Court Opinion

ID: 3016027
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:15:02.699306+00
Date Added: 2024-06-11T15:03:19.998982
License: Public Domain

___________

                            No. 95-1522
                            ___________

United States of America,        *
                                 *
          Appellee,              *    Appeal from the United States
                                 *    District Court for the
     v.                          *    District of Minnesota.
                                 *
Y. George Roggy,                 *
                                 *
          Appellant.             *
                            ___________

                   Submitted:   October 17, 1995

                       Filed: January 31, 1996
                            ___________

Before WOLLMAN, FLOYD R. GIBSON, and MORRIS SHEPPARD ARNOLD,
     Circuit Judges.
                           ___________

WOLLMAN, Circuit Judge.

     After a jury found Y. George Roggy guilty of mail fraud in
violation of 18 U.S.C. § 1341, adulteration of a raw agricultural
commodity in violation of 21 U.S.C. §§ 331(k) and 333(a)(2), and
using a pesticide in a manner contrary to its label in violation of
7 U.S.C. § 136(j), the district court1 sentenced him to sixty
months' imprisonment, three years of supervised release, and 200
hours of community service.     Roggy appeals his conviction and
sentence. We affirm.

                                 I.

     Roggy was a licensed pesticide applicator and distributor in
Minnesota and elsewhere.     He owned and operated a pesticide

    1
     The Honorable Michael J. Davis, United States District Judge
for the District of Minnesota.
application business named Fumicon, Inc. and a pesticide
distribution business named Aggesch, Inc. Roggy was regarded by
his peers as an expert in the field of pesticide application.

     In 1989, General Mills, Inc. (General Mills) hired Roggy to
apply pesticide to raw oats that were to be used in making cereal.
General Mills initially purchased the pesticide Reldan and
instructed Roggy to use it on the oats. Reldan was approved by the
Environmental Protection Agency (EPA) for use on raw oats.       In
1993, General Mills asked Roggy to purchase Reldan himself and bill
General Mills for the product and his services accordingly.

     Instead of purchasing Reldan, however, Roggy purchased and
used Dursban, a product that was not approved by the EPA for use on
raw oats. Roggy submitted invoices for his services to General
Mills over the course of thirteen months. The invoices stated that
Reldan had been applied at an approximate cost of $173 per gallon,
when Roggy had actually used Dursban, which cost approximately $83
per gallon. The difference between the cost of Dursban and the
invoice price for Reldan was approximately $85,000.

     In 1994, the Food and Drug Administration (FDA) detected the
presence of chlorpyrifos-ethyl in some of General Mills' oats while
taking random samples from various grain elevators. Chlorpyrifos-
ethyl is not approved for use on raw oats and is found in the
pesticide Dursban. Further testing by the FDA revealed that all of
General Mills' grain processing facilities in the Twin Cities and
Duluth, Minnesota, and in Superior, Wisconsin, had been
contaminated. In addition, widespread Dursban contamination was
found in oats and oat flour from these facilities, in finished
cereal products, and in a spraying apparatus owned by Roggy and
located at the Superior facility. Approximately 16 million bushels
of oats and 160 million boxes of cereal were tainted by the
unapproved pesticide.

                               -2-
     The investigation eventually focused on Roggy, who initially
denied using Dursban. On June 6, 1994, he told an FDA investigator
that he had used Reldan in treating the oats.       He showed the
investigator two barrels that he had used, claiming that they
contained Reldan.   One barrel displayed a Reldan label but was
empty.    The other barrel was unlabeled but contained some
pesticide. Tests conducted by the FDA subsequently revealed that
both barrels contained Dursban.    On the same day that he was
interviewed by the FDA investigator, Roggy returned an unused
barrel of Dursban to his supplier.

     In an interview with employees of General Mills on June 12,
1994, Roggy admitted that he had used Dursban in treating the oats.
He acknowledged making the switch because he was experiencing
financial difficulties.   Roggy was thereafter charged with mail
fraud, adulteration of a raw agricultural commodity, and misuse of
a pesticide.

                               II.

        Roggy first contends that his due process rights were
violated when the district court denied his motion requesting the
government to disclose any information in its possession regarding
the relative toxicity, similarity, safety and risk analyses of
Dursban and Reldan. In Brady v. Maryland, 373 U.S. 83, 87 (1963),
the Supreme Court held that "suppression by the prosecution of
evidence favorable to an accused upon request violates due process
where the evidence is material either to guilt or to punishment[.]"
Evidence is material only if it is likely that, had the evidence
been disclosed, the outcome of the proceeding would have been
different. United States v. Quintanilla, 25 F.3d 694, 698 (8th
Cir.) (quoting United States v. Bagley, 473 U.S. 667, 682 (1985)),
cert. denied, 115 S. Ct. 457 (1994).

                               -3-
     We agree with the district court that the evidence at issue
was immaterial to the charges contained in the indictment. First,
it is clear that information regarding the safety of Dursban did
not relate to the mail fraud charges brought under 18 U.S.C. §
1341. The only evidence that was relevant to the fraud charges was
the fact that Roggy had substituted Dursban for Reldan and had
billed General Mills for the higher-priced Reldan, thereby causing
General Mills to suffer damage. Thus, any evidence regarding the
similarity between the two pesticides would not have cleared Roggy
of the fraud charges.

     Nor was the information pertinent to the charge of
adulteration of a raw agricultural commodity in violation of 21
U.S.C. §§ 331(k) and 333(a)(2).2 Section 331(k) prohibits any act
that results in adulteration of a food, if the act is done while
the food is held for sale after shipment in interstate commerce.
A food is considered adulterated "if it is a raw agricultural
commodity and it bears or contains a pesticide chemical which is
unsafe within the meaning of section 346a(a) of this title[.]" 21
U.S.C. § 342(a)(2)(B). Absent a tolerance level or an exemption
from the tolerance requirement, a pesticide is unsafe if it is not
generally recognized among experts as safe for use on the
particular raw agricultural commodity. 21 U.S.C. § 346a(a).

     The above statutes make clear that evidence comparing Dursban
and Reldan was immaterial to the adulteration charge. The relevant
issue was whether Roggy caused the oats to be adulterated when he
applied the Dursban. There was no tolerance level or exemption
from the tolerance for Dursban pertaining to raw oats. Therefore,
the only pertinent evidence with respect to the adulteration charge
was whether Dursban was generally recognized as safe for use on

    2
      Roggy is not contesting his misdemeanor conviction for using
a pesticide in a manner contrary to its label in violation of 7
U.S.C. § 136(j).

                               -4-
oats within the meaning of section 346a.      Comparison evidence
regarding Dursban and Reldan was irrelevant, as was evidence
showing that Dursban was safe for use on other stored grains.

     Roggy's Brady requests would not have led to any information
that was material to the crimes charged in the indictment. Thus,
the district court was correct in denying Roggy's motion.

                                III.

     Roggy also contends that the district court erred in excluding
evidence showing that the relative wholesale price of Dursban was
higher than Reldan. He claims that this information would have
shown that General Mills was not getting "ripped off" when Roggy
marked up the price of Dursban to that of Reldan.       Again, this
evidence was simply not relevant to any of the charges contained in
the indictment. The government simply had to prove that Dursban
was an unapproved pesticide for use on oats and that Roggy billed
General Mills for Reldan when he was actually using Dursban. Any
evidence regarding the price of Dursban on the wholesale market was
irrelevant because Roggy, at all times, falsely represented that he
was using Reldan; he did not simply mark up the price of Dursban to
that of Reldan. Thus, the evidence was properly excluded.

                                 IV.

     Roggy contends that the court erred in sentencing him to sixty
months under U.S.S.G. § 2F1.1. First, he claims that the court
miscalculated the appropriate loss figure. The court found that
the amount of the loss General Mills suffered was in excess of $80
million, resulting in the maximum increase in the base offense
level.3

         3
          The district court found that General Mills sustained an
actual     loss of $146.9 million as follows:     $2.3 million --

                                 -5-
                        A.   Amount of Loss

     We review the district court's determination as to factual
issues concerning the amount of loss under the clearly erroneous
standard.   United States v. Morris, 18 F.3d 562, 570 (8th Cir.
1994) (citing United States v. Earles, 955 F.2d 1175, 1180 (8th
Cir. 1992)).    Interpretation of the sentencing guidelines and
application of the guidelines to the facts of the case is subject
to a de novo standard of review, however. United States v. Willis,
997 F.2d 407, 417 (8th Cir. 1993), cert. denied, 114 S. Ct. 704
(1994).

     Section 2F1.1 provides a base level of six for offenses
involving fraud or deceit. Under section 2F1.1(b), the base level
is increased according to the amount of loss attributed to the
fraud.   In calculating the loss, the court will use either the
amount of the actual loss resulting from the fraud or the amount of
loss the defendant attempted to inflict, whichever is greater. §
2F1.1, comment. (n.7); Morris, 18 F.3d at 570. The commentary to
section 2F1.1 contains special provisions for determining the loss
in product substitution cases because damages in such cases are
frequently substantial.    See § 2F1.1, comment. (n.7(c)).      It
provides that, in addition to direct damages, consequential
foreseeable damages can be used to compute the loss. Id.

     Roggy claims that the amount of the loss should be either
$85,000, which was the amount he overcharged General Mills, or
$166,000, which was the total bill for his services. This would
result in a base level of twelve or thirteen instead of the maximum
base level of twenty-four. He contends that consequential damages
may only be considered in government fraud procurement cases,

legal/consulting fees; $22.7 million -- marketing costs; $11.9
million -- sales costs; $100 million -- operating costs; and $10
million -- contingency fund.

                                -6-
citing United States v. Wilson, 993 F.2d 214 (11th Cir. 1993), in
support of his argument. In Wilson, however, the court stated that
consequential damages may be considered in "government procurement
and product substitution frauds[.]" Id. at 217 (emphasis added).
It is true that the two examples listed in Application Note 7(c) to
section 2F1.1 relate to cases in which the government was
defrauded; however, both the title to and the general rule
contained in subsection (c) do not limit its application to cases
where the government is a party. Thus, we hold that the district
court was correct in considering consequential damages in
calculating the loss.

     In any event, the actual loss suffered by General Mills was
much greater than either of the amounts Roggy claims. In addition
to being charged for Roggy's fraudulent services, General Mills was
left with more than 16 million bushels of tainted oats and 160
million boxes of tainted cereal. Roggy not only contaminated the
oats that he sprayed, he contaminated the facilities where those
oats were processed as well as the unsprayed oats that moved
through those facilities.     General Mills sustained huge losses
attributable to the contaminated oats and incurred additional
expenses in cleaning its production facilities.

     Also without merit is Roggy's contention that the court should
have used either $85,000 or $166,000 in calculating the loss
because that was the amount of the loss he intended to inflict on
General Mills.     The intended loss figure is only used in
calculating the loss if it is greater than the actual loss.       §
2F1.1, comment. (n.7). Thus, the district court was correct in
using the actual loss sustained by General Mills of $146.9 million
in calculating the appropriate offense level.

                    B.   Use of a Special Skill

     Roggy also claims that the district court erred when it

                                -7-
increased the base level for use of a special skill under U.S.S.G.
§ 3B1.3. The district court found that Roggy was one of the top
pesticide applicators in Minnesota and that "his skill and
knowledge of the product and chemicals, through his teaching and
lecturing of practically all of the pesticide people in this state
and in the upper midwest area" warranted an increase in the base
level. An adjustment in sentencing is entitled to great deference
and is reviewed under the clearly erroneous standard.       United
States v. Culver, 929 F.2d 389, 392 (8th Cir. 1991) (citing United
States v. Nunley, 873 F.2d 182, 187 (8th Cir. 1989)).

     Section 3B1.3 allows the base level to be increased by two
points if the defendant used a special skill to facilitate the
commission or concealment of the offense. The commentary to that
section states that a special skill is a skill not possessed by the
general public and which usually requires substantial education,
training or licensing. § 3B1.3, comment. (n.2). Some examples
include pilots, attorneys, doctors, and chemists. Id.

     Roggy was licensed as a master pesticide applicator.       His
knowledge of pesticides led him to switch the unapproved Dursban
for the approved Reldan because he believed that such a switch
could not be detected. Roggy's claim that he did not use his skill
as a pesticide applicator when he submitted the fraudulent invoices
to General Mills is unpersuasive.     We have held that use of a
special skill does not have to be directly related to the offense
of the conviction. See United States v. Graham, 60 F.3d 463, 469
(8th Cir. 1994) (citing Culver, 929 F.2d at 393). Because Roggy
used his expertise in the selection and application of pesticides
to facilitate a fraud on General Mills, we find that the
enhancement was proper.

                 C.   Acceptance of Responsibility

     Roggy also claims the court erred in refusing to decrease the

                                -8-
base level for acceptance of responsibility under U.S.S.G. § 3E1.1.
Roggy argues that the district court's refusal to grant him a
reduction for acceptance of responsibility was based solely upon
his exercise of his right to proceed to trial.

     The district court stated at the sentencing hearing that
"[p]ursuant to Section 3E1.1 in application note two . . . a
defendant who puts the government to its burden of proof at trial
is not entitled to a reduction." As the district court well knew,
of course, Application Note 2 goes on to state that "conviction by
trial   does   not  automatically   preclude   a   defendant   from
consideration for such a reduction."      Application Note 2 also
states that no adjustment is warranted when the defendant denies
the factual element of guilt, goes to trial, is convicted, and only
then admits guilt and expresses remorse.

     Because the sentencing judge is in a unique position to
evaluate the defendant's acceptance of responsibility, that
determination is entitled to great deference on review. § 3E1.1,
comment. (n.5). We hold that the district court did not err in
finding that Roggy had not clearly accepted responsibility for his
actions. The Presentence Investigation Report (PSR) recommended
that the district court deny a reduction because Roggy failed to
meet the requirements contained in section 3E1.1.       When first
questioned by the FDA investigator, Roggy denied using the
unapproved pesticide. Although Roggy eventually admitted making
the switch, he continued to assert that his actions did not amount
to fraud.    According to the PSR, Roggy still claims that he
believed Dursban was a generic equivalent for Reldan and that
therefore the pesticides could be substituted much like "a generic
brand of aspirin and Bayer aspirin." Because Roggy continues to
deny the fraud, he is not entitled to a reduction for acceptance of
responsibility. See United States v. Edgar, 971 F.2d 89, 92 (8th
Cir. 1992) (denying downward departure when defendant denied any
intent to defraud his creditors). Moreover, his mere expression of

                               -9-
remorse does not warrant a reduction under section 3E1.1.       See
United States v. Sloman, 909 F.2d 176, 182 (6th Cir. 1990) (holding
no departure warranted when defendant expressed regret but denied
fraudulent intent).

     We note that the district court had given careful thought and
consideration to the sentence it felt was warranted by the facts in
the case, as reflected in its statement that "I've lost a lot of
sleep thinking about what should happen.        And I've read the
guidelines and studied the guidelines." This, then, is not one of
those cases in which there might be some question that the district
court was unaware of its authority to grant an acceptance of
responsibility reduction. Rather, the record reflects the district
court's informed, conscientious, considered exercise of the
authority granted to it by the sentencing guidelines.

     We have carefully examined Roggy's other claims and find them
to be without merit.

     The conviction and sentence are affirmed.

     A true copy.

          Attest:

               CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.

                               -10-