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.

Loyd McCord is the president and sole shareholder of McCord, Inc., an

interstate trucking company. A United States Department of Transportation (“DOT”)

investigation revealed that McCord, Inc., employees had been systematically falsifying

truck driver duty status forms (“driver logs”) to conceal non-compliance with DOT

hours-of-service regulations. McCord and the company pleaded guilty to violating 18
The HONORABLE JIMM LARRY HENDREN, United States District Judge 1

for the Western District of Arkansas.

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U.S.C. § 1001, which prohibits the making of materially false statements in matters

within the jurisdiction of federal departments and agencies. They appeal their

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 offenses 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 eighthour break, more than sixty hours per week, more than seventy hours in an eight-day

period, or after having been on duty fifteen 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 status” for each twenty-four-hour period, detailing

on a prescribed form their time spent driving, resting in the vehicle’s sleeper berth, onduty but not driving, and off duty. See 49 C.F.R. § 395.8(b). 

Advised that McCord, Inc., was falsifying driver logs, DOT investigators

discovered that the company hired others to fill out logs for the drivers, and that logs

systematically 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 fact a single driver had done all the driving. Sixteen hundred McCord, Inc., logs

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 informations charging violations of 18 U.S.C. § 1001. The district

court withheld approval of the plea agreements until Presentence Investigation Reports

were available. The government persuaded the probation office to recommend

§ 2F1.1(b)(4)(A) enhancements, which increased defendants’ base offense levels from
On appeal, McCord and the company argue the district court abused its

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 district court at sentencing. As defendants elected not to withdraw their guilty

pleas, there is no specific performance that would affect their sentences. 

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eight to thirteen. McCord and the company argued this was a breach of the plea

agreements. At sentencing, the district court found the agreements ambiguous on this

issue and rejected them, giving defendants an opportunity to withdraw their guilty

pleas. McCord, acting for himself and the company, adhered to the guilty pleas, and

the court proceeded with the sentencing hearing. After hearing evidence and

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argument, the district court imposed § 2F1.1(b)(4)(A) enhancements. The court

sentenced McCord to twelve months in prison and two years supervised release. It

imposed a fine of $15,000 on McCord and a $100,000 fine on the company, to be

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

addition, § 2(b) of that Act instructed the Sentencing Commission to promulgate

guidelines “for appropriate penalty enhancements, where conscious or reckless risk of

serious personal injury resulting from the fraud has occurred.” In response, the

Commission amended § 2F1.1, which establishes base offense levels for fraud offenses.

As amended, § 2F1.1(a) provides that the base offense level is 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 serious

bodily injury . . . increase by 2 levels. If the resulting offense level is less

than level 13, increase to level 13.
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§ 2F1.1(b)(4)(A). Rather than limit this amendment to procurement frauds, the subject

of the Major Fraud Act of 1988, the Commission concluded that the enhancement

“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 court

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, relying on the Major Fraud Act’s legislative history, McCord and the

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 within the Commission’s general Guidelines authority, and nothing in the

Major Fraud Act or its legislative history suggests an intent to limit the Commission to

an enhancement for procurement 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 as

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 penalties authorized in the more specific

Motor Carrier Safety Act. See 49 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 prosecute under

§ 1001 even if the Motor Carrier Safety Act provided another basis for prosecuting the

same conduct. See United States v. Batchelder, 442 U.S. 114, 123-24 (1979); United

States v. Oliver, 908 F.2d 260, 264 (8th Cir. 1990).
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Having rejected McCord’s threshold legal arguments, we come to 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

at sentencing consisted of the testimony of a DOT Special Agent who assisted in the

investigation. She testified that 1600 driver logs falsely concealed hours-of-service

violations. She also provided foundation for the admission of a 1990 National

Transportation Safety Board nationwide study of the effects of alcohol, drugs, fatigue,

and medical factors on 182 truck accidents in which the driver was killed. This study

concluded that driver fatigue was a factor in thirty-one percent of the accidents, that

nineteen percent of the drivers had been driving hours in excess of those permitted by

the DOT regulations, and that accident rates increase as drivers go beyond eight hours

of continuous driving. The government argued to the district court, and asserts on

appeal, that this evidence provided an adequate factual basis to impose the

§ 2F1.1(b)(4)(A) enhancements. We disagree. 

The enhancement applies when fraud involves “conscious or reckless risk of

serious bodily injury.” The normal 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.”

Farmer v. Brennan, 114 S. Ct. 1970, 1979 (1994). In an unrelated part of the

Guidelines, the Sentencing Commission adopted the criminal law meaning of the term

reckless in explaining its involuntary manslaughter Guideline:

“Reckless” refers 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 that risk constituted a gross deviation from the standard

of care that a reasonable person would exercise in such a situation.

USSG § 2A1.4, comment. (n.1). We conclude that the Commission intended this

meaning in § 2F1.1(b)(4)(A) as well. Therefore, the government must prove not only
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that the fraudulent conduct created a risk of serious bodily injury, but also that each

defendant was in fact aware of and consciously or recklessly disregarded that risk. 

 Some fraudulent schemes include such obvious risks of serious bodily injury that

the criminal recklessness of their perpetrators will be self-evident, such as the

defendant who intentionally caused car accidents as part of the insurance fraud in

United States v. Hoffman, 9 F.3d 49 (8th Cir. 1993), cert. denied, 114 S. Ct. 1320

(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. 965

(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 training

required by the Federal Mine Safety and Health Act, and the court affirmed application

of the enhancement because of “the myriad of safety problems experienced over the

years at [defendants’ mine], the general danger of underground mining, and the

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 motivated in part

by safety concerns, the limitations in the current DOT regulations have been in effect

for many decades. The government has not explained their specific relation to fatigue

and safe motor vehicle operation. Therefore, particularized proof of a defendant’s

knowledge of a safety risk created by particular recordkeeping violations is necessary

to prove criminal recklessness. The government’s proof at sentencing fell far short of

establishing such recklessness by Loyd McCord. In her direct testimony, the

government’s witness did not explain what specific hours-of-service violations had

been uncovered and how they relate to motor carrier safety. She did not explain

McCord’s role in the falsification of driver logs (the enhancement may not be based

solely upon strict liability for the corporate owner or chief executive officer). And she

did not refute McCord, Inc.’s, excellent safety record during the period in question.
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For these reasons, if the record ended with the government’s case-in-chief at

sentencing, we would reverse the imposition of a § 2F1.1(b)(4)(A) enhancement on

Loyd McCord. But 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 many hours that he checked

himself into 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 questionable

reliability because DOT stopped investigating once the plea agreements were

negotiated, and because the government offered no supporting driver testimony, the

district court was entitled to give it some weight. 

Second, defendants presented testimony by a transportation consultant hired to

implement a compliance program after the violations were uncovered. This witness

testified that when he began the program he encountered strong resistance to hours-ofservice compliance from the company’s drivers and dispatchers. This testimony

suggests that the violations here at issue reflected a pervasive corporate environment

in which safety concerns were of low priority.

Finally, and in our view most significantly, the district court questioned Loyd

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 driver practice had continued,

knowing it was wrong, and failing to end the practice when he could have done so. He

also knew the company hired others to complete the false driver logs, a violation of the

regulation requiring drivers to maintain their logs personally.
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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 while

fatigued, the specific evidence of particular McCord, Inc., drivers driving while

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 unlawful

practices, we conclude that the district court did not clearly err in finding that the

offenses to which McCord and the company pleaded guilty involved a conscious or

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.