United States v. Crundwell, No. 13-1407 (7th Cir. 2013)

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Justia Opinion Summary

Crundwell, Comptroller of Dixon, Illinois since 1983, pleaded guilty to embezzling about $53 million from the city between 1990 and 2012. She used the money to support more than 400 quarter horses and a lavish lifestyle, which she had previously claimed to be the fruit of the horses’ success. During the last six years of her scheme, the embezzlement averaged 28% of the city’s budget. In exchange for her plea, the prosecutor limited the charge to a single count of wire fraud, 18 U.S.C. 1343. The crime’s impact on the population of Dixon played a major role in the district court’s decision to sentence her to 235 months’ imprisonment, substantially above the Guideline range of 151 to 188 months. The Seventh Circuit affirmed. The district court pronounced a substantively reasonable sentence after giving Crundwell full opportunity to present evidence and arguments. The judge considered deterrence and addressed every one of her arguments. That he thought less of her cooperation than Crundwell herself did, and gave a lower weight to her age than she requested does not undermine the sentence’s validity.

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In the United States Court of Appeals For the Seventh Circuit ____________________   No.  13-­ 1407   UNITED  STATES  OF  AMERICA,   Plaintiff-­ Appellee,   v.   RITA  A.  CRUNDWELL,   Defendant-­ Appellant.   ____________________   Appeal  from  the  United  States  District  Court  for  the   Northern  District  of  Illinois,  Western  Division.   No.  12  CR  50027    Philip  G.  Reinhard,  Judge.   ____________________   ARGUED  NOVEMBER  4,  2013    DECIDED  NOVEMBER  15,  2013   ____________________   Before  EASTERBROOK,  KANNE,  and  TINDER,  Circuit  Judges.   EASTERBROOK,   Circuit   Judge.   In   2011   a   Commissioner   of   Dixon,   Illinois,   the   childhood   home   of   President   Reagan,   lauded   Rita   Crundwell,   the   City s   Comptroller   since   1983,   because   she   looks   after   every   tax   dollar   as   if   it   were   her   own.  How  right  he  was.  The  next  year  Crundwell  pleaded   guilty   to   embezzling   approximately   $53   million   from   the   City  between  1990  and  2012.  She  used  the  money  to  support   more   than   400   quarter   horses   and   a   lavish   lifestyle,   which   No.  13-­ 1407   2   she   explained   to   co-­ workers   as   the   fruit   of   the   horses   suc-­ cess.   During   the   final   six   years   of   her   scheme,   the   embez-­ zlement  averaged  28%  of  the  City s  budget.  In  exchange  for   her  guilty  plea,  the  prosecutor  limited  the  charge  to  a  single   count  of  wire  fraud.  See  18  U.S.C.  §1343.   Crundwell  told  other  public  officials  that  the  City  had  to   tighten  its  belt.  She  blamed  a  downturn  in  the  economy  and   a   reduction   in   remittances   from   the   state,   when   her   own   theft   was   the   real   cause.   Police   went   without   valuable   equipment.   The   City   reduced   the   staff   of   its   Street   Depart-­ ment  from  nine  to  six  and  cut  the  rate  of  maintenance.  In  the   decade   before   Crundwell s   arrest,   the   City   resurfaced   only   65  blocks  of  its  more  than  100  miles  of  paved  roads.  The  list   of  ways  in  which  Crundwell s  crime  injured  the  population   of   Dixon   is   long   and   played   a   major   role   in   the   district   court s   decision   to   sentence   her   to   235   months   imprison-­ ment,  substantially  above  the  Guideline  range  of  151  to  188   months.   The   scheme   was   not   particularly   sophisticated.   Crundwell   opened   an   account   at   a   local   branch   of   Fifth   Third  Bank.  The  account  was  called   RSCDA  Reserve  Fund   and  nominally  was  owned  by  the  City,  but  Crundwell  held   sole   control   over   disbursements.   She   used   her   authority   as   Comptroller   to   move   money   from   the   City s   legitimate   ac-­ counts   to   the   RSCDA   account.   Once   the   money   was   there   she  wrote  checks  for  her  own  benefit.  She  created  bogus  in-­ voices  to  justify  the  transfers  from  the  legitimate  accounts.   For  more  than  20  years,  the  bank  failed  to  notice  that  the   funds   in   the   RSCDA   account   were   being   put   to   private   ra-­ ther   than   public   use.   And   the   City s   auditors CliftonLarsonAllen   and   Samuel   Card,   a   local   accountant 3   No.  13-­ 1407   failed  to  detect  the  scam,  even  though  the  spot  checks  of  in-­ voices   and   disbursements   required   by   auditing   standards   ought  to  have  turned  it  up  long  before  2012.  The  embezzle-­ ment  was  caught  when  a  bank  statement  of  the  RSCDA  ac-­ count  reached  the  Mayor  by  accident,  and  he  phoned  the  FBI   because   the   transactions   it   revealed   startled   him.   The   City   sued   the   bank   and   the   two   auditors,   which   recently   settled   for   approximately   $40   million.   Sales   of   Crundwell s   assets   realized  another  $10  million,  so  the  City  has  recovered  much   of  what  Crundwell  took  (if  we  disregard  interest,  which  over   this  lengthy  period  would  have  been  substantial)  but  lost  the   benefits,   such   as   well-­ paved   roads   and   efficient   police,   that   the   money   could   have   achieved   had   it   been   available   be-­ tween  1990  and  2012.   Crundwell   asked   the   judge   to   impose   a   sentence   at   the   low   end   of   the   Guideline   range,   contending   that   a   higher   sentence   could   hold   her   well   into   her   70s   (she   was   born   in   1953).   She   contended   that   she   had   provided   extraordinary   assistance  to  the  prosecution  by  describing  all  details  of  her   scheme   and   helping   agents   marshal   her   assets,   so   that   they   could  be  sold  for  the  City s  benefit.  The  prosecutor,  by  con-­ trast,  depicted  Crundwell  as  being  no  more  candid  than  she   thought   necessary   and   less   candid   than   she   should   have   been.   She   initially   asserted   that   the   embezzlement   began   in   1999   or   2000,   a   decade   after   it   actually   started,   and   that   the   total   take   was   approximately   $10   million.   She   admitted   the   earlier   start,   and   the   higher   total,   only   when   confronted   by   evidence.   She   did   not   bother   to   tell   her   debriefers   that   she   began  stealing  from  the  City  in  1988,  using  a  method  differ-­ ent  from  the  RSCDA  account,  until  federal  agents  discovered   that  additional  crime  on  their  own.   No.  13-­ 1407   4   The   district   judge   recognized   that   Crundwell   had   pro-­ vided   some   aid,   principally   in   rounding   up   assets,   but   he   thought  that  the  value  of  the  assistance  paled  in  comparison   with  the  injury  that  Crundwell  had  inflicted  on  the  citizenry.   The   judge   noted   that   her   thefts   deprived   the   citizens   of   the   services   for   which   their   taxes   had   paid,   and   the   discovery   that  her  long-­ running  scheme  had  gone  on  under  the  noses   of   mayors,   members   of   the   local   legislature,   auditors,   and   banks   alike   led   to   a   slump   in   the   citizens   estimate   of   the   government s  competence  and  value.  The  loss  of  public  ben-­ efits   and   confidence   justify   a   penalty   above   the   Guideline   range,  the  judge  concluded.  The  judge  also  noted  that  a  235-­ month   sentence   would   allow   Crundwell   to   be   released   in   2030,  when  she  would  be  77,  well  under  the  life  expectancy   of  a  60-­ year-­ old  woman.   In  explaining  why  he  chose  a  sentence  above  the  Guide-­ line  range,  the  judge  relied  in  part  on  U.S.S.G.  §2B1.1  Appli-­ cation  Note  19(A)(ii),  which  says  that  a  sentence  may  depart   from   the   range   recommended   by   the   Sentencing   Commis-­ sion   for   financial   crimes   when   [t]he   offense   caused   or   risked  substantial  non-­ monetary  harm.  For  example,  the  of-­ fense   caused   physical   harm,   psychological   harm,   or   severe   emotional   trauma .   (This   language   is   part   of   Application   Note   20(A)(ii)   in   the   current   version   of   the   Guidelines;   its   substance  is  unchanged.)   The  judge  thought   that  citizens  of   Dixon   suffered   psychological   harm   from   the   revelation   that   a   prominent   officeholder   was   crooked,   that   other   offi-­ cials  did  not  detect  the  crime,  and  that  for  20  years  they  had   been   deprived   of   valuable   municipal   services.   Crundwell   contends   that   only   the   City   counts   as   a   victim   and   that   or-­ ganizations   cannot   suffer   psychological   harm   because   they   are  insensate.  Yet  §2B1.1  Application  Note  19(A)(ii)  does  not   5   No.  13-­ 1407   specify  the  crime s  immediate  victim  only;  the  language  asks   whether  the  crime  caused  physical  or  psychological  harm  to   anyone.   We   stated   in   United   States   v.   Pabey,   664   F.3d   1084,   1098 99   (7th   Cir.   2011),   that   a   loss   of   public   confidence   in   government  caused  by  a  public  official s  defalcation  is   psy-­ chological  harm  for  the  purpose  of  this  text.   What s  more,  a  sentence s  propriety  does  not  depend  on   whether  the  Sentencing  Commission  has  authorized  a  depar-­ ture   from   the   Guidelines and   departure   is   what   §2B1.1   Application   Note   19(A)(ii)   is   about.   United   States   v.   Booker,   543   U.S.   220   (2005),   made   departures   obsolete.   That s   why   we   held   in   United   States   v.   Townsend,   724   F.3d   749,   751   (7th   Cir.   2013),   that   it   no   longer   matters   whether   a   sentencing   judge  properly  understands  the  Commission s  prescriptions   about   when   departures   are   justified.   Once   a   judge   correctly   calculates   the   applicable   range and   Crundwell   does   not   contest  the  calculation  of  her  range everything  depends  on   the  judge s  reasonable  application  of  the  criteria  in  18  U.S.C.   §3553(a).   Judges   are   entitled   to   implement   their   own   penal   philosophies;   they   are   not   bound   by   the   Sentencing   Com-­ mission s.   See   Spears   v.   United   States,   555   U.S.   261   (2009);   Kimbrough  v.  United  States,  552  U.S.  85  (2007);  United  States  v.   Corner,  598  F.3d  411  (7th  Cir.  2010)  (en  banc).   Crundwell  contends  that  Townsend  is  distinguishable  be-­ cause   it   involved   the   denial   of   a   defendant s   request   for   a   downward   variance,   while   her   case   entails   the   grant   of   the   prosecutor s  request  for  an  upward  variance.  That s  a  differ-­ ence,   to   be   sure,   but   it   is   an   irrelevant   difference.   Townsend   reflects  the  fact  that  Booker  supersedes  departures.  Judges  are   entitled  to  discretion  whether  the  variance  is  above  or  below   No.  13-­ 1407   6   the  Guideline  range;  the  terms  on  which  departures  used  to   be  authorized  do  not  matter  in  either  direction.   Townsend   observes   that   a   judge   could   misuse   or   misun-­ derstand   the   remnants   of   the   old   departure   system   in   three   ways:  a  judge  might  suppose  that  a  variance  is  forbidden  un-­ less   authorized   by   the   Sentencing   Commission   in   a   policy   statement  or  application  note  (that  would  be  an  error  under   Booker  and  later  opinions);  a  judge  might  refuse  to  entertain   an  argument  based  on  a  policy  statement  or  note  (that  would   be  an  error  because  many  of  the  criteria  formerly  used  to  jus-­ tify   departures   remain   salient   under   §3553(a));   or   a   judge   might   believe   that   the   policy   statements   and   notes   in   the   Guidelines   Manual   exhaust   the   appropriate   grounds   for   a   variance   (that   would   be   an   error   because   §3553(a),   not   the   Guidelines  Manual,  supplies  the  legally  controlling  criteria).   Crundwell  does  not  contend  that  the  judge  made  any  of  the-­ se  mistakes.  The  most  one  can  say  for  her  position  is  that  the   judge  may  have  understood   psychological  harm  different-­ ly   from   the   Sentencing   Commission but   as   any   difference   on  that  score  does  not  affect  the  validity  of  her  sentence,  the   possibility  gets  her  nowhere.   The  district  judge  pronounced  a  substantively  reasonable   sentence   after   giving   Crundwell   full   opportunity   to   present   evidence   and   arguments.   The   judge   thought   a   substantial   penalty  justified  by  considerations  of  deterrence  and  desert.   Crundwell  single-­ handedly  stole  from  the  citizens  of  a  small   community  (Dixon s  population  is  under  16,000)  ten  times  as   much   as   public   officials   in   the   Teapot   Dome   Affair,   the   na-­ tional   government s   most   notorious   financial   scandal,   mis-­ appropriated   from   the   citizenry   of   the   country   as   a   whole.   (Secretary  of  the  Interior  Albert  Fall  received  about  $400,000,   7   No.  13-­ 1407   worth   $5.3   million   in   current   dollars.)   Crundwell   maintains   that  the  judge  did  not  consider  her  arguments,  but  the  judge   addressed   every   one   of   them.   That   he   thought   less   well   of   her  cooperation  than  Crundwell  herself  did,  and  gave  a  low-­ er  weight  to  her  age  than  she  asked  him  to,  does  not  under-­ mine  the  sentence s  validity.  Judges  must  consider  a  defend-­ ant s  principal  arguments  but  need  not  agree  with  them.   AFFIRMED