U.S. v. Walker

• Decision Date: 05 October 2000
• Docket Number: No. 00-1396 and N,00-1396 and N
• Citation: 234 F.3d 780
• Parties: (1st Cir. 2000) UNITED STATES, Appellee/Cross-Appellant, v. CHRISTOPHER R. WALKER, Defendant, Appellant/Cross-Appellee. o. 00-1405 Heard
• Court: U.S. Court of Appeals — First Circuit

Page 780

234 F.3d 780 (1st Cir. 2000)

UNITED STATES, Appellee/Cross-Appellant, v. CHRISTOPHER R. WALKER, Defendant, Appellant/Cross-Appellee.

No. 00-1396 and No. 00-1405

United States Court of Appeals For the First Circuit

Heard October 5, 2000

Decided December 19, 2000

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MAINE [Hon. Gene Carter, U.S. District Judge] Eric E. Menoyo, with whom David J. Van Dyke and Berman & Simmone, P.A. were on brief, for defendant-appellant/cross-appellee.

F. Mark Terison, Senior Litigation Counsel, with whom Jay P. McCloskey, U.S. Attorney, was on brief, for appellee/cross-appellant.

Before Torruella, Chief Judge, Lynch and Lipez, Circuit Judges.

LYNCH, Circuit Judge.

Christopher Walker embezzled from an employee-benefit fund that never contained much more than $500,000. Nevertheless, at sentencing the district court calculated the relevant loss under U.S.S.G. § 2B1.1(b) as $933,369. Walker challenges this seeming paradox. In addition, Walker appeals the sentencing court's refusal to decrease the base level of his offense for acceptance of responsibility and its refusal to make a downward departure on several suggested bases. The government cross-appeals, claiming that Walker's sentence should have been enhanced for obstruction of justice. We affirm the district court's sentence on all grounds.

I.

Walker was part owner of Beacon Motor Company, Inc., an automobile dealership in Bangor, Maine, and he had financial control of its checking accounts during the relevant time period. Faced with serious cash flow problems, Walker began to "borrow" money from the dealership's profit sharing plan (the "Plan") in 1995. During the next three years, he made eleven withdrawals from the Plan, totaling $925,000. An additional shortfall of $8,369 was discovered prior to sentencing. At various times during the embezzlement, Walker returned money to the Plan, leaving an actual shortfall of $468,663.

After Walker's embezzlement was discovered, he offered to cooperate with prosecutors. In the course of these discussions, he attributed much of the responsibility for the embezzlement scheme to his partner in the automobile dealership, James Gallant. The prosecutor advised Walker that he might receive a downward departure for substantial assistance if he provided information against Gallant that led to his prosecution. No such case was ever made. Walker eventually reached a plea agreement with the prosecutor under which he pled guilty to one count of embezzlement under 18 U.S.C. § 664.

The presentence report found, among other things, that (i) despite Walker's insistence to the contrary, Gallant had not participated in the embezzlement scheme; (ii) Walker had not been fully forthright in providing documentation of his crimes; (iii) Walker had fabricated details of his actions at the dealership; (iv) Walker had not accepted full responsibility for his actions; and (v) Walker had misrepresented his finances. The presentence officer did not recommend any adjustments to Walker's base offense level or discretionary downward departures.

The sentencing judge agreed, refusing to reduce the offense level for acceptance of responsibility, and declining to make any discretionary downward departures. In order to set the offense level, the sentencing court then calculated the amount of loss. The judge totaled the amounts of the eleven unlawful withdrawals from the Plan and the missing $8,269 to arrive at a loss amount of $933,369, increasing the offense level by 13. See U.S.S.G. § 2B1.1(b)(1)(N). Two other enhancements not at issue further increased the offense level to 21. The government sought an additional enhancement for obstruction of justice under U.S.S.G. § 3C1.1 on the basis of allegedly perjurious testimony by Walker at the sentencing hearing, but the sentencing judge declined to make such a finding. The court sentenced Walker to 46 months in prison, the high end of the 37 to 46 month range provided by the Guidelines given his offense level and criminal history.

II.

A. Calculation of Loss

Walker presents a simple argument: considering the amount of money Walker returned to the plan, his total "theft" was only $468,663, a loss which would enhance his offense level by 11. See U.S.S.G. § 2B1.1(b)(1)(L). The court instead calculated the loss by summing all eleven of Walker's unlawful withdrawals, and hence Walker received no credit whatsoever in the loss calculation for returning the money. This approach resulted in a loss amount of $933,369, and an adjustment in the offense level of 13. Despite the inherent appeal of Walker's argument, however, the sentencing court followed the proper approach for calculation of loss in cases of embezzlement.

We start with the standard of review. The government argues that we should review the sentencing court's determination of the loss amount for clear error, since the court made a factual finding as to the amount of loss. Walker does not, however, challenge the factual basis of the sentencing court's loss calculation but rather the method by which the calculation was made. The appropriate method for calculating loss amounts under the Guidelines is a prototypical question of legal interpretation, and we review de novo. See United States v. Carrington, 96 F.3d 1, 6 (1st Cir. 1996) ("This court reviews de novo the district court's interpretation of the loss provisions of the Guidelines. Thereafter, it normally reviews a district court's factual findings only for clear error."); cf.United States v. Phaneuf, 91 F.3d 255, 261 (1st Cir. 1996) (challenges to the factual basis of the district court's loss determination reviewed for clear error).

U.S.S.G. § 2B1.1(b)(1) itself gives no guidance on the appropriate method for calculating loss. The commentary to the Guidelines provides little additional direction. It simply defines "loss" as "the value of property taken, damaged, or destroyed." U.S.S.G. § 2B1.1 cmt. n.2. This commentary suggests that "loss" refers primarily to the value of what was taken, not the harm ultimately suffered by the victim. With this limited guidance, we turn to the crime at issue. Since the crime of embezzlement does not include as an element an intent to permanently deprive the victim of the funds, but rather a temporary deprivation will do, we conclude that the loss calculation for embezzlement properly uses the amount of each deprivation.

Walker's crimes were complete at the time that he made the unlawful withdrawals from the Plan. See United States v. Cruz-Santiago, 12 F.3d 1, 3 (1st Cir. 1993) ("Embezzlement need not involve an intent to deprive permanently."); see also United States v. Hathcoat, 30 F.3d 913, 916 (7th Cir. 1994) (relevant criminal action in embezzlement is fraudulent appropriation). With each unlawful withdrawal, Walker created a significant risk that the Plan would become unable to meet its obligations, and Walker was guilty of an act of embezzlement regardless of any intended or actual repayments. As each of these unlawful withdrawals reflects a completed act of embezzlement, the sentencing court properly calculated loss by summing the amounts of the eleven withdrawals without regard for any repayments made by Walker at other times. Otherwise, the logic of Walker's argument leads to the untenable conclusion that had Walker managed to repay fully the funds he had embezzled, the proper amount of loss would be zero.

This conclusion is consistent with the interpretation of similar loss provisions by other circuits. In United States v. Brach, 942 F.2d 141 (2d Cir. 1991), the court addressed a similar loss provision in the fraud guideline.¹ Id. at 143. The court concluded that the loss calculation under the fraud guideline should be determined in reference to the loss at the completion of the crime, rendering the defendant's intention to repay and the actual harm ultimately suffered by the victim irrelevant. See id.; see also United States v. Cea, 925 F.2d 56, 57 (2d Cir. 1991) ("There is no suggestion in the commentaries that loss was intended to be limited to the harm done by the defendant when, for some reason, the amount taken exceeded the harm suffered by the victim."). Cf. Cruz-Santiago, 12 F.3d at 2-3 (relying on specific example in the commentary to decide loss calculation under the robbery guideline to include the full value of a stolen car despite its return unharmed).

Walker's reliance on the commentary provision that "in certain cases, an offense may involve a series of transactions without a corresponding increase in loss," is misplaced. U.S.S.G. § 2B1.1 cmt. n.2. While certain embezzlement schemes may involve complex transactions that move funds multiple times without changing the risk of loss or adding a new risk of loss, this is not such a case. This provision does not encompass the return and then subsequent re-embezzlement of funds, since each subsequent embezzlement creates a new risk of loss, and hence is properly accounted for through an additive loss calculation.

A defendant's repayment of embezzled funds nonetheless may serve to mitigate a defendant's punishment in other areas of sentencing. Here, Judge Carter calculated a loss of $933,369 as a result of Walker's embezzlement, yet only required restitution of $505,081.82 from Walker. Moreover, as was noted at oral argument, Walker was certainly entitled to seek a downward departure based upon his return of money to the Plan. He did not do so, perhaps because he returned the money only in an attempt to cover up his own wrongdoing. In any event, the district court calculated the loss correctly, and we affirm its decision.

B. Acceptance of Responsibility

The sentencing judge found that Walker was not eligible for a reduction in offense level for acceptance of responsibility under U.S.S.G. § 3E1.1(a). We review this decision with "great deference" because the "sentencing judge is in a unique position to evaluate a defendant...