Court Opinion

ID: 3182889
Source: CourtListenerOpinion
Date Created: 2016-03-04 21:04:19.228409+00
Date Added: 2024-06-11T07:38:59.429004
License: Public Domain

NOT PRECEDENTIAL
                    UNITED STATES COURT OF APPEALS
                         FOR THE THIRD CIRCUIT
                              _____________

                                   No. 15-1927
                                  _____________

                        UNITED STATES OF AMERICA

                                          v.

                                ABBE EDELMAN,
                                          Appellant
                                _______________

                  On Appeal from the United States District Court
                            for the District of New Jersey
                           (D.N.J. No. 2-14-cr-00706-001)
                   District Judge: Honorable Susan D. Wigenton
                                  _______________

                   Submitted Under Third Circuit L.A.R. 34.1(a)
                                 March 3, 2016

           Before: JORDAN, GREENBERG, and SCIRICA, Circuit Judges.

                               (Filed: March 4, 2016)
                                     _______________

                                       OPINION
                                    _______________

JORDAN, Circuit Judge.

       Abbe Edelman appeals his sentence from the United States District Court

for the District of New Jersey. Specifically, he challenges the application of a

       
        This disposition is not an opinion of the full court and, pursuant to I.O.P.
5.7, does not constitute binding precedent.
two-level enhancement in the calculation of the sentencing Guidelines, based on

his abuse of a position of public or private trust. We will affirm.

I.     Background

       From as early as 2004 through his arrest in May 2014, Edelman engaged in

a fraudulent real estate investment scheme. He presented himself to his victims as

a successful real estate investor operating through several entities (the “Edelman

Real Estate Companies” or “ERECs”),1 and he claimed substantial experience

buying and selling real estate, a history of working with banks to profitably flip

foreclosed properties, and an MBA in real estate finance from New York

University. None of those claims were true. He also touted, truthfully, his long

tenure as a real estate appraiser, the license for which he had held since 1988.

       In soliciting investments from his victims, Edelman employed a variety of

misrepresentations. He told victims that their investments would be used to

purchase foreclosed properties in New York, New Jersey, California, and Florida

at deep discounts from banks, whereupon the properties would be either leased out

or sold, generating substantial profits for the investors. He also falsely claimed

that he had already made millions through similar transactions, was investing his

own money in the alleged transactions, and had a host of other investors

participating (including professional athletes and celebrities). Little to none of the

money he obtained was, in fact, used to purchase real estate. Instead, Edelman ran

       1
        These entities included Classic Real Estate Appraisers, d/b/a Regency
Property Appraisers, Embassy Real Estate Fund, LLC, Regency Equity Partners
LLC, and Regency Equity Partners LLP.
                                          2
a classic Ponzi scheme, making “lulling” payments to existing investors to allow

his fraud to continue undetected. (App. at 14.) He also sent emails that purported

to be from banks selling investment properties, to falsely assure his victims that

their investment was proceeding as planned and to limit any suspicion. In total,

Edelman fraudulently secured over $5 million from investors, much of which he

used to pay his extravagant personal expenses. His scheme was ultimately

discovered and he was arrested on May 13, 2014.

       Edelman reached a plea agreement with the government, pursuant to which

he pled guilty to a single count of wire fraud in violation of 18 U.S.C. § 1343, and

agreed to a forfeiture of over three million dollars. He and the government further

agreed that the appropriate offense level under the U.S. Sentencing Guidelines for

his crime was 26. That calculation included a three-level reduction for acceptance

of personal responsibility under U.S.S.G. §§ 3E1.1(a) and (b), conditioned on his

ongoing acceptance of responsibility and cooperation with authorities. As part of

the plea agreement, Edelman reserved his right to appeal any sentence above the

Guidelines range associated with an offense level of 26.2 At that level, and based

on Edelman’s criminal history category of I, the applicable range was 63 to 78

months. U.S.S.G. Ch. 5 Pt. A.

       2
         As the plea agreement pointed out, the agreed-upon offense level operated
only as a recommendation to the sentencing judge, who was free to “make
independent factual findings and … reject any or all of the stipulations entered
into by the parties.” (App. at 21).
                                          3
       The U.S. Probation office took issue with that Guidelines calculation in its

Presentence Investigation Report. It argued instead that Edelman should not

receive any reduction for acceptance of responsibility and should be subject to a

two-level enhancement for abuse of a position of public or private trust under

U.S.S.G § 3B1.3, yielding a final offense level of 31 and associated imprisonment

range of 108 to 135 months. U.S.S.G. Ch. 5 Pt. A. The acceptance-of-

responsibility reduction, it argued, was inappropriate in light of Edelman’s failure

to honestly and forthrightly disclose the disposition of the proceeds of his fraud

and to provide a complete and accurate financial affidavit. As to the enhancement

for abuse of a position of trust, the Probation Office relied primarily on Edelman’s

license as a real estate appraiser and his advertising based on that license,

concluding that Edelment “exploited his license” to “[give] his victims a false

sense of confidence and trust, thereby facilitating his ability to run the Ponzi

scheme.” (PSR ¶ 45.)

       At the sentencing hearing, after Edelman and a number of his victims made

statements, the District Court concurred with the Probation Office’s

recommendation. The Court concluded that Edelman had, indeed, failed to

sufficiently take personal responsibility for his actions and so did not merit a

reduction under §§ 3E1.1(a) and (b). It similarly adopted the Probation Office’s

recommendation as to Edelman’s abuse of a position of trust. In so doing, the

judge stated:

                                          4
       Probation then assessed another set of points as it related to abuse of
       trust. And I did find that that was absolutely applicable. I know that
       there’s an argument that abuse of trust is the same thing as
       sophisticated means, and I don’t think that that’s the case. Abuse of
       trust is just as the victims stated here. It was this luring that you
       involved yourself in, that you basically ingratiated yourself with
       these individuals. You learned things about their families. You did
       personal things with them. You shared personal things with them.
       And one victim wrote that you even brought your child to meet them
       and basically in part of – in the process of luring them in to believe
       your absolute web of lies. And because of that, they developed a
       relationship with you. They developed a belief that you were an
       honest person. They believed that you were exactly who you said
       you were. That you had these years of experience. And not only had
       those years of experience, but you had the degrees to go with it. And
       all of this information you basically used to lure them in. To
       basically con them into believing that you were this sincere
       individual, which by any stretch of the imagination, you are clearly
       not … .

       So I think that you absolutely violated their trust.

(App. 152-53.)

              Based on those findings, the District Court concluded that the proper

offense level for Edelman was 31 and sentenced him to 135 months’ incarceration,

the top of his Guidelines range.

       This timely appeal followed.

II.    Discussion3

       Edelman challenges the District Court’s application of the abuse-of-a-

position-of-trust enhancement under U.S.S.G. § 3B1.3 in calculating his

       3
         The District Court had jurisdiction under 18 U.S.C. § 3231. We have
jurisdiction pursuant to 18 U.S.C. § 3742(a).

                                           5
Guidelines range.4 The inquiry into whether that section should be applied is two-

fold. “First, the court must determine whether a defendant was placed in a

position of trust, and, if he was, it must then determine whether he abused that

position in a way that significantly facilitated his crime.” United States v. Babaria,

775 F.3d 593, 596 (3d Cir. 2014) (internal quotation marks omitted). “We review

de novo the legal question of whether a position is one of trust under § 3B1.3 of

the Guidelines, and we review for clear error whether a defendant abused that

position.” Id. at 595 (internal quotation marks omitted).

       Section 3B1.3 imposes a two-level enhancement when “the defendant

abused a position of public or private trust, or used a special skill, in a manner that

significantly facilitated the commission or concealment of the offense … .” It

defines a position of “public or private trust” as one “characterized by professional

or managerial discretion,” a role “subject to significantly less supervision than

employees whose responsibilities are primarily non-discretionary in nature.”

U.S.S.G. § 3B1.3 cmt. 1. “This adjustment also applies in a case in which the

defendant provides sufficient indicia to the victim that the defendant legitimately

holds a position of private or public trust when, in fact, the defendant does not.”

U.S.S.G. § 3B1.3 cmt. 3. As laid out in United States v. Pardo, there are three

factors to consider in determining whether a position is one of public or private

       4
         While the District Court’s deviation from the agreed-upon offense level of
26 includes not only the addition of the two-level enhancement under § 3B1.3 but
also a refusal to apply the acceptance of responsibility three-level reduction,
Edelman challenges only the former.
                                           6
trust for purposes of § 3B1.3: “(1) whether the position allows the defendant to

commit a difficult-to-detect wrong; (2) the degree of authority which the position

vests in defendant vis-à-vis the object of the wrongful act; and (3) whether there

has been reliance on the integrity of the person occupying the position.” 25 F.3d
1187, 1192 (3d Cir. 1994).

       We explored how those factors would apply to the perpetrator of an

investment fraud scheme in United States v. Iannone, 184 F.3d 214 (3d Cir. 1999).

In that case, Iannone, relying on his experience in the oil and natural gas industry,

established his own company that purported to do business in that field. Id. at 217.

He solicited investments from neighbors, ostensibly for opening wells on two

leaseholds that he had, in fact, secured. Id. However, rather than use any of the

“investments” for the asserted purposes, he simply used the money “for personal

expenses.” Id. at 218. As part of the ongoing fraud, Iannone held himself out as a

Vietnam veteran to gain the trust of his victims, and continuously lied to his

“investors” whenever they became concerned or suspicious. Id.

       Iannone pleaded guilty and received a sentence that included the § 3B1.3

enhancement. Id. at 219. On appeal, we affirmed the application of that

enhancement, based on Iannone’s position as the CEO of the company he created

and used to execute the fraud. Id. at 223-25. Specifically, we reasoned that,

operating as the head of his company, he “solicited investment monies for the

express purpose of financing” the sham venture, and that he “occupied a

‘managerial’ position, in which he expectedly was entrusted with the task of using

                                          7
the investors’ money to complete [the project the victims thought they were

investing in].” Id. at 224-25.

       We then applied the Pardo factors. First, we concluded that Iannone’s

position facilitated the commission of a difficult-to-detect wrong because “[h]is

managerial position allowed him to conceal his personal use of the victims’

investment money” and because, as the owner and sole proprietor of the company,

“he was the victims’ only source of information about the status of their

investment and was not subject to any supervision that would have uncovered his

fraud.” Id. at 225. In finding the second factor – the degree of authority –

satisfied, we concluded that Iannone’s sole-proprietor status conferred complete

control, as “he alone was entrusted with the proper use of the investment money”

which “provided him unfettered authority over the victims’ investment[s].” Id.

Finally, as to the third Pardo factor – reliance by victims on the defendant’s

integrity – we noted that Iannone had used his resume to build the trust of his

victims, and had further “fostered reliance on his integrity by posing as a

decorated Vietnam veteran.” Id. Having concluded that all three Pardo factors

were satisfied, we held that the District Court had properly applied the § 3B1.3

enhancement.

       This case is on all fours with Iannone. Like Iannone, Edelman established

himself as the sole proprietor of companies in which his victims would invest, and

                                          8
it was through those entities that he fleeced them.5 The application of the Pardo

factors is also analogous. Regarding the difficulty of detection, his sole

proprietorship of the ERECs, like Iannone’s of his company, put Edelman in a

position of managerial control over the “investments,” with no supervision,

making him the sole source of information about the “investments.” As to the

second factor, Edelman’s case again neatly parallels Iannone’s, with his complete

control over the ERECs conferring absolute authority over the disposition of his

victim’s funds. Finally, Edelman, like Iannone, used his resume to induce his

victims’ reliance on his integrity, claiming via sales brochures and his website that

he had significant experience in real estate development, was a licensed real estate

appraiser, had an MBA in real estate finance from NYU, and had already secured

the participation of numerous other investors in the scheme. Just as we gave

significant weight to Iannone’s deception about his veteran status in concluding

that he “fostered reliance on his integrity,” id., so too Edelman’s many deceptions

and distortions of the truth were rightly considered in concluding that he fostered

his victims’ reliance on his integrity.6 Edelman was therefore eligible for the

       5
         The PSR and the District Court concluded that Edelman was eligible for
the § 3B1.3 enhancement for different reasons, and neither focused on Edelman’s
role as the sole proprietor of the ERECs. Because the question of whether a
position constitutes one of trust for the purposes of § 3B1.3 is one of pure law,
Babaria, 775 F.3d at 595, “[w]e may affirm the District Court on any grounds
supported by the record” and do so here. Nicini v. Morra, 212 F.3d 798, 805 (3d
Cir. 2000) (en banc).
       6
        Indeed, on this point, the District Court reached the same conclusion,
addressing Edelman at sentencing by stating “[t]hey believed that you were
                                          9
§ 3B1.3 enhancement, and there was no error in applying it in calculating his

Guidelines sentence.7

III.   Conclusion

       For the foregoing reasons, we will affirm.

exactly who you said you were. That you had these years of experience. And not
only had those years of experience, but you had the degrees to go with it. And all
of this information you basically used to lure them in.” (App. 152-53).
       7
          Having determined that a defendant occupied a position of trust, the
§ 3B1.3 analysis typically proceeds to the question of “whether he abused that
position in a way that significantly facilitated his crime.” Babaria, 775 F.3d at 596
(internal quotation marks omitted). However, because Edelman did not raise this
issue, it is waived. Albrecht v. Horn, 485 F.3d 103, 113 n.3 (3d Cir. 2007) (“An
issue that is not discussed in the briefs is waived.”).
                                         10