United States v. Kehoe ( 1999 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 98-4141
JAMES ANDREW KEHOE, III,
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Albert V. Bryan, Jr., Senior District Judge.
(CR-97-322-A)
Argued: January 28, 1999
Decided: April 2, 1999
Before LUTTIG, WILLIAMS, and MICHAEL, Circuit Judges.
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Affirmed by unpublished per curiam opinion.
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COUNSEL
ARGUED: Marvin David Miller, LAW OFFICES OF MARVIN D.
MILLER, Alexandria, Virginia, for Appellant. Thomas Higgins
McQuillan, Assistant United States Attorney, OFFICE OF THE
UNITED STATES ATTORNEY, Alexandria, Virginia, for Appellee.
ON BRIEF: Helen F. Fahey, United States Attorney, OFFICE OF
THE UNITED STATES ATTORNEY, Alexandria, Virginia, for
Appellee.
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Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
James Andrew Kehoe, III pleaded guilty to charges of interstate
transportation of money obtained by fraud, in violation of 18 U.S.C.
§ 2314, and was sentenced to thirty-eight months imprisonment. On
appeal he contends that the district court improperly precluded the use
of evidence of diminished capacity because of his late filing of notice
of this defense. He further objects to sentence enhancements imposed
by the court for "unusually vulnerable victim" and "abuse of position
of trust." We affirm.
I.
Kehoe was an insurance agent for Jackson National Life Insurance
Company ("JNLIC") and sold annuity policies on its behalf. He was
charged, in a four-count indictment, of defrauding a longtime client,
a seventy-four year old woman, of approximately $84,500. On four
separate occasions, from July 1993 to January 1995, Kehoe received
investment funds from this client earmarked for the purpose of buying
JNLIC annuity policies. He did not forward the money to JNLIC (and
thus failed to have JNLIC issue the policies), but instead deposited it
in a bank account he controlled.1
At sentencing the district court also considered that Kehoe had
defrauded two other clients. In six transactions from September 1992
to November 1994, Kehoe collected approximately $183,000 from a
second client, a seventy-eight year old woman, for the purchase of
JNLIC annuities. He also deposited this money into his own bank
account.2 Finally, Kehoe misappropriated approximately $268,000
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1 JNLIC made this victim whole and therefore bears the financial loss
in this case.
2 JNLIC also made this victim whole.
2
from a third client, an eighty-four year old man. He caused securities
from that client's account to be redeemed and transferred the proceeds
into his own bank account. He used some of these proceeds to par-
tially repay the second victim in this case and retained approximately
$116,000 for his own purposes.
At arraignment the district court ordered that pretrial motions
would be heard on October 24, 1997, and set the trial for November
4, 1997. Kehoe subsequently moved for, and was granted, a continu-
ance of his trial date to November 24, but his lawyer specifically told
the court that no change was needed to the October 24 motions hear-
ing date.
By October 24 Kehoe had not filed a notice pursuant to Federal
Rule of Criminal Procedure 12.2 of his intent to introduce expert testi-
mony regarding his mental condition. The government therefore made
a motion on November 5, 1997, to preclude an insanity defense, or
in the alternative, to order a psychiatric examination of Kehoe. The
court denied this motion. On November 14, 1997, ten days before
trial, Kehoe moved for an extension of time for filing a Rule 12.2
notice. The Rule 12.2 notice was tendered with the motion for exten-
sion. The district court denied the motion and ruled that Kehoe was
precluded from offering evidence of his diminished capacity at trial.
Kehoe then pleaded guilty on all counts.3 The district court sen-
tenced him to a term of thirty-eight months imprisonment. In calculat-
ing this sentence, the court applied a two-point increase for
"vulnerable victim" pursuant to U.S.S.G. § 3A1.1(b) and a two-point
increase for "abuse of position of trust" pursuant to U.S.S.G. § 3B1.3.
Kehoe appeals.
II.
The district court did not abuse its discretion in precluding the psy-
chiatric evidence proffered by Kehoe.
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3 Kehoe made a conditional guilty plea pursuant to Federal Rule of
Criminal Procedure 11(a)(2), preserving his right to appeal the district
court's ruling that precluded his use of testimony from a psychiatric
expert.
3
A defendant who intends to introduce expert testimony relating to
his mental condition must provide written notice to the government
within the time provided for filing pretrial motions or face possible
exclusion of that evidence at trial. Fed. R. Crim. P. 12.2(b), (d). This
requirement gives the government time to prepare for cross-
examination of the defendant's expert witnesses and to arrange for
any rebuttal witnesses without delaying the trial. See Fed. R. Crim. P.
12.2 advisory committee's notes. Of course, courts have discretion,
upon a showing of cause, to allow the late filing of the notice or to
grant the parties additional time to prepare for trial. Fed. R. Crim. P.
12.2(b).
We conclude that the district court did not abuse its discretion by
refusing to allow the late filing and by precluding the use of the evi-
dence. To establish cause for the late filing of a Rule 12.2 notice, a
defendant must satisfy a two-prong test. He must provide (1) an
explanation for the late filing and (2) some evidence that the asserted
defense may prevail. Government of the Virgin Islands v. Knight, 989
F.2d 619, 628 (3d Cir. 1993); United States v. Duggan, 743 F.2d 59,
80 (2d Cir. 1984). The district court held that Kehoe failed on both
prongs. First, it rejected Kehoe's explanation for the late filing and
found that allowing the late filing would require a further continuance
of the trial. This concern about delay was one of the reasons for the
adoption of Rule 12.2. See Fed. R. Crim. P. 12.2 advisory commit-
tee's notes. Second, the court concluded that the proffered evidence
would not necessarily negate specific intent on Kehoe's part.4 The
district court did not abuse its discretion in precluding this evidence.
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4 Kehoe's subsequently filed written proffer confirms this analysis.
Kehoe indicated that two expert witnesses would testify regarding the
combined effects of abusing alcohol and taking prescription anti-
depressant drugs. These witnesses would testify that"an individual" who
takes such a mixture would experience severe impairment in judgment
and an impaired ability to formulate and execute plans. However, none
of this demonstrates that Kehoe lacked a specific intent to defraud.
Indeed, the district court expressed concern that it"presents an inherent
danger that it would distract the jury from focusing on the actual pres-
ence or absence of intent, and it opens up wider usage to the jury more
akin to justification, and I don't think the evidence if believed would
support a legally acceptable theory of mens rea."
4
III.
Kehoe next challenges two sentence enhancements applied by the
district court. The court included a two-level increase for "vulnerable
victim" pursuant to U.S.S.G. § 3A1.1(b) and a two-level increase for
"abuse of position of trust" pursuant to U.S.S.G. § 3B1.3. We affirm
on both points.
A.
The Sentencing Guidelines provide for a two-level increase if the
defendant "knew or should have known that a victim of the offense
was unusually vulnerable due to age, physical or mental condition, or
that a victim was otherwise particularly susceptible to the criminal
conduct." U.S.S.G. § 3A1.1(b). We have held that a court must make
two findings before applying a "vulnerable victim" enhancement.
First, the court must find that the victim was "more susceptible to
abuse from a perpetrator than most other potential victims of the par-
ticular offense." United States v. Singh, 54 F.3d 1182, 1191 (4th Cir.
1995). Second, it must find that the defendant targeted the victim
because of that vulnerability. Id.Here, the district court concluded:
Insofar as vulnerable victim is concerned, I find that these
three persons were vulnerable and unusually so, and that
they were targeted because of that. Their ages range from 74
to 84. It's singular that this man -- he may not have had any
other clients, but these are the ones he sought out, and their
age and their vulnerability clearly played a part in the defen-
dant's selection of them and in the crime that he committed.
The district court did not err by applying a vulnerable victim
enhancement to Kehoe's sentence. Section 3A1.1 of the Guidelines
lists age as the first example of unusual vulnerability. All of the vic-
tims were elderly and invested portions of their life savings with
Kehoe. Indeed, one of the victims said, "Mr. James Kehoe, my former
broker, was handling my accounts since I am 85 years old and don't
understand my monthly statements." Although the district court's
5
findings of fact might have been stronger with some amplification, we
cannot say that the court erred in finding that the victims were unusu-
ally vulnerable and that Kehoe targeted them for that reason.
B.
Section 3B1.3 of the Guidelines provides for a two-level increase
if a 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." U.S.S.G. § 3B1.3. The defendant
must occupy a position of trust with respect to the victim of the crime.
United States v. Moore, 29 F.3d 175, 179-80 (4th Cir. 1994). Ordi-
nary commercial relationships do not rise to the level of a position of
trust. Id. at 180.
The district court concluded:
I also think that there is warranted a two-level increase for
abuse of trust. This defendant not only abused the trust of
these victims, because he was their investment advisor, but
he abused the trust of the insurance company.
He -- and that trust enabled him to commit the crime and
made it harder to detect. He was in a position where the
insurance company thought he was going to do what he was
supposed to do, that is, remit payments to them, and the vic-
tims thought he was going to remit the payment they made
to him to the insurance company. It wasn't until later that
they found out that he had done -- they both found out that
he had not done what he was supposed to.
Clearly, he was in a position of trust, and clearly that
position enabled him to commit the crimes.
We find no error in the district court's determination. Kehoe
abused his position of trust as a financial advisor to his clients, taking
money that had been entrusted to him for the purchase of annuities.
The ongoing relationship of trust with these clients distinguishes this
from ordinary commercial dealings. On virtually identical facts, the
6
Tenth Circuit held that this conduct by an insurance agent "was
plainly an abuse of trust by a fiduciary." United States v. Trammell,
133 F.3d 1343, 1355-56 (10th Cir. 1998). We also agree that Kehoe
abused his position of trust with JNLIC. The insurance company
should be deemed a victim of the crime for purposes of sentencing
because it bore the financial loss of Kehoe's fraud after making whole
the two clients whose monies were not applied to the purchase of
JNLIC annuities. See United States v. Blake, 81 F.3d 498, 503-04 (4th
Cir. 1996) (treating both individual cardholders and credit card issuers
as victims for sentencing purposes on credit card fraud charges).
Kehoe served as an independent agent for JNLIC and had broad dis-
cretion, with only minimal supervision, to sell policies and collect ini-
tial premium payments from customers. He abused this position of
trust to commit the fraud.
C.
Finally, we reject Kehoe's contention that the application of sen-
tence enhancements for "vulnerable victim" and"abuse of position of
trust" resulted in impermissible double counting. These two adjust-
ments relate to different conduct by Kehoe and serve different pur-
poses. Cf. Singh, 54 F.3d at 1193 n. 7 (rejecting use of both provisions
when victims were vulnerable solely because defendant, a doctor, was
in a position to violate their trust). The vulnerable victim adjustment
related to Kehoe's conduct in selecting and targeting elderly people.
The adjustment for abuse of position of trust was for abusing the trust
of his clients, who were in need of financial services, and of his prin-
cipal (JNLIC), who gave him broad discretion. Therefore, the use of
both provisions does not constitute double counting.
IV.
Kehoe's conviction and sentence are affirmed.
AFFIRMED
7