United States v. David John Moskal ( 2000 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 99-2570
___________
United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the District
* of Minnesota.
David J. Moskal, *
*
Appellant. *
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Submitted: March 14, 2000
Filed: May 1, 2000
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Before RICHARD S. ARNOLD and BEAM, Circuit Judges, and CONMY,1 District
Judge.
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BEAM, Circuit Judge.
David J. Moskal entered a plea of guilty to three counts of mail fraud in violation
of 18 U.S.C. § 1341. The district court2 sentenced Moskal to sixty months
1
The Honorable Patrick A. Conmy, United States District Judge for the District
of North Dakota, sitting by designation.
2
The Honorable John R. Tunheim, United States District Judge for the District
of Minnesota.
imprisonment, departing upward under sections 3A1.1 and 5K2.0 of the United States
Sentencing Guidelines. Moskal appeals the upward departure and we affirm.
I. BACKGROUND
Moskal, an attorney, was a shareholder in the law firm of Schwebel, Goetz,
Sieben, and Moskal, a prominent personal injury firm in Minnesota. In July 1998, the
Schwebel firm discovered Moskal had been embezzling money. An emergency
meeting was held during which the shareholders confronted Moskal with their
suspicions. At the meeting Moskal admitted he had stolen $200,000. In light of this
admission, the Schwebel firm fired Moskal and notified the Lawyer's Board of
Professional Responsibility of his thefts.3
Over the next several months, the shareholders and law enforcement authorities
discovered the extent of Moskal's fraud. Moskal had embezzled large sums of money
from August 1993 to July 1998. During this period, Moskal stole about $2.4 million
from clients, referring attorneys, and his own law firm.
Moskal was indicted in October 1998 and entered a plea agreement with the
United States Attorney with respect to sentencing that resulted in an expected
sentencing range of thirty to thirty-seven months. As part of this understanding, the
parties agreed that neither of them would request a departure.
Before the sentencing hearing, the district court notified the parties that it would
consider an upward departure based on several factors. Following a sentencing
hearing, the district court departed upward two levels under section 3A1.1, the
vulnerable victim guideline. It then departed upward three levels under section 5K2.0
3
Moskal has been disbarred.
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on the basis of the factors cited in the letter to counsel. Moskal appeals both upward
departures.4 We affirm.
II. DISCUSSION
A. Vulnerable Victim
Under section 3A1.1 of the Sentencing Guidelines "[i]f 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
criminal conduct" then a two-level sentence enhancement is required. U.S.S.G. §
3A1.1 (1997). The district court's determination that a vulnerable victim enhancement
is deserved turns on a factual finding subject to review for clear error. See United
States v. Hogan, 121 F.3d 370, 372 (8th Cir. 1997).
The district court found that Moskal had defrauded several vulnerable victims.
The court specifically singled out three victims: a mentally retarded adult who had been
hit by a car; another car accident victim who had suffered a debilitating stroke; and a
third client who was disabled. Additionally, the court found, based on the testimony
of an accountant for the Schwebel firm, that Moskal had stolen from at least eight
minors, eight deceased persons, twelve people over the age of sixty, two clients who
were either HIV-positive or dying of AIDS, and one homeless person. The district
court also found Moskal knew or should have known of these vulnerabilities during the
course of his representation.
4
Moskal made a motion to supplement the record. We grant the motion, but note
that the supplemental information was not relevant to our decision. The government
also made a motion to strike a portion of Moskal's reply brief if we did not grant the
motion to supplement the record. Because we granted that motion, we deny the
government's motion to strike.
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Moskal, however, contends these findings do not warrant an adjustment. He
asserts the district court must show a nexus between the vulnerability and the criminal
conduct. Moskal's contention may have had some force under the guideline that was
in effect prior to 1995, but the guideline application notes no longer require that the
defendant target his victim because of the vulnerability. Compare U.S.S.G. § 3A1.1
App. Note 1 (1993); with U.S.S.G. § 3A1.1 App. Note 2 (1997).
Therefore, the two-level enhancement under section 3A1.1 is not clearly
erroneous.
B. Upward Departure
We review a district court's decision to depart from the guidelines for an abuse
of discretion. See Koon v. United States, 518 U.S. 81, 98 (1996). The district court
departed upward because of: (1) the large number of vulnerable victims; (2) the
extraordinary manner he manipulated the victims to gain their trust; (3) the number of
methods he used to defraud his victims; (4) the damage to the Schwebel firm's goodwill
and standing in the legal community; and (5) the adverse impact on the legal profession
and the system of justice.
A district court may depart if there are mitigating or aggravating circumstances
not adequately taken into account by the guidelines. See U.S.S.G. § 5K2.0. The
district court has special competence in gauging the ordinariness or unusualness of the
facts of a particular case and whether the case falls within the heartland of typical
cases that the guidelines are meant to govern. See Koon, 518 U.S. 98-99. The district
court's discretion, however, is not unlimited. The Sentencing Guidelines forbid the use
of certain factors, encourage or discourage the use of some, and do not even address
others. See United States v. Diaz-Diaz, 135 F.3d 572, 580 (8th Cir. 1998). A district
court may use an encouraged or discouraged factor already taken into account by the
guidelines only if that factor is present to an extraordinary degree. See id. "If a factor
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is unmentioned, departure on that basis is permissible only when the circumstances of
the case are atypical in view of the structure and theory of the Guidelines" and should
be "'highly infrequent.'" Id. (quoting Koon, 518 U.S. at 96). In this case, the district
court used a mixture of factors, both encouraged and unmentioned, to support the
departure.
The first factor is the significant number of vulnerable victims. A defendant can
qualify for an enhancement under section 3A1.1 if he has only one vulnerable victim.
See U.S.S.G. § 3A1.1(b). In this case, the district court addressed in detail the special
vulnerabilities of three of Moskal's victims, and pointed to at least thirty other clients
who met the criteria of section 3A1.1. Additionally, these numbers do not include
Moskal's other clients who, by the nature of Moskal's personal injury practice, were
suffering from physical or mental injuries or grief over loss of a loved one.
The Sentencing Commission recognized that a two-level adjustment might be
inadequate if there is a large number of vulnerable victims, and amended the Sentencing
Guidelines to allow an additional two-level adjustment if there is a large number of
vulnerable victims. See U.S.S.G. § 3A1.1(b)(2) (1998). Although the amendment is
not applicable in this case, we find its logic persuasive. We thus find the district court's
use of this factor permissible.
The second factor is the extraordinary lengths to which Moskal went to gain the
trust of his clients and then to abuse that trust. The unusual means Moskal utilized
included mowing his clients's lawns, taking them to movies, and sending flowers and
wedding presents. Moskal also used professions of religious faith to impress on his
clients that he was a man of great integrity. We agree with the district court that "these
acts served to cultivate his clients' trust in him to an extraordinary level beyond that
normally present in the attorney-client relationship." Although Moskal received an
enhancement for abuse of trust under section 3B1.3 as a part of his plea agreement, we
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find the methods he used to garner the trust of his clients exceeded the contemplation
of the guidelines and enabled him to more easily conceal his embezzlement.
The third factor is the large number of schemes employed by Moskal. For
example in cases with multiple defendants or insurers, Moskal entered into settlements
with one defendant and passed that settlement on to the clients, but did not disclose
additional settlements made with other defendants. He told clients settlements were for
less than their true amounts, or in cases with multiple plaintiffs from the same family,
he only turned over the settlement for one family member. Moskal told one client his
case had no merit and then settled the case and kept all the money for himself. He also
pocketed referral fees from other attorneys entitled to them. Moskal negotiated lower
fees for medical services than had been deposited in the firm's trust account on behalf
of clients, and kept the excess for himself. Finally, when third parties, like Medicare,
had previously paid for medical expenses, Moskal pocketed the settlement money
allotted to the medical expenses rather than reimbursing the third party.
Although Moskal received a two-level enhancement for "more than minimal
planning" under section 2F1.1(b)(2)(A), these numerous schemes involved considerable
planning over five years. Thus, Moskal's level of planning is exceptional when
compared to that contemplated by the guidelines.
The fourth factor is the impact of Moskal's actions on the Schwebel firm. The
district court found the firm's goodwill with the public and standing in the legal
community were irreparably harmed. Additionally, Moskal's actions had financial
repercussions on the firm, its shareholders and employees because the firm immediately
repaid all of Moskal's clients. Moreover, the law firm faces a class action lawsuit
brought by his clients. Although this factor is not mentioned in the guidelines, the
losses suffered by the Schwebel firm are certainly attributable to Moskal's conduct and
he should have known such losses were a likely consequence of his theft. We find this
factor is an acceptable basis for departure in this case.
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The fifth factor cited by the district court is damage to the legal profession and
to the public's confidence in the justice system. Application Note 10 of section 2F1.1
states that the loss calculation under the guidelines may not fully capture the
seriousness or harmfulness of the conduct. An example of such a situation is when "the
offense caused a loss of confidence in an important institution." U.S.S.G. § 2F1.1 App.
Note 10(e).
Moskal was one of the most prominent and successful personal injury attorneys
in Minnesota.5 The district court found his conduct was extraordinarily shocking to the
public conscience because of his prominence. Additionally, several of Moskal's
victims stated that their confidence in the legal system was undermined. Moskal's
behavior and its resulting consequences falls within the situation described by
Application Note 10. Therefore, this factor is a permissible basis for departure.
We find all five factors cited by the district court for departure are permissible
under the guidelines. Thus, we hold that the district court did not abuse its discretion
in departing three levels under section 5K2.0 because the facts of this case fall outside
the heartland.
III. CONCLUSION
Accordingly, the sentence of the district court is affirmed.
5
A popular legal publication in Minnesota published an article on Moskal
describing him as the "Tort King."
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A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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