U.S. v. Tiojanco, 01-3170.

• Decision Date: 17 April 2002
• Docket Number: No. 01-3170.,01-3170.
• Citation: 286 F.3d 1019
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Eduardo Manalo TIOJANCO, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1019

286 F.3d 1019

UNITED STATES of America, Plaintiff-Appellee, v. Eduardo Manalo TIOJANCO, Defendant-Appellant.

No. 01-3170.

United States Court of Appeals, Seventh Circuit.

Argued January 30, 2002.

Decided April 17, 2002.

Patrick J. King, Jr. (argued), Office of the United States Attorney Criminal Division, Chicago, IL, for plaintiff-appellee.

John A. Meyer (argued), Chicago, IL, for defendant-appellant.

Before MANION, DIANE P. WOOD, and EVANS, Circuit Judges.

TERENCE T. EVANS, Circuit Judge.

Eduardo Tiojanco pleaded guilty to a federal wire fraud charge (18 U.S.C. § 1343) after using his position as an accounts receivable clerk at Chicago's Palmer House Hilton to steal more than a quarter of a million dollars in hotel funds. He was able to turn this trick because he worked with the hotel's credit card accounts and, with access to them, he disguised credit card refunds that went to cards he controlled as refunds destined for hotel guests. He appeals a 2-level upward adjustment he received under U.S.S.G. § 3B1.1 for abusing a position of private trust.

From 1988 to 1998 Tiojanco worked as a clerk in the Palmer House's accounts receivable department, where he was responsible for handling telephone calls from hotel guests who disputed charges made to their credit card accounts. In 1993, after 5 years on the job, Tiojanco decided to augment his salary by ripping off the hotel. Using credit card numbers issued in the name of an accomplice (Antonio Reyes), Tiojanco devised a scheme to issue credits to them as if they were owed to a hotel guest. He "processed the credit" by forwarding to his supervisor, the hotel's comptroller, a "rebate slip" listing the amount of the credit and the reason for the refund. The comptroller, thinking it was a legitimate refund to a deserving guest, initialed the slip and passed it on to the hotel's night audit division for processing. The night audit department performed no review function and the comptroller's review was limited — he never spoke directly with "complaining" hotel customers but instead relied on the rebate slips Tiojanco submitted. This enabled Tiojanco to process $261,755.25 in phony refunds to 36 different credit card accounts he (and his accomplice) controlled.

The district court found that Tiojanco held a "key" position at the Palmer House, that he was entrusted with valuable credit card information, and that his supervisor relied heavily on Tiojanco's work. The court concluded that Tiojanco's job required him to exercise "professional discretion" and thus was a position of private trust, and that Tiojanco had abused that position by committing this massive fraud. See U.S.S.G. § 3B1.3 & comment. (n.1). Accordingly, the court increased his offense level from 15 to 17. Tiojanco's criminal history category was I, so the adjustment only resulted in a modest change from 18-24 months to 24-30 months in his guideline range. The sentence Tiojanco received — 24 months imprisonment — would thus have been possible even without the § 3B1.3 adjustment.

A survey of recent cases in which we have upheld application of the adjustment for abusing a position of private trust demonstrates the futility of Tiojanco's argument. The cases fall into two general categories; the first includes people like doctors, lawyers, and investment advisors who have (or hold themselves out as having) specialized expertise that leaves the average layman ill-equipped to monitor their job performance. This explains why we have found the adjustment properly applied to a psychologist who failed to provide treatment to her mentally ill patients, see United States v. Hoogenboom, 209 F.3d 665, 667, 671 (7th Cir.2000), and a doctor who ordered unnecessary tests and contraindicated treatments, see United States v. Vivit, 214 F.3d 908, 911-13, 923-24 (7th Cir.2000) — both of whom nonetheless attempted to obtain reimbursement from their patients' insurers — and a lawyer representing a debtor in bankruptcy who failed to disclose his firm's connection to a senior secured creditor, see United States v. Gellene, 182 F.3d 578, 581, 596-97 (7th Cir.1999). Doctors and lawyers enjoy significant discretion in deciding what course of action is appropriate for their patients and clients; patients and clients (and their insurers) are forced to rely on these professional judgments. Similarly, clients of investment advisors face a discontinuity in expertise but place trust in their advisors, granting them discretion to invest their funds with the understanding that the advisor will act in the investor's best interests. And so we have concluded that those who hold themselves out as having extensive experience trading commodities, see United States v. Davuluri, 239 F.3d 902, 904, 908-09 (7th Cir.2001), or securities, see United States v. Frykholm, 267 F.3d 604, 612-13 (7th Cir.2001), or as holding a Series 7 license, see United States v. Paneras, 222 F.3d 406, 412-13 (7th Cir.2000), may occupy positions of private trust with respect to individual investors, and that those who make use of the corporate form of doing business assume a fiduciary duty, and thus occupy a position of trust, with respect to the corporation's investors, see United States v. Bhagavan, 116 F.3d 189, 193 (7th Cir.1997); United States v. Strang, 80 F.3d 1214, 1216, 1220 (7th Cir.1996).

A second category of positions of trust exists in organizational settings, where businesses or similar entities charge particular employees with deciding, on a case-by-case basis, whether a particular expenditure or transfer of company funds or other valuables is necessary or beneficial to the organization. Some employees have unfettered authority to spend company money; others provide initial authorization that for reasons of efficiency is subject only to nominal review. In the latter case, supervisors defer to lower-level decisionmakers, who generally have first-hand knowledge of the relevant facts through personal observation, customer interaction, or document review. Thus, we have held that the position-of-trust adjustment was properly applied to an assistant manager of a bank branch who had authority to transfer large amounts of...