United States v. Reid ( 2006 )


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  •                             UNPUBLISHED
    UNITED STATES COURT OF APPEALS
    FOR THE FOURTH CIRCUIT
    No. 04-4383
    UNITED STATES OF AMERICA,
    Plaintiff - Appellee,
    versus
    JOHN COLEMAN REID,
    Defendant - Appellant.
    No. 04-4384
    UNITED STATES OF AMERICA,
    Plaintiff - Appellee,
    versus
    ALAN B. PINKERTON,
    Defendant - Appellant.
    Appeals from the United States District Court for the Western
    District of Virginia, at Charlottesville. James H. Michael, Jr.,
    Senior District Judge. (CR-04-13)
    Submitted:   November 30, 2005            Decided:   January 6, 2006
    Before WILKINSON, NIEMEYER, and LUTTIG, Circuit Judges.
    Affirmed by unpublished per curiam opinion.
    Frederick T. Heblich, Jr., Charlottesville, Virginia; Francis McQ.
    Lawrence, ST. JOHN, BOWLING & LAWRENCE, Charlottesville, Virginia,
    for Appellants. John L. Brownlee, United States Attorney, Jean B.
    Hudson, Assistant United States Attorney, Charlottesville,
    Virginia, for Appellee.
    Unpublished opinions are not binding precedent in this circuit.
    See Local Rule 36(c).
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    PER CURIAM:
    John Coleman Reid and Alan B. Pinkerton pled guilty to
    bank fraud, 
    18 U.S.C. § 1344
     (2000), and were sentenced to terms of
    forty-six     months      and      thirty-seven           months     imprisonment,
    respectively.       On   appeal,       Appellants    challenge       the   two-level
    adjustment for abuse of a position of trust that the district court
    applied in each case under U.S. Sentencing Guidelines Manual
    § 3B1.3 (2003).     We affirm.
    Reid was hired in 1996 as president of the Ivy Tygart
    Acquisition     Corporation        (ITAC),        which      was      located      in
    Charlottesville, Virginia, and known locally as Ivy Industries.
    Pinkerton was the chief financial officer. Reid and two investors,
    Francis Parker and Corwith Davis, formed RPD Enterprises, which
    acquired all the stock of ITAC in February 1998.                   In 1999, another
    company they owned, RPD Properties, acquired the real property of
    ITAC.    Beginning       in   2000,     because     Ivy    Industries      had   been
    experiencing cash flow problems since 1996, Reid and Pinkerton
    began kiting checks between company accounts at Albemarle First
    Bank and SunTrust Bank to create false positive balances at                      both
    banks.   Reid also created false financial statements for ITAC that
    misrepresented the company’s inventory and assets, which helped him
    to   secure   two   loans       from    Virginia     National       Bank   totaling
    $1,020,000, a $ 2,000,000 loan from Guaranty Bank, and a $795,000
    loan from Albemarle First Bank. In 2003, Reid forged the signature
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    of Corwith Davis to obtain a $500,000 loan from Southern Financial
    Bank.   When the check kiting scheme was discovered in 2003,
    Albemarle First Bank suffered a financial loss of $2,420,000, of
    which $100,000 was paid by Progressive Insurance.        The company
    ceased operations and its inventory was liquidated to recover some
    of the loss suffered by Guaranty Bank.
    Reid and Pinkerton pled guilty to bank fraud in February
    2004 and were sentenced in May 2004. The district court calculated
    Reid’s base offense level at 6, U.S. Sentencing Guidelines Manual
    § 2B1.1 (2002), with an 18-level enhancement for a loss over $2.5
    million, USSG § 2B1.1(b)(1)(J), and a 2-level adjustment for abuse
    of a position of trust, USSG § 3B1.3.    Reduced by three levels for
    acceptance of responsibility, USSG § 3E1.1, Reid’s recommended
    offense level was 23.    He was in criminal history category I,
    making his guideline range 46-57 months.   Pinkerton’s   calculation
    was the same, except that he was held responsible for a loss of
    only $2,420,000, which gave him an offense level of 21 and a
    guideline range of 37-46 months.   The court deferred the issue of
    restitution because the parties were not ready to resolve it.     On
    November 3, 2005, the court ordered Reid to make restitution to the
    four victim banks, Corwith Davis, Francis Parker, and Progressive
    Insurance Company.   Pinkerton was ordered to make restitution to
    Albemarle First Bank, Corwith Davis, and Progressive Insurance
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    Company.    The amount of restitution owed to Davis and Parker was
    approximately $1.5 million.
    At their respective sentencing hearings on May 10, 2004,
    the district court determined that Reid and Pinkerton each held a
    position    of   trust   with   respect   to    the   victim   banks.    In   a
    memorandum opinion filed a week later, the court explained the
    adjustment differently, finding that there were two categories of
    victims.    The court found that, while the banks were the primary
    and direct victims, a second category of victims consisted of Davis
    and Parker, the co-owners of Ivy Industries, as well as the
    employees    and   shareholders     in    the   corporation.       The   court
    determined that Reid and Pinkerton had a position of trust in
    relation to the secondary group of victims.
    On appeal, Reid and Pinkerton argue for the first time
    that the district court’s use of the sentencing guidelines to
    enhance their sentences for abuse of a position of trust violated
    the Sixth Amendment under Blakely v. Washington, 
    542 U.S. 296
    (2004). They also contend that the district court erred in finding
    that they possessed a position of trust with respect to the banks
    that were the victims of the check kite or were induced by fraud to
    make bad loans, and that the secondary victims identified by the
    court were not victims of the offense within the meaning of
    § 3B1.3.
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    Appellants   were   sentenced    before   the   Supreme   Court
    decided Blakely or United States v. Booker, 
    125 S. Ct. 738
     (2005).
    In Booker, the Supreme Court held that Blakely applies to the
    federal sentencing guidelines and that the mandatory guidelines
    scheme which provides for sentence enhancements based on facts
    found by the court violated the Sixth Amendment.             125 S. Ct. at
    746, 750.    This court has identified two types of Booker error:          a
    violation of the Sixth Amendment, and a failure to treat the
    sentencing guidelines as advisory.*          United States v. Hughes, 
    401 F.3d 540
    , 552 (4th Cir. 2005).      A Sixth Amendment error occurs when
    the district court imposes a sentence greater than the maximum
    permitted based on facts found by a jury or admitted by the
    defendant.    Booker, 125 S. Ct. at 756.       Because Appellants did not
    raise a Sixth Amendment challenge in the district court, our review
    is for plain error.       Hughes, 
    401 F.3d at 547
    .
    Without the contested two-level enhancements for abuse of
    a position of trust under § 3B1.3, Reid’s offense level would have
    been 24 and Pinkerton’s offense level would have been 22.                For
    purposes of determining Booker error, this court uses the guideline
    range based on the facts the defendant admitted before the range is
    *
    While the mandatory application of the guidelines constitutes
    plain error, a defendant who seeks resentencing on this ground must
    show actual prejudice. United States v. White, 
    405 F.3d 208
    , 217,
    223 (4th Cir.), cert. denied, ___ S. Ct. ___, 
    2005 WL 3027841
     (U.S.
    Nov. 14, 2005) (No. 05-6981). Appellants do not attempt to show
    error under White.
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    adjusted   downward     for    acceptance    of   responsibility.       United
    States v. Evans, 
    416 F.3d 298
    , 300 n.4 (4th Cir. 2005).                Reid’s
    guideline range under this analysis would have been 51-63 months
    and Pinkerton’s guideline range would have been 30-37 months.
    Reid’s sentence of forty-six months imprisonment and Pinkerton’s
    sentence of thirty-seven months imprisonment are thus within the
    range that would apply based only on facts that they admitted.              We
    conclude that no Sixth Amendment error occurred.
    We review the district court’s factual findings that
    support the adjustment for abuse of a position of trust for clear
    error, while its legal interpretation of the guideline is reviewed
    de novo.     United States v. Caplinger, 
    339 F.3d 226
    , 235-36 (4th
    Cir. 2003).     The guideline provides for an adjustment when “the
    defendant abused a position of public or private trust . . . in a
    manner that significantly facilitated the commission or concealment
    of the offense.”      USSG § 3B1.3.       Application Note 1 explains that
    “[p]ersons    holding    such    positions    ordinarily   are    subject   to
    significantly      less        supervision        than   employees       whose
    responsibilities      are     primarily    non-discretionary     in   nature.”
    Further, their position “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.
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    The district court’s focus in making its determination
    must be on “the relationship between the defendant and the victim
    from the perspective of the victim.”             Caplinger, 
    339 F.3d at
    236
    (citing United States v. Gordon, 
    61 F.3d 263
    , 269 (4th Cir. 1995)).
    A “victim” is currently defined in Application Note 1 to USSG
    § 1B1.1 as “any person who sustained any part of the actual loss,”
    that is, the reasonably foreseeable pecuniary harm. “In every case
    of fraud, the defendant will have [gained the] confidence and trust
    [of]   the     victim.        But    fraud   alone    does   not    justify     the
    enhancement.”        Id. at 237 (quoting United States v. Bollin, 
    264 F.3d 391
    ,    415    (4th    Cir.   2001)).     “A   sentencing      court    must
    ‘carefully      distinguish      between     those    arms-length      commercial
    relationships where trust is created by the defendant’s personality
    or the victim’s credulity,’” 
    id.
     (quoting Bollin, 
    264 F.3d at 415
    ),
    “and those ‘where a fiduciary or personal trust relationship
    exists’ with [the victim], and the defendant takes advantage of the
    relationship to perpetrate or conceal the offense.’”                 
    Id.
     (quoting
    United States v. Koehn, 
    74 F.3d 199
    , 201 (10th Cir. 1996)).                    Thus
    “application of the enhancement requires more than a mere showing
    that the victim had confidence in the defendant.                   Something more
    akin to a fiduciary function is required.”               
    Id.
     (quoting United
    States v. Brunson, 
    54 F.3d 673
    , 678 (10th Cir. 1995)).                 In Bollin,
    this court quoted with approval United States v. Davuluri, 
    239 F.3d 902
    ,   909     (7th    Cir.    2001),     for   the   principle      that     “what
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    distinguishes situations in which § 3B1.3 should apply is ‘whether
    the defendant has broad discretion to act on behalf of the victim
    and the victim believes the defendant will act in the victim’s best
    interest.’”    Bollin, 
    264 F.3d at 416
    .
    Here, the adjustment cannot be affirmed on the ground
    that Reid and Pinkerton had a position of trust with respect to the
    banks that were victimized by the check kite and induced to make
    loans in reliance on false information.               All the transactions
    between representatives of Ivy Industries and the victim banks were
    part of an arms-length commercial relationship that is not within
    the scope of § 3B1.3.     Bollin, 
    264 F.3d at 415
    .
    The district court’s later explanation of the adjustment
    as based on Reid’s and Pinkerton’s position of trust within Ivy
    Industries and their betrayal of that trust, resulting in financial
    loss for Davis and Parker in particular, provides a better ground
    for affirming the adjustment.          In United States v. Akinkoye, 
    185 F.3d 192
     (4th Cir. 1999), this court upheld an adjustment under
    § 3B1.3 for a defendant convicted of credit card fraud who had
    stolen information from homes he entered in his capacity as a real
    estate agent.    Although the primary victims of his crime were the
    banks   that   issued   the   credit    cards   and   ultimately   bore   the
    financial loss, the homeowners who trusted the real estate agency
    to represent their interests were also victims.          Id. at 204-05.    In
    this case, as president and chief financial officer, Reid and
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    Pinkerton had broad discretion to act on behalf of the company and
    were in a position to carry out a difficult-to-detect wrong because
    they had authority over the company’s bank accounts and acted
    apparently without supervision.       Their actions caused considerable
    financial losses to the co-owners, Davis and Parker, who had
    reposed a trust in them that was close to a fiduciary one.                 We
    conclude that they each held a position of trust with respect to
    Davis and Parker, see Caplinger, 
    339 F.3d at 237
    , and abused it.
    Although the district court did not provide this justification for
    the adjustment until after the sentencing hearings, we may affirm
    a   sentence   for   any   reason   appearing   in   the   record.    United
    States v. Swann, 
    149 F.3d 271
    , 277 (4th Cir. 1998).
    We therefore affirm the sentences imposed by the district
    court.   We dispense with oral argument because the facts and legal
    contentions are adequately presented in the materials before the
    court and argument would not aid the decisional process.
    AFFIRMED
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