Michael E. Stewart pleaded guilty to two counts of mail fraud in violation of 18 U.S.C. § 1341 and was sentenced to a twenty-one month prison term. The Government appeals from the order imposing sentence. The Government contends that the district court clearly erred in finding (1) that Stewart had not abused a position of private trust in a manner that significantly facilitated the commission and concealment of the offense within the meaning of section 3B1.3 of the United States Sentencing Guidelinеs, U.S.S.G. § 3B1.3; and (2) that the elderly persons who were induced to part with their money in response to Stewart’s false representations were not vulnerable victims within the meaning of section 3A1.1, U.S.S.G. § 3A1.1. We hold that the district court clearly erred in finding (1) that Stewart’s position as a licensed insurance agent did not significantly facilitate the commission or concealment of his fraudulent scheme; and (2) that the funeral directors were the sole victims of Stewart’s crime. We vacate the order imposing sentence and remand for a de novo sentencing hearing.
I.
Stewart was president and the operator of Pre-Need Services, Inc., an insurance firm specializing in the sale of annuities to the elderly. Stewart induced 316 elderly persons to forward 1.1 million dollars for the purpose *766 of purchasing annuities to compensate designated funeral directors for performing funeral services. Instead, Stewart converted the money for his own use. Thus, as a direct result of Stewart’s fraudulent representations, the funeral directors, who had contractually obligated themselves to perform funeral and burial services, received no compensation for these services.
Stewart accomplished his fraudulent scheme by organizing funeral directors to act as his agents to sell annuities to elderly persons to pay for their funeral expenses. The record shows that the elderly pawns of Stewart’s scheme had been advised by state officials that they could purchase “a pre-need funeral” as one means of reducing their financial estates in order to qualify for Medicaid funds for nursing home expenses. The funeral directors represented that the annuity would be used to pay the price of the funeral services selected by the elderly person. The elderly were informed that the cost of the annuity would be less than the actual price of the requested funeral services. The funeral directors also advised the еlderly persons that the interest earned on the annuity would be sufficient to compensate the funeral director for these services at the actual cost. Any excess amount would be transmitted to a designated beneficiary.
Stewart provided the funeral directors with forms to be filled out by his prospective clients. In the “Pre-Need Services E-Z Form” (E-Z Form), Stewart requested the client to provide personal and health information. 1 The E-Z Form also required that the “funeral price” and the “amount sent” be filled in and that both the client and the funeral director sign it.
The second form is entitled “Declaration of Irrevocable Trust” form (Trust form). 2 By signing this form, the client designated the State and Savings Bank, Monticello Indiana, as the trustee, and agreed that the funeral director who sold the annuity would perform the funeral services. The trustee was directed to use the proceeds of the policy to pay in full the “contract amount” of the funeral costs, and tо deliver any excess funds to the beneficiary designated by the settlor.
The client, with the assistance of the funeral director, was required to fill out the Trust form except for the annuity policy number and the name of the insurance company. After the client signed Stewart’s forms and furnished the cost of the annuity, the two agreements and the money were forwarded to Stewart.
Initially, Stewart purchased annuities for approximately thirty-eight of his elderly clients in a face amount substantiаlly less than that which his agents had represented would be provided to cover the actual cost of burial services. Stewart converted the remaining money for his personal use. Thereafter, Stewart converted all of the money entrusted to him for the purchase of 278 annuities.
To avoid detection, Stewart used a pyramid scheme. From the funds received from new clients, Stewart sent money to the funeral directors to provide funeral services for those pеrsons who died before his fraudulent conduct was discovered. Stewart also mailed a letter to each elderly client acknowledging the “receipt of the Funeral Trust papers that [the elderly client] arranged through [the named] Funeral Home.” 3 Stewart’s letter also confirmed that the “papers” were “being processed,” and that the client had placed his or her confidence in “very capable hands” because the named funeral home was “well аnd favorably known for their ever present concern for the families they serve.”
Stewart concealed from the funeral directors the fact that he had converted his elderly clients’ funds by sending statements to them that falsely represented that the policies had been purchased. Stewart’s obvious intent in sending these statements was to lull the funeral director into the belief that he or she would be compensated for the burial expenses by the proceeds from the annuities.
*767 The pyramid scheme collapsed when the cost of the funeral expenses exceeded the funds provided by the elderly victims of Stewart’s scheme. A complaint to a prosecutor in White County, Indiana commenced the investigation that resulted in Stewart’s mail fraud conviction.
II.
In the presentence report, the probation officer recommended that Stewart receive a total offense level of sixteen points. The Probation Department also added eleven points to the six point base offense level for mail fraud because the amount of loss was 1.1 million dollars. U.S.S.G. § 2Fl.l(b)(l)(L). Two additional points were added because the offense involved more than minimal planning. U.S.S.G. § 2Fl.l(b)(2)(A). Three points were subtracted for acceptance of responsibility.
The Government objected to the presen-tence report because it did not recommend application of two enhancement рrovisions that would increase Stewart’s offense level by four points. The Government argued that a two-level enhancement was required because Stewart abused a position of private trust pursuant to U.S.S.G. § 3B1.3, and that an additional two-level enhancement was warranted pursuant to U.S.S.G. § 3A1.1 because Stewart’s clients 'were unusually vulnerable due to their age and susceptibility to his fraudulent scheme.
At the sentencing hearing, the parties stipulated that the funeral homes were сontractually obligated to provide funeral services to the customers. The parties also stipulated that the only direct contact Stewart had with his clients was the letter that he sent confirming the alleged purchase of the annuity. Finally, the parties stipulated that Stewart was a licensed insurance broker and that this licensure was necessary to enable Stewart to purchase annuities for his clients.
The Government introduced a summary of the data that demonstrаtes that Stewart falsely represented he had purchased annuities for his clients. The exhibit shows that Stewart did not purchase any annuities for 278 clients and that he purchased annuities for thirty-eight clients in an amount less than that set forth in the written agreement.
Special Agent Walter Valentine of the Federal Bureau of Investigation testified that he determined the ages of 283 clients who were induced to furnish funds for the purchase of annuities by Stewart’s fraudulent representations. The median age of Stewart’s clients was “in the low 80’s. The average age was about 74.” Thirty-nine persons were over ninety years of age. Eighty-four were over the age of seventy, and 117 were over eighty years of age. Special Agent Valentine also stated that when Stewart’s elderly victims were informed of the fraudulent scheme, they were upset because the money they had advanced to purchase their funeral services had been misappropriated. Burial services have been performed for Stewart’s clients who died after paying for an annuity, notwithstanding the fact that the designated funeral directors have not been compensated because Stewart converted the money he received for the purchase of annuities.
The district court refused to apply a two-level enhancement for abuse of a position of trust and a two-level enhancement for targeting a vulnerable victim. The district court adоpted the calculation in the presentence report and sentenced Stewart to 21 months in prison. This appeal followed.
III.
The Government contends that the district court erred in determining that a two-level enhancement under Sentencing Guidelines § 3B1.3 was inapplicable because Stewart did not abuse a position of trust in a manner that significantly facilitated the commission or concealment of the offense. We will uphold the district court’s imposition of а sentence “if the court correctly applied the guidelines to factual findings which are not clearly erroneous.”
United States v. Kosth,
Under the Sentencing Guidelines, a court must add two offense levels “if the defendant abused a position of public or private trust ... in a manner that significantly facilitated the commission or concealment of the of *768 fense.” U.S.S.G. § 3B1.3. Application Note 1 states that:
“Public or private trust” refers to a position of public or private trust characterized by professional or managerial discrеtion. ... Persons holding such positions ordinarily are subject to significantly less supervision than employees whose responsibilities are primarily nondiscretionary in nature. For this enhancement to apply, the position of trust must have contributed in some significant way to facilitating the commission or concealment of the of-fense_ This adjustment would not apply in the case of an embezzlement or theft by an ordinary bank teller....
U.S.S.G. § 3B1.3, Application Note 1.
We apply the following two-part test to detеrmine if the enhancement applies: 1) whether the defendant occupied a position of trust; and 2) whether his abuse of the position of trust significantly facilitated the crime.
United States v. Boyle,
The determination that a defendant occupies a position of trust within the meaning of section 3B1.3 “dеpends on whether the defendant has ‘access or authority over valuable things.’ ”
United States v. Boyle,
Likewise, whether the abuse of the position of trust significantly facilitated the crime rеquires a factual determination that the abuse of a position of trust made it significantly “easier to commit or conceal a crime regardless of the success of that abuse.”
United States v. Gould,
The district court did not make a finding regarding whether Stewart occupied a position of trust. The district court determined that Stewart’s position did not substantially contribute to his crime. The court also found that Stewart did not use his insurance license to facilitate the fraud. The court explained its view of the facts in the following words:
The question not of saying I’m going to put it with this company or put it with that company and try to, you know, get some bid rigging, it was question of solely saying, “I’m going to get some insurance and never getting it, which is pure out and out theft. Accordingly, the court will not give a two-level increase for abuse of trust_
The district court clearly erred in concluding that Stewart’s position of trust did not substantially facilitate the commission of his crime. The evidence is undisputed that Stewart could not have purchased the annuities without being a licensed insurance broker. Stewart used his position as a licensed insurance broker to inducе funeral directors to act as his agents for the purpose of selling annuities to elderly clients. For these services, funeral directors were to receive ten percent of the amount paid by the client for the annuity. This amount was in addition to the price fixed for the services requested by the elderly.
Because of his position as a licensed insurance broker, Stewart had access and authority over the funds solicited from his clients. The elderly targets of Stewаrt’s fraudulent scheme entrusted him with their money *769 based on the representation that the money would be used to pay for an annuity that would fund their funeral expenses. Thus, Stewart’s position gave him access and authority over 1.1 million dollars of his clients’ money.
In
United States v. Lamb,
We also conclude that Stewart’s abuse of his position of trust made it significantly easier for him to commit and conceal his fraudulent scheme. Stewart’s licensure enabled him to represent that he had the authority to purchase annuities. Both the funeral directors and the elderly clients relied on Stewart’s representation that he would use the funds furnished by his clients to obtain annuities to pay for their funeral services. As set forth above, to conceal the fact that he converted his clients’ money, Stewart sent the funeral directors statements falsely representing that the annuities had been purchased. Stewart also mailed letters to his clients in which he falsely represented that he was taking the necessary steps to purchase the annuities.
Stewart argues that the district court correctly concluded that his fraudulent scheme did not qualify for the abuse of trust enhancement because the evidence showed that he merely had a contractual and commercial relationship with the funeral directors. In making this argument, Stewart relies on
United States v. Kosth,
Kosth entered into a contract with a bank which enabled him to collect money from the bank upon presentation of a slip of paper indicating that a customer had purchased merchandise with a credit card. As with all credit transactions, there was an element of reliance present. However, the relationship described by the facts in this case was a standard commercial relationship. The fraud described here does not differ from any other commercial credit transaction fraud. The defendant was not an “insider” of the credit card pаyment system.... He was an ordinary merchant customer of the bank who committed fraud by abusing his contractual and commercial relationship with it.
Id.
In
United States v. Boyle,
The defendant in Boyle was the president of the Public Armored Car Company (PAC) and responsible for the company’s business services. Id. at 487. PAC operated as a supplier of coin and currency and a messenger service for various customers. Id. PAC collected funds in advance from its customers, in the form of cashier checks, bank account transfers, money orders and currency, which it converted into coin and currency. Id. At the direction of its customers, PAC deposited the coin and currency in its vault coin account or stored it at a depository of the customer’s choice. Id. Boyle intermingled and misappropriated over four million dollars from the Federal Reserve Bank and *770 Dover’s Bank. Id. at 488-89. He concealed the crime by signing false daily and weekly reports apprising the Federal Reserve Bank of the total amount of coin stored on its behalf. Id. at 488. We held that the two level abuse of trust enhancement applied to Boyle. We explained that “[w]ith total access to and authority over these funds, Boyle was free to manipulate PAC’s records and to falsify the inventory statements he prepared for his customers. It is difficult to imagine a position embodying more trust.” Id. at 489.
Like the defendant in
Boyle,
Stewart had total access to the funds entrusted to him by his elderly clients. Stewart did not enter into a standard commercial relationship with his elderly clients. Rather, “[t]he relationship involved a special element of trust which [Stewart] recognized and exploited to facilitate” his scheme to obtain funds on the false representation that he would use the money to purchase annuities.
United States v. Alex Janows & Co.,
IV.
The Government also asserts that the district court erred in finding that a two-level enhancement under Sentеncing Guidelines § 3A1.1 did not apply because the elderly clients were not the victims of Stewart’s crime. Section 3A1.1 provides that “[i]f the defendant knew or should have known that
a
victim of the offense was unusually vulnerable due to age, ... or that a victim was otherwise particularly susceptible to the criminal conduct, increase by 2 levels.” U.S.S.G. § 3A1.1 (emphasis added). “Whether a defendant’s victims were ‘unusually vulnerable’ is a question of fact reversible only for clear error.”
United States v. Sutherland,
The district court deniеd the Government’s request for a two-level enhancement on the ground that the funeral directors were the sole victim of Stewart’s fraud because they provided burial services for Stewart’s deceased clients, notwithstanding Stewart’s failure to obtain the annuities intended to cover all funeral expenses. The district court appears to have succumbed to Stewart’s argument that section 3A1.1 requires that the vulnerable victim suffer a financial loss. There is no requirement in section 3A1.1 that a target of the defendant’s criminal activities must suffer financial loss. Furthermore, by using the words “a victim” of the crime, rather than “the victim,” it is obvious that the drafters were mindful of the fact that some crimes have multiple victims. U.S.S.G. § 3A1.1 Some victims may be unusually vulnerable to criminal conduct because of their age. Id. Others may be unusually vulnerable because of their physical or mental condition. Id.
In
United States v. Neuman,
In this matter, Stewart induced funeral directors to agree to provide the funeral services for elderly persons by representing that the money received from them would be used to purсhase annuities for that purpose. Thus, as in Newman, the defendant in this matter made his elderly clients the innocent instruments of his scheme to defraud the funeral directors of the value of their services.
Our interpretation of the vulnerable victim enhancement has also been adopted by other circuits.
See, e.g., United States v. Bachyn-sky,
Stewart’s scheme targeted elderly clients who were concerned with making adequate financial arrangements for their own funeral services. They furnished funds for the purchase of the annuities sold by Stewart’s agents and provided him with information about their age and health status. The evidence supports an inference that Stewart targeted the elderly because he was aware of their concern about providing for their own terminal expenses without burdening their families. Facing the inevitable physical or mental consequences of their own mortality, they were especially vulnerable to Stewart’s promise that they could provide for their funeral expenses, and build an estate to pass on to others, if they purchased an annuity at less expense than the fixed price for a funeral.
The district court clearly erred in concluding that the elderly were not vulnerable victims. Accordingly, we must vacate the sentence and remand with instructions that it be enhanced by two levels for abuse of a position of trust and an additional two levels because Stewart preyed on vulnerable victims.
Vacated AND Remanded.
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