United States v. Nash

• Decision Date: 16 August 2012
• Docket Number: DOCKET NO. 2: 11cr00112-001
• Citation: United States v. Nash, DOCKET NO. 2: 11cr00112-001 (W.D. La. Aug 16, 2012)
• Parties: UNITED STATES OF AMERICA v. CRAIG MICHAEL NASH
• Court: U.S. District Court — Western District of Louisiana

UNITED STATES OF AMERICA

v.CRAIG MICHAEL NASH

DOCKET NO. 2: 11cr00112-001

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA LAKE CHARLES DIVISION

Dated: August 15, 2012

Dated: August 16, 2012

JUDGE MINALDI

MAGISTRATE JUDGE KAY

MEMORANDUM RULING

Before the court are objections by the Government and by the defendant to the Presentence Report ("PSR") prepared by the Probation Department.

The Government argues that there should be an additional two point assessment pursuant to USSG §2B1.1 (b)(9)(C) which states that: "If the offense involved...(C) a violation of any prior, specific or administrative order, injunction, decree or process not addressed elsewhere in the guidelines...increase by 2 levels."

Application note (7)(C) states:

(C)Fraud in Contravention of Prior Judicial Order .--Subsection (b)(9)(C) provides an enhancement if the defendant commits a fraud in contravention of a prior, official judicial or administrative warning, in the form of an order, injunction, decree, or process, to take or not to take a specified action.A defendant who does not comply with such a prior, official judicial or administrative warning demonstrates aggravated criminal intent and deserves additional punishment.If it is established that an entity the defendant controlled was a party to the prior proceeding that resulted in the official judicial or administrative action, and the defendant had knowledge of that prior decree or order, this enhancement applies even if the defendant was not a specifically named party in that prior case.For example, a defendant whose business previously was enjoined from selling a dangerous product, but who nonetheless engaged in fraudulent conduct to sell the product, is subject to this enhancement.This enhancement does not apply if the same conduct resulted in an enhancement pursuant to a provision found elsewhere in the guidelines (e.g. , a violation of acondition of release addressed in §3C1.3(Commission of Offense While on Release) or a violation of probation addressed in §4A1.1(Criminal History Category)).USSG § 2B1.1(11/1/11).

The Fifth Circuit discussed whether violating a cease and desist order from the Texas Board of Orthotics & Prosthetics qualified as an "act or omission" for purposes of the Guidelines in United States v. Garcia, 432 Fed.App'x. 318, 329-330, (5th Cir.2011).The Fifth Circuit found that other circuit courts had only imposed "the enhancement after a meaningful negotiation or interaction led the agency to issue a directive that the defendant subsequently violated."United States v. Goldberg, 538 F.3d 280, 291(3d Cir.2008);see alsoUnited States v. Malol, 476 F.3d 1283, 1293-94(11th Cir.2007);United States v. Mantas, 274 F.3d 1127, 1132-33(7th Cir.2001);United States v. Spencer, 129 F.3d 246, 252(2d Cir.1997).Federal circuit courts have not permitted application of the sentencing enhancement "to every situation where 'a defendant knew or was told by someone in authority that what she was doing was illegal.' "United States v. Wallace, 355 F.3d 1095, 1097-98(7th Cir.2004)(quotingUnited States v. Linville, 10 F.3d 630, 632-33(9th Cir.1993)).Rather, a district court's application of the enhancement was only affirmed when the notice, order, or judgment stemmed from an "interaction between the agency and defendant that allowed the defendant to participate in some meaningful way... and that led to a definite result."Goldberg, 538 F.3d at 291.As the Ninth Circuit noted, "the Sentencing Commission did not intend to subject every recipient of relatively informal missives and official notifications and warnings of violations from administrative agencies to the extra penalties designed for people with aggravated criminal intent."Linville, 10 F.3d at 633(internal citations and quotations omitted).

In the instant case, the Food Nutrition Service ("FNS") Retailer Investigative Branch ("RIB") determined that Goodfellas, the store owned by Nash, had previously violated the federalSupplemental Nutrition Assistance Program ("SNAP") by exchanging benefits for ineligible items from January 17, 2007 until April 3, 2007.On July 9, 2008, in lieu of a six month disqualification period, Goodfellas was assessed a civil money penalty of $14,742.00.Nash acknowledged this violation and agreed to pay the penalty.The Government asserts that this penalty was, at a minimum, an administrative warning which Nash violated in the commission of this fraud.

After reviewing the USDA letters dated July 1, 2008 and July 9, 2008, the court finds that the two level enhancement should apply.The administrative warning issued in 2008 arose from a negotiation which allowed the defendant to participate in a meaningful way and it led to a definite result, a fine rather than a suspension from the program.

The Government next argues that the defendant should be assessed an additional two points for abuse of trust.USSG §3B1.1.Guideline 3B1.3 imposes the two level increase "[i]f the defendant abused a position of public or private trust ... in a manner that significantly facilitated the commission or concealment of the offense...."The commentary to the guideline states:

The position of trust must have contributed in some significant way to facilitating the commission or concealment of the offense.This adjustment, for example, would not apply to an embezzlement by an ordinary bank teller.Appl. Note 1.

The Ninth Circuit, affirming the application of the guideline in United States v. Hill, 915 F.2d 502(9th Cir.1990), set forth one principle and two indicia for determining whether a defendant occupies a position of trust.After studying the commentary to the guideline and earlier cases applying the guideline adjustment¹, the Ninth Circuit selected as the principle that "the primary trait that distinguishes a person in a position of trust from one who is not is the extent to which theposition provides the freedom to commit a difficult-to-detect wrong."Id. at 506.The corresponding indicia adopted by the Ninth Circuit and also derived from the ordinary bank teller exclusion were the "inability of the trustor objectively and expediently to determine the trustee's honesty" and the "ease with which the trustee's activities can be observed."Id.

Using these standards, the Ninth Circuit determined that Hill, a truck driver, held a position of private trust and abused it within the meaning of the guideline.Finding the ordinary bank teller reference in the commentary "significant,"the court searched for characteristics which supported the exclusion.The bank teller is subject to a daily accounting of financial transactions and can be easily observed by branch manager, the court reasoned.The interstate truck driver, on the other hand, has the opportunity to steal the cargo unobserved and, in this case, the trustors, families moving overseas, had no expedient means by which to check for missing items.The court concluded that the bank teller was not in a position of trust and Hill was.

Once the court decided that Hill, as a truck driver transporting household belongings between states, occupied a position of private trust, it analyzed whether he abused the position "in a manner that significantly facilitated the commission or concealment of the offense," as dictated by the guideline.U.S.S.G. § 3B1.3.Looking to the commentary for guidance on the question of facilitating the offense, the court focused on the language, "merely ... provided an opportunity that could as easily have been afforded to other persons."It disagreed with the defendant that the other persons phrase meant compared to other truck drivers.Instead, the court held that the proper question "is whether Hill, relative to all people in a position to conspire to steal goods from interstate commerce (i.e., the public at large), was in a superior position as a result of a trust relationship."United States v. Hill, 915 F.2d at 507-08.Interpreted this way, Hill's position clearly gave him a specialopportunity to steal the goods, and thus facilitated the commission of the offense.

The majority of courts which have confronted the applicability of the abuse of trust guideline use standards similar to the Hillprinciple and determining factors.The defendant receives the abuse of trust increase if his activities are not supervised, and are not routinely checked by his employer.²Most cour...