United States v. Benjamin Sheftall Eichholz

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 10-11626 ELEVENTH CIRCUIT
Non-Argument Calendar AUGUST 31, 2010
________________________ JOHN LEY
CLERK
D.C. Docket No. 4:09-cr-00166-WTM-GRS-1
UNITED STATES OF AMERICA,
lllllllllllllllllllllPlaintiff-Appellee,
versus
BENJAMIN SHEFTALL EICHHOLZ,
lllllllllllllllllllllDefendant-Appellant.
________________________
Appeal from the United States District Court
for the Southern District of Georgia
________________________
(August 31, 2010)
Before BLACK, HULL and PRYOR, Circuit Judges.
PER CURIAM:
After pleading guilty, Benjamin Eichholz appeals his 21-month sentence for
obstruction of a Department of Labor (“DOL”) investigation, in violation of 18
U.S.C. § 1505. Eichholz argues that the district court erred when it imposed a
sentencing enhancement pursuant to U.S.S.G. § 3B1.3 for abuse of a position of
trust. After review, we affirm.
I. BACKGROUND
A. Eichholz’s Employee Benefits Plans
Eichholz, an attorney, owned a law firm most recently known as The
Eichholz Law Firm. In 1991, Eichholz established two benefits plans to provide
retirement and pension benefits for long-time employees of the law firm (“the
plans”). The plans were subject to the requirements of Title I of the Employee
Retirement Security Act of 1974 (“ERISA”). The plans had nineteen participants,
including Eichholz and his mother, but the participants’ interest in the plans
varied. The plans were funded by employer contributions from the firm, for which
Eichholz was allowed a tax deduction.
Eichholz served as the sole fiduciary of the plans. Erskine and Associates
was the plans’ third-party administrator and provided consultive, administrative
and record-keeping services. As the plans’ fiduciary, Eichholz was required to file
Form 5500 with the DOL providing information about the plans’ assets, liabilities
and kinds of investments. Sherrie Erskine of Erskine and Associates prepared the
Form 5500s for Eichholz using information Eichholz and his employees provided.
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The plans’ rules prohibited Eichholz from issuing loans to participants and
also discouraged a large number of loans because they were not considered safe
investments. Nonetheless, a significant portion of the plans’ assets were
outstanding loans.
B. DOL’s April 18, 2007 Interview
In February 2007, based on Form 5500s filed by Eichholz, the DOL began a
civil investigation into Eichholz’s management of the plans. The DOL suspected
that the plans’ assets may have been used for personal gain because of (1) the
small number of plan participants, only a few of which held an interest in a large
percentage of the assets, and (2) the large number of loans listed as the plans’
assets. In March 2007, the DOL notified Eichholz of its investigation and
requested an interview.
During an April 18, 2007 interview with a DOL investigator, Eichholz said
that he purchased Flora Danica china as an investment for the plans. However, the
investigator later learned that the china was displayed in a cabinet in Eichholz’s
home.
The investigator asked Eichholz about the plans’ loans. Eichholz said that a
$50,000 loan to James Cole was repaid the week before the interview. However,
when the DOL investigator interviewed Cole, he denied receiving or paying back
3
a loan from the plans. The DOL investigator then determined that the $50,000
check representing the purported Cole loan was deposited into an account
controlled by Eichholz.
Eichholz told the DOL investigator that the plans issued a loan to an
individual identified only as “Eubanks.” The DOL investigator could not locate
Eubanks, but determined that the check representing the loan proceeds was
deposited into an account held by Eichholz.
Finally, during the interview, Eichholz told the DOL investigator that he did
not have an ownership interest in Delta Building Systems, a company that received
several loans from the plans. The DOL investigator later learned that Eichholz
owned 100 percent of the company and that a few days before the interview
Eichholz had filed documents with the Georgia Secretary of State’s office
removing his name as the chief executive officer.
C. DOL’s Subsequent Interviews
On June 22, 2007, Eichholz sent the DOL a document that purported to
detail the plans’ outstanding loans. The list included loans to Eubanks, Delta
Building Systems, Greg Hirsch and Richard Crose. In subsequent DOL
interviews, Hirsch and Crose denied receiving loans from the plans. Yet, in a
second interview on August 2, 2007, Eichholz reiterated that Eubanks, Hirsch,
4
Crose and Cole had received loans from the plans and that Cole had repaid his
loan. Eichholz also stated that Hirsch had repaid his loan by transferring stock to
the plans.
On December 10, 2007, DOL investigators interviewed Eichholz a third
time and asked about plan checks issued to Crose, Joseph Benefield and
Endermology Associations, a company owned by Eichholz’s wife. Eichholz told
DOL investigators the checks represented loans. However, the endorsements
revealed that the checks were deposited into accounts controlled by Eichholz. In a
fourth interview on January 8, 2008, Eichholz again denied any interest in Delta
Building Systems and claimed that another plan check to Delta Building Systems
represented a loan. However, this check was also deposited into an account
controlled by Eichholz.
D. Grand Jury Indictment
In subsequent federal grand jury proceedings, Sherrie Erskine testified that
she repeatedly warned Eichholz about the number of loans Eichholz issued with
plan funds and that he might be engaging in prohibited transactions. Erskine
instructed Eichholz on the rules of the plans and provided him with documentation
supporting her assertions. Once the DOL investigation began, Eichholz asked
Erskine about closing the plans. In addition, James Cole, James Benefield, Greg
5
Hirsch and Richard Crose testified that they had not received any loans from the
plans.
On August 5, 2009, the grand jury returned a 77-count indictment against
Eichholz, including thirty counts of embezzlement from the plans, 18 U.S.C.
§ 664; four counts of money laundering, in violation of 18 U.S.C. § 1957; ten
counts of mail fraud, in violation of 18 U.S.C. § 1341; ten counts of false
statements and concealment of facts in employee benefit plan records and reports,
in violation of 18 U.S.C. § 1027; twenty-two counts of false statements, in
violation of 18 U.S.C. § 1001; and one count (Count 55) of obstruction of a DOL
investigation, in violation of 18 U.S.C. § 1505. Count 55 listed numerous
allegedly false and misleading statements Eichholz made to DOL investigators
during their investigation about the plans’ assets, liabilities and investments.
E. Guilty Plea
Pursuant to a written plea agreement, Eichholz pled guilty to Count 55. In
addition to pleading guilty, Eichholz agreed to the entry of an order of restitution
for the losses to his identifiable victims, excluding himself and his mother. In
exchange for Eichholz’s guilty plea, the government agreed, among other things,
that it would recommend that the district court not apply a sentencing
enhancement pursuant to U.S.S.G. § 3B1.3 for abuse of a position of trust.
6
However, the government retained the right to bring all sentencing facts to the
court’s attention.
As the factual basis for Eichholz’s plea, the plea agreement stated that: (1)
during a January 8, 2008 interview, a DOL investigator asked Eichholz about
Eichholz’s interest in Delta Building Systems, which had received substantial
loans from the plans; and (2) in response, in order to obstruct, influence and
impede the DOL investigation, Eichholz falsely stated that he was not a Delta
Building Systems shareholder when in fact he knew he owned 100 percent of the
company.
At Eichholz’s plea hearing, Eichholz stated that he was pleading guilty to
Count 55 based on the facts related to Delta Building Systems. The government’s
proffer and Eichholz’s allocution identified his false statement concerning his
interest in Delta Building Systems, which received $227,000 in loans from the
plans, as the factual basis for his guilty plea.
F. Presentence Investigation Report
Eichholz’s Presentence Investigation Report (“PSI”) recounted the DOL’s
investigation and Eichholz’s responses to it, as discussed above. In all, the PSI
listed thirty checks that were improperly issued by Eichholz from the plans.
Sixteen of those checks had not been repaid, totaling $294,807.99 in losses. These
7
checks were reportedly repaid via Eichholz’s transfer of Newsgrade stock to the
plans. However, the stock had little, if any, value, and Eichholz agreed to repay
the plans for those checks.
The PSI identified the plan participants, other than Eichholz and his mother,
as the “victims of the instant offense.” These seventeen plan participants
cumulatively held a 17.57 percent interest in the plans. Accordingly, the plans
were due $50,117.36 in restitution.
The PSI calculated a base offense level of 14, pursuant to U.S.S.G. § 2J1.2
and gave a two-level reduction for acceptance of responsibility, pursuant to
U.S.S.G. § 3E1.1(a). With a total offense level of 12 and a criminal history
category of I, the PSI recommended an advisory guidelines range of 10 to 16
months’ imprisonment. The probation officer noted that while Eichholz had
admitted obstructing the DOL investigation by lying only about his ownership
interest in Delta Building Systems, his obstructive conduct was much more
extensive. Nevertheless, the probation officer recommended a 10-month sentence.
Eichholz did not file any objections to the PSI.
Prior to sentencing, the district court gave Eichholz notice by letter that it
was considering applying a § 3B1.3 enhancement for abuse of a position of trust.
In response, the government noted its obligation in the plea agreement to
recommend that the court not apply a § 3B1.3 enhancement. However, in
8
addressing the various 18 U.S.C. § 3553(a) factors, the government argued that
although Eichholz admitted during his plea colloquy only one obstructive act
(lying about his ownership of Delta Building Systems), Eichholz had lied about
other things as well (such as the purported loans to Cole, Eubanks, Hirsch and
Crose) and had engaged in other acts of obstruction (such as submitting false
documents to the DOL and refusing to provide other information to DOL
investigators) during the almost year-long investigation. The government asked
for a sentence “at the top of the advisory guidelines as found by the Court.”
In a sentencing memorandum, Eichholz reiterated that he had no objection
to the contents of the PSI. Eichholz opposed a § 3B1.3 enhancement for an abuse
of a position of trust. Eichholz argued that § 3B1.3 did not apply because the
embezzlement charges were dismissed and the PSI reflected that no embezzlement
occurred given that he either had already repaid the loans or had agreed to repay
the loans. Eichholz asked for a downward variance based on his age and the fact
that he had already lost his business and his law license.
E. Sentencing Hearing
At the sentencing hearing, Eichholz confirmed that he had no objections to
the facts in the PSI. The district court then adopted the PSI’s facts as its findings
of fact. However, the district court declined to adopt the PSI’s conclusions
regarding the applicable guidelines.
9
During discussions with counsel about § 3B1.3’s abuse-of-trust
enhancement, the district court noted that Eichholz was the sole fiduciary for the
plans and that the DOL went to question Eichholz only because he was the plans’
sole fiduciary. Eichholz restated his argument that the PSI revealed no
embezzlement had occurred because all the loans were repaid. Eichholz stressed
that (1) the offense of conviction was obstruction of a DOL investigation, (2) the
government, and not the plans’ participants, was the victim of that offense and (3)
Eichholz did not have a fiduciary duty to the government.
The district court applied the abuse of trust enhancement.1 The district court
noted that (1) the purpose of the DOL investigation was to determine how
Eichholz, as the plans’ sole fiduciary, was managing them and (2) Eichholz pled
guilty to obstruction of that DOL investigation. The district court found that
Eichholz, as the fiduciary, did not properly manage and administer the plans. The
district court determined that (1) the PSI identified the plan participants as victims
of the offense, (2) Eichholz’s position as fiduciary of the plans was “a position of
trust with respect to the plans’ participants,” (3) under ERISA, a benefit plan
fiduciary exercises discretionary authority and control over the management of the
plan and the management and disposition of its assets and has the discretionary
1
The district court considered, but ultimately declined to apply, an enhancement for
substantial interference with the administration of justice, pursuant to U.S.S.G. § 2J1.2(b)(2).
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authority in the administration of the plan, (4) “[a]s sole fiduciary of the plans, Mr.
Eichholz occupied a unique and very discretionary position with respect to the
plans, and this position clearly contributed significantly to his commission and
concealment of the offense,” and (5) “the facts as admitted to in the PSI and the
plea that Mr. Eichholz made clearly indicate that on numerous occasions Mr.
Eichholz gave false information and made false statements to the labor department
investigator, and refused to furnish documentation to the labor department
investigator during the course of the investigation, and by doing so interfered with
the investigation being conducted by the labor department . . . .”
After applying the two-level abuse-of-trust enhancement, the district court
calculated a total offense level of 14, which, combined with a criminal history
category of I, yielded an advisory guidelines range of 15 to 21 months. Eichholz
requested a 10-month sentence. Emphasizing, inter alia, that Eichholz repeatedly
lied to the DOL during the investigation, the government recommended a 21-
month sentence. Eichholz took exception to the government’s statements that he
repeatedly lied, arguing that he would have defended against those allegations had
he gone to trial. The district court advised Eichholz that he could withdraw his
guilty plea before the court pronounced his sentence and reminded Eichholz that
he was told during his plea hearing that the court could consider all relevant
conduct not just the count of conviction. Eichholz stated that he did not want to
11
withdraw his guilty plea.
The district court then imposed a 21-month sentence. The district court
ordered Eichholz to pay restitution in the amount of $50,117.36 to the plans. The
district court directed Eichholz to pay the restitution to the district court clerk “for
disbursement to the victims.” Eichholz filed this appeal challenging only the
abuse-of-trust enhancement.
II. DISCUSSION
A. Abuse-of-Trust Enhancement
A defendant’s offense level is increased by two levels if the defendant
abused of a position of public or private trust “in a manner that significantly
facilitated the commission or concealment of the offense.” U.S.S.G. § 3B1.3. For
the enhancement to apply, the government must show: “(1) that the defendant held
a place of public or private trust; and (2) that the defendant abused that position in
a way that significantly facilitated the commission or concealment of the offense.”
United States v. Ward, 222 F.3d 909, 911 (11th Cir. 2000). The enhancement
applies only when the victim of the offense conferred the trust. United States v.
Walker, 490 F.3d 1282, 1300 (11th Cir. 2007).2
2
We review for clear error a district court’s factual determination that the defendant abused
a position of trust and review de novo the district court’s legal conclusion that the defendant’s
conduct justifies application of the abuse-of-trust enhancement. United States v. Garrison, 133 F.3d
831, 837 (11th Cir. 1998).
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Eichholz does not dispute that he held a position of private trust as the
fiduciary of the plans. Instead, Eichholz argues that the victim of his offense of
conviction was the DOL and that he did not hold or abuse a position of trust as to
the DOL. Although the DOL may be a victim of Eichholz’s offense, the PSI, to
which Eichholz did not object, listed the plans’ participants as victims.
Specifically, the PSI contained these facts: (1) the victims of Eichholz’s
offense were the participants of the plans, with the exception of Eichholz and his
mother; (2) Eichholz had not repaid $294,807.99 in checks improperly issued from
the plans; and (3) Eichholz had agreed to pay back those outstanding improperly
issued checks. The PSI recommended that restitution be awarded to the plans in
the amount of $50,117.36, which represented the 17.75 percent interest held by the
plan-participant victims. Eichholz accepted the PSI’s victim restitution
recommendation and has not objected to repaying restitution in the amount of
$50,117.36.
More importantly, the district court adopted the PSI’s facts without
objection. To the extent Eichholz now argues that the evidence was insufficient to
support a finding that the plan participants were victims of his offense, this
argument has been waived. See United States v. Beckles, 565 F.3d 832, 844 (11th
Cir. 2009) (“It is the law of this circuit that a failure to object to allegations of fact
in a PSI admits those facts for sentencing purposes and precludes the argument
13
that there was error in them.” (quotation marks omitted)); United States v. Hedges,
175 F.3d 1312, 1315 (11th Cir. 1999) (concluding that district court properly may
rely on undisputed conclusory statements in PSI “despite the absence of
supporting evidence”).
In a similar case, this Court concluded that when the defendant failed to
object to the PSI’s identification of the victim, the district court could rely upon
that victim in imposing an abuse-of-trust enhancement. See United States v.
Harness, 180 F.3d 1232, 1236 (11th Cir. 1999) (upholding abuse-of-trust
enhancement where defendant, an accountant employed by non-profit
organization, did not object to PSI’s identification of non-profit organization,
rather than government, as the victim of the defendant’s illegal diversion to
himself of federal funds intended for the non-profit); cf. United States v. Williams,
527 F.3d 1235, 1251 & n.13 (11th Cir. 2008) (rejecting abuse-of-trust
enhancement where government did not object to PSI’s identification of
government, rather than employer, as the victim of the defendant’s theft of federal
funds, but acknowledging that district court could have considered additional
victims). Accordingly, Eichholz’s failure to object to the PSI’s identification of
the plans’ participants as the victims of his offense permitted the district court to
rely upon that fact in imposing the abuse-of-trust enhancement.
Alternatively, Eichholz argues that his abuse of his position of trust as the
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plans’ fiduciary did not facilitate the offense of obstructing the DOL investigation.
To satisfy U.S.S.G. § 3B1.3’s significant facilitation requirement, the abuse of the
trust must be tied to the offense of conviction. United States v. Barakat, 130 F.3d
1448, 1455 (11th Cir. 1997). There is significant facilitation when “the person in
the position of trust has an advantage in committing the crime because of the trust
and uses that advantage in order to commit the crime.” Id.As the district court pointed out, the DOL approached Eichholz during its
investigation precisely because he was the plans’ fiduciary. Eichholz’s
cooperation with the DOL investigation (or lack thereof) was as the plans’
fiduciary. It was Eichholz’s position as the plans’ fiduciary that provided him the
opportunity and ability to commit the offense of conviction. Thus, Eichholz had
an advantage by virtue of his fiduciary position and used it to obstruct the DOL
investigation.
Furthermore, Eichholz’s argument limits his abuse of his position of trust to
his mismanagement of the plans’ assets, when in fact Eichholz’s actions during the
DOL investigation continued to abuse his position of trust. ERISA requires a
fiduciary to “discharge his duties with respect to a plan solely in the interest of the
participants and beneficiaries,” 29 U.S.C. § 1104(a)(1), and “with the care, skill,
prudence, and diligence” of a prudent person in similar circumstances. 29 U.S.C.
§ 1104(a)(1), (a)(1)(B). The DOL investigators were investigating the possibility
15
that the plans’ assets were being used for personal gain and were particularly
concerned about the large percentage of plan assets that were loans. Eichholz’s
lying about the circumstances of those loans (i.e., to whom the plans had extended
loans and whether Eichholz had an interest in the plans’ debtors) was not an act
“solely in the interest of the participants and beneficiaries” of the plans.3 Rather, it
was an act solely in the interest of Eichholz. Furthermore, Eichholz did not
respond to the DOL investigators’ investigation with the care, skill or diligence of
a prudent plan fiduciary. By making false statements as to the plans’ assets,
Eichholz further abused his fiduciary duties to the plans’ participants and at the
same time “significantly facilitated” his obstruction of the DOL’s investigation
into his suspected plan mismanagement.
B. Double Counting
We also reject Eichholz’s claim that the abuse-of-trust enhancement is
impermissible double counting.4 Eichholz’s base offense level of 14 was derived
3
In applying the abuse-of-trust enhancement, the district court was permitted to consider all
relevant conduct related to the offense of conviction. See Barakat, 130 F.3d at 1455; see also
U.S.S.G. § 1B1.3(a) (authorizing the sentencing court to consider as relevant conduct all acts or
omissions by the defendant that occurred in preparation for, during the commission of, or in
attempting to avoid detection or responsibility for the offense of conviction). Thus, the district court
was not limited to Eichholz’s false statements about his ownership interest in Delta Building
Systems, but could also consider his false statements to DOL investigators about the purported loans
to individuals such as Cole, Hirsch and Crose and his attempt to close the plans once the
investigation began.
4
We ordinarily review de novo a claim of double counting. United States v. De La Cruz
Suarez, 601 F.3d 1202, 1220 (11th Cir.), cert. denied sub nom., Vazquez v. United States, 130 S. Ct.
16from U.S.S.G. § 2J1.2, which covers various offenses qualifying as a form of
obstruction of justice, not just those involving an abuse of a position of trust or the
breach of a fiduciary duty. See U.S.S.G. § 2J1.2 cmt. background (listing the
variety of offenses that constitute obstruction of justice covered by § 2J2.2). Thus,
Eichholz’s base offense level did not take into account Eichholz’s abuse of his
position of private trust vis-a-vis the plans’ participants. See United States v.
Bracciale, 374 F.3d 998, 1005, 1010 (11th Cir. 2004) (concluding that application
of the abuse-of-trust enhancement is not impermissible double counting where the
defendant’s base-offense-level guideline covers a wide variety of crimes and its
application is “not dependent on any abuse of trust or breach of fiduciary duty”).
We find no error, plain or otherwise, with regard to the double-counting issue.
For these reasons, the district court did not err in applying the two-level
abuse-of-trust enhancement in calculating Eichholz’s advisory guidelines range.5
We affirm Eichholz’s 21-month sentence.
3532 (2010). However, because Eichholz did not raise his double-counting argument in the district
court, our review is for plain error. See United States v. Neely, 979 F.2d 1522, 1523 (11th Cir. 1992)
(explaining that objections to a sentence raised for the first time on appeal are subject to the plain
error doctrine).
5
We reject Eichholz’s argument that the government breached the plea agreement by
defending the district court’s imposition of the abuse-of-trust enhancement on appeal. Eichholz’s
plea agreement required the government to recommend that the sentencing court “not apply” the
abuse-of-trust enhancement. Once the sentencing court imposed the enhancement over the
government’s recommendation, nothing in the plea agreement prohibited the government from
responding in opposition to Eichholz’s appeal.
17
AFFIRMED.
18