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Abuse of Trust Case Analysis

The reason the above discussion devotes so much more space to the dissent than the majority opinion is the avoidable result of the fact that the majority opinion is only two paragraphs long, while the dissent goes on for 10 pages.

As such, defense attorneys wishing to preserve this issue for potential review in the Supreme Court need not look far for ready-made arguments.

Notwithstanding the majority’s citation to decisions from several other circuits, the decision in this case actually goes far beyond any other circuit in the country, except the First Circuit (and it goes somewhat further than that Circuit as well).

The most direct conflict is with the Ninth Circuit’s decision in U.S. v. Technic Services, Inc., 314 F.3d 1031 (7th Cir. 2002), a case which also involved a private employee guilty of violating the Clean Water Act (and the Clean Air Act, too).

The Ninth Circuit held that U.S.S.G. 3B1.3 could not be used to increase his sentence, in a very lengthy discussion, giving many of the same reasons as Judge Coffey in dissent. Id., 314 F.3d at 1048-1053.

The majority’s opinion also goes further than the Sixth Circuit has gone. U.S. v. White, 270 F.3d 356, 370-373 (6th Cir. 2001), applied the abuse of trust enhancement to a white collar employee who violated the Clean Water Act, but the defendant was a public employee, rather than a private one. Furthermore, nothing in the White decision suggests it could be applied to an employee of a private corporation.

In U.S. v. Kuhn, 345 F.3d 431 (6th Cir. 2003), the Sixth Circuit again held a 3B1.3 enhancement proper for a violation of the CWA, but again, the defendant was a public employee — superintendent of the sewerage district.

The majority opinion also goes beyond the Fourth Circuit’s position in U.S. v. Turner, 102 F.3d 1350 (4th Cir. 1996). In that case, the court upheld an abuse of trust enhancement to owners of a private corporation, based on violations of federal mining laws.

However, the laws involved were not environmental laws, but employee safety laws. Thus, the victims were the defendant’s employees, rather than the public at large.

The majority’s citation to Turner as supporting its holding is therefore misleading. The majority writes, “the regulations here apply to matters that directly and significantly affect the public’s health and safety … [citing Turner](owners and operators of coal mine).”

A casual reader would be justified in assuming from this citation that the defendants in Turner were owners of coal mines who violated environmental laws. Actually reading the decision in Turner, however, makes clear that the victims were not the public at large, as in the case at bar, but the owner’s employees, thus providing no support for the majority decision.

Related Links

7th Circuit Court of Appeals

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Private employees have
fiduciary duty to public

Only the First Circuit’s position is consistent with the majority opinion. U.S. v. Gonzalez-Alvarez, 277 F.3d 73 (1st. Cir.2002). In that case, the court held it proper to apply 3B1.3 to a licensed dairy farmer who conspired to adulterate milk.

The decision in the case at bar goes even further, however, because the dairy farmer in Gonzalez-Alvarez was directly licensed by the federal government, and directly trusted to comply with regulations. Snook, on the other hand, was only entrusted by Clark, not the government.

The decision thus places the Seventh Circuit in the vanguard of expansive interpretation of the abuse of trust enhancement, potentially subjecting any private employee who violates any public health and welfare statute to its application.

The white collar defendants facing that prospect should be more likely than most defendants to have the financial means to vigorously contest that application until the U.S. Supreme Court decides whether such application is proper.

– David Ziemer

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David Ziemer can be reached by email.

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