U.S. v. Hairston, 95-5771

• Decision Date: 16 September 1996
• Docket Number: No. 95-5771,95-5771
• Citation: 96 F.3d 102
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. Delores Elease HAIRSTON, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 102

96 F.3d 102

UNITED STATES of America, Plaintiff-Appellant, v. Delores Elease HAIRSTON, Defendant-Appellee.

No. 95-5771.

United States Court of Appeals Fourth Circuit.

Argued March 8, 1996.

Decided Sept. 16, 1996.

ARGUED: Brian Lee Whisler, Assistant United States Attorney, Charlotte, North Carolina, for Plaintiff-Appellant. E. Fitzgerald Parnell, III, Poyner & Spruill, L.L.P., Charlotte, North Carolina, for Defendant-Appellee. ON BRIEF: Mark T. Calloway, United States Attorney, Asheville, North Carolina, for Plaintiff-Appellant.

Before MURNAGHAN and MOTZ, Circuit Judges, and LEGG, United States District Judge for the District of Maryland, sitting by designation.

Reversed and remanded by published opinion. Judge DIANA GRIBBON MOTZ wrote the opinion, in which Judge MURNAGHAN and Judge LEGG joined.

OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

The Government appeals the district court's decision to depart from the Sentencing Guidelines due to the defendant's "extraordinary restitution." The defendant's restitution, offered to settle her civil liability to her employer, equaled less than half the amount she embezzled and came not from her own funds but from the generosity of friends. Concluding that the district court abused its discretion in finding that these circumstances merited departure, we reverse.

I.

The parties do not dispute the underlying facts of this case. Delores Hairston worked as a branch manager for the First Union National Bank of North Carolina. Beginning in August 1987, Hairston began diverting bank funds to her personal use. Her managerial position enabled her to avoid detection for more than five years, and she ultimately embezzled a total of $607,777.08. Her scheme came to an end, however, when an internal bank audit in 1993 uncovered certain "irregularities" attributable to her conduct. When bank officials confronted Hairston about the irregularities, she admitted the theft.

In May 1994, during an interview with agents of the Federal Bureau of Investigation, Hairston disclosed that she had expended all of the embezzled funds. She spent the stolen money: (1) to pay for her children's college expenses; (2) to make up for losses on defaulted loans of bank customers; (3) to provide personal loans to friends and others; (4) to contribute to church-related activities; and (5) to buy personal items, including clothes and jewelry.

While federal authorities pursued their investigation, Hairston attempted to reach a civil settlement with the bank. On August 5, 1994, Hairston gave a sworn statement to the bank in which she averred that she had spent all the diverted funds and had few available assets. On October 3, 1994, a federal indictment was returned charging Hairston with bank embezzlement, making false entries in bank records, and bank fraud.

On February 28, 1995, Hairston and the bank entered into a settlement agreement and release. Hairston, through the generosity of friends and her church, repaid the bank $250,000 to settle her civil liability. In return, a bank official promised to testify, during Hairston's criminal proceedings, as to his belief that the $250,000 payment constituted "extraordinary restitution."

Thereafter, on March 8, 1995, Hairston entered into a plea agreement with the Government in which she agreed to plead guilty to the charge of bank fraud. At a sentencing hearing, Hairston introduced the bank officer's testimony and contended that her efforts at restitution merited a departure from the Guidelines.

The district court accepted Hairston's argument, finding that the Bank would not have recovered any of its loss but for Hairston's extraordinary efforts at restitution. The court determined that her efforts merited a departure from the Guidelines and reduced her offense level by five, from seventeen to twelve. The court then sentenced Hairston to six months imprisonment, followed by six months probation and three years of supervised release; without the departure her sentencing range would have been twenty-four to thirty months imprisonment.

II.

The Government contends that the district court improperly considered the $250,000 Hairston obtained from her friends in determining whether to grant Hairston a departure from the appropriate Guideline range. The Government does not maintain that "extraordinary restitution" may never provide a proper basis for departure from the Guidelines, but asserts that under the facts of this case, the district court abused its discretion in finding Hairston's restitution "extraordinary." Hairston counters that because the total amount of restitution was substantial and because the victim of the embezzlement--the bank--would have recovered nothing absent the restitution, the district court properly found the circumstances "extraordinary" and appropriately departed from the Guidelines.

A.

The Supreme Court recently clarified the appropriate standard of appellate review of a district court's decision to depart from the Guidelines. Koon v. United States, --- U.S. ----, 116 S.Ct. 2035, 135 L.Ed.2d 392 (1996). Koon had been argued but not decided when we heard oral argument in this case. Accordingly, we held this case in abeyance while awaiting the Supreme Court's opinion. In the wake of it, we asked the parties to file supplemental briefs on the opinion's impact on this case, which they have now done.

In Koon, the Supreme Court directed that "appellate court[s] should not review the departure decision de novo, but instead should ask whether the sentencing court abused its discretion." Id. at ----, 116 S.Ct. at 2043. The Court explained that a deferential standard of review was appropriate because although the Guidelines were intended to cabin the sentencing court's discretion in the typical case, see U.S.S.G. Ch. 1, Pt. A, intro., Congress and the Sentencing Commission had not intended to wholly divest district courts of their traditional sentencing functions. Id. at ----, 116 S.Ct. at 2044. As the Court explained:

Acknowledging the wisdom, even the necessity, of sentencing procedures that take into account individual circumstances, see 28 U.S.C. § 991(b)(1)(B), Congress allows district courts to depart from the applicable Guideline range if "the court finds that there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines that should result in a sentence different from that described." 18 U.S.C. § 3553(b). To determine whether a circumstance was adequately taken into consideration by the Commission, Congress instructed courts to "consider only the sentencing guidelines, policy statements, and official commentary of the Sentencing Commission." Ibid.

Turning our attention, as instructed, to the Guidelines Manual, we learn that the Commission did not adequately take into account cases that are, for one reason or another, "unusual." 1995 U.S.S.G. ch. 1, Pt. A, intro. comment. 4(b).

Id. (emphasis added).

To aid sentencing courts in determining if an asserted basis for departure removes a case from the "usual" (the "heartland" for which the guideline was designed), the Commission lists several factors that may never provide a proper basis for departure (e.g., race, sex, national origin, etc.). "[W]ith the exception of those listed factors," the Commission states that it "does not intend to limit the kinds of factors, whether or not mentioned anywhere else in the guidelines, that could constitute grounds for departure in an unusual case." Id. (quoting 1995 U.S.S.G. ch. 1, Pt. A, intro. comment. 4(b)). For further guidance, however, the Commission enumerates certain other factors that it views as either "encouraged," see U.S.S.G § 5K2.0 et seq., or "discouraged" bases for departure. See U.S.S.G. § 5H1.1 et seq.

If the special feature suggested as a basis for departure is an encouraged factor, then a court can depart on that basis, if that feature is not already taken into account in the applicable guideline. If the special feature is a discouraged factor, or an encouraged factor already taken into account in the applicable guideline, then a court can depart "only if the factor is present to an exceptional degree or in some other way makes the case different from the ordinary case where the factor is present." Koon, --- U.S. at ----, 116 S.Ct. at 2045. Finally, if the special feature is not mentioned at all in the Guidelines, before departing on this basis, a court must consider the "structure and theory" of the relevant individual guideline and the Guidelines as a whole, bearing in mind that departures on the basis of factors not mentioned in the Guidelines will be "highly infrequent." Id.

The Supreme Court in Koon repeatedly emphasized the sentencing court's primacy in determining whether a factor merits departure in the individual case. Due to its greater experience with sentencing determinations, the district court enjoys an "institutional advantage" over an appellate court in making this determination. Id. at ----, 116 S.Ct. at 2047.

In performing its role, the sentencing court's duty is to make a "refined assessment of the many facts bearing on the outcome, informed by [the court's] vantage point and day-to-day experience in criminal sentencing." Id. at ---- - ----, 116 S.Ct. at 2046-47. Thus, a sentencing court must determine not as a general matter whether a suggested basis for departure is within the heartland, but whether it is within the heartland given the specific facts of the particular case. Id. Although the sentencing court may rely on its individual sentencing experience, this factor is not solely determinative and the question of "[w]hether a given factor is present to a degree not adequately considered by the Commission, or whether a discouraged factor nonetheless justifies departure because it is present in some unusual or exceptional way, are matters determined in large part by...