*1 214 (Hindes) involves each the FIRREA case sued the County plaintiffs
In Clinton history function language, Protection claims with Environmental States (“EPA”) pro- EPA enjoin applicable from those very different from Agency (ii) incineration Hindes MCorp, with a trial burn ceeding FECA cases Court dismissed remedy. The District form of relief County some and Clinton citing jurisdiction, subject lack of matter The proceedings. available ill future judicial re- statutory provisions precluding statutory construction set of principles were activities until EPA’s remedial view cases, however, equally are in those forth contention completed. Rejecting plaintiffs’ here, regardless of the context. applicable violation of Kyne doctrine that under rely upon the plaintiff When a seeks constituted statutory prohibition clear are in- these circumstances Kyne doctrine bar, statutory we stated exception to the statutory a clear to overcome sufficient Kyne refined the “[sjubsequent cases have judicial review such as of prohibition Bell, 404, U.S. In Briscoe v. 432 doctrine. 8128(b). (1977), 2428, L.Ed.2d 439 97 53 S.Ct. jurisdiction to review held that Court IV. Conclusion allegedly in excess of statu- agency action reasons, af- we will foregoing For the inferred when tory authority cannot be granting order firm the district court’s expressly itself language statute complaint. to dismiss the DOL’s motion re- judicial review.... More forecloses MCorp v. cently, in Board Governors Financial, Inc., [Supreme] Court judicial review that a right
reiterated only if there Kyne may be inferred prohibition of such statutory
is no clear
review.” 8128(b) clear language
The in convincing Congress evidence of America UNITED STATES jurisdic deny the courts tended to district tion to of the DOL. review decisions v. include both
language enough is broad IANNONE, Appellant. Michael John of the Sec policy or rule decisions making 98-3373, Nos. 98-3374. retary well as benefit deter individual Labor, Secretary minations. Paluca v. Appeals, United States Court (1st 524, Cir.), denied 527-28 cert. 813 Third Circuit. Labor, Secretary sub nom. Roberts v. 943, 328, 108 S.Ct. 98 L.Ed.2d 484 U.S. 10, Argued Dec. 1998. (1987). 12, July Filed 1999. McDougal-Saddler distinguish seeks to County from MCorp, Hindes Clinton (i) case, MCorp, present arguing (Clinton County) and
the CERCLA case
Labor,
634,
Dep’t
639-40
954 F.2d
have stated
States
In dicta four circuits
1992); (same);
(11th
jurisdiction
Brumley
review claims that
v.
exists to
Cir.
Cir.1994),
policy
statutory
(8th
com
Labor,
OWCP
clear
violated
Dep’t
Linda Schlueter, R. Bonnie Assistant (Argued), Attorney, Paul E. Hull Attorney, Counsel Assistant United States Appellee. (Argued) Green- Stanley W. Greenfield Brewer, field, Kay, Bailor & Counsel Appellant. BECKER, Judge, Chief
Before: STAPLETON, Judge, and Circuit HARRIS,* Judge. District * Columbia, Harris, Judge for the District Stanley Stales District S. Honorable HNR legitimate was a THE business.1 Iannone
OPINION OF COURT was HNR’s sole operator, giv- owner and HARRIS, Judge: District ing himself the title of Chief Executive Ian- Defendant-appellant John Michael (“CEO”). Officer (“Iannone”) from appeals none the sen- early In Iannone secured several imposed guilty plea tence after his to six leaseholds and two contractual farm-out transportation prop- of interstate counts arrangements Corporation Exxon fraud, taken one count mail erty operate drill and oil wells. Pursuant fraud, and one count wire fraud. arrangement, the Exxon Iannone contract- determining Iannone’s sentence well, ed to drill test Horizon No. Sentencing the United States Guidelines *4 stated deadline. Despite two or three ex- (“U.S.S.G.”), applied the district court sev- deadline, tensions of the Iannone never eral enhancements to the offense level. 1992, drilled the By test well.' November challenges Iannone two actual and one de appeared Iannone’s business failing. (1) a in- facto enhancements: two-level wells, He had any not drilled all but one of pursuant crease 3A1.1 for a vulnera- his expired, leaseholds had and Exxon had victim; pursu- ble a two-level increase terminated one of the two farm-out ar- ant to 3B1.3 for of a position abuse rangements.2 trust; private upward depar- and ture, increase, achieved via a two-level 1992, In December Iannone began to §to 5K2.0 for conduct outside solicit investment monies from neigh- his the guideline. “heartland” of the fraud bors, ostensibly purpose for the of drilling We affirm the sentence. wells, operating and two Horizon Nos. 1
and 2. of the precarious Unaware state of I. FACTUAL BACKGROUND business, his neighbors invested $320,000 approximately him. Includ- Essentially, people Iannone defrauded among ed those investors were several by encouraging them to in invest oil and family, one Stringerts. members of ventures, gas drilling using but then neighbor Iannone had been a friend and money personal expenses investors’ for his Stringerts years. for several Iannone than promised purposes. rather for the Stringerts sold the what he labeled “inter- against Iannone committed these frauds in ests” “shares” Horizon Nos. victims, states, living several in different and entered into contracts with the Strin- years. over the course of several However, gerts on behalf of HNR. rather fraudulently total of the funds Iannone investing money drilling than in the $600,000. obtained amounted to more than project, Iannone used it for his own per- expenses. sonal Pennsylvania A. The Frauds Having spent money by 1991 or Iannone his own all of that started company, Horizon Natural Resources end of Iannone began October (“HNR”), leaving job after his as an execu- solicit further investments Horizon drilling project. tive at Consolidated Natural Gas. HNR told victims Iannone in exploration gas encourage was an oil and natural various lies order to their leasing company, tract with an office in For he told in- example, investment. one Wexford, initially, At Pennsylvania. already least vestor that the wells were drilled sitting by designation. ception purpose was not created for the That, committing originally, a fraud. there finding," 1. The district court madé a factual function_"). legitimate was some business request, began defendant’s that HNR as a ("I legitimate business venture. think then finding that what we need to do is make remaining 2. terminated farm-out Exxon ’ cloth[,] that this was not a fraud in the whole arrangement April 1993. meaning that the entire venture from its in- several been awarded and that he had others and told producing medals, Purple Heart and including the in December to be going drilled
wells were Star, that he represented Exxon’s and he acquired the Silver that he had 1993 and for the in the wells. received a recommendation royalty had overriding interest solicitations, pro- Honor. He Congressional these Medal a result of As $170,000 citation Stringerts in investment with a false vided the another received acquaintances he acts for which neighbors recounting from the heroic monies November, December October, Star. How- Silver supposedly received investments, Ian- prior story Stringert As with the recount- ard described ex- money personal One “Ramboesque.”3 none used ed the citation penses. family, Stringert- Janice member Streich, home where he visited Iannone’s received time Iannone From the prominently medal dis- Star had Silver December first investment monies her brother Howard played. Janice and January Ian- until he absconded sentencing at the Stringert both testified continually Stringerts to the lied none family great respect had hearing that their to conceal the other investors order and that this influ- military veterans money personal their to his conversion of *5 Ian- decisions to invest with enced their that he had investors use. He told some none. compa- money drilling to a their hire used with Exxon was in contact ny and that he had some investors By October then- that would increase process a about Iannone, pre- and he suspicious become investor— the wells. one yield from When buying a disappearance, for his pared Stringert suspicious, Howard a false name with some truck under —became $100,000 buy to back his agreed Iannone 11, 1994, money. January investment On once he project in the oil well investment leaving his wife disappeared, Iannone pending a suit a from settlement received Approximately three children behind. How- Gas. against Consolidated Natural $110,000 $70,000 in investment funds ever, were false. representations those for at the time of his were unaccounted drilling company, had not hired a Iannone being pur- to avoid abscondance. order Exxon about a not in contact with was sued, He Iannone his own death. faked yield, and wells’ process to increase the claiming a letter that he had left behind litigation with Con- already settled had government left on a secret mission for year-and-a- Natural Gas over solidated it and that he “alphabet agency” feared $17,000. Iannone did only half earlier his death. He then left might result his any of the monies not use investment van, blood and littered with splattered with drilling took it all for his project; he weapon, parked at the casings shell from use. personal Airport. International Pittsburgh Greater police quickly realized both that Local in which Iannone Throughout period and that Ian- had fabricated scene been invest in the soliciting neighbors was the victim of a crime. none had not been falsely posing as a project, he Horizon adopted This decorated Vietnam veteran. B. The Cobrado Fravds gain helped Iannone military persona hero disappearance Pennsylva- from family. pro- He After his Stringert the trust of the nia, he in Colorado where Stringert fami- Iannone settled members of the some vided Hamilton, the Wayne alias D. indicating adopted that he a resume ly falsely veteran. He a name of a Vietnam years three deceased spent had Vietnam war as Vietnam masquerade Forces continued to Army Special in the U.S. Captain bold, deep captive prisoners of war held dramatic tale American recounts a The citation Iannone, commanding territory. enemy officer which as the within A-Team, Special Forces rescued four a acquaintances family Investigation that his the Federal Bureau of hero and told July 1997. by Posing killed a drunk driver. had been veteran, a Vietnam he befriended sever- Clancy people, including al O’Dowd C. District Court’s Sentence an America Hegler, through
Diana
Online
pled guilty
Iannone
in-
six counts of
developed
He
chat room for veterans.
transportation
terstate
of property taken
O’Dowd,
friendship with
based' on
close
fraud,
fraud,
one count of mail
and one
experiences
shared combat
supposed
their
count of wire fraud. The district court
in Vietnam.
a two-day sentencing hearing
conducted
which four of Iannone’s
Apparently, Iannone lived off the Penn-
victims testified:
O’Dowd, Hegler,
Stringert-Streich,
Janice
sylvania
proceeds
lor about three
and Howard Stringert. The court found
money,
ran
Ian-
years. When he
low on
several
ap-
Guidelines enhancements to be
Pennsylvania
essentially repeated
none
plicable.
testimony,
Based on O’Dowd’s
Associates, a
scheme. As head of W.D.H.
the court
determined
he was vulner-
gas company,
sham oil and
Iannone of-
able victim and increased Iannone’s of-
neighbors
new friends and
fered his
points pursuant
fense level
two
gas
to invest
in oil
opportunity
and/or
3A1.1
the Guidelines. The court also
wells
Texas
Nebraska. Several
determined that
occupied
posi-
neighbors acquiesced, buy-
his friends and
private
tion of
trust vis-a-vis his victims
ing percentage
gas
shares of oil and/or
trust,
and abused
in-
and therefore
from
with the
well leases
Iannone. As
creased the offense
points
level
two
frauds,
in-
Pennsylvania
Iannone did not
3B1.3
the Guidelines.
money
vest this
for the
that it was
purpose
*6
The court increased Iannone’s offense level
him, but
it
personal
entrusted to
used
by an additional
points
two
consistent with
He
expenses.
approximately
received
Guidelines,
that,
§
finding
5K2.0 of the
$115,500from the Colorado frauds.
factors,
based on a combination of
Ian-
Again, Iannone lied to the investors in
sufficiently
none’s conduct was
outside the
order to conceal his fraud.
Iannone told
“heartland” of the fraud
to war-
producing
investors that
the wells were
upward departure.
rant an
Based on a
they
expect
should
their first
guidelines
total
offense level of 21 and a
royalty
to arrive in March April
checks
I,
history category
criminal
of which pro-
of 1997. When the checks did not materi-
range
imprisonment
vided a
of 37 to 46
alize,
again disappeared.
Iannone
On or months,
the court sentenced Iannone
3, 1997,
around
Iannone left
June
Colora-
imprisonment.
months of
See United
do, falsely informing
investors
most
.that
Commission,
Sentencing
Guidelines
going
he was
to Texas to check on the
(Nov.1997).4
Manual,
5, Pt. A
Ch.
investor, O’Dowd,
He told one
wells.
different
going
lie:
he was
to confront
II. DISCUSSION
family.
the drunk driver who had killed his
began
some of the
to com-
When
investors
argues
Iannone
that the increases in his
municate with each other and became sus-
improper
offense level were
and that he
picious, Iannone sent them an electronic
been sentenced based on a
should have
15,
message claiming
employee
to be an
of an
offense level of
which established
agency”
protec-
imprisonment.
“alphabet
range
witness
of 18 to months of
(Nov.1997).
Ch.5, A
program.
tion
Iannone was arrested
Pt.
U.S.S.G.
(Nov.1997) ("The
apply
4. We
the November 1997 edition ol the
court shall use the Guide-
Manual,
Guidelines
as that was the version in
lines
in effect on the date that
.Manual
sentenced.”);
sentencing—
date
18 U.S.C.
effect on the
of Iannone’s
defendant
19,
1B1.11(a)
3553(a)(4).
§
§
June
1998. Sea U.S.S.G.
Similarly, for
senile.
happened
be
Adjustment
A.
Victim
Vulnerable
an unusual-
teller is not
example, bank
the district
challenges
solely by virtue of
victim
ly vulnerable
“vul
a two-level
apply
decision to
court’s
position in a bank.
the teller’s
adjustment
level
victim” offense
nerable
comment, (n.2) (Nov.
3A1.1,
3Al.l(b),
that the U.S.S.G.
claiming
§to
1997). Thus,
that this
suggests
the note
its deci
the court based
victim on which
apply
where
designed
vic
enhancement
a vulnerable
sion—O’Dowd—was
recklessly exploits
knowingly or
defendant
provision.
meaning of
tim within the
to facilitate
vulnerability
order
a victim’s
that,
if
was
even O’Dowd
argues
He also
crime.
commission of the
victim,
no demon
his
there was
vulnerable
vulnerability
between
strated nexus
and its
In accordance with
3A1.1
factual
A
court’s
fraud.
district
and the
note, this Court
corresponding application
victim
concerning the vulnerable
findings
analysis to a decision
applies
three-step
only for clear
adjustment are reversible
enhance
vulnerable victim
apply
Monostra, 125
States v.
error. See United
may
applied
ment. The enhancement
(3d
(citing United
(1)
particularly
victim
sus
where:
was
Hillstrom, 988 F.2d
to the criminal con
ceptible or vulnerable
Cir.1993)).
find the district
Because we
duct;
the defendant knew
should
determining
clearly err
court did not
susceptibility or vulner
have known of this
victim and
a vulnerable
that O’Dowd was
vulnerability
or sus
ability; and
vulnerability to
exploited this
that Iannone
defendant’s crime
ceptibility facilitated the
fraud, we
commission of the
aid
manner;
is,
there was “a
in some
en
the district court’s two-level
affirm
vulnerability
the victim’s
nexus between
3Al.l(b).
hancement
crime’s ultimate success.” Monos
and the
3Al.l(b)
tra,
that:
(quoting
Section
cal or mental *7 Iannone’s Conduct ble to Criminal particularly susceptible to was otherwise conduct, by 2 lev- the criminal increase argues that the district court els. a vulnera- improperly found O’Dowd was 3Al.l(b) (Nov.1997).5 Applica- § U.S.S.G. a merely on his status as ble victim based (b) provides a tion Note to subsection argument is with- Vietnam veteran. This example useful of when this enhancement merit, abundantly it clear from out is appropriately applied: that the court did not base its the record vulnerability merely adjustment finding of O’Dowd’s apply, would for exam- The broad, unsupported generalizations re- in where the defendant on ple, a fraud case veteran status. O’Dowdtesti- lating an ineffective cancer cure or to his marketed length sentencing hearing, at at the robbery in the defendant select- fied where and, testimony, court it on his handicapped ed a victim. But would based findings as to his express, specific made apply in a case where the defendant as Ian- by particular susceptibility mail to the well sold fraudulent securities In knowledge susceptibility. of this of the victims none’s general public and one (Nov.1998). provision analysis, amended we The 5. While it does not affect our 3Al.l(b) recently § amend- increasing note that has been offense level a subsection adds provision "[i]f ed. new states that The offense "in- two levels if the additional that a defendant knew or should have known large of vulnerable victims.” volved number victim, was a vulnerable victim of the offense 3A1.1(b)(2)(Nov.1998). U.S.S.G. 3A1.1(b)(1) by 2 U.S.S.G. increase levels.” sentencing to the to a rendering predation 0’Dowd[ ][was] its decision as vulnerable enhancement, by somebody the court noted: purported 3A1.1 who to a col- be brother-at-arms.”). league war[ ][and] O’Dowd question [The whether] [was] provides ample record evidence to way in dif- particularly vulnerable some support finding. testimony, O’Dowd’s general public, from the and I ferent supported by correspondence problem saying[ yes. have no Just between ] O’Dowd and Iannone big strong because he’s a man and a introduced into evi- mean that he dence at the sentencing hearing, veteran of combat doesn’t demon- very, very vulnerable in a actively encouraged not] strates that Iannone [was tragic way[,] just O’Dowd, and that is as he de- developed friendship beautifully testimony. it so in large part scribed based on supposed their developed people He a belief that who experiences shared combat Vietnam. are share combat brothers-in-arms and The friendship between the two men be- can be believed. He made that [belief] gan through an America Online chat room So, [I known to the defendant. find military progressed veterans and to he was vulnerable that he was calls, that] telephone messages, electronic deluded susceptible [and] more meeting person on approximately three represented cheated who someone During occasions. the course of their himself to be brother-in-arms.... friendship, Iannone and O’Dowd discussed way he O’Dowd was vulnerable honor, feelings their duty, about and the vulnerable, he was and it was described bonds between fellow combat veterans on vulnerability it particular because many several occasions. of their com- apply general public wouldn’t to the but munications, Iannone and O’Dowd used only expressed to someone who himself back,” which, phrase “back accord- as he did. ing testimony, phrase O’Dowd’s is a Thus, assertions, contrary experience derived from his Vietnam essentially my district court did not means “I would life in put find Vietnam per persons your you veterans are se vulnerable to and trust it proper- hands use claiming ly.” then Similarly, to be fellow veterans and O’Dowd and Iannone often solely rely on O’Dowd’sveteran status to referred to one another as “brother” find that he was vulnerable victim. correspondence. their O’Dowd testified Rather, the court based its determination feelings that Iannone was aware of his that O’Dowd was a vulnerable victim on loyalty trust and towards fellow combat personality his individual traits and char- generally veterans and towards Iannone in acteristics, as testified to O’Dowdat the Thus, particular. provides suf- the record hearing. Only sentencing specif- after this ficient evidence Iannone was aware ic inquiry did the court find that O’Dowd vulnerability. O’Dowd’s' *8 particularly repre- was vulnerable to one senting himself as a fellow combat veteran. Vulnerability 3. O’Dowd’s Facilitated Thus, clearly the district court did not err Iannone’s Crime determining “particu-
in that O’Dowd was The district court also found that larly susceptible” to Iannone’s fraud. vulnerability facilitated Ian- O’Dowd’s Have Iannone Knew or Should fraud, link noting none’s between Vulnerability Known O’Dowd’s vulnerability, 839<!>0’Dowd’s vulnerability, awareness of that and Ian- specifically
The district court found that (“It clear that [is] none’s fraud. knew or had reason to know of Iannone vulnerability was made known vulnerability [O’Dowd’s] O’Dowd’s to fellow Vietnam (“I why That’s it was so a to defendant. preponderance veterans. find easy for the defendant extract these the evidence that the defendant knew or to from much [O’Dowd] had reason to know that funds without occupy If he did such private or trust. going what he was way proof determine it.”)- the court must finding, position, this then disputes Iannone get position abused this that, a vulner- the defendant if whether even O’Dowd arguing facilitat way significantly in a that victim, demonstrated of trust there was no able v. Crad vulnerability Ian- crime. See United States ed his between this nexus (3d Cir.1993). dock, Be However, F.2d sup- the record crime. none’s only the initial According challenges finding. cause Iannone the court’s ports posi he held a of whether testimony, Iannone framed his determination O’Dowd’s trust, we devote most of our discus help. Ian- tion of plea offer as a investment loan, We review de novo sion to this issue. asked O’Dowd for initially none a defen determination that had backed out of district court’s claiming that an investor of trust within the occupied position and that he was dant his investments one of 3B1.3, ques legal § as this is a Only meaning of to lose the entire investment. going Sokolow, 91 suggest that O’Dowd tion. See United did Iannone later himself, (citing than Crad rather project invest 340). dock, a dis that he 993 F.2d at We review money. him testified lend O’Dowd that a defendant finding trict court’s because he was con- primarily invested error, for clear position of trust that “brother” was trouble abused cerned question. this is a factual Id. anything do he could and he would him. He also testified that he made assist occupy a argues Iannone that he did not Thus, on known to Iannone. based respect to his vic- position of trust with it, the district court the evidence before tims, court and therefore the district “clearly”- deter- err —much less did not —-in not have enhanced his offense level should vulnerability that facili- mining O’Dowd’s Determining § what pursuant 3B1.3. Iannone’s fraud. tated pur- of trust for the constitutes a sum, court we find that the district § poses simple 3B1.3 is not a task. (1) clearly finding: err in did not applicable § Com- Neither 3B1.3 nor its particularly vulnerable to Ian- O’Dowdwas mentary what is meant clearly defines fraud; was, or none’s “position of trust.” United States been, should have aware of his vulnerabili- (D.C.Cir.1993). Smaw, vulnerability ty; and that O’Dowd’s nar- of trust” could be defined “Position Iannone’s crime. We therefore facilitated fiduciary formal rowly encompass only affirm the decision to enhance the offense Or, employment relationships. the con- 3Al.l(b). § level under broadly could defined to include cept places any relationship which victim Trust En- B. Abuse a Position of The Commen- his trust defendant. hancement tary to 3B1.3 indicates the Sentenc- (“Commission”) did not ing that the district Iannone claims Commission “position of trust” to applying a two-level en intend for the term court erred narrowly, too as the Com- interpreted level to be hancement to his offense phrase’s appli- limit mentary of a does not 3B1.3 of the Guidelines for his abuse only fiduciary employ- cation to formal trust. Section 3B1.3 private 3B1.3, relationships. that: “If the defendant ment See U.S.S.G. part *9 ' (n.l) (Nov.1997). However, a comment. position public private a of or trust abused defining the facilitat court should hesitate before significantly in a manner that broadly, compo- “there a concept of the too ed the commission or concealment offense, inherent in the by misplaced 2 levels.” U.S.S.G. nent of trust increase (Nov.1997). 3B1.3, § of fraud.” v. Garri- applying concept § United States 3B1.3 (11th Cir.1998) 831, son, F.3d 838 initially determine whether 133 a court must Mullens, v. 65 F.3d public (quoting a of United States occupied position the defendant
223
Cir.1995) (internal
(11th
an
1560,
quota
ordinary
embezzlement or theft
an
1567
omitted));
bank teller or hotel clerk....
see also United
tion marks
1343,
Trammell,
v.
Id.
(“The
(10th Cir.1998)
[§ 3B1.3]
In accordance with the Commis
than a
requires more
mere
enhancement
guidance,
developed
sion’s
this Court has
a
in
showing that the victim had confidence
“position
analysis
of trust”
“look[s]
defendant.”)
v. Brun
(citing United States
meaning
position
the essence of the
of a
of
(10th
son,
673,
Cir.1995));
54 F.3d
Pardo,
trust.” United States v.
25 F.3d
Koehn,
74 F.3d
United States
Cir.1994);
see also United
(10th Cir.1996) (“In every successful fraud
(7th
Boyle,
will have created confidence
the defendant
that,
(stating
determining
victim,
sentencing
in the
but the
and trust
a
occupies
“position
whether
defendant
a
apply
trust,”
enhancement
is not intended
a
beyond
court “must look
de
fraud.”).
every
scriptive
case
the actual
labels to
nature of the
relationship
responsibility
the de
Commentary
Note 1 of the
Application
given”).
fendant is
We consider three fac
provides
guidance
§
some
as to
3B1.3
in determining
tors
whether a defendant
position
public
what
considered a
or
occupies
position
pur
a
of trust for the
private
purposes
trust
for the
of this
“(1)
§
poses
position
of 3B1.3:
whether the
guideline provision.
part:
It states in
allows the defendant to commit a difficult-
wrong;
the degree
to-detect
of authori
posi-
to a
private
“Public or
trust” refers
ty
position
which the
vests
defen
public
private
tion
or
trust character-
object
wrongful
dant
of the
vis-a-vis
by professional
managerial
ized
dis-
act; and
whether there has been reli
(ie.,
discretionary
cretion
substantial
integrity
person occupy
ance on the
ordinarily
judgment
given
that is
consid-
Pardo,
ing
position.”
show that all
that,
the
is
where
defendant
as head of hancement
position
Iannone’s
been met:
trust, his victims are
occupies
invested
a
position
the victims
company which
the
detect,
his fraud
likely
to
vested
to discover
because
difficult
less
made his fraud
authority
investigate
over the vic-
the matter
they will not
significant
him with
monies,
encouraged
in an arm’s-
thoroughly
they
would
tim’s investment
perceived integri-
on his
focus of the first
rely
to
length
his victims
transaction.
defendant,
on the
not his
ty-
prong
Pardo
is
victims,
the court to deter-
requires
First,
allowed
position
Iannone’s
the defendant
position
mine
the
whether
wrong.
commit a difficult-to-detect
him to
a
him to commit difficult-
occupied allowed
that his fraud
primarily argues
Iannone
crime.
to-detect
detectable,
discov
was not
easily
but
Pennsylvania
In connection with his
diligence.
lack
ered
to his victims’
due
frauds,
solicited investors
Iannone
evinces misunder
argument
Iannone’s
a
HNR,
capacity as the owner
CEO
of the first Pardo consideration.
standing
company.
gas drilling/leasing
an oil and
analysis is not a
of the Pardo
prong
That
investment monies
Iannone solicited
vic
requirement.
diligence
due
explor-
an
express purpose
financing
the
in the oil
experts
not have to be
tims did
venture, selling the victims
atory drilling
an extensive
industry or conduct
gas
or “shares” of HNR’s Horizon
“interests”
into Iannone’s business
investigation
signing contracts with the
applicable. projects
§
to
the
3B1.3 enhancement
be
Thus,
by leading
fraud
company
financial
investor
from the start.
sham
legitimate
defendant is a
invest-
occupied any legitimate position of
believe the
never
broker;
(B) perpetrates
a
respect
or
to his Colorado victims.
ment
trust
employ-
representing falsely
patient
or
signifi
Although
dispositive
the issue is not of
physi-
er that the defendant is
licensed
cance,
majority
we
that the
of circuits
note
making
misrepresentation,
cian.
held that a defen
that have addressed it have
trust,
position
rela-
assumes
defendant
position of trust is
occupying a sham
dant
victim,
provides the defen-
tive to the
that
§
subject to the
3B1.3 enhancement. See
opportunity to
dant with the same
commit
Deal,
562,
(7th
v.
147 F.3d
563
United States
crime that the defendant
difficult-to-detect
Barnes,
Cir.1998);
v.
125 F.3d
United States
position were
would
had if the
held
have
1287,
(9th Cir.1997);
States v.
1292
United
legitimately.
Gill,
484,
(1st Cir.1996);
99 F.3d
488-89
comment,
1998).
3B1.3,
(n.2) (Nov.
§
U.S.S.G.
Queen,
925,
(10th
4 F.3d
exception,
limited
Guidelines
With
commen-
Cir.1993).
Echevar
But see United
binding
tary
on courts. See Stinson v.
is
175,
ria,
(2d Cir.1994).
Accord
1913,
States,
U.S.
S.Ct.
view,
ing
majority
defendant
where a
(1993) (''[Cjommentary
123 L.Ed.2d
sufficient, objective
provided
victims with
interprets
ex-
Manual that
or
the Guidelines
trust,
occupied position
it
that he
indicia
it
plains
guideline
is authoritative unless
appropriate
to hold him accountable
statute,
or a federal
violates
Constitution
victim,
perspective
§
3B1.3. From
with,
plainly
or a
or is inconsistent
erroneous
posed
whether ihe
the threat
is the same
of,
reading
guideline.”);
see also
legitimate
posi
occupies a
sham
defendant
(Nov.1997) ("Failure
§ 1B1.7
to fol-
U.S.S.G.
the crime
tion of trust: the
facilitates
commentary
an in-
could constitute
low
the chance of
and reduces
Gill,
detection.
....”)
application
guidelines
correct
of the
225 Thus, company. victims on behalf listing of years experience of in the oil and occupied “managerial” position, gas Iannone industry and providing detailed de- expectedly scriptions which he was entrusted of that experience. with Iannone fur- ther using the task of fostered reliance money integrity investors’ to on his complete contrast, posing as a drilling project. By decorated Vietnam veteran. Some his of victims merely passive his victims were indicated that they investors decided to little, invest with with if Iannone any, knowledge of because the oil and he was both a and an gas experienced veteran industry. These facts indicate that businessperson offering what seemed to be relationship Iannone’s Pennsylva- with his great investment opportunity. Based on victims was fiduciary nia to the analogous representations, Iannone’s victims his be- relátionship that exists between a corpo- they lieved were investing genuine in a rate officer or director and the corpora- drilling project. tion’s shareholders. Thus, application .of the three Pardo fiduciary-like This relationship allowed to considerations Iannone’s case demon- Iannone to commit a difficult-to-detect that, HNR, strates as CEO of occupied he wrong. managerial His position allowed position private trust vis-a-vis his conceal, to personal him his use of the Pennsylvania victims.7 The foregoing money. victims’ investment In order to analysis with accords our decisions in re- prevent detected, his being fraud from he cent involving cases similar factual situa- thp provided with reports victims false on tions. Bennett, See United States v. progress of the drilling project and his (3d Cir.1998); F.3d Sokolow, 195-96 use of their money. investment Because Having 412-13. found that Iannone was the sole owner operator occupied Iannone a position of private HNR, he was only the victims’ source of trust, (and we conclude appellant does about information the status of their in- not challenge) that the district court did subject vestment and was not any su- clearly err in finding- Iannone abused pervision that would have uncovered his position his trust manner that sig-
fraud. nificantly Therefore, facilitated his crime. Iannone’s position also satisfies the sec- we affirm the district court’s decision to criterion, ond Pardo it provided him Iannone’s enhance offense level authority unfettered over the in- victims’ §to 3B1.3. money. vestment As sole oper- owner and HNR, ator of he alone was entrusted with C. Departure Section 5K2.0 n proper use of money the investment Finally, challenges Iannone complete the drilling project. This total the district court’s impose decision to supervision lack of allowed (set upward levels) departure at two pur spend the money investment freely. Once 5K2.0, suant to based on a combination HNR, victims his no invested one but took factors case out of to, Iannone had access pow- or supervisory guideline. “heartland” the fraud A dis over, er HNR’s financial records bank trict court’s decision depart from the accounts. applicable guideline range subject Finally, the evidence demonstrates the review for abuse of discretion. See Koon perceived victims’ reliance on States, 81, 99-100, U.S. integrity 2035, 135 owner and CEO of (1996); HNR. Ian- S.Ct. L.Ed.2d gave none some of his Jacobs, victims his resume argues Iannone also that the 3B1.3 en- neighbors from investments friends inapplicable hancement is because his friend- capacity posi- as head a company. ship with the did not victims constitute a tion trust at issue is not Ianrione's friend- victims, argument ignores of trust. ship This but his as own- critical fact of this case: Iannone solicited er and CEO HNR. *12 226 number a limited of Outside departure). a did court Cir.1999). the district findWe may nev- a court that from of departing prohibited by factors its discretion not abuse the departure, grounds consider case. er in this
the Guidelines
fac-
of
“limit the kinds
not
do
Guidelines
each
of
conceives
The Commission
grounds
could
that
constitute
tors
‘heart
a
“carving out
guideline
offense
U.S.S.G.,
case.”8
an unusual
departure
the
embodying
cases
typical
land,’
of
set
a
intro,
(Nov.1997);
4(b)
see
A,
Ch.l,
p.s.
Pt.
describes.”
each
that
conduct
2035;
106,
Koon,
116
at
S.Ct.
518 U.S.
also
intro,
(Nov.
4(b)
A,
p.s.
U.S.S.G., Ch.l, Pt.
Baird,
at 870.
109 F.3d
a
in which
1997).
case
In the unusual
typi
the
falls outside
conduct
defendant’s
additional
provided
Supreme Court
The
may consider
“heartland,”
court
the
cal
Koon,' instruct-
departures
on
guidance
sentence.
the Guidelines
from
departure
analysis
following
apply the
ing courts
Baird, 109 F.3d
id.;
United States
departure.
§ 5K2.0
considering
when
—
denied,
(3d
U.S.
Cir.), cert.
856, 870
factors
First,
factor or
the
identify
(1997)
243, 139
173
L.Ed.2d
—, 118 S.Ct.
the
outside
the case
take
potentially
93-94, 116 S.Ct.
Koon,
at
518 U.S.
(citing
special
make it
“heartland” and
Guidelines’
that a
2035).
court
5K2.0
Section
95,
Koon,
116
at
U.S.
unusual.
518
or
applica
the
outside
a sentence
may impose
Second,
whether
determine
2035.
S.Ct.
‘that
court finds
“if the
guideline range
ble
on
departures based
forbid
the Guidelines
mitigating
or
aggravating
an
there exists
on
factor,
departures based
encourage
the
not
kind,
degree,
or to
of
circumstance
at
factor,
the factor
do not mention
the
the
taken into consideration
adequately
Third,
94-95,
116
S.Ct.
all.9 Id.
the
formulating
Sentencing Commission
(1) if
factor
rule:
the
appropriate
apply the
in a sentence
that should result
guidelines
”
it as a
forbidden,
cannot use
the court
is
U.S.S.G.
that described.’
from
different
is
if the factor
for departure;
basis
(Nov.1997)
18 U.S.C.
5K2.0,
(quoting
p.S;
to de-
authorized
court is
encouraged, the
§ 5K2.0
3553(b)).
Commentary to
does
applicable guideline
if the
part
the
depart in
may also
a court
adds that
account;
if
it into
already take
that,
of
because
“extraordinary case
encouraged but
discouraged, or
is
factor
or cir
of
characteristics
combination
such
applica-
into account
already taken
from
cumstances,
significantly
differs
depart only
should
the court
guideline,
ble
guidelines
cases covered
‘heartland’
exceptional
present
if
factor is
statutory
important to
way
that is
way
other
makes
or in some
degree,
though none
sentencing,
even
purposes
ordinary
case
from
different
case
in
or circumstances
the characteristics
(4) if the
present; or
is
the factor
which
ease,”
also
but
distinguishes the
dividually
must,
unmentioned, “the court
factor
ex
“will be
departures
these
notes that
theory
considering the structure and
comment.;,
after
Id.,
see
rare.”
tremely
guidelines
individual
relevant
113-114,
both
Koon,
S.Ct.
518 U.S. at
whole, decide
taken as
the Guidelines
on
based
departure
possible
(noting
to take
is sufficient
[the factor]
whether
factors,
though none
even
a combination
heartland.”
out
case
Guideline’s
justify
would
standing alone
the factors
discourage de-
example, the Guidelines
may
9. For
nev-
that a court
prohibited
8. The
factors
sex,
(race,
educational
on the
parture
§§
based
defendant’s
5H1.10
are
er
listed
consider
skills,
creed,
§ 5H1.2
religion, socio-econom-
U.S.S.G.
origin,
see
vocational
national
status),
(lack
guidance
youth
as a
departure
based
(Nov.1997),
encourage
5H1.12
ic
circumstances), part of 5H1.4
and similar
See U.S.S.G.
provocation.
victim
on
abuse), and
dependence or
(drug
alcohol
(Nov.1997).
§ 5K2.10
difficulties
financial
part
(personal
5K2.12
busi-
pressures upon a trade or
and economic
intro,
1,
A,
p.s.
ness).
Ch.
Pt.
See U.S.S.G.
4(b) (Nov.1997).
(internal
96-96,
Id. at
Koon provides (b)(3)(A) guideline fraud level in offense a two-level increase theory” for “structure Considering the misrepresen- “a offense involved where the the Guidelines guideline of the acting on was the defendant instructs, tation that find that whole, we as Koon educational, charitable, reli- aof behalf discretion within its court acted district or a organization, govern- gious political of five this combination concluding that 2Fl.l(b)(3)(A) § U.S.S.G. agency.” ment to take sufficient was factors unmentioned Commentary (Nov.1997). applicable The heart- the Guidelines’ out of case Iannone’s this en- for the rationale indicates that 2035. 116 S.Ct. U.S. land. 518 exploit who is that “defendants ex- hancement guideline the fraud Commentary to or trust impulses charitable victims’ departures upward provides for pressly harm.” social particular create government listed factors not based on comment, ¶ 4). 2F1.1, (backg’d § guide- U.S.S.G. remedy the fraud text. In order 2Fl.l(b)(3)(A) § enhance- monetary Although on the focus predominant line’s conduct, apply Iannone’s not loss, ment does the Commen- of the victims’ amount misrepresen- Iannone’s does: its rationale may be departures upward tary states veteran, Vietnam he was a ... tations that loss in which the cases “[i]n warranted government recipient, combat medal the harmfulness fully capture not does family lost had and widower who agent, U.S.S.G. conduct.” of the seriousness comment, driver, particular (Nov.1997). created (n.10) a drunk By to 2F1.1, § not do the Guidelines social harm court dem- the district upwards, departing into account.13 explicitly take the harmfulness its belief onstrated being a Vietnam misrepresentations about was conduct of Iannone’s and seriousness there specifically found that also the court relied court district 12. factors One up- support an § evidence for its 5K2.0 "combination’' was not sufficient upon as a basis Thus, psychological harm Ian- because § 5K2.3. departure departure was the ward Notably, his victims. depart fraud caused based on none’s not court did the district injury” rather, an encour- harm,” psychological “extreme but psychological "extreme § How- departure under 5K2.3. aged ever, basis of circumstances a combination based on find- factual court’s based on district psychological harm a lesser which included classify factor as "unmentioned” ings, we "unmen- classify factor as component, we Guidelines, an encour- rather than as by the tioned” the Guidelines. court departure. While aged basis for more victims suffered that Iannone’s found falsely to be Though claimed typical fraud vic- than a psychological harm quali- agent, did not government this conduct equate of harm ("I the kind [not] would tim 2F1.1(b)(3)(A) be- § enhancement fy typical kind with the caused here that was selling HNR or to be claimed cause he never psychiatric [T]he emotional harm.... of a opportunities on behalf WDH investment losing only to that is attendant trauma agency. government thought you ... money what your [also] but harm”), friendship[ a severe [is] was ] recipient veteran and of several medals the analogic reasoning that gen- this court exploited respect erally his victims’ trust requires determining the extent for Vietnam war Iannone’s claim upward heroes. of an departure. However, by been for the couching have recommended Con- the departure as a two-level in- gressional particular- Medal of level, Honor crease in the offense the district ly exploitive, highest as this is nation’s implicitly court above, did so. As noted military and most revered award.14 His there is a analogy in reasonable the Guide- misrepresentation that he worked for a justifies lines that the extent of the court’s government agency encouraged (b)(3)(A) his departure: subsection Finally, victims’ trust. misrepresenta- fraud guideline, provides which for a two- family tion that his had been killed level increase in offense level. See exploited 2F1.1(b)(3)(A) driver (Nov.1997). drunk his victims’ charita- impulses. ble Another area of the Guide- briefly We address Iannone’s arguments upward lines that for an depar- in support of his challenge to the district ture based on conduct similar to Iannone’s court’s 5K2.0 departure. Iannone ar specifically 5K2.3. It encourages gues that the offense base level for fraud depart upwards courts to if the defendant’s adequately took into account all of his rele *15 conduct caused his victim extreme psycho- misconduct; is, vant that both his misrep logical injury. While the district court did resentations and the psychological damage not find that Iannone’s victims had suf- to his victims. As to his misrepresenta fered psychological injury, extreme it did tions, Iannone argues in his brief that the they find that had psychological suffered a Guidelines “obviously contemplated fraud injury more severe that occurring than misrepresentations ulent integral to typical case included as a and the commission of a fraud” and they thus reason for a departure. These two analo- did not warrant upward departure un gies to conduct similar to fur- Iannone’s der 5K2.0. Iannone claims that his mis ther support the finding district court’s representations were either incidental to that a 5K2.0 departure appropriate. his fraud or mere acts of concealment and analogies
These
also demon
therefore
sufficiently
were not
offensive
strate that the extent of the district
unique
court’s
to “suggest a factor ‘present in a
departure
offense
degree
levels—was rea
which the
did not con
Commission
—two
A
sonable.
district
in determining
court
....
sider’
‘substantially
[or]
excess
the extent of a departure should generally
that which
ordinarily
involved
the
”
by
do
analogizing
so
to existing Guidelines offense of
(Quoting
conviction.’
provisions.
Uca,
(3d
See United States v.
Kikumu
867 F.2d
Cir.
ra,
(3d Cir.1990) 1989).)
918 F.2d
1110-14
argues
death,
He
faking
that
his
(establishing this Court’s standard for de
falsely
to
claiming work for a federal “al
termining
proper
departure);
extent of
phabet agency,”
falsely stating
and
that his
Baird, 109
at
(applying
family
Kikumu
had been killed
a drunk driver
ra).
Adelman,
merely
were
creative concealment stories
(analogizing
only
detection,
invented
to avoid
and
provision
another Guidelines
ap
was an
therefore that
misrepresentations
those
do
propriate
determining
method for
not warrant an upward departure.
ex
He
tent
upward
of an
departure). We review also claims that
misrepresentations
this determination
deferentially.
See himself
aas Vietnam veteran
recipient
and
Baird,
case,
promise defendant; of the integrity rely on the elements Pardo, three we identified In very point of fraud. is the again, that posi- determining whether to consider Motel, F.3d v. Starlite Agathos trust: tion constitutes Cir.1995) (3d that the elements (explaining (1) the de- allows whether misrepresentation, knowing fraud are a difficult-to-detect to commit fendant reliance); reliance, and intent to induce cf. authority degree of wrong; (1st 11, 16 Pelkey, 29 F.3d v. States defendant vests in the position which of trust the abuse (discussing act; wrongful object of the vis-a-vis “[sjome de noting that enhancement reliance there has been whether and reliance trust consequential gree occupying person of the integrity on the majority expected to be the victim is position. pretenses”). involving false fraud cases Pardo, Pardo stated at 1192. 25 F.3d all normally includes fraud Because be considered factors should “[TJhese factors, of abuse of description our three the sec- rationale of guiding light of description of as a equally well trust works their who abuse ‘insiders’ punish tion—to crimi to take party is able fraud: one “[I]f take ad- those who rather than positions relationship without advantage of nal Id. opportunity.” an available vantage by the ready quick notice second fear application the literal difficulty is that clearly placed party has the second party, under- in fraud cases three-part of the test United States in the first.”' a level of trust to “insiders.” Pardo’s limitation mines (3d Lieberman, Cir. 971 F.2d v. fraud, orchestrates a defendant Where Hill, 1992) v. States (quoting United prosecuted kind particularly Cir.1990)). (9th court, always almost will in federal he Bennett, Cir. test, the Pardo “insider” sufficient 1998), ran Ponzi scheme the defendant taking the same time if he is even defrauding many charity, of a guise his acts opportunity that advantage of the We found sums. out of substantial victims made available. that: ordinarily contains A scheme fraudulent him to dis- authority allowed Bennett’s de- difficulty of all Pardo elements: three agree- trust falsehoods about seminate First, tection, and reliance. authority, benefactors, anonymous ments it not do fraud do who commit people com- received no misrepresent he make they conceal it. Efforts overtly; efforts, cre- for his charitable pensation necessary are legitimate look the fraud *18 made of directors phony a board ate simple in a scam— fraud. Even part of individuals, in- deceive up prominent a ficti- door-to-door solicitation e.g., a New deposited with funds vestors that verify charity difficult to is tious —it held escrow organizations were Era Fraud is purpose. charitable claim of accounts, provide quasi-escrow or to detect. difficult by its nature therefore in- to the I.R.S. and false information vests Second, average fraud even vestors. authority in defendant high degree undertakings, it these In all of wrongful act. object of his vis-a-vis that of trust cloaked position Bennett’s give getting a victim consists of Fraud authority de- requisite him with the value, authority over items ato criminal .... ceive See, e.g., fleeting illegitimate. however Furthermore, the victims it clear Sokolow, is 91 F.3d mak- integrity when Bennett’s Cir.1996) (defendant relied on (3d requisite had the believed, on They based ing donations. he was autho- because authority degree (without representations, money their them intent) apparent criminal would held in low-risk help be accounts to be her friend. We found that there was by anonymous matched donors and ulti- no of trust because the safeguards mately used for charitable purposes. designed were so that the bank would not need to rely on borrowers’ credibility; the Id. at 195-96. As soon as the abuse crime should not have been difficult to described, trust has been so has the fraud. detect. Likewise, fraud, describing or its “cous- Judge Harris’s opinion distinguishes in,” deceit, by theft an describes abuse of Iannone’s situation from that in Pardo be- trust because fraud is culpable exploi- cause the difficult-to-detect element does tation of trust: not require due diligence by the victim: By viewing especially culpable per- Iannone’s victims did not have sons positions who “abuse” their experts in the oil gas industry trust, recognizes conduct an investigation extensive into legal concept time-honored by theft business 3B1.3 en- deceit is to be dealt with more harshly hancement to be fact, applicable. In one simple than theft. ordinary Whereas rationale for a 3B1.3 enhancement is by theft is large impersonal act, an that, where the defendant occupies a deceit, theft fraud, like its cousin trust, his victims are less personal. entirely Where individual likely to discover his fraud they because makes particularly himself vulnerable will not investigate the matter as thor- entrusting another with au- substantial oughly they would in an arm’s-length thority and discretion to act on his be- transaction. The focus of the first Par- half and then upon relies and defers to do prong defendant, is on the not his person, a decision to take advantage victims, requires the court to deter- of that trust and vulnerability particu- mine whether the position the defendant abhorrent, larly as it undermines faith occupied allowed him to commit a diffi- one’s in way fellow man that the ordi- cult-to-detect crime. nary pick-pocket simply cannot. Slip atOp. Ragland, I agree While that Pardo is distinguish (6th Cir.1996). able, disagree I that we can “focus” on the defendant to the exclusion of victims. II. Pardo, for example, if there had no been The preceding discussion demonstrates formal safeguards fraud, against bank that our tripartite test is better at detect- the bank had managers’ relied on assess ing abuses of including frauds'— trustworthiness, ments of trust — clients’ then the than it is defining “position” trae of defendant’s fraud would have been difficult Thus, trust. garden-variety fraud as well Sherman, detect. United States v. Cf. as exotic schemes will ordinarily qualify (insur 969-70 enhancement, for the though even the Sen- ance abused a position doctor tencing Guidelines were not supposed to trust because victim-insurer used an work way. system). honor ignore But decision to *19 the victims’ level of care does not obviate True, an occasional exceptional may case the to need look the victims to see not qualify the enhancement. Pardo is whether, circumstances, under the the de one increasingly of reject the rare cases to occupied fendant a position of trust an abuse of trust enhancement for fraud. respect to them. case, In that we found the enhancement unjustified where formal checks against unique Pardo is almost because the de- bank place, fraud were in but the informal, defen- personal fendant used ties to friend, dant’s manager, bank bypassed standard, subvert safeguards. formalized officers, it but was police to delegated ty contrast, Iannone chose case, by this insofar particularly to difficult inherently dif- not was whereby fraud detect — method from the of trust position look at representations as we own to detect —his ficult see, e.g., United leases, land, and perspective, oil ownership of victim’s about (2d 57, 62 informal The more industry. Castagnet, v. gas and oil States Nevertheless, no doubt Cir.1991). the defendant I have between the encounter it will be for victims, difficult the more enhancement of trust the abuse that fraud; infor- potential to detect Claymore. in justified victims “position” leads defendant’s mality of the F.2d Zamarripa, v. States even enhancement of the application Cir.1990) (abuse to the enhance- (10th of trust trust a traditional far from sexually it is though babysitter where applicable ment from our follows This result relationship. child). abused existence decisions, yoked the have which in which example is an Claymore of difficulty to of trust position of underinclusive, would test Pardo of the the circumstances detection that our test danger is greater though the crime: of fraud elements closely parallels the so in a placed has been [0]ne the under Both it is overinclusive. that authority when, of the by virtue trust the fact from follow over-inclusiveness lack and the employer by the conferred all test are Pardo the elements that authority, he on that imposed controls in deceit, is which involved basically about that is not an commit offense able is to all) fiduciary (but aof abuses not most cases, the In such readily discoverable. involved and is also of trust rely is necessity, by choice employer, occurs Deceit crimes. many other of the integrity on the primarily ing formal forms, relationships both many the loss against safeguard employee informal, longstanding. casual by the offense. occasioned then, tripartite Ultimately, the use Craddock, F.2d v. “position” concept of dilutes test added). (emphasis practical trust, reducing inquiry our an hardly is out Pardo exception carved was an “abuse there to whether terms worth the all; game is not exception at trust.” candle. difficulty arisen has that I this believe has extracted jurisprudence our
because III. trust traditional characterize that elements of trust” “abuse expanded we have Once from them relationships generalized only a which there to cover situations While case of trust.” “positions define that can- legitimacy misrepresentation that relationship of a example verified, I see limit- cannot easily not be and still seems elements the requisite has discern, the as I can As far principle. ing meaning the usual beyond far go me to justify might that fraud only type of trust,” also exam- there are “position simple is a trust enhancement abuse of the three of trust without positions ples of only if we that drop” scam—and “pigeon In United States elements. distilled require- minimal impose some (8th Cir.1992), choose Claymore, 978 precau- sensible victims take ment girl and 13-year-old raped a police officer fraud.2 Yet against tions may have This crime child. her federal fathered ever, involve defendants rarely, if the authori- cases given prevent, difficult been consequences legal tax unspecified drop” which "pigeon a scheme 2. A have, in- perpetrators they simple split. The prevent a victim convince criminals together, They giving up own upon riches. her mon- veigle lost into the victim stumbled *20 amongst disappear. them- split windfall "agree” good the and then her faith ey to show selves, victim convince the but the criminals
235 commit, who basic pigeon frauds like the “abused” is simply the reliance of the Indeed, drop. single the pigeon federal victim on the misleading statements or drop prosecution in past the years fifteen I conduct of the defendant. The trust in have in reported found the federal cases is a specific short offense characteristic feigned position invol veda of trust —a pho fraud, Section 3B1.3 enhance- ny “investment adviser”—not unlike Ian- ment inappropriate. is In the instant none’s in this case. See United v. matter, the lenders’ trust Jolly was Jones, F.Supp. 648 (S.D.N.Y.1986), 225 simply their reliance on representa- in part and rev’d part sub nom. aff'd tions about Microtech’s ongoing business Blackmon, United States v. 889 900 F.2d appearance and the created by the re- (2d Cir.1988).3 payments. Such reliance is hope
I therefore believe that the Sentencing every engages defendant who in fraud. Commission should rethink the relation-
ship the abuse between of trust enhance- ... Jolly ment and cases, fraud crimes.4 In held such himself out presi- as the enhancement should either dent of a company be seeking limited capital, not fiduciary or quasifiduciary as relationships, or an investment advisor. that, recognize Commission should United States v. Jolly, 102 F.3d 49-50 cases, expanded by the abuse of trust is (2d Cir.1996).
part of the definition of fraud and there- fore should not applied to fraud crimes. Under this approach, Iannone’s fraud (“This See adjustment U.S.S.G. 3B1.8 have would been an arm’s-length invest- may employed not be if an abuse of trust transaction, ment despite his personal re- or skill is included the base offense level lationship with the victims. Friendship specific characteristic.”). offense should not convert a non-fiduciary relation-
Alternatively, I ship into a urge my fiduciary Koehn, would col- one. See 74 leagues to revisit the F.3d at 201 applying standard (distinguishing “arms-length the enhancement to fraud cases. The commercial relationships where trust Court of Appeals for the Second Circuit created personality defendant’s has an approach instructive that we might credulity” victim’s from “relationships consider. Its standard bars enhance- which the victim’s trust is based on ment in fraud cases where the defendant is transaction”); defendant’s neither a trusted employee of the victim Mullens, United States v. any
nor in fiduciary or (11th quasi-fiduciary rela- (rejecting the en- tionship with the victim: hancement where the defendant befriend-
Section
precludes
3B1.1
an
ed his victims
enhancement
and touted himself as a
where
investor,
abuse of
gifted
trust is included in
but did not hold himself
specific
broker;
offense
out
characteristic.
holding
investment
that
Where fraud
occurs
arm’s-length
“[fraudulently inducing trust in an inves-
not involving
transactions
tor
fiduciary-like
is not the
abusing
same as
a bona fide
relationships,
“trust”
investor”).
relationship of
trust
only
area,
3. The
"pigeon
See,
other
drop"
federal
cases
we are
e.g.,
not alone.
I have
predate
uncovered
the Guidelines
Becraft,
(D.C.Cir.
States v.
trust to the children some resemblance
bears all of Wobegon, Lake Keillor’s
Garrison unnec- This has average. are above
whom law, stretching
essarily complicated meaning of a
the conventional it has breaking And point. to its
trust may well regime
created substituting a as over-inclusive
as well vic- deceived the defendant
showing that fiduciary a true a requirement
tims trust.” “position quasi-fiduciary the Sen- is for approach the better
Thus area, revisit
tencing Commission of abuse the notion bring to) (or its at least close back
of trust meaning. understood
generally TOURSCHER, Appellant, D.
Mark Kathy Emil; McCULLOUGH;
John Whitesel, Horn; Jay
Commissioner 97-cv-00223J). (D.C. No. Civil