United States v. Friedberg, No. 08-3763 (2d Cir. 2009)

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08-3763-cr United States v. Friedberg 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 -------- 4 August Term, 2008 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 (Argued: February 3, 2009 20 Decided: March 2, 2009) Judge.1 Docket No. 08-3763-cr -----------------------------------------------------------X UNITED STATES OF AMERICA, Appellee, - v. DANIEL FRIEDBERG, Defendant-Appellant. -----------------------------------------------------------X Before: POOLER and KATZMANN, Circuit Judges, PRESKA, District 21 Appeal from a judgment of the United States District Court 22 for the Eastern District of New York (Townes, J.), convicting 23 defendant, after a guilty plea, of five counts of tax evasion. 24 We hold that the district court properly considered defendant s 25 uncharged embezzlement when it applied an abuse of trust 26 enhancement at sentencing. 27 AFFIRMED. 1 The Honorable Loretta A. Preska, of the United States District Court for the Southern District of New York, sitting by designation. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 ELIZABETH A. GEDDES, Assistant United States Attorney, for Benton J. Campbell, United States Attorney for the Eastern District of New York, Brooklyn, New York (Emily Berger, on the brief), for Appellee. GEORGE R. GOLTZER, Goltzer & Adler, New York, New York, for DefendantAppellant. PRESKA, District Judge: Daniel Friedberg pleaded guilty to five counts of tax 15 evasion in violation of 26 U.S.C. § 7201. 16 applicable advisory Sentencing Guidelines range, the district 17 court included a two-point increase in offense level for abuse of 18 a position of trust, pursuant to U.S.S.G. § 3B1.3, and sentenced 19 Friedberg to twenty-six months incarceration. 20 Friedberg challenges the abuse of trust enhancement and argues 21 that his sentence was substantively unreasonable. 22 that the district court s sentencing determination was proper. 23 Accordingly, we affirm. 24 25 When calculating the On appeal, We conclude BACKGROUND Friedberg was Grand Secretary for the Independent Order of 26 Odd Fellows ( Odd Fellows ) from 1986 to 2004. 27 2004, he embezzled $562,000 of the organization s funds. 28 personal bills, made mortgage payments for himself and a friend, 29 and purchased health insurance for non-employees with his ill2 Between 2000 and He paid 1 gotten gains. 2 to either cash or himself and deposited these funds (totaling 3 $298,436) as savings. 4 embezzled funds as income. 5 Friedberg also wrote organizational checks payable He did not, however, report any of the The government ultimately charged Friedberg with five counts 6 of tax evasion, to which he pleaded guilty on January 23, 2008. 7 The United States Probation Office subsequently prepared a Pre- 8 sentence Investigation Report ( PSR ) for Friedberg. 9 the Probation Office calculated the base offense level at sixteen In the PSR, 10 based on a tax loss of more than $80,000. See U.S.S.G. § 11 2T4.1(F). 12 report more than $10,000 of income in a given year pursuant to 13 U.S.S.G. § 2T1.1(b)(1) and a two-level enhancement for abuse of a 14 position of trust pursuant to U.S.S.G. § 3B1.3. 15 Probation Office deducted three points for Friedberg s acceptance 16 of responsibility under U.S.S.G. § 3E1.1, yielding a total 17 offense level of seventeen. 18 with a criminal history category of I, the Sentencing Guidelines 19 recommend a range of imprisonment of 24 to 30 months. See 20 U.S.S.G. Ch. 5, Pt. A. 21 It then added a two-level enhancement for failing to Finally, the For this offense level, combined Over defense counsel s objection, the district court 22 accepted the PSR s application of the abuse of trust enhancement 23 in calculating the offense level. 3 The court then sentenced 1 Friedberg to a term of imprisonment of twenty-six months. 2 Friedberg now appeals his sentence. DISCUSSION 3 4 We review a challenged sentence for reasonableness. United 5 States v. Verkhoglyad, 516 F.3d 122, 127 (2d Cir. 2008)(internal 6 quotation marks omitted). 7 substantive components. Id. 8 determine whether the district court relied on erroneous factual 9 findings, correctly calculated the applicable Guidelines range, 10 treated the Guidelines as advisory, and considered the factors 11 listed in 18 U.S.C. § 3553(a). See United States v. Cavera, 550 12 F.3d 180, 190 (2d Cir. 2008)(en banc). 13 focuses on whether, under the totality of the circumstances, the 14 sentence is within the range of permissible decisions. Id. at 15 189 (quoting United States v. Rigas, 490 F.3d 208, 238 (2d Cir. 16 2007)). 17 under an abuse of discretion standard. Id. at 188. 18 contemplates de novo review of legal questions and clear-error 19 review of the district court s factual determinations. United 20 States v. Salim, 549 F.3d 67, 72 (2d Cir. 2008). 21 This inquiry has both procedural and Under the procedural component, we The substantive component We assess both procedural and substantive reasonableness This standard On appeal, Friedberg challenges his sentence as both 22 procedurally and substantively unreasonable. 23 former, he argues the district court s application of the abuse 4 With respect to the 1 of trust enhancement was legal error. As to the latter, he 2 argues that his age and personal characteristics rendered 3 imposition of a Guidelines sentence improper. 4 A. Enhancement for Abuse of a Position of Trust 5 Friedberg concedes that he abused a position of trust with 6 respect to Odd Fellows by virtue of his embezzlement. 7 he argues that this abuse cannot support a sentencing enhancement 8 because he did not occupy a position of trust with respect to the 9 government, which was the primary victim of his tax evasion. 10 must therefore determine whether the district court properly 11 considered the circumstances of Friedberg s embezzlement from Odd 12 Fellows when imposing the abuse-of-trust enhancement. 13 reasons that follow, we think it did. 14 However, We For the Under the Sentencing Guidelines, a two-point enhancement is 15 warranted if the defendant abused a position of public or 16 private trust . . . in a manner that significantly facilitated 17 the commission or concealment of the offense. U.S.S.G. 18 § 3B1.3. 19 sentencing court must consider a defendant s role in the 20 offense on the basis of [r]elevant [c]onduct, which is not 21 limited to the elements and acts cited in the count of 22 conviction. 23 conduct includes all acts and omissions committed . . . by the In determining whether to apply this enhancement, a U.S.S.G. Ch. 3, Pt. B, introductory cmt. 5 Relevant 1 defendant . . . that occurred during the commission of the 2 offense of conviction, in preparation for that offense, or in the 3 course of attempting to avoid detection or responsibility for 4 that offense. U.S.S.G. § 1B1.3(a)(1). 5 offenses at issue may be grouped under U.S.S.G. § 3D1.2(d), the 6 sentencing court is to consider all acts and omissions . . . 7 that were part of the same course of conduct or common scheme or 8 plan as the offense of conviction. 2 U.S.S.G. § 1B1.3(a)(2). 9 Where, as here, the In United States v. Cianci, the Third Circuit held that a 10 defendant s uncharged embezzlement constituted relevant conduct 11 supporting an abuse of trust enhancement in the offense level 12 calculation for a tax evasion conviction. 13 1998). 14 consider [c]onduct that is not formally charged or is not an 15 element of the offense of conviction , U.S.S.G. § 1B1.3, 16 background cmt. para. 1, the Cianci court reasoned that the 17 defendant s abuse of his position as a high ranking corporate 18 official enabled him to embezzle the income he failed to report 2 154 F.3d 106 (3d Cir. Noting that the Sentencing Guidelines instruct courts to The base offense level and specific offense characteristics for tax evasion are provided in U.S.S.G. § 2T1.1. Guidelines section 3D1.2(d) includes offenses covered by U.S.S.G. § 2T1.1 among those to be grouped. Section 3D1.2(d) also includes embezzlement, covered by U.S.S.G. § 2B1.1, as eligible for grouping because the offense level for embezzlement is likewise determined largely on the basis of the total amount of harm or loss. 6 1 and thus constituted relevant conduct to be considered at 2 sentencing. 154 F.3d at 112-13. 3 similar reasoning to uphold abuse of trust enhancements in 4 analogous circumstances. See United States v. Gricco, 277 F.3d 5 339, 361-62 (3d Cir. 2002) (applying Cianci in finding that 6 uncharged embezzlement was relevant conduct to tax evasion 7 supporting abuse of trust enhancement); United States v. Young, 8 266 F.3d 468, 478 (6th Cir. 2001) (finding Cianci persuasive in 9 holding that the district court correctly used the Defendant s 10 embezzlement activities as relevant conduct to enhance the money 11 laundering offense level for abuse of position of trust ); United 12 States v. Duran, 15 F.3d 131, 134 (9th Cir. 1994) (the district 13 court properly considered law enforcement officer s use of his 14 position to steal money from suspected drug dealers to support 15 application of an abuse of trust enhancement in connection with 16 his structuring conviction); see also United States v. Fife, 471 17 F.3d 750, 753 (7th Cir. 2006) (affirming abuse of trust 18 enhancement for tax evasion where defendant abused his position 19 of trust to facilitate fraudulent scheme); United States v. 20 Bhagavan, 116 F.3d 189, 192-93 (7th Cir. 1997) (abuse of trust 21 enhancement to tax evasion sentence warranted where defendant 22 majority shareholder used his position to divert money from the 23 company). Several circuits have employed 7 1 Two circuit courts, however, have held to the contrary. In 2 United States v. Barakat, the Eleventh Circuit overturned an 3 abuse of discretion enhancement resulting from the district 4 court s consideration of the defendant s participation in an 5 illegal kickback scheme when imposing a sentence for tax 6 evasion. 130 F.3d 1448 (11th Cir. 1997). 7 from the Barakat court s conclusion that the sentencing court 8 could consider only conduct relating to the offense of conviction 9 when determining whether to apply the enhancement. Id. at 1455. 10 Barakat has since been criticized as inconsistent with the plain 11 language of the Guidelines requiring courts to look beyond 12 elements and acts cited in the count of conviction when 13 evaluating relevant conduct. U.S.S.G. Ch. 3, Pt. B, introductory 14 cmt.; see Young, 266 F.3d at 479 ( The Eleventh Circuit s 15 position . . . contravenes a plain reading of the Sentencing 16 Guidelines. ); Cianci, 154 F.3d at 111 (criticizing the Barakat 17 court s interpretation of relevant conduct as unduly narrow). This result stemmed 18 In United States v. Guidry, the Tenth Circuit held that an 19 abuse of trust enhancement is appropriate with respect to a tax 20 evasion offense only where the defendant occupies a position of 21 trust vis-Ã -vis the government. 199 F.3d 1150, 1160 (10th Cir. 22 1999). 23 to embezzle millions of dollars from her employer and was In Guidry, the defendant used her position as controller 8 1 subsequently convicted for failing to report the illicit income. 2 Unlike the Eleventh Circuit in Barakat, the Guidry court noted 3 that the district court may have been correct in finding [that 4 the defendant s] embezzlement activity was relevant conduct, 5 committed to avoid detection of her false income tax returns. 6 Id. at 1159-60. 7 enhancement was improper because the defendant did not occupy a 8 position of trust with respect to the victim of her tax evasion. 9 Id. at 1160. It nonetheless held that an abuse of trust 10 The Guidry court s holding thus depends on the assumption 11 that the government is always the sole victim of a tax evasion 12 offense. However, other circuits have expressly rejected this 13 premise. In United States v. Bhagavan, the Seventh Circuit 14 upheld an abuse of trust enhancement in a tax evasion conviction 15 based on the defendant s exploitation of his majority shareholder 16 status and corporate rank to divert funds from the company. 116 17 F.3d 189. 18 government was the sole victim of the tax evasion as a logical 19 fallacy. Id. at 193. 20 corporate position as part of an overall scheme to enrich himself 21 at the company s expense and avoid taxes. 22 corporation, its shareholders, and the government were all 23 victims the offense. Id. ( It is enough that identifiable victims The court viewed the defendant s argument that the It reasoned that the defendant abused his 9 Therefore the 1 of [the defendant s] overall scheme to evade his taxes put him in 2 a position of trust and that his position contributed in some 3 significant way to facilitating the commission or concealment of 4 the offense. (quoting U.S.S.G. § 3B1.3, cmt. n.1)); see also 5 Fife, 471 F.3d at 753 ( [The defendant] incorrectly argues that 6 because his crime is tax evasion, and the United States 7 government is the direct victim of his crime, the abuse of 8 position of trust enhancement is only proper if it was the United 9 States that placed him in a position of trust. ); Cianci, 154 10 F.3d at 112 ( Admittedly, the employer-victim here was not the 11 victim of the offense of conviction, but no language in the 12 applicable sentencing guideline so circumscribes the 13 enhancement. ). 14 We employed similar reasoning to uphold an abuse of trust 15 enhancement in United States v. Cusack, 229 F.3d 344 (2d Cir. 16 2000). 17 fraud resulting from his sale of forged documents purportedly 18 belonging to President John F. Kennedy. 19 his forgeries, the defendant used his position as a paralegal to 20 obtain unsupervised access to the vault of the Archdiocese of the 21 Catholic Church, a firm client, and steal genuine deeds showing 22 transfers of land from the Kennedy family to the Archdiocese. 23 This Court held that the enhancement was properly applied even There, the defendant had been convicted for mail and wire 10 To lend authenticity to 1 though the primary victims of the fraud were the purchasers of 2 defendant s forgeries. 3 necessarily requires abuse of substantial discretion afforded by 4 the victim to the defendant, the victim whose trust the 5 defendant abused need not have been the primary victim of the 6 fraud. Id. at 349. 7 plainly a secondary victim of Cusack s crime because its 8 documents had been stolen to facilitate the crime of conviction 9 and some of the forgeries implicated it in fictitious intrigues. 10 11 We reasoned that while the enhancement We then found that the Archdiocese was Id. We think that both Cusack and Cianci apply with equal force 12 here. Friedberg s tax evasion was part of a larger scheme to 13 embezzle funds and hide the income. 14 abusing his position as Grand Secretary of Odd Fellows and 15 shielding the illicit income from the government. 16 embezzlement accomplished in this manner was part and parcel of 17 the crime of conviction insofar as it both provided Friedberg 18 with the funds he failed to report and tended to conceal the 19 criminal activity. 20 Cf. Cianci, 154 F.3d at 112-113 ( [Defendant s] abuse of his 21 position of trust . . . by conducting the complex transactions 22 that facilitated his uncharged criminal conduct leading to his 23 receipt of the income he failed to report may properly be He effectuated the scheme by The As such, it was undoubtedly relevant conduct. 11 1 considered as relevant conduct. ); Duran, 15 F.3d at 134 (the 2 district court properly considered conduct forming part of a 3 common scheme to avoid detection when imposing an abuse of 4 trust enhancement in a sentence for structuring). 5 the abuse of trust inherent in Friedberg s embezzlement 6 victimized both the government and Odd Fellows by depriving them 7 of funds rightfully theirs. See Bhagavan, 116 F.3d at 193 8 (finding multiple victims of a tax evasion offense); cf. Cusack, 9 229 F.3d at 349 ( the victim whose trust the defendant abused Furthermore, 10 need not have been the primary victim ). 11 therefore free to apply an enhancement on the basis of 12 Friedberg s abuse of his position of trust to effectuate the 13 scheme resulting in his conviction for tax evasion. 14 § 3B1.3. 15 The district court was U.S.S.G. Friedberg argues that this conclusion is foreclosed by our 16 decisions in United States v. Broderson, 67 F.3d 452 (2d Cir. 17 1995), United States v. Jolly, 102 F.3d 46 (2d Cir. 1996), and 18 United States v. Nuzzo, 385 F.3d 109 (2d Cir. 2004). 19 disagree. 20 enhancement where the defendant had acted out of a misguided 21 attempt to protect his employer, to whom the trust was owed. 67 22 F.3d at 455. In Jolly, we reversed where the defendant was not in 23 a position of trust with respect to the lenders whose trust he We In Broderson, we reversed an abuse-of-trust 12 1 had purportedly abused. 102 F.3d at 48. 2 Friedberg both occupied a position of trust at Odd Fellows and 3 used it to effectuate a scheme harmful to that organization. 4 Nuzzo is also distinguishable because there we found insufficient 5 evidence to support the conclusion that the defendant used his 6 position to effectuate his crimes. 385 F.3d at 116. 7 on the other hand, clearly utilized his position at Odd Fellows 8 to embezzle funds which he hid from the government. 9 Here, by contrast, Friedberg, Friedberg also contends that upholding an abuse-of-trust 10 enhancement here would open the floodgates to similar 11 enhancements for anyone convicted of tax evasion. 12 hold only that where, as here, a defendant s tax evasion was part 13 of a larger scheme constituting relevant conduct, an integral 14 part of which involved abusing a position of trust, the 15 sentencing court may properly apply an enhancement under U.S.S.G. 16 § 3B1.3. Not so. We 17 B. Substantive Reasonableness 18 Friedberg also challenges his sentence as substantively 19 unreasonable. We will set aside a district court s substantive 20 determination only in exceptional cases. Cavera, 550 F.3d at 21 189. 22 calculated the applicable Sentencing Guidelines range and 23 considered the factors enumerated in 18 U.S.C. § 3553(a). Friedberg s is not among them. 13 The district court properly It 1 then imposed a sentence near the bottom of the applicable 2 guidelines range. 3 noted that in the overwhelming majority of cases, a Guidelines 4 sentence will fall comfortably within the broad range of 5 sentences that would be reasonable in the particular 6 circumstances. United States v. Eberhard, 525 F.3d 175, 179 (2d 7 Cir. 2008) (quoting United States v. Fernandez, 443 F.3d 19, 27 8 (2d Cir. 2006)). 9 the district court imposed an unacceptably harsh sentence here. While not presumptively reasonable, we have We see nothing in this record to indicate that 10 14 1 CONCLUSION 2 For the foregoing reasons, we AFFIRM the judgment of the 3 district court. 15

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