U.S. v. Hardesty

• Decision Date: 22 January 1997
• Docket Number: No. 95-3392,95-3392
• Citation: 105 F.3d 558
• Parties: 97 CJ C.A.R. 139 UNITED STATES of America, Plaintiff-Appellee, v. Murray F. HARDESTY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 558

105 F.3d 558

97 CJ C.A.R. 139

UNITED STATES of America, Plaintiff-Appellee, v. Murray F. HARDESTY, Defendant-Appellant.

No. 95-3392.

United States Court of Appeals Tenth Circuit.

Jan. 22, 1997.

David Phillips, Federal Public Defender, (Michael L. Harris, Assistant Federal Public Defender, on the brief), Kansas City, Kansas, for defendant-appellant.

Kurt J. Shernuk, Assistant United States Attorney, (Jackie N. Williams, United States Attorney, with him on the brief,) Kansas City, Kansas, for plaintiff-appellee.

Before TACHA, Circuit Judge, BALDOCK, Circuit Judge, and McWILLIAMS, Senior Circuit Judge.

McWILLIAMS, Senior Circuit Judge.

The only issue in this appeal is whether the district court erred in increasing the defendant's base offense level by 2 levels based on United States Sentencing Guideline § 3A1.1 (1994). ¹ Our study of the matter convinces us that the district court did not err in increasing the defendant's base offense level by 2 levels, and we affirm.

As will be developed, the defendant, pursuant to a plea bargain, pled guilty to 3 counts of an 11 count criminal indictment. Based on the pre-sentence report, and the proffers of proof made at the time of sentencing, it appears that Murray F. Hardesty, an attorney practicing in Topeka, Kansas, was the trustee of several trusts, including 2 trusts where Miriam Klugg and Lea Burgwin were the beneficiaries. The pre-sentence report indicates that from 1991 to 1993 Hardesty embezzled $2,100,000.00 from those 2 trusts, and from several other trusts, and that, in connection therewith, Hardesty, inter alia, submitted false reports to Klugg and Burgwin to cover the embezzlements. However, it was also agreed that as concerns each of these trusts, an attorney-client relationship existed long before any criminal conduct by Hardesty.

Based on his mishandling of the several trusts under his control, Hardesty was charged with various offenses in an 11 count indictment filed in the United States District Court for the District of Kansas. Specifically, in count 1 Hardesty was charged under 18 U.S.C. § 644 with embezzling assets from a pension fund which was entrusted to his care. In counts 2 through 5 Hardesty was charged with mail fraud, involving, inter alia, the misappropriation of funds from the Klugg and Burgwin trusts in violation of 18 U.S.C. § 1341. In counts 6 through 9 Hardesty was charged with money laundering in violation of 18 U.S.C. § 1957. In counts 10 and 11 Hardesty was charged with money laundering in violation of 18 U.S.C. § 1956(a)(1)(A)(i).

Pursuant to a plea agreement, Hardesty pleaded guilty to counts 1, 5 and 9, and the remaining counts were dismissed. The matter was then referred to the Probation Department for a pre-sentence report. The pre-sentence report recommended that there be no increase in Hardesty's base offense level based on U.S.S.G. § 3A1.1. The government filed an objection to that recommendation, and, at time of sentencing, a hearing was held on that objection. At the hearing, with the consent of both parties, the government and Hardesty made a proffer of what their evidence bearing on that particular matter would be, which proffers were accepted by the district court. The district court then held that the record justified a 2 level increase in Hardesty's base offense level under U.S.S.G. § 3A.1.1. The district court's findings and conclusion on this matter are set forth in Attachment A.

The factual findings on which a determination of victim vulnerability is based are reviewed under a clearly erroneous standard. United States v. Brunson, 54 F.3d 673, 676 (10th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 397, 133 L.Ed.2d 317 (1995). As we understand it, Hardesty's counsel in this appeal does not claim that the district court's findings of fact are not supported by the present record. Counsel does claim, however, that the district court's conclusion that Klugg and Burgwin were vulnerable victims under U.S.S.G. § 3A1.1 is a misunderstanding of the guideline and commentary, and that such is reviewed by us de novo. United States v. Frazier, 53 F.3d 1105 (10th Cir.1995). In any event, our study of the matter leads us to conclude that the district court's findings of fact are supported by the record and that the district court did not err in concluding that under the U.S.S.G. § 3A1.1, Klugg and Burgwin were "vulnerable victims."

Hardesty's position in this court, as it was in the district court, is that under the commentary to U.S.S.G. § 3A1.1, Application note 1, the district court erred in enhancing his base offense level since the district court made no finding that "a victim was specifically selected, or targeted, as a victim because of a particular vulnerability." Indeed, counsel argues here, as he did in the district court, that Hardesty's base offense level cannot be increased by 2 levels under U.S.S.G § 3A1.1, unless the district court finds, which it did not, that the defendant was a "predator," virtually stalking his prey, and determining, to his own satisfaction, that his "prey" was a "vulnerable victim," before committing any criminal action against his prey. We do not agree.

We are here concerned, initially, with U.S.S.G. § 3A1.1, and not the commentary. As indicated, U.S.S.G. § 3A1.1 simply provides that a defendant's base offense level should be increased by 2 levels "[i]f the defendant knew or should have known that a victim of the offense was unusually vulnerable due to age, physical or mental condition, or that a victim was otherwise particularly susceptible to the criminal conduct." Commentary to Sentencing Guidelines which interprets or explains a guideline is authoritative unless it violates the Constitution or a federal statute or is inconsistent with the guideline which it seeks to explain or is a plainly erroneous reading of the guideline itself. Stinson v. United States, 508 U.S. 36, 113 S.Ct. 1913, 123 L.Ed.2d 598 (1993). See also United States v. Davis, 60 F.3d 1479, 1485 (10th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 1829, 134 L.Ed.2d 933 (1996). We believe that the "targeting language" in the first sentence of Application note 1 is at odds with U.S.S.G. § 3A1.1.

We agree that at the inception of the relationship between Hardesty, Klugg and Burgwin, the latter two were probably not "vulnerable victims." The two trusts here involved were set up years before Hardesty embezzled therefrom. However, in the ensuing years the physical and mental condition of Klugg and Burgwin deteriorated to the end that they became "vulnerable victims" during the years when Hardesty diverted their trust funds to his personal use. In this regard, it should be kept in mind that both Klugg and Burgwin were at the time of Hardesty's criminal acts about 90 years of age. We recognize that in United States v. Lee, 973 F.2d 832, 834-35 (10th Cir.1992), we said that the fact that a victim was "elderly" would not, without more, support a "vulnerable victim" enhancement. We do not know from our opinion just how "elderly" the victims in Lee were. But here, as stated, they are both around 90 years of age. However, the district court in the instant case did not rely solely on age, but also found that because of "their medical and physical needs as they advanced in years, and their obvious inexperience in finances" they were "vulnerable victims" by the time Hardesty got around to embezzling their trust monies. The presentence report and the proffers of proof at the sentencing hearing support such findings and conclusions.

In support of our resolution of this appeal, the Ninth Circuit, recognizing that there was authority to the contrary, held that U.S.S.G. § 3A1.1 did not require a finding by a district court that the defendant "targeted" a vulnerable victim. United States v. O'Brien, 50 F.3d 751 (9th Cir.1995). In so holding, the Ninth Circuit stated that "[t]he requirement [in the commentary] that the defendant must target the vulnerable victim is inconsistent with the plain language of § 3A1.1, which only requires that the defendant 'should have known' that the victim was...