Opinion ID: 78019
Heading Depth: 2
Heading Rank: 5

Heading: Application of Offense Level Adjustments

Text: We apply a two-pronged standard to review claims that the district court erroneously applied sentencing guidelines adjustments. First, we review the factual findings underlying the district court's sentencing determination for clear error. United States v. Walker, 490 F.3d 1282, 1299 (11th Cir.2007). We then review the court's application of those facts to the guidelines de novo. Id. Although the sentencing guidelines are now advisory after the Supreme Court's decision in United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), district courts are still required to correctly calculate the appropriate advisory guidelines range. United States v. Livesay, 484 F.3d 1324, 1329 (11th Cir.2007) (per curiam). The ultimate sentence imposed by the district court is reviewed for reasonableness in light of the factors outlined in 18 U.S.C. § 3553(a). United States v. Scott, 426 F.3d 1324, 1328 (11th Cir.2005).
Williams argues that the district court erred in applying the two-level aggravating-role adjustment per U.S.S.G. § 3B1.1(c) because her husband's acquittal on all counts precludes any basis for finding that she was an organizer, leader, manager, or supervisor of one or more other participants. [9] The federal sentencing guidelines provide for an increase in the defendant's base offense level by two levels if the defendant was an organizer, leader, manager, or supervisor in any criminal activity other than described in [subsections] (a) or (b). U.S.S.G. § 3B1.1(c). [10] The commentary states that to qualify for an adjustment under § 3B1.1, the defendant must have been the organizer, leader, manager, or supervisor of one or more other participants. U.S.S.G. § 3B1.1, cmt. n.2. [11] Participant is defined as a person who is criminally responsible for the commission of the offense, but need not have been convicted. Id., cmt. n.1 (emphasis added). The district court would not have been precluded from applying the § 3B1.1 adjustment merely because Williams's husband was acquitted on all counts. [12] At sentencing, the court did not face the same burden of proof  beyond a reasonable doubt  that the jury faced at trial. The court could have applied the § 3B1.1 adjustment if it found by a preponderance of the evidence that Bunnis Williams was criminally responsible for the wire fraud scheme or federal funds theft and that Alma Williams exerted some degree of control, leadership or influence over him. See United States v. Ndiaye, 434 F.3d 1270, 1304 (11th Cir.), cert. denied, ___ U.S. ___, 127 S.Ct. 128, 166 L.Ed.2d 95 (2006). The relevant question, therefore, is whether Bunnis Williams was a participant, or someone criminally responsible for the commission of Williams's wire fraud and theft. The district court's application of § 3B1.1 to determine that a person is a participant is a question law that we review de novo, while we review the underlying factual findings for clear error. In applying the two-level upward adjustment under § 3B1.1(c), the district court considered, inter alia, Bunnis Williams's participation in the scheme. This record reveals, however, that Bunnis's role was de minimis and insufficient to justify a § 3B1.1(c) upward adjustment. At sentencing, the district court found that to accomplish her fraud, Williams directed the accounting entries to cover unauthorized expenses, which included travel expenditures and loan payments to Bunnis Williams. The court also found that Bunnis Williams would often take and use of ETA checks without the bookkeepers' knowledge and without justifying his expenses. Assuming, without deciding, that these factual findings are correct, they do not go so far as to establish, by a preponderance of the evidence, that Bunnis Williams was a criminally culpable participant in Williams's wire fraud or federal funds theft. A participant, as the guidelines defines the term, is a person who is criminally responsible for the commission of the offense. U.S.S.G. § 3B1.1, cmt. n.1. Bunnis's intent to defraud and steal is a requisite threshold question for determining his criminal responsibility. Because grant rules expressly permit commingling of funds in ETA's account and Bunnis Williams was the Chief Executive Officer of ETA, he could have taken funds from ETA's account, without intending to defraud the government or steal federal funds. Although these facts may amount to unethical conduct, they fall short of demonstrating by a preponderance of the evidence that Bunnis Williams was criminally responsible for his wife's wire fraud and federal funds theft. See United States v. Yates, 990 F.2d 1179, 1182 (11th Cir. 1993) (per curiam) (reviewing the guidelines commentary to § 3B1.1 and concluding that the district court's statement that the defendant was involved in an organization that was `otherwise extensive,' even if correct, was insufficient as a matter of law to justify an upward adjustment under § 3B1.1(a)). Because the evidence is insufficient as a matter of law to show that Williams was an organizer, leader, manager, or supervisor of one or more other participants in criminal activity, we conclude that the district court erred in applying the two-level aggravated-role adjustment under U.S.S.G. § 3B1.1(c).
Williams contends that the district court erred in applying the two-level abuse-of-trust adjustment to her base offense level, per U.S.S.G. § 3B1.3, because she did not occupy a position of public or private trust in relation to CNCS. The sentencing guidelines provide that the sentencing court may increase the defendant's base offense level by two levels if the court finds by a preponderance of the evidence that the defendant abused a position of public or private trust ... in a manner that significantly facilitated the commission or concealment of the offense. U.S.S.G. § 3B1.3. The application note accompanying § 3B1.3 defines position of public or private trust as a position ... 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. Sentencing and reviewing courts must determine whether a defendant occupied a position of trust that justifies the § 3B1.3 upward adjustment by assessing the defendant's relationship to the victim of the crime. United States v. Garrison, 133 F.3d 831, 837 (11th Cir.1998). Therefore, the abuse-of-trust adjustment `applies only where the defendant has abused discretionary authority entrusted to the defendant by the victim ....' Id. at 839 (quoting United States v. Jolly, 102 F.3d 46, 48 (2d Cir.1996)); see also United States v. Walker, 490 F.3d 1282, 1300 (11th Cir.2007). Additionally, we have explained that § 3B1.3 applies in the fraud context where the defendant is in a fiduciary, or other personal trust, relationship to the victim of the fraud, and `the defendant takes advantage of the relationship to perpetrate or conceal the offense.' Garrison, 133 F.3d at 838 (quoting United States v. Koehn, 74 F.3d 199, 201 (10th Cir.1996)). Where statutory reporting requirements are the only connection between the defendant and the government agency that is the victim, this connection is insufficient to show a fiduciary relationship necessary for a § 3B1.3 adjustment. In Garrison, we held that while the government may have been a victim in a Medicare fraud scheme, an abuse-of-trust adjustment was unjustified because the defendant did not occupy a sufficiently proximate position of trust relative to Medicare. Id. at 841. In so holding, we found that statutory reporting requirements do not create a position of trust relative to a victim of the crime. Id. We confirmed this finding in United States v. Mills, 138 F.3d 928 (11th Cir.1998), where we held that the defendants' sentences could not be upwardly adjusted under § 3B1.3 because lying to Medicare did not constitute any breach of public trust. 138 F.3d at 941. In summary, the abuse-of-trust adjustment under § 3B1.1 is justified where the defendant has abused a fiduciary relationship or discretionary authority entrusted by a victim of the crime. In addition to this fiduciary prerequisite to the abuse-of-trust adjustment, the guidelines specify that [t]his adjustment may not be employed if an abuse of trust ... is included in the base offense level or specific offense characteristic. U.S.S.G. § 3B1.3. This is particularly true where, as here, the underlying offense involves fraud because `there is a component of misplaced trust inherent in the concept of fraud[.]' Garrison, 133 F.3d at 838 (quoting United States v. Mullens, 65 F.3d 1560, 1567 (11th Cir.1995)). We have previously cautioned that a sentencing court must be careful not to be `overly broad' in imposing the enhancement for abuse of a position of trust or `the sentence of virtually every defendant who occupied a position of trust with anyone, victim or otherwise' would receive a section 3B1.1 enhancement. Id. (quoting United States v. Moored, 997 F.2d 139, 145 (6th Cir. 1993)). Thus, for the abuse-of-trust adjustment to apply in the fraud context, there must be a showing that the victim placed a special trust in the defendant beyond ordinary reliance on the defendant's integrity and honesty that underlies every fraud scenario. The district court found that CNCS, an independent federal agency, was the victim of Williams's wire fraud and federal funds theft. The record supports this finding, especially considering the amount of loss that CNCS suffered. The court determined that Williams occupied a position of trust vis-a-vis CNCS because as ETA's Executive Director, she maintained a position of managerial and professional discretion, had little or no supervision, and exercised a high level of authority over ETA employees. These facts, however, show that ETA, not CNCS, entrusted Williams with discretionary authority in the financial management of its funds. [13] As to CNCS, Williams did not have any discretion as to how federal funds were spent. Rather than permit Williams to use her independent judgment in making program expenditures and later charge them to CNCS in a reimbursement-type scenario, CNCS awarded grant funds only after reviewing and pre-approving a specific line-item budget. Williams's only obligation was to provide accurate progress status reports demonstrating that ETA spent grant funds in the manner required by CNCS. The record does not show that CNCS  the victim  entered into a fiduciary relationship with Williams and entrusted her with discretion in allocating the federal funds by awarding the grants to ETA. Nor did the district court find that CNCS placed a special trust in Williams above her obligation to adhere to the terms and conditions for the grants. The district court justified the § 3B1.3 adjustment because CNCS, by administering the grants, relies on the integrity and honesty of the grantees to use the funds appropriately and as outlined in the approved line item budget. Williams's abuse of this trust as to CNCS is already accounted for in the base offense level for her convictions of wire fraud and federal funds theft. The promise of veracity, often under penalty of perjury, underlies nearly every loan application, grant, or other financial transaction with the federal government. It could not have been intended that § 3B1.3 apply in every case where the defendant receives pecuniary gain by lying to the government. Because there is no evidence that CNCS entrusted Williams with discretionary authority or placed a special trust, akin to that of a fiduciary, in Williams, the district court erred in applying the abuse-of-trust adjustment based on Williams's relationship with CNCS. On remand, the district court shall re-calculate Williams's advisory Guidelines sentence without the § 3B1.3 adjustment.
The district court applied a two-level obstruction-of-justice adjustment to Williams's base offense level because Williams began to amend the accounting system to remove some of the unapproved expenditures after learning of the allegations and the pending investigation. Williams argues that she bore no fraudulent intent when she ordered the reallocation of expenses in Quickbooks, and that she was only correcting her prior misunderstanding of how program expenditures should be classified under government regulations. We reject Williams's argument. Section § 3C1.1 provides for an upward adjustment by two levels if the defendant willfully obstructed or impeded, or attempted to obstruct or impede, the administration of justice with respect to the investigation, prosecution or sentencing of the instant offense of conviction.... U.S.S.G. § 3C1.1. An example of such obstructive conduct is producing or attempting to produce a false, altered, or counterfeit document or record during an official investigation or official proceeding. U.S.S.G. § 3C1.1, cmt. n.4. Notwithstanding Williams's assertion of good faith, there is sufficient evidence in the record to support the district court's finding that she did in fact direct the bookkeepers to alter the ETA's accounting records to conceal the unapproved expenditure of federal funds. The district court's finding was not clearly erroneous, and we affirm the district court's application of the § 3C1.1 adjustment.