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United States v. Schweitzer

argued: August 3, 1993.


On Appeal From the United States District Court For the District of New Jersey. (D.C. Crim. Action No. 91-00542-01).

Before: Stapleton, Hutchinson and Roth, Circuit Judges.

Author: Stapleton


STAPLETON, Circuit Judge:

Allen Schweitzer pleaded guilty to conspiring to bribe a public official in order to secure confidential information held by the Social Security Administration ("SSA"). He here appeals from a sentence of fourteen months imprisonment imposed as a result of an upward departure from the Guideline range. Because one of the factors cited by the district court to justify its upward departure was not relevant to Schweitzer's culpability, we will reverse and remand for resentencing.


Schweitzer operated a private investigative agency that provided its clientele with personal information about individuals. This information would include addresses, phone numbers, banking and credit information, earnings and employment information and the like. The objective of Schweitzer's conspiracy was to obtain employment and earnings information maintained by the SSA in its confidential computer files. Disclosure of this information is prohibited by 26 U.S.C. § 6103.

Schweitzer approached James Bailey, a former Regional Inspector General for the Office of Inspector General ("OIG"). As an inspector, Bailey had supervised Patricia Rosemond who was an OIG Special Agent. As a Special Agent, Rosemond had access to SSA's confidential files. At Schweitzer's request, Bailey obtained confidential information on 36 individuals from Rosemond for a single $1,000 payment. Bailey supplied this information to Schweitzer and received from him 28 payments of $130 each, for a total of $3,640. Schweitzer, in turn, sold each individual's information to a client. The government contends that he received $300 in each instance, for a total of $10,800. At the sentencing hearing, Schweitzer's counsel disputed the $10,800 figure but acknowledged gross receipts as high as $8,000.

While awaiting his sentencing hearing, Schweitzer appeared on the Oprah Winfrey Show and detailed the workings of his private investigation business and others like it. He claimed to have earned personal income in the high six figures and insisted that he continued to have the ability to obtain confidential information from government sources. According to Schweitzer, present and former government employees capitalize on pervasive abuse of confidential information.

Section 2C1.1(a) of the Sentencing Guidelines establishes a base offense level of 10. If "the benefit received in return for" the bribe exceeds $5,000, a two level enhancement is provided. U.S.S.G. §§ 2C1.1(b)(2)(A), 2F1.1(b)(1)(C). Application Note 2 of the Commentary to § 2C1.1 explains the meaning of "benefit received" in this context:

The value of "the benefit received or to be received" means the net value of such benefit. Examples : (1) A government employee, in return for a $500 bribe, reduces the price of a piece of surplus property offered for sale by the government from $10,000 to $2,000; the value of the benefit received is $8,000. (2) A $150,000 contract on which $20,000 profit was made was awarded in return for a bribe; the value of the benefit received is $20,000. Do not deduct the value of the bribe itself in computing the value of the benefit received or to be received. In the above examples, therefore, the value of the benefit received would be the same regardless of the value of the bribe.

The district court concluded that the benefit received by Schweitzer and his co-conspirators was in excess of $5,000 and added two points to the base offense level. It then adjusted downward two points under U.S.S.G. § 3E1.1(a) for Schweitzer's acceptance of responsibility. Utilizing a criminal history category of I, the district court calculated a guideline range of six to twelve months. It then departed upward from that range under U.S.S.G. § 5K2.0*fn1, giving the following explanation:

I find, by a preponderance of the evidence, that there is an aggravating circumstance both of a kind and to a degree not taken into consideration by the Sentencing Commission. This defendant's conduct went well beyond the usual bribe situation comprehended by 2 C1.1. His conduct, as the Government has observed in its brief, invaded the privacy of so many people whose private and confidential information was accessed, compromised and sold. Moreover, his wholesale buying and selling of confidential information provided to the Government in confidence, not only has undermined the Government's ability to amass that information in the future, but has caused a loss of confidence in our government on the part of those persons and others. This loss of public confidence (and, no doubt, the fear of many members of the public that even if the defendant has now cleaned up his act, either he or others had gotten information that had been given in confidence) was enhanced by the Oprah Winfrey Show on which he rather arrogantly appeared, telling people who had not theretofore known that their information, too, may well have been compromised. Indeed, the defendant has apparently not restricted himself to the Oprah Winfrey Show, but has given multiple other interviews as well telling about what he had done and, on the Oprah Winfrey Show, how much money he got out of it, and bragging or predicting that he would get probation. And as the Government also tells me, and there's no serious dispute on this score, the records seized from his business indicate that he was doing an enormous business in confidential information. As he himself said, he was reaping in the high six figures.

These factors are aggravating factors simply not taken into account by the Sentencing Commission and I will upward depart to a ...

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