United States v. Hernandez, Jovel ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 00-1537
United States of America,
Plaintiff-Appellee,
v.
Jovel Hernandez,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern
Division.
No. 98 CR 900--Charles P. Kocoras, Judge.
Argued October 4, 2000--Decided November 9,
2000
Before Manion, Evans, and Williams, Circuit
Judges.
Manion, Circuit Judge. Jovel Hernandez
stole $115,000 from Zenith Electronics
Corporation while employed as one of its
staff accountants. As a result, a jury
found Hernandez guilty of nine counts of
wire fraud, 18 U.S.C. sec. 1343, and six
counts of passing forged securities, 18
U.S.C. sec. 513(a). He was sentenced to
30 months’ imprisonment. On appeal,
Hernandez challenges the district court’s
determination that he abused "a position
of trust," which resulted in a two-level
upward adjustment under U.S.S.G. sec.
3B1.3. We affirm.
I.
In 1994, Zenith hired Hernandez as a
staff accountant in the Tax Department of
its Glenview, Illinois, office. The Tax
Department included Director of Taxes
Bernadette Abdow, Tax Supervisor James
Rapcan, Hernandez, and four other staff
accountants. Hernandez’s duties included
calculating Zenith’s sales and use tax
liabilities for jurisdictions across the
country and preparing check request forms
that authorized the Payables Department
to generate payment checks. In August
1996, Hernandez began preparing check
requests for phony tax debts and, with
the aid of accomplice Antoin Howard,
depositing the resulting checks in
Howard’s personal bank account. Hernandez
and Howard then shared the proceeds.
Before a check request form could be
sent to the Payables Department, however,
it required the signature of one of the
supervisors, Abdow or Rapcan. To prevent
their thorough review of his fraudulent
check requests, Hernandez would ask one
supervisor to quickly sign the form while
falsely asserting that the other
supervisor had already reviewed it but
had merely forgotten to sign it.
Hernandez would then forward the
fraudulent check request form to the
Payables Department. In order to assure
that the newly created checks were sent
to him instead of the named payee,
Hernandez would mark the "return to check
requestor" box on the request form. He
then gave the checks to Howard. The
scheme went undetected for four months,
until Howard’s bank froze his account to
investigate the unusually large number of
third-party checks being deposited into
his account. A jury convicted Hernandez
of wire fraud and forgery.
At sentencing the district court set
Hernandez’s base level at six, see
U.S.S.G. sec. 2F1.1(a); added two levels
for the amount of loss, calculated at
$115,261.24, see id. sec. 2F1.1(b)
(1)(G); and added two more levels because
the offense involved more than minimal
planning, see id. sec. 2D1.1(b) (2)(A).
The court then increased the total by two
more levels because Hernandez played a
leadership role. See U.S.S.G. sec.
3B1.1(c). These calculations are not in
dispute. Over Hernandez’s objection,
however, the district court also assessed
another two levels for abuse of a
position of private trust under U.S.S.G.
sec. 3B1.3. With the resulting total
offense level of 18, and a Category I
criminal history, Hernandez’s guideline
imprisonment range was 27-33 months. The
court sentenced him to 30 months’
imprisonment. On appeal Hernandez
challenges the two-level increase for
abuse of position of trust.
II.
Hernandez first argues that his "staff
accountant" position could not possibly
have constituted a "position of trust"
within the meaning of the guideline
because Zenith--from whose perspective
Hernandez says the sentencing court must
look--gave him a title and a job
description that conferred neither
"supervisory" nor "managerial" authority.
This interpretation of "position of
trust" is a legal question that is
reviewed de novo. See United States v.
Paneras, 222 F.3d 406, 412 (7th Cir.
2000); United States v. Strang, 80 F.3d
1214, 1219 (7th Cir. 1996).
Our cases reject Hernandez’s position.
Job title alone does not answer whether a
position is one of trust because "a
diminutive title or lack of sweeping
power are unimportant." United States v.
Sierra, 188 F.3d 798, 802 (7th Cir.
1999). Instead, sentencing judges should
assess the actual amount of access an
employee has "to items of value." United
States v. Lamb, 6 F.3d 415, 419 (7th Cir.
1993). See also Strang, 80 F.3d at 1220(rejecting contention that without an
actual license defendant who posed as
licensed securities broker could not
possibly have abused a position of
trust); United States v. Lilly, 37 F.3d
1222, 1227-28 (7th Cir. 1995) (upholding
sec. 3B1.3 adjustment for defendant
"Pastor" who misused church funds,
although not officially labeled
"financial officer"); see generally
United States v. Allen, 201 F.3d 163, 166
(2d Cir. 2000) (discounting importance of
employee’s title). The fact that
Hernandez was a "staff accountant" while
Abdow was "Director of Taxes" and Rapcan
the "Tax Supervisor" does not mean that
Hernandez could not possess supervisory
or managerial duties.
Hernandez responds, though, that our
willingness to look beyond job title, as
announced in cases beginning with Lamb,
is no longer appropriate after the 1993
amendment to Application Note 1 of sec.
3B1.3. In its present form,/1
Application Note 1 explains that a
position of trust is characterized by
"professional or managerial discretion,"
which the application note goes on to
define as "substantial discretionary
judgment that is ordinarily given
considerable deference." Hernandez
suggests that, despite Lamb and
subsequent cases, Application Note 1
indeed requires sentencing courts to
analyze "positions of trust" by how an
employer labeled a position, rather than
according to actual job duties.
We see no reason to depart from Lamb,
because we conclude that the reference to
"professional" or "managerial" discretion
in the present version of Application
Note 1 is not inconsistent with the Lamb
standard. Application Note 1 does not
specify that "professional" or
"managerial" discretion must be conferred
through the job title alone; in fact, the
language of the note suggests that
district courts should look beyond job
title. Indeed, the same note explains
that persons holding positions of trust
are usually "subject to significantly
less supervision than employees whose
responsibilities are primarily non-
discretionary in nature," see U.S.S.G.
sec. 3B.1.3, and only by comparing the
actual work performed by various
employees can a sentencing judge
determine whether the defendant is "less
supervised" or has "more discretion" than
other employees. Hernandez concedes as
much by suggesting his job be analyzed
from Zenith’s "perspective;" the
"perspective" of Zenith, of course,
includes not only an employee’s title,
but also the tasks carried out by that
employee, whetherformally assigned or
not. Thus, although Hernandez argues that
Application Note 1 cabins the district
court’s inquiry, we reject his
interpretation of the Note and his
invitation that we abandon Lamb’s
approval of a more thorough examination
in determining positions of trust.
In the alternative, Hernandez argues
that, even under Lamb, the district court
erred in finding that he occupied a
position of trust. Insofar as this is his
argument, the district court’s finding
that Hernandez occupied a position of
trust is a factual finding that we review
only for clear error. United States v.
Bailey, No. 99-2933, 2000 WL 1281332, at
*13 (7th Cir. Sept. 12, 2000). Upon
reviewing the record, we agree with the
district court’s finding that Hernandez
occupied a position of trust.
As noted previously, we have endorsed
the view that in applying sec. 3B1.3 the
district court should consider the
"amount of access and authority over
valuable things" that the defendant had.
Sierra, 188 F.3d at 802; see Bailey, 2000
WL 128132 at *14. In this case, Hernandez
possessed considerable access and
authority over valuable property. He was
the only accountant responsible for
generating the sales and use tax returns
for the entire states of Alabama and
Louisiana, and he alone calculated the
amount assessed to each region. Based on
his false representations that his work
had already been reviewed, his
supervisors simply signed the requests
without actually verifying them./2 Just
by using his routine job tasks, then,
Hernandez fraudulently gained access to
over $115,000 in only four months.
Moreover, despite Hernandez’s contrary
contention, the district court also
relied upon factors beyond Hernandez’s
access to Zenith’s funds in finding a
position of trust. The record also shows
his autonomy in preparing check request
forms, his supervisors’ virtual rubber-
stamping of his work, and his ability to
use routine forms to route large payment
checks directly into his own hands. These
actions show not just physical access to
Zenith’s funds, but that Zenith’s system
was based on its faith in its staff
accountants’ honesty in presenting their
work to their supervisors and in sending
payment checks to the correct payee. Sim
ply by checking a box on a form and lying
to his supervisors, Hernandez was able to
directly route $115, 000 to his hands.
Zenith expected Hernandez to identify its
tax liabilities and make sure those taxes
were paid in the most efficient manner.
Hernandez had more than access to the
company’s funds; he held a position where
his representations that Zenith needed to
pay out those funds was virtually
unquestioned. The trust inherent in his
position was key to the smooth execution
of his scheme; indeed, Hernandez was
stopped, not because Zenith was looking
over his shoulder, but because Howard’s
bank was vigilant in protecting itself
against fraud losses.
In this regard, Hernandez’s attempt to
fit himself within the "bank teller"
example of Application Note 1 is
unpersuasive. Regardless how Hernandez
characterizes his job at Zenith, we have
previously held that an employee similar
to Hernandez occupied a position of
trust. See United States v. Deal, 147
F.3d 562, 563-564 (7th Cir. 1998). In
Deal, the defendant worked as a
comptroller of a shopping center. He kept
the monthly financial records and
submitted them for review to his general
manager. Id. at 563. Like Hernandez, Deal
created false statements that caused the
company to make unnecessary payments. Id.We rejected the notion that supervisory
review is inconsistent with a position of
trust, as we observed that "[n]o one who
is entrusted with large amounts of money
is trusted completely." Id. at 564.
Regardless of his title, Hernandez’s
actual duties involved substantial
discretion and responsibility. Given this
extensive amount of responsibility, his
"I was merely a bank teller" argument is
unconvincing.
AFFIRMED.
/1 Application Note 1 provides, in relevant part:
Public or private trust refers to a position of
public or private trust characterized by profes-
sional 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 responsi-
bilities are primarily non-discretionary in
nature. For this adjustment to apply, the posi-
tion of public or private trust must have con-
tributed 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). This adjustment, for example,
applies in the case of an embezzlement of a
client’s funds by an attorney serving as a guard-
ian, a bank executive’s fraudulent loan scheme,
or the criminal sexual abuse of a patient by a
physician under the guise of an examination. This
adjustment does not apply in the case of an
embezzlement or theft by an ordinary bank teller
or hotel clerk because such positions are not
characterized by the above-described factors.
U.S.S.G. sec. 3B1.3, comment. (n.1) (1998).
2/ Although Hernandez argues that this lax review is
not evidence of a position of trust, see United
States v. Helton, 953 F.2d 867, 870 (4th Cir.
1992), we agree with the district court that the
important point is not that Hernandez’s supervi-
sors were lax, but rather why the supervisors
felt they could be lax: a combination of Hernan-
dez’s false representations and their trust in
him. If his job is to be viewed from Zenith’s
perspective, as Hernandez advocates, his supervi-
sors’ view of his position is certainly relevant.