U.S. v. Vitale
| Decision Date | 06 November 1998 |
| Docket Number | No. 98-5072,98-5072 |
| Citation | 159 F.3d 810 |
| Parties | -7098 UNITED STATES of America v. Francis X. VITALE, Appellant. |
| Court | U.S. Court of Appeals — Third Circuit |
Justin P. Walder (Argued), Walder, Sondak & Brogan, Roseland, NJ, for Appellant.
George S. Leone, Amanda Haines (Argued), Office of United States Attorney, Newark, NJ, for Appellee.
Before: SLOVITER, ROTH, Circuit Judges, and FULLAM, * District Judge.
In this case the principal issue we must decide is whether the offenses of wire fraud and tax evasion should be grouped together for sentencing purposes when the government stipulated that the conduct underlying the wire fraud charge was embezzlement. Appellant also raises an issue of his alleged entitlement to a downward departure for diminished mental capacity.
On September 30, 1997, Francis X. Vitale entered a guilty plea to one count of wire fraud and one count of tax evasion pursuant to a plea agreement. He was charged in the wire fraud charge with causing $407,223.80 to be illegally wire transferred from Engelhard's account to an antique clock dealer in Switzerland. He was charged in the second count with failing to pay over $1,200,000 in income tax on taxable income of more than $3,700,000.
The charges against Vitale stemmed from his embezzlement of approximately $12 million from his employer, Engelhard Corporation, between 1987 and 1996. Vitale used this money to acquire and restore antique clocks, which he displayed in what has been described as a museum type gallery in Spring Lake, New Jersey. Vitale himself states that his collection was one of the finest of 18th and 19th century European clocks.
Vitale had been employed for more than thirteen years by Engelhard, a specialty chemical and metal products manufacturer, most notably as the vice president of strategic development and corporate affairs. He controlled a multi-million dollar budget for domestic and international marketing and communications and had sole and unlimited authority to approve at least a million dollars in international marketing expenditures. Vitale forwarded fabricated invoices to Engelhard's cash management office, which received authorization to wire funds on the bogus invoices to named vendors who were, in fact, European clock dealers who sold antique clocks to Vitale's shop. In addition, Vitale solicited the owner of Dimensional Marketing, Inc. to wire transfer funds and send checks to various vendors under the guise of helping Engelhard with a purported budgeting problem. These payments, however, went to vendors of Vitale's clock company, with Vitale approving payment of the invoices. Vitale failed to report any of the embezzled funds on his income tax returns.
When Vitale was confronted with these crimes by Engelhard's senior executives, he admitted his guilt and cooperated with Engelhard by providing complete restitution by selling his entire clock collection. Vitale's extraordinary cooperation in organizing the sale of his clocks was noted in several letters written by Engelhard employees. Vitale also volunteered full-time with the Boys & Girls Club of Trenton/Mercer Counties in 1997.
Vitale also underwent psychiatric counseling. Dr. Ventano, Vitale's treating psychiatrist, opined that Vitale was not motivated by greed or accumulation of wealth; instead, he had an obsession with antique clocks which overpowered his sense of right and wrong. Ventano observed that Vitale knew what he was doing was wrong, but could not stop himself.
This appeal concerns Vitale's sentence, which the district court calculated as follows:
The district court rejected Vitale's argument that the wire fraud and tax evasion counts should be grouped. Therefore, under the multiple-count rules of Chapter 3 of the Sentencing Guidelines, Vitale's greater adjusted offense level of 25 was increased by two levels, based on the number of units, for a combined adjusted offense level of 27. Three levels were deducted for acceptance of responsibility, for a total offense level of 24, which corresponds (with a Criminal History Category of I) to a range of 51 to 63 months incarceration.
The court denied Vitale's request for a downward departure based on the government's alleged manipulation of the charging documents, app. at 94, and declined to further depart downward from the guideline
range based upon Vitale's alleged reduced mental capacity, app. at 94. However, the court granted Vitale's motion for downward departure pursuant to U.S.S.G. § 5K2.0 due to Vitale's extraordinary acceptance of responsibility, restitution efforts, community service and post-offense rehabilitation. Thus, after all the calculations and the downward departure, Vitale was sentenced to thirty months imprisonment (concurrent on counts one and two), two years of supervised release (also concurrent on counts one and two), and 500 hours of community service. App. at 95-96. Vitale appeals.
Vitale argues that the district court erred in denying his request to group the two charges. We give deference to a district court's grouping decision, see United States v. Seligsohn, 981 F.2d 1418, 1426 (3d Cir.1992) (citation omitted), and we review its factual findings leading to a grouping determination for clear error, see United States v. Bush, 56 F.3d 536, 537-38 (3d Cir.1995). However, we have plenary review of the district court's interpretation of the Sentencing Guidelines. See United States v. Rudolph, 137 F.3d 173, 178 (3d Cir.1998) (citations omitted).
Vitale premises his argument for grouping on U.S.S.G. § 3D1.2, which instructs as follows: "All counts involving substantially the same harm shall be grouped together into a single Group." The Guideline then sets forth four circumstances which involve the same harm and in which counts are to be grouped together. 1 The Guideline also lists certain offenses that must be grouped and certain offenses which are excluded from grouping.
Vitale relies on the subsection that provides that counts involve "substantially the same harm" when, inter alia, one of the counts "embodies conduct that is treated as a specific offense characteristic in, or other adjustment to, the guideline applicable to another of the counts." § 3D1.2(c). Vitale contends that because the offense level for his tax count was increased two levels under § 2T1.1(b)(1) because the unreported income was derived from his criminal activity, i.e., the wire fraud charged in count one, the wire fraud "embodies conduct that is treated as a specific offense characteristic of the tax evasion count" and therefore grouping is required.
This court dealt with a comparable situation in United States v. Astorri, 923 F.2d 1052 (3d Cir.1991), where defendant, a stockbroker who defrauded various vulnerable investors, pled guilty to one count of wire fraud and one count of income tax evasion. Astorri sought to have the counts grouped under U.S.S.G. § 3D1.2(c) arguing, as Vitale does, that "the fraud count embodies conduct treated as a specific offense characteristic under the tax evasion offense." Id. at 1056. We disagreed. We noted that because the Sentencing Commission listed the failure to report criminally-derived income as a Specific Offense Characteristic for tax evasion in order to deter concealment of such income, it would negate that deterrence were that designation the basis for grouping. Id. at 1057.
It is difficult to see why our reasoning in Astorri is not apposite here. Like Astorri, Vitale pled guilty to wire fraud, 18 U.S.C. § 1343, and tax evasion, 26 U.S.C. § 1701. As in Astorri, the counts here involve different victims (Engelhard and the United Vitale argues that this case is not controlled by Astorri because although he, like the defendant in Astorri, was charged with fraud, the government stipulated with him in the plea agreement that "the conduct underlying the wire fraud offense is embezzlement." App. at 16, p 8. Vitale then argues that grouping is appropriate when the government has brought charges of both embezzlement and tax evasion, an issue we left open in United States v. Lieberman, 971 F.2d 989 (3d Cir.1992).
States), different harms, and different types of conduct. As explained in Astorri, the tax evasion count represents significant criminal conduct in addition to the fraud count, and therefore the two counts are not so closely related that such grouping is required. See also United States v. Bissell, 954 F.Supp. 841 (D.N.J.1996) (), aff'd, 142 F.3d 429 (3d Cir.1998) (Table).
Lieberman was a former bank vice president who pled guilty to bank embezzlement and attempted income tax evasion. In setting the sentence, the district court departed downward for inappropriate manipulation of the indictment, and the government appealed. We upheld the district court's discretion in that regard, and, in the course of our discussion, observed that Lieberman made a plausible argument that "a case involving tax evasion and embezzlement, which necessarily involves a...
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