Court Opinion

ID: 9490380
Source: CourtListenerOpinion
Date Created: 2023-08-05 13:41:48.609367+00
Date Added: 2024-06-11T17:54:04.008612
License: Public Domain

CUDAHY, Circuit Judge,
concurring in part and dissenting in part.
I concur in all aspects of the able majority opinion but one: its treatment of the sentence enhancement for abuse of trust under U.S.S.G. § 3B1.3.
The question here is whether Bhagavan abused a position of trust reposed in him by a victim of the crime for which he was convicted — tax evasion. The majority points to his abusing his fiduciary relationship to Valley Engineering’s minority stockholders. By receiving payments for engineering services personally instead of allowing them to be submitted to the corporation, Bhagavan may have violated a duty to the minority stockholders. Bhagavan says that the minority stockholders may not have been deprived of anything tangible since Bhagavan as majority stockholder had the power to pay himself large sums as salary; this may very well be so, since the minority stockholders in the years in question received only $200 in dividends. I concede, however, that in principle if not in concrete reality, the minority stockholders reposed a trust in Bhagavan and that the minority has suffered from the diversion of revenue.
But this concession does not answer the relevant question. For, although the minority stockholders may be victims of the diversion of revenue, they are not victims of the crime of conviction — tax evasion — or any other crime, for that matter. Thus, there is no nexus between the putative victims, the minority stockholders, and the crime of conviction, tax evasion. No nexus, no enhancement: this is the law of this circuit, and of others as well. See, e.g., United States v. Hathcoat, 30 F.3d 913, 919 (7th Cir.1994); United States v. Broderson, 67 F.3d 452, 456 (2d Cir.1995). The majority cites examples from the Guidelines’ Application Note that confirm this rule: an attorney’s embezzling from his client and a bank executive’s approving fraudulent loans. In both examples a nexus links victim and crime: the client was the victim of the embezzlement, the bank the victim of the fraudulent loans. I agree that beyond a doubt a crime may have more than one victim, but all the alleged victims must suffer from the one crime — not from some other circumstances.
The majority speaks of Bhagavan’s “scheme”: diverting the revenue from Valley Engineering and then not paying the taxes due. Bhagavan, however, stands convicted only of tax evasion. The diversion of revenue is not even a crime, as far as I can tell. And even if the diversion were relevant, there is nothing to show that Bhagavan diverted the revenue for the purpose of avoiding taxes. All we know is that the revenue was diverted and the taxes not paid. This is roughly analogous to a person’s embezzling from her employer and not paying taxes on the loot. She steals, but we do not ordinarily assume that she steals for the purpose of evading taxes. (There the employer would be a victim — but of the crime of theft, not of her tax evasion.)
Although the minority shareholders may have been victims of the diversion, they were certainly not victims of the tax evasion. If anything, Bhagavan’s failure to pay the corporate taxes benefitted, not burdened, the minority shareholders. The problem with the majority’s multiple-victim theory here is that the IRS and the minority shareholders *195were not victims of the same crime. In fact, the minority shareholders were not victims of any crime. They merely may have suffered a breach of fiduciary trust — at most, a civil wrong.
I therefore respectfully dissent with respect to the enhancement.