United States v. Reid

UNPUBLISHED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Affirmed by unpublished per curiam opinion.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Unpublished opinions are not binding precedent in this circuit.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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