Opinion ID: 714054
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: 3 Far from being a dry, dull example of white-collar crime, this case tells the story of how the defendant, James P. Hickok, exploited a business associate, Robert DeWitt, for his own personal gain. It is the story of how DeWitt and Hickok, through a pattern of conduct nearly a year in duration, looted and defrauded the United States Cellular Corporation (USC or the company), a provider of cellular telephone services headquartered in Chicago, Illinois. 4 In August of 1990, DeWitt, then twenty-seven years old, assumed the position of market manager for USC in Casa Grande, Arizona and the surrounding area. In this capacity, he had substantial responsibility for the company's regional operations and was subordinate only to a handful of top executives within the company. One of DeWitt's first decisions as market manager was to hire the appellant, Hickok, fifty-one years of age, as a salesman, with a base salary of $1,000 a month, plus commissions and other benefits. Hickok's job required him to sign up as many customers as possible for the cellular telephone services provided by USC. 1 At the time of his hiring, Hickok was provided with a copy of the company's Code of Conduct, and required to acknowledge that he had read and understood the document. The Code of Conduct prohibited, among other things, the unauthorized sale of company equipment or any misuse or waste [of] Company property, such as by using it or permitting others to use it for personal gain or some other unethical or unlawful purpose. 5 After a little more than a year of working successfully as a USC salesman, Hickok encountered difficulty meeting his monthly sales quotas and found himself on the verge of being terminated by the company. 2 DeWitt averted Hickok's firing by approaching his superiors at USC and suggesting that Hickok be allowed to continue to work with the company as an independent sales agent, rather than as a salaried employee. Under this proposed arrangement, which USC approved, Hickok would no longer work directly for the company; instead, he would sell the services of USC on the company's behalf and receive a commission for each new customer he signed up or activated. Hickok agreed to this arrangement and resigned from USC in November of 1991, going into business shortly thereafter as Central Arizona Cellular (CAC). DeWitt permitted Hickok to use spare office space at USC for the new venture. 6 In January of 1992, DeWitt approached Hickok and told him that he was experiencing personal financial problems. According to DeWitt, Hickok responded by saying I have a solution for your problem. Hickok's solution was to pay $1,000 to DeWitt personally if DeWitt would take certain used cellular telephones and equipment belonging to USC and transfer them to Hickok. This equipment (which, according to DeWitt's testimony, was worth approximately $1,800) consisted of demonstration models, trade-ins, and other used or slightly damaged equipment that was not carefully inventoried by USC. Obtaining this equipment cheaply had two advantages for Hickok: first, he could sell the equipment at a profit, and second, he could obtain commissions from USC for activating new customers who purchased the equipment. DeWitt agreed to the exchange proposed by Hickok, and brought the equipment to him at CAC. The defendant gave DeWitt an envelope, which DeWitt later discovered contained $1,100 in cash. When DeWitt questioned Hickok about the extra $100, Hickok replied: Well, go ahead and keep it; I'm sure there will be used phones in the future. DeWitt replied Yes, you're right. Indeed, this was not the last time that Hickok would take advantage of DeWitt's financial difficulties and his position with USC to obtain equipment and other benefits (e.g., sales commissions) to which he was not entitled. Just a few weeks later, DeWitt transferred a second, smaller quantity of used equipment to Hickok, again receiving cash in exchange. 7 In March 1992, USC offered DeWitt a transfer to the company's office in Logansport, Indiana and a raise in annual salary of $10,000. This posed a problem for DeWitt because his departure might lead to the discovery of a $9,800 inventory shortfall in Casa Grande. DeWitt testified that this shortfall was caused by poor bookkeeping, mismanagement, and unrecorded give-aways of equipment (to charity or to USC customers) and that the problem was largely unrelated to his dealings with Hickok. DeWitt also testified that it would have been difficult for him to come clean about these inventory matters because he had been filing false inventory reports with his superiors at USC in order to cover up the sloppy bookkeeping and inventory control in his office. When DeWitt discussed the situation with Hickok in mid-April, Hickok (according to DeWitt) stated That's not your problem, that's our problem. Hickok then immediately asked about the possibility of securing an agent contract in the Logansport, Indiana region, similar to the one he obtained in Arizona after leaving the employ of USC. DeWitt told him that the prospects of arranging such a contract were very good. The meeting ended with Hickok pledging to make efforts to borrow or somehow obtain the $9,800 on DeWitt's behalf. In the next several weeks, according to DeWitt, he and Hickok had a couple of more conversations in which DeWitt made it clear that he desperately needed to receive a payment from [Hickok/CAC] showing the sale on paper to CAC for the approximately $9,800 worth of [unaccounted for] equipment. 8 Although he had not yet resolved the shortfall problem, DeWitt accepted his employer's offer of promotion and transfer in April of 1992. He assumed responsibility for the Logansport office immediately, but remained in Arizona until mid-July, travelling to and from Indiana as necessary (sometimes accompanying Hickok, who was scouting the area in anticipation of being awarded an agent's contract). In early May, Hickok was granted an agent contract for the Logansport area under the name Central Indiana Cellular (CIC). By the end of June, Hickok had not yet obtained the money he promised DeWitt, so DeWitt, still working out of the office in Casa Grande, figured out a way to make a paper transfer of the problematic shortfall from the Casa Grande office to the Logansport office. In effect, he managed to take the problem with him and thus buy time during which Hickok could acquire the needed funds. 9 While still in Arizona, DeWitt fell $800 behind on his personal utility bill and incurred a $4,000 debt to an Arizona travel agency for business air travel (instead of using his travel re-imbursement checks from USC to pay the travel agency, DeWitt had used the checks for other purposes). DeWitt asked Hickok for help with these personal debts, and Hickok obliged by providing him with money for the utility bill and the unpaid travel expenses. 10 In mid-July, DeWitt moved to Logansport. Shortly thereafter, Hickok was at last able to receive a loan to cover DeWitt's $9,800 shortfall. 3 After Hickok obtained the funds, he complied with DeWitt's wishes and issued a check in the amount of $9,800, representing payment for the purported sale of used USC telephone equipment to CIC. 11 Now that DeWitt really owed him one, the defendant began to take full advantage of DeWitt's position at USC. Hickok used his influence over DeWitt in a variety of ways, but the basic pattern was always the same: whenever Hickok asked DeWitt for special favors or concessions, he would first remind DeWitt that he was re-paying the loan that he incurred on DeWitt's behalf, or mention that he had just given DeWitt money to help him with his personal debts. 12 The first special favor sought by Hickok was the ability to obtain telephones, batteries, and accessories from the USC office in Logansport on an open invoice (i.e., on credit). DeWitt testified that while this was definitely against company policy, he granted the request because he felt obligated to Hickok for getting him out of the hole. Hickok claimed to be short on funds and promised to pay for the equipment when he received his Fall commissions from USC. Obviously, as Hickok repeatedly took advantage of his arrangement with DeWitt between approximately May and December 1992, the amount he owed USC continued to increase. DeWitt discussed the situation with Hickok, who said that he would pay for the equipment when his commissions for the Fall period came through. According to DeWitt and one of his employees, Kim Emery (a customer service representative in the Logansport office), DeWitt eventually instructed his employees to give Hickok whatever he wanted from inventory without even recording it. Hickok's office manager, Jodie Oldham, also testified that we [CIC employees] were taking their inventory basically, and that USC employees resented this because they would have fewer phones to sell themselves. 13 DeWitt also ignored Hickok's staggering cellular telephone service bills. Hickok (CIC) was a USC customer as well as one of its sales agents, and he was therefore obligated to pay USC for telecommunications services provided, just as he was obligated to pay other utility bills such as gas, water, electric, etc. Nevertheless, Hickok treated free cellular phone service as a perk, allowing the bills to accumulate and specifically instructing his office manager, Jodie Oldham, not to pay them. DeWitt, for his part, overlooked the past due amounts on Hickok's account, even though USC customarily disconnected customers who were more than 45 days overdue (30 days for customers who were also sales agents). DeWitt instructed Emery not to send out overdue notices or take steps to disconnect Hickok. When Emery advised her boss that Hickok's unpaid phone bills had reached $7,000, DeWitt informed Hickok that these charges were under scrutiny and that he would have to disconnect Hickok if he continued not paying his phone bills. Hickok responded that he needed the telephone service for his business and DeWitt dropped the subject. As DeWitt testified, he was hardly in a position to play hardball like [he] would have [been] with any other [sales] agent because of his indebtedness to Hickok for past favors. When Emery, on her own, attempted to arrange the disconnection of Hickok's telephone service, DeWitt intervened, ordering her to reconnect Hickok and ordering that she never take such action again. 14 The trial testimony of DeWitt, Emery, and Oldham also established that Hickok used his relationship with DeWitt to obtain sales commissions to which he was not entitled. DeWitt had an incentive for Hickok to do well with commissions, so that he could begin paying for all the equipment he was obtaining on credit. Consequently, DeWitt unilaterally (and without authorization from his superiors at USC) raised the amounts of some of Hickok's commissions from $300 to $400 or $500, approved the payment of commissions that Hickok had not earned (including duplicate commissions), and allowed Hickok to sign up or activate new customers without running the necessary credit check or obtaining the required security deposit. Additionally, Hickok was not charged back on commissions when customers canceled their cellular service within a short period of time. 4 Kim Emery, one of DeWitt's employees in the Logansport office, testified that there were always discrepancies between her records pertaining to commissions and the reports submitted by Hickok and CIC: Any time I sat down to figure a [commission] report, it would undoubtedly come to the point where Jim [Hickok] and his associates [at CIC] would have more on their commission reports than what I would show. Emery testified that after a while, calling such discrepancies to DeWitt's attention became pointless and that from that time on, she simply accepted the figures Hickok provided. On one occasion, while DeWitt was on vacation, Hickok angrily demanded to be paid a commission for a customer who had not yet been activated. Emery recalled complying with this request reluctantly because it so clearly contradicted company policy. 15 Emery also testified that on another occasion, in October or November, she, Hickok and DeWitt were in the office together when Hickok looked at DeWitt and said You think we should let Kim know what's going on? Emery further testified that her response to this statement was I don't think I want to know. The details surrounding this exchange are not entirely clear, but Emery testified that she and the other USC employees knew that something was wrong and were aware that DeWitt was in trouble. Emery testified that Hickok's statement confirmed all the suspicions that [she] had. 16 Jodie Oldham, the office manager at Hickok's company (CIC), also testified concerning the favoritism extended by DeWitt to Hickok and CIC. She recalled that Hickok's explanation for this special treatment was that Bobby [DeWitt] owed him some money or owed him, and ... the pay back [was] ... that we were getting inventory. 17 In early to mid November, as DeWitt recalls, the defendant approached him about purchasing some USC promotional coupons or certificates that offered 100 minutes of free cellular service to new customers. DeWitt was not authorized to sell these coupons to sales agents, much less to profit personally from a transaction of this nature, to the detriment of his employer. Nevertheless, he accepted Hickok's offer of $1,000 for a quantity of 100 coupons and pocketed the money himself. At Hickok's suggestion, DeWitt also provided copies of internal USC customer files detailing potential sales leads. These files were normally restricted to insiders at USC (i.e., salaried employees) and not provided to independent sales agents, who were expected to develop and pursue leads on their own. Although no money changed hands as part of this transaction, DeWitt testified that he would not have performed this favor for any other sales agent, and that he would not have done so for Hickok except that Hickok had paid him a lot of money. 18 In late November, an accountant named James Lyday was hired to perform a routine audit of USC's office in Logansport. Lyday testified that he discovered telephones missing from inventory and around thirty outstanding bills to CIC, Hickok's company. In Lyday's opinion, DeWitt was not following policy and procedure, was not collecting money that should have been collected, was not insisting on payment for telephones, and was probably involved in a collusive arrangement that involved kickbacks. DeWitt was summoned to a meeting in USC's Chicago office to explain these discrepancies. Before attending this meeting, DeWitt and Hickok tried to cover up their fraudulent scheme and prepared back-dated memos reflecting demands for payment on the CIC accounts and a payment plan for one of the larger invoices. Hickok also provided four post-dated CIC checks made payable to USC, which DeWitt planned to take to Chicago as evidence of a payment plan for Hickok's equipment bills. These efforts to salvage the situation did not work, and USC terminated DeWitt on December 21. 5 19 DeWitt testified that he received a total of $21,000 from Hickok during the entire period between January and December 1992. According to DeWitt, Hickok obtained more than $60,000 of USC telephone equipment for which he never paid, $20,000 in excess commissions, and accumulated over $10,000 in unpaid cellular telephone service bills. 6 Lyday testified that the total loss to USC as a result of Dewitt's and Hickok's activities was $261,000, with approximately 80% of that loss attributable to the defendant.
20 Investigators for USC interviewed Hickok in February of 1993 and obtained a seven-page, handwritten statement from him outlining the events of the previous year (this statement, which Hickok provided voluntarily, was later admitted at his trial). In his account, Hickok admitted making substantial payments to DeWitt and receiving USC equipment that could be resold and a commission derived from that resale. Hickok explained: 21 It was in my best interest for [DeWitt] to stay in his position [at USC] since my relationship with United States Cellular through Bobby DeWitt had become so lucrative. In total, I considered the payments to [DeWitt] a cost of doing business. I understand that these payments could be considered as kickbacks. These payments were not loans. (emphasis added). 22 In his trial testimony, Hickok provided a different version of events. As Hickok now maintained, the first purchase of USC equipment (in Arizona) was entirely DeWitt's idea, and, further, DeWitt had given him the impression that the used telephone equipment belonged to him and not USC. Hickok also asserted that $1,100 (not $1,000) was the agreed-upon price for this equipment. 23 Hickok admitted that on various occasions he gave money to DeWitt, whom he described as a very likeable young man with a young family who had taught [him] everything [he] knew about the cellular business. However, Hickok denied receiving anything in exchange for this assistance to his associate. 24 With respect to the unpaid-for equipment that Hickok obtained on open invoice at the Logansport office, Hickok testified that he intended to pay for this equipment (as well as the unpaid service bills) with his November and December commission checks (these checks were held up for several months because of the ongoing Lyday audit). 25 Hickok was so eager to obtain the November and December commission checks that he agreed to be interviewed by two private investigators working for USC. According to Hickok's testimony, these investigators composed and dictated the handwritten statement that was subsequently introduced at his trial.
26 The Pre-Sentence Investigation Report (PSR) recommended that the court apply a two-point enhancement in Hickok's sentence for obstruction of justice because, in the opinion of the probation department, Hickok made several false statements in his trial testimony. On February 10, 1995, the district court conducted a hearing to address the PSR and responses thereto filed by both parties. This hearing was continued on February 21, following additional briefing by the parties and the filing of an amended PSR by the probation department. 27 The district court agreed with the PSR's conclusion that Hickok made perjurious statements at his trial. [A]fter reviewing its notes 7 and after reviewing the briefs filed by counsel and also after hearing testimony, as well as the PSR, the district court found that there were at least five instances of false statements made by the defendant which constituted obstruction of justice. The court determined that the following were material false statements: 28 (1) Hickok's assertion that USC investigators essentially made and dictated his handwritten statement of February 24, 1993. The court described this as an attempt to discredit the statement. 29 (2) The defendant's testimony that he planned to pay for the telephones invoiced to him by DeWitt. The court found this to be perjurious because the defendant had this inventory for a long period of time, made substantial income and did not make any effort to pay for these telephones. 30 (3), (4) Hickok's statements to the effect that he neither submitted fraudulent commission reports nor received duplicate commissions. The court found that the evidence at trial (including the testimony of Kim Emery and several checks that represented duplicate payments for single commissions) clearly point[ed] this out to be untrue. 31 (5) The defendant's claim that he believed the phones he purchased from DeWitt in Arizona belonged to DeWitt personally and not USC. The court found this clearly contrary to the testimony that was given at trial and implausible in light of the defendant's prior status as a USC employee. 32 Pursuant to U.S.S.G. § 3C1.1, which authorizes a sentence enhancement for obstruction of justice (including perjury), the court adjusted Hickok's offense level upwards by two points. 8 On each of the three counts of the indictment, the district court sentenced Hickok at the low end of the applicable Guidelines range: thirty-three (33) months in prison, followed by three years of supervised release (with the sentences to run concurrently). The court also ordered the defendant to pay a special assessment of $150 and restitution in the amount of $179,502.07.