67 F.3d 452 (2nd Cir. 1995), 1522, United States v. Broderson

Docket Nº:1522, 1903, Dockets 94-1586(L), 94-1638.
Citation:67 F.3d 452
Party Name:UNITED STATES of America, Appellee/Cross-Appellant, v. Howard BRODERSON, Defendant-Appellant/Cross-Appellee.
Case Date:September 29, 1995
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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67 F.3d 452 (2nd Cir. 1995)

UNITED STATES of America, Appellee/Cross-Appellant,


Howard BRODERSON, Defendant-Appellant/Cross-Appellee.

Nos. 1522, 1903, Dockets 94-1586(L), 94-1638.

United States Court of Appeals, Second Circuit

September 29, 1995

Argued June 13, 1995.

As Modified Oct. 23, 1995.

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Candace Reid, New York City (Lawrence S. Goldman, Goldman & Hafetz, of counsel), for Defendant-Appellant/Cross-Appellee.

Scott W. Mackay, Washington, DC (Deborah A. Kent, United States Department of Justice, Defense Procurement Fraud Unit, of counsel), for Appellee/Cross-Appellant.

Before: OAKES, WINTER and MAHONEY, Circuit Judges.

WINTER, Circuit Judge:

Howard Broderson appeals from the sentence imposed by Judge Mishler after a jury convicted Broderson of twenty-two counts involving fraudulent conduct directed at the United States government. Broderson challenges: (i) the enhancement of his offense level by two levels based on a determination that he had abused a "position of trust" with the victim of the fraud, see U.S.S.G. Sec. 3B1.3; (ii) the use of the 1993 Guidelines Manual instead of the 1988 Manual in determining his sentence; and (iii) the enhancement of his offense level by twelve levels based on a finding that the "intended loss" to the victim was $2.1 million, see U.S.S.G. Sec. 2F1.1(b)(1)(M). The government cross-appeals, contending that the district court erred when it departed downward by seven levels under U.S.S.G. Secs. 2F1.1, comment. (n. 7(b)), 5K2.0. We hold that Broderson's conduct was not an abuse of a position of public trust under U.S.S.G. Sec. 3B1.3. We disagree with the district court's calculation of the intended loss. We agree that the grounds relied upon by the district court as a basis for a downward departure were proper. We therefore remand for resentencing.


In the summer of 1989, Grumman Data Systems Corporation and the National Aeronautics and Space Administration ("NASA") negotiated a contract under which Grumman agreed to provide supercomputer hardware, software, and related integration and maintenance services to the Lyndon B. Johnson Space Center in Houston, Texas. Broderson, a vice president of the Business Operations Division of Grumman, negotiated the contract on behalf of Grumman and was responsible for preparing and submitting Grumman's proposals to NASA. The contract negotiations were governed by the Truth in Negotiations Act ("TINA"), 10 U.S.C. Sec. 2306a, and TINA's implementing regulations in the Federal Acquisition Regulations ("FAR"), 48 C.F.R. Secs. 15.801-15.804. TINA and FAR required Broderson to disclose to NASA (and to update) all "cost or pricing data" until an agreement was reached by NASA and Grumman. 10 U.S.C. Sec. 2306a; 48 C.F.R. Sec. 15.801.

Under the contract, Grumman was to purchase supercomputer hardware and lease it to NASA under a "lease-to-ownership-plan" ("LTOP"). Under the LTOP, NASA was to make 57 or 58 monthly payments to Grumman, the total cost not to exceed $48 million. Broderson arranged to finance Grumman's

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purchase of the supercomputer hardware through a third-party financing company, Old Stone Leasing Corporation. Old Stone initially offered Broderson an interest rate of 13.77 percent, which he disclosed to NASA. Approximately three weeks later, Old Stone reduced the requested interest rate to 10.5 percent. Broderson failed to inform NASA of the lower interest rate. Broderson signed and caused to be submitted to NASA two Certificates of Current Cost or Pricing Data, which falsely stated that to the best of Broderson's knowledge and belief, Grumman's cost or pricing data were accurate, complete, and current. The final contract between Grumman and NASA provided for a 57-month stream of lease payments at the 13.77 percent interest rate. However, Grumman thereafter sold the lease stream to Old Stone, valuing it at the 10.5 percent interest rate.

A jury convicted Broderson of eleven counts of executing a major fraud scheme in connection with the defective pricing of a government contract valued at more than $1 million, in violation of 18 U.S.C. Secs. 1031, 2; nine counts of wire fraud, in violation of 18 U.S.C. Secs. 1343, 2; and two counts of making false statements to the United States, in violation of 18 U.S.C. Secs. 1001, 2. Broderson does not appeal from the conviction.

At sentencing, the district court assigned Broderson a base offense level of six under U.S.S.G. Sec. 2F1.1(a). Judge Mishler then enhanced the offense level by twelve levels based on an intended loss of $2.1 million under U.S.S.G. Sec. 2F1.1(b)(1)(M); two levels for abuse of a position of public trust under U.S.S.G. Sec. 3B1.3; and two levels for more than minimal planning under U.S.S.G. Sec. 2F1.1(b)(2)(A). Judge Mishler then departed downward by seven levels based on his findings that the determination under Section 2F1.1 significantly overstated the seriousness of Broderson's conduct, and that there were mitigating circumstances of a kind or degree not adequately taken into consideration in the Guidelines, see U.S.S.G. Sec. 5K2.0. In support of these findings, Judge Mishler noted that: (i) Broderson had sought only to benefit his employer, Grumman, and had received no personal benefit from the fraud; (ii) under existing market conditions, the contract was favorable to the government; and (iii) the government received restitution from Grumman.

Based on a criminal history category of I and offense level of 15, the district court set Broderson's sentencing range at 18 to 24 months. Absent the downward departure, Broderson's guideline range would have been 41 to 51 months. Judge Mishler sentenced Broderson to 18 months imprisonment to be followed by three years of supervised release, and imposed a $1,100 mandatory special assessment.


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