U.S. v. Boyle

• Decision Date: 24 November 1993
• Docket Number: No. 92-3048,92-3048
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. John BOYLE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 485

10 F.3d 485

UNITED STATES of America, Plaintiff-Appellee, v. John BOYLE, Defendant-Appellant.

No. 92-3048.

United States Court of Appeals, Seventh Circuit.

Argued May 5, 1993.

Decided Nov. 24, 1993.

Bennett E. Kaplan (argued), Office of the U.S. Atty., Criminal Div., Barry R. Elden, Asst. U.S. Atty., Criminal Receiving, Appellate Div., Chicago, IL, for plaintiff-appellee.

Peter Schmiedel, Erica Thompson (argued), Peoples Law Office, Chicago, IL, for defendant-appellant.

Before EASTERBROOK and ROVNER, Circuit Judges, and WILLIAMS, Senior District Judge. ^*

SPENCER WILLIAMS, Senior District Judge.

In 1992, John Boyle pled nolo contendere to one count of wire fraud, in violation of 18 U.S.C. Sec. 1344, one count of bank embezzlement, in violation of 18 U.S.C. Sec. 656, and eleven counts of making false and fraudulent statements to an agency of the United States, in violation of 18 U.S.C. Sec. 1001. Over Boyle's objections, the district court (1) imposed a sentence enhancement for abuse of a position of trust, pursuant to U.S.S.G. Sec. 3B1.3; (2) denied a reduction in his offense level under U.S.S.G. Sec. 3E1.1 for acceptance of responsibility; and (3) ordered him to pay $2 million in restitution. Boyle appeals these rulings. For the reasons expressed below, we affirm.

BACKGROUND

Public Armored Car Company ("PAC") operated in Bensenville, Illinois, as a supplier of coin and currency and as a messenger service for various customers. The company collected funds in advance from its customers, in the form of cashier checks, bank account transfers, money orders and currency, which it converted into specific denominations of rolled coin and strapped currency. PAC deposited the coin and currency in its vault coin account at Gladstone Norwood Bank or stored it in a depository at its premises, as directed by its customers.

In March 1987, John Boyle became president of PAC and assumed responsibility for the company's business services. Within a year, the company's net operating loss rose dramatically, from $71,801 to $834,262, due to Boyle's rapid expansion of the business. Boyle was unable to attract investors to finance the large capital expenditures that were necessary for this endeavor.

In June 1988, PAC contracted with the Federal Reserve Bank ("FRB") to store $3 About this same time, PAC entered into contracts with the Illinois Tollway Authority and Cole Taylor/Drovers Bank ("Drovers Bank") to pick up, proof and count all of the fees collected at the Tollway Authority's toll collection booths, to store the coin and currency at PAC's facility, and to credit the receipts to the Tollway Authority's account with Drovers Bank. In addition to performing these functions, PAC transferred Drovers Bank funds, at the bank's direction, to the FRB in order to satisfy reserve requirements for membership in the Federal Reserve banking system. The FRB typically ordered PAC to store this coin on PAC's premises, where it would be available for delivery to other member banks.

million of FRB-owned coin in its depository and to deliver this coin to FRB customers. PAC was to keep the FRB deposit separate from other funds and was not authorized to use the coin for its own purposes. The contract also required PAC to prepare daily and weekly reports apprising the FRB of the total amount of FRB-owned coin being stored. Boyle signed these reports.

Under the contract between PAC and the FRB, the FRB was entitled to conduct "surprise" spot audits of its coin stored at PAC. When conducting one of these audits in December 1988, the FRB discovered that many bags of its coin were missing. Alarmed, the FRB cancelled its contract with PAC, removed its remaining coin from the PAC facility, and conducted a transactional analysis to ascertain the exact amount of its missing funds. That analysis uncovered a shortage of $2,476,175. Drovers Bank also conducted an audit and transactional analysis of its funds held by PAC and discovered that it was missing $1,599,725. PAC's insurance company, Lloyd's of London, paid the FRB and Drovers Bank the respective amounts of their losses.

A government investigation revealed that FRB and Drovers Bank funds had been intermingled and that substantial sums had been misappropriated. The investigation further revealed that Boyle was responsible. On eleven different occasions between October and December of 1988, PAC's president falsely certified and verified in the weekly written reports to the FRB the amount of FRB-owned coin on site at PAC. PAC records also revealed that Boyle transferred one million dollars from PAC's vault coin account to its operating account without providing any explanation. Additionally, there was evidence indicating that he took another one million dollars directly received from coin-buying customers to pay the costs of PAC's operation and expansion. Finally, the government found that Boyle had signed checks and delivery receipts, enabling him to embezzle more than $480,000, which he used to cover his own personal expenses and those of his family and friends.

On appeal, Boyle argues that he did not occupy a position of trust warranting the sentence enhancement under U.S.S.G. Sec. 3B1.3. Secondly, Boyle contends that his offense level should be adjusted downward under U.S.S.G. Sec. 3E1.1 because his plea of nolo contendere constitutes an acceptance of responsibility for the acts charged. Finally, Boyle maintains that the district court ordered him to make restitution without sufficient evidence of the loss and without considering his inability to pay. We address his arguments in turn.

DISCUSSION

I. Abuse of a Position of Trust

Under U.S.S.G. Sec. 3B1.3, a sentencing court must enhance a defendant's sentence two levels "[i]f the defendant abused a position of public or private trust, or used a special skill, in a manner that significantly facilitated the commission or concealment of the offense...." Application Note 1 to U.S.S.G. Sec. 3B1.3 further advises: "The position of trust must have contributed in some substantial way to facilitating the crime and not merely have provided an opportunity that could as easily have been afforded to other persons." U.S.S.G. Sec. 3B1.3 comment. (n. 1). As such, in determining the applicability of this Guideline, the court must determine "(1) whether the defendant occupies a position of trust; and (2) whether the defendant abused his position in a manner that significantly facilitated the commission or concealment of the offense." United States v. Gould, 983 F.2d 92, 94 (7th Cir.1993). Boyle contests the district court's determination only as to the first issue, arguing that the relationship he had with his victims was not the type contemplated by Sec. 3B1.3 of the Guidelines. Whether Boyle occupied such a position is a question of fact, which we review under the clearly erroneous standard, while the interpretation of the term "position of trust" is a legal question subject to de novo review. Id. at 93.

Boyle argues that he did not occupy a position of trust because he had a contractual relationship with the FRB, the Illinois Tollway Authority and Drovers Bank. In making this argument, Boyle relies on United States v. Kosth, 943 F.2d 798 (7th Cir.1991). In Kosth, the defendant opened a merchant account at a bank to process orders from customers using credit cards. The account allowed him to forward credit card invoices to the bank, which would then credit his account and seek reimbursement from the credit card company. Using fraudulent and altered credit cards, Kosth received payment from the bank for phantom purchases. After Kosth pled guilty to conspiracy to commit fraud by access device, the district court found that he had abused a position of private trust and, thus, applied a two-level enhancement under U.S.S.G. Sec. 3B1.3. This Court reversed that determination, reasoning that

[Kosth's] arrangement with the bank was the same as that of any other merchant--be that a restaurant, shoe store or hotel. There was no special element of private trust involved. 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 payment system as the government argues. He was an ordinary merchant customer of the bank who committed fraud by abusing his contractual and commercial relationship with it.

Id. at 800. Boyle argues that, like Kosth, he had a contractual and commercial relationship with his victims. He also contends that he, too, was not an "insider" of any of his victims and, therefore, no independent trust relationship existed.

We disagree. Whether someone occupies a "position of trust" for purposes of Sec. 3B1.3 does not turn on simple categories that might be used to characterize the relationship. Instead, as this Court recently held, application of the enhancement depends on whether the defendant has " 'access or authority over valuable things.' " United States v. Lamb, 6 F.3d 415, 421 (7th Cir.1993) (quoting United States v. Odoms, 801 F.Supp. 59, 64 (N.D.Ill.1992)). Therefore, the sentencing court must look beyond descriptive labels to the actual nature of the relationship and the responsibility the defendant is given.

Based on these considerations, the district court was correct in concluding that Boyle occupied a position of trust. Unlike Kosth, who was only an account holder at the bank he defrauded, Boyle was an agent of his victims, which entitled him to take possession of funds on their behalf. Boyle was entrusted not only to deliver and store millions of dollars of...