United States v. Pardo ( 1994 )

Opinions of the United
1994 Decisions States Court of Appeals
for the Third Circuit
5-25-1994
United States of America v. Pardo
Precedential or Non-Precedential:
Docket 93-5104
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UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
No. 93-5104
UNITED STATES OF AMERICA
v.
JUAN PARDO,
Appellant
Appeal from the United States District Court
for the District of New Jersey
(D.C. Crim. No. 92-00235-1)
Argued January 19, 1994
Before: SLOVITER, Chief Judge, SCIRICA and
LEWIS, Circuit Judges
(Filed May 25, 1994)
Barbara M. Donovan (Argued)
Assistant Federal Public Defender
Office of Federal Public Defender
Newark, NJ 07102
Counsel for Appellant
Michael Chertoff
United States Attorney
Edna B. Axelrod
Eric L. Muller (Argued)
Assistant United States Attorneys
Office of United States Attorney
Newark, NJ 07102
Counsel for Appellee
1
OPINION OF THE COURT
SLOVITER, Chief Judge.
Appellant Juan Pardo challenges on four grounds his
sentence imposed after a guilty plea to single counts of bank and
wire fraud and a count of failure to appear. Two grounds are set
forth in his counselled brief, and two others appear in a
supplemental pro se filing. Although we reject most of Pardo's
arguments, we agree that the district court misapplied United
States Sentencing Guideline §3B1.3 when it determined that
Pardo's friendship with a bank manager constituted a position of
trust that facilitated his defrauding the bank. See United
States Sentencing Commission, Guidelines Manual, §3B1.3 (1993)
[hereinafter USSG]. We will therefore vacate the judgment of
sentence and remand for resentencing.
I.
FACTS AND PROCEDURAL HISTORY
There is no dispute about the relevant facts in this
case. Juan Pardo engaged in a classic check kiting scheme in
which he defrauded First Fidelity Bank out of more than $51,000,
in violation of 18 U.S.C. § 1344 (Supp. IV 1992) (bank fraud) and
18 U.S.C. § 2 (1988), and defrauded numerous clients in excess of
$204,000 by collecting loan application and processing fees for
loans that they never received, in violation of 18 U.S.C. § 1343
(Supp. IV 1992) (wire fraud) and 18 U.S.C. § 2 (1988). Shortly
after his initial arraignment, Pardo fled to Canada where he
remained for several weeks, and thus failed to appear in
violation of 18 U.S.C. §§ 3146(a) and 2 (1988).
2
A. The Check Kiting Scheme
Shortly before the incident which was the subject of
the bank fraud charge in this indictment, Pardo engaged in
another check-kiting scheme at the Guttenberg, New Jersey, branch
of First Fidelity Bank which caused First Fidelity a loss of
$7,324.39. Although it was never reimbursed for this loss, First
Fidelity declined to prosecute Pardo. The bank, however, did
report Pardo's illegal conduct to Chex Systems as a security
measure.
On October 1, 1991, notwithstanding his earlier fraud
on First Fidelity, Pardo opened an account at the Ridgefield Park
branch of First Fidelity under the name of SJF Funding
Corporation, the same corporation he used in the earlier fraud.
The usual bank practice required a background check, which would
have revealed Pardo's prior fraud on First Federal itself, but
that routine was not followed by Brigit Schumann, the branch
manager, who had been a personal friend of Pardo's wife for ten
years and was a bridesmaid at the Pardos' wedding. The record is
silent as to whether Pardo said anything to induce Schumann's
failure to take precautions, or whether she was just negligent.
Between October 4 and October 15, 1991, Pardo deposited
five checks into the First Fidelity account totalling $232,000
which had been drawn on accounts Pardo had at other banks, and
which were uncollectible. Nonetheless, almost immediately after
depositing these checks, Pardo began to write checks against
those deposits on his First Fidelity account, and by October 23,
1991, he had withdrawn a total of $76,771.86. When Schumann
3
became aware of Pardo's conduct and confronted his wife, she
received assurances that Pardo would reimburse the bank for the
fraudulently obtained funds. Later, Frank Amato, an associate of
Pardo, wired $25,000 back to the bank. First Fidelity received
no additional reimbursement and its total loss due to this second
check kiting scheme is $51,771.86.
B. The Loan Fraud Scheme
In the Spring of 1991, Pardo became the North American
representative of Siam Commercial Finance S.A., a company based
in Bangkok, Thailand. His function was to locate customers
seeking loans from several hundred thousand to several million
dollars, and he received in excess of $204,000 as loan
application fees, servicing fees and pre-commitment fees from at
least fourteen individual and corporate clients. Neither he nor
SJF Funding successfully placed a single loan with Siam through
at least March 1992, the month before he was indicted. Although
Pardo later claimed he was unaware of Siam's fraudulent
activities, he did not deny that he altered checks that he
received in these transactions nor that he deposited them in his
personal account.
C. Failure to Appear
Following his arrest, Pardo was released on bail.
Thereafter, the government sought his detention because it had
learned of other activities by Pardo and was seeking a
superseding indictment concerning additional charges of bank and
wire fraud. On Friday, May 8, 1992, the district court ordered a
second hearing to be held on the following Monday, May 11, 1992.
4
Pardo fled to Canada over that intervening weekend. He was
arrested on June 22, 1992, the date that the trial on the
original charges was to begin, when he tried to reenter the
United States near Richford, Vermont.
On September 30, 1992, Pardo pled guilty to Counts 2
(bank fraud), 16 (wire fraud) and 47 (failure to appear) of the
indictment pursuant to a plea agreement reached with the
government. On February 8, 1993, the district court sentenced
Pardo. The court determined that Pardo's total offense level was
18, based in part on its application of a two-level decrease for
acceptance of responsibility (USSG §3E1.1) and a two-level
increase for abuse of a position of trust (USSG §3B1.3). The
court calculated Pardo's criminal history level as II, based in
part on his conviction on a disorderly persons charge in state
court for which he had not yet been sentenced. The court then
sentenced Pardo to 37 months imprisonment (31 months on Counts 2
and 16, followed by a consecutive six-month term on Count 47) and
to four years of supervised release, and ordered him to pay
$39,135.93 in restitution and $150 in special assessments. Pardo
filed a timely appeal on February 16, 1993. Pardo moved and was
given permission to file a pro se supplemental brief. We have
jurisdiction pursuant to 18 U.S.C. § 3742(a) (1988) and 28 U.S.C.
§ 1291 (1988).
II.
DISCUSSION
We first consider Pardo's claim that the district court
misapplied Sentencing Guideline §3B1.3. That section, which
5
authorizes a two-level enhancement for abuse of a position of
trust, provides:
If the defendant abused a position of public
or private trust . . . in a manner that
significantly facilitated the commission or
concealment of the offense, increase by 2
levels.
USSG §3B1.3. The only commentary relating to the abuse of a
position of trust enhancement appears in Application Note 1. For
the period relevant here, the Application Note was quite terse.
It provided merely that:
The position of trust must have contributed in some
substantial way to facilitating the crime and not
merely have provided an opportunity that could as
easily have been afforded to other persons. This
adjustment, for example, would not apply to an
embezzlement by an ordinary bank teller.
USSG §3B1.3, comment. (n.1) (1992).
On November 1, 1993, an amendment to the Application
Note became effective. To the extent that the new Commentary
sheds any light on the nature of the relationships to which
§3B1.3 applies, we note that it refers exclusively to employment
or professional relationships, such as embezzlement by guardians,
bank executives, bank tellers, and attorneys, and sexual abuse of
patients by physicians.
The classic cases in this circuit in which we found
abuse of a position of trust fall within these categories. See
United States v. Craddock, 993 F.2d 338 (3d Cir. 1993)
(enhancement for abuse of position of trust applicable to teller
of financial institution who processed Western Union money orders
knowing they were based on fraudulent credit card transactions);
6
United States v. Brann, 990 F.2d 98 (3d Cir. 1993) (enhancement
applied to narcotics agent who embezzled government-provided
funds by engaging in phony drug transactions and pocketing the
money); United States v. Lieberman, 971 F.2d 989, 992-94 (3d Cir.
1992) (reversing failure to enhance for bank vice president);
United States v. Georgiadis, 933 F.2d 1219, 1225 (3d Cir. 1991),
(affirming district court's application of enhancement to
assistant bank president who diverted funds to own account);
United States v. McMillen, 917 F.2d 773, 775-76 (3d Cir. 1990)
(branch manager operating a position of trust).
Nonetheless, we are unwilling to draw a bright line
limiting the abuse of trust increase to the employment
relationship. Neither the Guideline itself nor the Application
Note that follows expressly limits its application to employment
positions. In fact, other courts of appeals have found positions
of trust outside the traditional employment context.1 In United
States v. Ledesma, 979 F.2d 816, 822 (11th Cir. 1992), the Court
of Appeals affirmed the two level increase imposed on a defendant
who had her young adult daughter bag cocaine and relay drug-
related telephone messages. The court reasoned that an
enhancement under §3B1.3 was appropriate because Ledesma, as
1
In one case in this court, United States v. Astorri, 923 F.2d
1052, 1061 (3d Cir. 1991), although the district court did not
address an enhancement based on abuse of a position of trust, and
we did not require that it do so, one judge, in a dissent,
suggested that §3B1.3 would apply to a broker who defrauded his
fiancee's parents out of their life savings. The majority found
enhancement on another basis.
7
mother, held a position of trust which she abused when she
involved her daughter in the drug conspiracy.
In United States v. Zamarripa, 905 F.2d 337 (10th Cir.
1990), defendant, a friend of the family of an eight year-old
girl whom he sexually abused while serving as her babysitter, was
given a two-level enhancement. The Court of Appeals concluded
that Zamarripa's position as babysitter was one of trust, which
he had abused to facilitate his crime, and that therefore
enhancement of his sentence in accordance with §3B1.3 was
appropriate. See also United States v. Ellis, 935 F.2d 385, 395
n.9 (1st Cir.) (district court found abuse of a position of trust
by defendant's sexual abuse of young daughter of his common law
wife), cert. denied, 112 S. Ct. 201 (1991). We approvingly cited
Zamarripa in Craddock, 993 F.2d at 343 n.7.
Accordingly, we are not prepared to hold that the abuse
of a position of trust enhancement under §3B1.3 was not
applicable to Pardo on the ground that he was not employed by the
bank.2 Instead we look to the essence of the meaning of a
position of trust.
In determining the defining characteristics of a
position of trust, we begin by considering the rationale for the
2
Pardo argues that the enhancement is not applicable to him
because he does not fit into the language used in United States
v. Hickman, 991 F.2d 1110, 1112 (3d Cir. 1993), where we stated
that "[t]o abuse a position of trust, a defendant must, by
definition, have taken criminal advantage of a trust relationship
between himself and his victim." The government argues that the
bank manager was the victim. Although we find this somewhat
tenuous, we need not decide the application of Hickman in light
of our disposition on other grounds.
8
two-level enhancement. This court has noted that "[t]he
rationale for increased punishment is that an insider who takes
advantage of a position of trust to facilitate a crime is thought
to be more culpable than one who simply commits the offense."
Craddock, 993 F.2d at 340 (emphasis added). This factor was
subsequently clarified in the 1993 amendment to Application Note
1, which now provides in part:
"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.
USSG §3B1.3, comment. (n.1) (emphasis added).3
More concretely, this court repeatedly has recognized
that, "'the primary trait that distinguishes a person in a
position of trust from one who is not is the extent to which the
position provides the freedom to commit a difficult-to-detect
wrong.'" United States v. Lieberman, 971 F.2d 989 (3d Cir. 1992)
(emphasis added) (quoting United States v Hill, 915 F.2d 502, 506
(9th Cir. 1990)); see also Craddock, 993 F.2d at 341 (quoting
this language); Brann, 990 F.2d at 103 (same).
Another factor that the case law identifies as relevant
in finding a position of trust is the authority given to
3
Craddock distinguished the conduct of an insider from an abuse
of "an opportunity that could as easily have been afforded to
other persons." Craddock, 993 F.2d at 340 (quoting USSG §3B1.3,
comment. (n.1)). Although the latter phrase was deleted from
Application Note 1 of §3B1.3 in the 1993 amendment, other
language added in that amendment underlined above makes it clear
that the distinction made in Craddock is still applicable.
9
defendant by the position which provides the wherewithal to
commit the wrongful act. See, e.g., United States v. Lamb, 6
F.3d 415, 421 (7th Cir. 1993) ("a position of trust is
characterized by access or authority over valuable things")
(quotations omitted). In McMillen, a branch manager of a savings
and loan association approved fraudulent loans to himself,
created a false savings certificate to serve as collateral for
the loans, and opened a checking account in a fictitious name.
See McMillen, 917 F.2d at 774. We held that because he had the
authority to perform all of those acts without any supervision,
he occupied a position of trust. See id. at 776. Later, in
Lieberman, we emphasized the fact that the defendant bank manager
was solely responsible for balancing the account from which he
embezzled. See Lieberman, 971 F.2d at 993.
Similarly, in Brann where the defendant Narcotics
Strike Force agent embezzled $18,000, we noted that the
defendant's position enabled him to obtain $9,000 on two separate
occasions, based solely on his assertion that he had set up drug
buys. See Brann, 990 F.2d at 103. Although Brann did not hold a
high level managerial post, we were swayed by the fact that his
position entailed sufficient authority to allow him to embezzle
in this respect. See id.
Finally, in Craddock, a teller participated in a
conspiracy to defraud his employer by permitting his accomplices
to provide false identification in connection with bogus credit
card transactions via Western Union. Although Craddock was a low
level employee, he had authority to verify the identity of the
10
persons to whom he was making payouts. We held that the "key
point . . . is . . . whether Craddock . . . exploited the
authority provided by his position," Craddock, 993 F.2d at 343,
and because he did we upheld the enhancement for abuse of a
position of trust. The characteristics of a position of trust
defined in Craddock are as applicable outside of the employment
context as well as in:
the standard for tellers, as for clerks, mechanics, and
all other defendants, is (1) whether the authority
conferred and the absence of controls indicate that the
employer relied on the integrity of the defendant to
protect against the loss occasioned by the crime; and
(2) whether the trust aspect of the job made the
commission or concealment of the crime significantly
easier.
Id. at 343.
Culling these principles from our cases, it follows
that in considering whether a position constitutes a position of
trust for purposes of §3B1.3, a court must consider: (1) whether
the position allows the defendant to commit a difficult-to-detect
wrong; (2) the degree of authority which the position vests in
defendant vis-a-vis the object of the wrongful act; and (3)
whether there has been reliance on the integrity of the person
occupying the position. These factors should be considered in
light of the guiding rationale of the section--to punish
"insiders" who abuse their positions rather than those who take
advantage of an available opportunity.
By applying these factors to the facts of this case, it
is evident that Pardo did not occupy a position of trust. First,
Pardo's "position" as a friend of the bank manager did not give
11
him the ability to commit a difficult-to-detect wrong. There
would have been nothing difficult to detect had the routine
precautions been taken. His friendship with the bank manager did
not make her or the bank peculiarly vulnerable, as did the
positions of mother, babysitter or stepfather in Ledesma,
Zamarripa, and Ellis respectively. At most, Pardo's position as
a friend allowed him the opportunity to commit an easily
detectible wrong. Our cases and the Application Note counsel
that this is simply not sufficient to warrant enhancement.
Even more clearly lacking in Pardo's case is the
requisite degree of authority over the object of his wrong.
Unlike the defendants in every other case considered in this
circuit, or those involving non-employment situations cited by
the government, Pardo had no authority over anyone or anything
necessary to the commission of his crimes.
Thus, although Schumann may have relied on Pardo's
integrity, he was not placed by the bank in any position that
gave him the wherewithal to commit the fraud. He was in a far
lesser position than the defendant in United States v. Kosth, 943
F.2d 798 (7th Cir. 1991), who submitted fraudulent credit card
slips through the bank at which he obtained a merchant account.
The Court of Appeals overturned the two point enhancement,
stating that there was no special element of private trust
involved, even though there was an element of reliance present.
Id. at 800.
12
Because Pardo's position as Schumann's friend was not a
position of trust within the meaning of §3B1.3,4 we will remand
to the district court for resentencing.
Next, we turn to Pardo's remaining claims of error. In
his counselled brief, Pardo argues that he should have been
granted a three level, rather than a two level, reduction for
acceptance of responsibility. Because the district court is
particularly well situated to evaluate the defendant's acceptance
of responsibility, its determination in this regard may be
reversed only if it is clearly erroneous. See United States v.
Singh, 923 F.2d 1039, 1042-43 (3d Cir. 1991).
Section 3E1.1 of the Guidelines provides for a two
level reduction "[i]f the defendant clearly demonstrates
acceptance of responsibility for his offense." In addition,
subsection (b) authorizes an additional one level reduction where
the offense level is 16 or greater, and:
the defendant has assisted authorities in the
investigation or prosecution of his own misconduct by
taking one or more of the following steps:
(1) timely providing complete information to the
government concerning his own involvement in the
offense; or
(2) timely notifying authorities of his intention to
enter a plea of guilty, thereby permitting the
government to avoid preparing for trial and
permitting the court to allocate its resources
efficiently.
4
In light of our decision on this issue, we need not consider
whether there was sufficient evidence to support the second prong
of §3B1.3, i.e., whether defendant's abuse of the position of
trust "significantly facilitated the commission or concealment of
the offense." USSG §3B1.3.
13
USSG §3E1.1(b).
The district court rejected Pardo's arguments that he
was entitled to the three level reduction, finding that the
information he provided regarding the fraudulent activities of
Siam was incomplete. Moreover, the district court, concluded
that Pardo's plea was not timely, finding that his "plea came
after a long period of flight, during which the government was
put to a continuing investigation of defendant's many criminal
schemes." App. at 91. These factual findings find ample support
in the Presentence Report, and we cannot say they are clearly
erroneous. Thus, we will affirm this portion of Pardo's
sentence.
Next, Pardo raises two additional claims in his
supplemental pro se filing. First, he contends that the district
court's method of calculating his total offense level under the
Sentencing Guidelines resulted in "double counting" of his
failure to appear. Because the appellant did not object to the
enhancement in the Presentence Report, at the Sentencing Hearing
or in any other manner in the district court, we review the
district court's decision for plain error. See Fed. R. Crim. P.
52(b); United States v. Olano, 113 S. Ct. 1770, 1778-79 (1993).
Under the Sentencing Guidelines:
[I]n the case of a conviction on both the underlying
offense and the failure to appear, the failure to
appear is treated under §3C1.1 (Obstructing or Impeding
the Administration of Justice) as an obstruction of the
underlying offense; and the failure to appear count and
the count(s) for the underlying offenses are grouped
together under §3D1.2(c).
14
USSG §2J1.6, comment. (n.3). Thus, the court arrives at a total
punishment level, based on the underlying charge(s) and the
obstruction charge. The district court followed the Guidelines
precisely when it added two levels for obstruction of justice to
the total offense level for the two fraud counts (Counts 2 and
16).
Because 18 U.S.C. § 3146(b)(2)(1988) requires that any
sentence imposed for obstruction be imposed consecutive to any
other sentence, the court must separate out the portion of the
total sentence corresponding to obstruction. The Application
Notes to §2J1.6 contemplate the very situation posed here:
For example, where the combined applicable guideline
range for both counts is 30-37 months and the court
determines a "total punishment" of 36 months is
appropriate, a sentence of thirty months for the
underlying offense plus a consecutive six months
sentence for the failure to appear count would satisfy
these requirements.
USSG §2J1.6, comment. (n.3). Here, the court determined that the
appropriate sentence for the defendant was 37 months, the maximum
sentence in the range (31-37 months) based on its determination
of his criminal history and base offense levels. The court then
sentenced the defendant to 31 months on Counts 2 and 16, and six
months on Count 47 (failure to appear). This sentence in no way
involves double counting, and there was no error.
Pardo's final argument is that his criminal history
level for Count 2 should have been I instead of II. However,
Pardo's sentence for Count 2 was imposed concurrently with his
sentence on Count 16. In this case, his sentence under Counts 16
15
and 47 would be identical even if his criminal history for Count
2 were I instead of II.5 We decline to consider his challenge to
his sentence under Count 2 under this circumstance.6
III.
CONCLUSION
For the foregoing reasons, we will vacate the judgment
of sentence of the district court because of the two point
increase for an abuse of position of trust under USSG §3B1.3, and
will remand to the district court for resentencing consistent
with this opinion. In all other respects, the judgment will be
affirmed.
5
Based on the total amount of loss caused by Pardo's wire fraud
(in excess of $200,000), his more than minimal planning activity,
his acceptance of responsibility and his obstruction of justice,
his base offense level for the wire fraud would have been the
same as it was for the bank and wire fraud together. Thus, based
on the offense level for Count 16, and a criminal history of II
for that count (which Pardo does not challenge), his sentence
would not have been different even if count 2 were excluded. In
any event, under the Guideline concept of grouping, the offenses
would be treated together, rather than separately, as Pardo
argues.
6
In Ray v. United States, 481 U.S. 736, 737 (1987) (per curiam),
the Supreme Court held that where a special assessment was
imposed on three separate counts, they could not be considered
concurrent sentences. Ray is inapplicable here because Pardo
would still be subject to the separate special $50 assessment on
each count. We have, when appropriate, applied the concurrent
sentence doctrine after Ray. See United States v. American
Investors of Pittsburgh, Inc., 879 F.2d 1087, 1100 (3d Cir. 1987)
(opting not to consider claims of individual defendants whose
sentences were concurrent and involved no detrimental effects).
16