U.S. v. Barrett
| Decision Date | 03 June 1999 |
| Docket Number | No. 98-1294,98-1294 |
| Citation | 178 F.3d 643 |
| Parties | , UNITED STATES of America, Appellee, v. Jeremy E. BARRETT, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Second Circuit |
Andrew G. Tretter, McDonough, Marcus, Cohn, Tretter, Heller & Kanca, LLP, New York, NY (John L. Ponzini, Brandner & Ponzini, Stamford, CT, on the brief), for Defendant-Appellant.
David C. Finn, Assistant United States Attorney (Mary Jo White, United States Attorney, Southern District of New York, Dietrich L. Snell, Assistant United States Attorney, on the brief), New York, NY, for Appellee.
Before: WINTER, Chief Judge, JACOBS and POOLER, Circuit Judges.
Jeremy E. Barrett appeals from the May 27, 1998, judgment of the United States District Court for the Southern District of New York (Martin, J.) sentencing him in connection with his guilty plea to bank fraud in violation of 18 U.S.C. § 1344. Barrett raises several challenges to his sentence, none of which has merit. In addition, Barrett makes a collateral attack on the validity of his plea in the context of a sentencing dispute. Because Barrett's conduct and state of mind satisfied the elements of bank fraud, we do not disturb Barrett's plea.
A one-count information filed on September 25, 1997, charged Barrett with bank fraud in connection with his six-year scheme to embezzle approximately $714,000 from his employer, F. Schumacher & Co. Barrett pleaded guilty to the information on September 25, 1997. Barrett began working for F. Schumacher & Co. in 1981 and was the company's vice president of sales and national sales manager when he left in 1996. Between 1990 and 1996, Barrett submitted false invoices and check requests to the company's accounting department and asked that the checks be returned to him. The false invoices reflected both actual and fictitious F. Schumacher accounts, and Barrett interspersed his fraudulent check requests with legitimate payment requests. When Barrett received the checks, he forged the payee endorsement, further endorsed the check in his name or the name of his wife, and deposited the funds in a personal account he shared with his wife. Barrett therefore presented the checks with forged endorsements to a financial institution for negotiation, and the Bank of New York paid out the funds because F. Schumacher held its account there. Using this method, Barrett acquired approximately 100 false checks totaling $714,000.
After Barrett left F. Schumacher, the company discovered through internal audits that Barrett may have embezzled several hundred thousand dollars. The full extent of Barrett's crime became apparent after the Federal Bureau of Investigation ("FBI") conducted an audit and investigation. Barrett, who was represented by counsel at the time, made a full statement of confession to FBI investigators on December 13, 1996. According to Barrett, no one else was involved in his scheme, and he used most of the money to finance repairs and renovations to his house in New Canaan, Connecticut.
After conducting an evidentiary hearing, Judge Martin sentenced Barrett to 24 months imprisonment, three years supervised release, and a $100 special assessment. The court also ordered Barrett to pay restitution to F. Schumacher. Barrett now appeals his sentence.
We apply de novo review to the legal questions regarding application of the Sentencing Guidelines. See United States v. Jolly, 102 F.3d 46, 48 (2d Cir.1996). We review the district court's findings of fact for clear error. See United States v. Farah, 991 F.2d 1065, 1068 (2d Cir.1993).
The district court at sentencing increased Barrett's offense level calculation by two levels pursuant to U.S.S.G. § 3B1.3 because Barrett abused a position of trust in the commission of his crime. Appellant raises three challenges to this increase. First, Barrett argues that the enhancement is erroneous because his position within F. Schumacher was outside the company's financial operations and did not allow him to write checks independently. Second, appellant contends that the Sentencing Guidelines section does not apply because the bank fraud victim, the Bank of New York, did not entrust Barrett with authority. Finally, Barrett claims that the facts of his crime do not constitute bank fraud and that the enhancement would not apply if he had been properly charged with transportation or receipt of stolen property.
The sentencing enhancement for abuse of a position of trust applies where a defendant used his position of public or private trust "in a manner that significantly facilitated the commission or concealment of the offense." U.S.S.G. § 3B1.3. Professional or managerial discretion characterizes the position, and people holding these jobs "ordinarily are subject to significantly less supervision than employees whose responsibilities are primarily non-discretionary in nature." Id., comment. (n.1). The position of trust must have "contributed in some significant way to facilitating the commission or concealment of the offense." Id. In addition, the defendant must have misused discretionary authority that the victim entrusted to him or that another party entrusted to him on the victim's behalf. See Jolly, 102 F.3d at 48. We use the perspective of the victim to determine whether a defendant was in a position of trust. See United States v. Castagnet, 936 F.2d 57, 62 (2d Cir.1991).
Barrett argues first that the sentencing enhancement should not apply because his job merely involved sales rather than some fiduciary position within the financial operations of F. Schumacher. Barrett states that he lacked the requisite discretionary authority because he could not issue checks independently but instead had to request them from F. Schumacher's accounting department like any other company employee. Appellant incorrectly limits Section 3B1.3 enhancements to fiduciaries because the guideline is not that narrow. For example, the enhancement has applied to defendants who were police officers, security guards, babysitters, custodians, and truck drivers. See Castagnet, 936 F.2d at 60-62 (citing cases). The common thread in these cases is "the extent to which the position provides the freedom to commit a difficult-to-detect wrong" rather than a legally defined duty such as fiduciary duty. Id. at 61-62 (quoting United States v. Hill, 915 F.2d 502, 506 (9th Cir.1990)).
Moreover, Barrett's statement to authorities belies his present contention that he lacked discretionary authority at F. Schumacher to facilitate the commission and concealment of his crime. There is no question that Barrett was a higher-level manager in the company with discretionary authority, and he stated that he supervised 40 people nationwide, traveled internationally in connection with his job, and earned $160,000 annually. Importantly, even though Barrett had to request checks from the accounting department, his position at F. Schumacher facilitated his crime because he stated that his "check requests were not questioned because he was the Vice President of Sales and had the authority to authorize any check on any open account." Statement of Def. of 12/12/96 at 3. Barrett's position also gave him access to account records and sales reports that he used to create false invoices for the check requests. Barrett was in a position with freedom to commit a wrong so difficult to detect that a company audit uncovered less than half of the stolen amount of money.
Contrary to Barrett's argument, his is not a case like United States v. Williams, where the Sixth Circuit held that the enhancement did not apply to an agency executive director who embezzled government funds because she committed the same crime while she was a regular, non-supervisory employee. See United States v. Williams, 993 F.2d 1224, 1228 (6th Cir.1993). By Barrett's own admission, accounting department employees did not question his check requests due to his position in the company. The facts of this case easily fall within established Second Circuit precedent. See United States v. Valenti, 60 F.3d 941, 947 (2d Cir.1995) (); see also United States v. Melendez, 41 F.3d 797, 799 (2d Cir.1994) (). Therefore, we conclude that Barrett's position at F. Schumacher was one of private trust.
Appellant argues second that the enhancement is inapplicable because the Bank of New York was the victim of his bank fraud and Barrett held no position of trust with respect to the bank. According to Barrett, the bank entrusted him with no special authority.
We utilize the victim's perspective in applying the enhancement for abuse of a position of trust. See Castagnet, 936 F.2d at 62. However, the definition of victim depends upon the circumstances of the case. We must examine the relationship that existed between the defendant and victim and whether it provided defendant the ability to commit the crime. See id. In addition, the Sentencing Guidelines recognize that there exist primary and secondary victims of fraud. See United States v. Echevarria, 33 F.3d 175, 180-81 (2d Cir.1994) (). Banks are not always the immediate victims in a bank fraud. See United States v. Rodriguez, 140 F.3d 163, 168 (2d Cir.1998).
In this case, Barrett's relationship with F. Schumacher enabled him to commit and conceal his crime, and the...
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