UNPUBLISHED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Affirmed by unpublished per curiam opinion.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Unpublished opinions are not binding precedent in this circuit.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

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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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
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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