US v. Franklin
| Citation | 837 F. Supp. 916 |
| Decision Date | 04 November 1993 |
| Docket Number | No. 93 Cr 263.,93 Cr 263. |
| Parties | UNITED STATES of America v. Ralph C.T. FRANKLIN. |
| Court | U.S. District Court — Northern District of Illinois |
Patrick Brian Murray, Asst. U.S. Atty., Chicago, IL, for plaintiff.
Mark Hellner, Chicago, IL, for defendant.
On July 16, 1993, defendant Ralph C.T. Franklin pled guilty to one count of obstruction of justice in violation of 18 U.S.C. § 1503. Franklin is to be sentenced on November 19, 1993. This matter is presently before the court on Franklin's objections to the presentence investigation report ("PSI").
Specifically, Franklin objects to the recommended enhancement of his sentence for his alleged use of a special skill in the commission of the crime. Franklin also believes he is entitled to a downward departure of two levels for his attempted assistance in an unrelated criminal investigation. Finally, Franklin urges a further departure of two levels on various equitable grounds. For the reasons stated below, the court denies defendant's objections.
Since his admission to the Illinois bar in May 1977 through May 1993, Franklin worked as a practicing attorney with law offices in Chicago and later, in Maywood, Illinois. According to Franklin, much of his practice was devoted to assisting poor and minority clients. (Defendant's PSI Brief at 8). Although Franklin was apparently a successful practitioner, as of spring 1991, more than six complaints concerning Franklin's handling of various trust documents and real estate transactions had been filed with the Attorney Registration and Disciplinary Committee for the Illinois Supreme Court.2
In April 1991, Franklin met with a new client, Samuel Gibson, to discuss the preparation and filing of a bankruptcy petition on Gibson's behalf. Gibson explained to Franklin that he had certain assets, in particular the proceeds from the recent sale of Gibson's home, which he did not want to lose as a result of the bankruptcy filing. Gibson told Franklin that he maintained some of the proceeds from the sale of his home in a certificate of deposit registered in another person's name and the remainder in a safety deposit box.
Franklin advised his new client that they could shield some of his assets from his creditors by falsely claiming that Gibson had gambled away some of the money from the sale of his home. As part of the plan, Franklin told Gibson to travel to Las Vegas or Atlantic City and obtain hotel room receipts and other documentation to make the story seem more credible. At Franklin's suggestion, Gibson and his wife travelled to Atlantic City and stayed at a hotel there for three days. Upon his return to the Chicago area, Gibson gave Franklin the receipts for the hotel and the rental car Gibson and his wife used while in Atlantic City.
In June 1991, Franklin filed Gibson's fraudulent bankruptcy petition with the U.S. Bankruptcy Court for the Northern District of Illinois. On Schedule B-2 of the petition, under the Personal Property heading, Franklin stated that the debtors, (Gibson and his wife Phyllis Gibson) had no cash reserves. On the "Statement of Financial Affairs for Debtor Not Engaged in Business" schedule, Franklin further stated that Gibson had lost approximately $100,000 gambling in Atlantic City. Franklin knew that both of these statements were false.
A month later, Franklin met again with Gibson, this time to prepare him for a Section 341 hearing with his creditors scheduled for the next day. At this point, Gibson was cooperating with the Federal Bureau of Investigation in the agency's investigation into Franklin's activities.3 During the meeting, which Gibson taped, Franklin made several incriminating statements. He first advised Gibson that Gibson's creditors were unaware of the money in Gibson's safety deposit box. Franklin then informed Gibson that the bankruptcy petition filed on his behalf did not disclose Gibson's ownership of land in Olympia Fields, Illinois. Finally, Franklin told Gibson to falsely state that he lost approximately $100,000 gambling in Atlantic City and that Gibson and his wife had no cash reserves.
Gibson's Section 341 hearing was held on August 11, 1991. Gibson was subsequently discharged in bankruptcy for having no assets. As noted above, Franklin was charged with, and on July 16, 1993 pled guilty to, one count of obstructing justice in violation of 18 U.S.C. § 1503.
Section 3B1.3 of the United States Sentencing Guidelines provides for a sentencing enhancement of two levels if a defendant "abused a position of public or private trust, or used a special skill, in a manner that significantly facilitated the commission or concealment of the offense." United States Sentencing Commission, Guidelines Manual, § 3B1.3 (Nov.1993). The enhancement does not apply where an abuse of trust or skill is included in the base offense level or specific offense characteristic. Id.
The Application Notes for 3B1.3 flesh out the key terms "position of public or private trust" and "special skill". According to the Notes, the position of trust "must have contributed in some substantial way to facilitating the commission or concealment of the offense (e.g., by making the detection of the offense or the defendant's responsibility for the offense more difficult)." Id., comment. (n.1). A "special skill", the Notes explain, refers to skills that usually require "substantial education, training or licensing", skills not normally possessed by the general public. Id. comment. (n.2). Examples include skills possessed by pilots, lawyers, doctors, accountants and chemists. Id. Accord United States v. Ashman, 979 F.2d 469, 490 (7th Cir.1992).
Because he allegedly used his special skills as a licensed attorney to significantly facilitate his crime, Franklin was awarded two points under Section 3B1.3. (PSI at 2). The PSI concluded, however, that Franklin does not qualify for the two-level enhancement based on an abuse of a position of trust. Id. Franklin objects, arguing that neither rationale warrants enhancement. The government, on the other hand, believes that Franklin qualifies for the two-level enhancement on either ground.
Franklin opposes the enhancement for use of a special skill on two grounds: 1) no special skills were used in the commission of the crime, and 2) even if such skills were used, they did not significantly facilitate the commission or concealment of the offense. According to Franklin, his advice to his client to lie about gambling losses was a "dumb and unimaginative" ruse that any lay person could have concocted without legal assistance. (Defendant's PSI Brief at 4). This is especially true, he points out, because the preprinted bankruptcy petition forms themselves include a question about gambling losses, a fact that Franklin characterizes as a virtual "invitation" to defraud one's creditors. (Id. at 4-5). To find that Franklin used special skills in advising his client how to fraudulently avoid bankruptcy liability under these circumstances, he concludes, would penalize Franklin merely for his status as a lawyer and not for any actual skills he employed.
On October 2, 1993, the court held an evidentiary hearing on this issue. Sandra Rasnak, an Assistant United States Trustee was the only witness. The United States Trustee's office was created in 1979 to act as a watchdog agency, overseeing the work of private bankruptcy trustees and guarding against fraud in the bankruptcy process. Rasnak joined the U.S. Trustee's office in 1985 as a Senior Staff Attorney, primarily responsible for overseeing the office's fraud monitoring system. During her tenure at the Trustee's office, Rasnak has personally reviewed hundreds of Chapter 7 bankruptcy petitions for fraud.
At the hearing, Rasnak identified Franklin as a "regular" at the bankruptcy court. A February 1993 United States Trustees report (Government Exhibit 2) supports this assertion, listing Franklin as the attorney of record in 29 Chapter 7 bankruptcy cases then pending in the Northern District of Illinois. Having reviewed the Gibson's Chapter 7 bankruptcy petition filed by Franklin, Rasnak testified that she believed Franklin's special expertise as a bankruptcy attorney, especially in Chapter 7 "no assets" cases, allowed him to anticipate safeguards in the U.S. Trustee's detection process and to avoid common pitfalls facing pro se petitioners unfamiliar with the U.S. Trustee's operating procedures. In particular, Rasnak noted that pro se petitioners often attempt to fraudulently shield their assets by claiming that they gave the assets away as gifts or that the assets had been lost, stolen, or destroyed. This kind of fraud, according to Rasnak, is far easier for the Trustee's office to detect than are claimed gambling losses, especially when these claimed losses are accompanied by hotel and casino receipts.
Rasnak also observed that the filing of a "no assets" petition further enhanced the scheme's likelihood of success. For "no assets" petitions, unlike other types of petitions, the trustee receives only $45 for her representation of the petitioner's creditors. According to Rasnak, Franklin ensured his client a limited review process by filing a "no assets" petition on his behalf.
Based in part on Rasnak's testimony, but also on the court's review of the briefs and the applicable case law, the court concludes that Franklin used a special skill to significantly facilitate his crime. Although the defendant's plan to defraud his client's creditors was not elaborate, it clearly was enhanced by his special knowledge of the legal process generally, and as a regular before the bankruptcy court, of bankruptcy proceedings in particular. Franklin's familiarity with the constraints on the bankruptcy's court's ability to verify claims made in bankruptcy petitions, unquestionably facilitated the scheme...
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...with client to gain access to cocaine), cert. denied, --- U.S. ----, 114 S.Ct. 1115, 127 L.Ed.2d 425 (1994); United States v. Franklin, 837 F.Supp. 916, 919-20 (N.D.Ill.1993) (alternatively holding that a private attorney holds a position of public trust). The preamble to the Arkansas Model......