United States v. Evans, William A. ( 2002 )

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
AUG 29 2002
TENTH CIRCUIT
PATRICK FISHER
Clerk
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
Nos. 01-4048, 01-4052
WILLIAM ARTHUR EVANS and (D.C. Nos. 2:98-CR-575-01-C,
MAGDA GUZMAN EVANS, 2:98-CR-575-02-C)
(D. Utah)
Defendants - Appellants.
ORDER AND JUDGMENT *
Before KELLY , BRISCOE , and LUCERO , Circuit Judges.
Defendants William Arthur Evans and his wife Magda Guzman Evans were
charged by a superceding indictment with 130 counts of false statements to a
government agency, in violation of 18 U.S.C. § 1001, and embezzlement or
misapplication from a government child nutrition program, in violation of
*
The case is unanimously ordered submitted without oral argument
according to the parties’ request for a decision on the briefs and pursuant to
Fed. R. App. P. 34(f) and 10th Cir. R. 34.1(G). This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. The Court generally disfavors the citation of orders and
judgments; nevertheless, an order and judgment may be cited under the terms and
conditions of 10th Cir. R. 36.3.
42 U.S.C. § 1760(g). Each defendant pled guilty to four of these counts, and the
balance were dismissed. After conducting two evidentiary hearings and a
comprehensive sentencing hearing, the district court enhanced each defendant’s
sentence for knowledge of a vulnerable victim and for abuse of a position of trust.
U.S.S.G. §§ 3A1.1(b)(1), 3B1.3. On appeal defendants challenge these
enhancements. We have jurisdiction under 12 U.S.C. § 1291 and 18 U.S.C.
§ 3742(a)(2), and we affirm.
I
The parties are familiar with the underlying facts, and we repeat them only
to the extent necessary. Defendants ran a sponsoring organization, Children of
the Future, Inc. (“COTFI”), which contracted with the Utah State Office of
Education (“USOE”) to carry out the Child and Adult Care Food Program under
the National School Lunch Act. As a sponsoring organization, COTFI recruited
day care providers, who in turn provided meals to underprivileged children.
USOE received funds from the federal government and dispensed them to the
sponsors based on the number of children being fed. In addition to receiving
money to reimburse the providers, sponsors received funds to cover overhead and
other administrative costs. Sponsors were generally responsible for recruiting and
training providers, securing health and fire inspections of provider homes,
collecting monthly meal claim forms for submission to USOE, and disbursing
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payment to the providers. Sponsors received training in the administrative and
record keeping functions, but, in general, they were subjected to little direct
oversight by the state because of insufficient staff. The defendants in this case
were also relatively free from supervision because their records appeared to be in
order.
Taking advantage of this lack of oversight, defendants submitted fraudulent
paperwork to USOE; claimed reimbursement for meals not served or for providers
no longer with the program; and listed incorrect addresses for providers, which
secured government inspections of homes that were not provider homes. In
addition, defendants demanded that some providers give them kickbacks from
provider-reimbursement checks, allegedly to assist in obtaining a new office for
COTFI.
II
As a result of these activities, and after hearing considerable evidence, the
district court enhanced defendants’ sentences for two reasons: because they knew
or should have known that the victims of their crimes were vulnerable victims,
and because they abused a position of trust. Defendants challenge the district
court’s application of the sentencing guidelines in enhancing their sentences. We
review the district court’s interpretation and application of the sentencing
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guidelines de novo and review the underlying factual determinations for clear
error. United States v. Pappert , 112 F.3d 1073, 1078 (10th Cir. 1997).
III
Under U.S.S.G. § 3A1.1(b)(1), a two-level enhancement is allowed “[i]f the
defendant knew or should have known that a victim of the offense was a
vulnerable victim.” A vulnerable victim is a person “who is a victim of the
offense of conviction and any conduct for which the defendant is accountable
under § 1B1.3 (Relevant Conduct)” and one “who is unusually vulnerable due to
age, physical or mental condition, or who is otherwise particularly susceptible to
the criminal conduct.” Id. at comment n.2. A district court’s identification of
unusually vulnerable victims is a factual determination that we review for clear
error. United States v. Caballero , 277 F.3d 1235, 1250 (10th Cir. 2002). The
court’s findings are clearly erroneous only if there is no “factual support in the
record, or if after reviewing all the evidence we are left with the definite and firm
conviction that a mistake has been made.” United States v. Beaulieu , 893 F.2d
1177, 1182 (10th Cir. 1990).
After hearing extensive testimony, the district court found that a group of
providers in the Wendover, Utah area were vulnerable victims. The court
concluded they were victims because defendants demanded kickbacks from their
provider reimbursement checks, and several providers testified that they complied
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with defendants’ demands. The district court found that the providers were
vulnerable based on a combination of facts: they faced severe financial
conditions, including challenges because of the need to feed their own children;
they lacked legal immigration status, which resulted in apprehension regarding
reporting defendants’ actions to authorities and fear of being deported or
summarily terminated from the provider program; they had language difficulties
because most spoke little or no English; and they were lacking in education. Our
review of the record reflects ample support for the district court’s findings and
the conclusion that these providers were vulnerable victims. 1
Moreover, relevant conduct includes “all acts . . . that occurred during the
commission of the offense of conviction. . . .” U.S.S.G. § 1B1.3(a). Based on the
district court’s specific findings regarding the characteristics of the Wendover
providers, it is clear that these victims are victims of the relevant conduct for
which defendants are accountable. See United States v. Holbert , 285 F.3d 1257,
1262 (10th Cir. 2002) (court has long held that “victim of the offense” includes
either victim of offense of conviction or of any relevant conduct). The court may
properly consider all harm caused by the relevant conduct. See United States v.
1
Because only one vulnerable victim is necessary to support this
enhancement, United States v. Smith , 133 F.3d 737, 749 (10th Cir. 1997), we
need not address defendants’ argument that the government cannot be a
vulnerable victim.
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Calozza , 125 F.3d 687, 690 (9th Cir. 1997). That the government may have been
the entity directly targeted by the offense of conviction does not change the
applicability of the vulnerable victim enhancement in this case. See United States
v. Firment , 296 F.3d 118, 121 (2d Cir. 2002) (vulnerable victim adjustment
authorized where offense conduct victimized vulnerable person, even though
entity directly targeted by offense of conviction was different); United States v.
Johnson , 297 F.3d 845, 873 (9th Cir. 2002) (vulnerable victim enhancement
proper where conduct relevant to defendant’s crime of conspiracy to commit
promotional money laundering victimized vulnerable persons).
Defendants’ sentences were also enhanced under U.S.S.G. § 3B1.3 for
abusing a position of trust. 2
A position of trust is characterized by “professional
or managerial discretion ( i.e. , substantial discretionary judgment ordinarily given
considerable deference).” U.S.S.G. § 3B1.3 cmt. n.1. “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).” Id. The primary concern of this enhancement “is to
2
Defendants’ argument that the enhancement was improper because it is
included in their base offense level is foreclosed by this court’s decision in
United States v. Queen , 4 F.3d 925, 928 (10th Cir. 1993) (holding that “[t]he
guideline for fraud is § 2F1.1, and it does not include any factoring for abuse of a
position of trust”).
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penalize defendants who take advantage of a position that provides them freedom
to commit or conceal a difficult-to-detect wrong.” United States v. Trammell ,
133 F.3d 1343, 1355 (10th Cir. 1998) (further quotation omitted). The factors
used in determining whether a defendant occupied a position of trust include (1)
the extent to which the position provides freedom to commit a difficult-to-detect
wrong and whether an abuse could be readily or easily noticed; (2) the
defendant’s duties as compared to those of other employees; (3) the defendant’s
level of specialized knowledge; (4) the defendant’s level of authority in the
position; and (5) the level of public trust. United States v. Williams , 966 F.2d
555, 557 (10th Cir. 1992).
As with the vulnerable victim finding, whether a defendant occupies a
position of trust is generally a factual matter that we review for clear error.
United States v. Haber , 251 F.3d 881, 890-91 (10th Cir.), cert. denied , 122 S. Ct.
259 (2001). We have generally applied this enhancement in two categories of
cases: “(1) where employees abuse their position within their own organization to
take advantage of the employer, and (2) where someone uses a fiduciary or
personal trust relationship to perpetrate the charged offense against the
beneficiary of the trust.” Pappert , 112 F.3d at 1080 (further quotations omitted).
Extensive testimony regarding the trust reposed in defendants by the
governmental agencies and defendants’ abuse of that trust was heard by the
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district court. The record shows that defendants exercised considerable control
and maintained considerable independence, despite some regulatory oversight. In
addition to taking advantage of the funding agencies, the record also supports the
finding that defendants occupied a position of trust with respect to the providers
and that they used that relationship to perpetuate the offense. Providers were not
given funds in advance to provide meals for children, but rather were reimbursed
for meals provided during the previous month. Defendants received the funds
that they were to use to reimburse providers. This placed defendants in a personal
trust relationship with the providers, and the defendants’ demands for kickbacks
abused that trust and deprived the providers of reimbursement funds.
On appeal, defendants also argue that the abuse of a position of trust
enhancement was improper because abuse of trust was included in their base
offense level. In United States v. Levy , 992 F.2d 1081, 1084 (10th Cir. 1993), we
held that the abuse of a position of trust guideline “directs that we look to the
base offense level and the specific offense characteristics assigned by the
guidelines to the crime of conviction.” In this case, it is not disputed that the
appropriate guideline is U.S.S.G. § 2F1.1. Neither the base level, which covers
many forms of fraud, nor the special offense characteristics, account for an abuse
of trust. See id.
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We have also held that this enhancement may not be applied when the
elements of the underlying offense include abuse of a position of trust. United
States v. Chimal , 976 F.2d 608, 613 (10th Cir. 1992). The essential elements
supporting a conviction under 18 U.S.C. § 1001 (making false statements to
government agency) are that the defendant (1) made a statement, (2) which was
false, fictitious or fraudulent and defendant knew it was, (3) the statement was
made knowingly and willfully, (4) was within the jurisdiction of the federal
agency and (5) was material. United States v. Harrod , 981 F.2d 1171, 1175 (10th
Cir. 1992). Thus, § 1001 can be violated by a defendant making a false statement
“in any manner within the jurisdiction or any department or agency of the United
States,” not just by one in a position of trust. None of the elements of this
offense involve the abuse of a position of trust.
As to the embezzlement count, these elements involve a fraudulent
appropriation of property or money entrusted to the defendant by another, by a
clerk, agent, trustee, public officer, or other person acting in a fiduciary character.
See Chimal , 976 F.2d at 613 n.5 (quotation omitted). Moreover, “[a]lthough
embezzlement by definition involves an abuse of trust, embezzlement by someone
in a significant position of trust warrants the enhancement when the position of
trust substantially facilitated the commission of concealment of the crime.” Id. at
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613 (footnote omitted). In this case, defendants’ positions substantially
facilitated both the commission and concealment of the crimes.
Finally, in United States v. Queen , 4 F.3d 925, 928 (10th Cir. 1993), we
recognized the divergence between Levy and Chimal , as “indicative of the general
division characterizing the federal courts with respect to the meaning of the term
‘base offense level’ in the context of § 3B1.3.” Thus, we concluded that under
either Chimal or Levy , the defendant’s base offense did not implicate an abuse of
trust. Id. Specifically, we held that the fraud guideline is U.S.S.G. § 2F1.1, “and
it does not include any factoring for abuse of a position of trust.” We also
considered the elements underlying the specific offense. Id. As with the
defendant in Queen , in this case the government did not need to prove that
defendants’ false statements or embezzlement constituted an abuse of a position
of trust as an element of the offense. Accordingly, this enhancement was proper.
IV
The record amply supports the district court’s findings that defendants
knew or should have known that their victims were vulnerable and that defendants
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abused a position of trust. As a result, we conclude that the district court
correctly applied the sentencing guidelines to enhance defendants’ sentences.
AFFIRMED.
ENTERED FOR THE COURT
Carlos F. Lucero
Circuit Judge
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