Attorney, with him on the brief), Albuquerque, New Mexico, for Plaintiff-
Appellee.
Before LUCERO , HOLLOWAY , and ANDERSON , Circuit Judges.
ANDERSON , Circuit Judge.
Jennifer Edwards pled guilty to bank fraud, committed in violation of 18
U.S.C. § 1344, and was sentenced under the United States Sentencing
Commission, Guidelines Manual (Nov. 2000) (USSG), to five months
imprisonment, to be served at a halfway house, followed by five years of
supervised release, including five months on home confinement under the
electronic monitoring program. The sentence was based on a calculated total
offense level of 12, two levels of which reflected an adjustment, pursuant to
USSG §3B1.3, for abusing a position of trust. On appeal, Ms. Edwards contends
that the district court erred in applying that adjustment because she did not
occupy the type of position for which §3B1.3 was designed: a position
“characterized by professional or managerial discretion ( i.e. , substantial
discretionary judgment that is ordinarily given considerable deference).” USSG
§3B1.3, comment. (n.1).
As relevant to our disposition of this case, “[w]hether a defendant occupied
a position of trust within the meaning of USSG § 3B1.3 is a factual question, and
we will affirm the sentencing court unless we find its decision clearly erroneous.”
United States v. Koehn , 74 F.3d 199, 201 (10th Cir. 1996). Applying that
standard to the analysis set forth below, we vacate the sentence and remand for
resentencing.
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A.
At the sentencing hearing in this case, the district court adopted the
Presentence Investigation Report (PIR), and one witness testified, establishing the
following central facts. From 1992 through 1998, Ms. Edwards worked as an
hourly wage employee in the outdoor advertising division of the accounting
department of Bowlin, a New Mexico retail and outdoor advertising company. In
that job, she largely handled accounts receivable. More specifically, her duties
during the pertinent period consisted of receiving checks mailed in by Bowlin
customers, preparing them for deposit, posting the payments to customer accounts
and the cash receipts journal, sending out bills, calculating customer account
balances, and compiling and forwarding to sales personnel and her supervisors
reports reflecting this data. Cash receipts journal reports were incorporated in the
company’s general ledgers and, subsequently, its financial statements.
Ms. Edwards’ duties also included posting credits to customer accounts.
Credits were granted in amounts determined by authorized company personnel
when they were advised by customers of various problems with their outdoor
signs. Ms. Edwards had no authority to grant credits and no authority to exercise
discretionary judgment with respect to any other part of her job. Her tasks were
solely ministerial.
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From late December 1997, through mid-September 1998, Ms. Edwards
embezzled $31,395.06 from Bowlin by failing to post certain customer payments
and by re-routing some fifty-nine checks reflecting those payments to her
boyfriend’s account at The First Security Bank—an account to which she had
access. In all but two instances, she accomplished this by simply endorsing the
back of the check “for deposit only” to the number of that account. In two
instances she changed the name of the payee on the check to correspond to the
account. She then included the checks in the regular deposits she prepared. She
concealed this diversion of payments by posting false credits to the accounts of
customers whose checks were diverted. Thus, the accounts balanced for reporting
purposes.
In September 1998, a bank teller finally noticed the discrepancy on the
checks between Bowlin, as payee, and the account number listed on the back of
the check for deposit purposes. This discovery led eventually to the bank fraud
charge in this case.
B.
Section 3B1.3 of the Sentencing Guidelines, and Application Note 1 of the
Commentary to the Guideline, provide in pertinent part, as follows:
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Abuse of Position of Trust or Use of Special Skill
If the defendant abused a position of public or private trust, or used a
special skill, in a manner that significantly facilitated the commission
or concealment of the offense, increase by 2 levels. This adjustment
may not be employed if an abuse of trust or skill is included in the
base offense level or specific offense characteristic ....
Commentary
Application Notes :
1. “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 non-discretionary in nature. For this
adjustment to apply, the position of public or private trust must have
contributed in some significant way to facilitating the commission or
concealment of the offense ( e.g. , by making the detection of the
offense or the defendant’s responsibility for the offense more
difficult). This adjustment, for example, applies in the case of an
embezzlement of a client’s funds by an attorney serving as a
guardian, a bank executive’s fraudulent loan scheme, or the criminal
sexual abuse of a patient by a physician under the guise of an
examination. This adjustment does not apply in the case of an
embezzlement or theft by an ordinary bank teller or hotel clerk
because such positions are not characterized by the above-described
factors.
USSG §3B1.3, comment. (n.1) (emphasis added).
As indicated above, Ms. Edwards contends that this guideline adjustment
should not have been applied to her because, among other things, her job was
purely ministerial and did not entail substantial discretionary judgment. The
government, on the other hand, emphasizes Ms. Edwards’ alleged specialized
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accounting skills, her minimal oversight, her virtual exclusive control over the
accounts receivable and customer billing records—with resulting impact on the
company’s general ledger—and her use of her position to conceal the defalcation.
In the fraud context, we have recognized that the application of §3B1.3 is
categorized and analyzed somewhat differently depending on the defendant’s
status and type of activity in which the defendant is engaged or purports to be
engaged. One of those categories relates to employees of a business, such as to
the defendant in this case. It involves those situations “where the defendant
steals from his employer, using his position in the company to facilitate the
offense.” Koehn , 74 F.3d at 201. See also United States v. Pappert , 112 F.3d
1073, 1080 (10th Cir. 1997). Typically, the question of whether an employee
occupied a position of trust within the meaning of §3B1.3 is a heavily fact-
specific determination to be made by the district court using the guideline and
other factors which we have recognized. See , e.g. , United States v. Haber , 251
F.3d 881, 890-91 (10th Cir. 2001).
However, as the emphasized portions of the guideline and commentary set
out above indicate, the adjustment under §3B1.3 is not intended to be routinely
applied to every employee fraud or embezzlement case. As we have stated in an
analogous context, the fact is that “[i]n every successful fraud the defendant will
have created confidence and trust in the victim, but the sentencing enhancement is
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not intended to apply in every case of fraud.” Koehn , 74 F.3d at 201. Thus, the
fact that Ms. Edwards was trusted by her employer with significant
responsibility—even to the point of allowing her to bypass usual accounting
controls and pick up customer checks from incoming mail—is not determinative.
Nor does the fact that she made entries in and compiled balances from customer
accounts and the cash receipts journal necessarily establish that she possessed
special accounting skills.
A careful review of the district court’s ruling convinces us that with the
single important exception discussed below, the court understood the guideline
and ably and conscientiously sorted out the facts. Thus, for instance, we agree
with the district court’s statement during the sentencing hearing that job titles
themselves do not control; actual duties and authorized activities do. R. Vol. III
at 17-18. We also agree with the court’s findings that company officials trusted
Ms. Edwards, and that her position gave her access to customers’ checks and
important company records. Id. at 52-53.
However, the evidence does not support the district court’s suggestion that
Ms. Edwards either had the discretionary authority to grant credits to customers,
id. at 53, or, for that matter any other authority to make substantial discretionary
judgments regarding company revenues or expenses. Ms. Edwards’ work, as she
contends on appeal, was indeed clerical and ministerial. Opportunity and access
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do not equate to authority, or to the kind of “substantial discretionary judgment
that is ordinarily given considerable deference.” USSG § 3B1.3, comment.(n.1).
We agree with the Seventh Circuit that the guideline language regarding
discretion refers, in general, to the type of trusted position in an organizational
setting—
where business or similar entities charge particular employees with
deciding, on a case-by-case basis, whether a particular expenditure or
transfer of company funds or other valuables is necessary or
beneficial to the organization. Some employees have unfettered
authority to spend company money; others provide initial
authorization that for reasons of efficiency is subject only to nominal
review.
United States v. Tiojanco , 286 F.3d 1019, 1021 (7th Cir. 2002) (discussing hotel
clerk having authority to evaluate complaints and exercise discretion with respect
to issuing refunds and credits).
In sum, the facts show no more than that Ms. Edwards’ job was responsible
but ministerial. The Sentencing Commission, by its language in Application Note
1, deliberately set the bar at a higher level. Ms. Edwards’ criminal conduct was
the type of offense to which §3B1.3 refers by its statement that “[t]his adjustment
may not be employed if an abuse of trust or skill is included in the base offense
level or specific offense characteristic.” USSG §3B1.3. Accordingly, we hold
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that the adjustment pursuant to §3B1.3 was clearly erroneous, and we, therefore,
VACATE the sentence and REMAND for resentencing. 1
1
The question of how broadly or narrowly the term “victim” should be
defined in relation to the position of trust held by the defendant was not raised at
any point in this case. Thus, we do not address the issue except to observe that it
is a matter of dispute among the circuits. See, e.g., United States v. Guidry, 199
F.3d 1150, 1160 n.6 (10th Cir. 1999) (discussing cases). In any event, the
judgment in this case specifically included an amount of restitution to Bowlin, as
well as restitution to the bank, leaving no doubt that both were victimized on a
quantifiable basis.
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