U.S. v. Gottfried

• Citation: 58 F.3d 648
• Decision Date: 27 June 1995
• Docket Number: No. 95-3016,95-3016
• Parties: UNITED STATES of America, Appellee, v. Lawrence R. GOTTFRIED, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 648

58 F.3d 648

313 U.S.App.D.C. 88

UNITED STATES of America, Appellee, v. Lawrence R. GOTTFRIED, Appellant.

No. 95-3016.

United States Court of Appeals,

District of Columbia Circuit.

Argued April 18, 1995.

Decided June 27, 1995.

Appeal from the United States District Court for the District of Columbia (94cr00306-01).

John H. Jamnback, Washington, DC, argued the cause, for appellant. With him on the briefs was Robert A. Boraks.

Laura L. Gansler, Asst. U.S. Atty., Washington, DC, argued the cause for appellee. With her on the briefs were Eric H. Holder, Jr., U.S. Atty., John R. Fisher, Roy W. McLeese, III, and Suzanne G. Curt, Asst. U.S. Attys., Washington, DC.

Before: SILBERMAN, HENDERSON, and RANDOLPH, Circuit Judges.

Concurring opinion filed by Circuit Judge KAREN LeCRAFT HENDERSON.

RANDOLPH, Circuit Judge:

Lawrence R. Gottfried pled guilty to one count of unlawful concealment, removal, and mutilation of government records in violation of 18 U.S.C. Sec. 2071. The district court sentenced him to fifteen months' imprisonment and ordered him to make restitution to the United States Treasury in the amount of $39,931.33. Gottfried's principal argument is that the district court, in applying the Sentencing Guidelines, miscalculated the "loss" his criminal conduct caused.

I

From 1971 until August 1994, Gottfried served as an Attorney Advisor to the Board of Veterans' Appeals in the Department of Veterans Affairs. The three-member Board decides veterans' appeals from determinations of the Department's regional offices denying disability benefits. The files in these cases typically contain the veterans' claims, medical and service records, and statements supporting the claims. Gottfried's job was to review the case file and prepare a draft decision for the Board granting or denying the appeal. If needed records were missing from the file, Gottfried would quickly dispose of the appeal by recommending a remand of the case to the regional office for further administrative action.

An investigation by the Department's Office of the Inspector General revealed that Gottfried systematically tampered with the files in order to reduce his workload. Rather than preparing a proposed merits decision for the Board, Gottfried removed documents from the case file, destroyed them, and then recommended that the case be sent back to the regional office because the file was incomplete. From February 9, 1994, to May 10, 1994, the Inspector General copied thirty-eight veterans' appeals files before the cases were assigned to Gottfried. In thirty-two of the cases, Gottfried removed and destroyed medical records, service records and other documents, and, in each case, he recommended that the Board remand without deciding the merits of the appeal. Some of the missing documents were found among trash on the curb outside Gottfried's home and in his garage. Nearly all of the documents recovered had been torn, cut or mutilated in some fashion.

The Board began reprocessing all thirty-two of the cases in which Gottfried tampered with the files. In light of information indicating that Gottfried began tampering with case files as early as January 1990, the Board also began examining 1008 appeals Gottfried handled between then and the beginning of the Inspector General's investigation.

The main point of contention at sentencing dealt with the court's calculation of the "loss" attributable to Gottfried's offense. Destruction of government documents in violation of 18 U.S.C. Sec. 2071 falls within the category of basic property offenses, such as larceny, embezzlement, and theft. For these offenses, Sec. 2B1.3(b)(1) of the Guidelines (U.S.S.G.App. A (Nov. 1994)), requires the court to place a dollar amount on the victim's loss. As the amount of the loss increases, so does the corresponding increase in the base offense level. See U.S.S.G. Sec. 2B1.1(b). The district court, finding the loss to be greater than $40,000 and less than $70,000, added 7 points to Gottfried's base offense level of 4.

The government placed its losses from Gottfried's malfeasance into four categories, which together totalled $123,764. The first category consisted of costs the Board incurred in reprocessing the thirty-two appeals. The government used $1,247.85 to represent the Board's "total cost per decision issue," a number the Board computes annually by dividing its total budget for processing veterans' appeals by the number of appeals. The government then multiplied $1,247.85 by thirty-two, representing the cases in which Gottfried had been caught removing and destroying documents. This resulted in a loss to the government of $39,931.

The second category allegedly dealt with Gottfried's "uncharged conduct." According to the government, the Board was incurring expenses in its effort to identify and reevaluate the 1008 additional appeals, between January 1, 1990, and February 9, 1994, in which Gottfried may have tampered with documents. Based on the salaries of the employees assigned to review those cases, and the cost of notifying the veterans, the Board's estimated losses amounted to $19,052.

The third and fourth categories were the Board's estimated administrative costs and expenses incurred during the period Gottfried was under investigation and the period after government agents confronted him with evidence of his conduct. The total estimated loss from categories three and four was $64,781.

The district court rejected the government's third and fourth categories. These were "investigative-type" expenses not properly considered losses suffered by the victim of the offense. The court accepted the government's other two calculations and thus concluded that the total loss resulting from Gottfried's conduct was $58,983, which increased Gottfried's base offense level by 7 points. The court added 2 points for "more than minimal planning" (U.S.S.G. Sec. 2B1.3(b)(3)), plus 2 points for "abuse of a position of trust" (U.S.S.G. Sec. 3B1.3), less 2 points for "acceptance of responsibility" (U.S.S.G. Sec. 3E1.1(a)). Starting with a base offense level of 4 (U.S.S.G. Sec. 2B1.3), Gottfried wound up with an offense level of 13, giving him a sentencing range of 12-18 months. The district court sentenced him to 15 months' imprisonment.

II

A

As to the district court's attributing $58,983 in losses to Gottfried, the commentary to Sec. 2B1.1 states that the victim's "loss" will "[o]rdinarily" equal the fair market value of the property taken, damaged or destroyed. U.S.S.G. Sec. 2B1.1, comment. (n. 2). From this, Gottfried argues that the loss in this case must only be the nominal value of a few sheets of paper. That of course makes no sense. The purpose of the exercise is to measure the economic harm Gottfried caused. The greater the harm the greater the defendant's culpability, or at least that is the underlying theory. See U.S.S.G. Sec. 2B1.1, comment. (backg'd). The commentary to Sec. 2B1.1 contemplates cases such as the one before us. After talking about what "loss" ordinarily means, the authors continue: "Where the market value is difficult to ascertain or inadequate to measure harm to the victim, the court may measure loss in some other way...." U.S.S.G. Sec. 2B1.1, comment. (n. 2). To this the authors add that the loss "need not be determined with precision. The court need only make a reasonable estimate of the loss, given the available information. This estimate, for example, may be based upon the approximate number of victims and the average loss to each victim, or on more general factors such as the scope and duration of the offense." Id. comment. (n. 3).

In light of the commentary to Sec. 2B1.1, the district court properly refused to use fair market value in measuring the loss. Whether the court used a permissible surrogate is the next issue.

B

With respect to the loss of $39,931 for reprocessing the thirty-two cases, the parties assume, as did the district court, that the government was the "victim" of the crime. ¹ Gottfried's objection is that the court included the Board's pro rata overhead expenses calculating the loss. The Board would have incurred these costs, he says, even if he had not broken the law. That may be true, but it does not render the calculation invalid. The Board delivers a service. It decides appeals from the regional offices. The Board, like Gottfried's counsel, cannot adequately perform that service without telephones, support staff, office space, heat, light, and so forth. When parties request attorneys' fees, overhead expenses will be a component of the fees. We have recognized as much. See Hirschey v. FERC, 777 F.2d 1, 6 (D.C.Cir.1985); EEOC v. Strasburger, Price, Kelton, Martin & Unis, 626 F.2d 1272, 1275-76 (5th Cir.1980). And so did the district court in this related context. Including pro rata overhead expenses in the amount of the Board's loss, or "fee," for reprocessing the thirty-two appeals merely attributed to Gottfried the cost of undoing the damage he had done.

We are not persuaded otherwise by the decisions holding that merely "incidental" or "consequential" damages may not be counted in computing "loss." See United States v. Daddona, 34 F.3d 163, 171-72 (3d Cir.) (applying U.S.S.G. Sec. 2F1.1), cert. denied, --- U.S. ----, 115 S.Ct. 515, 130 L.Ed.2d 421 (1994); United States v. Marlatt, 24 F.3d 1005, 1007-08 (7th Cir.1994) (applying U.S.S.G. Sec. 2F1.1); United States v. Newman, 6 F.3d 623, 630 (9th Cir.1993) (applying U.S.S.G. Sec. 2B1.1); United States v. Wilson, 993 F.2d 214, 217 (11th Cir.1993) (applying U.S.S.G. Secs. 2F1.1, 2B1.1); but see United States v. King, 915 F.2d 269, 271-72 (6th Cir.1990) (applying U.S.S.G. Sec. 2B1.1). Daddona held that defendants' unauthorized issuance of performance and payment bonds on a construction project defrauded the insurer and caused losses to it and perhaps to subcontractors who had unsatisfied claims, but the "loss" under the Guidelines did not also include the costs...