U.S. v. Craddock

• Citation: 993 F.2d 338
• Decision Date: 14 May 1993
• Docket Number: No. 92-1254,92-1254
• Parties: UNITED STATES of America, v. Leon CRADDOCK, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 338

993 F.2d 338

UNITED STATES of America, v. Leon CRADDOCK, Appellant.

No. 92-1254.

United States Court of Appeals, Third Circuit.

Argued Nov. 5, 1992.

Decided May 14, 1993.

Robert P. Fulton (argued), Glenside, PA, for appellant.

Michael M. Baylson, U.S. Atty., Walter S. Batty, Jr., Asst. U.S. Atty., Roland B. Jarvis (argued), Asst. U.S. Atty., Philadelphia, PA, for appellee.

Before: BECKER, STAPLETON and LAY, ^* Circuit Judges.

OPINION OF THE COURT

STAPLETON, Circuit Judge:

Defendant-appellant Leon Craddock, a teller responsible for paying out Western Union money orders, was sentenced to 37 months imprisonment for his role in a conspiracy to commit credit card fraud. He challenges the calculation of his sentence based on the district court's finding that he abused a position of trust within the meaning of Section 3B1.3 of the United States Sentencing Guidelines. We will affirm the sentence. ¹

I.

Leon Craddock was one of twelve defendants named in a twenty-two count Indictment charging conspiracy to commit credit card fraud and unauthorized use of access devices, in violation of 18 U.S.C. §§ 1029(b)(2) and 1029(a)(2), and aiding and abetting, in violation of 18 U.S.C. § 2. All defendants pleaded guilty to the conspiracy charge, which involved a scheme of using the information from discarded credit card carbons to conduct Western Union wire transfers without the knowledge of the owner of the credit card. Craddock's co-conspirators would dig through dumpsters until they found carbons, then call Western Union and use the information to wire money to a fabricated name. They would pick up the money by going to a Western Union location and presenting false identification in that name.

Leon Craddock was a teller at the Financial Exchange Company in Philadelphia, an office that processed and paid out Western Union wire transfers. The tellers were supposed to take steps to protect against fraudulent transactions. After a customer filled out a "to receive money" form, they were required to check the customer's identification and signature. It was also standard practice to photograph customers with a "Regiscope"; the proper documentation would be stamped with a Regiscope number, and the film would be filed away and developed later if a question arose about the transaction. After this verification procedure, the customer would receive money by endorsing a "money transfer" check which would be countersigned by the teller.

Craddock and two other tellers joined the conspiracy after it had been underway for more than a year. Rather than guard against fraudulent transactions, they agreed to pay out wire transfers to the conspirators, who were thus relieved of the burden of producing false identification for each pickup. In exchange, the tellers received a 10% commission on each transaction. Documentary evidence showed that Craddock engaged in ninety such transactions; the form for each was stamped with a Regiscope number but there was no corresponding photograph. In the approximately thirteen months before Craddock and his co-workers joined the conspiracy, there were nineteen fraudulent transactions; in the approximately eight months after they joined, there were 163 transactions.

The main issue at Craddock's sentencing hearing was whether he was subject to an increase in his offense level under U.S.S.G. § 3B1.3 for abusing a position of trust. The presentence report prepared by the Probation Office concluded that he was not, but the district court held otherwise. With the two level increase under § 3B1.3, the court calculated a total offense level of 14 and sentenced Craddock to 37 months imprisonment, the lowest term allowable given Craddock's criminal history category of 6. ² We have jurisdiction to review this final decision pursuant to 28 U.S.C. § 1291 and, because this appeal involves the application of the Sentencing Guidelines, 18 U.S.C. § 3742.

II.

A.

Section 3B1.3 of the Sentencing Guidelines provides for an upward adjustment of a defendant's offense level for abuse of a position of trust. It states in relevant part:

If 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, increase by 2 levels.

U.S.S.G. § 3B1.3. The first Application Note attempts to illuminate the scope of the section:

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. This adjustment, for example, would not apply to an embezzlement by an ordinary bank teller.

§ 3B1.3, Application Note 1. The rationale for increased punishment is that an insider who takes advantage of a position of trust to facilitate a crime is thought to be more culpable than one who simply commits the offense. § 3B1.3, Background.

In applying the section a sentencing court must determine whether a defendant was placed in a position of trust, and if he was, whether he abused that position in a way that significantly facilitated his crime. The first question approaches a purely legal determination and is reviewed de novo. United States v. McMillen, 917 F.2d 773, 775 (3d Cir.1990). The second question more closely resembles a question of fact and is reviewed for clear error. Id.

Craddock argued to the district court, as he argues on appeal, that § 3B1.3 does not apply to him because his offense was similar to "an embezzlement by an ordinary bank teller," which the Application Note advises is not covered by the section. The district court addressed this argument by comparing Craddock's conduct to two methods of embezzlement that could be employed by an ordinary bank teller. The first involved simply taking money from the teller's drawer; the second involved taking kickbacks for paying out funds to an accomplice who made unauthorized withdrawals from the business account of the accomplice's employer. The court distinguished these schemes from Craddock's because they were easily detectable. Skimming from the till would be obvious to the bank when the teller's drawer did not balance for the day, the court reasoned, and the accomplice scheme would be detected by the internal auditing procedures of the defrauded employer. In contrast, the fraudulent wire transfers could not be detected by balancing because Craddock paid out the full amount of each transfer. The court reasoned further that individual credit cardholders were less likely than a defrauded business to trace the scheme back to the culprits. Based on the difficulty of detecting Craddock's offense and the substantial increase in fraudulent transactions after he and his co-workers joined the conspiracy, the court concluded that Craddock held a position of trust and abused it in a manner that significantly facilitated the conspiracy.

B.

We reach the same conclusion as the district court but arrive there by somewhat different reasoning. We perceive little material difference, either in terms of the conduct involved or the means of detecting that conduct, between Craddock's role in the wire transfer conspiracy and that of the "ordinary bank teller" of the district court's hypothetical who pays funds to an accomplice making unauthorized withdrawals. We believe, however, that neither scheme is exempt from scrutiny under § 3B1.3.

As noted, by its terms the section applies to one who occupied a position of trust and abused that position in a manner that significantly facilitated the commission or concealment of an offense. According to the Application Note, an offense is not "significantly facilitated" by an abuse of a position of trust if the position "merely ... provided an opportunity that could as easily have been afforded other persons"; thus, the adjustment "would not apply to an embezzlement by an ordinary bank teller." U.S.S.G. § 3B1.3, Application Note 1. ³

This court has considered the meaning and scope of the section and its commentary in recent opinions. In United States v. McMillen, 917 F.2d 773 (3d Cir.1990), a branch manager of a savings and loan association misapplied funds by obtaining loans for himself in a fictitious name. Defendant collateralized the loans with a savings certificate he issued in the fictitious name; he also opened a checking account in that name and, after approving the fraudulent loans himself, deposited the proceeds in that account. As the scheme revealed, defendant had the authority to approve loan applications, issue savings certificates, and sign bank documents without supervisory approval. Noting the absence of evidence reflecting material limitations on this authority, we found it clear that he occupied a position of trust. Id. at 774-75.

Turning to the significant facilitation prong of § 3B1.3, we found that defendant had abused his position in a manner that significantly facilitated the offense because, pursuant to his authority, he personally and without supervision approved the documents that enabled his scheme to be successful. We rejected, as unsupported by the record, the district court's conclusion that the hypothetical ordinary bank teller spoken of in the Application Note could have undertaken a similar scheme of embezzlement and cover-up. We found it clear that defendant had greater authority than the normal bank teller and that this authority contributed substantially to both the commission and concealment of his crime. Id. at 776 & n. 4.

We again considered § 3B1.3 in United States v. Lieberman, 971 F.2d 989 (3d Cir.1992), which involved a bank vice president who, in the exercise of his unsupervised authority to balance a loan account, made repeated transfers from the bank's account into his own over a four-year period. In assessing whether defendant occupied a position of trust, we approved of the statement of the Ninth Circuit in United States v. Hill, 915 F.2d 502 (9th Cir.1990), that ...