1994 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

5-25-1994

United States of America v. Pardo

Precedential or Non-Precedential:

Docket 93-5104

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1 

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT 

 

No. 93-5104 

 

UNITED STATES OF AMERICA 

v. 

JUAN PARDO, 

 Appellant

 

Appeal from the United States District Court 

for the District of New Jersey 

(D.C. Crim. No. 92-00235-1) 

 

Argued January 19, 1994 

Before: SLOVITER, Chief Judge, SCIRICA and 

LEWIS, Circuit Judges

(Filed May 25, 1994) 

 

Barbara M. Donovan (Argued) 

 Assistant Federal Public Defender 

Office of Federal Public Defender 

Newark, NJ 07102 

 Counsel for Appellant 

Michael Chertoff 

 United States Attorney 

Edna B. Axelrod 

Eric L. Muller (Argued) 

 Assistant United States Attorneys 

Office of United States Attorney 

Newark, NJ 07102 

 Counsel for Appellee 
2 

OPINION OF THE COURT

SLOVITER, Chief Judge. 

 Appellant Juan Pardo challenges on four grounds his 

sentence imposed after a guilty plea to single counts of bank and 

wire fraud and a count of failure to appear. Two grounds are set 

forth in his counselled brief, and two others appear in a 

supplemental pro se filing. Although we reject most of Pardo's 

arguments, we agree that the district court misapplied United 

States Sentencing Guideline §3B1.3 when it determined that 

Pardo's friendship with a bank manager constituted a position of 

trust that facilitated his defrauding the bank. See United 

States Sentencing Commission, Guidelines Manual, §3B1.3 (1993) 

[hereinafter USSG]. We will therefore vacate the judgment of 

sentence and remand for resentencing. 

I. 

FACTS AND PROCEDURAL HISTORY

 There is no dispute about the relevant facts in this 

case. Juan Pardo engaged in a classic check kiting scheme in 

which he defrauded First Fidelity Bank out of more than $51,000, 

in violation of 18 U.S.C. § 1344 (Supp. IV 1992) (bank fraud) and 

18 U.S.C. § 2 (1988), and defrauded numerous clients in excess of 

$204,000 by collecting loan application and processing fees for 

loans that they never received, in violation of 18 U.S.C. § 1343 

(Supp. IV 1992) (wire fraud) and 18 U.S.C. § 2 (1988). Shortly 

after his initial arraignment, Pardo fled to Canada where he 

remained for several weeks, and thus failed to appear in 

violation of 18 U.S.C. §§ 3146(a) and 2 (1988). 
3 

A. The Check Kiting Scheme

 Shortly before the incident which was the subject of 

the bank fraud charge in this indictment, Pardo engaged in 

another check-kiting scheme at the Guttenberg, New Jersey, branch 

of First Fidelity Bank which caused First Fidelity a loss of 

$7,324.39. Although it was never reimbursed for this loss, First 

Fidelity declined to prosecute Pardo. The bank, however, did 

report Pardo's illegal conduct to Chex Systems as a security 

measure. 

 On October 1, 1991, notwithstanding his earlier fraud 

on First Fidelity, Pardo opened an account at the Ridgefield Park 

branch of First Fidelity under the name of SJF Funding 

Corporation, the same corporation he used in the earlier fraud. 

The usual bank practice required a background check, which would 

have revealed Pardo's prior fraud on First Federal itself, but 

that routine was not followed by Brigit Schumann, the branch 

manager, who had been a personal friend of Pardo's wife for ten 

years and was a bridesmaid at the Pardos' wedding. The record is 

silent as to whether Pardo said anything to induce Schumann's 

failure to take precautions, or whether she was just negligent. 

 Between October 4 and October 15, 1991, Pardo deposited 

five checks into the First Fidelity account totalling $232,000 

which had been drawn on accounts Pardo had at other banks, and 

which were uncollectible. Nonetheless, almost immediately after 

depositing these checks, Pardo began to write checks against 

those deposits on his First Fidelity account, and by October 23, 

1991, he had withdrawn a total of $76,771.86. When Schumann 
4 

became aware of Pardo's conduct and confronted his wife, she 

received assurances that Pardo would reimburse the bank for the 

fraudulently obtained funds. Later, Frank Amato, an associate of 

Pardo, wired $25,000 back to the bank. First Fidelity received 

no additional reimbursement and its total loss due to this second 

check kiting scheme is $51,771.86. 

B. The Loan Fraud Scheme

 In the Spring of 1991, Pardo became the North American 

representative of Siam Commercial Finance S.A., a company based 

in Bangkok, Thailand. His function was to locate customers 

seeking loans from several hundred thousand to several million 

dollars, and he received in excess of $204,000 as loan 

application fees, servicing fees and pre-commitment fees from at 

least fourteen individual and corporate clients. Neither he nor 

SJF Funding successfully placed a single loan with Siam through 

at least March 1992, the month before he was indicted. Although 

Pardo later claimed he was unaware of Siam's fraudulent 

activities, he did not deny that he altered checks that he 

received in these transactions nor that he deposited them in his 

personal account. 

C. Failure to Appear

 Following his arrest, Pardo was released on bail. 

Thereafter, the government sought his detention because it had 

learned of other activities by Pardo and was seeking a 

superseding indictment concerning additional charges of bank and 

wire fraud. On Friday, May 8, 1992, the district court ordered a 

second hearing to be held on the following Monday, May 11, 1992. 
5 

Pardo fled to Canada over that intervening weekend. He was 

arrested on June 22, 1992, the date that the trial on the 

original charges was to begin, when he tried to reenter the 

United States near Richford, Vermont. 

 On September 30, 1992, Pardo pled guilty to Counts 2 

(bank fraud), 16 (wire fraud) and 47 (failure to appear) of the 

indictment pursuant to a plea agreement reached with the 

government. On February 8, 1993, the district court sentenced 

Pardo. The court determined that Pardo's total offense level was 

18, based in part on its application of a two-level decrease for 

acceptance of responsibility (USSG §3E1.1) and a two-level 

increase for abuse of a position of trust (USSG §3B1.3). The 

court calculated Pardo's criminal history level as II, based in 

part on his conviction on a disorderly persons charge in state 

court for which he had not yet been sentenced. The court then 

sentenced Pardo to 37 months imprisonment (31 months on Counts 2 

and 16, followed by a consecutive six-month term on Count 47) and 

to four years of supervised release, and ordered him to pay 

$39,135.93 in restitution and $150 in special assessments. Pardo 

filed a timely appeal on February 16, 1993. Pardo moved and was 

given permission to file a pro se supplemental brief. We have 

jurisdiction pursuant to 18 U.S.C. § 3742(a) (1988) and 28 U.S.C. 

§ 1291 (1988). 

II. 

DISCUSSION

 We first consider Pardo's claim that the district court 

misapplied Sentencing Guideline §3B1.3. That section, which 
6 

authorizes a two-level enhancement for abuse of a position of 

trust, provides: 

If the defendant abused a position of public 

or private trust . . . in a manner that 

significantly facilitated the commission or 

concealment of the offense, increase by 2

levels. 

USSG §3B1.3. The only commentary relating to the abuse of a 

position of trust enhancement appears in Application Note 1. For 

the period relevant here, the Application Note was quite terse. 

It provided merely that: 

The position of trust must have contributed in some 

substantial way to facilitating the crime and not 

merely have provided an opportunity that could as 

easily have been afforded to other persons. This 

adjustment, for example, would not apply to an 

embezzlement by an ordinary bank teller. 

USSG §3B1.3, comment. (n.1) (1992). 

 On November 1, 1993, an amendment to the Application 

Note became effective. To the extent that the new Commentary 

sheds any light on the nature of the relationships to which 

§3B1.3 applies, we note that it refers exclusively to employment 

or professional relationships, such as embezzlement by guardians, 

bank executives, bank tellers, and attorneys, and sexual abuse of 

patients by physicians. 

 The classic cases in this circuit in which we found 

abuse of a position of trust fall within these categories. See

United States v. Craddock, 993 F.2d 338 (3d Cir. 1993) 

(enhancement for abuse of position of trust applicable to teller 

of financial institution who processed Western Union money orders 

knowing they were based on fraudulent credit card transactions); 
7 

United States v. Brann, 990 F.2d 98 (3d Cir. 1993) (enhancement 

applied to narcotics agent who embezzled government-provided 

funds by engaging in phony drug transactions and pocketing the 

money); United States v. Lieberman, 971 F.2d 989, 992-94 (3d Cir. 

1992) (reversing failure to enhance for bank vice president); 

United States v. Georgiadis, 933 F.2d 1219, 1225 (3d Cir. 1991), 

(affirming district court's application of enhancement to 

assistant bank president who diverted funds to own account); 

United States v. McMillen, 917 F.2d 773, 775-76 (3d Cir. 1990) 

(branch manager operating a position of trust). 

 Nonetheless, we are unwilling to draw a bright line 

limiting the abuse of trust increase to the employment 

relationship. Neither the Guideline itself nor the Application 

Note that follows expressly limits its application to employment 

positions. In fact, other courts of appeals have found positions 

of trust outside the traditional employment context.1 In United 

States v. Ledesma, 979 F.2d 816, 822 (11th Cir. 1992), the Court 

of Appeals affirmed the two level increase imposed on a defendant 

who had her young adult daughter bag cocaine and relay drugrelated telephone messages. The court reasoned that an 

enhancement under §3B1.3 was appropriate because Ledesma, as 

 

1In one case in this court, United States v. Astorri, 923 F.2d 

1052, 1061 (3d Cir. 1991), although the district court did not 

address an enhancement based on abuse of a position of trust, and 

we did not require that it do so, one judge, in a dissent, 

suggested that §3B1.3 would apply to a broker who defrauded his 

fiancee's parents out of their life savings. The majority found 

enhancement on another basis. 
8 

mother, held a position of trust which she abused when she 

involved her daughter in the drug conspiracy. 

 In United States v. Zamarripa, 905 F.2d 337 (10th Cir. 

1990), defendant, a friend of the family of an eight year-old 

girl whom he sexually abused while serving as her babysitter, was 

given a two-level enhancement. The Court of Appeals concluded 

that Zamarripa's position as babysitter was one of trust, which 

he had abused to facilitate his crime, and that therefore 

enhancement of his sentence in accordance with §3B1.3 was 

appropriate. See also United States v. Ellis, 935 F.2d 385, 395 

n.9 (1st Cir.) (district court found abuse of a position of trust 

by defendant's sexual abuse of young daughter of his common law 

wife), cert. denied, 112 S. Ct. 201 (1991). We approvingly cited 

Zamarripa in Craddock, 993 F.2d at 343 n.7. 

 Accordingly, we are not prepared to hold that the abuse 

of a position of trust enhancement under §3B1.3 was not 

applicable to Pardo on the ground that he was not employed by the 

bank.2 Instead we look to the essence of the meaning of a 

position of trust. 

 In determining the defining characteristics of a 

position of trust, we begin by considering the rationale for the 

 

2Pardo argues that the enhancement is not applicable to him 

because he does not fit into the language used in United States 

v. Hickman, 991 F.2d 1110, 1112 (3d Cir. 1993), where we stated 

that "[t]o abuse a position of trust, a defendant must, by 

definition, have taken criminal advantage of a trust relationship 

between himself and his victim." The government argues that the 

bank manager was the victim. Although we find this somewhat 

tenuous, we need not decide the application of Hickman in light 

of our disposition on other grounds. 
9 

two-level enhancement. This court has noted that "[t]he 

rationale for increased punishment is that an insider who takes 

advantage of a position of trust to facilitate a crime is thought 

to be more culpable than one who simply commits the offense." 

Craddock, 993 F.2d at 340 (emphasis added). This factor was 

subsequently clarified in the 1993 amendment to Application Note 

1, which now provides in part: 

"Public or private trust" refers to a position of 

public or private trust characterized by professional 

or managerial discretion (i.e., substantial 

discretionary judgment that is ordinarily given 

considerable deference). Persons holding such 

positions ordinarily are subject to significantly less 

supervision than employees whose responsibilities are 

primarily non-discretionary in nature. 

USSG §3B1.3, comment. (n.1) (emphasis added).3

 More concretely, this court repeatedly has recognized 

that, "'the primary trait that distinguishes a person in a 

position of trust from one who is not is the extent to which the 

position provides the freedom to commit a difficult-to-detect 

wrong.'" United States v. Lieberman, 971 F.2d 989 (3d Cir. 1992) 

(emphasis added) (quoting United States v Hill, 915 F.2d 502, 506 

(9th Cir. 1990)); see also Craddock, 993 F.2d at 341 (quoting 

this language); Brann, 990 F.2d at 103 (same). 

 Another factor that the case law identifies as relevant 

in finding a position of trust is the authority given to 

 

3 Craddock distinguished the conduct of an insider from an abuse 

of "an opportunity that could as easily have been afforded to 

other persons." Craddock, 993 F.2d at 340 (quoting USSG §3B1.3, 

comment. (n.1)). Although the latter phrase was deleted from 

Application Note 1 of §3B1.3 in the 1993 amendment, other 

language added in that amendment underlined above makes it clear 

that the distinction made in Craddock is still applicable. 
10 

defendant by the position which provides the wherewithal to 

commit the wrongful act. See, e.g., United States v. Lamb, 6 

F.3d 415, 421 (7th Cir. 1993) ("a position of trust is 

characterized by access or authority over valuable things") 

(quotations omitted). In McMillen, a branch manager of a savings 

and loan association approved fraudulent loans to himself, 

created a false savings certificate to serve as collateral for 

the loans, and opened a checking account in a fictitious name. 

See McMillen, 917 F.2d at 774. We held that because he had the 

authority to perform all of those acts without any supervision, 

he occupied a position of trust. See id. at 776. Later, in 

Lieberman, we emphasized the fact that the defendant bank manager 

was solely responsible for balancing the account from which he 

embezzled. See Lieberman, 971 F.2d at 993. 

 Similarly, in Brann where the defendant Narcotics 

Strike Force agent embezzled $18,000, we noted that the 

defendant's position enabled him to obtain $9,000 on two separate 

occasions, based solely on his assertion that he had set up drug 

buys. See Brann, 990 F.2d at 103. Although Brann did not hold a 

high level managerial post, we were swayed by the fact that his 

position entailed sufficient authority to allow him to embezzle 

in this respect. See id.

 Finally, in Craddock, a teller participated in a 

conspiracy to defraud his employer by permitting his accomplices 

to provide false identification in connection with bogus credit 

card transactions via Western Union. Although Craddock was a low 

level employee, he had authority to verify the identity of the 
11 

persons to whom he was making payouts. We held that the "key 

point . . . is . . . whether Craddock . . . exploited the 

authority provided by his position," Craddock, 993 F.2d at 343, 

and because he did we upheld the enhancement for abuse of a 

position of trust. The characteristics of a position of trust 

defined in Craddock are as applicable outside of the employment 

context as well as in: 

the standard for tellers, as for clerks, mechanics, and 

all other defendants, is (1) whether the authority 

conferred and the absence of controls indicate that the 

employer relied on the integrity of the defendant to 

protect against the loss occasioned by the crime; and 

(2) whether the trust aspect of the job made the 

commission or concealment of the crime significantly 

easier. 

Id. at 343. 

 Culling these principles from our cases, it follows 

that in considering whether a position constitutes a position of 

trust for purposes of §3B1.3, a court must consider: (1) whether 

the position allows the defendant to commit a difficult-to-detect 

wrong; (2) the degree of authority which the position vests in 

defendant vis-a-vis the object of the wrongful act; and (3) 

whether there has been reliance on the integrity of the person 

occupying the position. These factors should be considered in 

light of the guiding rationale of the section--to punish 

"insiders" who abuse their positions rather than those who take 

advantage of an available opportunity. 

 By applying these factors to the facts of this case, it 

is evident that Pardo did not occupy a position of trust. First, 

Pardo's "position" as a friend of the bank manager did not give 
12 

him the ability to commit a difficult-to-detect wrong. There 

would have been nothing difficult to detect had the routine 

precautions been taken. His friendship with the bank manager did 

not make her or the bank peculiarly vulnerable, as did the 

positions of mother, babysitter or stepfather in Ledesma, 

Zamarripa, and Ellis respectively. At most, Pardo's position as 

a friend allowed him the opportunity to commit an easily 

detectible wrong. Our cases and the Application Note counsel 

that this is simply not sufficient to warrant enhancement. 

 Even more clearly lacking in Pardo's case is the 

requisite degree of authority over the object of his wrong. 

Unlike the defendants in every other case considered in this 

circuit, or those involving non-employment situations cited by 

the government, Pardo had no authority over anyone or anything 

necessary to the commission of his crimes. 

 Thus, although Schumann may have relied on Pardo's 

integrity, he was not placed by the bank in any position that 

gave him the wherewithal to commit the fraud. He was in a far 

lesser position than the defendant in United States v. Kosth, 943 

F.2d 798 (7th Cir. 1991), who submitted fraudulent credit card 

slips through the bank at which he obtained a merchant account. 

The Court of Appeals overturned the two point enhancement, 

stating that there was no special element of private trust 

involved, even though there was an element of reliance present. 

Id. at 800. 
13 

 Because Pardo's position as Schumann's friend was not a 

position of trust within the meaning of §3B1.3,4 we will remand 

to the district court for resentencing. 

 Next, we turn to Pardo's remaining claims of error. In 

his counselled brief, Pardo argues that he should have been 

granted a three level, rather than a two level, reduction for 

acceptance of responsibility. Because the district court is 

particularly well situated to evaluate the defendant's acceptance 

of responsibility, its determination in this regard may be 

reversed only if it is clearly erroneous. See United States v. 

Singh, 923 F.2d 1039, 1042-43 (3d Cir. 1991). 

 Section 3E1.1 of the Guidelines provides for a two 

level reduction "[i]f the defendant clearly demonstrates 

acceptance of responsibility for his offense." In addition, 

subsection (b) authorizes an additional one level reduction where 

the offense level is 16 or greater, and: 

the defendant has assisted authorities in the 

investigation or prosecution of his own misconduct by 

taking one or more of the following steps: 

(1) timely providing complete information to the 

government concerning his own involvement in the 

offense; or 

(2) timely notifying authorities of his intention to 

enter a plea of guilty, thereby permitting the 

government to avoid preparing for trial and 

permitting the court to allocate its resources 

efficiently. 

 

4In light of our decision on this issue, we need not consider 

whether there was sufficient evidence to support the second prong 

of §3B1.3, i.e., whether defendant's abuse of the position of 

trust "significantly facilitated the commission or concealment of 

the offense." USSG §3B1.3. 
14 

USSG §3E1.1(b). 

 The district court rejected Pardo's arguments that he 

was entitled to the three level reduction, finding that the 

information he provided regarding the fraudulent activities of 

Siam was incomplete. Moreover, the district court, concluded 

that Pardo's plea was not timely, finding that his "plea came 

after a long period of flight, during which the government was 

put to a continuing investigation of defendant's many criminal 

schemes." App. at 91. These factual findings find ample support 

in the Presentence Report, and we cannot say they are clearly 

erroneous. Thus, we will affirm this portion of Pardo's 

sentence. 

 Next, Pardo raises two additional claims in his 

supplemental pro se filing. First, he contends that the district 

court's method of calculating his total offense level under the 

Sentencing Guidelines resulted in "double counting" of his 

failure to appear. Because the appellant did not object to the 

enhancement in the Presentence Report, at the Sentencing Hearing 

or in any other manner in the district court, we review the 

district court's decision for plain error. See Fed. R. Crim. P. 

52(b); United States v. Olano, 113 S. Ct. 1770, 1778-79 (1993). 

 Under the Sentencing Guidelines: 

[I]n the case of a conviction on both the underlying 

offense and the failure to appear, the failure to 

appear is treated under §3C1.1 (Obstructing or Impeding 

the Administration of Justice) as an obstruction of the 

underlying offense; and the failure to appear count and 

the count(s) for the underlying offenses are grouped 

together under §3D1.2(c). 
15 

USSG §2J1.6, comment. (n.3). Thus, the court arrives at a total 

punishment level, based on the underlying charge(s) and the 

obstruction charge. The district court followed the Guidelines 

precisely when it added two levels for obstruction of justice to 

the total offense level for the two fraud counts (Counts 2 and 

16). 

 Because 18 U.S.C. § 3146(b)(2)(1988) requires that any 

sentence imposed for obstruction be imposed consecutive to any 

other sentence, the court must separate out the portion of the 

total sentence corresponding to obstruction. The Application 

Notes to §2J1.6 contemplate the very situation posed here: 

For example, where the combined applicable guideline 

range for both counts is 30-37 months and the court 

determines a "total punishment" of 36 months is 

appropriate, a sentence of thirty months for the 

underlying offense plus a consecutive six months 

sentence for the failure to appear count would satisfy 

these requirements. 

USSG §2J1.6, comment. (n.3). Here, the court determined that the 

appropriate sentence for the defendant was 37 months, the maximum 

sentence in the range (31-37 months) based on its determination 

of his criminal history and base offense levels. The court then 

sentenced the defendant to 31 months on Counts 2 and 16, and six 

months on Count 47 (failure to appear). This sentence in no way 

involves double counting, and there was no error. 

 Pardo's final argument is that his criminal history 

level for Count 2 should have been I instead of II. However, 

Pardo's sentence for Count 2 was imposed concurrently with his 

sentence on Count 16. In this case, his sentence under Counts 16 
16 

and 47 would be identical even if his criminal history for Count 

2 were I instead of II.5 We decline to consider his challenge to 

his sentence under Count 2 under this circumstance.6

III. 

CONCLUSION

 For the foregoing reasons, we will vacate the judgment 

of sentence of the district court because of the two point 

increase for an abuse of position of trust under USSG §3B1.3, and 

will remand to the district court for resentencing consistent 

with this opinion. In all other respects, the judgment will be 

affirmed. 

 

5Based on the total amount of loss caused by Pardo's wire fraud 

(in excess of $200,000), his more than minimal planning activity, 

his acceptance of responsibility and his obstruction of justice, 

his base offense level for the wire fraud would have been the 

same as it was for the bank and wire fraud together. Thus, based 

on the offense level for Count 16, and a criminal history of II 

for that count (which Pardo does not challenge), his sentence 

would not have been different even if count 2 were excluded. In 

any event, under the Guideline concept of grouping, the offenses 

would be treated together, rather than separately, as Pardo 

argues. 

6In Ray v. United States, 481 U.S. 736, 737 (1987) (per curiam), 

the Supreme Court held that where a special assessment was 

imposed on three separate counts, they could not be considered 

concurrent sentences. Ray is inapplicable here because Pardo 

would still be subject to the separate special $50 assessment on 

each count. We have, when appropriate, applied the concurrent 

sentence doctrine after Ray. See United States v. American 

Investors of Pittsburgh, Inc., 879 F.2d 1087, 1100 (3d Cir. 1987) 

(opting not to consider claims of individual defendants whose 

sentences were concurrent and involved no detrimental effects).