Court Opinion

ID: 163202
Source: CourtListenerOpinion
Date Created: 2010-08-14 07:48:48+00
Date Added: 2024-06-11T12:18:57.729976
License: Public Domain

UNITED STATES COURT OF APPEALS

                                 TENTH CIRCUIT

 UNITED STATES OF AMERICA,

             Plaintiff - Appellee,                     No. 02-2045
       v.
 JENNIFER EDWARDS,

             Defendant - Appellant.

                                      ORDER

                                 Filed April 9, 2003

Before LUCERO , HOLLOWAY , and ANDERSON , Circuit Judges.

            Appellant’s motion to publish the order and judgment dated

March 13, 2003, is granted. A copy of the published opinion is attached.

                                       Entered for the Court
                                       PATRICK FISHER, Clerk of Court

                                       By:

                                             Deputy Clerk
                                                                     F I L E D
                                                             United States Court of Appeals
                                     PUBLISH                         Tenth Circuit

                  UNITED STATES COURT OF APPEALS                     MAR 13 2003

                               TENTH CIRCUIT                   PATRICK FISHER
                                                                         Clerk

 UNITED STATES OF AMERICA,

             Plaintiff - Appellee,
       v.                                              No. 02-2045
 JENNIFER EDWARDS,

             Defendant - Appellant.

        APPEAL FROM THE UNITED STATES DISTRICT COURT
               FOR THE DISTRICT OF NEW MEXICO
                    (D.C. NO. CR-01-399-LH)

Susan Bronstein Dunleavy, Assistant Federal Public Defender (Stephen P.
McCue, Federal Public Defender), Albuquerque, New Mexico, for Defendant-
Appellant.

Norman Cairns, Assistant United States Attorney (David C. Iglesias, United
States Attorney, with him on the brief), Albuquerque, New Mexico, for Plaintiff-
Appellee.

Before LUCERO , HOLLOWAY , and ANDERSON , Circuit Judges.

ANDERSON , Circuit Judge.
      Jennifer Edwards pled guilty to bank fraud, committed in violation of 18

U.S.C. § 1344, and was sentenced under the United States Sentencing

Commission, Guidelines Manual (Nov. 2000) (USSG), to five months

imprisonment, to be served at a halfway house, followed by five years of

supervised release, including five months on home confinement under the

electronic monitoring program. The sentence was based on a calculated total

offense level of 12, two levels of which reflected an adjustment, pursuant to

USSG §3B1.3, for abusing a position of trust. On appeal, Ms. Edwards contends

that the district court erred in applying that adjustment because she did not

occupy the type of position for which §3B1.3 was designed: a position

“characterized by professional or managerial discretion (   i.e. , substantial

discretionary judgment that is ordinarily given considerable deference).” USSG

§3B1.3, comment. (n.1).

      As relevant to our disposition of this case, “[w]hether a defendant occupied

a position of trust within the meaning of USSG § 3B1.3 is a factual question, and

we will affirm the sentencing court unless we find its decision clearly erroneous.”

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

standard to the analysis set forth below, we vacate the sentence and remand for

resentencing.

                                            -2-
                                        A.

      At the sentencing hearing in this case, the district court adopted the

Presentence Investigation Report (PIR), and one witness testified, establishing the

following central facts. From 1992 through 1998, Ms. Edwards worked as an

hourly wage employee in the outdoor advertising division of the accounting

department of Bowlin, a New Mexico retail and outdoor advertising company. In

that job, she largely handled accounts receivable. More specifically, her duties

during the pertinent period consisted of receiving checks mailed in by Bowlin

customers, preparing them for deposit, posting the payments to customer accounts

and the cash receipts journal, sending out bills, calculating customer account

balances, and compiling and forwarding to sales personnel and her supervisors

reports reflecting this data. Cash receipts journal reports were incorporated in the

company’s general ledgers and, subsequently, its financial statements.

      Ms. Edwards’ duties also included posting credits to customer accounts.

Credits were granted in amounts determined by authorized company personnel

when they were advised by customers of various problems with their outdoor

signs. Ms. Edwards had no authority to grant credits and no authority to exercise

discretionary judgment with respect to any other part of her job. Her tasks were

solely ministerial.

                                        -3-
      From late December 1997, through mid-September 1998, Ms. Edwards

embezzled $31,395.06 from Bowlin by failing to post certain customer payments

and by re-routing some fifty-nine checks reflecting those payments to her

boyfriend’s account at The First Security Bank—an account to which she had

access. In all but two instances, she accomplished this by simply endorsing the

back of the check “for deposit only” to the number of that account. In two

instances she changed the name of the payee on the check to correspond to the

account. She then included the checks in the regular deposits she prepared. She

concealed this diversion of payments by posting false credits to the accounts of

customers whose checks were diverted. Thus, the accounts balanced for reporting

purposes.

      In September 1998, a bank teller finally noticed the discrepancy on the

checks between Bowlin, as payee, and the account number listed on the back of

the check for deposit purposes. This discovery led eventually to the bank fraud

charge in this case.

                                         B.

      Section 3B1.3 of the Sentencing Guidelines, and Application Note 1 of the

Commentary to the Guideline, provide in pertinent part, as follows:

                                        -4-
      Abuse of Position of Trust or Use of Special Skill

      If 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, increase by      2 levels. This adjustment
      may not be employed if an abuse of trust or skill is included in the
      base offense level or specific offense characteristic    ....

                                   Commentary

      Application Notes :

      1.    “Public or private trust” refers to a position of public or private
            trust characterized by professional or managerial discretion (i.e.,
            substantial discretionary judgment that is ordinarily given
            considerable deference ). Persons holding such positions ordinarily
            are subject to significantly less supervision than employees whose
            responsibilities are primarily non-discretionary in nature. For this
            adjustment to apply, the position of public or private trust 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). This adjustment, for example, applies in the case of an
            embezzlement of a client’s funds by an attorney serving as a
            guardian, a bank executive’s fraudulent loan scheme, or the criminal
            sexual abuse of a patient by a physician under the guise of an
            examination. This adjustment does not apply in the case of an
            embezzlement or theft by an ordinary bank teller or hotel clerk
            because such positions are not characterized by the above-described
            factors.

USSG §3B1.3, comment. (n.1) (emphasis added).

      As indicated above, Ms. Edwards contends that this guideline adjustment

should not have been applied to her because, among other things, her job was

purely ministerial and did not entail substantial discretionary judgment. The

government, on the other hand, emphasizes Ms. Edwards’ alleged specialized

                                         -5-
accounting skills, her minimal oversight, her virtual exclusive control over the

accounts receivable and customer billing records—with resulting impact on the

company’s general ledger—and her use of her position to conceal the defalcation.

      In the fraud context, we have recognized that the application of §3B1.3 is

categorized and analyzed somewhat differently depending on the defendant’s

status and type of activity in which the defendant is engaged or purports to be

engaged. One of those categories relates to employees of a business, such as to

the defendant in this case. It involves those situations “where the defendant

steals from his employer, using his position in the company to facilitate the

offense.” Koehn , 74 F.3d at 201.   See also United States v. Pappert , 112 F.3d

1073, 1080 (10th Cir. 1997). Typically, the question of whether an employee

occupied a position of trust within the meaning of §3B1.3 is a heavily fact-

specific determination to be made by the district court using the guideline and

other factors which we have recognized.    See , e.g. , United States v. Haber , 251

F.3d 881, 890-91 (10th Cir. 2001).

      However, as the emphasized portions of the guideline and commentary set

out above indicate, the adjustment under §3B1.3 is not intended to be routinely

applied to every employee fraud or embezzlement case. As we have stated in an

analogous context, the fact is that “[i]n every successful fraud the defendant will

have created confidence and trust in the victim, but the sentencing enhancement is

                                          -6-
not intended to apply in every case of fraud.”    Koehn , 74 F.3d at 201. Thus, the

fact that Ms. Edwards was trusted by her employer with significant

responsibility—even to the point of allowing her to bypass usual accounting

controls and pick up customer checks from incoming mail—is not determinative.

Nor does the fact that she made entries in and compiled balances from customer

accounts and the cash receipts journal necessarily establish that she possessed

special accounting skills.

       A careful review of the district court’s ruling convinces us that with the

single important exception discussed below, the court understood the guideline

and ably and conscientiously sorted out the facts. Thus, for instance, we agree

with the district court’s statement during the sentencing hearing that job titles

themselves do not control; actual duties and authorized activities do. R. Vol. III

at 17-18. We also agree with the court’s findings that company officials trusted

Ms. Edwards, and that her position gave her access to customers’ checks and

important company records.      Id. at 52-53.

       However, the evidence does not support the district court’s suggestion that

Ms. Edwards either had the discretionary authority to grant credits to customers,

id. at 53, or, for that matter any other authority to make substantial discretionary

judgments regarding company revenues or expenses. Ms. Edwards’ work, as she

contends on appeal, was indeed clerical and ministerial. Opportunity and access

                                            -7-
do not equate to authority, or to the kind of “substantial discretionary judgment

that is ordinarily given considerable deference.” USSG § 3B1.3, comment.(n.1).

      We agree with the Seventh Circuit that the guideline language regarding

discretion refers, in general, to the type of trusted position in an organizational

setting—

      where business or similar entities charge particular employees with
      deciding, on a case-by-case basis, whether a particular expenditure or
      transfer of company funds or other valuables is necessary or
      beneficial to the organization. Some employees have unfettered
      authority to spend company money; others provide initial
      authorization that for reasons of efficiency is subject only to nominal
      review.

United States v. Tiojanco , 286 F.3d 1019, 1021 (7th Cir. 2002) (discussing hotel

clerk having authority to evaluate complaints and exercise discretion with respect

to issuing refunds and credits).

      In sum, the facts show no more than that Ms. Edwards’ job was responsible

but ministerial. The Sentencing Commission, by its language in Application Note

1, deliberately set the bar at a higher level. Ms. Edwards’ criminal conduct was

the type of offense to which §3B1.3 refers by its statement that “[t]his adjustment

may not be employed if an abuse of trust or skill is included in the base offense

level or specific offense characteristic.” USSG §3B1.3. Accordingly, we hold

                                          -8-
that the adjustment pursuant to §3B1.3 was clearly erroneous, and we, therefore,

VACATE the sentence and REMAND for resentencing.        1

      1
       The question of how broadly or narrowly the term “victim” should be
defined in relation to the position of trust held by the defendant was not raised at
any point in this case. Thus, we do not address the issue except to observe that it
is a matter of dispute among the circuits. See, e.g., United States v. Guidry, 199
F.3d 1150, 1160 n.6 (10th Cir. 1999) (discussing cases). In any event, the
judgment in this case specifically included an amount of restitution to Bowlin, as
well as restitution to the bank, leaving no doubt that both were victimized on a
quantifiable basis.

                                         -9-