United States v. Ramona Cunningham ( 2010 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 09-1037
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United States of America, *
*
Appellee, *
* On Appeal from the United
v. * States District Court for the
* Southern District of Iowa.
Ramona Cunningham, *
*
Appellant. *
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Submitted: October 23, 2009
Filed: February 5, 2010
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Before BYE, BEAM, and SHEPHERD, Circuit Judges.
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BEAM, Circuit Court Judge.
Ramona Cunningham pled guilty to one count of conspiracy to commit fraud
or misapplication concerning federal funds under the Workforce Investment Act in
violation of 18 U.S.C. § 371, two counts of fraud or misapplication concerning federal
funds under the Workforce Investment Act in violation of 18 U.S.C. § 665(a), four
counts of fraud or misapplication concerning a program receiving federal funds in
violation of 18 U.S.C. § 666(a)(1)(A), and one count of obstruction of an investigation
or inquiry concerning federal funds under the Workforce Investment Act in violation
of 18 U.S.C. § 665(c). The district court1 sentenced Cunningham to eighty-four
months' imprisonment. Cunningham appeals that sentence, challenging the district
court's application of certain sentencing enhancements and claiming that the overall
sentence is unreasonable. We affirm.
I. BACKGROUND
Cunningham worked in various capacities at the Central Iowa Employment and
Training Consortium (CIETC)–a job employment, training and education organization
funded primarily through grants from federal, state, and local governments–from 1984
to 2006. From 1995 to 2006, Cunningham served as the agency's Chief Executive
Officer/Executive Director (CEO). The fraud alleged in this case concerned the
proper (or, rather, improper) allocation of the time of CIETC employees; the billing
of various local, state, and federal entities for those employees' time; and
misapplication of funds CIETC received from the funding entities through payment
of excessive compensation to CIETC executive staff. The government investigated
this alleged fraud from January 2003 until around April 2006.
The executive staff of CIETC was comprised of Cunningham (CEO), John
Bargman (Chief Operating Officer, or COO), and Karen Tesdell (Chief Accountant).
CIETC's Local Officials Board was comprised of Archie Brooks and Dan Albritton,
among others. Also relevant to the investigation was the Iowa Workforce
Development (IWD), which oversaw CIETC's administration of certain programs.
Jane Barto was the Deputy Director of IWD. Each of these individuals were named
in the resulting indictments following the above-mentioned investigation. As CEO
of CIETC, Cunningham's responsibilities included, in addition to other duties,
coordination of staff and consultant services; preparing and administering the annual
1
The Honorable Robert W. Pratt, Chief United States District Judge for the
Southern District of Iowa.
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work program and budget; employing, retaining, removing and setting the salaries of
all personnel; representing CIETC in the absence of the board chairperson; and
exercising discretion in the interpretation of policies and procedures of CIETC.
At all times material to the government's investigation, CIETC's annual budget
ranged from approximately $5,000,000 to $7,000,000, and several government
agencies oversaw CIETC's operations. Although the investigation was lengthy and
detailed, the alleged fraud that formed the basis for the charges in this case generally
concerned the administration of grant funds received by CIETC that were improperly
obtained and used for inflated salaries and exorbitant bonuses for certain individuals,
including Cunningham. For example, during CIETC's fiscal years 2004 through 2006,
Cunningham, Bargman and Tesdell were paid a combined total of $2,058,862 in
compensation and the government's investigation determined that of that total,
$1,074,509 were non-allowable monies used for excessive and unreasonable staff
compensation.
Following Cunningham's guilty plea to eight of the thirty counts contained in
the superseding indictment, and after conducting the sentencing hearing, the district
court applied certain enhancements at sentencing based upon its factual findings. The
court sentenced Cunningham to eighty-four months, twenty-four months below the
low end of the court's calculation of the suggested Guidelines range of 108 to 135
months. The facts relevant to each of those enhancements are discussed below.
II. DISCUSSION
Cunningham argues the district court committed procedural error by applying
certain sentencing enhancements under the Guidelines and substantive error for when
it failed to give sufficient consideration to certain sentencing factors under 18 U.S.C.
§ 3553(a), resulting in the imposition of an unreasonable sentence. Specifically,
Cunningham contends the district court erred by applying a two-level sentencing
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enhancement for obstruction of justice, a four-level sentencing enhancement for her
aggravating role in the offense as a leader or organizer of criminal activity and a two-
level sentencing enhancement because the number of victims in her case was more
than ten but less than fifty. She also contends that in light of the nature and
characteristics of her offense, her personal history and sentences imposed on co-
defendants in this prosecution, the district court should have given her a substantially
lighter sentence.
On appeal, we will review a sentence for an abuse of discretion, giving
due deference to the district court's decision. First, we will ensure that
the district court did not commit a significant procedural error, such as
miscalculating the Guidelines range, treating the Guidelines as
mandatory, failing to consider the § 3553(a) factors, selecting a sentence
based on clearly erroneous facts, or failing to adequately explain why a
sentence was chosen. If the district court's decision is procedurally
sound, then we will consider the substantive reasonableness of the
sentence imposed, applying an abuse-of-discretion standard.
United States v. Zastrow, 534 F.3d 854, 855 (8th Cir. 2008) (internal quotations
omitted). "A sentence within the Guidelines range is accorded a presumption of
substantive reasonableness on appeal." United States v. Robinson, 516 F.3d 716, 717
(8th Cir. 2008).
A. Obstruction of Justice
Cunningham first argues that the district court committed procedural error in
applying the advisory Guidelines when it imposed a two-level enhancement under
United States Sentencing Guidelines (U.S.S.G.) § 3C1.1 for obstructing or impeding
the administration of justice. We give great deference to a district court's decision to
impose an obstruction of justice enhancement, reversing only when the district court's
findings are insufficient. United States v. Craft, 478 F.3d 899, 901 (8th Cir. 2007).
"The district court must find the predicate facts supporting an enhancement for
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obstruction of justice by a preponderance of the evidence, and we review those
findings for clear error." United States v. Montes-Medina, 570 F.3d 1052, 1061 (8th
Cir. 2009).
Cunningham claims that this enhancement was applied for two reasons:
Cunningham ordered the destruction of evidence during an audit and failed to report
her Iowa Public Employees' Retirement System (IPERS) assets in her financial
statement during the course of the presentence investigation. Regardless of whether
or not Cunningham failed to disclose her IPERS account, a fact Cunningham claims
was inadvertently omitted if at all, the testimony of Traci Dow-Wyatt, a special agent
of the FBI involved in the CIETC investigation, regarding Cunningham's direction
to destroy certain documents supports the enhancement. The Presentence
Investigation Report (PSR) indicated that prior to an auditor's visit, Cunningham
ordered the destruction of time records that would have shown inconsistencies in
reporting practices of employees–conduct directly relevant to the pending
investigation. This was corroborated at sentencing through Dow-Wyatt's testimony,
who recalled statements of others that Cunningham either directed them to dispose of
a number of time cards of individual CIETC employees or who were otherwise
involved in the destruction or alteration of CIETC business records. The district
court's reliance upon this evidence is sufficient to support the enhancement.
B. Role in the Offense as Leader or Organizer
Under the Guidelines, a defendant's sentence can be enhanced two to four
offense levels if the defendant's role in the offense was an aggravating one. U.S.S.G.
§ 3B1.1(a-c). The "'adjustment for being an organizer or leader is intended to reflect
relative responsibility compared to other participants in the crime.'" United States v.
Villareal-Amarillas, 454 F.3d 925, 931 (8th Cir. 2006) (quoting United States v.
Rodriguez, 112 F.3d 374, 377 (8th Cir. 1997)).
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Factors the court should consider include the exercise of decision making
authority, the nature of participation in the commission of the offense,
the recruitment of accomplices, the claimed right to a larger share of the
fruits of the crime, the degree of participation in planning or organizing
the offense, the nature and scope of the illegal activity, and the degree of
control and authority exercised over others. There can, of course, be
more than one person who qualifies as a leader or organizer of a criminal
association or conspiracy.
U.S.S.G. § 3B1.1 cmt. n.4. The PSR suggested a four-level increase under section
3B1.1, which the district court applied. We review for clear error the district court's
factual findings underlying the imposition of a sentencing enhancement regarding a
defendant's role in the offense. United States v. Davis, 583 F.3d 1081, 1097 (8th Cir.
2009).
The entirety of Cunningham's argument on this issue is that "clearly" Bargman,
not Cunningham, was the organizer and leader of this criminal activity. Cunningham
claims that prior to Bargman's arrival at CIETC, she received one or two salary
increases a year, attributable to annual raises or raises received because of
reassignment, reclassification or additional responsibilities. It was not until 2000, the
year Bargman began his employment with CIETC, that Cunningham began to receive
numerous bonuses. She further highlights that Bargman supervised key employees
and directed how employees were to bill their time to certain programs in excess of
time worked, a key factor in the fraud scheme. And, Cunningham claims it was
Bargman who managed the assets, property and activities of the criminal activity.
The government responds that "water doesn't run uphill." That is, without
Cunningham none of it could have happened. The district court agreed and did not
clearly err in doing so. Indeed, the district court acknowledged Bargman's major role
in this operation and found that both Cunningham and Bargman were "equally
culpable," regardless of the fact that the criminal activity did not start until after
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Bargman started at CIETC. Cunningham's role as Executive Director of CIETC and
associated responsibilities are undisputed. We thus affirm the district court's
application of the role enhancement.
C. Number of Victims
We also find no clear error in the district court's finding that Cunningham's
illegal conduct involved more than ten and less than fifty victims. U.S.S.G. §
2B1.1(b)(2)(A); United States v. Jenkins-Watts, 574 F.3d 950, 961 (8th Cir. 2009)
(standard of review). Governmental entities can be considered victims for purposes
of this sentencing enhancement. United States v. Reyes, 908 F.2d 281, 288-89 (8th
Cir. 1990).
Cunningham argues that at most there are eight victims including the State of
Iowa, Department of Health and Human Services, Department of Labor, Creative
Vision, Polk County, the federal government, and the Workforce Investment Act and
Promise Jobs programs. The PSR stated that the offense involved ten or more but less
than fifty victims and calculated a two-level increase accordingly. The victims, as
stated in the PSR, included the nine governmental agencies (the city of Des Moines
and eight counties in Iowa) that comprised CIETC, i.e., the entities that funded
CIETC's programs, and the State of Iowa as well. In its calculation, the district court
accounted for the State of Iowa, nine central Iowa counties,2 the City of Des Moines,
and the United States Government, which the district court treated as one entity rather
than a compilation of its various affected agencies. Without further scrutiny into
additional entities that might be noted, and acknowledging that there are only eight
2
We recognize that the district court's statement regarding the "nine" affected
counties is erroneous but correction is unnecessary, as there are more than ten victims
regardless.
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county victims here, the district court's calculation stands and satisfies the "ten or
more" required for the enhancement.
D. Substantive Unreasonableness
Having determined that the sentence is procedurally sound, we now consider
the substantive reasonableness of the sentence imposed, applying an abuse-of-
discretion standard. Zastrow, 534 F.3d at 855. We judge the substantive
reasonableness of the sentence with reference to the factors enumerated in 18 U.S.C.
§ 3553(a). United States v. Wahlstrom, 588 F.3d 538, 547 (8th Cir. 2009). Here, the
district court calculated an advisory Guidelines range of 108 to 135 months and varied
downward, imposing an eighty-four month sentence, following its consideration of
the section 3553(a) factors. Cunningham does not claim that the district court failed
to consider the appropriate factors, but rather that those factors warranted a greater
downward variance in this case.
Cunningham focuses on the first of the section 3553(a) factors, reviewing the
nature and circumstances of the offense and Cunningham's history and characteristics.
A large portion of Cunningham's brief is dedicated to the argument that Cunningham
should not be punished for her conduct because the transparency of the CIETC
operation somehow makes her less culpable, or at least deserving of a less severe
punishment as a result. She highlights the public nature of CIETC, which involved
oversight by multiple agencies and groups of individuals, many of whom conducted
audits and reviews that were communicated to Cunningham. Cunningham argues that
because there was no mention of wrongdoing as relevant to the current charges in any
report or other communication following these reviews, she should not be penalized
for her reliance upon them. She likewise claims that she relied upon Bargman (who,
she points out, unfairly received a much lighter sentence following his own guilty plea
to a two-count information) and his experience and knowledge of the laws, as if such
reliance serves as an explanation for her own failures to responsibly act in accordance
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with her duties as Executive Director of CIETC, and justifies a shorter sentence.
Finally, as to her own history, Cunningham highlights her own unfortunate past and
the many obstacles she overcame to succeed at CIETC. She was effective in many
aspects of her job at CIETC, as is highlighted in her brief. And, she details the great
backlash she experienced following the public unveiling of the wrongdoing.
The district court conducted a lengthy and thorough colloquy regarding its
section 3553(a) analysis as relevant to the facts of this case. The court discussed the
appropriate considerations under section 3553(a), but stated that the seriousness of this
offense was a large part of its consideration. The court sentenced Cunningham
twenty-four months below the suggested advisory Guidelines range–a sentence amply
supported by the record. We conclude that the sentence is not substantively
unreasonable and that the district court did not abuse its discretion.
III. CONCLUSION
For the reasons stated herein, we affirm.
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