United States v. Pabey
2011 U.S. App. LEXIS 25870
| 7th Cir. | 2011Background
- Pabey, former East Chicago mayor, and Camacho, the Engineering Director, were convicted of conspiring to embezzle and embezzling city funds used to renovate the Property in Gary, Indiana.
- The government alleged city funds and on‑the‑clock city workers were used for renovations; Pabey claimed no knowledge of the scheme.
- The jury heard evidence of purchases charged to city accounts and workers performing renovations on city time, with some payments made by the Pabeys.
- Receipts and records showed city funds were used for materials; the defense argued Camacho pocketed funds and Pabey paid cash.
- The district court gave a conscious avoidance (ostrich) instruction, and sentenced Pabey to 60 months with fines, restitution, and supervision; the court upwardly departed from the Guidelines.
- Pabey appeals the ostrich instruction and the sentencing enhancements (obstruction, role, and abuse of trust) as well as the upward departure.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the ostrich instruction was proper. | Pabey claims no deliberate avoidance evidence. | Government showed deliberate avoidance via red flags and conduct. | Ostrich instruction affirmed; evidence supported deliberate avoidance. |
| Obstruction of justice enhancement validity. | Enhancement based on perjured testimony by Hilda lacked willful perjury. | District court reasonably found perjury and subornation; material. | Obstruction enhancement upheld. |
| Leader role enhancement validity. | Claimed not leader; Camacho and others controlled scheme. | Pabey recruited and benefited; leadership supported by factors. | Leader enhancement affirmed. |
| Abuse of position of trust enhancement validity. | Position did not meaningfully facilitate offense. | Control over money and people facilitated scheme. | Abuse of trust enhancement affirmed. |
| Reasonableness of upward departure. | Departure unsupported by §3553 factors. | Court adequately discussed §3553 factors and applicable notes. | Upward departure reasonable and within discretion. |
Key Cases Cited
- United States v. Fallon, 348 F.3d 248 (7th Cir. 2003) (defines conscious avoidance/inference of knowledge)
- United States v. Green, 648 F.3d 569 (7th Cir. 2011) (ostrich instruction suitability when knowledge is disputed)
- United States v. L.E. Myers Co., 562 F.3d 845 (7th Cir. 2009) (limits ostrich instruction to deliberate avoidance evidence)
- United States v. Carrillo, 435 F.3d 767 (7th Cir. 2006) (negligence/curiosity not sufficient for knowledge inference)
- United States v. Giovannetti, 919 F.2d 1223 (7th Cir. 1990) (distinguishes deliberate avoidance from mere curiosity)