Court Opinion

ID: 1018133
Source: CourtListenerOpinion
Date Created: 2013-07-04 22:15:29.032146+00
Date Added: 2024-06-11T15:36:21.099091
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                            No. 04-4383

UNITED STATES OF AMERICA,

                                              Plaintiff - Appellee,

          versus

JOHN COLEMAN REID,

                                             Defendant - Appellant.

                            No. 04-4384

UNITED STATES OF AMERICA,

                                              Plaintiff - Appellee,

          versus

ALAN B. PINKERTON,

                                             Defendant - Appellant.

Appeals from the United States District Court for the Western
District of Virginia, at Charlottesville. James H. Michael, Jr.,
Senior District Judge. (CR-04-13)

Submitted:   November 30, 2005            Decided:   January 6, 2006

Before WILKINSON, NIEMEYER, and LUTTIG, Circuit Judges.
Affirmed by unpublished per curiam opinion.

Frederick T. Heblich, Jr., Charlottesville, Virginia; Francis McQ.
Lawrence, ST. JOHN, BOWLING & LAWRENCE, Charlottesville, Virginia,
for Appellants. John L. Brownlee, United States Attorney, Jean B.
Hudson, Assistant United States Attorney, Charlottesville,
Virginia, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).

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PER CURIAM:

            John Coleman Reid and Alan B. Pinkerton pled guilty to

bank fraud, 18 U.S.C. § 1344 (2000), and were sentenced to terms of

forty-six     months      and      thirty-seven           months     imprisonment,

respectively.       On   appeal,       Appellants    challenge       the   two-level

adjustment for abuse of a position of trust that the district court

applied in each case under U.S. Sentencing Guidelines Manual

§ 3B1.3 (2003).     We affirm.

            Reid was hired in 1996 as president of the Ivy Tygart

Acquisition     Corporation        (ITAC),        which      was      located      in

Charlottesville, Virginia, and known locally as Ivy Industries.

Pinkerton was the chief financial officer. Reid and two investors,

Francis Parker and Corwith Davis, formed RPD Enterprises, which

acquired all the stock of ITAC in February 1998.                   In 1999, another

company they owned, RPD Properties, acquired the real property of

ITAC.    Beginning       in   2000,     because     Ivy    Industries      had   been

experiencing cash flow problems since 1996, Reid and Pinkerton

began kiting checks between company accounts at Albemarle First

Bank and SunTrust Bank to create false positive balances at                      both

banks.   Reid also created false financial statements for ITAC that

misrepresented the company’s inventory and assets, which helped him

to   secure   two   loans       from    Virginia     National       Bank   totaling

$1,020,000, a $ 2,000,000 loan from Guaranty Bank, and a $795,000

loan from Albemarle First Bank. In 2003, Reid forged the signature

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of Corwith Davis to obtain a $500,000 loan from Southern Financial

Bank.   When the check kiting scheme was discovered in 2003,

Albemarle First Bank suffered a financial loss of $2,420,000, of

which $100,000 was paid by Progressive Insurance.        The company

ceased operations and its inventory was liquidated to recover some

of the loss suffered by Guaranty Bank.

          Reid and Pinkerton pled guilty to bank fraud in February

2004 and were sentenced in May 2004. The district court calculated

Reid’s base offense level at 6, U.S. Sentencing Guidelines Manual

§ 2B1.1 (2002), with an 18-level enhancement for a loss over $2.5

million, USSG § 2B1.1(b)(1)(J), and a 2-level adjustment for abuse

of a position of trust, USSG § 3B1.3.    Reduced by three levels for

acceptance of responsibility, USSG § 3E1.1, Reid’s recommended

offense level was 23.    He was in criminal history category I,

making his guideline range 46-57 months.   Pinkerton’s   calculation

was the same, except that he was held responsible for a loss of

only $2,420,000, which gave him an offense level of 21 and a

guideline range of 37-46 months.   The court deferred the issue of

restitution because the parties were not ready to resolve it.     On

November 3, 2005, the court ordered Reid to make restitution to the

four victim banks, Corwith Davis, Francis Parker, and Progressive

Insurance Company.   Pinkerton was ordered to make restitution to

Albemarle First Bank, Corwith Davis, and Progressive Insurance

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Company.    The amount of restitution owed to Davis and Parker was

approximately $1.5 million.

            At their respective sentencing hearings on May 10, 2004,

the district court determined that Reid and Pinkerton each held a

position    of   trust   with   respect   to    the   victim   banks.    In   a

memorandum opinion filed a week later, the court explained the

adjustment differently, finding that there were two categories of

victims.    The court found that, while the banks were the primary

and direct victims, a second category of victims consisted of Davis

and Parker, the co-owners of Ivy Industries, as well as the

employees    and   shareholders     in    the   corporation.       The   court

determined that Reid and Pinkerton had a position of trust in

relation to the secondary group of victims.

            On appeal, Reid and Pinkerton argue for the first time

that the district court’s use of the sentencing guidelines to

enhance their sentences for abuse of a position of trust violated

the Sixth Amendment under Blakely v. Washington, 542 U.S. 296

(2004). They also contend that the district court erred in finding

that they possessed a position of trust with respect to the banks

that were the victims of the check kite or were induced by fraud to

make bad loans, and that the secondary victims identified by the

court were not victims of the offense within the meaning of

§ 3B1.3.

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             Appellants   were   sentenced    before   the   Supreme   Court

decided Blakely or United States v. Booker, 125 S. Ct. 738 (2005).

In Booker, the Supreme Court held that Blakely applies to the

federal sentencing guidelines and that the mandatory guidelines

scheme which provides for sentence enhancements based on facts

found by the court violated the Sixth Amendment.             125 S. Ct. at

746, 750.    This court has identified two types of Booker error:          a

violation of the Sixth Amendment, and a failure to treat the

sentencing guidelines as advisory.*          United States v. Hughes, 401

F.3d 540, 552 (4th Cir. 2005).      A Sixth Amendment error occurs when

the district court imposes a sentence greater than the maximum

permitted based on facts found by a jury or admitted by the

defendant.    Booker, 125 S. Ct. at 756.       Because Appellants did not

raise a Sixth Amendment challenge in the district court, our review

is for plain error.       Hughes, 401 F.3d at 547.

             Without the contested two-level enhancements for abuse of

a position of trust under § 3B1.3, Reid’s offense level would have

been 24 and Pinkerton’s offense level would have been 22.                For

purposes of determining Booker error, this court uses the guideline

range based on the facts the defendant admitted before the range is

     *
      While the mandatory application of the guidelines constitutes
plain error, a defendant who seeks resentencing on this ground must
show actual prejudice. United States v. White, 405 F.3d 208, 217,
223 (4th Cir.), cert. denied, ___ S. Ct. ___, 2005 WL 3027841 (U.S.
Nov. 14, 2005) (No. 05-6981). Appellants do not attempt to show
error under White.

                                   - 6 -
adjusted   downward     for    acceptance    of   responsibility.       United

States v. Evans, 416 F.3d 298, 300 n.4 (4th Cir. 2005).                Reid’s

guideline range under this analysis would have been 51-63 months

and Pinkerton’s guideline range would have been 30-37 months.

Reid’s sentence of forty-six months imprisonment and Pinkerton’s

sentence of thirty-seven months imprisonment are thus within the

range that would apply based only on facts that they admitted.              We

conclude that no Sixth Amendment error occurred.

           We review the district court’s factual findings that

support the adjustment for abuse of a position of trust for clear

error, while its legal interpretation of the guideline is reviewed

de novo.     United States v. Caplinger, 339 F.3d 226, 235-36 (4th

Cir. 2003).     The guideline provides for an adjustment when “the

defendant abused a position of public or private trust . . . in a

manner that significantly facilitated the commission or concealment

of the offense.”      USSG § 3B1.3.       Application Note 1 explains that

“[p]ersons    holding    such    positions    ordinarily   are    subject   to

significantly      less        supervision        than   employees       whose

responsibilities      are     primarily    non-discretionary     in   nature.”

Further, their position “must have contributed in some significant

way to facilitating the commission or concealment of the offense

(e.g., by making the detection of the offense or the defendant’s

responsibility for the offense more difficult).”           Id.

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              The district court’s focus in making its determination

must be on “the relationship between the defendant and the victim

from the perspective of the victim.”             Caplinger, 339 F.3d at 236

(citing United States v. Gordon, 61 F.3d 263, 269 (4th Cir. 1995)).

A “victim” is currently defined in Application Note 1 to USSG

§ 1B1.1 as “any person who sustained any part of the actual loss,”

that is, the reasonably foreseeable pecuniary harm. “In every case

of fraud, the defendant will have [gained the] confidence and trust

[of]   the     victim.        But    fraud   alone    does   not    justify     the

enhancement.”        Id. at 237 (quoting United States v. Bollin, 264

F.3d   391,    415    (4th    Cir.   2001)).     “A   sentencing      court    must

‘carefully      distinguish      between     those    arms-length      commercial

relationships where trust is created by the defendant’s personality

or the victim’s credulity,’” id. (quoting Bollin, 264 F.3d at 415),

“and those ‘where a fiduciary or personal trust relationship

exists’ with [the victim], and the defendant takes advantage of the

relationship to perpetrate or conceal the offense.’”                 Id. (quoting

United States v. Koehn, 74 F.3d 199, 201 (10th Cir. 1996)).                    Thus

“application of the enhancement requires more than a mere showing

that the victim had confidence in the defendant.                   Something more

akin to a fiduciary function is required.”               Id. (quoting United

States v. Brunson, 54 F.3d 673, 678 (10th Cir. 1995)).                 In Bollin,

this court quoted with approval United States v. Davuluri, 239 F.3d

902,   909     (7th    Cir.    2001),     for   the   principle      that     “what

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distinguishes situations in which § 3B1.3 should apply is ‘whether

the defendant has broad discretion to act on behalf of the victim

and the victim believes the defendant will act in the victim’s best

interest.’”    Bollin, 264 F.3d at 416.

           Here, the adjustment cannot be affirmed on the ground

that Reid and Pinkerton had a position of trust with respect to the

banks that were victimized by the check kite and induced to make

loans in reliance on false information.               All the transactions

between representatives of Ivy Industries and the victim banks were

part of an arms-length commercial relationship that is not within

the scope of § 3B1.3.     Bollin, 264 F.3d at 415.

           The district court’s later explanation of the adjustment

as based on Reid’s and Pinkerton’s position of trust within Ivy

Industries and their betrayal of that trust, resulting in financial

loss for Davis and Parker in particular, provides a better ground

for affirming the adjustment.          In United States v. Akinkoye, 185

F.3d 192 (4th Cir. 1999), this court upheld an adjustment under

§ 3B1.3 for a defendant convicted of credit card fraud who had

stolen information from homes he entered in his capacity as a real

estate agent.    Although the primary victims of his crime were the

banks   that   issued   the   credit    cards   and   ultimately   bore   the

financial loss, the homeowners who trusted the real estate agency

to represent their interests were also victims.          Id. at 204-05.    In

this case, as president and chief financial officer, Reid and

                                  - 9 -
Pinkerton had broad discretion to act on behalf of the company and

were in a position to carry out a difficult-to-detect wrong because

they had authority over the company’s bank accounts and acted

apparently without supervision.       Their actions caused considerable

financial losses to the co-owners, Davis and Parker, who had

reposed a trust in them that was close to a fiduciary one.                 We

conclude that they each held a position of trust with respect to

Davis and Parker, see Caplinger, 339 F.3d at 237, and abused it.

Although the district court did not provide this justification for

the adjustment until after the sentencing hearings, we may affirm

a   sentence   for   any   reason   appearing   in   the   record.    United

States v. Swann, 149 F.3d 271, 277 (4th Cir. 1998).

           We therefore affirm the sentences imposed by the district

court.   We dispense with oral argument because the facts and legal

contentions are adequately presented in the materials before the

court and argument would not aid the decisional process.

                                                                     AFFIRMED

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