                                        PUBLISH

                      UNITED STATES COURT OF APPEALS
Filed 1/22/97
                                   TENTH CIRCUIT



 UNITED STATES OF AMERICA,

        Plaintiff-Appellee,
 v.
                                                              No. 95-3392
 MURRAY F. HARDESTY,

        Defendant-Appellant.


           APPEAL FROM THE UNITED STATES DISTRICT COURT
                    FOR THE DISTRICT OF KANSAS
                         (D.C. No. 95-20031-01)


David Phillips, Federal Public Defender, (Michael L. Harris, Assistant Federal Public
Defender, on the brief), Kansas City, Kansas

Kurt J. Shernuk, Assistant United States Attorney, (Jackie N. Williams, United States
Attorney, with him on the brief), Kansas City, Kansas


Before TACHA, Circuit Judge, BALDOCK, Circuit Judge, and MCWILLIAMS,
Senior Circuit Judge.


McWILLIAMS, Senior Circuit Judge.


      The only issue in this appeal is whether the district court erred in increasing the

defendant’s base offense level by 2 levels based on United States Sentencing Guideline §
3A1.1 (1994).1 Our study of the matter convinces us that the district court did not err in

increasing the defendant’s base offense level by 2 levels, and we affirm.

       As will be developed, the defendant, pursuant to a plea bargain, pled guilty to 3

counts of an 11 count criminal indictment. Based on the pre-sentence report, and the

proffers of proof made at the time of sentencing, it appears that Murray F. Hardesty, an



       U.S.S.G. § 3A1.1 provides as follows:
       1



              § 3A1.1. Vulnerable Victim

                     If the defendant knew or should have known
                     that a victim of the offense was unusually
                     vulnerable due to age, physical or mental
                     condition, or that a victim was otherwise
                     particularly susceptible to the criminal conduct,
                     increase by 2 levels.

                                       Commentary

              Application Notes:

              1.     This adjustment applies to offenses where an
                     unusually vulnerable victim is made a target
                     of criminal activity by the defendant. The
                     adjustment would apply, for example, in a
                     fraud case where the defendant marketed an
                     ineffective cancer cure or in a robbery where
                     the defendant selected a handicapped victim.
                     But it would not apply in a case where the
                     defendant sold fraudulent securities by mail to
                     the general public and one of the victims
                     happened to be senile. Similarly, for example,
                     a bank teller is not an unusually vulnerable
                     victim solely by virtue of the teller’s position
                     in a bank. (emphasis added).

                                            -2-
attorney practicing in Topeka, Kansas, was the trustee of several trusts, including 2 trusts

where Miriam Klugg and Lea Burgwin were the beneficiaries. The pre-sentence report

indicates that from 1991 to 1993 Hardesty embezzled $2,100,000.00 from those 2 trusts,

and from several other trusts, and that, in connection therewith, Hardesty, inter alia,

submitted false reports to Klugg and Burgwin to cover the embezzlements. However, it

was also agreed that as concerns each of these trusts, an attorney-client relationship

existed long before any criminal conduct by Hardesty.

       Based on his mishandling of the several trusts under his control, Hardesty was

charged with various offenses in an 11 count indictment filed in the United States District

Court for the District of Kansas. Specifically, in count 1 Hardesty was charged under 18

U.S.C. § 644 with embezzling assets from a pension fund which was entrusted to his care.

In counts 2 through 5 Hardesty was charged with mail fraud, involving, inter alia, the

misappropriation of funds from the Klugg and Burgwin trusts in violation of 18 U.S.C. §

1341. In counts 6 through 9 Hardesty was charged with money laundering in violation of

18 U.S.C. § 1957. In counts 10 and 11 Hardesty was charged with money laundering in

violation of 18 U.S.C. § 1956(a)(1)(A)(i).

       Pursuant to a plea agreement, Hardesty pleaded guilty to counts 1, 5 and 9, and the

remaining counts were dismissed. The matter was then referred to the Probation

Department for a pre-sentence report. The pre-sentence report recommended that there

be no increase in Hardesty’s base offense level based on U.S.S.G. § 3A1.1. The


                                             -3-
government filed an objection to that recommendation, and, at time of sentencing, a

hearing was held on that objection. At the hearing, with the consent of both parties, the

government and Hardesty made a proffer of what their evidence bearing on that particular

matter would be, which proffers were accepted by the district court. The district court

then held that the record justified a 2 level increase in Hardesty’s base offense level under

U.S.S.G. § 3A.1.1. The district court’s findings and conclusion on this matter are set

forth in Attachment A.

       The factual findings on which a determination of victim vulnerability is based are

reviewed under a clearly erroneous standard. United States v. Brunson, 54 F.3d 673, 676

(10th Cir. 1995), cert. denied, 116 S.Ct. 397 (1995). As we understand it, Hardesty’s

counsel in this appeal does not claim that the district court’s findings of fact are not

supported by the present record. Counsel does claim, however, that the district court’s

conclusion that Klugg and Burgwin were vulnerable victims under U.S.S.G. § 3A1.1 is a

misunderstanding of the guideline and commentary, and that such is reviewed by us de

novo. United States v. Frazier, 53 F.3d 1105 (10th Cir. 1995). In any event, our study of

the matter leads us to conclude that the district court’s findings of fact are supported by

the record and that the district court did not err in concluding that under the U.S.S.G. §

3A1.1, Klugg and Burgwin were “vulnerable victims.”

       Hardesty’s position in this court, as it was in the district court, is that under the

commentary to U.S.S.G. § 3A1.1, Application note 1, the district court erred in enhancing


                                              -4-
his base offense level since the district court made no finding that “a victim was

specifically selected, or targeted, as a victim because of a particular vulnerability.”

Indeed, counsel argues here, as he did in the district court, that Hardesty’s base offense

level cannot be increased by 2 levels under U.S.S.G. § 3A1.1, unless the district court

finds, which it did not, that the defendant was a “predator,” virtually stalking his prey, and

determining, to his own satisfaction, that his “prey” was a “vulnerable victim,” before

committing any criminal action against his prey. We do not agree.

       We are here concerned, initially, with U.S.S.G. § 3A1.1, and not the commentary.

As indicated, U.S.S.G. § 3A1.1 simply provides that a defendant’s base offense level

should be increased by 2 levels “[i]f the defendant knew or should have known that a

victim of the offense was unusually vulnerable due to age, physical or mental condition,

or that a victim was otherwise particularly susceptible to the criminal conduct.”

Commentary to Sentencing Guidelines which interprets or explains a guideline is

authoritive unless it violates the Constitution or a federal statute or is inconsistent with

the guideline which it seeks to explain or is a plainly erroneous reading of the guideline

itself. Stinsen v. United States, 508 U.S. 36 (1993). See also United States v. Davis, 60

F.3d 1479, 1485 (10th Cir. 1993), cert. denied, 116 S.Ct. 1829 (1996). We believe that

the “targeting language” in the first sentence of Application note 1 is at odds with

U.S.S.G. § 3A1.1.

       We agree that at the inception of the relationship between Hardesty, Klugg and


                                             -5-
Burgwin, the latter two were probably not “vulnerable victims.” The two trusts here

involved were set up years before Hardesty embezzled therefrom. However, in the

ensuing years the physical and mental condition of Klugg and Burgwin deteriorated to the

end that they became “vulnerable victims” during the years when Hardesty diverted their

trust funds to his personal use. In this regard, it should be kept in mind that both Klugg

and Burgwin were at the time of Hardesty’s criminal acts about 90 years of age. We

recognize that in United States v. Lee, 973 F.2d 832, 834-35 (10th Cir. 1992), we said that

the fact that a victim was “elderly” would not, without more, support a “vulnerable

victim” enhancement. We do not know from our opinion just how “elderly” the victims

in Lee were. But here, as stated, they are both around 90 years of age. However, the

district court in the instant case did not rely solely on age, but also found that because of

“their medical and physical needs as they advanced in years, and their obvious

inexperience in finances” they were “vulnerable victims” by the time Hardesty got around

to embezzling their trust monies. The presentence report and the proffers of proof at the

sentencing hearing support such findings and conclusions.

       In support of our resolution of this appeal, the Ninth Circuit, recognizing that there

was authority to the contrary, held that U.S.S.G. § 3A1.1 did not require a finding by a

district court that the defendant “targeted” a vulnerable victim. United States v. O’Brien,

50 F.3d 751 (9th Cir. 1995). In so holding, the Ninth Circuit stated that “[t]he

requirement [in the commentary] that the defendant must target the vulnerable victim is


                                             -6-
inconsistent with the plain language of § 3A1.1, which only requires that the defendant

‘should have known’ that the victim was vulnerable.” Id. at 755. To like effect, the

Eleventh Circuit held that even though the defendants in that case did not initially know

of their victims’ vulnerabilities, the defendants still warranted enhancement under

U.S.S.G. 3A1.1 because they later learned of such vulnerabilities “at some point during

the loan fraud yet continued to perpetrate the fraud against victims whom they knew to be

unusually vulnerable to the loan scheme.” United States v. Page, 69 F.3d 482, 490 (11th

Cir. 1995).

       Further, we believe our resolution of the appeal is in general accord with Tenth

Circuit cases considering U.S.S.G. § 3A1.1. In United States v. Pearce, 967 F.2d 434,

435 (10th Cir.), cert. denied, 506 U.S. 922 (1992), we held that a frail, older woman

recently weakened by a double mastectomy who was targeted for a sexual assault was an

unusually vulnerable victim. In United States v. Lowder, 5 F.3d 467, 471 (10th Cir.

1993), we held that a U.S.S.G. § 3A1.1 enhancement was proper on a finding that the

victims were elderly, unsophisticated retirees who were fraudulently induced to invest

their retirement funds in a phony investment scam. And in Brunson, 54 F.3d at 676, this

court, after citing with approval both Pearce and Lowder, stated that “[a]s these cases

indicate, ‘vulnerable victims’ are those who are in need of greater societal protection.”

       Our resolution of the present controversy is fortified by the fact that, effective

November 1, 1995, the commentary to U.S.S.G. § 3A1.1 was altered by deleting the


                                             -7-
following language appearing in its predecessor: “This adjustment applies to offenses

where an unusually vulnerable victim is made a target of criminal activity by the

appellant.” This is the same language relied on here by Hardesty. In this general

connection, in United States v. Saucedo, 950 F.2d 1508, 1515 (10th Cir. 1991), where we

were concerned with an amendment to the commentary to a guideline whose text had not

been changed, we spoke as follows:

              Generally, when amendments merely clarify pre-existing
              guidelines, ‘their retrospective application presents no ex post
              facto issue.’ (citations omitted). Courts frequently consider
              clarifying amendments to discern the Sentencing
              Commission’s intent as to application of the pre-amendment
              guideline. (citations omitted).

       In sum, at the very least, Hardesty “should have known,” if he didn’t in fact know,

that Klugg and Burgwin because of their age, physical and mental condition, and

inexperience with financial matters were vulnerable victims.

       Judgment affirmed.




                                            -8-
                                    Attachment A

        But in the instant case, the defendant was a lawyer, with special expertise in the
tax law and estate planning, which included the creation and administration of trusts. He
held himself out to the general public as a person specially qualified and competent in his
field of expertise. While perhaps he did not make these two elderly persons specific
targets of his criminal activity, he clearly knew or should have known, and this is out of
the language of the guideline, that they were unusually vulnerable due to their age, the
potential requirements of their medical and physical needs as they advanced in years, and
their obvious inexperience in finances. They both lacked the background or ability to
watch over their finances.

       They most certainly relied on his expertise and had every reasonable expectation
that he would fulfill his fiduciary duties and act in an honest, fair and candid manner in
managing the trust estates for the purposes for which they were established.

        The defendant’s commission of these crimes whereby he provided his victims with
false statements and diverted the trust assets for his own personal use and benefit was
made much easier by the fact of these two victims’ vulnerability due to their age and
obvious inexperience in financial matters.

        Now, they placed complete trust in Mr. Hardesty, and he took full advantage of
them.

        As I have indicated, whether he solicited them, in words of some of the cases
that’s used, in my opinion is not really all that material, and I find United States versus
O’Brien, the reasoning of that case very, very persuasive.

        Moreover, even though Mr. Hardesty may not have specifically sought out these
victims and targeted them as such, he is a lawyer, had a right to select his clients. When
they came to him, he could have turned them down or he could, as he did, agree to be
their lawyer, their estate planner and their confidant. There were reciprocal undertakings
in the attorney/clients relationship that developed.

       Under all the facts before the Court, it may reasonably be inferred that these two
victims fit perfectly into the accomplishment of Mr. Hardesty’s nefarious scheme to
defraud and make discovery of what was really happening to the trust moneys more
difficult because of the victims’ vulnerability, thus postponing the day when the scheme
might be discovered and the day of reckoning come.


                                             -1-
       The Court finds and concludes by a preponderance of the evidence that the facts as
outlined in the presentence investigation report, the letters for and on behalf of the
victims, Mrs. Burgwin and Mrs. Klugg, and the proffered testimony presented here today,
both by the Government and the defendant, that Mrs. Burgwin and Mrs. Klugg were and
are vulnerable victims as contemplated by the United States Sentencing Guideline,
Section 3A1.1, hence the offense level is increased two levels in accordance with that
guideline.




                                          -2-
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