Court Opinion

ID: 2709164
Source: CourtListenerOpinion
Date Created: 2014-08-05 15:11:23.757617+00
Date Added: 2024-06-11T13:01:15.108327
License: Public Domain

In the

      United States Court of Appeals
                     For the Seventh Circuit
                          ____________________  

No.  13-­‐‑1407  
UNITED  STATES  OF  AMERICA,  
                                                              Plaintiff-­‐‑Appellee,  
                                         v.  

RITA  A.  CRUNDWELL,  
                                                         Defendant-­‐‑Appellant.  
                          ____________________  

            Appeal  from  the  United  States  District  Court  for  the  
              Northern  District  of  Illinois,  Western  Division.  
              No.  12  CR  50027  —  Philip  G.  Reinhard,  Judge.  
                          ____________________  

  ARGUED  NOVEMBER  4,  2013  —  DECIDED  NOVEMBER  15,  2013  
                ____________________  

    Before  EASTERBROOK,  KANNE,  and  TINDER,  Circuit  Judges.  
   EASTERBROOK,   Circuit   Judge.   In   2011   a   Commissioner   of  
Dixon,   Illinois,   the   childhood   home   of   President   Reagan,  
lauded   Rita   Crundwell,   the   City’s   Comptroller   since   1983,  
because   “she   looks   after   every   tax   dollar   as   if   it   were   her  
own.”  How  right  he  was.  The  next  year  Crundwell  pleaded  
guilty   to   embezzling   approximately   $53   million   from   the  
City  between  1990  and  2012.  She  used  the  money  to  support  
more   than   400   quarter   horses   and   a   lavish   lifestyle,   which  
No.  13-­‐‑1407                                                                    2  

she   explained   to   co-­‐‑workers   as   the   fruit   of   the   horses’   suc-­‐‑
cess.   During   the   final   six   years   of   her   scheme,   the   embez-­‐‑
zlement  averaged  28%  of  the  City’s  budget.  In  exchange  for  
her  guilty  plea,  the  prosecutor  limited  the  charge  to  a  single  
count  of  wire  fraud.  See  18  U.S.C.  §1343.  
     Crundwell  told  other  public  officials  that  the  City  had  to  
tighten  its  belt.  She  blamed  a  downturn  in  the  economy  and  
a   reduction   in   remittances   from   the   state,   when   her   own  
theft   was   the   real   cause.   Police   went   without   valuable  
equipment.   The   City   reduced   the   staff   of   its   Street   Depart-­‐‑
ment  from  nine  to  six  and  cut  the  rate  of  maintenance.  In  the  
decade   before   Crundwell’s   arrest,   the   City   resurfaced   only  
65  blocks  of  its  more  than  100  miles  of  paved  roads.  The  list  
of  ways  in  which  Crundwell’s  crime  injured  the  population  
of   Dixon   is   long   and   played   a   major   role   in   the   district  
court’s   decision   to   sentence   her   to   235   months’   imprison-­‐‑
ment,  substantially  above  the  Guideline  range  of  151  to  188  
months.  
   The   scheme   was   not   particularly   sophisticated.  
Crundwell   opened   an   account   at   a   local   branch   of   Fifth  
Third  Bank.  The  account  was  called  “RSCDA  Reserve  Fund”  
and  nominally  was  owned  by  the  City,  but  Crundwell  held  
sole   control   over   disbursements.   She   used   her   authority   as  
Comptroller   to   move   money   from   the   City’s   legitimate   ac-­‐‑
counts   to   the   RSCDA   account.   Once   the   money   was   there  
she  wrote  checks  for  her  own  benefit.  She  created  bogus  in-­‐‑
voices  to  justify  the  transfers  from  the  legitimate  accounts.  
    For  more  than  20  years,  the  bank  failed  to  notice  that  the  
funds   in   the   RSCDA   account   were   being   put   to   private   ra-­‐‑
ther   than   public   use.   And   the   City’s   auditors—
CliftonLarsonAllen   and   Samuel   Card,   a   local   accountant—
3                                                                   No.  13-­‐‑1407  

failed  to  detect  the  scam,  even  though  the  spot  checks  of  in-­‐‑
voices   and   disbursements   required   by   auditing   standards  
ought  to  have  turned  it  up  long  before  2012.  The  embezzle-­‐‑
ment  was  caught  when  a  bank  statement  of  the  RSCDA  ac-­‐‑
count  reached  the  Mayor  by  accident,  and  he  phoned  the  FBI  
because   the   transactions   it   revealed   startled   him.   The   City  
sued   the   bank   and   the   two   auditors,   which   recently   settled  
for   approximately   $40   million.   Sales   of   Crundwell’s   assets  
realized  another  $10  million,  so  the  City  has  recovered  much  
of  what  Crundwell  took  (if  we  disregard  interest,  which  over  
this  lengthy  period  would  have  been  substantial)  but  lost  the  
benefits,   such   as   well-­‐‑paved   roads   and   efficient   police,   that  
the   money   could   have   achieved   had   it   been   available   be-­‐‑
tween  1990  and  2012.  
    Crundwell   asked   the   judge   to   impose   a   sentence   at   the  
low   end   of   the   Guideline   range,   contending   that   a   higher  
sentence   could   hold   her   well   into   her   70s   (she   was   born   in  
1953).   She   contended   that   she   had   provided   extraordinary  
assistance  to  the  prosecution  by  describing  all  details  of  her  
scheme   and   helping   agents   marshal   her   assets,   so   that   they  
could  be  sold  for  the  City’s  benefit.  The  prosecutor,  by  con-­‐‑
trast,  depicted  Crundwell  as  being  no  more  candid  than  she  
thought   necessary   and   less   candid   than   she   should   have  
been.   She   initially   asserted   that   the   embezzlement   began   in  
1999   or   2000,   a   decade   after   it   actually   started,   and   that   the  
total   take   was   approximately   $10   million.   She   admitted   the  
earlier   start,   and   the   higher   total,   only   when   confronted   by  
evidence.   She   did   not   bother   to   tell   her   debriefers   that   she  
began  stealing  from  the  City  in  1988,  using  a  method  differ-­‐‑
ent  from  the  RSCDA  account,  until  federal  agents  discovered  
that  additional  crime  on  their  own.  
No.  13-­‐‑1407                                                                  4  

     The   district   judge   recognized   that   Crundwell   had   pro-­‐‑
vided   some   aid,   principally   in   rounding   up   assets,   but   he  
thought  that  the  value  of  the  assistance  paled  in  comparison  
with  the  injury  that  Crundwell  had  inflicted  on  the  citizenry.  
The   judge   noted   that   her   thefts   deprived   the   citizens   of   the  
services   for   which   their   taxes   had   paid,   and   the   discovery  
that  her  long-­‐‑running  scheme  had  gone  on  under  the  noses  
of   mayors,   members   of   the   local   legislature,   auditors,   and  
banks   alike   led   to   a   slump   in   the   citizens’   estimate   of   the  
government’s  competence  and  value.  The  loss  of  public  ben-­‐‑
efits   and   confidence   justify   a   penalty   above   the   Guideline  
range,  the  judge  concluded.  The  judge  also  noted  that  a  235-­‐‑
month   sentence   would   allow   Crundwell   to   be   released   in  
2030,  when  she  would  be  77,  well  under  the  life  expectancy  
of  a  60-­‐‑year-­‐‑old  woman.  
    In  explaining  why  he  chose  a  sentence  above  the  Guide-­‐‑
line  range,  the  judge  relied  in  part  on  U.S.S.G.  §2B1.1  Appli-­‐‑
cation  Note  19(A)(ii),  which  says  that  a  sentence  may  depart  
from   the   range   recommended   by   the   Sentencing   Commis-­‐‑
sion   for   financial   crimes   when   “[t]he   offense   caused   or  
risked  substantial  non-­‐‑monetary  harm.  For  example,  the  of-­‐‑
fense   caused   physical   harm,   psychological   harm,   or   severe  
emotional   trauma”.   (This   language   is   part   of   Application  
Note   20(A)(ii)   in   the   current   version   of   the   Guidelines;   its  
substance  is  unchanged.)   The  judge  thought   that  citizens  of  
Dixon   suffered   “psychological   harm”   from   the   revelation  
that   a   prominent   officeholder   was   crooked,   that   other   offi-­‐‑
cials  did  not  detect  the  crime,  and  that  for  20  years  they  had  
been   deprived   of   valuable   municipal   services.   Crundwell  
contends   that   only   the   City   counts   as   a   victim   and   that   or-­‐‑
ganizations   cannot   suffer   psychological   harm   because   they  
are  insensate.  Yet  §2B1.1  Application  Note  19(A)(ii)  does  not  
5                                                                  No.  13-­‐‑1407  

specify  the  crime’s  immediate  victim  only;  the  language  asks  
whether  the  crime  caused  physical  or  psychological  harm  to  
anyone.   We   stated   in   United   States   v.   Pabey,   664   F.3d   1084,  
1098–99   (7th   Cir.   2011),   that   a   loss   of   public   confidence   in  
government  caused  by  a  public  official’s  defalcation  is  “psy-­‐‑
chological  harm”  for  the  purpose  of  this  text.  
    What’s  more,  a  sentence’s  propriety  does  not  depend  on  
whether  the  Sentencing  Commission  has  authorized  a  depar-­‐‑
ture   from   the   Guidelines—and   departure   is   what   §2B1.1  
Application   Note   19(A)(ii)   is   about.   United   States   v.   Booker,  
543   U.S.   220   (2005),   made   departures   obsolete.   That’s   why  
we   held   in   United   States   v.   Townsend,   724   F.3d   749,   751   (7th  
Cir.   2013),   that   it   no   longer   matters   whether   a   sentencing  
judge  properly  understands  the  Commission’s  prescriptions  
about   when   departures   are   justified.   Once   a   judge   correctly  
calculates   the   applicable   range—and   Crundwell   does   not  
contest  the  calculation  of  her  range—everything  depends  on  
the  judge’s  reasonable  application  of  the  criteria  in  18  U.S.C.  
§3553(a).   Judges   are   entitled   to   implement   their   own   penal  
philosophies;   they   are   not   bound   by   the   Sentencing   Com-­‐‑
mission’s.   See   Spears   v.   United   States,   555   U.S.   261   (2009);  
Kimbrough  v.  United  States,  552  U.S.  85  (2007);  United  States  v.  
Corner,  598  F.3d  411  (7th  Cir.  2010)  (en  banc).  
    Crundwell  contends  that  Townsend  is  distinguishable  be-­‐‑
cause   it   involved   the   denial   of   a   defendant’s   request   for   a  
downward   variance,   while   her   case   entails   the   grant   of   the  
prosecutor’s  request  for  an  upward  variance.  That’s  a  differ-­‐‑
ence,   to   be   sure,   but   it   is   an   irrelevant   difference.   Townsend  
reflects  the  fact  that  Booker  supersedes  departures.  Judges  are  
entitled  to  discretion  whether  the  variance  is  above  or  below  
No.  13-­‐‑1407                                                                6  

the  Guideline  range;  the  terms  on  which  departures  used  to  
be  authorized  do  not  matter  in  either  direction.  
      Townsend   observes   that   a   judge   could   misuse   or   misun-­‐‑
derstand   the   remnants   of   the   old   departure   system   in   three  
ways:  a  judge  might  suppose  that  a  variance  is  forbidden  un-­‐‑
less   authorized   by   the   Sentencing   Commission   in   a   policy  
statement  or  application  note  (that  would  be  an  error  under  
Booker  and  later  opinions);  a  judge  might  refuse  to  entertain  
an  argument  based  on  a  policy  statement  or  note  (that  would  
be  an  error  because  many  of  the  criteria  formerly  used  to  jus-­‐‑
tify   departures   remain   salient   under   §3553(a));   or   a   judge  
might   believe   that   the   policy   statements   and   notes   in   the  
Guidelines   Manual   exhaust   the   appropriate   grounds   for   a  
variance   (that   would   be   an   error   because   §3553(a),   not   the  
Guidelines  Manual,  supplies  the  legally  controlling  criteria).  
Crundwell  does  not  contend  that  the  judge  made  any  of  the-­‐‑
se  mistakes.  The  most  one  can  say  for  her  position  is  that  the  
judge  may  have  understood  “psychological  harm”  different-­‐‑
ly   from   the   Sentencing   Commission—but   as   any   difference  
on  that  score  does  not  affect  the  validity  of  her  sentence,  the  
possibility  gets  her  nowhere.  
    The  district  judge  pronounced  a  substantively  reasonable  
sentence   after   giving   Crundwell   full   opportunity   to   present  
evidence   and   arguments.   The   judge   thought   a   substantial  
penalty  justified  by  considerations  of  deterrence  and  desert.  
Crundwell  single-­‐‑handedly  stole  from  the  citizens  of  a  small  
community  (Dixon’s  population  is  under  16,000)  ten  times  as  
much   as   public   officials   in   the   Teapot   Dome   Affair,   the   na-­‐‑
tional   government’s   most   notorious   financial   scandal,   mis-­‐‑
appropriated   from   the   citizenry   of   the   country   as   a   whole.  
(Secretary  of  the  Interior  Albert  Fall  received  about  $400,000,  
7                                                              No.  13-­‐‑1407  

worth   $5.3   million   in   current   dollars.)   Crundwell   maintains  
that  the  judge  did  not  consider  her  arguments,  but  the  judge  
addressed   every   one   of   them.   That   he   thought   less   well   of  
her  cooperation  than  Crundwell  herself  did,  and  gave  a  low-­‐‑
er  weight  to  her  age  than  she  asked  him  to,  does  not  under-­‐‑
mine  the  sentence’s  validity.  Judges  must  consider  a  defend-­‐‑
ant’s  principal  arguments  but  need  not  agree  with  them.  
                                                                 AFFIRMED