Opinion ID: 78019
Heading Depth: 3
Heading Rank: 2

Heading: Abuse of Position of Trust Adjustment

Text: 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.