United States v. Griffith

• Decision Date: 24 June 2015
• Docket Number: Criminal Action No. 2:14–cr–00118.
• Citation: 115 F.Supp.3d 726
• Parties: UNITED STATES of America, Plaintiff, v. Gary K. GRIFFITH, Defendant.
• Court: U.S. District Court — Southern District of West Virginia

115 F.Supp.3d 726

UNITED STATES of America, Plaintiff,

v.Gary K. GRIFFITH, Defendant.

Criminal Action No. 2:14–cr–00118.

United States District Court, S.D. West Virginia.

Signed June 24, 2015.

Meredith George Thomas, Thomas C. Ryan, U.S. Attorney's Office, Charleston, WV, for Plaintiff.

Thomas J. Gillooly, Charleston, WV, for Defendant.

MEMORANDUM OPINION AND ORDER

THOMAS E. JOHNSTON, District Judge.

Pending before the Court are the Sentencing Guidelines determinations in this matter. For the reasons discussed herein, the Court finds that an enhancement pertaining to loss under U.S.S.G. § 2B1.1(b)(1) and the two-level enhancement for abuse of position of trust under U.S.S.G. § 3B1.3 are inapplicable in this case.

I. Background

This case arises out of a series of kickback schemes that centered primarily at the Mountain Laurel Mining Complex ("Mountain Laurel") in Logan County, West Virginia. Mountain Laurel is owned by Mingo Logan Coal Company, which, in turn, is a wholly-owned subsidiary of Arch Coal, Inc. ("Arch Coal"). (Mar. 9, 2015 Presentence Investigation Report ("PSR") ¶ 8.)

"Dating back to at least the early 2000s, [Defendant] served as a maintenance manager for an [Arch Coal] underground mine known as the Ben Creek mine, near the Logan and Mingo County Lines." (ECF 8, Ex. B at 1.) "At the time, as maintenance manager, [Defendant] was responsible for ordering repairs and replacement of heavy equipment, including shuttle cars." (Id. ) "Shuttle cars are primarily used for hauling debris created in the extraction of coal from the underground seam." (Id. )

North American Rebuild Company, Inc. ("NARCO") "is in the business of refurbishing and replacing shuttle cars." (Id. ) "Once a shuttle car has reached its maximum useful life, coal companies like [Arch Coal] generally swap out the used shuttle car for one refurbished by NARCO, rather than purchase a new one." (Id. ) "NARCO then takes the used shuttle car, strips down its parts and rebuilds the entire unit so it can be sold as refurbished." (Id. ) "NARCO is owned by two individuals, one of [whom] ... dealt directly with [Defendant] when it was time to order a refurbished shuttle car" (the "NARCO Contact"). (Id. )

"Since at least sometime around 2002, [David] Runyon served as the superintendent or general manager of [Arch Coal's] Ben Creek mine operation." (Id. at 2.) Defendant and Runyon together benefitted from a scheme whereby the NARCO Contact paid each of them for work relating to the shuttle cars (the "Scheme"). (See id.; see also PSR ¶ 60 (noting Defendant's statement that the NARCO Contact's brother also "paid [Defendant] on at least 10 occasions"). See generally id. ¶¶ 14–20, 33–34, 37–41, 49–56, 66–67 (describing additional schemes at Mountain Laurel that allegedly involved Defendant).) During the course of the Scheme, "[the NARCO Contact] paid ... cash each to [Defendant] and Mr. Runyon for every shuttle car that was ordered for the Ben Creek mine operation." (ECF 8, Ex. B at 2. See generally PSR ¶ 31 (describing Stephen Herndon's statement that "Runyon used [Defendant] as a means to collect kickbacks").)

"Sometime in late 2005 or early 2006, [Arch Coal] shifted operations from Ben Creek to [Mountain Laurel]...." (ECF 8, Ex. B at 2.) "Mr. Runyon was transferred" to Mountain Laurel "to serve as the general manager and [Defendant] was transferred to serve as the maintenance manager." (Id. ) "The [Scheme] continued at [Mountain Laurel]." (Id.; see also PSR ¶ 59 ("Prior to relocating from Ben Creek to Mountain Laurel sometime in 2006, [Defendant] was already receiving kickback payments for shuttle cars Mountain Laurel purchased from NARCO.").)

"Sometime around 2008, [Defendant] began suffering some health problems and eventually was placed on disability sometime around 2010." (ECF 8, Ex. B at 2.) The Government and Defendant "estimate that over the course of the [Scheme] ..., [Defendant] and Mr. Runyon each received approximately $125,000, totaling approximately $250,000 in illegal cash kickbacks paid by [the NARCO Contact] on behalf of NARCO." (Id.; see also PSR ¶ 61 (describing Defendant's June 10, 2014 statement, in which he "acknowledged that he ... and Runyon each received about $125,000, for a total of $250,000 is [sic] cash kickbacks for [the Scheme]").)

On March 31, 2014, special agents of the Internal Revenue Service ("IRS") "interviewed [Defendant] regarding his knowledge of allegations of any cash kickback payments made by any vendors at [Mountain Laurel]." (ECF 8, Ex. B at 2.) "[Defendant] falsely denied any knowledge or involvement and knew the statement was unlawful when made." (Id.; see also PSR ¶¶ 42–47 (describing Defendant's March 31, 2014 interview with special agents of the IRS).)

On May 30, 2014, the Government filed a single-count Information that charges Defendant with making a false, fictitious, or fraudulent statement or representation "in a matter within the jurisdiction of a department or agency of the United States" in violation of 18 U.S.C. § 1001(a)(2). (ECF 1 ¶ 7.) This charge relates to Defendant's statements to special agents of the IRS "[o]n or about March 31, 2014, at or near Beaver, Raleigh County, West Virginia." (Id. ) The Information includes the following additional allegations regarding the Scheme:

Since at least sometime in 2006, [Defendant], for himself and on behalf of David E. Runyon, received illegal cash kickbacks from [the NARCO Contact] amounting to $6,000 to $10,000 for each new or refurbished shuttle car that was ordered for [Mountain Laurel]....

Defendant ... has accepted at least $250,000 in cash kickbacks from [the NARCO Contact].

(Id. ¶¶ 5 & 6.)

Defendant entered into a plea agreement with the Government, dated May 12, 2014, in which he agreed to plead guilty to the single-count Information. (ECF 8.) The plea agreement also states that Defendant "agrees that he owes restitution in the amount of $250,000 to Arch Coal." (Id. ¶ 5.) The plea agreement further provides that U.S.S.G. § 2B1.1 applies in this case and the following two enhancements are applicable: (1) a twelve-level enhancement for a loss more than $200,000, but less than $400,000; and (2) a two-level enhancement for abuse of position of trust. (Id. ¶ 11.) Defendant then pled guilty to the single-count Information during a plea hearing on July 14, 2014. (ECF 5.)

In the PSR, the probation officer recommends that the Court apply a twelve-level enhancement under U.S.S.G. § 2B1.1(b)(1)(G) due to the "$250,000 in kickback payments" Defendant accepted "for his involvement in the [Scheme], half of which he subsequently paid to David Runyon." (PSR ¶ 77.) The PSR also includes a recommendation that the Court apply the two-level enhancement for abuse of position of trust under U.S.S.G. § 3B1.3 due to Defendant's role in the Scheme. (Id. ¶ 79.) Neither party submitted an objection to these two recommendations. (See id. at 29.)

The Court held a sentencing hearing in this case on March 10, 2015. (ECF 23.) During this hearing, the Court addressed its concerns regarding the attribution to Defendant of relevant conduct relating to the Scheme. (See id. ) The Court then directed the parties to file briefing addressing whether the loss and role enhancements arising out of the Scheme are applicable in this case. The Government filed its brief on March 17, 2015, (ECF 26), and Defendant filed his brief on April 1, 2015, (ECF 30). As such, these issues are fully briefed and ready for disposition.

II. Legal Standard

Prior to the enactment of the Sentencing Reform Act of 1984 (the "SRA"), sentencing courts were permitted wide discretionin imposing criminal sentences within statutory minimums and maximums. United States v. Pauley, 511 F.3d 468, 471 (4th Cir.2007) (citing Mistretta v. United States, 488 U.S. 361, 363, 109 S.Ct. 647, 102 L.Ed.2d 714 (1989) ). However, the SRA created the Sentencing Commission "as an independent commission in the judicial branch of the United States" authorized to establish and implement Sentencing Guidelines for the federal judicial system. Id. (citing 28 U.S.C. § 991(a) ).

The Supreme Court has "instructed district courts to read the United States Sentencing Guidelines as ‘effectively advisory.’ " Kimbrough v. United States, 552 U.S. 85, 90, 128 S.Ct. 558, 169 L.Ed.2d 481 (2007) (quoting United States v. Booker, 543 U.S. 220, 245, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005) ). Nevertheless, the Supreme Court "stressed ... that a sentencing court still must take the Guidelines into account at sentencing along with the factors set forth in § 3553(a)." Pauley, 511 F.3d at 472 (citing Booker, 543 U.S. at 264, 125 S.Ct. 738 ).

In Gall v. United States, the Supreme Court provided the following steps for a sentencing court: (1) calculate the Guidelines range; (2) give both parties an opportunity to argue for an "appropriate" sentence; (3) consider all factors listed in § 3553(a) to determine if they support a sentence requested by either party; and (4) adequately explain its reasons for choosing the sentence, including any justification for any variance. 552 U.S. 38, 49–50, 128 S.Ct. 586, 169 L.Ed.2d 445 (2007). The Court "may not presume that the Guidelines range is reasonable." Id. at 50, 128 S.Ct. 586 (citing Rita v. United States, 551 U.S. 338, 351, 127 S.Ct. 2456, 168 L.Ed.2d 203 (2007) ). Rather, the Court "must make an individualized assessment based on the facts presented." Id.; United States v. Carter, 564 F.3d 325, 330 (4th Cir.2009) ("Regardless of whether the district court imposes an above, below, or within-Guidelines sentence, it must place on the record an ‘individualized assessment’ based on the particular facts of the case before it." (quoting Gall, 552 U.S. at 50–52, 128 S.Ct. 586 )). "After settling on the appropriate sentence, [the Court] must adequately explain the chosen sentence to allow for meaningful appellate review and to promote the perception of fair sentencing." Gall, 552 U.S. at 50, 128 S.Ct. 586 (citing Rita, 551 U.S. 338, 127 S.Ct....