2008 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 1-8-2008 

# U SA v . H arley P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 05-5086

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2008

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. It h as be e n a c c ept e d for inclusion in 2008 D e c i sion s b y an author i z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. F or mor e inform at ion, p le as e c ont a ct Be n j amin . C arl s on@l a

w . vi ll anova . e du . Re c omme nde d C it at ion " U SA v . H arley " (2008). 2008 D e cisio n s . P ape r 1791. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2008/1791NOT P RE CE DE NT I AL I N TH E UN I TED STATES CO UR T OF A PP EALS

F O R T H E T H IR D C IR C U IT

______________ N o: 05- 5086

______________ UNI TE D ST ATE S OF AM ERI CA

v. M I CH AE L K. HAR L E Y, A ppel l ant

_______________ O n A p p ea l from the U n it ed S tat es D istri ct C o u rt f o r th e M id d le D istric t o f P e n n sy lv a n ia ( D . C . N o. 05- cr - 00192) D i s t r i ctJ udge: H onor abl e Sy l vi a H . R ambo

_______________ Subm i t t ed U nderT hi r d C i r cui tL A R 34. 1( a)

J anuary7, 2008 B e f o re : F U E N T E S a n d J O R D A N , C i r cui tJudges a n d O ’N E IL L * , D is tr i ct Judge. ( Fi l ed : J anuary8, 2008)

_______________ OPI NI ON O F THE COURT

_______________ J O R D A N , C i r cui tJudge .

_______________ *H onor abl e Thom as N . O ’ N ei l l , J r . , D i s t r i ctC our tJ udge forthe East ern D i s t r i ctof Penns y l vani a, s i t t i ng bydes i gnat i on.2

O n t hi s appea l fr om t he s ent ence he r ece i ved af t erbei ng convi ct ed of w i r e fr aud, M i chae l K . H ar l eycont ends t hatt he D i s t r i ctC our terr ed i n i t s appl i cat i on of the U ni t ed S t a t e s S e n t e n c i n g Gu i d e l i n e s . F i n d i n g n o e r r o r , we wi l l a f f i r m. Backg r ound B eca us e w e w r i t e s ol el yforthe part i es ’ benef i t , w e as s um e fa m i l i ar i t yw i t h t he cas e and di s cus s onl yt hos e fa ct s nece s s aryt o ourdeci s i on. H ar l eys erved fors ever al y ear s i n the ac count i ng depart m entof V oi t h Si emens H y dr o Pow erG ener at i on, I nc. ( “V oi th”) . I n 1998, fol l ow i ng a pr om ot i on t o G ener al A ccount i ng M anage r , he w as gi ven author i tyt o i ni t i at e and a ppr ove w i r e tr ans fer s , t o dr aw funds fr om V oi t h’ s chec ki ng acc ount , and t o r econc i l e mont hl ybank s t at ement s . Shor t l ybefor e thatpr om ot i on, and w i th i ncr eas i ng fr equenc yaft eri t , H ar l eyus ed hi s pos i t i on t o embezzl e. H e l efthi s j ob w i th V oi th ear l yi n 2004. B yA ugus t , the companyhad di s cover ed ac count i ng i rr egul ar i t i es and had be gun t o i nves t i gat e H ar l ey ’ s tr ans act i ons overthe y ear s . T he i n v e s t i g a t i o n r e v e a l e d t h a tH a r l e y h a d s t o l e n m o r e th a n $ 5 . 3 m i l l i o n f r o m th e c o m p a n y. O n J une 30, 2005, H ar l eyw ai ved i ndi ctm entand pl ed gui l t yt o an i nform at i on char gi ng hi m w i t h comm i t t i ng w i r e fr aud i n vi ol at i on of 18 U . S. C . § 1343. H e w as s ent ence d t o s i xt y - t hr ee mont hs i m pr i s onm ent , thr ee y ear s of s upervi s ed r el eas e, no fi ne, and r es t i tut i on of nea r l y$3 m i l l i on.T h e D is tr ic t C o u rt h a d ju ri s d ic tio n o v e r t h is c a s e p u rs u a n t to 1 8 U .S .C . § 3 2 3 1 . 1 W e have j ur i s di ct i on underbot h 28 U . S. C . § 1291 and 18 U . S. C . § 3742( a) . W e l ook for c le a r e rr o r w h e n re v ie w in g th e D is tr ic t C o u rt ’s f a c tu a l f in d in g s re la te d to s e n te n c in g . U ni t ed Stat es v. G r i er , 4 7 5 F . 3 d 5 5 6 , 5 7 0 (3d C ir . 2 0 0 7 ) ( en banc ) . O urr evi ew of the D is tr ic t C o u rt ’s in te rp re ta tio n o f th e S e n te n c in g G u id e lin e s is p le n a ry. I d. “W e r evi ew the D i s tr i ctC our t ' s appl i cat i on of the G ui del i nes t o fac t s for abus e of di s cr et i on. ” U ni t ed Stat es v. Tupone , 442 F. 3d 145, 149 ( 3d C i r . 2006) . A nd w e al s o r evi ew forabus e of di s cr et i on t he det erm i nat i on of the appr opr i at e s ent ence ; w e w i l l notdi s turb a s ent ence thatcan be char act er i zed a s “r eas onabl e. ” See G al lv. U ni t ed Stat es , 2007 W L 4292116, a t * 6 (U .S ., D e c . 1 0 , 2 0 0 7 ) (“ [ A ]p p e llate re v iew o f se n ten c in g d e c isio n s is lim ited to d e te rm in in g w h e th e r t h e ya re ‘r e a s o n a b le .’ O u r e x p la n a tio n o f ‘r e a s o n a b le n e s s ’ r e v ie w ... m ad e it. . . clea r th at th e f am il iar ab u se-o f-d iscreti o n stan d ard o f re v iew n o w ap p li es .. . . ”).

3 D i s cus s i on H arleym ak es f

o u r arg u m en ts on ap p ea l. F ir st, h e a sserts th at th e D istri ct C o u rt ’s 1 deci s i on t o appl ya tw o- poi nti ncr eas e t o hi s offe ns e l evel forus e of a s ophi s t i cat ed sc h e m e is e rro r. T h e o n lyb a sis H a rle yp ro v id e s f o r th a t as se rtio n is th a t h e w a s o n ly us i ng s t andar d acc ount i ng t ool s and t echni ques . W e thi nk he gi ves hi m s el f and other acc ount ant s t oo l i t t l e cr edi t . A ccount ant s have the bene fi tof s peci al i zed know l edge, and the embezzl ements cheme H ar l eyempl oy ed r equi r ed s peci al i zed, s ophi s t i cat ed know l edge t o engi neerand exe cut e. I ti nvol ved notonl ythe theftof the moneybutthe c o n tin u in g n e e d to c o n c e a l th e th e f ts . C f. U. S . S . G. , § 2 B1 . 1 , Ap p l i c a t i o n No t e 8 ( B) ( “C onducts uch as hi di ng as s et s ort r ans act i ons , orboth, thr ough t he us e of f i ct i t i ous ent i t i es , corpor at e s hel l s , oroffs hor e fi nanci al acc ount s . . . or di nar i l yi ndi cat es soph i st i cat ed m eans. ”). T hat the sche m e w as ul t i m at el ydetect ed m akes i tno l ess s ophi s t i cat ed and no l es s w or t hyof the dubi ous honorof a tw o- poi nti ncr eas e i n t he4

offe ns e l evel . T he D i s t r i ctC our t ’ s concl us i on t o t hateff ectw as notan abus e of di s cr et i on. Second, H ar l eyar gues t hatt he D i s t r i ctC our terr ed i n appl y i ng anothertw o- poi nt offe ns e l evel i ncr eas e bas ed on hi s havi ng abus ed a pos i t i on of trus t . I n par t i cul ar , he c o n ten d s th a t th e a b u se -o f -tru st a sp e c t o f

h is c rim e , to th e e x ten t th e re is a n ysu c h a sp e c t, i s al r eadyacc ount ed fori n the G ui del i ne s et t i ng hi s bas e off ens e l evel . G i ven the r ecor d, th is a rg u m e n t is p a rticu lar lystra in e d . T h e sp e c if ic G u id e lin e s p ro v isio n u se d to c a lcu late th e b a se o f

f e n se lev e l w a s § 2 B 1 .1 , w h ich a p p lies to a ll m a n n e r o f th e f t, fra u d , an d d e c e it, i ncl udi ng w i r e fr aud, t he off ens e forw hi ch H ar l eyw as convi ct ed. I ti s s i m pl ynotthe cas e thatal l fr aud i nvol ves a br eac h of trus t , though thi s fr aud mostcert ai nl ydi d. H ar l ey gai ned hi s empl oy er ’ s t rus tand, havi ng at t ai ned the pow ert o i ni t i at e funds tr ans fer s on his ow n, he ab used thatt rustt o li ne h i s pock et s. T he D i stri ctC ou rt ’s decis i on t o im po se th e tw o -p o in t ab u se -o f

-tru st e n h a n c e m e n t ca lled f o r b yG u id e lin e § 3 B 1 .3 is f u lly ju s tif ie d . C f. U . S. S. G . , § 3B 1. 3, A ppl i cat i on N ot e 1 ( “Thi s adj us t m ent , forexampl e, ap p li es in the c ase o f .. . a b an k ex ec u ti v e' s fra u d u lent loan sch em e .. . . ”). H ar l ey ’ s fi nal t w o ar gum ent s ar e thatthe D i s t r i ctC our terr ed i n r efus i ng t o gr ant h im a d o w n w a rd d e p a rtu re f o r e x c e p tio n a l ac c e p tan c e o f re sp o n sib ili tya n d th a t h is s e n te n c e o f

s ix ty-th re e m o n th s in c a rc e ra tio n is u n re a s o n a b le u n d e r 1 8 U .S .C . § 3 5 5 3 (a ). A s to th e f

o rm e r a rg u m e n t, th e D istric t C o u rt’s d isc re tio n a ryd e c isio n is n o t su b jec t to re v ie w . U

ni t ed Stat es v. C ooper , 4 3 7 F . 3 d 3 2 4 , 3 3 3 ( 3 d Ci r . 2 0 0 6 ) ( d e c l i n i n g t o r e v i e w a5

d istric t co u rt' s d e c isio n to d e n yd e p a rtu re ). A s to th e latte r a rg u m e n t, w e c o n c lu d e th a t, part i cul ar l yundert he br oad di s cr et i on aff or ded t o di s t r i ctcour t s i n s ent enci ng, the s e n te n c e im p o s e d w a s re a s o n a b le . S e e G a ll , 2007 W L 4292116, at*8 ( “The se nt enci ng jud g e is i n a su p erior p o sit ion [to an ap p ell ate c o u rt ] t o fin d fa cts an d jud g e the irim p o rt u n d er § 3 5 5 3 (a) in the ind ividu al ca se.” (interna l qu o tat ion m ark s an d cit ati o n o m itted)). C oncl usi on A ccor di ngl y , w e w i l l aff i r m the j udgm entof s ent ence .