U.S. v. Kennedy

• Citation: 554 F.3d 415
• Decision Date: 04 February 2009
• Docket Number: No. 08-1172.,08-1172.
• Parties: UNITED STATES of America, v. Dianne L. KENNEDY, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

554 F.3d 415

UNITED STATES of America, v. Dianne L. KENNEDY, Appellant.

No. 08-1172.

United States Court of Appeals, Third Circuit.

Argued October 1, 2008.

Filed: February 4, 2009.

Robert L. Eberhardt, (Argued), Office of the United States Attorney, Pittsburgh, PA, Attorney for Appellee.

Karen S. Gerlach, (Argued), Office of Federal Public Defender, Pittsburgh, PA, Attorney for Appellant.

Before: FISHER, CHAGARES and HARDIMAN, Circuit Judges.

OPINION OF THE COURT

HARDIMAN, Circuit Judge.

Dianne Kennedy appeals the District Court's judgment of sentence following her pleas of guilty to ten counts of an indictment. Kennedy challenges three enhancements pursuant to the United States Sentencing Guidelines (Guidelines or USSG). The application of one of those enhancements — the number of victims pursuant to USSG § 2B1.1(b)(2) — has challenged trial and appellate courts because the language of the enhancement and its commentary define "victim" more narrowly than the commonsense understanding of that term. We hold that we are bound by the clear language of the Guidelines, and find that only those who are actually harmed by the crime can be counted as victims for purposes of USSG § 2B1.1(b)(2). Our finding that the § 2B1.1(b)(2) enhancement does not apply does not mean that Kennedy's crime is not serious. Under the post-Booker sentencing framework, the Guidelines are advisory and district judges must use their discretion to ensure that each sentence is commensurate with the crime.

I.

From September 1999 to August 2001, Dianne Kennedy worked as a representative payee liaison for Ursuline Services, Inc., a non-profit corporation that assists the elderly in Pittsburgh, Pennsylvania.¹ As a representative payee, Ursuline managed funds payable to beneficiaries of the Social Security Administration, the Department of Veterans Affairs, and the Railroad Retirement Board who were unable to manage their own financial affairs. In this capacity, Ursuline received benefit payments, held funds in trust, and made disbursements to cover beneficiaries' expenses, such as rent, utilities, and food. For example, if PNC Bank notified Ursuline of a deposit by a government program in the name of a specific beneficiary, that amount would be added to the internal Ursuline account for that individual. The representative payee liaison would then write checks from the internal account to cover the beneficiary's living expenses. Thus, in fulfilling her duties, Kennedy was aware of the beneficiary's account balances and oversaw their financial transactions. From February 2, 2001 to April 9, 2001, Kennedy wrote checks, mostly payable to cash, from the accounts of 34 beneficiaries. Ursuline and its insurer, Zurich American Insurance Company, fully replenished the accounts that Kennedy looted.

Kennedy was indicted on four counts of mail fraud in violation of 18 U.S.C. § 1341, and six counts of making and using false writings or documents in violation of 18 U.S.C. § 1001(a)(3). Kennedy promptly pleaded guilty and the Probation Office issued a Presentence Investigation Report (PSR), which calculated an advisory Guidelines imprisonment range of 21 to 27 months based on an adjusted total offense level of 15 and a criminal history category of II. Although Kennedy's base offense level was only six, the Probation Office found her subject to four enhancements: (1) six points for the amount of loss ($54,-321.12), USSG § 2B1.1(b)(1)(D); (2) two points for ten or more victims, USSG § 2B1.1(b)(2)(A); (3) two points for vulnerable victims, USSG § 3A1.1(b)(1); and (4) two points for abusing a position of trust, USSG § 3B1.3.

At sentencing, Kennedy did not challenge the amount of loss, but she objected to the other three sentencing enhancements. First, she claimed that her only victims were Ursuline and Zurich, which rendered the enhancement for ten or more victims inappropriate. Second, Kennedy argued that because Ursuline and Zurich were the only victims, they did not qualify as "vulnerable victims" under the Guidelines. Finally, Kennedy disputed the application of the abuse of a position of trust enhancement.

In addition, Kennedy argued that her criminal history category of II was inaccurate because it was based on an offense that occurred after the instant offense. Finally, she requested a downward variance and a mitigated sentence of twelve months and one day because she was the sole provider for her mother and mentally challenged granddaughters.

The District Court rejected Kennedy's objections to the sentencing enhancements, as well as her request for a variance on the basis of her family circumstances. The District Court held a sentencing hearing and reduced Kennedy's criminal history category to I, thereby adjusting her Guidelines imprisonment range to 18 to 24 months. Kennedy was sentenced to 18 months imprisonment and three years of supervised release, and was ordered to pay restitution to Ursuline ($29,321.12) and Zurich ($25,000).

II.

In this appeal, Kennedy challenges the same three enhancements to which she objected at sentencing. She also claims that the District Court applied the wrong legal standard in denying her request for a variance.

The District Court's interpretation of the Sentencing Guidelines is subject to plenary review. United States v. Moorer, 383 F.3d 164, 167 (3d Cir.2004). We review findings of fact that support Guidelines enhancements for clear error. See United States v. Grier, 475 F.3d 556, 569 (3d Cir.2007) (en banc). We review the sentence itself for reasonableness under an abuse of discretion standard. United States v. Gunter, 527 F.3d 282, 284 (3d Cir.2008) (citing Gall v. United States, ___ U.S. ____, 128 S.Ct. 586, 597-98, 169 L.Ed.2d 445 (2007)).

III.

A.

We begin by considering whether the District Court erred in finding that each of the 34 individual account holders was a victim under § 2B1.1(b)(2)(A) of the Guidelines. Although these 34 elderly and incapacitated clients would satisfy a commonsense or dictionary² definition, our task here is to determine whether they are deemed victims under the Sentencing Guidelines' definition. If, as here, "a statute includes an explicit definition, we must follow that definition, even if it varies from that term's ordinary meaning." See Biskupski v. Attorney General, 503 F.3d 274, 280 (3d Cir.2007) (citing Stenberg v. Carhart, 530 U.S. 914, 942, 120 S.Ct. 2597, 147 L.Ed.2d 743 (2000)); see also Meese v. Keene, 481 U.S. 465, 484, 107 S.Ct. 1862, 95 L.Ed.2d 415 (1987) (recognizing "the respect we normally owe to the Legislature's power to define the terms that it uses in legislation"); Lawson v. Suwannee Fruit & S.S. Co., 336 U.S. 198, 201, 69 S.Ct. 503, 93 L.Ed. 611 (1949) ("Statutory definitions control the meaning of statutory words...."). Additionally, "where a definition informs what a particular term `means,' that definition will include whatever express meanings follow." Biskupski, 503 F.3d at 280 (citing Colautti v. Franklin, 439 U.S. 379, 392 n. 10, 99 S.Ct. 675, 58 L.Ed.2d 596 (1979) ("As a rule, [a] definition which declares what a term `means' ... excludes any meaning that is not stated.") (quotation marks and citation omitted), overruled in part on other grounds by Webster v. Reproductive Health Servs., 492 U.S. 490, 109 S.Ct. 3040, 106 L.Ed.2d 410 (1989)).

The critical word — "victim" — is defined in the commentary as "any person who sustained any part of the actual loss...." See USSG § 2B1.1(b)(2), cmt. n. 1. "Actual loss," in turn, is defined as "the reasonably foreseeable pecuniary harm that resulted from the offense." See cmt. n. 3(A)(i). Application Note 3(A)(i) explains that "`pecuniary harm' means harm that is monetary or that otherwise is readily measurable in money," and "does not include emotional distress, harm to reputation, or other non-economic harm." Id. at cmt. n. 3(A)(iii). Additionally, certain damages are specifically excluded from "loss," such as "[i]nterest of any kind, finance charges, late fees, penalties, amounts based on an agreed-upon return or rate of return, or other similar costs." See cmt. n. 3(D)(i).

Kennedy admitted to stealing from 34 individual accounts. It is undisputed, however, that those account holders did not "sustain[ ] any part of the actual loss" because they were reimbursed by Ursuline and Zurich. Indeed, the Government failed to meet its burden to prove that the account holders even knew that their funds had been stolen before they were completely reimbursed by Ursuline and Zurich. Because Ursuline and Zurich were the only parties who suffered any pecuniary harm — which is a prerequisite for being deemed a "victim" under § 2B1.1(b)(2) — they are the only "victims" under the Guidelines. Accordingly, we hold that the District Court committed legal error when it held that the 34 account holders were "victims" under USSG § 2B1.1(b)(2)(A) despite suffering no pecuniary harm.

B.

Our interpretation of § 2B1.1(b)(2)(A) of the Guidelines is consistent with United States v. Yagar, 404 F.3d 967 (6th Cir. 2005), United States v. Icaza, 492 F.3d 967 (8th Cir.2007), and United States v. Conner, 537 F.3d 480 (5th Cir.2008).

In Yagar, the defendant used stolen checks to deposit in excess of $88,000 into more than 50 individual accounts at five banks. 404 F.3d at 988. Yagar then withdrew portions of the deposited funds from 47 of those accounts, receiving over $20,000 in cash. Id. Although the parties agreed that the five banks were victims, the Government argued that the account holders were also victims. Id. at 971. Analyzing § 2B1.1(b)(2), the Sixth Circuit rejected the Government's argument, finding that the account holders did not suffer an "actual loss" because "they were fully reimbursed for their temporary financial losses." Id.

In Icaza, the defendants traveled across the country stealing from Walgreens stores. 492 F.3d at 968-69. The district court counted each of the approximately 400 stores that were robbed as...