Court Opinion

ID: 2960347
Source: CourtListenerOpinion
Date Created: 2015-09-17 17:47:44.170814+00
Date Added: 2024-06-11T15:01:23.991095
License: Public Domain

08-3763-cr
     United States v. Friedberg

1                        UNITED STATES COURT OF APPEALS

2                               FOR THE SECOND CIRCUIT

3                                      --------

4                                  August Term, 2008

 5   (Argued: February 3, 2009                 Decided: March 2, 2009)
 6
 7                         Docket No. 08-3763-cr
 8   -----------------------------------------------------------X
 9   UNITED STATES OF AMERICA,
10
11                     Appellee,
12
13                     - v. -
14
15   DANIEL FRIEDBERG,
16
17                  Defendant-Appellant.
18   -----------------------------------------------------------X
19   Before:   POOLER and KATZMANN, Circuit Judges, PRESKA, District

20   Judge.1

21         Appeal from a judgment of the United States District Court

22   for the Eastern District of New York (Townes, J.), convicting

23   defendant, after a guilty plea, of five counts of tax evasion.

24   We hold that the district court properly considered defendant’s

25   uncharged embezzlement when it applied an abuse of trust

26   enhancement at sentencing.

27         AFFIRMED.

     1
      The Honorable Loretta A. Preska, of the United States District
     Court for the Southern District of New York, sitting by
     designation.
 1                                 ELIZABETH A. GEDDES, Assistant
 2                                 United States Attorney, for Benton
 3                                 J. Campbell, United States Attorney
 4                                 for the Eastern District of New
 5                                 York, Brooklyn, New York (Emily
 6                                 Berger, on the brief), for
 7                                 Appellee.
 8
 9                                 GEORGE R. GOLTZER, Goltzer & Adler,
10                                 New York, New York, for Defendant-
11                                 Appellant.
12
13   PRESKA, District Judge:

14        Daniel Friedberg pleaded guilty to five counts of tax

15   evasion in violation of 26 U.S.C. § 7201.   When calculating the

16   applicable advisory Sentencing Guidelines range, the district

17   court included a two-point increase in offense level for abuse of

18   a position of trust, pursuant to U.S.S.G. § 3B1.3, and sentenced

19   Friedberg to twenty-six months’ incarceration.   On appeal,

20   Friedberg challenges the abuse of trust enhancement and argues

21   that his sentence was substantively unreasonable.   We conclude

22   that the district court’s sentencing determination was proper.

23   Accordingly, we affirm.

24                              BACKGROUND

25        Friedberg was Grand Secretary for the Independent Order of

26   Odd Fellows (“Odd Fellows”) from 1986 to 2004.   Between 2000 and

27   2004, he embezzled $562,000 of the organization’s funds.   He paid

28   personal bills, made mortgage payments for himself and a friend,

29   and purchased health insurance for non-employees with his ill-

                                     2
1    gotten gains.   Friedberg also wrote organizational checks payable

2    to either cash or himself and deposited these funds (totaling

3    $298,436) as savings.    He did not, however, report any of the

4    embezzled funds as income.

5         The government ultimately charged Friedberg with five counts

6    of tax evasion, to which he pleaded guilty on January 23, 2008.

7    The United States Probation Office subsequently prepared a Pre-

8    sentence Investigation Report (“PSR”) for Friedberg.     In the PSR,

9    the Probation Office calculated the base offense level at sixteen

10   based on a tax loss of more than $80,000. See U.S.S.G. §

11   2T4.1(F).   It then added a two-level enhancement for failing to

12   report more than $10,000 of income in a given year pursuant to

13   U.S.S.G. § 2T1.1(b)(1) and a two-level enhancement for abuse of a

14   position of trust pursuant to U.S.S.G. § 3B1.3.     Finally, the

15   Probation Office deducted three points for Friedberg’s acceptance

16   of responsibility under U.S.S.G. § 3E1.1, yielding a total

17   offense level of seventeen.    For this offense level, combined

18   with a criminal history category of I, the Sentencing Guidelines

19   recommend a range of imprisonment of 24 to 30 months. See

20   U.S.S.G. Ch. 5, Pt. A.

21        Over defense counsel’s objection, the district court

22   accepted the PSR’s application of the abuse of trust enhancement

23   in calculating the offense level.     The court then sentenced

                                       3
1    Friedberg to a term of imprisonment of twenty-six months.

2    Friedberg now appeals his sentence.

3                                  DISCUSSION

4         We review a challenged sentence for “reasonableness.” United

5    States v. Verkhoglyad, 516 F.3d 122, 127 (2d Cir. 2008)(internal

6    quotation marks omitted).   This inquiry has both procedural and

7    substantive components. Id.    Under the procedural component, we

8    determine whether the district court relied on erroneous factual

9    findings, correctly calculated the applicable Guidelines range,

10   treated the Guidelines as advisory, and considered the factors

11   listed in 18 U.S.C. § 3553(a). See United States v. Cavera, 550

12   F.3d 180, 190 (2d Cir. 2008)(en banc).     The substantive component

13   focuses on whether, under the totality of the circumstances, the

14   sentence is “‘within the range of permissible decisions.’” Id. at

15   189 (quoting United States v. Rigas, 490 F.3d 208, 238 (2d Cir.

16   2007)).   We assess both procedural and substantive reasonableness

17   under an abuse of discretion standard. Id. at 188.    This standard

18   contemplates de novo review of legal questions and clear-error

19   review of the district court’s factual determinations. United

20   States v. Salim, 549 F.3d 67, 72 (2d Cir. 2008).

21        On appeal, Friedberg challenges his sentence as both

22   procedurally and substantively unreasonable.    With respect to the

23   former, he argues the district court’s application of the abuse

                                       4
1    of trust enhancement was legal error.   As to the latter, he

2    argues that his age and personal characteristics rendered

3    imposition of a Guidelines sentence improper.

4         A.    Enhancement for Abuse of a Position of Trust

5         Friedberg concedes that he abused a position of trust with

6    respect to Odd Fellows by virtue of his embezzlement.     However,

7    he argues that this abuse cannot support a sentencing enhancement

8    because he did not occupy a position of trust with respect to the

9    government, which was the primary victim of his tax evasion.     We

10   must therefore determine whether the district court properly

11   considered the circumstances of Friedberg’s embezzlement from Odd

12   Fellows when imposing the abuse-of-trust enhancement.     For the

13   reasons that follow, we think it did.

14         Under the Sentencing Guidelines, a two-point enhancement is

15   warranted if the defendant “abused a position of public or

16   private trust . . . in a manner that significantly facilitated

17   the commission or concealment of the offense.” U.S.S.G.

18   § 3B1.3.   In determining whether to apply this enhancement, a

19   sentencing court must consider “a defendant’s role in the

20   offense” on the basis of “[r]elevant [c]onduct,” which is not

21   limited to the “elements and acts cited in the count of

22   conviction.”   U.S.S.G. Ch. 3, Pt. B, introductory cmt.    Relevant

23   conduct includes “all acts and omissions committed . . . by the

                                      5
1    defendant . . . that occurred during the commission of the

2    offense of conviction, in preparation for that offense, or in the

3    course of attempting to avoid detection or responsibility for

4    that offense.” U.S.S.G. § 1B1.3(a)(1).   Where, as here, the

5    offenses at issue may be grouped under U.S.S.G. § 3D1.2(d), the

6    sentencing court is to consider “all acts and omissions . . .

7    that were part of the same course of conduct or common scheme or

8    plan as the offense of conviction.”2 U.S.S.G. § 1B1.3(a)(2).

9         In United States v. Cianci, the Third Circuit held that a

10   defendant’s uncharged embezzlement constituted relevant conduct

11   supporting an abuse of trust enhancement in the offense level

12   calculation for a tax evasion conviction.   154 F.3d 106 (3d Cir.

13   1998).   Noting that the Sentencing Guidelines instruct courts to

14   consider “[c]onduct that is not formally charged or is not an

15   element of the offense of conviction”, U.S.S.G. § 1B1.3,

16   background cmt. para. 1, the Cianci court reasoned that the

17   defendant’s abuse of his position as a high ranking corporate

18   official enabled him to embezzle the income he failed to report

     2
      The base offense level and specific offense characteristics for
     tax evasion are provided in U.S.S.G. § 2T1.1. Guidelines section
     3D1.2(d) includes offenses covered by U.S.S.G. § 2T1.1 among
     those “to be grouped.” Section 3D1.2(d) also includes
     embezzlement, covered by U.S.S.G. § 2B1.1, as eligible for
     grouping because the offense level for embezzlement is likewise
     “determined largely on the basis of the total amount of harm or
     loss.”
                                     6
1    and thus constituted relevant conduct to be considered at

2    sentencing. 154 F.3d at 112-13.   Several circuits have employed

3    similar reasoning to uphold abuse of trust enhancements in

4    analogous circumstances. See United States v. Gricco, 277 F.3d

5    339, 361-62 (3d Cir. 2002) (applying Cianci in finding that

6    uncharged embezzlement was relevant conduct to tax evasion

7    supporting abuse of trust enhancement); United States v. Young,

8    266 F.3d 468, 478 (6th Cir. 2001) (finding Cianci persuasive in

9    holding that the district court correctly “used the Defendant’s

10   embezzlement activities as relevant conduct to enhance the money

11   laundering offense level for abuse of position of trust”); United

12   States v. Duran, 15 F.3d 131, 134 (9th Cir. 1994) (the district

13   court properly considered law enforcement officer’s use of his

14   position to steal money from suspected drug dealers to support

15   application of an abuse of trust enhancement in connection with

16   his structuring conviction); see also United States v. Fife, 471

17   F.3d 750, 753 (7th Cir. 2006) (affirming abuse of trust

18   enhancement for tax evasion where defendant abused his position

19   of trust to facilitate fraudulent scheme); United States v.

20   Bhagavan, 116 F.3d 189, 192-93 (7th Cir. 1997) (abuse of trust

21   enhancement to tax evasion sentence warranted where defendant

22   majority shareholder used his position to divert money from the

23   company).

                                       7
1         Two circuit courts, however, have held to the contrary.     In

2    United States v. Barakat, the Eleventh Circuit overturned an

3    abuse of discretion enhancement resulting from the district

4    court’s consideration of the defendant’s participation in an

5    illegal “kickback” scheme when imposing a sentence for tax

6    evasion. 130 F.3d 1448 (11th Cir. 1997).   This result stemmed

7    from the Barakat court’s conclusion that the sentencing court

8    could consider only conduct relating to the offense of conviction

9    when determining whether to apply the enhancement. Id. at 1455.

10   Barakat has since been criticized as inconsistent with the plain

11   language of the Guidelines requiring courts to look beyond

12   “elements and acts cited in the count of conviction” when

13   evaluating relevant conduct. U.S.S.G. Ch. 3, Pt. B, introductory

14   cmt.; see Young, 266 F.3d at 479 (“The Eleventh Circuit’s

15   position . . . contravenes a plain reading of the Sentencing

16   Guidelines.”); Cianci, 154 F.3d at 111 (criticizing the Barakat

17   court’s interpretation of relevant conduct as unduly narrow).

18        In United States v. Guidry, the Tenth Circuit held that an

19   abuse of trust enhancement is appropriate with respect to a tax

20   evasion offense only where the defendant occupies “a position of

21   trust vis-à-vis the government.” 199 F.3d 1150, 1160 (10th Cir.

22   1999).   In Guidry, the defendant used her position as controller

23   to embezzle millions of dollars from her employer and was

                                      8
1    subsequently convicted for failing to report the illicit income.

2    Unlike the Eleventh Circuit in Barakat, the Guidry court noted

3    that “the district court may have been correct in finding [that

4    the defendant’s] embezzlement activity was relevant conduct,

5    committed to avoid detection of her false income tax returns.”

6    Id. at 1159-60.    It nonetheless held that an abuse of trust

7    enhancement was improper because the defendant did not occupy a

8    position of trust with respect to the victim of her tax evasion.

9    Id. at 1160.

10        The Guidry court’s holding thus depends on the assumption

11   that the government is always the sole victim of a tax evasion

12   offense.    However, other circuits have expressly rejected this

13   premise.    In United States v. Bhagavan, the Seventh Circuit

14   upheld an abuse of trust enhancement in a tax evasion conviction

15   based on the defendant’s exploitation of his majority shareholder

16   status and corporate rank to divert funds from the company. 116

17   F.3d 189.    The court viewed the defendant’s argument that the

18   government was the sole victim of the tax evasion as a logical

19   “fallacy.” Id. at 193.    It reasoned that the defendant abused his

20   corporate position as part of an overall scheme to enrich himself

21   at the company’s expense and avoid taxes.    Therefore the

22   corporation, its shareholders, and the government were all

23   victims the offense. Id. (“It is enough that identifiable victims

                                       9
1    of [the defendant’s] overall scheme to evade his taxes put him in

2    a position of trust and that his position ‘contributed in some

3    significant way to facilitating the commission or concealment of

4    the offense.’” (quoting U.S.S.G. § 3B1.3, cmt. n.1)); see also

5    Fife, 471 F.3d at 753 (“[The defendant] incorrectly argues that

6    because his crime is tax evasion, and the United States

7    government is the direct victim of his crime, the abuse of

8    position of trust enhancement is only proper if it was the United

9    States that placed him in a position of trust.”); Cianci, 154

10   F.3d at 112 (“Admittedly, the employer-victim here was not the

11   victim of the offense of conviction, but no language in the

12   applicable sentencing guideline so circumscribes the

13   enhancement.”).

14        We employed similar reasoning to uphold an abuse of trust

15   enhancement in United States v. Cusack, 229 F.3d 344 (2d Cir.

16   2000).   There, the defendant had been convicted for mail and wire

17   fraud resulting from his sale of forged documents purportedly

18   belonging to President John F. Kennedy.   To lend authenticity to

19   his forgeries, the defendant used his position as a paralegal to

20   obtain unsupervised access to the vault of the Archdiocese of the

21   Catholic Church, a firm client, and steal genuine deeds showing

22   transfers of land from the Kennedy family to the Archdiocese.

23   This Court held that the enhancement was properly applied even

                                     10
1    though the primary victims of the fraud were the purchasers of

2    defendant’s forgeries.   We reasoned that while the enhancement

3    necessarily requires abuse of substantial discretion afforded by

4    the victim to the defendant, “the victim whose trust the

5    defendant abused need not have been the primary victim of the

6    fraud.” Id. at 349.   We then found that “the Archdiocese was

7    plainly a secondary victim of Cusack’s crime” because its

8    documents had been stolen to facilitate the crime of conviction

9    and some of the forgeries implicated it in fictitious intrigues.

10   Id.

11         We think that both Cusack and Cianci apply with equal force

12   here.   Friedberg’s tax evasion was part of a larger scheme to

13   embezzle funds and hide the income.   He effectuated the scheme by

14   abusing his position as Grand Secretary of Odd Fellows and

15   shielding the illicit income from the government.   The

16   embezzlement accomplished in this manner was part and parcel of

17   the crime of conviction insofar as it both provided Friedberg

18   with the funds he failed to report and tended to conceal the

19   criminal activity.    As such, it was undoubtedly relevant conduct.

20   Cf. Cianci, 154 F.3d at 112-113 (“[Defendant’s] abuse of his

21   position of trust . . . by conducting the complex transactions

22   that facilitated his uncharged criminal conduct leading to his

23   receipt of the income he failed to report may properly be

                                      11
1    considered as relevant conduct.”); Duran, 15 F.3d at 134 (the

2    district court properly considered conduct forming part of a

3    “common scheme” to avoid detection when imposing an abuse of

4    trust enhancement in a sentence for structuring).   Furthermore,

5    the abuse of trust inherent in Friedberg’s embezzlement

6    victimized both the government and Odd Fellows by depriving them

7    of funds rightfully theirs. See Bhagavan, 116 F.3d at 193

8    (finding multiple victims of a tax evasion offense); cf. Cusack,

9    229 F.3d at 349 (“the victim whose trust the defendant abused

10   need not have been the primary victim”).   The district court was

11   therefore free to apply an enhancement on the basis of

12   Friedberg’s abuse of his position of trust to effectuate the

13   scheme resulting in his conviction for tax evasion.    U.S.S.G.

14   § 3B1.3.

15        Friedberg argues that this conclusion is foreclosed by our

16   decisions in United States v. Broderson, 67 F.3d 452 (2d Cir.

17   1995), United States v. Jolly, 102 F.3d 46 (2d Cir. 1996), and

18   United States v. Nuzzo, 385 F.3d 109 (2d Cir. 2004).    We

19   disagree.   In Broderson, we reversed an abuse-of-trust

20   enhancement where the defendant had acted out of a misguided

21   attempt to protect his employer, to whom the trust was owed. 67

22   F.3d at 455. In Jolly, we reversed where the defendant was not in

23   a position of trust with respect to the lenders whose trust he

                                     12
1    had purportedly abused. 102 F.3d at 48.    Here, by contrast,

2    Friedberg both occupied a position of trust at Odd Fellows and

3    used it to effectuate a scheme harmful to that organization.

4    Nuzzo is also distinguishable because there we found insufficient

5    evidence to support the conclusion that the defendant used his

6    position to effectuate his crimes. 385 F.3d at 116.    Friedberg,

7    on the other hand, clearly utilized his position at Odd Fellows

8    to embezzle funds which he hid from the government.

9           Friedberg also contends that upholding an abuse-of-trust

10   enhancement here would open the floodgates to similar

11   enhancements for anyone convicted of tax evasion.    Not so.    We

12   hold only that where, as here, a defendant’s tax evasion was part

13   of a larger scheme constituting relevant conduct, an integral

14   part of which involved abusing a position of trust, the

15   sentencing court may properly apply an enhancement under U.S.S.G.

16   § 3B1.3.

17          B.   Substantive Reasonableness

18          Friedberg also challenges his sentence as substantively

19   unreasonable.    We will “set aside a district court’s substantive

20   determination only in exceptional cases.” Cavera, 550 F.3d at

21   189.    Friedberg’s is not among them.   The district court properly

22   calculated the applicable Sentencing Guidelines range and

23   considered the factors enumerated in 18 U.S.C. § 3553(a).      It

                                      13
1    then imposed a sentence near the bottom of the applicable

2    guidelines range.   While not presumptively reasonable, we have

3    noted that “in the overwhelming majority of cases, a Guidelines

4    sentence will fall comfortably within the broad range of

5    sentences that would be reasonable in the particular

6    circumstances.” United States v. Eberhard, 525 F.3d 175, 179 (2d

7    Cir. 2008) (quoting United States v. Fernandez, 443 F.3d 19, 27

8    (2d Cir. 2006)).    We see nothing in this record to indicate that

9    the district court imposed an unacceptably harsh sentence here.

10

                                      14
1                              CONCLUSION

2        For the foregoing reasons, we AFFIRM the judgment of the

3   district court.

                                   15