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Судебные дела / Зарубежная практика  / UNITED STATES OF AMERICA, Plaintiff, v. STACY DEPREY, Defendant., UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN, Case No. 01-CR-227, November 7, 2002





Case No. 01-CR-227

November 7, 2002



Defendant Stacy DePrey was indicted on five counts of failure to report payroll taxes to the Internal Revenue Service (IRS) and three counts of filing a false income tax return. The charges arose out of her employment with Marken International, a Wisconsin company that manufactures sitting and positioning equipment for wheelchairs. Defendant worked as the office manager of the company from 1995 to 1998, and in that capacity was responsible for all accounting functions, including paying over to the IRS employment taxes withheld from the checks of Marken's employees.

Defendant took advantage of her position by embezzling a total of $113,326.13 from Marken between 1996 and 1998. She "covered" her theft of funds (and provided herself with a pool of money to steal) by failing to pay over to the IRS a total of $125,217.36 in payroll taxes owed by Marken. In May of 1998 her scheme was discovered, and she was fired.

Defendant pled guilty to one count of failing to pay over payroll taxes and one count of filing false income tax returns based on her failure to report as income the money she embezzled. A pre-sentence report (PSR) was prepared in anticipation of sentencing.

The PSR calculated defendant's base offense level under U.S.S.G. ╖╖ 2T1.6(a) & 2T1.1(a)(1). 1 These provisions provide that in tax evasion cases the base offense level is computed by entering the amount of tax loss occasioned by the criminal conduct into the tax table located in ╖ 2T4.1. Defendant failed to pay over $125,217.36 in payroll taxes and was determined to owe the IRS $26,356.01 based on the $1 13,326.13 she stole and did not report as income, for a total of $151,573.37. Under the ╖ 2T4.1 table, losses between $120,000 and $200,000 call for a base offense level of 15.


1 Because it was more favorable to her, the 1997 version of the guidelines was used to calculate defendant's sentence.


The PSR then added a two level enhancement under U.S.S.G. ╖ 2T1.1(b)(1) because defendant failed to report or identify the source of income exceeding $10,000 in any year from criminal activity. The unreported funds in this case came from her embezzlement and exceeded $10,000 in each of the tax years at issue. The PSR also added a two level enhancement under U.S.S.G. ╖ 3B1.3 because defendant abused a position of trust at Marken in a manner that significantly facilitated commission of the offense. Finally, the PSR allowed for a three level reduction for acceptance of responsibility under ╖ 3B1.1 because defendant timely entered a plea of guilty and admitted all of her conduct. The final offense level was 16. Defendant raises three issues concerning her sentence, which I address in this decision.


A. Abuse of Position of Trust

First, defendant argues that she should not receive an enhancement for abuse of a position of trust under U.S.S.G. ╖ 3B1.3. That section provides:

If the defendant abused a position of public or private trust, or used a special skill, in a manner that significantly facilitated the commission or concealment of the offense, increase by 2 levels. This adjustment may not be employed if an abuse of trust or skill is included in the base offense level or specific offense characteristic.

According to application note 1,

"Public or private trust" refers to a position of public or private trust characterized by professional or managerial discretion (i.e., substantial discretionary judgment that is ordinarily given considerable deference). Persons holding such positions ordinarily are subject to significantly less supervision than employees whose responsibilities are primarily non-discretionary in nature. For this adjustment to apply, the position of public or private trust must have contributed in some significant way to facilitating the commission or concealment of the offense (e.g., by making the detection of the offense or the defendant's responsibility for the offense more difficult).

It is undisputed that defendant occupied a position of trust as office manager at Marken. She was responsible for all of the company's accounting functions, including paying over employment taxes, directing and authorizing payment of bills, maintaining records, and balancing the corporate checking account. She was able to sign corporate checks and worked with little or no supervision from the company's owners. Defendant used that position, taking advantage of the lack of oversight, to embezzle from her employer and fail to pay over payroll taxes in order to provide funds for the theft.

Defendant disputes none of these facts but argues that abuse of trust or skill is included in the base offense level for failing to pay over payroll taxes under 26 U.S.C. ╖ 7202. 2 She states that "responsible persons" liable under ╖ 7202 - those who collect, account for, and pay over taxes - will always occupy positions of trust. Therefore, the court cannot punish her for this offense and again under ╖ 3B1.3 of the guidelines.


2 Essentially, this is a "double counting" argument. Double counting occurs when a sentencing court applies two or more upward adjustments based on the same conduct or an upward adjustment based on an aggravating factor already taken into account in the base offense level. United States v. Tankersley , 296 F.3d 620, 624 (7th Cir. 2002); United States v. Senn , 129 F.3d 886, 897 (7th Cir. 1997).


Defendant's contention has some logical appeal; those required to collect and pay over payroll taxes will often occupy positions of trust. However, her argument must fail because the particular guidelines at issue here - ╖╖ 2T1.1 & 2T1.6 - do not include abuse of trust in computing an offense level. The offense level is based solely on the amount of tax the defendant failed to pay over. Whether the defendant abused a position of trust or special skill is irrelevant. As the court noted in United States v. Brickey , 289 F.3d 1144, 1 154 (9th Cir. 2002) in rejecting a similar double counting argument, "U.S.S.G. ╖ 2T1.1 dictates a base offense level for tax crimes based solely on the amount of tax loss involved; it does not consider who committed the offense or in what manner the offense was committed."

Further, the Seventh Circuit has held that the "bar on double counting comes into play only if the offense itself necessarily includes the same conduct as the enhancement." Senn , 129 F.3d at 897. A ╖ 7202 offense does not necessarily include the same conduct as that required for the ╖- 3B1.3 enhancement. The government provides as an example a sole proprietor who fails to pay over taxes withheld from his employees. This person would be liable under ╖ 7202 but would not be subject to the ╖ 3B1.3 enhancement. Therefore, there is no double counting, and defendant's arguments must be rejected.

However, application of the enhancement might be questioned for another, more basic reason. Whether a defendant occupies a "position of trust" must be viewed from the perspective of the victim. United States v. Hathcoat , 30 F.3d 913, 919 (7th Cir. 1994). Defendant undoubtedly occupied a "position of trust" with Marken, but Marken is not the victim here, the IRS is. The IRS never placed defendant in a position of trust. Thus, it appears that the guideline should not apply.

However, in United States v. Bhagavan , 116 F.3d 189, 193 (7th Cir. 1997), the Seventh Circuit, over Judge Cudahy's dissent, held that the government is not necessarily the only victim in a tax evasion scheme, and that it is enough that identifiable victims of the overall scheme to evade taxes put the defendant in a position of trust. Bhagavan supports application of the enhancement here, even though Marken is not, as Judge Cudahy noted in his dissent, the "victim of the crime for which [defendant] was convicted ." Id . at 194 (Cudahy, J., dissenting). "I agree that beyond a doubt a crime may have more than one victim, but all the alleged victims must suffer from the one crime - not from some other circumstances." Id .

Judge Cudahy's position is consistent with the plain language of the guideline, which requires that abuse of the position of trust "significantly facilitate[] the commission or concealment of the offense ." U.S.S.G. ╖ 3B1.3 (emphasis added). Moreover, setting the enhancement loose from its moorings as the Seventh Circuit did "might cause virtually anyone who is commanded by statute to make an accurate report to the government to be subject to a Section 3B1.3 enhancement. All taxpayers who file false tax returns, for example, might be included." United States v. Broderson , 67 F.3d 452, 455 (2d Cir. 1995). "Moreover, every example of an abuse of trust in the Commentary accompanying Section 3B1.3 . . . involves a victim entrusting an agent or employee with discretion." Id . at 456.

The Seventh Circuit's view is in the minority of the courts of appeal. Compare United States v. Trice , 245 F.3d 1041, 1042 (8th Cir. 2001) (reversing ╖ 3B1.3 enhancement where defendant was convicted of making false statement in a funding application to HUD submitted pursuant to his employment because defendant "was not in a position of trust vis-a-vis the United States"); United States v. Guidry , 199 F.3d 1150, 1160 (10th Cir. 1999) (holding that defendant who embezzled from her employer and failed to report that income, leading to conviction for filing false tax return, could not receive ╖ 3B1.3 enhancement because she "did not occupy a position of trust vis-a-vis the government, the victim in this case"); United States v. Barakat , 130 F.3d 1448, 1454-56 (11th Cir. 1997) (citing with approval Judge Cudahy's Bhagavan dissent and holding that defendant did not use his particular position of trust, which allowed him access to illegal unreported income, to conceal the offense of conviction - tax evasion); Broderson , 67 F.3d at 455-56 (holding that executive at private company that supplied services to NASA, who was convicted of making false statements to the United States, "did not occupy a position of trust vis-a-vis the government"); United States v. Moore , 29 F.3d 175, 180 (4th Cir. 1994) (reversing ╖ 3B1.3 enhancement when defendant held position of trust in relation to entities other than the victim of the offense); and United States v. Moored , 997 F.2d 139, 145 (6th Cir. 1993) (reversing ╖ 3B1 .3 enhancement where defendant "held no position of trust with the intended victims of his offense" but rather with another entity, which district court found facilitated his ability to obtain fraudulent loan); with United States v. Cianci , 154 F.3d 106, 1 10-13 (3d Cir. 1998) (holding ╖ 3B1.3 enhancement appropriate in tax evasion case when defendant abused position of trust with his company to embezzle unreported income); and United States v. Duran , 15 F.3d 131, 132-34 (9th Cir. 1994) (applying relevant conduct rule of ╖ 1B1.3 to link embezzlement charge, in which defendant abused position of trust but on which he had not been convicted, with conviction of structuring financial transactions to avoid reporting requirements in violation of 31 U.S.C. ╖ 5324, on which he had been convicted, to uphold ╖ 3B1.3 enhancement).

But unless and until the Seventh Circuit reconsiders its position, I am obliged to apply the enhancement even when the victim of the offense of conviction did not place the defendant in a position of trust. Therefore, because it is supported by the facts and applicable Seventh Circuit case law defining the term "position of trust," I apply the enhancement.

B. ═ Failure to Identify Source of Income From Criminal Activity

Defendant next objects to the two level enhancement under U.S.S.G. ╖ 2T1.1(b)(1), which applies if the defendant failed to report or correctly identify the source of income exceeding $10,000 in any year from criminal activity. Defendant does not dispute that she failed to report more than $10,000 in embezzled income in the applicable years. However, she contends that imposing the enhancement under the particular circumstances of this case does not serve the underlying purpose of the enhancement. According to the background commentary to ╖ 2T1.1, the enhancement was created because criminally derived income is generally difficult to establish, so that the tax loss in such cases tends to be substantially understated. But in the present case defendant's criminally derived income has been precisely established, and there is no understatement. Because its purpose is not served here, defendant argues that the enhancement should not be applied.

The government argues that defendant's conduct falls within the plain meaning of the guideline, and that the guideline properly provides increased punishment for defendants who commit tax offenses when a significant portion of their income is derived from criminal activity. All things being equal, such individuals are more culpable than those who fail to report legitimate earnings. The government acknowledges that the commentary explains the purpose of the enhancement as accounting for the difficulty in identifying and measuring criminally derived income but notes that, although in this case it was able to identify the amount defendant embezzled, it was only able to do so after examining each individual check issued by defendant and determining whether it represented embezzlement or a legitimate business expense. This task would have been much easier, the government avers, if defendant had simply failed to report her wages at Marken.

Based on the plain language of the guideline I am compelled to apply the enhancement. However, in the present case the enhancement does not serve its intended purpose and results in an overstatement of the seriousness of the offense, which leads me to defendant's third argument.

C. ═ Motion for Downward Departure

Defendant's final argument is that application of the guidelines in this case results in an overstatement of the tax loss, justifying a downward departure. Defendant notes that it is rare for an employee to be prosecuted both for failing to pay over taxes (to conceal embezzlement) and for failing to report the embezzled income, as she was.

She further notes that it is rare for an employee to be prosecuted under ╖ 7202. Usually, failure to pay over taxes is committed by the employer for its own benefit; the employer keeps the money withheld from employees' paychecks that it should be paying over to the IRS. Here, the failure to pay over was to the detriment of the employer-taxpayer, which was the actual and intended victim rather than the IRS. Defendant asserts that the Sentencing Commission likely did not envision this scenario in calculating the offense level, and use of the ╖ 2T4.1 tax table inflates the damage done to the United States treasury.

Defendant also argues that the same money is being counted twice: the money that should have gone to satisfy the employer's tax obligation was essentially the same money she took and failed to pay taxes on. Therefore, the government is "double dipping" from the same pool of money.

For several reasons, these arguments do not justify a departure. First, inclusion of the tax loss from defendant's failure to report income has no impact on the base offense level. According to the 1997 version of ╖ 2T4.1, tax losses between $120,000 and $200,000 call for an offense level of 15. In this case, defendant failed to pay over $125,217.36; her failure to report income resulted in a tax loss of $26,356.01; the sum is $151,573.37. Inclusion of the loss based on failure to report income does not change the base offense level. Thus, even if the government is double dipping in the same pool of money, defendant's offense level is not increased thereby. While I have the discretion to depart downward when the amount of loss used to calculate an offense level overstates the seriousness of the criminal conduct, see United States v. Forchette , No. 02-CR-37, 2002 U.S. Dist. LEXIS 17278, at *27 (E.D. Wis. Sept. 5, 2002), that did not happen here.

I also see no basis to depart because prosecutions under ╖ 7202 are infrequent. Further, I disagree with defendant's claim that the loss here fell on the employer rather than the IRS. Defendant's conduct deprived the United States treasury of $125,000 in revenue; that it had the additional effect of harming the employer does not mitigate the seriousness of the conduct. While the facts of this case - an employee embezzles funds from her employer (and fails to pay taxes thereon) and covers the gap by failing to pay over taxes withheld from the paychecks of her co-workers - are unusual, they are not unusual in a mitigating sense. Therefore, I decline to exercise my discretion and depart downward based on this factor.

However, I do find that the application of the ╖ 2T1.1(b)(1) enhancement results in an overstatement of the seriousness of defendant's criminal conduct, and for that reason a two level downward departure is warranted.

I may depart from the applicable Guideline range if I find " 'that there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines that should result in a sentence different from that described.' " Koon v. United States , 518 U.S. 81, 92 (1996) (quoting 18 U.S.C. ╖ 3553(b)). The Commission has provided guidance in making departure decisions by listing certain factors that are "forbidden" bases for departure, "encouraged" bases for departure, and "discouraged" bases for departure. Id . at 93-95

The Supreme Court has thus adopted the following test for determining whether to depart: (1) What factors of the case make it special or unusual? (2) Has the Commission forbidden departures based on those factors? (3) If not, has the Commission encouraged departures based on those factors? (4) If not, has the Commission discouraged departures based on those factors? Id . at 95.

If the special factor is a forbidden factor, the sentencing court cannot use it as a basis for departure. If the special factor is an encouraged factor, the court is authorized to depart if the applicable Guideline does not already take it into account. If the special factor is a discouraged factor, or an encouraged factor already taken into account by the applicable Guideline, the court should depart only if the factor is present to an exceptional degree or in some other way makes the case different from the ordinary case where the factor is present. If a factor is unmentioned in the Guidelines, the court must, after considering the structure and theory of both relevant individual guidelines and the Guidelines taken as a whole, decide whether it is sufficient to take the case out of the Guideline's heartland.

Id . at 95-96 (citations and internal quote marks omitted).

The factor that potentially takes this case out of the guidelines heartland - the irrational application of an enhancement - is unmentioned in the guidelines. But as the Seventh Circuit has noted, the district court may depart if "the conduct at issue differs significantly from the norm even though the guideline linguistically applies." United States v. Jaderany , 221 F.3d 989, 995 (7th Cir. 2000), cert. denied , 531 U.S. 1151 12 (2001). That is exactly the situation here: ╖ 2T1.1(b)(1) applies by its plain terms, but, based on the particular facts of the case, its purposes are not served.

The background commentary to ╖ 2T1.1 offers the following explanation for the enhancement:

Criminally derived income is generally difficult to establish, so that the tax loss in such cases will tend to be substantially understated. An enhancement for offenders who violate the tax laws as part of a pattern of criminal activity from which they derive a substantial portion of their income also serves to implement the mandate of 28 U.S.C. ╖ 994(i)(2).

I will analyze the two justifications offered for the enhancement to determine whether they apply in a case such as this.

The first justification is that the amount of tax loss used to calculate the offense level will usually be understated when the unreported income came from criminal activity. This makes sense; criminals tend not to keep complete and accurate books (at least that the government can find). Thus, the provable tax loss will often be understated.

But that will not always be case. There will be situations where, as here, the tax loss based on unreported income can be computed to the penny, and as a result there will be no understatement, substantial or otherwise. In such situations, adding two points to the offense level does nothing except overstate the seriousness of the offense because it increases punishment based on a factor which is demonstrably not present. The purpose of the enhancement is not served, and the penalty is increased beyond that envisioned by the Commission.

The second rationale offered for ╖ 2T1.1(b)(1) is that it serves the purpose of 28 U.S.C. ╖ 994(i)(2), which states:

The Commission shall assure that the guidelines specify a sentence to a substantial term of imprisonment for categories of defendants in which the defendant . . . committed the offense as part of a pattern of criminal conduct from which the defendant derived a substantial portion of the defendant's income . . . .

The Commission indicates that it authored this particular enhancement so that defendants who committed tax offenses as part of a pattern of criminal activity would receive stiffer sentences.

In the present case, defendant's tax offenses were an incident of her embezzlement. Although defendant was not charged with embezzlement, she admitted that she stole about $113,000 from her employer. She failed to pay over payroll taxes in order to provide sufficient funds for her to steal. Therefore, on the surface, it might appear that this rationale for the enhancement applies.

However, to apply the enhancement based on the "pattern of criminal activity" justification would be in considerable tension with the rule against double counting. This is so because the losses occasioned by defendant's other criminal conduct - her embezzlement - were fully taken into account in establishing the offense level on her tax evasion convictions. The money she embezzled and the money she failed to send the IRS is the same. 3 Moreover, if extra punishment is called for based on her conduct relative to Marken that purpose is served by application of the ╖ 3131.3 enhancement (recall that Marken is not the victim of defendant's offense of conviction).


3 This point differs from defendant's earlier departure argument, that her offense level was overstated because the tax loss figure included both the money she failed to pay over to the IRS on behalf of the employer and the amount she personally owed the IRS based on her failure to report as income the money she stole. The earlier argument failed because, even though both figures were derived from the same pool of money, adding them had no effect on the offense level. But application of the ╖ 2T1.1(b)(1) enhancement under the "pattern of criminal activity" rationale is another matter; it essentially results in defendant being punished twice for taking the same money, once from the employer and once from the IRS.


Thus, I conclude that the ╖ 2T1.1(b)(1) enhancement results in an overstatement of the seriousness of the offense. While the enhancement linguistically applies, to impose it here would result in a sentence greater than that contemplated by the Commission. Therefore, a two level departure is appropriate.

However, before deciding whether to depart I always consider the factors set forth in 18 U.S.C. ╖ 3553(a): (1) the nature and circumstances of the offense and the history and characteristics of the defendant; (2) the need for the sentence imposed -(a) to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment; (b) to afford adequate deterrence to criminal conduct; (c) to protect the public from further crimes of the defendant; and (d) to provide for the defendant's rehabilitative needs; (3) the kinds of sentences available; (4) any pertinent policy statement issued by the Sentencing Commission; (5) the need to avoid unwarranted sentence disparities; and (6) the need to provide restitution to the victims of the offense.

Defendant's offense was a serious one; she abused the trust of her employer, caused extreme hardship to its owners, and deprived the treasury of a substantial amount of revenue. A prison sentence is called for. However, a two level departure leaves defendant in the 15-21 month imprisonment range, which I conclude will provide just punishment for her crimes, promote respect for the law, and deter others from similar conduct.

Defendant has no other criminal record. She has obtained a new job and is apparently well liked and respected by her employer. She will owe substantial amounts, including penalties, to the IRS, which will pursue its own collection action. She will be required to cooperate with the IRS as a condition of supervised release. She also owes a substantial amount to her former employer, which has obtained a civil judgment against her. The matter will not end for her when she leaves prison.

Based on all of these considerations, I will grant a two level departure pursuant to 18 U.S.C. ╖ 3553(b) and U.S.S.G. ╖ 5K2.0. Defendant's adjusted offense level is 14. With a criminal history category of I, her imprisonment range is 15-21 months. I sentence defendant to 15 months in prison. Other conditions of her sentence appear in the judgment.


When application of the plain language of a guideline leads to the imposition of punishment greater than that envisioned by the Commission, the court should look to the intent of the Commission and implement it, departing downward if necessary. In this case, the sentence called for by a literal reading of the guideline is in discord with the guideline's purpose. I thus depart downward by two levels to bring them into consonance.

THEREFORE, IT IS ORDERED THAT defendant's objections to the PSR are OVERRULED; IT IS FURTHER ORDERED THAT defendant's motion for a downward departure is GRANTED .

Dated at Milwaukee, Wisconsin, this 7th day of November, 2002.


District Judge


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