§230 Public Officials, Offenses
2nd Circuit upholds increases for “public official” and “elected public official” as not double counting. (125)(230) Defendant, a member of the New York State Assembly, was convicted of conspiracy to commit honest services fraud, and related bribery and extortion charges. He challenged his 36-month sentence, arguing for the first time on appeal that enhancements for acting as a “public official,” under §2C1.1(a)(1), and as an “elected public official,” under §2C1.1(b)(3), were improper double counting. The Second Circuit found no error. The two enhancements did not serve identical purposes or address the same harm. Betrayal of public trust may be considered a greater harm when committed by one who has been elected to office rather than simply appointed to a public position. Enhancements under both §§2C1.1(a)(1) and 2C1.1(b)(3) did not constitute double counting. U.S. v. Stevenson, 834 F.3d 80 (2d Cir. 2016).
2nd Circuit refuses to reduce value of improper payments by value of legitimate services provided as cover-up. (220)(230) Defendant, the former governor of Connecticut, was convicted of charges stemming from his efforts to obtain paid political consulting work on behalf of two Congressional candidates. One of those candidates arranged to pay defendant through Apple Rehab, a related nursing home company, to avoid reporting the payments to the Federal Election Commission. Defendant was convicted of seven counts of violating campaign finance laws and falsifying records. The district court applied a six-level increase under §§2C1.8 and 2B1.1, based on the $35,000 in illegal transactions defendant received from Apple. Defendant argued that this should have been offset by $5,000, the value of the services he actually provided to Apple. The district court rejected this argument, finding the value of defendant’s services was simply “a byproduct of the attempted cover-up of the true nature of the campaign contributions.” The Second Circuit agreed. Defendant would not have performed services for Apple at all but for his planned cover-up. U.S. v. Rowland, __ F.3d __ (2d Cir. June 17, 2015) No. 15-985.
7th Circuit relies on recorded calls to include in loss the amount defendant attempted to extort. (230) Defendant, the former governor of Illinois, engaged in a variety of improper schemes to profit from his authority to name an Illinois Senator after Barack Obama was elected president. At one point he turned to supporters of Rep. Jesse Jackson, Jr., offering the appointment in exchange for a $1.5 million “campaign contribution.” Defendant was convicted of attempted extortion, corrupt solicitation of funds, wire fraud, and lying to federal investigators. The Seventh Circuit upheld the court’s inclusion under § 2C1.1(b)(2) of the $1.5 million that it found defendant had asked supporters of Rep. Jackson to supply. The $1.5 million figure did not come out of a hat; it was a number discussed in federal recordings of defendant’s phone calls. That nothing came of these overtures did not affect the calculation of loss under § 2C1.1(b)(2). It was an amount defendant intended to receive from criminal conduct even though not a sum anyone else turned out to be willing to pay. U.S. v. Blagojevich, __ F.3d __ (7th Cir. July 21, 2015) No. 11-3852.
11th Circuit affirms relevant conduct findings based on “clearly identifiable evidence.” (175) (230) Defendant, a former governor of Alabama, was convicted of bribery and related charges. The district court used defendant’s bribery conviction as the offense of conviction, but considered conduct beyond the bribery in calculating defendant’s sentence, i.e., a series of sham transactions carried out after the investigation into defendant had commenced. Defendant challenged for the first time on appeal the district court’s failure to explicitly explain why these transactions qualified as relevant conduct. The Eleventh Circuit found no error. A district court’s failure to make explicit relevant conduct findings does not preclude appellate review, and does not warrant reversal, “where the court’s decisions are based on clearly identifiable evidence.” Here, in rejecting defendant’s objection to the PSR’s value-of-the-bribe calculation, the district court expressly listed the money involved in the sham transactions, making it clear that the district court treated the sham transactions as relevant conduct to the bribery offense. U.S. v. Siegelman, __ F.3d __ (11th Cir. May 20, 2015) No. 12-14373.
11th Circuit treats as relevant conduct, transactions with a common accomplice, victim, purpose, and method. (175)(230) Defendant, a former governor of Alabama, was convicted of bribery and related charges. In calculating defendant’s sentence, the district court considered as relevant conduct a series of sham transactions carried out after the investigation into defendant had commenced. The Eleventh Circuit found no error. The sham transactions were substantially connected to the bribery by a common accomplice, Bailey, defendant’s close associate. The sham transactions were also substantially connected to the bribery by a common victim, common purpose, and similar modus operandi. Both offenses deprived the citizens of Alabama of the honest services of their Governor and therefore harmed a common victim. Moreover, both offenses were committed for the common purpose of obtaining power and money for defendant and his associates. U.S. v. Siegelman, __ F.3d __ (11th Cir. May 20, 2015) No. 12-14373.
5th Circuit upholds elected public official increase even though defendant later ruled ineligible for office. (230) Defendant, a former member of the local school board, pledged his support to an applicant for school board superintendent in exchange for $5,000. After defendant’s indictment, a Louisiana state court held that defendant was ineligible to serve on the school board be-cause of a prior, unrelated felony conviction. Defendant argued that because of his ineligibility, the district court improperly applied an enhancement under § 2C1.1(b)(3) for an offense involving “an elected public official.” The Fifth Circuit rejected this argument. The language of the guideline did not require that defendant be an eligible officeholder. Defendant was, in fact, elected and he did, in fact, serve on the school board in an official capacity with the full authority of the office, and he accepted the bribe while officially occupying the office. Since defendant unquestionably was “an elected public official,” the district court did not err in increasing defendant’s offense level under § 2C1.1(b)(3). U.S. v. Richard, __ F.3d __ (5th Cir. Dec. 29, 2014) No. 13-31044.
5th Circuit rules court properly included bribe paid to co-conspirator. (230) Defendant, a former member of the local school board, pledged his support to an applicant for the position of school board superintendent in exchange for $5,000. The district court found that the offense involved bribes totaling $10,000, which included an additional $5,000 the applicant paid to Miller, another member of the school board. The Fifth Circuit held that the court did not err in holding defendant accountable for both bribes because defendant was convicted of conspiring with Miller. Because the $5,000 received by Miller was part of the conspiracy conviction, the addi-tional $5,000 was properly included in the § 2C1.1(b)(2) calculation. The fact that the government ultimately recovered the bribe money did not make § 2C1.1(b)(2) inapplicable. Section 2C1.1(b)(2) instructs the court to determine the extent of the offense-level increase based on the greatest of the amount of the bribe, the amount of the benefit to be received by the bribe-giver, or the loss to the government. The court was therefore not required to look to the loss to the government in determining the applicability of § 2C1.1(b)(2). U.S. v. Richard, __ F.3d __ (5th Cir. Dec. 29, 2014) No. 13-31044.
5th Circuit applies § 2C1.1 in bribery case where indictment alleged corrupt purpose. (230) Defendant, a former member of the local school board, pledged his support to an applicant for the position of school board superintendent in exchange for $5,000. Defendant was convicted by a jury under the federal bribery statute, 18 U.S.C. § 666. The statutory index suggested both § 2C1.1 and § 2C1.2 for violations of § 666. Defendant argued that the district court erred in applying the bribery guideline, § 2C1.1, instead of the gratuity guideline, § 2C1.2. The Fifth Circuit found no error. Section 2C1.1 is the appropriate guideline when the offense charged includes a “corrupt purpose.” See U.S. v. Whitfield, 590 F.3d 325 (5th Cir. 2009). Here, the indictment alleged that defendant “corruptly agreed to accept and did in fact accept a thing of value.” Thus, the district court properly applied § 2C1.1. U.S. v. Richard, __ F.3d __ (5th Cir. Dec. 29, 2014) No. 13-31044.
1st Circuit upholds sentence for accepting bribe rather than illegal gratuity. (230) Defendant operated a mail-order pharmacy that accepted payments from Internet pharmacy sites. He pled guilty to seeking and accepting kickbacks in violation of 18 U.S.C. § 666(a)(1)(B). Defendant argued that the district court should have sentenced him for accepting an illegal gratuity (§ 2C1.2) rather than for demanding a bribe (§ 2C1.1). The First Circuit disagreed. When the district court sentenced defendant, it was possible to construe 18 U.S.C. § 666(a)(1)(B) as making it unlawful to solicit or to accept either bribes or gratuities. However, in U.S. v. Fernandez, 722 F.3d 1 (1st Cir. 2013), the court clarified that § 666(a)(1)(B) does not apply to gratuities. The essential distinction between a bribe and a gratuity is that a bribe requires a quid pro quo, and the indicted offense to which defendant pled guilty plainly charged a quid pro quo. When a person with the power to do or not do something demands a payment from the beneficiary of the exercise of that power as a condition for continuing to do so, the payment is not gratuitous. U.S. v. Gracie, 731 F.3d 1 (1st Cir. 2013).
1st Circuit holds that two-level abuse of trust increases were improper double counting. (230) Defendant, the former major of a city in Puerto Rico, extorted money from government contractors and embezzled funds that belonged to the city. The district court applied a two-level abuse of trust increase under §3B1.3. This adjustment should “not be employed if an abuse of trust or skill is included in the base offense level or specific offense characteristic.” The district court found that §3B1.3 was applicable because defendant had used the power of his high office in extortion and embezzling funds. However, abuse of high office was the same concern that justified the application of an eight-level enhancement under §2C1.1(b)(2)(B). The First Circuit held that the abuse of trust increase was improper double counting and reversed. U.S. v. Cruzado-Laureano, 440 F.3d 44 (1st Cir. 2006).
1st Circuit rules court properly applied special offense characteristic provisions of §2S1.1(b) after calculating offense level under extortion guideline. (230) Defendant, the former major of a city in Puerto Rico, extorted money from government contractors and embezzled city funds. Section 2S1.1, the money laundering guideline, directs a sentencing court to take as the base offense level the full calculated offense level that applies to the offense that produced the laundered funds. Following this instruction, the district court calculated defendant’s offense level as it would have applied to the extortion counts standing alone, making reference to §2C1.1. The court then returned to §2S1.1 and found that a further two-level enhancement was warranted under §2S1.1 (b)(2)(B) because defendant was convicted of money laundering under 18 U.S.C. §1956. Defendant argued that, having once turned from §2S1.1 to §2C1.1, the court should not have turned back to a consideration of the special offense characteristics under §2S1.1(b). The First Circuit found this argument “flatly incorrect.” Section 2S1.1 contemplates that that the adjustments for special offense characteristics specified in its part (b) will be applied after the base offense level specified in its part (a) has been calculated whether or not that base offense level is calculated by reference to another provision of the guidelines. U.S. v. Cruzado-Laureano, 440 F.3d 44 (1st Cir. 2006).
1st Circuit applies enhancement to public official who extorted money from government contractors. (230) Defendant, the former major of a city in Puerto Rico, extorted money from government contractors and embezzled funds that belonged to the city. Section 2C1.1(b)(2)(B) provides for an eight-level enhancement if “the offense involved a payment for the purpose of influencing an elected official or any official holding a high-level decision-making or sensitive position.” Defendant was convicted for being on the receiving end of various corrupt pay-offs, and he argued that this provision only applies when a defendant has made, rather than received, the payment. The First Circuit disagreed. Nothing in the quoted language suggested this interpretation. The enhancement is mandated for a defendant precisely like the defendant here, an elected official who abuses his position. Extortion “involves” payments intended to influence the behavior of the extortioner just as clearly as bribery “involves” payments intended to influence the bribe-taker. U.S. v. Cruzado-Laureano, 440 F.3d 44 (1st Cir. 2006).
1st Circuit holds that “honest services” fraud contemplates enhancement for loss to government. (230) Defendant acted as an intermediary between Page, the tax assessor of Kittery, Maine, and taxpayers to whom Page granted favorable revaluations and tax abatements in exchange for kickbacks. The kickbacks were paid to defendant and split between defendant and Page. Defendant was convicted of conspiring with Page to deprive the citizens of Page’s honest services. Defendant argued that there is no loss of property when a defendant has been prosecuted on a theory that he deprived the victim of “honest services.” The First Circuit found this argument foreclosed by § 2C1.7, entitled “Fraud involving deprivation of the intangible right to the honest services of public officials….” That guideline states in subsection (b)(1)(A): “if the loss to the government … exceeded $2,000, increase by the corresponding number of levels from the table in § 2F1.1 (Fraud or Deceit)….” Thus, the guidelines clearly contemplate that a sentence can be enhanced for loss to the government even when the defendant was charged with “honest services” fraud. U.S. v. Paquette, 201 F.3d 40 (1st Cir. 2000).
1st Circuit calculates loss as amount of fraudulently granted revaluations and abatements. (230) Defendant acted as an intermediary between Page, the tax assessor of Kittery, Maine, and taxpayers to whom Page granted favorable revaluations and tax abatements in exchange for kickbacks. The kickbacks were paid to defendant and split between defendant and Page. The district court calculated the loss as $736,066, the amount of the revaluations and abatements granted by Page as part of the scheme. Defendant argued that this figure overstated the loss because the assessments on some properties were excessive. Thus, the fraudulently granted revaluations and abatements merely restored the properties to their fair valuations. The First Circuit found no error. Under Maine law, a town’s assessment is presumed valid and the taxpayer must prove it manifestly wrong. Thus, the town was entitled to the tax revenue even if some taxpayers might have been able to prove the assessments wrong in an uncorrupted abatement process. Although defendant contended that Page intentionally inflated some of the property values as part of the scheme, defendant did not establish an evidentiary basis for this claim. U.S. v. Paquette, 201 F.3d 40 (1st Cir. 2000).
1st Circuit finds defendant’s fraud was within heartland of § 2C1.7. (230) Defendant, a city alderman, gave gifts and gratuities to other aldermen so they would award a lucrative construction contract to the company for which he worked. He pled guilty to using the mails to defraud the city of its right to the honest service of its public officials, in violation of 18 U.S.C. §§ 1341 and 1344. The court sentenced defendant under § 2C1.7 (Fraud Involving Deprivation of Intangible Right to Honest Services of Public Officials). Defendant argued that the court misunderstood its authority to depart downward, by analogy, to § 2C1.3 (Conflict of Interest). The First Circuit held that defendant’s conduct fell within the heartland of § 2C1.7. Defendant lobbied board members after his recusal from the committees that awarded the contract. He secretly delivered gratuities and information about the company without disclosing his actions to other board members. Although defendant may not have received a direct monetary benefit, he clearly deprived the citizens of their right to the honest services of their government. U.S. v. Grandmaison, 77 F.3d 555 (1st Cir. 1996), superseded on other grounds by guideline as stated in U.S. v. Mikutowicz, 365 F.3d 65 (1st Cir. 2004).
1st Circuit agrees that amount of bribes exceeded $10,000. (230) Defendant offered an undercover agent, posing as a corrupt INS inspector, $1,000 for each alien who was permitted to sneak into the U.S. from the Dominican Republic. The Second Circuit held that the amount of the bribes exceeded $10,000 under § 2C1.1(b)(2)(A). The sentencing court was permitted to consider both consummated and unconsummated bribes. The district court properly concluded that defendant had offered or given at least 12 bribes, each in the amount of $1,000. The court identified five aliens involved in the counts of conviction, plus at least seven more. Relevant conduct is not limited to the counts of conviction. The additional aliens, while not named in the indictment, were sufficiently proven by audiotapes of defendant’s conversations with the agent. Moreover, defendant was in the process of delivering a $2,000 bribe at his arrest, and had promised three more bribes in the future. U.S. v. Tejada-Beltran, 50 F.3d 105 (1st Cir. 1995).
1st Circuit finds 2C1.1 most analogous guideline for making illicit payments to municipal official. (230)) Defendants were convicted of making illicit payments to a municipal official in violation of 18 U.S.C. section 666(a)(2). The 1st Circuit affirmed that the most analogous guideline for the offense was section 2C1.1 (dealing with bribery of, and extortion by, a public official) rather than section 2C1.2 (dealing in part with the giving of a gratuity to a public official). The court found that this was a fact-intensive issue subject to review for “clear error.” The bribery guideline applies when a transfer of money has a corrupt purpose, such as inducing a public official to participate in a fraud, while the gratuity provision does not include a corrupt purpose as an element of the offense. Since defendants each sought to receive a quid pro quo, in the form of future favorable treatment, and since their offenses involved corrupt intent, the determination that their actions were more akin to bribe-giving than to gift-giving was not clearly erroneous. U.S. v. Mariano, 983 F.2d 1150 (1st Cir. 1993).
2nd Circuit holds that U.N. officer was “public official.” (230) During defendant’s employment as a chief within the United Nations Procurement Division, he provided improper assistance to a long-time friend who sought to become a supplier to the U.N. The Second Circuit held that defendant was properly sentenced as a “public official” under guideline § 2C1.1. Under Note 1, the phrase “public official” is to be “construed broadly.” The fact that defendant was at an international organization did not mean that he was not a public official for purposes of § 2C1.1. The closely analogous guideline § 2B4.1, which relates to commercial bribery, demonstrated the applicability of § 2C1.1 to this case. The commentary to § 2B4.1 says: “this guideline covers commercial bribery offenses and kickbacks that do not involve officials or federal, state, or local governments, foreign governments, or public international organizations.” Note 1 to § 2B4.1. The commentary to § 2B4.1 refers the reader to part C, for “Offenses Involving Public Officials, if any such officials are involved.” This plainly indicated that part C was meant to encompass employees of the U.N., since the U.N. is undoubtedly a public international organization. U.S. v. Bahel, 662 F.3d 610 (2d Cir. 2011).
2nd Circuit affirms court’s refusal to impose below-guideline sentence based on age, health and undischarged sentence. (230) Defendant argued that his sentence was unreasonable because the district court should have weighed more heavily his age, health, and undischarged sentence from a prior conviction for shipping industry extortion. The district court imposed a sentence within the guideline range after noting that the “facts relevant under Section 3553(a) strongly support a lengthy sentence.” The court considered defendant’s age and health, noting that his claim that he was “no longer a threat to society because of his age and medical conditions [was] belied by the trial testimony establishing that he, like other members of the Gambino crime family, only needed to direct subordinates to commit the criminal acts from which he profited.” As for the undischarged sentence, the court ruled that § 3553(a), especially the goals of punishment and deterrence, favored a “lengthy sentence.” The Second Circuit found no error. U.S. v. Matera, 489 F.3d 115 (2d Cir. 2007).
2nd Circuit holds that two separate bribes occurred. (230) Defendant paid an undercover agent, posing as a Social Security Administration representative, $2500 for 11 social security cards. The next day, defendant and the agent met again. The agent gave defendant fake receipts for the 11 social security cards defendant had paid for the previous day. Defendant then requested two additional cards and provided the agent with the personal information and addresses of two additional undocumented aliens, as well as $500 in cash as payment for these two cards. The district court imposed a two-level increase under § 2C1.1(b)(1) because the offense involved more that one bribe. Although the method of making payments was the same for both the initial $2500 payment and the subsequent $500 payment, the Second Circuit had “no doubt” that two separate bribes occurred. First, the two sums were not installments toward the payment of a larger, previously-agreed upon payment. More importantly, the $2500 payment and the $500 payment were clearly meant to influence two separate actions. U.S. v. Soumano, 318 F.3d 135 (2d Cir. 2003).
2nd Circuit holds that series of bribes related to same contract were multiple bribes. (230) Defendant’s company had a contract with the city to paint apartments at a public housing development. Over a several-month period, defendant paid a city inspector $10 for every apartment painted by his company if the inspector would refrain from penalizing defendant for any deficiencies. He also paid the inspector additional bribes for extra hours authorized by the inspectors, and made a $500 payment to expedite funds owed to defendant by the city. The Second Circuit upheld a § 2C1.1(b)(1) increase for multiple bribes. The first factor in distinguishing between multiple and single incidents of bribery is whether the payments were made to influence “a single action.” The district court properly found that defendant had made more than one bribe because he made discrete payments to obtain (1) approval of his deficient painting work, (2) authorization for more work hours, and (2) expedited payments. Although the bribes were all related to the same painting contract, “multiple payments meant to influence more than one action should not be merged together for purposes of § 2C1.1 merely because they share a single overall goal or are part of a larger conspiracy to enrich a particular defendant or enterprise.” Other factors a court may consider in distinguishing multiple from single bribes include the pattern and method of making the payments. U.S. v. Arshad, 239 F.3d 276 (2d Cir. 2001).
2nd Circuit agrees that offense involved two extortion schemes. (230) For 14 months, Lagaris paid defendants $2000 a month to avoid their interference with his cafeteria’s airport lease. Lagaris then refused to make additional monthly payments and asked defendants to buy out his share of the business. In response, defendants insisted they had a buyer for the business. They demanded that Lagaris pay them a lump-sum final payment in exchange for their corporate interest. Lagaris ultimately paid them $45,000 in cash. The Second Circuit affirmed a § 2C1.1(b)(1) increase for an offense involving more than one extortion. The final large payment was not an installment but a distinct payoff related to selling the business and ending defendants’ extortionate demands. U.S. v. Middlemiss, 217 F.3d 112 (2d Cir. 2000).
2nd Circuit includes bribe in loss calculation. (230) Defendant were convicted of RICO charges based on their involvement in a scheme to corrupt the New York City Transit Police Benevolent Association (TPBA) through bribery and other illegal acts. Defendant claimed that the district court improperly calculated the amount of loss attributable to the life insurance and campaign finance schemes. Specifically, he argued that it was error to include a disputed $100,000 insurance bribe in the loss calculation because the district court struck the alleged predicate act based on this bribe. The Second Circuit disagreed. Even though the district court struck the predicate act, the jury in its verdict sheet found that the government had proved its occurrence beyond a reasonable doubt. Moreover, even if the jury had not made such a finding, the district court was free to include the bribe in the loss calculation on the basis of the trial evidence. As to the campaign finance scheme, defendant was liable as a co-conspirator for “all reasonably foreseeable acts and omissions” in furtherance of the conspiracy. Because there was evidence that defendant was well aware of the larger scheme, the district court did not err in finding that defendant was liable for the entire loss. U.S. v. Zichettello, 208 F.3d 72 (2d Cir. 2000).
2nd Circuit rules payments to trustee were bribes, not gratuities. (230) Defendant ran a firm that marketed a health insurance program to employer groups. Defendant’s company engaged another firm to market the health plan. Defendant paid the trustee of the health plan $5 for each participant enrolled in the health plan through the sub-broker’s marketing efforts, and in return, the trustee allowed defendant to continue using the sub-broker. Defendant was convicted of bribing the trustee of a welfare benefits plan. The Second Circuit upheld the district court’s finding that the payments were bribes, not gratuities. Defendant and the trustee agreed that if defendant paid the trustee $5 for each additional participant, then the trustee would continue to use defendant’s company as his broker. This arrangement met the definition of a bribe. Bribery is an attempt to influence another to disregard his duty while continuing to appear devoted to it. In addition, defendant told a business associate that his payments to the trustee were “an expense of business” and that the payments gave defendant “some control” over the trustee. These statements were not consistent with the payment of a gratuity. U.S. v. Glick, 142 F.3d 520 (2d Cir. 1998).
2nd Circuit rules payment was a bribe rather than a gratuity. (230) Defendant, a chairman and trustee of an employee pension fund, agreed to vote in favor of an investment in return for a payment from the company of five percent of each investment. The Second Circuit agreed that the money paid to defendant was a bribe rather than a gratuity. Under the commentary to § 2E5.1, a bribe is the offer or acceptance of an unlawful payment with the specific understanding that it will corruptly affect an official act of the recipient. A gratuity is an unlawful payment other than a bribe. Defendant here informed the investment company that the pension fund would invest in the securities if defendant was paid. The fact that the payments were not made until after defendant voted to approve the investment was irrelevant. U.S. v. Lopreato, 83 F.3d 571 (2d Cir. 1996).
2nd Circuit says benefit to bribe payer was full amount of investment made by defendant’s pension fund. (230) Defendant, a chairman and trustee of an employee pension fund, agreed to vote in favor of an investment in return for a payment from the company of five percent of each investment. The company went bankrupt due to the mismanagement and fraud of its principals, and the pension funds lost all of its money. Defendant argued that his sentence under § 2C1.1 should be based on the amount he received rather than the more than $5 million the pension fund invested in the company. The Second Circuit upheld the court’s finding that the net benefit to the company of the bribe was in excess of $5 million. The defendant need not intend or foresee the $5 million in losses he caused. Section 2E5.1(b)(2) measures the harm as the benefit to the bribe‑payer. It makes no mention of foreseeability. The court’s finding that the full amount of the investment was a net benefit to the company was not erroneous. U.S. v. Lopreato, 83 F.3d 571 (2d Cir. 1996).
2nd Circuit says loss in bribery case is amount of tax liability defendant sought to eliminate. (230) Defendant tried to bribe an IRS official in order to discharge a friend’s $41,000 tax liability. Defendant received $3,500 for his services. Section 2C1.1(b)(2)(A) provides for an enhancement based on the value of the payment, the benefit received in return for the payment, or the loss to the government from the offense. The Second Circuit held that the loss to the government was the $41,000 tax liability that defendant sought to eliminate. Loss to the government includes both actual and intended loss. Here the intended loss was $41,000. This was not a reverse sting operation in which no actual loss could have occurred. The only reason defendant’s plan failed was because the IRS official notified law enforcement officials. U.S. v. Falcioni, 45 F.3d 24 (2d Cir. 1995).
2nd Circuit affirms that section 2C1.1 applies to corrupt “reward” for past favors. (230) Defendant was convicted under 18 U.S.C. section 666 of receiving corrupt payments. He argued that section 2C1.1 applies only to bribes (for future action) rather than rewards (for past favors). The 2nd Circuit rejected this limitation, upholding the application of section 2C1.1 to defendant. The statutory index lists both section 2C1.1 and 2C1.2 as applicable guidelines for section 666 offenses. However, section 2C1.2, which covers gratuities, does not include a corrupt purpose as an element of the offense. Since a corrupt purpose was an essential element of defendant’s conviction under section 666, sentencing under section 2C1.2 would be inappropriate. Moreover, since defendant received the payments during his term of office, it was possible they were bribes. U.S. v. Santopietro, 996 F.2d 17 (2nd Cir. 1993).
2nd Circuit upholds departure based on bribes made as part of continuing criminal relationship. (230) Defendant contended that the district court improperly departed under guideline § 5K.2 rather than § 4A. Reviewing the upward departure under a “reasonableness standard,” the 2nd Circuit upheld the departure. Defendant had been convicted of extorting and accepting bribes in his capacity as an Export Licensing Officer. The district court had determined that the bribes were solicited as a result of defendant’s “ongoing criminal relationship” with the shipping manager of another company. Testimony revealed that defendant requested the president of that company “to make false representations to federal agents in order to stymie their investigation of [defendant’s] pattern of illegal activity”. U.S. v. Stephenson, 921 F.2d 438 (2nd Cir. 1990).
2nd Circuit upholds finding that defendant had extorted over $100,000. (230) After a three day hearing, the district court increased this RICO defendant’s guideline level by 6 points under § 2C1.1(b)(1) finding him accountable for extorting in excess of $100,000. The 2nd Circuit found that because the government had proved the amount of money by a preponderance of evidence, the finding was not clearly erroneous. The evidence established that the defendant received at least $50 a week from each of the three inspectors whom he supervised during eight years of the conspiracy. The court multiplied this figure by two because it found that the inspectors shared with the defendant approximately half of the bribe money that they extorted. Furthermore, this figure was supported by the defendant’s financial statement which evidenced at least $481,000 in unexplained income. U.S. v. Tillem, 906 F.2d 814 (2nd Cir. 1990).
2nd Circuit finds no justification for increased bribery sentence either as “relevant conduct” or as “departure.” (230) Defendant was convicted of one bribery scheme but acquitted of another. At sentencing, the judge found “by a preponderance of the evidence” that the acquitted bribery “occurred,” and doubled defendant’s offense level from 10 to 20. It was unclear whether the increase in offense level was based on a finding that the second bribery was “relevant conduct” under U.S.S.G. 1B1.3 or an upward departure. The 2nd Circuit found both rationales faulty. Bribery and extortion are not required to be “grouped” under the multiple count section, 3D1.2(d), and therefore evidence of these offenses is excluded from “relevant conduct” under 1B1.3. If the judge intended to depart upward from the guidelines, he failed to articulate sufficient reasons for doing so. U.S. v. Stephenson, 895 F.2d 867 (2nd Cir. 1990).
2nd Circuit rejects government’s argument for upward departure in public corruption case. (230) The defendant, an export licensing officer at the U.S. Department of Commerce, reviewed applications for federal approval to export high technology equipment to the Soviet Union, China, and other countries. He was convicted of bribery and extortion under the Hobbs Act. The government argued that the sentencing judge erred in failing to depart upward based upon defendant’s “sensitive” position in the Commerce Department. The government relied on U.S.S.G. 2C1.1(b)(2) which provides for an 8-level increase if the offense “involved a bribe for the purpose of influencing . . . any official holding a high level decision making or sensitive position.” The 2nd Circuit rejected the argument, finding that the defendant did not fall within the section. His duties “did not set him apart from a multitude of personnel in the federal service.” U.S. v. Stephenson, 895 F.2d 867 (2nd Cir. 1990).
3rd Circuit agrees that project officer for temporary governing body in Iraq held high-level decision-making position. (230) Defendant was a U.S. Army Reserve officer who was deployed to Iraq to work for the Coalition Provisional Authority (CPA). The CPA was created by the United States and other countries to function as a temporary governing body in Iraq. Defendant participated in a bid-rigging scheme that involved directing millions of dollars in contracts to companies owned by Bloom, an American businessman. Section 2C1.1(b)(3) provides for a four-level increase when a theft or fraud offense “involve[s] an elected public official or any public official in a high-level decision-making or sensitive position.” The court applied §2C1.1(b)(3) to defendant because, as a project officer at CPA, he was an “integral participant in the bidding, and contracting, and payment process.” Defendant’s “signatures had to be on recommendations for projects before they went to the contract officers for review” and he was privy to confidential information about the CPA’s scopes of work and bid specifications. The Third Circuit ruled that the court’s conclusion that defendant held a high-level decision-making or sensitive position was reasonable. U.S. v. Whiteford, 676 F.3d 348 (3d Cir. 2012).
3rd Circuit says county human resources director held “high-level decision-making or sensitive position.” (230) Defendant, the former director of human resources for a county government, pled guilty to accepting a bribe to assist a consulting firm obtain a contract. The Third Circuit upheld a § 2C1.2(b)(3) enhancement for being a government official in a high-level decision-making or sensitive position. Defendant admitted that, as part of his job duties, he would refer three or four top candidates for a job to the County Commissioners for their ultimate hiring. He also administered his own department and made recommendations to his superiors. Moreover, his job description stated that defendant was “responsible for designing, implementing and maintaining a centralized Human Resource Department.” He also was responsible for “writ[ing], maintain[ing] and apply[ing] the County policies and guidelines ….” The district court did not clearly err in concluding that these job duties and responsibilities showed defendant’s ability to substantially influence the decision-making process. U.S. v. Richards, 674 F.3d 215 (3d Cir. 2012).
3rd Circuit reviews for clear error whether public official has a “high-level decision-making or sensitive position.” (230) Defendant, the former director of human resources for a county government, pled guilty to accepting a bribe. He challenged a § 2C1.2(b)(3) increase for being a government official in a high-level decision-making or sensitive position. The Third Circuit ruled that whether an individual is a public official in a “high-level decision-making or sensitive position” is a factual determination, reviewable on appeal for clear error. U.S. v. Richards, 674 F.3d 215 (3d Cir. 2012).
3rd Circuit holds that “benefit received” is net value of contracts obtained by bribery, less direct costs. (230) Defendant bribed an FAA employee to steer contracts to her husband’s computer services company. Under § 2C1.1(b) (2), the offense level of a defendant convicted of bribing a federal employee increases based on the “benefit received or to be received” in exchange for the bribe. The Third Circuit, adopting the Fifth Circuit’s approach in U.S. v. Landers, 68 F.3d 882 (5th Cir. 1995), held that the proper calculation of the “benefit received” under § 2C1.1(b)(2) is the net value of the government contracts obtained by bribery, minus the direct costs accruing to the entity on whose behalf the defendant paid the bribes. Direct costs are “all variable costs that can be specifically identified as costs of performing a contract.” “Indirect” or “fixed” costs are, on the other hand, “the costs incurred independently of output.” For example, rent and debt obligations are costs a business incurs no matter how many contracts a business receives. Because the district court did not explain why it rejected defendant’s proposed additional costs, the court remanded for the district court to consider whether any portion of the company’s overhead or defendants’ salaries could be attributed to the contracts in question. U.S. v. Lianidis, 599 F.3d 273 (3d Cir. 2010).
3rd Circuit holds that court properly departed after grouping. (230) Defendant argued that the district court erred in applying a three-level upward departure for his acts of public corruption under Application Note 5 to USSG § 2C1.7, to the final combined offense level after grouping, rather than to the offense level established for the public corruption charges only. Guideline § 1B1.1 lists the steps for calculating a sentence. Defendant contended that the court should have applied the departure at step (b) (directing court to determine the base offense level and apply any appropriate “specific offense characteristics,” “cross references,” and “special instructions”) rather than at step (i) (referring to departure factors in Chapter Five). The Third Circuit held that the district court did not err in applying Note 5 to defendant’s sentence after grouping. The departure warranted by Note 5 does not amount to a “specific offense characteristic,” “cross reference,” or “special instruction,” the only three types of sentencing adjustments to which step (b) refers. Note 5 is not the functional equivalent of a special instruction. Judge Greenberg dissented. U.S. v. Milan, 304 F.3d 273 (3d Cir. 2002).
3rd Circuit says “net benefit” based on total receipts from gambling operation, not net profit. (230) Defendant, a police officer, accepted bribes in return for permitting illegal video poker gambling machines to operate without police interference. Section 2C1.1 bases a defendant’s offense level on the greatest of the value of the payment, the benefit received in return for the payment, or the loss of the government. Defendant argued that the government had failed to prove the specific “net profit” or “net benefit” and that the court must sentence him based on the aggregate bribe amount proven. The government argued that the benefit received was the revenues the business realized from the illegal operation. The district court ruled, consistent with U.S. v. Schweitzer, 5 F.3d 44 (3d Cir. 1993), that “net benefit” was the monies realized from the illegal operation, and “has nothing to do with expenses incurred by the wrongdoer in obtaining the net value received” where the transaction was wholly illegal.” The Third Circuit agreed. The examples in Note 2 clearly demonstrated that, to arrive at the proper amount, a court should deduct the value legitimately and actually given, from the value received, to arrive at the “net value” of the benefit caused by the bribe. Illegal gambling operations have no legitimate object or service of value, and thus every dollar received by the business was received because of the bribe, not because of the intrinsic value of anything being provided. As a result, the entire amount of revenue was the benefit. U.S. v. Pena, 268 F.3d 215 (3d Cir. 2001).
3rd Circuit considers uncharged bribes defendant admitted to probation officer. (230) Defendant, an INS employee, accepted bribes in return for INS metal templates, a device that imprints a marking when fingerprints and signatures are affixed to alien registration “green” cards to demonstrate authenticity. He argued that it was improper to increase his offense level under § 2C1.1(b)(1) based on his admissions to the probation department that he had accepted two additional bribes that were not the subject of a charge. The Third Circuit upheld consideration of the uncharged bribes because they involved relevant conduct. The cooperating witness who paid all three bribes was a highly credible witness, and provided the probation department with information concerning his and defendant’s respective roles in each of the three bribes. That information was corroborated by tape recorded conversations and by defendant’s own admissions. Uncharged relevant conduct can be the basis of a sentencing enhancement. The consideration of defendant’s statements to the probation officer did not violate due process. Defendant was not forced to admit the relevant conduct in order to obtain a § 3E1.1 reduction. The guidelines permit a defendant to remain silent about relevant conduct without affecting his ability to obtain a § 3E1.1 reduction. U.S. v. Rudolph, 137 F.3d 173 (3d Cir. 1998).
3rd Circuit applies 2B3.2 or 2B3.3, not 2C1.1, to union leader’s extortion. (230) Defendant, the business agent for a labor union, was convicted of RICO related offenses including racketeering and extortion. The district court ruled that § 2C1.1, which governs extortion by public officials, was the applicable guideline. The Third Circuit reversed, ruling that either § 2B3.2 or § 2B3.3 was applicable. Section 2C1.1 was not applicable because defendant was not a public official and he did not accept money in exchange for action involving any official duties. Section 2B3.2 does not require the threat of serious bodily injury for its application. It was not clear from the record whether § 2B3.2 or § 2B3.3 was applicable. If on remand the court finds that a victim could reasonably have interpreted defendant’s threats to cause labor problems as express or implied threats of violence to person or property, or of economic harm so severe as to threaten the existence of the victim, then the court could use § 2B3.2. If there was no such threat of violence or economic ruin, then it could properly apply § 2B3.3. U.S. v. Boggi, 74 F.3d 470 (3d Cir. 1996).
3rd Circuit approves upward departure for numerous bribes and gratuities. (230) Defendant, an IRS agent, was convicted of demanding and receiving bribes and illegal gratuities to “fix” taxpayers’ problems with the IRS. The district court departed upward because of the magnitude of the scheme–defendant had accepted one bribe and five gratuities. The Third Circuit affirmed. Section 2C1.1(b)(1) requires a two-level increase if the offense involves more than one bribe. This did not apply because defendant’s offense only involved one bribe. Section 2C1.2(b)(1) requires a two-level increase if the offense involves more than one gratuity. This did not apply because defendant’s offense included a bribe. There is no provision increasing the offense level for one bribe and multiple gratuities. Nothing in the guidelines suggest that this type of repeated unlawful conduct involving a bribe and gratuities should be treated less harshly than repeated unlawful conduct involving only bribes or only gratuities. The departure was appropriate. U.S. v. Felton, 55 F.3d 861 (3d Cir. 1995).
3rd Circuit holds that expense of bribe is not to be deducted in calculating net value. (230) Defendant paid $3,640 to a government employee for certain confidential information, and then resold the information for at least $8,000. The 3rd Circuit rejected defendant’s claim that the amount of the bribe, $3,640, should be subtracted from the $8000 to determine “the benefit received” from the bribe under section 2C1.1(b)(2)(A). Application note 2 to section 2C1.1 allows for a deduction of the value that would be derived in a legitimate transaction not induced by a bribe. Here, there was no value that could be received in a legitimate transaction. The concept of “net value received” has nothing to do with the expense incurred by the wrongdoer in obtaining the net value received. The benefit received by defendant’s conspiracy was the market value of the information secured for defendant’s clients. U.S. v. Schweitzer, 5 F.3d 44 (3rd Cir. 1993).
4th Circuit affirms bribery sentence based on gross benefit rather than amount of bribe. (230) Defendant, a state legislator, was convicted of bribery and extortion based on charges that he secured state funding for a public university in exchange for employment by the university. The Fourth Circuit rejected defendant’s argument that, in determining the proper sentencing enhancement, the court should have relied on the value of the payment he received—approximately $87,000—rather than the value of the benefit the university obtained. Section 2C1.1(b)(2) requires the enhancement to be based on the greater of the payment received or the benefit obtained, and there was no dispute the benefit to the university was greater than the payment defendant received. The panel also rejected defendant’s argument, raised for the first time on appeal, that the court should have determined the benefit to the university based on the net, rather than gross, value of the state appropriation the university obtained. Defendant did not demonstrate that the net benefit to the university was $400,000 or less, which would have been required for a lesser sentencing enhancement. U.S. v. Hamilton, 701 F.3d 404 (4th Cir. 2012).
4th Circuit approves increase for multiple bribes. (230) Defendant was convicted of wire fraud and bribery after he arranged the award of a military contract to a co-defendant’s company in return for a series of payments and later employment with the company. Section 2C1.1(b)(1) provides for a two-level increase if the offense involved more than one bribe or extortion. The Fourth Circuit upheld a two-level increase. The district court found that the benefits provided in exchange for the bribes included the issuance of the original contract, subsequent add-ons to that contract, and the payments authorized by defendant. In return, defendant received numerous payments from the co-defendant as well as employment with the co-defendant’s company. U.S. v. Harvey, 532 F.3d 326 (4th Cir. 2008).
4th Circuit increases sentence based on gain from fraudulently-obtained contract. (230) Defendant was convicted of wire fraud and bribery after he arranged the award of a military contract to a co-defendant’s company in return for a series of payments and later employment with the company. Section 2C1.1(b)(2)(A) provides for an enhancement based on the value of the payment, the benefit received, or the loss to the government, whichever is greatest. The district court calculated the total loss as $383,621, an amount equal to the eight percent profit margin in the contract. Defendant argued that there was no actual loss because the company adequately performed its obligation under the contract and the government did not present any evidence that the profit earned under the contract was unreasonable. The Fourth Circuit found no error. Under the plain language of § 2C1.1(b)(2)(A), a finding of either actual loss or the amount of the benefit received may support the enhancement. The facts mirrored the example in Note 2 to § 2C1.1. The profit made on the contract was the “value of the benefit received.” U.S. v. Harvey, 532 F.3d 326 (4th Cir. 2008).
4th Circuit directs court to determine value of net benefits from proposed contracts. (230) Defendants, one of whom was the director of the Department of Treasury’s asset forfeiture agency, were convicted of soliciting a bribe in connection with contracts awarded by the agency. The district court concluded that the value of the benefit to be received in exchange for the bribes was $13.3 million, or the sum of the gross value of the contracts offered to two different companies. The government conceded on appeal that the court erred in calculating the benefit to be received by adding the gross, rather than the net, values of the contracts. The Fourth Circuit directed that on remand, the district court should determine the greater of (1) the value of the bribery payment, i.e. “anything of value” solicited by the defendants from the companies, or (2) the value of the net benefit to be received by the companies had they accepted defendants’ solicitations. If the greater of these two values exceeds $2,000, the court should consult the loss table in § 2F1.1 and apply the appropriate adjustment. See § 2C1.1(b) (2)(A). The panel rejected defendants’ argument that the value of the proposed contacts could not be determined because they were never executed or reduced to specific terms. The court also rejected the claim that defendants should not be held accountable for two proposed contracts that concerned the same subject matter since only one such contract would have been awarded. Defendants were convicted of two separate bribery crimes involving two separate contract proposals; there was no reason to ignore one of those crimes. U.S. v. Quinn, 359 F.3d 666 (4th Cir. 2004).
4th Circuit holds middleman in bribery scheme accountable for full benefit received. (230) In return for a 3% kickback on all IRS contracts, defendant arranged for an IRS employee to recommend Washington Data for an IRS computer maintenance contract. Following the successful completion of that first contract, Washington Data had its “foot in the door” and received about 30 short-term and long-term purchase orders from the IRS over the following five years. The revenues from these contracts exceeded $57 million, generating $9.5 million in profits for the company. For bribery offenses, USSG § 2C1.1(b)(2) provides that the sentence shall be enhanced by the greatest of (1) the value of the bribery payment, (2) the “benefit received or to be received” as a result of bribery payment, or (3) the loss to the government. The district court based the enhancement on the $9.5 million benefit that the government contractor received rather than the amount of benefit (about $340,000) that defendant personally received from the scheme. The Fourth Circuit affirmed. Defendant and Washington Data jointly undertook the bribery conspiracy. Defendant foresaw the scope of the continued course of dealing between the IRS and Washington Data, thus rendering the contractor’s profits includable under the relevant conduct guideline. The evidence showed that defendant expected that the initial bribe would allow the contractor to get its “foot in the door” and thereafter produce $60 million in revenues. U.S. v. Kinter, 235 F.3d 192 (4th Cir. 2000).
4th Circuit holds that Apprendi does not apply to guideline increases within statutory maximum. (230) Defendant was convicted of bribing a public official. The sentencing judge determined, by a preponderance of the evidence, that the benefit received from the bribes was $9.5 million, which increased defendant’s guideline sentence from a maximum of ten months to a range of 46-57 months. Defendant argued that Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348 (2000) required these facts to be submitted to a jury and proven beyond a reasonable doubt before they could form the basis of a sentence enhancement. Apprendi applies to factual determinations that increase the penalty for a crime beyond “the prescribed statutory maximum.” The Fourth Circuit held that the “prescribed statutory maximum” refers to the statute criminalizing the offense, and not sentencing enhancements under the guidelines. Under defendant’s arguments, district courts would no longer be permitted to make factual determinations that had the effect, in any real sense, of enhancing the defendant’s sentence, and the guidelines would be rendered essentially useless, which would undermine the constitutional seal of approval bestowed upon the Sentencing Commission by the Supreme Court in Mistretta v. United States, 488 U.S. 361 (1989). U.S. v. Kinter, 235 F.3d 192 (4th Cir. 2000).
4th Circuit rejects need for strong causal nexus between high-ranking official and crime. (230) Defendants switched GED test results for a political appointee who needed to pass the GED to qualify for his new job. Defendant Edwards, a senior executive assistant at the State Department of Education, had been asked to help by the state senator who had recommended the appointee for the job. Section 2C1.7(b)(1)(B) provides for an eight-level enhancement for an offense involving any public official “holding a high-level decision-making or sensitive position.” Defendants argued that the crime was not a function of, and had no bearing on, Edwards’ position at the Department of Education. The Fourth Circuit held that § 2C1.7(b)(1)(B), unlike the § 3B1.3 abuse of trust provision, does not require a strong causal nexus between defendant’s position and the successful execution of the crime. Section 2C1.7(b)(1)(B) merely requires that the offense “involved” an official. U.S. v. Edwards, 188 F.3d 230 (4th Cir. 1999).
4th Circuit says lottery commission’s attorney held a high-level decision-making or sensitive position. (230) Defendant served as a part-time attorney for the state lottery commission. When he learned of the commission’s plan to award an exclusive contract to a certain gaming company, he used all of his available funds to buy the company’s stock. He continued to represent the lottery commission without disclosing that he owned the stock and stood to benefit from the lottery expansion. The Fourth Circuit held that defendant was an “official holding a high-level decision-making or sensitive position” under § 2C1.7(b)(1)(B), even though he only held a part-time position. The district court properly considered the nature of the advice defendant gave the director of the lottery commission, the influence defendant had with other lottery commission members, and the fact that defendant was privy to confidential information as an attorney for the director. U.S. v. Rebrook, 58 F.3d 961 (4th Cir. 1995).
4th Circuit holds that supervisory engineer held high level, sensitive position. (230) Defendant, an attorney for certain defense contractors, paid for information from a supervisory engineer and branch head with responsibility for technical aspects of major procurements. The information gave defendant’s clients an advantage in preparing bids for future work with the Navy. The 4th Circuit upheld an enhancement under section 2C1.1(b)(2)(B) because the engineer was a high level, sensitive person. The engineer’s position on the Contract Award Review Panel (CARP) was sensitive. There were only three members and they made the recommendations to Navy officials on large Navy procurements. Although CARP did not make the final decision, the Navy would not likely accept a bid without a favorable report from CARP. U.S. v. Matzkin, 14 F.3d 1014 (4th Cir. 1994).
4th Circuit affirms calculation of expected benefit from bribery scheme. (230) Defendant used a lobbyist to bribe legislators to pass legislation favorable to a company in which defendant had a 20 percent interest. The 4th Circuit affirmed an 11 level enhancement under guideline section 2C1.1(b)(2)(A) based upon defendant’s expected receipt of over $800,000 as a result of the scheme. The district court properly included in the calculation the $500,000 that the company promised to pay defendant if the bill passed, even though the company later reneged on its promise. The evidence also supported the court’s determination that defendant’s 20 percent interest in the company, amounting to more than $600,000, was a benefit received from passage of the legislation, since passage of the legislation was essential to maintaining the company as an operating business entity. The court rejected the government’s contention that the district court should have included in the calculation the total profit the companies involved would have received from the scheme. Unlike other provisions of the guidelines, section 2C1.1 does not focus on the total loss or harm caused by the offense. U.S. v. Ellis, 951 F.2d 580 (4th Cir. 1991).
4th Circuit calculates offense level based on benefit received from bribe rather than amount of bribe. (230) Defendant conspired to pay $400,000 to a U.S. Maritime Administration Official for the opportunity to purchase a ship for substantially less than its market value. The district court calculated the offense level under section 2C1.1 on the basis of the $400,000 bribe. The 4th Circuit reversed, holding that the offense level should have been calculated on the basis of the expected benefit from the bribe, rather than the amount of the bribe. Application note 2 to section 2C1.1 requires the offense level to be based on the greater of the amount of the bribe or the value of the benefit received from the bribe. There was no dispute as to the figures for each, since defendant stipulated in his plea agreement that the amount of the bribe was $400,000 and the benefit to be derived from the conspiracy was between three and five million dollars — the difference between the fair market value of the vessel and the amount for which it would have been sold to the conspirators. U.S. v. Kant, 946 F.2d 267 (4th Cir. 1991).
4th Circuit affirms calculation of bribes based on amount defendant paid government employee. (230) Defendant ran a consulting firm that took bribes from a government defense contractor. Defendant then split the bribes with a government employee who supervised the award of government defense contracts. In total, defendant received approximately $188,000, $65,000 of which he paid to the government employee. The 4th Circuit affirmed the calculation of defendant’s bribes as $65,000, under guideline sections 2C1.1(b)(2)(A) and 2F1.1(b) (1)(F). The guidelines provide that the offense level is to be adjusted by considering the greater of the value of the bribe or the benefit received in return for the bribe. Because the evidence did not disclose the profit the government contractor made on contracts for which it paid bribes, the court properly measured the value of the bribe by the amount defendant paid to the government employee. U.S. v. Muldoon, 931 F.2d 282 (4th Cir. 1991).
5th Circuit says “bribery amount” should have been $10,000 defendant received for making false statement. (230) Defendant, the former mayor of a town in Louisiana, was convicted of corruption-related offenses, including bribery. The district court determined that the bribery amount under § 2B1.1(b)(1) was $6,382,000, which included $4 million for a fraudulent letter defendant sent to the EPA in support of a grant request from Cifer, a waste system business. The letter misrepresented to the EPA that defendant had met with other local mayors, and there was “an overwhelming interest” in Cifer’s technology. The Fifth Circuit rejected the valuation of the EPA letter, finding insufficient evidence to differentiate between legitimate funding Cifer could have received, and any benefits that defendant intended from the false statements in his letter. Defendant simply provided a letter of support that was introductory in nature, and did not specify a requested grant amount. The amount of loss from the EPA letter could not reasonably be determined, and it was therefore more appropriate to use the gain that resulted from the offense as an alternative measure of loss. Note 3(B) to § 2B1.1. The most appropriate valuation of the EPA letter was the $10,000 defendant received for writing it. U.S. v. Nelson, 732 F.3d 504 (5th Cir. 2013).
5th Circuit finds police captain convicted of fraud was “high-level public official.” (230) Defendant, a New Orleans police captain and traffic division commander, was convicted of fraud and conspiracy based on a scheme to defraud a New Orleans-based utilities provider. The district court found that defendant was a public official under § 2C1.1(a), and a public official in a high-level decision-making or sensitive position under § 2C1.1(b)(3). The Fifth Circuit agreed. Defendant was the commander of the traffic division, responsible for the important job of coordinating hurricane evacuations. Thus, he was “in a position of public trust with official responsibility for carrying out a government program or policy.” The four-level enhancement based on defendant’s high-level or sensitive position was also appropriate. Note 4(B) to § 2C1.1(b)(3) explicitly identifies a police officer as a person holding a sensitive position. The fact that his official role was not compromised by the crime did not matter. Section 2C1.1(b)(3) was amended in 2004 to expand the reach of the enhancement beyond public officials that receive direct payment bribes to influence their official actions. U.S. v. Roussel, 705 F.3d 184 (5th Cir. 2013).
5th Circuit reverses enhancement for more than one bribe. (230) Defendant, a New Orleans police captain and traffic division commander, was convicted of fraud and conspiracy based on a scheme to defraud a New Orleans-based utilities provider. The district court found that more than one bribe occurred, and applied a two-level enhancement under § 2C1.1(b)(1). The Fifth Circuit reversed. The government proved the payment of only one bribe – the payment of $1,000 “good faith” money to Dabdoub, a retired police captain who was the security manager for the utility. The rest was all speculative. For the same reason, the court clearly erred in its calculation of the fraudulent contract’s expected benefit to defendant and his co-conspirators. The district court applied a 16-level enhancement based on the PSR’s estimation of benefits to defendant and his co-conspirators from the fraudulent overpayment of between $1,000,000.01 and $2,500,000.00. The enhancement was based on the utility’s payments during the 2008 hurricane season, which included Hurricanes Ike and Gustav, two abnormally costly storms. The sounder method would have been to calculate the benefit that the conspirators would have actually obtained during the contract’s duration – $231,570.00. U.S. v. Roussel, 705 F.3d 184 (5th Cir. 2013).
5th Circuit upholds consideration of second bribe with similar modus operandi, common purpose, and temporal proximity to first bribe. (230) Defendant was convicted of wire fraud and making false statements, for using his position as a state judge to obtain money and sexual favors in exchange for assisting a criminal defendant. The district court increased his sentence by two levels under § 2C1.1(b)(1) for more than one bribe, based on a second bribe defendant received from a former client, even though defendant was not charged or convicted of this second bribe. The Fifth Circuit ruled that the court properly considered the second bribe because it involved a similar modus operandi, a common purpose, and occurred in close temporal proximity. These facts suggested that the two bribes were part of a common scheme or same course of conduct. U.S. v. Barraza, 655 F.3d 375 (5th Cir. 2011).
5th Circuit refuses to deduct from loss, legal fees incurred after offense was detected. (230) Defendant was convicted of wire fraud and making false statements for using his position as a state judge to obtain money and sexual favors in exchange for assisting a criminal defendant. The district court applied a § 2C1.1(b)(2) increase because the value of the payment or benefit received exceeded $5,000. Defendant agreed that he received $5,100 from the victim’s family, but argued that $2,000 was paid to his law partner for legitimate attorney’s fees. The Fifth Circuit ruled that any money paid for legitimate legal services could not be subtracted from the loss value, because these services were provided after the offense was detected. Law officials began investigating defendant in December 2008 and approached the victim’s friend for assistance in January 2009. The services of defendant’s law partner were legitimately provided in February and March 2009. U.S. v. Barraza, 655 F.3d 375 (5th Cir. 2011).
5th Circuit holds that enhancement for being public official was not improper double-counting. (230) Defendant was convicted of wire fraud and making false statements, for using his position as a state judge to obtain money and sexual favors in exchange for assisting a criminal defendant. His base offense level was set at 14 under § 2C1.1(a) because he was a public official. In addition, the court added a four-level enhancement under § 2C1.1(b)(3) for an offense involving “an elected public official in a high-level decision-making or sensitive position.” Defendant argued that applying both of these provisions double counted his status as an elected public official. The Fifth Circuit disagreed, finding that the guidelines directly contemplate this form of “double-counting.” The commentary explains that the four-level enhancement should be applied “if the payment was for the purpose of influencing an official act by certain officials.” Here, the payment defendant solicited was for the purpose of influencing the way he handled a criminal case in his capacity as an elected state judge. The district court properly applied the enhancement. U.S. v. Barraza, 655 F.3d 375 (5th Cir. 2011).
5th Circuit holds that error in using total ownership cost of two yachts was harmless error. (230) Defendants were charged with bribery relating to the award of computer technology contracts. They argued that in calculating the “value” of the bribe under § 2C1.1(b)(2), the district court overestimated the benefit of two yachts provided by one defendant’s company, MSE, for the personal use of defendant Bohuchot. The court equated the cost of actual ownership of the vessels with the Bohuchot’s frequent use. This resulted in the court attributing to Bohuchot 80% and 90%, respectively, of MSE’s total cost of ownership for the two yachts – $667,669 in total. Defendants argued that the proper methodology would have been to calculate the cost of renting the boats. The Fifth Circuit found that any error was harmless. The 14-level enhancement defendant received under § 2B1.1 (b)(2) applies when the value of the bribe is between $400,000 and $1,000,000. The value of other payments and benefits to Bohuchot was $278,243. Thus, the value of the use of the boats needed only to be more than $121,757 for the 14-level to apply. U.S. v. Bohuchot, 625 F.3d 892 (5th Cir. 2010).
5th Circuit cross-references drug guideline for border patrol agent who took bribes to help drug traffickers. (230) Defendant, a Border Patrol agent, was convicted of accepting a bribe to facilitate shipments of drugs into the country. Section 2C1.1(c) provides that if the offense was “committed for the purpose of facilitating the commission of another criminal offense,” then the court is to “apply the offense guideline applicable to a conspiracy to commit that other offense,” if it would result in a higher offense level than determined under subsection (a) and (b) of § 2C1.1. The Fifth Circuit upheld the application of the cross-reference to the drug trafficking guideline. Defendant’s offense was committed for the purpose of facilitating a drug conspiracy. Although defendant argued that he could not have conspired with the cooperating witness (an undercover agent) as a matter of law, this did not invalidate the use of the cross-reference. Subsection (c)(1) requires that the bribery offense be committed for the “purpose of facilitating” another offense, and does not require the consummation of the offense. U.S. v. Ruiz, 621 F.3d 390 (5th Cir. 2010).
5th Circuit relies on conduct involved in reversed convictions to apply increase for more than one extortion. (230) Defendant, the former police commissioner of a small city in Texas, was convicted of extortion and wire fraud in connection with a traffic ticket scheme. The district court applied a § 2C1.1(b)(1) increase because it found that defendant’s offenses involved more than one extortion “based upon the evidence at trial.” Defendant argued that because the court reversed a number of the convictions as unsupported by the evidence, the enhancement was improper. The Fifth Circuit disagreed. While it had reversed his convictions for several of the extortionate acts, this did not remove those acts from the universe of relevant conduct. The extortions of the non-interstate travelers, which were proven by a preponderance of the evidence, as well as the testimony of a co-conspirator as to the overall scheme to extort, was sufficient to support a finding that defendant participated in more than one extortionate act. The district court did not err in applying this increase. U.S. v. Mann, 493 F.3d 484 (5th Cir. 2007).
5th Circuit applies increase for high-level official who received extortionate payments. (230) Defendant, the former police commissioner of a small city in Texas, was convicted of extortion and wire fraud in connection with a traffic ticket scheme. He received an eight-level enhancement under § 2C1.1(b)(2)(B) for an offense involving “a payment for the purpose of influencing … any official holding a high-level decision-making or sensitive position.” Defendant argued that the purpose of the increase was to punish the person who makes the payment, rather than the recipient of the payment. The Fifth Circuit affirmed the enhancement, finding no support for defendant’s interpretation. Defendant received extorted payments for the purpose of influencing his management of the police department’s finances and recordkeeping system. There was no error. U.S. v. Mann, 493 F.3d 484 (5th Cir. 2007).
5th Circuit holds that abuse of trust increase was not double counting. (230) Defendant, a corrupt police officer, assisted in the transportation of what he believed to be a sizeable marijuana shipment. He argued that because he was convicted of extortion under the color of official right, the guideline for that offense, § 2C1.1, already took his official position into account. Therefore, an enhancement under § 3B1.3 constituted improper double counting. The Fifth Circuit disagreed. Defendant’s sentence was calculated, via a cross-reference, using the base offense level derived from § 2D1.1, because the extortion offense was committed “for the purpose of facilitating the commission of another criminal offense. Moreover, the guidelines expressly contemplate that the abuse of trust enhancement is applicable using the cross-reference in § 2C1.1(c)(1). See Note 3. U.S. v. Partida, 385 F.3d 546 (5th Cir. 2004).
5th Circuit holds that court erred in determining benefit received from bribes. (230) Defendants paid a bribe to a state agency in order to persuade the agency to grant defendants tax credits for a low-income housing project defendants intended to build. The district court applied a 13-level increase under § 2C1.1(b)(2) (A) because it found that the value of the benefit to be received from the offenses was $3.1 million. The Fifth Circuit held that the district court erred in calculating the benefit received. There was nothing in the record to support the court’s finding that defendants’ anticipated profit was $2.4 million. The project’s tax credit application, which indicated an expected profit of only $403,289, was the best indicator in the record as to what the expected costs and profits were. In addition, the benefit received should not have included $216,000 that defendants earned from a land sale, which had nothing to do with the bribe. The benefit received also should not have included the salary of one defendant or his anticipated bonus. Both were negotiated before the bribery scheme came into being. The court improperly included the $120,000 expected profit from a separate project not involved in the bribery scheme. Finally, the court erred in applying a two-level increase as a result of concluding that there were two bribes in the case. There was only one bribe charged. U.S. v. Griffin, 324 F.3d 330 (5th Cir. 2003).
5th Circuit adds together amount extorted from all schemes to determine loss. (230) Defendant was convicted for his role in various schemes to extort money from those who sought approval of riverboat casino projects in Louisiana. The Fifth Circuit upheld a 13-level increase for a loss of between $2.5 million and $5 million. Defendant did not challenge the $1.9 million loss figure found by the district court with respect to part of the scheme. In addition, the jury found, and the evidence supported, a finding that co-conspirator Shetler funneled at least $550,000 in extortion proceeds from the Players Scheme to defendant and his father. Since Shetler kept at least one-third of all the proceeds of the Players Scheme, this would amount to a minimum of an additional $225,000 that Shetler obtained through the extortion scheme, which constituted part of the actual loss caused by the scheme. Because the sum of $225,000, $550,000, and $1.9 million exceeded $2.5 million, any error by the court in including additional monies was harmless. U.S. v. Edwards, 303 F.3d 606 (5th Cir. 2002).
5th Circuit rules error in using guideline for underlying extortion, rather than conspiracy, was harmless. (230) Defendant, a state court prosecutor, was convicted of conspiring to commit extortion under the Hobbs Act by taking money to fix drug cases. He argued that the court incorrectly applied USSG § 2C1.1, the guideline applicable to bribery and extortion, rather than § 2X1.1, which covers attempts, conspiracies and solicitation. The Fifth Circuit agreed that the court applied the wrong guideline, but found the error harmless. Under § 2X1.1(a), the offense level for conspiracy is the same as the base offense level of the substantive offense, “plus any adjustments from such guideline for any intended offense conduct that can be established with reasonable certainty.” Thus, there is no difference between guideline calculations for conspiracy to extort and extortion when the evidence accepted by the sentencing court shows that the conspiracy’s objectives were actually completed. Here the district court found that the bribes alleged by the government were in fact completed. The panel also affirmed a § 2C1.1(b) (2)(B) increase for an offense involving a payment to influence an official holding a high-level decision making position. The fact that defendant received, rather than made, the corrupt payment was irrelevant. U.S. v. Villafranca, 260 F.3d 374 (5th Cir. 2001).
5th Circuit approves departure based on “systematic or pervasive corruption.” (230) Defendant, a Houston city councilman, was convicted of bribery and fraud for receiving kickbacks on city contracts. The district court departed under Note 5 to § 2C1.1, which authorizes a departure where “defendant’s conduct was part of a systematic or pervasive corruption of a governmental function, process, or office that may cause loss of public confidence in government.” The Fifth Circuit found that the factors considered by the district court in departing were proper. First, in finding systematic-or-pervasive corruption by defendant, the court relied on defendant’s role in the criminal activity. The court found that there were at least five criminally responsible participants, and defendant played an organizer role in the offense. The court’s finding with respect to defendant’s role in the corruption was in accord with the meaning of “systematic,” “pervasive,” or both. Second, in finding a loss of public confidence, the court noted that defendant, by his own admission, had “stained” the city counsel, that the mayor urged citizens not to let the verdicts reflect upon city officials generally; that a county judge, in his state-of-the-county address, spoke of “corruption in government” and “envelopes full of cash”; and that “widely reported media coverage of this case … has fueled the public perception of corruption of our own city counsel ….” U.S. v. Reyes, 239 F.3d 722 (5th Cir. 2001).
5th Circuit finds benefit to be received from bribe was briber’s share of profits. (230) Defendant, a Louisiana state senator, accepted bribes from Goodson, who owned and operated a video poker business. The district court based defendant’s offense level on its calculation of the “expected benefit to be received by the individual paying the bribe.” The district court found that the benefit was protection for a two-year period from legislation that would otherwise interfere with the operation of the Goodson’s video poker business. Since Goodson held a 50% interest in his video poker business, the district court found that Goodson’s expected benefit was one-half of the corporation’s profits for a two-year period, or $1.4 million. The Fifth Circuit found defendant’s challenge to this calculation meritless. The Fifth Circuit also rejected the government’s argument that the “benefit” should not be limited to Goodson’s personal benefit. The determination of the identity of the payer was a question of fact best resolved by the district court. Because the evidence could support either theory of bribery, the district court did not clearly err in finding that the personal benefit to Goodson was the appropriate valuation of the expected benefit. U.S. v. Bankston, 182 F.3d 296 (5th Cir. 1999), reversed in part on other grounds by Cleveland v. U.S., 531 U.S. 12 (2000), and Goodson v. U.S., 531 U.S. 987 (2000).
5th Circuit rules that juror held a high-level decision-making or sensitive position. (230) Defendant solicited a bribe to deliver a “not guilty” verdict from the jury on which he served. The district court sentenced him under § 2C1.1, and enhanced his offense level under § 2C1.1(b)(2)(B) because the offense involved a “payment for the purpose of influencing an elected official or any official holding a high-level decision-making or sensitive position. The Fifth Circuit held that defendant, a juror, was an official holding a high-level decision-making or sensitive position. Although a juror does not alone possess final-decision making authority over the guilt or innocence of a criminal defendant, he does maintain the absolute power to force a mistrial, at least in a federal case such as this. Moreover, each juror is in a very potent position to influence the verdict. Defendant’s position as jury foreman may have increased his ability to influence jury deliberations. U.S. v. Snell, 152 F.3d 345 (5th Cir. 1998).
5th Circuit rejects “compromise” offense level for bribery offense. (230) Defendants were convicted of bribery, misapplication of state funds, and conspiracy. The district court struggled between applying § 2C1.1 (Bribery), which carries a base offense level of 10, or § 2C1.2 (Gratuity), which carries an offense level of 7. The court compromised by using an offense level of 8, reasoning that the offense was somewhat more culpable than a mere gratuity, but somewhat less culpable than bribery. In the alternative, the court said it would have departed downward in this case. The Fifth Circuit refused to “sanction the creation of a compromise guideline provision merely because the case presents a difficult factual choice about which guideline should be applied. To do so would seriously erode the determinative nature and purpose of the sentencing guidelines.” The court refused to consider the court’s alternative holding. The court’s error could not be cured by crafting an alternative holding that posits the operation of a departure from a correctly calculated guideline range. U.S. v. Moeller, 80 F.3d 1053 (5th Cir. 1996).
5th Circuit holds that chief deputy was “official” under § 2C1.1(b)(2)(B). (230) Defendant, a bail bondsman, a sheriff and his chief deputy extorted money from travelers arrested at a roadside park in exchange for dropping charges. Defendant received an eight level enhancement under § 2C1.1(b)(2)(B) because the offense involved a payment to influence “an elected official or any other official holding a high level decision-making or sensitive position.” Defendant argued that there was no “official” because the sheriff, an elected official, was acquitted. The Fifth Circuit held that the chief deputy was an “official.” Note 1 explains that an official includes prosecuting attorneys, judges, agency administrators, supervisory law enforcement officers, and other government officials with similar levels of responsibility. The chief deputy was a supervisory law enforcement officer, and therefore, an official. U.S. v. Box, 50 F.3d 345 (5th Cir. 1995).
5th Circuit finds senator’s assistant and campaign treasurer occupied sensitive government position. (230) Defendant conspired to bribe a senator’s administrative assistant and campaign treasurer. The Fifth Circuit agreed that the assistant held a sensitive government position under § 2C1.1(b)(2)(B). A senator’s top administrative aide holds a position of substantial influence, because he often serves as the senator’s functional equivalent. Moreover, one witness testified that the aide’s presence at a meeting signified the senator’s direct interest in the outcome of the meeting. U.S. v. Tomblin, 46 F.3d 1369 (5th Cir. 1995).
5th Circuit affirms cross-reference to offense level for pre-guidelines offense. (230) Defendants were convicted of accepting a bribe in connection with the sentencing of a drug conspirator. Because the bribe was for the purpose of facilitating another offense, under the 1990 version of guideline section 2C1.1 and section 2X3.1, defendant’s offense level was based on the offense level for that other criminal offense, the drug conspiracy. The 5th Circuit affirmed that the cross-reference to the drug offense was proper, even though the drug offense was committed prior to the effective date of the guidelines. Pre-guidelines conduct may be considered in arriving at the guideline offense level. All of defendant’s conduct occurred after the guidelines were in place, so there were no ex post facto concerns. U.S. v. Collins, 972 F.2d 1385 (5th Cir. 1992).
5th Circuit affirms upward departure for officials convicted of extortion. (230) Finding that the amount of the bribe involving public officials did not reflect the seriousness of the offense, the district court departed upward. The court also departed upward based on the fact that defendants had violated public oaths to faithfully and impartially discharge their duties. The 5th Circuit noted that although guidelines § 2C1.1(b) permits increases in offense levels corresponding with the dollar amount extorted, application note 4 recognizes that in some cases the monetary amount may not adequately reflect the seriousness of the offense. Therefore, an upward departure based on value not calculable under 2C1.1(b) was permissible. Although the “oath factor” cited by the judge was taken into account by the guidelines, the 5th Circuit held it would be error to conclude the guideline takes into account all public officials convicted of corruption and the manner and extent to which the public trust was violated. Therefore the departure on this ground was also warranted. U.S. v. Reeves, 892 F.2d 1223 (5th Cir. 1990).
5th Circuit rules failure to apply guideline most applicable to the offense of conviction required reversal. (230) Guideline § 1B1.2(a) requires the court to apply the guideline most applicable to the offense of conviction. Here, the defendant was convicted of soliciting a bribe as a bank officer, in violation of 18 U.S.C. § 215. The applicable guideline is § 2B4.1. The district court, however, applied the guideline for bribery of a public official (§ 2C1.1). In addition to being a bank officer, the defendant was an assistant District Attorney and had solicited the bribe in both capacities. The 5th Circuit vacated the sentence and remanded for resentencing under § 2B4.1, but stated that on remand the court may wish to consider a departure if it concludes that defendant’s conduct as a public official was not adequately taken into consideration by the bank bribery guideline. U.S. v. Brunson, 882 F.2d 151 (5th Cir. 1989).
6th Circuit upholds loss estimate in bribery case. (230) Defendant, a project manager at a county-owned health care provider, facilitated a bribery scheme set up by his boss and an officer of a construction company. The district court calculated an enhancement under § 2C1.1(b)(2) by adding the value of the bribes that defendant received to the value of the bribes that his boss received, concluding that the total value of the bribes was “approximately $200,000.” Under § 2C1.1(b)(2) losses greater than $200,000 but less than $400,000 result in the same 12-level sentencing enhancement. The Sixth Circuit affirmed. In this circuit, defendants who challenge a district court’s loss calculation must show that the court’s “evaluation of the loss was not only inaccurate, but was outside the realm of permissible computations.” Defendant could not meet this high standard. The documentary evidence, including a list of “things of value” provided to defendant’s boss, totaled $298,216.29. This supported the district court’s conclusion that the boss’s involvement in the scheme equaled between $200,000 and $300,000, and therefore, defendant merited a 12-level enhancement under § 2C1.1(b)(2). U.S. v. Greco, 734 F.3d 441 (6th Cir. 2013).
6th Circuit upholds high-level position increase for defendant with influence over bid selection process. (230) Defendant, a supervisor of security-system contracts for a school district, corruptly solicited and obtained money from a security camera contract. The Sixth Circuit upheld a four-level increase under § 2C1.1(b)(3) because defendant occupied “a high-level decision-making or sensitive position” within the school district. The district court found it clear that defendant had “substantial influence” over the selection process. When bids came in, defendant would take the 10 to 15 vendors and narrow them down to a much smaller group before presenting them to his supervisor. After narrowing the vendors down, defendant would then recommend a particular vendor. In addition, defendant had the ability to single-handedly stop payment on invoices. His supervisor testified that he was not an expert on security cameras and therefore relied on defendant’s expertise. U.S. v. Watkins, 691 F.3d 841 (6th Cir. 2012).
6th Circuit holds that offense involved receipt of more than one gratuity. (230) Defendant was convicted of aiding and abetting the acceptance of an unlawful gratuity by a public official. Section 2C1.2(b)(1) provides for a two-level enhancement “if the offense involved more than one gratuity.” Note 4 to § 2C1.2 says that “[r]elated payments that, in essence, constitute a single gratuity (e.g. separate payments for airfare and hotel for a single vacation trip) are to be treated as a single gratuity, even if charged in separate counts.” Defendant argued that he was responsible for the receipt of only one $3500 gratuity, paid in two installments, which was intended to influence a single action – the preparation of projections for Pine Hollow. The Sixth Circuit found this argument without merit. Defendant pled guilty to aiding and abetting the receipt of illegal gratuities by public official DeLuca, not to receiving unlawful gratuities himself. Multiple gratuities were paid to Foggia II, an entity in which De Luca was a partner, pursuant to an agreement with Vukelic. The agreement provided for two distinct categories of payment: a general consulting fee and a $60,000 “success fee” to be paid upon Pine Hollow’s receipt of an operating permit. U.S. v. Canestraro, 282 F.3d 427 (6th Cir. 2002).
6th Circuit holds defendant accountable for all gratuities paid under contract he facilitated. (230) Defendant was convicted of aiding and abetting the acceptance of an unlawful gratuity by a public official. The district court determined that the value of the gratuity attributable to defendant as relevant conduct was $169,750, the entire amount paid by Vukelic to Foggia II. Defendant argued that he should be held accountable only for the $3500 fee he received for preparing certain projections, and that he was never a “true partner” in the conspiracy, and never received any portion of $169,750. The Sixth Circuit found no error. The district court found that it was reasonably foreseeable to defendant that Vukelic would pay $169,750 in illegal gratuities, and therefore used this sum to determine defendant’s sentence. This finding was amply supported by the record. Defendant signed an agreement obligating Vukelic to pay $330,000 in gratuities, and another agreement concerning the distribution of those gratuities. Defendant admitted he prepared projections in order to facilitate a contract that Foggia wanted that would require Vukelic to pay Foggia to assist in getting permits for a landfill. U.S. v. Canestraro, 282 F.3d 427 (6th Cir. 2002).
6th Circuit upholds sentencing prison employee for depriving citizens of right to honest services. (230) Defendant, the Chief of Security for an Ohio prison, entered into unauthorized business agreements with an inmate, and provided the inmate with preferential treatment and special favors. He was convicted under 18 U.S.C. §§ 1341 and 1343 for a scheme to deprive Ohio of its right to his honest services. The Sixth Circuit held that the district court properly sentenced defendant under § 2C1.7 (Fraud Involving Deprivation of the Intangible Right to the Honest Services of Public Officials) rather than § 2C1.2 (Offering, Giving , Soliciting, or Receiving a Gratuity). Although defendant did solicit and receive gratuities from the inmate, such as a plane ticket and a bottle of scotch, defendant also had an extensive business relationship with the inmate, performed personal favors for the inmate and provided him with preferential treatment. In the process, defendant violated several provisions of the prison’s employee conduct code for long term financial gain, thereby depriving the prison and the citizens of Ohio of their right to defendant’s honest services as Chief of Security. U.S. v. Mack, 159 F.3d 208 (6th Cir. 1998).
6th Circuit holds Chief of Security at prison held a high level decision-making or sensitive position. (230) Defendant held the rank of Major and served as Chief of Security for an Ohio prison that housed high-risk, violent offenders. He was convicted of fraud for entering into unauthorized business agreements with an inmate, and providing the inmate with preferential treatment and special favors. The Sixth Circuit held that defendant was a “supervisory law-enforcement officer” and thus qualified as an “official holding a high level decision-making or sensitive position” under § 2C1.7. As a Major and Chief of Security, defendant was the highest-ranking uniformed officer employed at the prison. In that capacity, he was responsible for supervising and maintaining order and discipline among more than 400 uniformed officers of various ranks. U.S. v. Mack, 159 F.3d 208 (6th Cir. 1998).
6th Circuit upholds application of section 2B3.2 to attempt to extort money to gain approval for rezoning. (230) Defendant, an associate of a powerful politician, attempted to extort money from developers in order to obtain the politician’s support for their rezoning bill. The 6th Circuit upheld the application of guideline section 2B3.2, which applies to threats to injure a person or drive an enterprise out of business. Defendant’s exploitation of the developer’s fears was based on the implied threat that, unless payments were made, rezoning would never take place, and the developers would suffer a devastating economic loss. Section 2C1.1, which applies to the bribery of a public official, was not applicable. Defendant was not a public official and the politician was to be bribed in a matter not involving his official actions, for he was not a member of the planning commission or the city council. U.S. v. Williams, 952 F.2d 1504 (6th Cir. 1991).
6th Circuit rejects claim that bribery sentence was harsh and excessive. (230) Defendant was an elected city councilman convicted of violating the Hobbs Act by soliciting a bribe. Defendant was sentenced to 30 months in prison, a $3,000 fine and two years of supervised probation. The 6th Circuit rejected defendant’s argument that his sentence was harsh and excessive. Defendant’s sentence was within the applicable guideline range. The sentence was also not cruel and unusual because it was not grossly disproportionate to the severity of his offense or to the sentence imposed on similarly situated criminals. U.S. v. Peete, 919 F.2d 1168 (6th Cir. 1990).
7th Circuit upholds calculation of bribes involved in conspiracy. (230) Defendant, a supervising building inspector, was convicted of bribery and making false statements to a federal agent. He challenged the district court’s decision to hold him accountable at sentencing for bribes that were unknown and unforeseeable to him, by including unsuccessful attempts to solicit bribes, and by assuming certain cash deposits were the proceeds of illicit bribes. The Seventh Circuit found no error. First, the district court properly held defendant liable for bribes received by his co-conspirators, since these payments were reasonably foreseeable and in furtherance of the conspiracy. There was an ongoing relationship between defendant and co-defendant Johnson, and they each mutually benefitted because of the other’s ability to manipulate the system. Second, the court did not err by holding defendant responsible for solicitations of bribes. The solicitation of a bribe is treated the same as a completed bribe. See background commentary to § 2C1.1. Finally, the court did not include the cash deposits made by defendant in the loss calculation. The court merely pointed to those deposits as circumstantial evidence in support of the conspiracy between the parties. U.S. v. Reese, 666 F.3d 1007 (7th Cir. 2012).
7th Circuit affirms “model statement” supporting upward variance. (230) Defendant, in his capacity as deputy liquor commissioner of East St. Louis, exerted his position and authority to demand bribes, property, and sexual favors from liquor license holders. The court calculated defendant’s guideline range as 41-51 months, but, after considering the § 3553(a) factors, imposed a 60-month sentence. The Seventh Circuit affirmed, ruling that the district court “provided a model statement of all the reasons that justify this modest sentence for the blatant abuse of power by a significant official in a corrupt area of Illinois.” The district court first pointed to the widespread corruption in East St. Louis, and the need to deter future public corruption. It then pointed out that defendant made misrepresentations on his unemployment compensation form, and thus, collected unemployment while he was under federal investigation and even after he pled guilty. The court noted several mitigating factors, but found this was a serious crime requiring a sentence sufficient for individual and general deterrence. Finally, the court found that a 60-month sentence was sufficient, but not greater than necessary, to meet the purposes of § 3553(a). U.S. v. Hill, 645 F.3d 900 (7th Cir. 2011).
7th Circuit finds deputy liquor commissioner held sensitive position. (230) Defendant, in his capacity as deputy liquor commissioner, used his position and authority to demand bribes, property, and sexual favors from liquor license holders. He pled guilty to attempting to commit extortion under color of official right, and making false statements to the FBI and IRS. The Seventh Circuit upheld an enhancement under § 2C1.1(b) (3) for conduct by a public official in a high-level decision-making or sensitive position. Although defendant did not establish liquor law policy, the district court found that he exercised substantial influence over the decision-making process. This finding was not clearly erroneous. As deputy liquor commissioner and the mayor’s assistant, defendant had de facto authority and power to deny renewal of licenses, inspect and review license holders’ businesses and records, and issue citations for liquor code violations. The district court properly determined that defendant held a “sensitive position,” given his relationship with the mayor and authority as deputy liquor commissioner. He may not have held a supervisory position, but he had the authority to oversee the licensing process and enforce the liquor code. U.S. v. Hill, 645 F.3d 900 (7th Cir. 2011).
7th Circuit says kickback scheme was properly sentenced under § 2C1.1. (230) Defendant was convicted of using his position as a township official to secure contracts for a counseling company owned by an acquaintance, in exchange for a share of the proceeds. He argued that the district court should have applied § 2B1.1 instead of § 2C1.1, because his conduct was more akin to simple theft than honest services fraud. The Seventh Circuit held that the district court properly sentenced defendant under § 2C1.1. Defendant did not just steal money from the township. He used his position in the township to steer contracts and renewals to a third party, which compensated defendant with proceeds from the contracts. This was a kickback scheme under 18 U.S.C. § 1346, and therefore came within the ambit of § 3C1.1. U.S. v. Cantrell, 617 F.3d 919 (7th Cir. 2010).
7th Circuit says defendant who impersonated FBI agent did not act “under color of official right.” (230) Defendant ran scams on unsuspecting immigrants, offering to make various immigration and criminal problems go away in return for cash. As part of his scheme, he sometimes claimed to be an FBI agent, and was convicted of impersonating an FBI agent. Guideline § 2J1.4 provides that if the impersonation was to facilitate another offense, the court should apply the guideline for that offense if it would result in a higher offense level. The district court followed the cross-reference in § 2J1.4 to sentence defendant under § 2C1.1 (the color of official right guideline). The Seventh Circuit ruled that defendant’s impersonation of a public official was not action “under color of official right.” Section 2C1.1 is inapplicable when the defendant was not a public official and did not accept money in exchange for action involving any official duties. Nevertheless, the error was harmless because the judge said she would have imposed the same sentence even if § 2C1.1 did not apply. U.S. v. Abbas, 560 F.3d 660 (7th Cir. 2009).
7th Circuit holds embezzling public funds should have been sentenced under fraud guideline, not honest services guideline. (230) Defendant, the trustee of a local township, embezzled over $300,000 from the township during a four-year period. He and his wife were convicted of mail fraud and tax evasion, and were sentenced to 135 months’ imprisonment. The Seventh Circuit found the sentence was “unusually high” for embezzlers and reversed. The district court sentenced defendants under § 2C1.1, which applies to (among other things), fraud involving the deprivation of the intangible right to honest services of public officials. The Seventh Circuit held that they should have been sentenced under § 2B1.1. The indictment charged defendants with mail fraud, in violation of 18 U.S.C. § 1341, and included a reference to 18 U.S.C. § 1346 (defining “scheme or artifice to defraud” as including deprivation of the intangible right of honest services). But this was not sufficient to bring the crime within § 2C1.1. Section 1346 is a definitional clause, not a separate crime, and was not necessary to defendants’ conviction. Defendants stole money from their employer. The intangible rights gloss on § 1341 was devised to deal with people who took cash from third parties (via bribes or kickbacks). The caption of § 2C1.1 is designed to include many kinds of bribery, and honest-services fraud can be one of those variants. But an honest services fraud that does not include bribery or a closely related offense is outside the scope of § 2C1.1. U.S. v. Orsburn, 525 F.3d 543 (7th Cir. 2008).
7th Circuit finds INS adjudications officer who decided permanent residency status held “sensitive position.” (230) Defendant was convicted of offering bribes to an INS district-adjudications officer, who had authority to grant or deny applications for permanent residency status in the U.S. Guideline § 2C1.1(b)(2)(B) provides for an enhancement if “the offense involved a payment for the purpose of influencing an elected official or any official holding a high-level decision-making or sensitive position.” Covered officials include judges, agency administrators, supervisory law enforcement officers, and anyone else with “similar levels of responsibility.” Note 1 to § 2C1.1. The Seventh Circuit affirmed the § 2C1.1(b)(2)(B) enhancement, holding that the district adjudications officer for the INS held a sensitive position. Because only a handful of decisions were ever reviewed, he had near total control over who could become a permanent resident and eventually a U.S. citizen. Possessing unreviewed power over important public decisions reflects a sensitive post, even if existing rules dictate how those decisions should be made. U.S. v. Reneslacis, 349 F.3d 412 (7th Cir. 2003).
7th Circuit holds that full $35,000 penalty, rather than negotiated settlement, was benefit of bribe. (230) OSHA issued a citation against defendant’s company proposing a $35,000 penalty for the company’s failure to install a guardrail on a scaffold. In response, defendant paid two $1000 bribes to OSHA inspectors. Section 2C1.1(b)(2)(A) provides for offense level increases based on “the value of the payment, the benefit received or to be received in return for the payment, or the loss to the government, whichever is greater.” The district court found that defendant paid the bribes to rid himself of the $35,000 “willful” violation. Defendant argued that he was told by counsel, before the bribe was paid, that OSHA agreed to a negotiated settlement of $6,000 for all penalties. The Seventh Circuit held that the district court properly based the enhancement on a $35,000 benefit rather than a $6,000 benefit. The secretly recorded conversations between defendant and the bribees left little doubt that defendant paid $2,000 to wipe away the $35,000 penalty. Even if defendant’s attorney had worked out a deal by the time the bribes were paid, the evidence clearly suggested that defendant himself was not up to speed on those negotiations. U.S. v. Chmielewski, 196 F.3d 893 (7th Cir. 1999).
7th Circuit applies public corruption guideline to state legislator who defrauded state. (230) Defendant was a state legislator who defrauded the state out of money intended for running his district office. He purchased office equipment with his own money, then entered into false contracts showing that he had leased the equipment from a friend’s company. Defendant’s office then submitted invoices for the lease payments to the state. The state paid the money to defendant’s friend, who kicked the money back to defendant. Over time, the state paid more on the leases than defendant had paid for the equipment. The Seventh Circuit upheld the use of § 2C1.7, the public corruption guideline, rather than § 2F1.1, the general fraud guideline. The public corruption guideline fit defendant “to a tee,” while the basic fraud guideline was more appropriate for defendant’s friend, who did not hold a position of public trust. U.S. v. Given, 164 F.3d 389 (7th Cir. 1999).
7th Circuit holds that receipt of bribes in previous job was relevant conduct. (230) From 1990 to 1994, defendant was the police chief of a suburb of Chicago. During his tenure, he accepted $500 a month from organized crime to protect illegal gambling in the town’s bars and restaurant. Between 1980 and 1990, defendant had been police chief of another suburb. During this previous job he also took bribes from organized crime to protect illegal gambling in that town. He was convicted of charges stemming from the 1990-1994 bribes. The Seventh Circuit agreed that defendant’s receipt of bribes in his previous job was “relevant conduct” under § 1B1.3(a)(2). All the crimes were committed pursuant to a single plan and involved cooperation with the same organized crime operation by protecting illegal gambling from police interference. U.S. v. Sapoznik, 161 F.3d 1117 (7th Cir. 1998).
7th Circuit says use of gross revenues as benefit received from bribes too speculative. (230) Defendant, the police chief of a suburb of Chicago, accepted $500 a month from organized crime to protect illegal gambling in the town’s bars and restaurant. The guidelines base the sentence for a crime that involves taking bribes on the “benefit received” in return for the bribe. The beneficiaries here were the owners of the bar and restaurants that profited from the illegal gambling that defendant protected, plus organized crime, which took a percentage of the gambling revenues. The district court estimated those revenues at $6 million. The Seventh Circuit held that this gross figure was too speculative to use as the “benefit received” from the bribes. The relevant “benefit received” was profit, not gross revenue. The government made no effort to net out the cost associated with the gambling. It was the government’s burden, not defendant’s, to provide evidence from which those costs could be estimated. Although it was possible that the $1 million by which the gross revenues exceeded the bottom of the sentencing bracket was a sufficient cushion, this was purely speculative. U.S. v. Sapoznik, 161 F.3d 1117 (7th Cir. 1998).
7th Circuit holds departure did not meet requirements of fraud commentary. (230) Defendant bribed a mayor in order to obtain support for a bond offering. Defendant was convicted of RICO conspiracy and fraud charges. Section 2C1.1(b)(2)(A) references the § 2F1.1 fraud table if the value of the payment, the benefit to be received, or the loss to the government exceeds $2,000. Although defendant’s benefit was between $5 million and $10 million, corresponding to a 14-level increase, the district court only applied a seven-level increase. Note 7(b) to § 2F1.1 authorizes a departure where the loss significantly overstates the seriousness of the defendant’s conduct. The Seventh Circuit held that in applying the cross-reference, the court was entitled to consider the application notes to the fraud table. However, the departure here did not satisfy note 7(b)’s requirements. Rather than addressing the seriousness of defendant’s conduct, the judge departed simply because he believed the sentence should depend on the loss to third parties rather than the gain to the perpetrator. In addition, there was a loss. The bonds issued were tax-free. The U.S. Treasury lost a dollar in tax revenue for every dollar defendant saved from the lower interest rate. U.S. v. Krilich, 159 F.3d 1020 (7th Cir. 1998).
7th Circuit upholds finding that payment was bribe rather than gratuity. (230) Defendant, the toll road manager for the Indiana Department of Transportation, was convicted of corruptly giving a $4,000 payment to a subordinate in violation of 18 U.S.C. § 666(a)(2). Defendant argued that the district court erred in sentencing him under § 2C1.1, which applies to the payment of bribes, rather than § 2C1.2, which applies to gratuities. The Seventh Circuit upheld the use of the bribe guideline. If the payer’s intent is to influence or affect future actions, then the payment is a bribe. If, however, the payer intends to money as a reward for actions the payee has already taken, then it is a gratuity. The evidence regarding defendant’s intent was conflicting. The subordinate was unable to say with certainty what defendant’s intent was. The government hypothesized that the payment was a bribe so that the subordinate would not cause any trouble with regard to the benefits defendant was giving to a favored business. The district court was privy to the testimony and argument regarding defendant’s intent first hand, and it was therefore more appropriate for it to determine whether the money was offered with a corrupt purpose. U.S. v. Agostino, 132 F.3d 1183 (7th Cir. 1997).
7th Circuit bases increase on value of bribe rather than benefit to third party. (230) Defendant, the toll road manager for the Indiana Department of Transportation, was convicted of corruptly giving a $4,000 payment to a subordinate in violation of 18 U.S.C. § 666(a)(2). The government’s theory was that the payment was a bribe so that the subordinate would not disclose to anyone the favored treatment defendant was giving to a company that supplied fuel to the gas stations on the state’s toll roads. The district court found that defendant did not intend to receive any benefit, so it increased the sentence based on the value of the bribe itself, $4,000, under § 2C1.1(b)(2)(A). The government argued that the increase should have been based on the benefit to the gas supplier. The Seventh Circuit held that in these unique circumstances, the court properly based the enhancement on the value of the bribe. Although some cases suggest that a court may consider benefits flowing to third parties, these cases have required either a jointly undertaken criminal activity or that the defendant act as an agent of the third party. Here, there was no established link between defendant and the company that received the benefit. In such a case, the appropriate measure is the amount of personal benefit to the defendant. Because the government did not establish that defendant received a benefit, the court correctly used the amount of the payment. U.S. v. Agostino, 132 F.3d 1183 (7th Cir. 1997).
7th Circuit calculates “benefit” from juror bribe as amount jury awarded plaintiff. (230) Defendant, a juror in a civil case, solicited a $2500 bribe from one of the litigants—a company—to sway the jury in the litigant’s favor. In calculating the § 2C1.1 “benefit” that the company would have received if defendant had remained on the jury, the court used the $933,000 that the jury awarded the plaintiff. The Seventh Circuit affirmed. Section 2C1.1 requires a court to enhance the offense by the higher of the (a) the payment (i.e. the bribe), (2) the benefit to be received for the bribe, or (3) the loss to the government. The bribe was $2,500, the benefit was the company being relieved of a $933,000 damage award, and the government did not sustain a monetary loss. Although the value of the benefit to be received might be speculative, particularly in criminal cases where a jury’s verdict does not involve monetary damages, this was not such a case. U.S. v. Muhammad, 120 F.3d 688 (7th Cir. 1997).
7th Circuit upholds estimate of loss to city from kickbacks on garbage contract. (230) Defendant, the mayor of a city, and several other city officials were convicted of extortion, bribery and racketeering charges. The Seventh Circuit upheld the district court’s estimate of the loss to the city under § 2C1.1(a) from a garbage hauling contract on which defendant and his conspirators received kickbacks. In 1983, the city paid $45,000 per month to pick up the residential trash in the city, with a monthly kickback of $900. In 1984, when the twice‑weekly pickups were instituted, the contract price rose to $90,000 per month, and the monthly kickbacks to $1800. The former manager of the trash company testified that twice‑weekly pickups were unnecessary. He calculated the increased costs of twice‑weekly pickups at only 10 percent, since the overhead costs and landfill fees remained the same. The government, for purposes of sentencing, assumed a 30 percent increase, resulting in a monthly loss of $31,500 to the city. Defendant failed to provide any evidence to contradict the former manager’s testimony. The government made a conservative calculation based on that testimony. U.S. v. Marshall, 75 F.3d 1097 (7th Cir. 1996).
7th Circuit affirms loss estimate notwithstanding tension with findings in related sentencing. (230) Defendant, a fare collector, bribed a supervisor to be assigned to a high-traffic position and then misrepresented the fares she collected, keeping some for herself. She argued that her restitution order was based on an unreliable estimate that she was responsible for $25,000 in losses. The 7th Circuit affirmed the determination even though the $25,000, when added to the $42,000 attributed to another defendant in a related case, exceeded the estimated total loss of $62,000. The district court had reached its conclusion by relying on evidence indicating that defendant usually stole over $100 per day, sometimes stealing as much as $300. The district court multiplied $100 by the number of days defendant worked during the scheme. U.S. v. Narvaez, 995 F.2d 759 (7th Cir. 1993).
7th Circuit upholds finding of single conspiracy in determining loss from criminal activity. (230) Defendant, a fare collector, bribed a supervisor to be assigned to a high-traffic position and then misrepresented the fares he collected, keeping some for himself. He appealed the district court’s inclusion of losses caused by other fare collectors who also were engaged in the same activity. The 7th Circuit affirmed, concluding that defendant was part of a single, large conspiracy including the other fare collectors rather than merely being involved in a smaller conspiracy. Defendant’s contacts with the other fare collectors bolstered the court’s conclusion. U.S. v. Narvaez, 995 F.2d 759 (7th Cir. 1993).
8th Circuit finds defendant failed to show prejudice from alleged use of incorrect guideline. (230) Defendant, a city superintendent, defrauded the city he worked for. He pled guilty to fraud and theft, and was sentenced under § 2C1.1. He brought a § 2255 motion alleging ineffective assistance of counsel, claiming that that counsel should have challenged the application of § 2C1.1 during plea negotiations and at sentencing. The Eighth Circuit upheld the sentence. Even if counsel was deficient, defendant failed to show that this deficiency prejudiced him. Defendant did not demonstrate or even allege that had counsel informed him that § 2C1.1 was not the proper guideline, he would not have pleaded guilty and would have demanded a trial. Nor did defendant show that going to trial would have resulted in a lower sentence. Furthermore, in exchange for defendant’s guilty plea, the government agreed to dismiss the remaining 47 counts of the indictment. If defendant’s counsel was deficient during sentencing, defendant could not show prejudice. An objection by counsel to the application of § 2C1.1 would have breached the plea agreement. This would have freed the government to pursue one or more of the 47 counts it agreed to dismiss. Covington v. U.S., 738 F.3d 759 (8th Cir. 2014).
8th Circuit holds that court properly sentenced former state representative under § 2C1.7. (230) Defendant, a former member of the Minnesota House of Representatives, was convicted of mail fraud, in violation of 18 U.S.C. § 1341, and money laundering, in violation of 18 U.S.C. § 1957. He argued that the court should have applied U.S.S.G. § 2C1.3 (Conflict of Interest; Payment or Receipt of Unauthorized Compensation) rather than § 2C1.7 (Fraud Involving Deprivation of the Right to Honest Services of Public Officials). The Eighth Circuit disagreed. While defendant’s nondisclosure of his conflict of interest was important evidence of his scheme to defraud the citizens of Minnesota, it was not the only criminal conduct proven by the government at trial. The government also charged and proved that defendant used his position to influence his colleagues and members of the utility industry for personal gain, and that he lied and fabricated documents. There was more to his scheme than a conflict of interest. The district court did not err in sentencing defendant under § 2C1.7. U.S. v. Jennings, 487 F.3d 564 (8th Cir. 2007).
8th Circuit uses public official guideline for prosecutors who extorted money from would-be defendants. (230) Defendant Harmon, a local prosecutor, and defendant Walls, the director of a drug task force, extorted money from individuals in exchange for not prosecuting them for crimes for which they otherwise would have been prosecuted. The Eighth Circuit held that defendants were properly sentenced under § 2C1.1, Extortion by Color of Right, rather than § 2B3.2, Extortion by Force or Threat of Injury. Defendants’ conduct did not involve threats of physical injury or property destruction, only the threat of prosecution. U.S. v. Harmon, 194 F.3d 890 (8th Cir. 1999).
8th Circuit upholds sentencing politician for bribe rather than gratuity. (230) Defendant, the Speaker of the Missouri House of Representatives, was convicted of bribery, mail fraud and RICO charges based on a scheme in which he recommended to the construction industry that they hire a certain lobbyist to lobby for a particular bill being considered by the state legislature. In return for the recommendations, defendant received two checks for $5,000 each from the lobbyist. The Eighth Circuit held that defendant was properly sentenced under § 2C1.1, which applies to bribes, rather than § 2C1.2, which governs illegal gratuities. The distinction between a bribe and an illegal gratuity is the corrupt intent of the person giving the bribe to receive a quid pro quo, something the recipient would not otherwise have done. The necessary quid pro quo was the payment of money by the lobbyist in exchange for defendant’s official actions on her behalf. The fact that defendant received the illegal payments after the acts for which he was paid was not dispositive. The core difference between a bribe and a gratuity is not the time the illegal payment is made, but the quid pro quo. U.S. v. Griffin, 154 F.3d 762 (8th Cir. 1998).
8th Circuit upholds cross‑reference from § 2E1.2(a)(2) to § 2C1.1 to § 2J1.2. (230) Defendant, a police officer, was convicted of extorting money from a motorist after discovering a loaded handgun in the motorist’s car. The Eighth Circuit upheld a cross‑reference from § 2E1.2(a)(2) (Travel Act violations) to § 2C1.1 (Extortion under Color of Official Right) to § 2J1.2 (Obstruction of Justice). Defendant’s extortion was committed for the purpose of obstructing justice with respect to another criminal offense, i.e., the motorist’s firearm violation. The district court was not required to cross reference 2X3.1 (Accessory After the Fact), which calls for a base offense level six levels lower than the firearms offense. Section 2J1.2(c)(1) says to apply the cross reference to § 2X3.1 only if the resulting offense level under § 2X3.1 is greater than the level determined under § 2J1.2. Thus a cross reference to § 2X3.1 would have complicated the analysis, and would not have yielded a greater offense level than under § 2J1.2. U.S. v. Baker, 82 F.3d 273 (8th Cir. 1996).
8th Circuit upholds use of benefit received by bribery victims under § 2C1.1(b)(2)(A). (230) Defendant’s job was to determine whether public housing applicants met federal criteria. A native of Laos, he used his bilingual skills to obtain bribes from housing applicants telling them they would not obtain the subsidized housing unless they paid him the bribe. Section 2C1.1(b)(2)(A) imposes an enhancement where the greatest of the value of the payment, the benefit received in return for the payment, and the loss to the government exceeds $2,000. Because the bribes themselves were relatively small and the government sustained no measurable loss, the district court sentenced defendant based on the benefit received by his victims. The Eighth Circuit affirmed, using the difference between the fair market rental value for housing similar to the victim and the amount they actually paid for the housing over a 12‑month period. Although defendant contended that each of the victims was otherwise eligible for public housing, the evidence showed that defendant completely withheld housing from individuals who failed to pay him bribes. U.S. v. Hang, 75 F.3d 1275 (8th Cir. 1996).
8th Circuit holds that benefit from bribe to IRS agent was amount of tax liability to be avoided. (230) Defendant conspired to bribe an IRS agent in order to avoid business and personal taxes. Under § 2C1.1(b)(2)(A), if the benefit to be received in return for the bribe exceeds $2,000, the offense level is to be increased according to the table in the fraud guideline, § 2F1.1. The 8th Circuit agreed that the benefit to be received exceeded $1.5 million, since the unpaid taxes for the companies alone exceeded $2.1. In a case involving bribery to cancel tax liability, the value of the benefit received from the bribe is the amount of tax liability that the defendant sought to eliminate. U.S. v. Dijan, 37 F.3d 398 (8th Cir. 1994).
8th Circuit says amount of gratuity, and not loss, is relevant inquiry under 2C1.2. (230) Defendant gave a gratuity to a public official. The 8th Circuit held that the amount of the gratuity, and not the loss, is the relevant inquiry under § 2C1.2. That section states that if the value of the gratuity exceeds $2,000, increase by the corresponding number of levels from the fraud table in § 2F1.1 In the context of § 2C1.2, the fraud table is not used to measure the loss caused by a defendant’s illegal gratuity. The numbers in the table have simply been borrowed by § 2C1.2, and the only relevant inquiry is the value of the gratuity. U.S. v. Patel, 32 F.3d 340 (8th Cir. 1994).
8th Circuit retroactively applies clarifying amendment to bribery guideline. (230) The 1990 version of guideline section 2C1.1(b)(2)(B) provides for an enhancement “if the offense involved a bribe for the purpose of influencing an elected official.” The 1991 version of this section changes the word “bribe” to “payment.” Defendant contended that under the 1990 version, the enhancement applied only when the offense of bribery was involved. Since his offense involved extortion, he argued that it violated the ex post facto clause to enhance his sentence under this section. The 8th Circuit rejected this interpretation, ruling that the 1991 amendment merely clarified the meaning of the 1990 version. The enhancement applied to defendant’s extortion offense under either version. U.S. v. Loftus, 992 F.2d 793 (8th Cir. 1993).
8th Circuit rejects claim that IRS officials’ setting of amount of loss in bribery case constituted sentencing entrapment. (230) Defendant, a CPA, was suspected of “making illegal offers and compromises.” To investigate, the IRS established a fictitious tax account for an undercover IRS agent and then filed fictitious federal tax liens against the agent in the amount of $116,156.22. After accepting the case, defendant eventually offered a bribe to the IRS agent assigned to the case to eliminate the tax liability. Under section 2C1.1, the amount of the bribe was determined to be $116,156.22, the value of the benefit received. The 8th Circuit rejected defendant’s claim that the government’s actions in setting the amount of the fictitious tax account constituted “sentencing entrapment.” For defendant to succeed, he would have to demonstrate that the IRS agents acted outrageously in overcoming a predisposition on his part only to offer bribes for clients whose tax liabilities were much smaller. In fact, there was some evidence that defendant was predisposed to deal in schemes with a high value. There was no evidence that the IRS was trying to obtain a particular sentence for him, since at the undercover operation began prior to the effective date of the guidelines. U.S. v. Stein, 973 F.2d 600 (8th Cir. 1992).
8th Circuit affirms that value of bribe was equal to amount of tax liability defendant sought to avoid. (230) Defendant was convicted of bribing a public official. The 8th Circuit affirmed that the “value of the action received in return for the bribe” under section 2C1.1(b)(1) was equal to the tax liability he sought to eliminate. This amount was the $1,432,425 that he stipulated was the taxes that were to be “wiped off the books” as a result of the bribery scheme. U.S. v. Ziglin, 964 F.2d 756 (8th Cir. 1992).
9th Circuit reverses for error in calculating value of benefit received for bribe. (230) Defendant obtained a loan valued at $15,000 in return for a bribe. Under the guideline for that offense, §2C1.1(a)(1), the district court was required to calculate the value of the benefit received for the bribe. At sentencing, the district court set the value of the benefit that defendant received at $15,000. The Ninth Circuit held that the district court erred in using the value of the loan as the value of the benefit received. The court explained that the value of the benefit received is not calculated using loss calculations under § 2B1.1 and remanded to determine if defendant received the loan under favorable terms that would actually constitute the value of the benefit. U.S. v. White Eagle, 721 F.3d 1108 (9th Cir. 2013).
9th Circuit reverses where court used wrong guideline for evading import duties. (230) Defendant pleaded guilty to importing goods without paying the proper duties. At sentencing, the district court used § 2C1.1, the guideline for bribery, extortion under color of official right, and interference with government functions. The Ninth Circuit held that the district court erred in using this Guideline and should have used § 2T3.1 entitled “Evading Import Duties or Restrictions (Smuggling); Receiving or Trafficking in Smuggled Property.” U.S. v. Huizar-Velazquez, 720 F.3d 1189 (9th Cir. 2013).
9th Circuit affirms calculation of value of bribe in judicial corruption case. (230) In sentencing a lawyer who bribed three judges, the district court increased the sentence by eight levels under § 2C1.1(b)(2)(B) because the offense involved an official in a “high level decision-making” position. The district court also found that the amount of the payments made by the lawyer to the judges – $110,078 – was the value of the improper benefit accrued under § 2C1.1(b) (2) (A). The government appealed, arguing that the value of the improper benefit was the amount of the judgments the lawyer expected to secure his clients through bribery, or at least the amount of attorney’s fees the lawyer expected to receive from cases tainted with bribery. However, the Ninth Circuit found no abuse of discretion, because the government was unable to connect any particular payment to the outcome in any particular case. U.S. v. Frega, 179 F.3d 793 (9th Cir. 1999).
9th Circuit bases bribery sentence on profit realized by importers, not bribes received by defendants. (230) Guideline § 2C1.1(b)(2)(A) provides for an increase in the bribery offense level based on “the value of the payment [or] the benefit received . . . in return for the payment . . . whichever is greatest.” Here, the defendants took bribes from importers to allow illegal imports into the United States. The bribes were only $54,500 and $10,075, respectively. The profit to the importers was $558,000, and the district court based the sentence on the $558,000 figure. On appeal, the Ninth Circuit affirmed, holding that the guidelines plainly contemplate that the measure of the crime should be the greater of the benefit to the payer or the recipient. This holding is consistent with rulings in the Seventh, Second and Eighth Circuits. The court distinguished the Fourth Circuit’s decision in U.S. v. Ellis, 951 F.2d 580, 585 (4th Cir. 1991) on the ground that the court there simply rejected the government’s cross-appeal regarding vicarious liability. U.S. v. Gillam, 167 F.3d 1273 (9th Cir. 1999).
9th Circuit finds that eight bribes were separate and totaled $52,000. (230) Defendant was convicted of one count of conspiracy and three counts of bribery of a public official. The sentencing judge found that defendant was accountable for all eight bribes as relevant conduct. He adjusted the offense level upward by two levels because more than one act of bribery occurred and by five levels because the total amount of the bribes was $52,000. The 9th Circuit upheld each of these findings, and agreed that all eight bribes were part of the relevant conduct for which defendant was accountable under §2C1.1. U.S. v. Kahlon, 38 F.3d 467 (9th Cir. 1994).
9th Circuit finds no double counting in adjustment for abuse of trust in bribery case. (230) Defendant argued that the district court erred in granting an enhancement for abuse of trust under section 3B1.3 because abuse of trust is included in the underlying offense of bribing a public official. The 9th Circuit found no error, noting that other courts have indicated that the abuse of trust enhancement may apply to bribery. U.S. v. Butt, 955 F.2d 77 (1st Cir. 1992); U.S. v. Clark, 989 F.2d 447, 449 (11th Cir. 1993). Application Note 3 to section 2C1(c)(1), specifically allows application of section 3B1.3, the abuse of trust adjustment. U.S. v. Gonzalez, 16 F.3d 985 (9th Cir. 1993).
9th Circuit upholds considering acts of bribery and losses after guidelines amended. (230) Defendant was convicted of conspiracy to defraud the United States, bribery, and other crimes arising out of corrupt practices as an employee of the IRS. He argued that the district court erred in applying a two level increase under an amended guideline provision because there was only one bribe after the provision was amended. In a 2-1 opinion, the Ninth Circuit disagreed, finding there were multiple criminal acts after the amendment and that it was properly applied. The district court did not “pour over” the loss from one count to another but correctly and separately considered the pre- and post-guideline conduct for each of the counts. The doctrine of “continuing offense” does not apply where the charged criminal conduct itself extends over a period of time. Here the conduct was a scheme that extended over a period of time. U.S. v. Morales, 11 F.3d 915 (9th Cir. 1993).
10th Circuit rejects claim of unwarranted disparity with co-conspirator’s sentence. (230) At defendant’s sentencing for engaging in a large-scale scheme to defraud a state government, the district court calculated defendant’s sentencing range at 151-181 months. Based on defendant’s substantial assistance to the government, the court departed downward to a sentencing range of 63-78 months. The court imposed a 67-month sentence, explaining that defendant was a public official and that he and a state senator were the leaders of the conspiracy. On appeal, defendant argued that his sentence was substantively unreasonable because the state senator did not cooperate with the government, and therefore an unwarranted disparity existed between his sentence and the 67-month sentence received by the state senator. The Tenth Circuit held that any disparity between defendant’s sentence and that of the state senator arose because the state senator’s plea agreement stipulated to a 67-month sentence. The court of appeals also found that it must give deference to the district court, which had considered the asserted disparity. U.S. v. Martinez, 610 F.3d 1216 (10th Cir. 2010).
10th Circuit finds no error in refusal to consider co-defendants’ relevant conduct. (230) Defendant participated in a conspiracy to defraud a state government by submitting overbillings for the construction of a county courthouse. At defendant’s sentencing on fraud offenses, defendant sought to show that his co-defendants had been involved in a similar scheme to defraud the state in connection with other public construction projects. Defendant sought to introduce this evidence to show that he had played a minor role in the fraudulent conduct of his co-defendants over many years. The district court excluded this evidence of the co-defendants’ relevant conduct because it had not been used to calculate the co-defendants’ offense levels. The Tenth Circuit held that the district court properly refused to hear evidence of prior co-conspirator conduct that was never alleged in the indictment or used to sentence the co-conspirators. U.S. v. Martinez, 610 F.3d 1216 (10th Cir. 2010).
10th Circuit holds defendants accountable for foreseeable amounts received by co-conspirator. (230) Defendants, one of whom worked in the office of the Oklahoma State Treasurer, were convicted of bribery and money laundering after arranging various securities transactions and sharing the commission earned on those transactions. Section 2C1.1(b)(2)(A) provides for an increase based on the greater of the value of the payment, the benefit received, or the loss the government. The Tenth Circuit based its § 2C1.1 increase on the amount of money received by the co‑conspirator as commissions in the securities transactions. A conspirator is responsible not only for the amount he receives, but for foreseeable amounts received by other conspirators during the course of the conspiracy. Here, the nature of the conspiracy was such that each participant almost certainly knew how much money was going where. The scheme was based on keeping track of money flowing from one conspirator to another. U.S. v. Pretty, 98 F.3d 1213 (10th Cir. 1996).
10th Circuit agrees that offense involved more than one bribe. (230) Defendant was the marketing director for two hospitals. He paid a postal employee a monthly “consulting fee” which in reality was kickbacks for patient referrals. The Tenth Circuit upheld a § 2C1.1(b)(1) enhancement for an offense involving more than one bribe. The payments were not installments for a single incident or act. The bribes were paid for ongoing patient referrals, under the guise of a consulting contract. Defendant expected three referrals a month. The referrals averaged slightly less than that over 15 months time. The payments occurred at approximately two to five week intervals. The bribes were paid as long as both parties wanted to perform. U.S. v. Martinez, 76 F.3d 1145 (10th Cir. 1996).
11th Circuit allows use of reduced bills to defendants’ company as “value received” from bribes. (230) Defendants co-owned a telecommunications company that purchased phone time from foreign vendors and resold the minutes to customers in the United States. One of the company’s main vendors was a company owned by the Haitian government. Defendants bribed officials of the Haitian company in return for reduced bills, and were convicted of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and related charges. Guideline § 2C1.1(b)(2), and the corresponding loss tables in § 2B1.1(b)(1), provide for an enhancement based on the greater of the bribe payment itself or the value of “the benefit received.” The district court found that defendants’ company received a total of $2.2 million in bill reductions, and applied a 16-level enhancement. Defendant argued for the first time on appeal that the value of “the benefit received” should be the value they each received individually, not what their company received. The Eleventh Circuit found no plain error in treating the lowered bills that defendants’ company received from the foreign officials as “proceeds” of defendants’ FCPA violations. U.S. v. Esquenazi, 752 F.3d 912 (11th Cir. 2014).
11th Circuit rules professional fees were received by firm “in return for” cash payments. (230) From 2003 to 2006, U.S. Infrastructure, an engineering firm, paid $22,000 in bribes to defendant, a county commissioner. At the same time, the county entered into 48 new contracts with U.S. Infrastructure, paying $1,107,755.55 in professional fees to the firm. Section 2B1.1(b)(1)(I) provides for a 16-level increase if “the value of the payment, the benefit received or to be received in return for the payment . . . whichever is greatest” is more than $1,000,000. Because the $1,107,755.55 in fees were greater than the $22,000 in cash payments that defendant received, the court applied a 16-level enhancement. The Eleventh Circuit affirmed, rejecting defendant’s argument that the U.S. Infrastructure contracts were not made “in return for the payment.” The evidence established a sufficient level of causation between the bribes and the contracts. The U.S. Infrastructure president testified that he paid defendant only during a period in which the company entered into the 48 contracts at issue, and that he did so to keep defendant “pretty much happy with” U.S. Infrastructure. A contract could have been stopped at “any point along the way.” U.S. v. White, 663 F.3d 1207 (11th Cir. 2011).
11th Circuit says increase for elected public official was not double counting. (230) Defendant, a county commissioner, was convicted of federal-funds bribery and related charges. Defendant’s base offense level under § 2C1.1(a), was 14 because he was a public official. The district court added four more levels under § 2C1.1(b)(3) because he was an elected public official. The Eleventh Circuit held that this was not impermissible double counting because the increase was not based on a harm that had already been taken into account by another part of the guidelines. Representative self-government is critically important, so the base offense level applicable to any public official who betrays the public trust did not “fully account” for the harm that was inflicted when an elected public official breaches the public trust. Being a bribe-taking elected public official is different from being a bribe-taking, non-elected public official. U.S. v. White, 663 F.3d 1207 (11th Cir. 2011).
11th Circuit approves departure based on loss of public confidence in government. (230) Defendant, the former governor of Alabama, was convicted of bribery, honest services fraud, and obstruction of justice. He argued that that the court’s upward departure under §§ 2C1.1 n.5 and 5K2.0 violated the First Amendment because it was based on defendant’s statements criticizing the prosecutors in the case. The Eleventh Circuit found that this did not accurately describe the district court’s reasons for the upward departure. The government’s written motion for departure and its arguments at sentencing stated that defendant’s conduct reflected such a systematic and pervasive corruption of the office of Governor and Lieutenant Governor, as well as various state agencies, as to cause a loss of public confidence in the government of the State of Alabama. This is a proper ground for departure. Although the government did refer at sentencing to defendant’s very public criticisms of the federal criminal justice system, there was no indication that the court based its upward departure on these attacks. U.S. v. Siegelman, 640 F.3d 1159 (11th Cir. 2011).
11th Circuit says public official who committed fraud was properly sentenced under conflict of interest guideline. (230) Defendant was the chairman of the Palm Beach Housing Finance Authority (HFA), a government entity chartered under state law to fund low-cost housing. Defendant was convicted of a variety of fraud charges, including a conspiracy to defraud the HFA of his honest services and to acquire money and property through fraudulent misrepresentations, in violation of 18 U.S.C. § 1341, 1346. The Statutory Index lists both U.S.S.G. §§ 2B1.1 and 2C1.7 as applicable to convictions under § 1341. Section 2C1.7 applies to the deprivation of the intangible right to the honest services of public officials. Section 2B1.1 applies to various theft crimes. The Eleventh Circuit agreed that as between these two guidelines, § 2C1.7 was the most applicable. However, § 2C1.7(c)(4) provides that if the offense is covered more specifically under § 2C1.3, the guideline applicable to conflict of interest offenses, the court should apply § 2C1.3. Because the offenses at issue essentially involved defendant’s failure to disclose his conflicts of interest, the district court did not clearly err by applying § 2C1.3. U.S. v. Hasner, 340 F.3d 1261 (11th Cir. 2003).
11th Circuit rules court should have applied bribery guideline, not fraud guideline. (230) Defendant operated treatment programs for drug addicts. He was convicted under the anti-kickback provisions of the Social Security Act for paying “referral fees” to employees of the state health services agency for referring pregnant drug addicts to his company. The Eleventh Circuit held that the district court should have sentenced him under the § 2F1.1 fraud guideline rather than the § 2C1.1 bribery guideline. Under Appendix A, three guidelines sections apply to 42 U.S.C. § 1320a-7b(b): § 2B1.1 (Larceny); § 2B4.1 (Commercial Bribery); and § 2F1.1 (Fraud). The parties agreed that §§ 2B1.1 and 2B4.1 were inapplicable. However, there was no reason to view § 2F1.1 as any more applicable. A central part of § 2F1.1 is determining the loss suffered by the defrauded victim. Defendant did not steal from anyone. Section 2C1.1 was more applicable to defendant’s kickback scheme. The term “induce” in § 1370a-7b(b)(2) can reasonably be understood to connote bribery. The Anti-Kickback statute explicitly refers to kickbacks, bribes or rebates as prohibited forms of remuneration for referrals. Finally, by paying for referrals, defendant sought to corrupt the employees execution of their duties as state employees and workers in a federal program—just the sort of corrosive activity § 2C1.1 is designed to punish. U.S. v. Starks, 157 F.3d 833 (11th Cir. 1998).
11th Circuit approves § 2C1.1 enhancements for recipient of bribes. (230) Defendant, a city council member, used his influence to reduce the rent of certain airport concessionaires by substantial amounts, in return for payments from the concessionaires. The court applied enhancements under § 2C1.1(b)(1) and (2)(B) because the offense involved more than one bribe and involved a payment for the purpose of influencing an elected official. Defendant argued that the enhancements were improper because he was the payee, not the payor, of the bribes. The Eleventh Circuit held that the § 2C1.1 enhancements apply to the recipients of bribes. The background commentary states that the guideline applies to a public official who solicits or accepts a bribe. U.S. v. Paradies, 98 F.3d 1266 (11th Cir. 1996).
11th Circuit upholds cross reference to 2X3.1 for bribe to dismiss state charges. (230) Defendant was convicted of bribery conspiracy for paying a DEA agent $20,000 to “fix” state drug charges against defendant’s son. Defendant challenged the enhancement of his sentence under the bribery guideline, section 2C1.1(c)(2), which cross references section 2X3.1 (Accessory After the Fact) when a bribe is made for the purpose of obstructing justice in respect to another criminal offense. Section 2X3.1, in turn, is tied to the offense level for the underlying offense, the prosecution of which defendant attempted to obstruct. Defendant argued that section 2X3.1 was inapplicable because the “underlying offense” at the time of the bribe was a state offense. The 11th Circuit refused to restrict section 2X3.1 to federal offenses. The Sentencing Commission intended that a defendant’s bribery sentence be determined by the nature of the underlying offense rather than by the timing of the bribe or the forum in which the underlying offense was investigated or prosecuted, either of which could be entirely fortuitous. U.S. v. Pompey, 17 F.3d 351 (11th Cir. 1994).
11th Circuit says assistant district director of INS held a high level decision-making position. (230) Defendant was convicted of bribing an assistant district director of the INS to influence the establishment of immigration bonds and the parole of Haitians at an INS detention center. The 11th Circuit held that the INS official held a high level decision-making or sensitive position under section 2C1.1(b)(2)(B). The official’s level of discretion and responsibility was similar to that of a supervisory law enforcement officer or prosecuting attorney or judge. The official could parole aliens pending deportation proceedings. He was authorized to set bonds or to release a detainee on his own recognizance. Although other INS employees received parole requests, the official bribed by defendant had the final authority to set bond and deny or grant a parole. The power to grant or deny parole is a significant and sensitive power. U.S. v. Lazarre, 14 F.3d 580 (11th Cir. 1994).
11th Circuit bases offense level on drugs sold by dealer from whom agent sought bribe. (230) Defendant, a government agent, pled guilty to soliciting a bribe from a suspected drug dealer. Section 2C1.1(c)(1) provides that if the bribery was for the purpose of concealing or facilitating a crime, the court must use the “accessory after the fact” guideline (section 2X3.1) if that offense level is higher than the bribery guideline. At the sentencing hearing, the government presented “incontrovertible testimony” that the drug dealer was dealing 700 to 800 kilograms of cocaine a month. An Assistant U.S. Attorney said the dealer was believed to be involved in 1500 kilograms of cocaine. The 11th Circuit affirmed an offense level based on 1500 kilograms of cocaine. Since the district court could have supported defendant’s base offense level of 30 with only 50 kilograms of cocaine, defendant’s contention that he should not have been exposed to the maximum offense level under section 2X3.1 was without merit. U.S. v. Cruz, 946 F.2d 122 (11th Cir. 1991).
D.C. Circuit says school police officer was in a “sensitive position.” (230) In exchange for a bribe, defendant, a special police officer in a public school, permitted an illegal parking scheme on school property. He pleaded guilty to bribery of a public official, in violation of 18 U.S.C. § 201. At sentencing, the district court found that defendant was a public official in a “sensitive position” and applied the four-level enhancement required by § 2C1.1(b)(3). The commentary to § 2C1.1 defines a “sensitive position” as one “characterized by direct authority to make decisions for, or on behalf of, a government department, agency, or other government entity” and includes “law enforcement officer” in a list of examples. The D.C. Circuit upheld the district court’s finding that defendant was in a “sensitive position.” U.S. v. Johnson, 605 F.3d 82 (D.C. Cir. 2010).
D.C. Circuit holds that company that paid bribe to obtain approval of procedure it was legally entitled to perform received benefit from bribe. (230) Defendant was an asbestos inspector who issued permits to contracting companies that allowed the company to conduct an asbestos abatement project. He told one company that a more costly abatement procedure (for friable asbestos) was required, but he would permit the company to use a less costly procedure (for non-friable asbestos) if it paid him $10,000. The cost differential between the two abatement procedures was $100,00 or more. Section 2C1.1(b)(2)(A) provides for an enhancement based on the “value of … the benefit … to be received in return for the payment.” Defendant argued that the court erred in basing the enhancement on the cost differential between the two abatement procedures, since it turned out that the company was lawfully entitled to use the less expensive abatement plan. He argued that since the company paid $10,000 to obtain approval for a less expensive abatement to which it was lawfully entitled, the value of the bribe to the contractor was zero. The D.C. Circuit disagreed. The district court committed no error in concluding that the company received a valuable “benefit” within the meaning of § 2C1.1(b)(2)(A) from the bribe extorted by defendant. U.S. v. Edwards, 496 F.3d 677 (D.C. Cir. 2007).
D.C. Circuit rejects assumption that defendants participated in conspiracy from beginning of employment. (230) Defendants, motor vehicle inspectors for the District of Columbia, sold inspection stickers to taxicab drivers and others. The court calculated the total amount of bribes attributable to defendants under § 2C1.1 based on the assumption that they began participating in the bribery scheme as soon as they began working at the inspection station. Instead of identifying specific facts to establish that their involvement began at that time, the court relied on the fact that the conspiracy required the cooperation of other inspectors to make it work. Because “there was never any indication that [they were] not involved from the beginning,” the court inferred that both defendants must have joined the scheme quite soon after starting work at the station. The D.C. Circuit rejected this inference, since the record showed that not all of the inspectors at the inspection station were involved in the conspiracy. It was possible that defendants waited some time before joining the conspiracy. The error was harmless as to one defendant, since even if the court subtracted the bribe amounts involved before his participation was established, it would not change his offense level. However, the error was not harmless for the second defendant. U.S. v. Williams, 216 F.3d 1099 (D.C. Cir. 2000).
D.C. Circuit rejects upward departure for illegal gratuities to cabinet member. (230) A large agricultural cooperative was convicted of making illegal gifts to former Secretary of Agriculture Mike Espy, committing wire fraud, and making illegal campaign contributions. Section 2C1.2 provides for an 8-level enhancement if the gratuity was given to an elected official or any official holding a high-level decision-making or sensitive position. The district court applied this enhancement, but then, finding that the guidelines did not adequately take into account Espy’s position as a cabinet-level official, departed upward an additional two levels. The D.C. Circuit reversed, holding that § 2C1.2 adequately accounts for the fact that the gratuity was made to a member of the President’s cabinet. The Secretary of Agriculture does not hold a position that differs in any material respect from the persons in Application Note 1. A straightforward reading the application note strongly suggests that Espy falls within the “agency administrator” category. U.S. v. Sun-Diamond Growers, 138 F.3d 961 (D.C. Cir. 1998).
D.C. Circuit holds that chief of housing subsidy division was a high‑level official. (230) Defendant, the head of a local housing authority’s federal subsidy division, accepted bribes in exchange for granting federal housing assistance subsidies to ineligible individuals. The district court applied an enhancement under § 2C1.1 (b)(20(B) on the ground that the payment was to influence an official holding “a high‑level of decision-making or sensitive position.” The D.C. Circuit agreed that defendant, as Chief of the federal subsidy division, was a high‑level official. Defendant supervised a 23‑person staff, ran the federal program and had authority over substantial amounts of money in housing subsidies. While regulations may have curtailed defendant’s ability to issue subsidies as she chose, she had the power to issue subsidies without further authorization or review. Note 1 lists “agency administrators” as the type of official to whom the guideline applies. U.S. v. Gatling, 96 F.3d 1511 (D.C. 1996).
Commission increases guidelines for offenses involving bribery, gratuities, and “honest services” of public officials. (230) Finding that public corruption offenses previously did not receive punishment commensurate with the gravity of such offenses, the Commission amended the guidelines in § 2C to ensure that punishment levels for public corruption offenses remained proportionate to those for closely analogous offenses sentenced under § 2B1.1. The amendment consolidates § 2C1.1 with § 2C1.7 and consolidates § 2C1.2 with § 2C1.6. The eight-level increase for a “high level decision maker” was replaced by two separate specific offense characteristics for “loss” and “status.” The Commission intended for these characteristics to ensure that the offense level will always rise commensurate with the financial magnitude of the offense and that all offenses involving “an elected public official or any public official in a high level decision making or sensitive position” will receive four additional levels and, when applicable, a minimum offense level of 18 in § 2C1.1, or level 15 in § 2C1.2. The amendment also added two additional offense levels when the offender is a public official whose position involves the security of the borders or the process for generating documents related to naturalization, legal entry, legal residence, or other government identification documents. Amendment 666, effective November 1, 2004.
Commission makes permanent the new guideline for campaign finance violations. (230) Effective January 25, 2003, the Commission promulgated an emergency amendment number 648 to add a new guideline at § 2C1.8 in response to a directive in the bipartisan campaign reform act of 2002, Pub. L. No. 107-155. Effective November 1, 2003, that amendment was repromulgated without change as a permanent amendment. The new guideline has a base offense level of 8 and five specific offense characteristics. The first uses the fraud loss table to incrementally increase the offense level in proportion to the amount of the illegal campaign transactions. The second provides an increase of two or four levels if the offense involves a foreign national or a foreign government. The third provides an increase if the offense involves either “governmental funds,” or an intent to derive “a specific, identifiable non-monetary federal benefit” (e.g. a Presidential pardon). The fourth increases the offense level if the offender engaged in “thirty or more illegal transactions.” Finally, the guideline provides a four-level enhancement if the offense involves the use of “intimidation, threat of pecuniary or other harm, or coercion.” Amendment 656, effective November 1, 2003.
Commission requires comparable sentences for both domestic and foreign bribery cases. (230) The Commission amended the statutory references to the Foreign Corrupt Practices Act in §§ 2B4.1 and 2C1.1 to recognize that public corruption of foreign officials are more akin to public corruption cases than to commercial bribery cases. The change was also made to comply with the mandate of a treaty which requires signatory parties to impose comparable sentences in both domestic and foreign bribery cases. Amendment 639, effective November 1, 2002.
Commission consolidates gratuity offenses involving public officials. (230) The new amendment consolidates §§ 2C1.3 (conflict of interest) and 2C1.4 (payment or receipt of authorized compensation) covering payments to obtain public office. The Commission found that consolidation was appropriate because the offenses covered by §§ 2C1.3 and 2C1.4 both involve unauthorized receipt of a payment in respect to an official act. The amendment also adds a cross-reference in §§ 2B1.1, 2C1.1 and 2C1.2 because the cases to which these guidelines apply usually involve a conflict of interest offense that is associated with a bribe or gratuity. Amendment 619, effective November 1, 2001.