United States v. Tiojanco, Eduardo ( 2002 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 01-3170
United States of America,
Plaintiff-Appellee,
v.
Eduardo Manalo Tiojanco,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 01 CR 229-1--Ruben Castillo, Judge.
Argued January 30, 2002--Decided April 17, 2002
Before Manion, Diane P. Wood, and Evans,
Circuit Judges.
Evans, Circuit Judge. Eduardo Tiojanco
pleaded guilty to a federal wire fraud
charge (18 U.S.C. sec. 1343) after using
his position as an accounts receivable
clerk at Chicago’s Palmer House Hilton to
steal more than a quarter of a million
dollars in hotel funds. He was able to
turn this trick because he worked with
the hotel’s credit card accounts and,
with access to them, he disguised credit
card refunds that went to cards he
controlled as refunds destined for hotel
guests. He appeals a 2-level upward
adjustment hereceived under U.S.S.G.
sec.3B1.1 for abusing a position of
private trust.
From 1988 to 1998 Tiojanco worked as a
clerk in the Palmer House’s accounts
receivable department, where he was
responsible for handling telephone calls
from hotel guests who disputed charges
made to their credit card accounts. In
1993, after 5 years on the job, Tiojanco
decided to augment his salary by ripping
off the hotel. Using credit card numbers
issued in the name of an accomplice
(Antonio Reyes), Tiojanco devised a
scheme to issue credits to them as if
they were owed to a hotel guest. He
"processed the credit" by forwarding to
his supervisor, the hotel’s comptroller,
a "rebate slip" listing the amount of the
credit and the reason for the refund. The
comptroller, thinking it was a legitimate
refund to a deserving guest, initialed
the slip and passed it on to the hotel’s
night audit division for processing. The
night audit department performed no
review function and the comptroller’s
review was limited--he never spoke
directly with "complaining" hotel
customers but instead relied on the
rebate slips Tiojanco submitted. This
enabled Tiojanco to process $261,755.25
in phony refunds to 36 different credit
card accounts he (and his accomplice)
controlled.
The district court found that Tiojanco
held a "key" position at the Palmer
House, that he was entrusted with
valuable credit card information, and
that his supervisor relied heavily on
Tiojanco’s work. The court concluded that
Tiojanco’s job required him to exercise
"professional discretion" and thus was a
position of private trust, and that
Tiojanco had abused that position by
committing this massive fraud. See
U.S.S.G. sec.3B1.3 & comment. (n.1).
Accordingly, the court increased his
offense level from 15 to 17. Tiojanco’s
criminal history category was I, so the
adjustment only resulted in a modest
change from 18-24 months to 24-30 months
in his guideline range. The sentence
Tiojanco received--24 months
imprisonment--would thus have been
possible even without the sec.3B1.3
adjustment.
A survey of recent cases in which we
have upheld application of the adjustment
for abusing a position of private trust
demonstrates the futility of Tiojanco’s
argument. The cases fall into two general
categories; the first includes people
like doctors, lawyers, and investment
advisors who have (or hold themselves out
as having) specialized expertise that
leaves the average layman ill-equipped to
monitor their job performance. This
explains why we have found the adjustment
properly applied to a psychologist who
failed to provide treatment to her
mentally ill patients, see United States
v. Hoogenboom, 209 F.3d 665, 667, 671
(7th Cir. 2000), and a doctor who ordered
unnecessary tests and contraindicated
treatments, see United States v. Vivit,
214 F.3d 908, 911-13, 923-24 (7th Cir.
2000)--both of whom nonetheless attempted
to obtain reimbursement from their
patients’ insurers--and a lawyer
representing a debtor in bankruptcy who
failed to disclose his firm’s connection
to a senior secured creditor, see United
States v. Gellene, 182 F.3d 578, 581,
596-97 (7th Cir. 1999). Doctors and
lawyers enjoy significant discretion in
deciding what course of action is
appropriate for their patients and
clients; patients and clients (and their
insurers) are forced to rely on
theseprofessional judgments. Similarly,
clients of investment advisors face a
discontinuity in expertise but place
trust in their advisors, granting them
discretion to invest their funds with the
understanding that the advisor will act
in the investor’s best interests. And so
we have concluded that those who hold
themselves out as having extensive
experience trading commodities, see
United States v. Davuluri, 239 F.3d 902,
904, 908-09 (7th Cir. 2001), or
securities, see United States v.
Frykholm, 267 F.3d 604, 612-13 (7th Cir.
2001), or as holding a Series 7 license,
see United States v. Paneras, 222 F.3d
406, 412-13 (7th Cir. 2000), may occupy
positions of private trust with respect
to individual investors, and that those
who make use of the corporate form of
doing business assume a fiduciary duty,
and thus occupy a position of trust, with
respect to the corporation’s investors,
see United States v. Bhagavan, 116 F.3d
189, 193 (7th Cir. 1997); United States
v. Strang, 80 F.3d 1214, 1216, 1220 (7th
Cir. 1996).
A second category of positions of trust
exists in organizational settings, where
businesses 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. In the latter case, supervisors
defer to lower-level decisionmakers, who
generally have first-hand knowledge of
the relevant facts through personal
observation, customer interaction, or
document review. Thus, we have held that
the position-of-trust adjustment was
properly applied to an assistant manager
of a bank branch who had authority to
transfer large amounts of funds without
supervisory approval, see United States
v. Anderson, 259 F.3d 853, 863 (7th Cir.
2001), and a bank vice president whose
duties as compliance officer included
insuring that all loan documents and
accounts--including those accounts he
personally administered--were in order,
see United States v. Sonsalla, 241 F.3d
904, 909-10 (7th Cir. 2001), as well as a
postal service employee responsible for
certifying that construction contractors
had properly completed their work, in
effect recommending that they be paid,
see United States v. Emerson, 128 F.3d
557, 559-60, 562-63 (7th Cir. 1997), a
staff accountant charged with determining
a corporation’s sales and use tax
liabilities and requesting checks to pay
them, see United States v. Hernandez, 231
F.3d 1087, 1088-91 (7th Cir. 2000), and a
shopping center comptroller responsible
for initially approving payment invoices
before submitting them to a general
manager for final approval, see United
States v. Deal, 147 F.3d 562 (7th Cir.
1998).
What makes all of the jobs in both of
these categories similar, though our
cases have not always stated it
explicitly, is that they involve the type
of complex, situation-specific
decisionmaking that is given considerable
deference precisely because it cannot be
dictated entirely by, or monitored
against, established protocol. All of
these individuals are charged with
exercising their judgment in the best in
terest of another person or entity; this
is the essence of the "professional or
managerial discretion" to which
theguideline refers. See U.S.S.G.
sec.3B1.3, comment. (n.1) (a "position of
public or private trust [is]
characterized by professional or
managerial discretion (i.e., substantial
discretionary judgment that is ordinarily
given considerable deference)," such as a
doctor, bank executive, or an attorney
serving as a guardian).
We think Tiojanco fits comfortably
within the class of discretionary
decisionmakers covered by the guideline
and are unpersuaded by his argument that
he is more like the "ordinary bank teller
or hotel clerk" who is exempted from the
adjustment. See U.S.S.G. sec.3B1.3,
comment. (n.1) ("adjustment does not
apply in the case of an embezzlement or
theft by an ordinary bank teller or hotel
clerk"). Certainly he was a "clerk" who
worked in a "hotel," but the Palmer House
obviously contemplated that he would have
primary responsibility for issuing well
over $50,000 in customer refunds each
year; otherwise, the average of $50,000
Tiojanco tacked on for himself and his
accomplices in each of the 5 years he
carried out his fraud could not have gone
unnoticed. This is not the type of
responsibility granted to a typical hotel
desk clerk.
Tiojanco also suggests he could not have
occupied a position of trust because he
was a "low-level" employee earning a
modest salary ($26,000 to $27,000) and
has no professional degree or even formal
training in accounting. But as we have
explained before, a defendant’s
"educational or other credentials . . .
are of little significance in assessing
whether the position he occupied was one
of trust." Deal, 147 F.3d at 563; see
also Frykholm, 267 F.3d at 612 (whether
defendant was licensed broker does
nothing to answer the position of trust
question). Practical experience and a
long track record with the company are
other factors that lead employers to
entrust employees with responsibilities
that might otherwise go to someone with
more formal education (and thus a higher
salary). See Deal, 147 F.3d at 563. This
is precisely what happened to Tiojanco,
who was promoted to the Palmer House’s
accounting department after 5 years’ work
as a "storeroom clerk."
Tiojanco’s final assertion--that the
district court clearly erred in finding
that his job required him to
exerciseprofessional discretion--fails to
account for the entirely reasonable
inference that listening to customers’
stories and then determining the validity
of their complaints required him to
exercise judgment in evaluating the
complaining customers’ credibility. See
Anderson, 259 F.3d at 862 (district
court’s factual finding that defendant
occupied a position of trust is reviewed
for clear error); United States v.
Zaragoza, 123 F.3d 472, 482 (7th Cir.
1997) (relying on reasonable inference
that defendant’s job involved "managerial
discretion"). Tiojanco points to no
evidence undermining this inference, but
even if he did, he would fail to
establish that the district court’s
inference was clear error. See United
States v. Bailey, 227 F.3d 792, 800 (7th
Cir. 2000) ("Where two permissible
interpretations of the evidence are
possible, a factfinder’s choice of one is
not clearly erroneous.").
AFFIRMED.