Opinion ID: 2998005
Heading Depth: 3
Heading Rank: 2

Heading: Sentence Enhancement for Abuse of Position of

Text: Trust The Sentencing Guidelines provide for a two-level enhancement if the defendant “abused a position of public or private trust, or used a special skill, in a manner that significantly facilitated the commission or concealment of the offense.” United States v. Gould, 983 F.2d 92, 94 (7th Cir. 1993); see also U.S.S.G. § 3B1.3. The district court applied this enhancement because it found that Baldwin held himself out to be a legitimate investment broker and that 3 In supplemental briefing to this court, the parties debated the effect on Baldwin’s sentence of United States v. Booker, 125 S. Ct. 738 (2005). Baldwin did not raise a Booker-type argument in the district court and therefore plain-error review would apply. United States v. Paladino, 401 F.3d 471, 481 (7th Cir. 2005). Had there been no basis to disturb Baldwin’s sentence for other reasons, we would have remanded the case to the district court for a statement on whether under the now-advisory Sentencing Guidelines the court would have imposed a lesser sentence. Id. at 483-84. But Baldwin must be resentenced because his original sentence exceeded the statutory maximum and the district court’s correction of the erroneous sentence came too late. Upon resentencing, of course, the district court will be operating under the new sentencing regime in which the Sentencing Guidelines are advisory. Booker, 125 S. Ct. at 765. 12 No. 03-3721 he represented the prime bank lending “program” as a legitimate and safe investment vehicle. Whether Baldwin occupied a position of trust is a question of fact that we review for clear error. United States v. Boyle, 10 F.3d 485, 489 (7th Cir. 1993); see also United States v. Beith, 407 F.3d 881, 891 (7th Cir. 2005) (factual findings under Sentencing Guidelines continue to be reviewed for clear error after United States v. Booker, 125 S. Ct. 738 (2005)). However, the interpretation of the term “position of trust” is a legal question that we determine without deference to the district court. Boyle, 10 F.3d at 489. In determining whether the defendant abused a position of trust, we analyze the circumstances from the perspective of the victim. United States v. Hathcoat, 30 F.3d 913, 919 (7th Cir. 1994) (citing United States v. Hill, 915 F.2d 502, 506 n.3 (9th Cir. 1990)). In addition, “the sentencing court must look beyond formal labels to the relationship between the victim and the defendant and the responsibility entrusted by the victim to the defendant.” United States v. Davuluri, 239 F.3d 902, 908 (7th Cir. 2001). Baldwin contends that applying the enhancement under the facts of this case is tantamount to applying it to every case of fraud because fraud by definition involves an abuse of the victim’s trust. Baldwin cites the commentary to § 3B1.3, which indicates that the enhancement may only be applied when the defendant abuses a position of public or private trust “characterized by professional or managerial discretion (i.e., substantial discretionary judgment that is ordinarily given considerable deference).” U.S.S.G. § 3B1.3, cmt. n.1. Baldwin argues that he was not a member of any professional organization and the joint venture agreements conferred no discretion on him regarding how Piscopo’s “investments” were to be handled. He says he was only empowered to “move Piscopo’s money from A to B and back again with interest, nothing more.” No. 03-3721 13 The government defends the application of the enhancement by citing a different section of the commentary which provides that the § 3B1.3 enhancement is warranted in cases where the defendant “provides sufficient indicia to the victim that the defendant legitimately holds a position of private or public trust when, in fact, the defendant does not.” U.S.S.G. § 3B1.3, cmt. n.2. As an example of such false pretenses, the commentary cites the case of a defendant who “perpetrates a financial fraud by leading an investor to believe the defendant is a legitimate investment broker.” Id. The government argues that Baldwin held himself out to Piscopo as a legitimate investment broker and that the district so found in sentencing him. In the district court’s findings and conclusions issued in connection with the judgment of conviction, the court never explicitly found that Baldwin held himself out as a “broker,” although the court did enter this finding at the sentencing hearing. In her written decision after trial, the judge found that Baldwin offered Piscopo his “personal guarantee” that the investments were risk free and that Piscopo agreed to invest the money because of his faith in a 20-year friendship with Baldwin and his belief that Baldwin was honest. The question before us is whether Baldwin’s exploitation of his long-standing personal relationship with Piscopo put him in a “position of trust” upon which the sentence enhancement may be based. We hold that it does. In United States v. Dorsey, 27 F.3d 285, 289 (7th Cir. 1994), we reversed the imposition of an abuse of trust enhancement because the defendant’s relationship with his victim was “a standard commercial agreement between a lending institution, a bank and an automobile dealership.” Dorsey, the owner of an automobile dealership, defrauded the bank that supplied the “floor plan” loan financing for his stock by concealing from the bank the sale of some cars. We held that “to impose a sentence enhancement for abuse of a position of trust, there must be something more than a 14 No. 03-3721 mere contractual relationship between the parties.” Id. Baldwin tries to bring himself within this holding in Dorsey by emphasizing the limited nature of the joint venture agreements signed by Baldwin. The agreements, he argues, were “mere contracts” akin to those in Dorsey. But Baldwin’s relationship with Piscopo went far beyond the joint venture agreements. There is no question that Baldwin succeeded in defrauding Piscopo by making reassuring representations and a “personal guarantee” that specifically traded on the two men’s long-standing personal relationship. Under the terms of the guideline, a sentence enhancement is warranted for abuses of public or private trust. Abuse of a purely personal relationship of trust in furtherance of a fraudulent scheme is a legitimate ground for imposition of the enhancement. See United States v. Strang, 80 F.3d 1214, 1220 (7th Cir. 1996) (affirming application of abuse of trust enhancement where defendant, although not a licensed investment broker, convinced victims to invest in a fraudulent scheme by befriending them). More fundamentally, Baldwin is wrong that the application of the enhancement here would effectively extend the enhancement to all frauds. It is true that all frauds involve deceit, but they may or may not involve the abuse of a position of trust. Application of the enhancement turns not on whether the scheme involved deceit, but whether the defendant exploited a particular sort of relationship with the victim. In Davuluri we observed that the consistent emphasis in our § 3B1.3 cases has been on the victim’s conferral of substantial discretion on the defendant to act on his or her behalf. Davuluri, 239 F.3d at 909 (citing United States v. Hernandez, 231 F.3d 1087, 1091 (7th Cir. 2000)); see also United States v. Gellene, 182 F.3d 578, 596 (7th Cir. 1999); United States v. Hoogenboom, 209 F.3d 665, 671 (7th Cir. 2000). In this sense, the joint venture agreements cited by Baldwin undermine his position on appeal. The agreements (actually, the addenda setting forth the structure of No. 03-3721 15 the investment “programs”) give the Daric Corporation—controlled by Baldwin—complete control over the management of Piscopo’s “investment.” One term of the agreement, in fact, forbids Piscopo from initiating any contact with the financial institutions that would be involved in the “program.” By the terms of these agreements and based upon the long-standing personal relationship of trust between the two men, Piscopo conferred upon Baldwin total control over a large amount of his money. The district court did not err in applying the two-level enhancement for abuse of a position of trust.