The HONORABLE RICHARD H. KYLE, United States District Judge for the * District of Minnesota, sitting by designation. United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 97-3192 No. 97-3193

___________ United States of America, *
* Plaintiff - Appellee, *
* Appeals from the United States
v. * District Court for the
* Western District of Arkansas. McCord, Inc.; Loyd E. McCord, *
* Defendants - Appellants. *

___________ Submitted: January 13, 1998 Filed: May 7, 1998

___________ Before LOKEN and MURPHY, Circuit Judges, and KYLE, District Judge. *

___________ LOKEN, Circuit Judge.

Lo ydMcCord is the president and sole shareholder of McCord, Inc., a n interstate trucking compan y. A United States Department of Transportation (“DOT”) investigation revealed that McCord, Inc., employ ees had been systematically falsifying tru ck driver duty status forms (“driver logs”) to conceal non-compliance with DO T hours-of-service regulation s. McCord and the company pleaded guilty to violating 18The HONORAB LE JIMM LARRY HENDREN, United States District Judge 1 for the Western District of Arkansas.
-2- U.S.C. § 1001, which prohibits the making of materially false statements in matter s wit hin the jurisdiction of federal departments and agencies. They appeal thei r sentences. The principal issue is whether the district court erred in applying the five- 1 level sentencing enhancement in USSG § 2F1.1(b)(4)(A) for fraud offe nses that involve “the conscious or reckless risk of serious bodily injury.” We affirm.
DOT regulations impose hours-of-service limitations on truck drivers. Regulated motor carriers may not permit their drivers to drive more than ten hours after an eighth o ur break, more than sixty hours per week, more than seventy hours in an eight-day period, or after having been on dutyfifteen hours. See 49 C.F.R. § 395.3. To enforce these limitations, the regulations further provide that commercial motor carriers must require drivers to record their “duty statu s” for each twenty-four-hour period, detailing on a prescribed form their time spent drivin g, resting in the vehicle’s sleeper berth, onduty but not driving, and off duty. See 49 C.F.R. § 395.8(b).

Advise d that McCord, Inc., was falsifying driver logs, DOT investigator s discovered that the company hired others to fill out logs for the drivers, and that logs syste matically reflected the presence of a second or “ghost” driver on long trips , creating the false impression that two drivers had taken turns driving and sleeping when in fac t a single driver had done all the driving. Sixteen hundred McCord, Inc., log s were found to contain such falsehoods. These prosecutions followed.
Pursuant to written plea

agreements, McCord and the company agreed to plead guilty to one-count information s charging violations of 18 U.S.C. § 1001. The district court withheld approval of the plea agreements u ntil Presentence Investigation Reports

were available. The government persuaded the probation office to recommen d § 2F1.1(b)(4)(A) enhancements, which in creased defendants’ base offense levels fromOn appeal, McCord and the company argue the district court abused it s 2 discretion in rejecting the plea agreements and urge us to compel specific performance. However, the agreements expressly preserved the government’s right to “make all facts known to the probation office and to the court.” Moreover, the agreements did not bind the distr ict court at sentencing. As defendants elected not to withdraw their guilt y pleas, there is no specific performance that would affect their sentences.
-3- eight to t hirteen. McCord and the company argued this was a breach of the ple a agreements. At sentencing, the district court found the agreements ambiguous on this is sue and rejected them, giving defendants an opportunity to withdraw their guilt y pleas. McCord, acting for himself and the company, adhered to the guilty pleas, and the court proceeded with the sentencing hearing. After hearing evidence an d 2 argument, the district court imposed § 2F1.1(b)(4)(A) enhancements. The cour t sentenc ed McCord to twelve months in prison and two years supervised release. I t impose d a fine of $15,000 on McCord and a $100,000 fine on the company, to b e offset by payment of McCord’s individual fine.

The § 2F1.1(b)(4)(A) Issue.
The Major Fraud Act of 1988 enacted 18 U.S.C. § 1031, which prohibits major procurement fraud against the United States . Pub. L. No. 100-700, 102 Stat. 4631. In add ition, § 2(b) of that Act instructed the Sentencing Commission to promulgat e guidelines “for appropriate pena lty enhancements, where conscious or reckless risk of seriou s personal injury resulting from the fraud has occurred.” In response, th e Commission amended § 2F1.1, which establishes base offense levels for fr aud offenses. As amended, § 2F1.1(a) provides that the base offense level i s six, and § 2F1.1(b) adds enhancements for specific offense characteristics, which now include:

(4) If the offense involved (A) the conscious or reckless risk of seriou s bodily injury . . . increase by 2 levels. If the resulting offense level is less than level 13, increase to level 13.-4-

§ 2F1.1(b)(4)(A). Rather than limit this amendme nt to procurement frauds, the subject of the Major Fraud Act of 1988, the Commission concluded that the enhancemen t “should apply to all fraud cases involving a conscious or reckless risk of serious bodily injury.” USSG App. C, Amend. 156. Applying this enhancement, the district cour t determined that the base

offense level for both McCord and McCord, Inc., is thirteen. On appeal, defendants argue that the enhancement does not apply to their offenses for a number of reasons.

First, rel ying on the Major Fraud Act’s legislative history, McCord and th e company argue that § 2F1.1(b)(4)(A) is limited to convictions for procurement fraud violations of 18 U.S.C. § 1031. We disagree. The Sentencing Commission concluded that a risk-of-serious-bodily-injury enhancement is appropriate for all fraud offenses. This is well w ithin the Commission’s general Guidelines authority, and nothing in the Major Fraud Act or its legislative historysuggests an intent to limit the Commission to an enhancement for procureme nt fraud. See S. Rep. No. 100-503 (1988), reprinted in 1988 U.S.C. C.A.N. 5969. Therefore, we are bound to apply the enhancement a s written, which encompasses fraud convictions under 18 U.S.C. § 1001 as well as 18 U.S.C. § 1031. See generally Stinson v. United States , 508 U.S. 36, 42 (1993).
Second, McCord and the company argue that a sentence under 18 U.S .C. § 1001 for their offenses may not exceed the criminal p enalties authorized in the more specific Motor Carrier Safety Act. See49 U.S.C. § 521(b)(6). However, 18 U.S. C. § 1001 has no maximum sentence, and there is nothing in 49 U.S.C § 521 suggesting an intent to repeal or supersede 18 U.S.C. § 1001. Therefore, the government may p rosecute under § 1001 even if the Motor Carrier Safety Act prov ided another basis for prosecuting the same conduct. See United Sta tes v. Batchelder , 442 U.S. 114, 123-24 (1979); United States v. Oliver , 908 F.2d 260, 264 (8th Cir. 1990).-5-

Having rejected McCord’s threshold legal arguments, we come t o the main issue on appeal, whether the government proved by a preponderance of the evidence that the § 2F1.1(b)(4)(A) enhancement applies to these offenses. The government’s evidence atsentencing consisted of the testimony of a DOT Special Agent who assisted in the in vestigation. She testified that 1600 driver logs falsely concealed hours-of-servic e viola tions. She also provided foundation for the admission of a 1990 Nationa l Transportation Safety Board nati onwide study of the effects of alcohol, drugs, fatigue, and medical factors on 182 truck accidents in which the driver was killed. This study conclu ded that driver fatigue was a factor in thirty-one percent of the accidents, tha t nineteen percent of the drivers had been driving hours in excess of those permitted by the DOT regulations, and that accide nt rates increase as drivers go beyond eight hours of continu ous driving. The government argued to the district court, and asserts o n appeal, that this evidence provided an adequate factual basis to impose th e § 2F1.1(b)(4)(A) enhancements. We disagree.

The enhan cement applies when fraud involves “conscious or reckless risk o f serious bodily injury.” The norm al meaning of reckless in the criminal law (unlike the civil law) is that the defendant disregarded “a risk of harm of which he is aware. ” Farm er v. Brennan , 114 S. Ct. 1970, 1979 (1994). In an unrelated part of th e Guidelines, the Sentencing Commission adopted the criminal law meaning of the term reckless in explaining its involuntary manslaughter Guideline:

“Reckless” re fers to a situation in which the defendant was aware of the risk created by his conduct and the risk was of such a nature and degree that to disregard t

hat risk constituted a gross deviation from the standard of care that a reasonable person would exercise in such a situation.

US SG § 2A1.4, comment. (n.1). We conclude that the Commission intended thi s meaning in § 2F 1.1(b)(4)(A) as well. Therefore, the government must prove not only-6-

that the frau dulent conduct created a risk of serious bodily injury, but also that eac h defendant was in fact aware of and consciously or recklessly disregarded that risk.
Some fraudulent schemes include such obvious risks of serious bodily injur y that the crimi nal recklessness of their perpetrators will be self-evident, such as th e defend ant who intentionally caused car accidents as part of the insurance fraud i n United States v. Hoffman , 9 F.3d 49 (8th Cir. 1993), cert. denied , 114 S. Ct. 132 0 (1994), or the doctor who performed unnecessary surgery as part of the Medicaid fraud in United States v. Laughlin , 26 F.3d 1523 (10th Cir.), cert. denied , 513 U.S. 96 5 (1994). But for most frauds, risk of serious bodily injury is less direct or less obvious. In those cases, the § 2F1.1(b)(4)(A) enhancement requires evidence of risk related to the particular defendant, as there was in United States v. Turner , 102 F.3d 1350, 1359 (4th Cir. 1996), where defendants falsely certified that miners had received trainin g required by the Federal Mine Safety and Health Act, an d the court affirmed application of th e enhancement because of “the myriad of safety problems experienced over th e years at [defendants’ mine], the general danger of underground mining, and th e potential risks that could arise as a result of having untrained miners in that setting.”
In this case, while hours-of-service regulations are undoubtedly m otivated in part by safe ty concerns, the limitations in the current DOT regulations have been in effect for many decades. The gov ernment has not explained their specific relation to fatigue andsafe motor vehicle operation. Therefore, particularized proof of a defendant’ s knowledge of a safety r

isk created by particular recordkeeping violations is necessary to prove criminal reck

lessness. The government’s proof at sentencing fell far short of establishi ng such recklessness by Loyd McCord. In her direct testimony, th e governm ent’s witness did not explain what specific hours-of-service violations ha d been uncovered and how they relate to motor carrier safety. She did not explai n McCord’ s role in the falsification of driver logs (the enhancement may not be base d solely upon strict liability for the c orporate owner or chief executive officer). And she did not refute McCord, Inc.’s, excellent safety record during the period in question.-7-

For these reasons, if the record ended with the government’s case-in-chief a t sentenci ng, we would reverse the imposition of a § 2F1.1(b)(4)(A) enhancement o n Loyd McCord. Bu t the record consists of much more than the direct testimony of the DOT Special Agent and the 1990 NTSB study. First , on cross exam, the DOT Special Agent testified that one driver log reported a driver and a ghost driver who drove 1528 miles in thirty hours; a single driver averaging sixty-five miles per hour would get less than seven hours sleep during that trip. The agent further testified that she interviewed a driver who said he was once so fatigued from driving too manyhours that he checked himself i nto a hospital, and a former driver who said that he quit driving for McCord, Inc., because he “was run too hard.” While this hearsay may be of questionabl e reliability because DOT stopped investigating once the plea agreements wer e negotia ted, and because the government offered no supporting driver testimony, th e district court was entitled to give it some weight.

Second, defend ants presented testimony by a transportation consultant hired to implement

a compliance program after the violations were uncovered. This witnes s testified that when he began the program he encountered strong resistance to hours-ofservice compliance from the company’s drivers and dispatchers. This testimon y suggests that the violations here at issue reflected a pervasive corporate environment in which safety concerns were of low priority.

Fina lly, and in our view most significantly, the district court questioned Loy d McCord at length before ruling on this issue. McCord -- an experienced truck driver -- admitted that his company was found guilty of previous hours-of-service violations in 1988 and again in 1994. He admitted knowing the ghost dri ver practice had continued, knowing it was wrong, and failing to end the practice w hen he could have done so. He also knew the company hired others to complete the fa lse driver logs, a violation of the regulation requiring drivers to maintain their logs personally.-8-

We review a district court’s factual findings at sentencing for clear error. See United States v. Wells , 127 F.3d 739, 744-45 (8th Cir. 1997). Given the large number of violations, the general risks to drivers and others of driving large trucks whil e fa tigued, the specific evidence of particular McCord, Inc., drivers driving whil e seriously fatigued, and Loyd McCord’s admissions that he was aware of repeated , systematic hours-of-service violations and chose not to put an end to these unlawfu l pr actices, we conclude that the district court did not clearly err in finding that th e offens es to which McCord and the company pleaded guilty involved a conscious o r reckless risk of serious bodily harm.
The judgments of the district court are affirmed.
A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.