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U.S. v. Cianci

August 21, 1998

UNITED STATES OF AMERICA
v.
ANTHONY CIANCI, APPELLANT



(D.C. Crim. No. 0312-2: 97-cr-00174)

Before: Sloviter and Roth, Circuit Judges, and FULLAM,*fn1 District Judge

The opinion of the court was delivered by: Sloviter, Circuit Judge.

On Appeal from the United States District Court for the District of New Jersey

Argued July 9, 1998

OPINION OF THE COURT

Anthony L. Cianci, who pled guilty to two counts of tax evasion, challenges the district court's consideration of uncharged conduct involving the generation of the unreported income in applying a two-level sentencing enhancement for the use of sophisticated means to impede discovery and a two-level enhancement for abuse of a position of trust. Cianci also asserts ineffective assistance of counsel at the sentencing proceeding.

I.

Factual History

On September 9, 1997, Cianci entered a guilty plea to two counts of tax evasion stemming from Cianci's failure to report income he obtained through embezzlement and kickbacks on his 1989 and 1990 tax returns. During this time, Cianci worked for the Panasonic Company, a manufacturer of consumer electronics, as the General Manager for the Northeast group. In 1986, Cianci and his two co-defendants, Mark Ross, also a Panasonic executive, and Mark Manevitz, purchased Drake Brothers, a wholesale and retail distributor of Panasonic products, with Manevitz holding the interest of Cianci and Ross in a secret trust. Manevitz was the owner of record of Drake and ran its day-to-day affairs. Cianci and Ross used Drake to sell goods they embezzled from Panasonic.

Cianci obtained some of the income on which he failed to pay taxes by diverting embezzled Panasonic merchandise to Drake by shipping them to Drake under a "bill to/ship to" order by which Panasonic products were billed to one major distributor but shipped by Panasonic to another distributor. To facilitate nondisclosure of the diversion of the merchandise through this mechanism, Cianci eliminated the mailing of monthly statements to its distributors. As part of the scheme, Cianci created a series of false offsets to the accounts of the distributors who had been billed in the form of fictitious advertising invoices, diverted volume rebates, and false mark downs which completely eliminated the cost of the products shipped to Drake from the distributors' accounts.

Once these goods were received by Drake, Manevitz transported them to independent retailers and sold them for cash; the transactions corresponding to the"billed to/shipped to" scheme were not recorded in Drake's books. Cianci received some of the profits and gave some to Ross. Manevitz was paid $1,200 per month for his participation. From approximately January 1989 through approximately December 1990, Cianci received approximately $175, 360.81 as his share of the cash generated through the sale of Panasonic merchandise by Drake.

Cianci received yet other money as kickbacks from executives at Odeon Distributors, a distributor of consumer electronic merchandise in New York and a customer of Panasonic, in return for preferential treatment in receiving Panasonic merchandise, which was then in high demand and short supply. Some of these kickbacks were in the form of leases of automobiles used by Cianci at the rate of $14,778.12 per year for the years 1989 and 1990 for a total of $29,556.24. In addition, Cianci received direct payments from Odeon and other Panasonic customers' executives in the form of money orders, which totaled $42,109.45.

Cianci was charged with obtaining and concealing $247,025 in income and evading $77,123 in taxes. In Cianci's plea agreement, he stipulated, inter alia, that his base level offense should be enhanced two levels pursuant to § 2T1.1(b)(2) of the Sentencing Guidelines for the use of sophisticated means to impede discovery of the offense. In its draft of the PSR the probation office rejected the sophisticated means enhancement, and instead recommended a two-point abuse of a position of trust enhancement under § 3B1.3 that had not been mentioned in the plea agreement.

At sentencing, the district court, applying the 1990 Sentencing Guidelines, calculated Cianci's base offense level at 12. See U.S.S.G. § 1B1.11. The court increased Cianci's base offense level by a total of six points: two points for his failing to report income exceeding $10,000 pursuant to U.S.S.G. § 2T1.1(b)(1), two points for his use of sophisticated means to impede discovery of the offense pursuant to § 2T1.1(b)(2), and two points for his abuse of a position of trust pursuant to § 3B1.3. The court rejected the government's § 5K1.1 motion for an additional departure to reflect Cianci's substantial assistance to the government, finding "nothing of a substantial or significant means wherein the Government has profited from the `cooperation' of Mr. Cianci." App. at 61.

Based upon an offense level of 16 and a criminal history category of I, the district court sentenced Cianci to concurrent 22-month terms of imprisonment, which fell at the lower end of the applicable 21-to-27-month range, a total fine of $40,000, a special assessment of $100 and a supervised ...


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