U.S. v. Szarwark, 3:97 CR 28 AS.

Decision Date02 April 1998
Docket NumberNo. 3:97 CR 28 AS.,3:97 CR 28 AS.
PartiesUNITED STATES of America v. Ernest J. SZARWARK.
CourtU.S. District Court — Northern District of Indiana

C. Kenneth Wilber, Jr., Berger James Gammage and Wilber, South Bend, IN, for Ernest J Szarwark, defendant.

Donald J. Schmid, U.S. Atty's Office, South Bend, IN, for U.S.

SENTENCING MEMORANDUM

ALLEN SHARP, District Judge.

I. Procedural History

The defendant, Ernest J. Szarwark, was charged in a four-Count indictment returned by a grand jury in this district on July 10, 1997. Defendant entered a plea of not guilty to all counts of the indictment. Defendant proceeded to a jury trial which commenced on January 5, 1998. On January 8, 1998, the jury returned a verdict of guilty on all four counts. Counts one through four charge the defendant with Mail Fraud in violation of 18 U.S.C. § 1341.

Because the offense occurred after November 1, 1987, the Sentencing Reform Act of 1984 and the United States Sentencing Commission Guidelines (Guidelines), as amended November 1, 1997, apply to this sentencing, pursuant to Miller v. Florida, 482 U.S. 423, 107 S.Ct. 2446, 96 L.Ed.2d 351 (1987).

II. The Presentence Report

The defendant, defense counsel, and the government have reviewed the presentence report, as has the court. The defendant objects to paragraphs 34, 37, 38, 47 and 84. The government objects to paragraphs 34, 36, and 87-90. All other paragraphs of the presentence report not specifically addressed are adopted by the court as findings of fact and statements of reason for imposition of sentence in this case.

III. The Defendant's Offense Level

Pursuant to U.S.S.G. § 3D1.2, counts One through Four are grouped together and sentenced. Pursuant to U.S.S.G. § 2F1.1, the base level for a violation of 18 U.S.C. § 1341 is six (6).1 Additionally, pursuant to U.S.S.G. § 2F1.1(b)(1)(J) if the loss is more than $350,000, the base offense level is increased by nine (9).2 This places defendant's initial base level at fifteen (15).

A. More than Minimal Planning

The defendant's level is (further) enhanced by two (2) levels for more than minimal planning pursuant to U.S.S.G. § 2F1.1(b)(2)(A). This enhancement is appropriate as the defendant's offense involved more than 120 transactions over a more than seven (7) year period. Accordingly, defendant's base level is adjusted to seventeen (17).

B. Abuse of Position of Trust (§ 3B1.3)

The definition of "public or private trust" in § 3B1.1, comment. (n. 1), was amended in November 1993. In addition to the factors listed in the guideline itself, courts should look for "professional or managerial discretion" and "significantly less supervision" than other employees. See, e.g., United States v. Ragland, 72 F.3d 500, 502-03 (6th Cir.1996); United States v. West, 56 F.3d 216, 220 (D.C.Cir. 1995). The Seventh Circuit uses a two-level analysis in applying this enhancement. See United States v. Stewart, 33 F.3d 764, 768-70 (7th Cir.1994). In determining the applicability of this enhancement, the Court must determine (1) whether the defendant occupied a position of trust; and (2) whether the defendant abused his position in a manner that significantly facilitated the commission or concealment of the offense. United States v. Zaragoza, 123 F.3d 472, 480 (7th Cir.1997); United States v. Boyle, 10 F.3d 485, 488-89 (7th Cir.1993); United States v. Gould, 983 F.2d 92, 94 (7th Cir.1993). Furthermore, the position of trust is viewed in relation to the victim of the offense. United States v. Hathcoat, 30 F.3d 913, 919 (7th Cir.1994). This adjustment, for example, would apply in the case of an embezzlement of a client's funds by an attorney serving as a guardian, a bank executive's fraudulent loan scheme, or the criminal sexual abuse of a patient by a physician under the guise of an examination. United States v. Garrison, 133 F.3d 831 (11th Cir.1998). This adjustment would not apply in the case of an embezzlement or theft by an ordinary bank teller or hotel clerk because such positions are not characterized by the above-described factors. Id.

A lawyer occupies a position of public trust. This is a given. United States v. Harrington, 114 F.3d 517, 519 (5th Cir.1997), cert. denied, ___ U.S. ___, 118 S.Ct. 320, 139 L.Ed.2d 248; United States v. Glymph, 96 F.3d 722 (4th Cir. 1996); United States v. Serhant, 740 F.2d 548 (7th Cir.1984). The integrity of our judicial system inextricably is intertwined with the integrity of our lawyers. It would be rank folly to suggest otherwise. See United States v. Post, 25 F.3d 599, 600 (8th Cir.1994) ("We conclude that Post's status as a licensed Arkansas attorney placed him in a position of public trust."). Szarwark's circumstances are similar to those in the case of United States v. White, 1 F.3d 13 (D.C.Cir.1993), cert. denied 510 U.S. 1111, 114 S.Ct. 1053, 127 L.Ed.2d 374 (1994), reh'g denied. In White, the court found that by setting up a trust account, which he later used to pay himself for his own part in the scheme, White used his skill to further the crime in this case. Id. In the present case, the defendant was a partner in his law firm. As an attorney, he held a position of trust. By embezzling funds from the firm he abused that position of trust. The defendant's level is thus properly enhanced by two (2) levels for his abuse of a position of trust pursuant to U.S.S.G. § 3B1.3 to a level nineteen (19).

C. Acceptance of Responsibility (§ 3E1.1)

District courts have broad discretion to grant or deny the reduction for acceptance of responsibility. See U.S.S.G. § 3E1.1, comment. (n. 5); United States v. Lghodaro, 967 F.2d 1028, 1031-32 (5th Cir. 1992), reh'g denied. Furthermore, whether or not a defendant has accepted responsibility for his crime is a factual question. United States v. Osborne, 931 F.2d 1139, 1155 (7th Cir.1991), reh'g denied. What the sentencing judge is to look for is a defendant's demonstration of "genuine remorse" or "conscience." See Zaragoza, 123 F.3d 472, 480, cert. denied ___ U.S. ___, 118 S.Ct. 317, 139 L.Ed.2d 245; United States v. Beserra, 967 F.2d 254, 256 (7th Cir.1992), cert. denied, 506 U.S. 957, 113 S.Ct. 419, 121 L.Ed.2d 341. The district court's determination as to acceptance of responsibility is highly fact specific and involves the district judge's subjective appraisal of the totality of the defendant's conduct. See, e.g., United States v. Dvorak, 41 F.3d 1215, 1217 (7th Cir.1994); United States v. Rosalez-Cortez, 19 F.3d 1210, 1218 (7th Cir.1994).

While it may be a close question in granting this defendant a reduction for acceptance of responsibility, it is this Court's view that the evidence tips ever so slightly in Szarwark's favor. Therefore, pursuant to U.S.S.G. § 3E1.1(a), the defendant is given a two (2) level reduction for acceptance of responsibility. An additional one (1) level reduction under § 3E1.1(b)(2) is not warranted in this case as this reduction is for "timely notifying authorities of an intention to enter a plea of guilty, thereby permitting the government to avoid preparing for trial." While the court acknowledges that this defendant admitted his guilt for the fraud he committed against Barnes & Thornburg, this defendant also proceeded to trial on the issue of mail fraud. Thus defendant's adjusted base level is seventeen (17).

D. Mental Defect or Condition (Diminished Capacity) (§ 5K2.13)

A significantly reduced mental capacity may be considered to warrant a downward departure, however, the Seventh Circuit requires a finding that the defendant's reduced mental capacity contributed to the commission of the crime; the link cannot be assumed. United States v. Frazier, 979 F.2d 1227, 1230 (7th Cir.1992) (remanded: no finding that defendant's "depressed mood" resulted in a significantly reduced mental capacity or contributed to the offense). The guidelines also instruct that "[m]ental and emotional conditions are not ordinarily relevant in determining whether a sentence should be outside the applicable guideline range..." U.S.S.G. § 5H1.3. Accordingly, courts have held that in order to qualify for a departure under § 5K2.13 a defendant must be suffering from something greater than "emotional problems," United States v. Gentry, 925 F.2d 186, 188 (7th Cir.1991), reh'g denied, or "hardship," United States v. Johnson, 979 F.2d 396, 401 (6th Cir. 1992), reh'g denied. See also United States v. Withers, 100 F.3d 1142 (4th Cir. 1996), cert. denied, 520 U.S. 1132, 117 S.Ct. 1282, 137 L.Ed.2d 358 (1997). A defendant must also demonstrate that his or her "significantly reduced mental capacity" bears a causal relationship to the crime. United States v. Goossens, 84 F.3d 697, 702 (4th Cir.1996); United States v. Sammoury, 74 F.3d 1341, 1345-46 (D.C.Cir. 1996); Gentry, 925 F.2d at 188. This causal connection must consist of more than an emotional weakness that leaves one open to suggestion. Rather, in order to qualify for a diminished capacity departure, a defendant must show an inability "to process information or to reason." Withers, 100 F.3d at 1148; United States v. Barajas-Nunez, 91 F.3d 826, 831 (6th Cir.1996).

In United States v. Pullen, 89 F.3d 368 (7th Cir.1996), cert. denied, 519 U.S. 1066, 117 S.Ct. 706, 136 L.Ed.2d 627 (1997), the Seventh Circuit rejected a diminished capacity departure despite the fact that a psychologist testified that the defendant suffered from a "schizoid disorder" that impaired "his ability to think and act clearly". Id. at 369-70. The Seventh Circuit noted that "[i]f a miserable family history were in an average case a permissible basis for leniency ... this would resurrect the pre-guidelines regime of discretionary sentencing." id. at 371. See also United States v. Cantu, 12 F.3d 1506 (9th Cir. 1993) (reduced mental capacity refers to a lack of full intellectual functions .. both organic dysfunction and behavior disturbances that impair the formations of...

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