In the
United States Court of Appeals
For the Seventh Circuit
No. 11-2046
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
G EORGE P ABEY,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Indiana, Hammond Division.
No. 2:10 CR 17—James T. Moody, Judge.
A RGUED O CTOBER 19, 2011—D ECIDED D ECEMBER 28, 2011
Before F LAUM and M ANION, Circuit Judges, and M AGNUS-
S TINSON, District Judge.
F LAUM, Circuit Judge. On September 24, 2010, George
Pabey, former mayor of East Chicago, and Jose Camacho,
East Chicago’s head of the Engineering Department,
The Honorable Jane E. Magnus-Stinson, United States
District Court for the Southern District of Indiana, sitting by
designation.
2 No. 11-2046
were convicted of conspiring to embezzle government
funds and embezzling government funds. According to
the district court, Pabey and Camacho used government
funds and government employees to renovate a house
(the “Property”) that Pabey and his wife purchased in
October 2007. During trial, Pabey claimed that he was
unaware of the scheme to use city funds and employ-
ees. In response to this denial, the district court gave
the jury a conscious avoidance instruction, informing
them that Pabey’s knowledge of the scheme can be
inferred if they find that he deliberately avoided the
knowledge necessary for his conviction. The jury con-
victed Pabey, and he appeals the court’s issuance of the
conscious avoidance instruction.
In the event that we do not upset his verdict, Pabey
asks that we reduce the length of his sentence. Pabey
was given an initial offense level of 10 under the United
States Sentencing Guidelines (“U.S.S.G.”), but the court
increased his offense level with several enhancements.
The court applied a two-point enhancement for obstruc-
tion of justice, a four-point enhancement for Pabey’s
leadership role in the offense, and a two-point enhance-
ment for abuse of a position of trust, bringing Pabey’s total
offense level to 18. With a criminal history level of one,
Pabey’s guideline range was 27-33 months’ imprison-
ment. The district court found that Pabey’s offense war-
ranted an upward departure from the guidelines and
sentenced him to 60 months’ imprisonment, along with
a $60,000 fine, more than $14,000 in restitution, a $200
special assessment fee, and three years of supervised
release. Pabey contests each of the sentence enhance-
No. 11-2046 3
ments as well as the reasonableness of the court’s up-
ward departure from the sentencing guidelines.
For the following reasons, we affirm both Pabey’s
conviction and the sentence imposed by the district court.
I. Background
George Pabey was born in East Chicago, Indiana and
has remained a lifetime resident. He has worked as an
employee for East Chicago for roughly three decades,
serving on the police force for 22 years, as the police
chief for one year, as a councilman for four years, and as
mayor since 2004. Throughout this time, Pabey and his
wife Hilda owned several pieces of property. Pabey
confesses that he is not what one would call a “handy-
man,” so any time their properties needed tending
they enlisted the help of their family and friends. Specifi-
cally, Pabey would often seek the help of his good
friend and political supporter Jose Camacho—who also
served as Pabey’s Engineering Supervisor during
Pabey’s mayoral tenure—and Angel Acosta—another city
worker who was friendly with the Pabeys. In the past,
Camacho, Acosta, and other friends would not charge
anything for their help, but Pabey and Hilda would
personally pay for all the supplies and costs associated
with the projects. Other times, Pabey and Hilda would
pay workers—including off-duty city workers—to help
with their repair needs.
In October 2007, Pabey decided to purchase a
house for his daughter in Gary, Indiana. He found the
4 No. 11-2046
Property, which had been foreclosed upon, and asked
Camacho and Acosta to accompany him to the house to
see whether it was worth purchasing. Camacho and
Acosta determined that the Property needed a good
amount of work, but was salvageable. Prior to any work
being completed, the Property was appraised at $67,000.
Pabey agreed to buy the house, and in December 2007,
Camacho took the lead on the improvements that the
Property required. By May 2009, the house was worth
$135,000. The $68,000 increase in value was largely at-
tributable to an embezzlement scheme aimed at using
East Chicago resources to complete the renovation of
the Property. The pertinent question in the case at hand
is whether Pabey was aware of that embezzlement
scheme. On February 3, 2010 a federal grand jury
returned a four-count indictment indicating that Pabey
may have been privy to the plan. While counts three
and four applied only to Camacho, both defendants
were charged with count one of conspiring to embezzle
local government funds under 18 U.S.C. § 371 and count
two of embezzling local government funds under 18
U.S.C. § 666(a)(1)(A). The defendants’ jury trial started
on September 20, 2010.
According to the government’s evidence at trial,
there were two methods of embezzlement employed by
Camacho and Pabey to repair the Property. First,
Camacho bought dozens of items that were installed at
Pabey’s new house by using his authority to charge
purchases to the city’s accounts at Menards and Joseph’s
Hardware. Among the items purchased using the city’s
money were the following: (1) front and rear entry doors
No. 11-2046 5
and locks; (2) a gas water heater; (3) doors and drawer
handles for the kitchen cabinetry; (4) a bathtub and adjust-
able shower head for the main floor bathroom; (5) interior
paint; (6) items used to finish the basement including
2X4s, drywall, corner bead, paint, primer tile, and grout;
(7) an exhaust fan and other items for the basement
bathroom; (8) light fixtures to be installed throughout the
home; and (9) wood materials used to construct a stair-
case and full bar in the basement. When items were
purchased on one of the city’s accounts, the city controller
would ultimately be responsible for paying off the
claims, but neither of the parties suggested that the con-
troller had any knowledge of the embezzlement scheme.
As Pabey points out, there were some items installed
that were not charged to the city, including appliances,
fixtures, carpeting and countertops (which the Pabeys
paid for) and a furnace (which Acosta paid for).
The second form of embezzlement involved Camacho’s
use of on-the-clock city workers—all of whom reported
to him—to complete the renovation project. In his brief,
Pabey notes that not all of the work was completed by
city workers on city time. His friend Benedicto Diaz
was not a city worker, and he provided much help with
the project. Acosta was an upper-level city worker, so
he was able to take compensatory time while he worked
on the Property. But the government put forth evidence
at trial that at least five city workers other than
Camacho and Acosta helped renovate the Property at
times during which they were being paid by the city of
East Chicago. They were each told that their work on
the Property, which was not located within the confines
6 No. 11-2046
of their employer city of East Chicago, was a “special
assignment.” The amount of time each of them
spent working on the house ranged from two to thirty
workdays. At least one employee, however, refused to
work on Pabey’s house. Alex Sanchez, who worked
directly under Camacho, refused to go into Pabey’s new
home, and told Camacho not to use any of Sanchez’s sub-
ordinates on the “special assignment.” According to
the government’s evidence, Camacho assured Sanchez
that the workers could be trusted and that they would
not talk.
The government also presented certain circumstantial
evidence at trial suggesting that Pabey either knew of
Camacho’s scheme to use government resources or pur-
posefully avoided the obtainment of such knowledge. In
an effort to illustrate that Pabey was aware of the use
of city employees, the government put on evidence of
Pabey’s, Camacho’s, and Hilda’s encounters with city
workers at the Property. For instance, Stojan Novakovic,
a city worker from the Engineering Department, testi-
fied that he saw Pabey at least three times at the
Property during the workday. Pabey knew Novakovic
for 20 years and had paid Novakovic to do work on
other properties he owned, but when Pabey saw
Novakovic working on the Property during work hours,
he did not offer to pay Novakovic, nor did he inquire as
to why Novakovic was working on Pabey’s house
during work hours. Hilda, on the other hand, gave
Novakovic specific directions regarding what rooms
needed to be painted. Edward Bittner—a city em-
ployee who did work both on and off the clock—was
No. 11-2046 7
also offered payment by Pabey for his off-duty efforts,
but was not offered any money for his work while on
the job.
To further support its theory, the government pro-
vided evidence that highlighted Camacho’s deep involve-
ment in the renovation of the Property juxtaposed
with Pabey and Camacho’s very close relationship. For
instance, there were 50 different weekdays where
Camacho made cell phone calls during work hours
while at the Property.1 There were also 186 calls between
Camacho and Pabey’s cell phones from October 2007 to
May 2010. Finally, Pabey was seen at the Property with
Camacho by several workers on several occassions.
Regarding the use of city funds, the government at-
tempted to prove that Pabey knew—or consciously
avoided the knowledge—that the supplies for the renova-
tion were purchased on the city’s accounts at Menards
and Joseph’s Hardware. The government’s evidence
revealed one incident where Pabey, Camacho, and Hilda
rented a sander from Menards. The Pabeys paid for the
rented sander, but the next day, Camacho paid for a
shop vac, sandpaper, and drop cloth on the Engineering
Department’s account, and later that day Pabey re-
1
In Gary, Indiana, any call made from a cell phone will be
transmitted from a cell phone tower within two miles of the
phone’s location. The district court found that the routing of
Camacho’s calls through the cell phone tower near the
Property was conclusive proof that Camacho was at the Prop-
erty, especially since the home was not in East Chicago.
8 No. 11-2046
turned the sander they had rented. The government
also presented evidence that during past home improve-
ment projects, the Pabey’s kept detailed receipts of all
transactions, but for this project, they simply requested
that Camacho put all receipts in a brown envelope—an
envelope they did not open until months after all renova-
tions had been completed. Further, Hilda testified at
trial that she usually paid for supplies with check or
credit card in the past, but for the Property there was
only one non-cash expenditure: a $600 check for
plumbing supplies.
Pabey’s defense at trial involved a denial of any knowl-
edge that city workers were being paid while working
at his house or that the materials purchased for his house
were bought by the city. Pabey claimed that he paid
Camacho cash for items Camacho needed to buy for
the renovations, and that Camacho must have pocketed
the money if government funds were used to purchase
the materials. Pabey supported this theory with the
testimony of his wife, Hilda.
Hilda testified that in this situation, as in the past,
she did not pay Acosta or Camacho for their work on the
Pabeys’ property. She testified that she would either
accompany them to buy materials herself, she would
give them cash to go purchase the materials, or she
would reimburse them for any expenditures they made.
Hilda admitted that she never directly took a receipt
from Camacho, and that no receipts existed for the
drywall installed, the 2X4s used, the door knobs, or the
door locks, but she insisted that she was unaware of
No. 11-2046 9
any purchases from Menards using city money. She
said that she gave Camacho money for the doors that
were installed, despite the fact that the city paid for
those doors. She also claimed that the knobs that were
attached to the cabinets were knobs that she had lying
around the house, and her explanation for the fact that
Camacho had bought the exact same knobs with city
money was that it must have been a coincidence. She
also claimed that she is positive she bought the blue
and purple paint that was used in the house, though
Camacho had bought the exact same paint at Menards
on the Engineering Department’s account. Finally, Hilda
claimed that she purchased the chandelier in the Gary
home for $25—the exact same model that Camacho
bought at Menards for $59.99, again with city money.
At the conclusion of trial, the district court gave Final
Instructions to the jury. Final Instruction No. 31 was a
conscious avoidance instruction—often referred to as an
ostrich instruction—and was in line with the Seventh
Circuit pattern jury instructions. The instruction stated:
You may infer knowledge from a combination of
suspicion and indifference to the truth. If you find
that a person had a strong suspicion that things
were not what they seemed or that someone had
withheld some important facts, yet shut his eyes for
fear of what he would learn, you may conclude that
he acted knowingly, as I have used that word.
You may not conclude that the defendant had knowl-
edge if he was merely negligent in not discovering
the truth.
10 No. 11-2046
Pabey objected to this instruction, asserting that no evi-
dence was presented showing that he deliberately
avoided knowledge of the scheme. The district court
overruled this objection, finding that the evidence sup-
ported the ostrich instruction.
On September 24, 2010, Pabey was found guilty on both
counts. At his sentencing hearing, Pabey’s base offense
level was set at six under U.S.S.G. § 2B1.1(a)(2), but was
increased four levels because the loss amount from his
embezzlement was between $10,000 and $30,000. See
U.S.S.G. § 2B1.1(b)(1)(C). The presentence report (“PSR”)
recommended an increase of four levels because Pabey
was the organizer or leader of a scheme that in-
volved five or more criminal participants and an increase
of two-more levels because Pabey abused his position
of trust. U.S.S.G. §§ 3B1.1(a), 3B1.3. The district court
accepted the PSR’s recommended increases and added a
two-level increase because Pabey obstructed justice by
suborning perjured testimony from his wife, Hilda.
U.S.S.G. § 3C1.1. Pabey’s total offense level was therefore
set at 18, and with a criminal history level of one, the
guideline range for his sentence was 27-33 months. The
district court also found that Pabey was deserving of a
sentence above the range due to the aggravating circum-
stance of the loss of public confidence in the honesty
and integrity of elected officials as a result of his crime,
which caused a substantial nonmonetary harm and
a significant disruption of a governmental function.
Thus, the court sentenced Pabey to 60 months’ incarcera-
tion, a $60,000 fine and a $200 special assessment fee,
all on top of the $14,405.14 in restitution that Pabey
owed the city.
No. 11-2046 11
Pabey appeals on several grounds. First, Pabey chal-
lenges the propriety of the ostrich instruction given the
evidence presented at trial. Second, Pabey challenges
the offense-level increases to his guidelines calculation
based on obstruction of justice, role in the scheme and
abuse of position of trust. Finally, Pabey challenges
the reasonableness of the district judge’s divergence
from the sentencing guidelines range.
II. Discussion
A. Ostrich Instruction
Pabey claims that the district court abused its discre-
tion by permitting the jury to receive the conscious avoid-
ance instruction, or “ostrich” instruction, and that absent
this instruction, the jury would not have convicted
him. The purpose of the ostrich instruction is to
inform jurors that the legal definition of “knowledge”
includes the deliberate avoidance of knowledge. United
States v. Fallon, 348 F.3d 248, 253 (7th Cir. 2003). Thus, a
defendant cannot avoid criminal liability by sticking
his head in the sand to purposefully avoid the knowl-
edge that he is involved in criminal dealings. United
States v. Green, 648 F.3d 569, 582 (7th Cir. 2011). We have
cautioned that the ostrich instruction is inappropriate
in situations where the evidence only supports a
finding that the defendant should have known or strongly
suspected that criminal dealings were afoot. See United
States v. L.E. Myers Co., 562 F.3d 845, 854 (7th Cir. 2009);
see also United States v. Carrillo, 435 F.3d 767, 782 (7th
12 No. 11-2046
Cir. 2006) (“[E]vidence merely supporting a finding of
negligence—that a reasonable person would have been
strongly suspicious, or that a defendant should have
been aware of criminal knowledge—does not support an
inference that a particular defendant was deliberately
ignorant.”). Such a standard would lead to convictions
based on mere negligence regardless of the appropriate
level of mens rea for a given crime, completely
abrogating the mens rea requirement of knowledge.
Carrillo, 435 F.3d at 781. Thus, an ostrich instruction is
only appropriate when two circumstances are present:
“(1) a defendant claims a lack of guilty knowledge and
(2) the government presents evidence that suggests
that the defendant deliberately avoided the truth.” United
States v. Tanner, 628 F.3d 890, 904 (7th Cir. 2010) (emphasis
added). It is undisputed that Pabey claimed a lack of
guilty knowledge at trial, so the only question to
answer regarding this issue is whether the government
presented sufficient evidence for a reasonable jury to
find that Pabey deliberately avoided the truth behind
the embezzlement scheme. Pabey argues that he did not
deliberately avoid the truth, but was simply negligent
in failing to discover Camacho’s embezzlement. We
review the district court’s finding that evidence existed
to support the ostrich instruction for abuse of discretion,
and we view all evidence in the light most favorable to
the government. United States v. Garcia, 580 F.3d 528,
537 (7th Cir. 2009).
There are two types of evidence that can illustrate a
defendant’s deliberate attempts to remain ignorant.
Carrillo, 435 F.3d at 780. First, a prosecutor can show
No. 11-2046 13
that the defendant committed overt physical acts to
avoid the knowledge. Id. In United States v. Giovannetti,
for instance, we held that a landlord who changed his
route to work to avoid driving past suspicious tenants
would be engaging in deliberate avoidance, but a
landlord who did not alter his route in order to check
up on the house was merely failing to show curiosity. 919
F.2d 1223, 1228 (7th Cir. 1990). Second, the prosecutor
can undertake the more difficult task of showing purely
psychological avoidance, otherwise described as the
“cutting off of one’s normal curiosity by an effort of will.”
Carrillo, 435 F.3d at 780. While the difference between
a defendant lacking curiosity and a defendant who af-
firmatively cuts off his curiosity is scant, we have estab-
lished that a jury can infer the deliberate avoidance of
knowledge from circumstantial evidence alone. Carrillo,
435 F.3d at 781. The key determinations to make when
examining this type of evidence are therefore “what the
defendant knew and whether that knowledge raises a
reasonable inference that [he] remained deliberately
ignorant of facts constituting criminal knowledge.” United
States v. Ramirez, 574 F.3d 869, 877 (7th Cir. 2009). An
example of psychological avoidance can be found in
United States v. Leahy, where the defendant, an insurance
broker for a temp agency, was convicted of mail and
wire fraud in connection with the temp agency’s
insurance fraud scheme. 464 F.3d 773, 794 (7th Cir. 2007).
We held that an ostrich instruction was appropriate in
Leahy since the defendant asked no questions about the
company’s auditing problems despite his exposure to
“numerous red flags, obvious to someone with his
14 No. 11-2046
training and experience, over the duration of his
business relationship with [the temp agency].” Id. at 796.
In the case at hand, the government presented both
types of evidence to show that if Pabey was unaware of
the embezzlement scheme surrounding the Property,
then he deliberately avoided such knowledge. To begin
with, the government presented evidence that Pabey
acted differently in this situation than he had during the
renovation of other properties he owned, suggesting
that he was avoiding the true nature of the renovations.
For instance, the government put forth evidence that
Pabey either did pay or offered to pay Novakovic and
Bittner in the past for work they did for him around
his properties. Pabey also either paid or offered to pay
Bittner for work he did on the air conditioning unit of
the Property at issue in this case. Yet Pabey did not even
acknowledge the work Bittner and Novakovic did for
him while they were on the clock. This is in spite of the
government’s evidence that Pabey had known
Novakovic for 20 years, and he witnessed both Bittner
and Novakovic working on his house during work
hours. Pabey also avoided looking at the receipts that
Camacho was putting into a brown envelope kept at the
Property, allegedly accounting for all of the expenditures
that were made by Pabey for the renovation. There was
evidence suggesting that in the past, Pabey and his
wife kept detailed receipts for home projects, yet they
did not so much as glance at receipts in the brown enve-
lope until nine months after the renovation had started.
From this, a jury could have reasonably found that
Pabey parted from his normal behavior in order to
No. 11-2046 15
avoid any knowledge of wrongdoing, much like the
hypothetical driver described in Giovannetti.
The government also provided evidence that Pabey
ignored multiple red flags regarding the nature of his
renovation. According to the government’s evidence,
Pabey was confronted with several situations which
strongly suggested that city workers were renovating
his house while on the clock, but he did not confront
these workers or ask Camacho how they could be
doing non-government work during the middle of the
day. As mentioned above, Pabey knew Novakovic for
over 20 years and had paid him to work on his house in
the past, yet Pabey allegedly said nothing but “hello” to
Novakovic when Pabey saw him working on the house
during work hours. The court found that Pabey’s wife
Hilda, however, did talk to Novakovic during work
hours and asked him to paint several walls. Pabey
also spoke with Camacho many times during work
hours while Camacho was at the Property. Given that
they were life-long friends, a jury could infer that
Camacho informed Pabey that he was at the Property
observing the renovations during work hours. Pabey
neglected to ask Camacho if he was taking compensa-
tion time or vacation time during the roughly 50 days
Camacho spent at Pabey’s house conducting renovations.
Finally, many of the items installed in Pabey’s Property
were paid for by the Engineering Department of East
Chicago. Despite these big ticket items continually
showing up at the Property, Pabey did not question
how all the items were being paid for. Pabey reminds us
that he did pay for some items, but viewing the evidence
16 No. 11-2046
in the light most favorable to the government, this fact
could actually hurt Pabey. If Pabey was paying for some
but not all of the items, where did he think the rest of
the merchandise was coming from? Pabey’s failure to ask
that question is enough for a jury to conclude that he
consciously avoided the answer. All these red flags,
along with the court’s finding that Pabey was usually a
“hands-on mayor,” suggest that Pabey deliberately
avoided incriminating knowledge while reaping num-
erous benefits.
In his brief, Pabey argues that Camacho was the perpe-
trator of this fraud, that Camacho was pocketing the
money Pabey gave him for supplies, and that Pabey,
therefore, was a victim. In support of this theory,
Pabey supplied evidence that Camacho did not want
Pabey to know that city resources were being used for
the renovation. First of all, the jury was free to reject
this evidence. The only question that matters in this
review for abuse of discretion is whether enough
evidence existed for a jury to reasonably conclude that
Pabey either had incriminating knowledge or delib-
erately avoided incriminating knowledge. Second, the
amount of knowledge that Camacho intended for Pabey
to acquire is irrelevant when determining the amount
of knowledge Pabey actually had and the number of red
flags Pabey ignored. A reasonable jury could have
found that Pabey was not just negligent in his alleged
ignorance of the scheme to embezzle money from
East Chicago, but that he either knew of the scheme or
deliberately avoided knowledge about the scheme.
The district court was therefore within its discretion in
issuing an ostrich instruction.
No. 11-2046 17
B. Sentencing Enhancement Challenges
Pabey also argues that even if he was properly found
guilty, the court improperly increased his sentence
under the U.S.S.G. At sentencing, the government
carried the burden to prove, by a preponderance of the
evidence, that the sentencing enhancements discussed
below applied to Pabey. We review the court’s findings
of fact for clear error, giving special deference to the
court’s findings based on witness credibility. United
States v. Banks-Giombetti, 245 F.3d 949, 954 (7th Cir. 2001).
We review de novo whether those facts adequately
support the three enhancements levied on Pabey.
United States v. Taylor, 637 F.3d 812, 817 (7th Cir. 2011).
1. Obstruction of Justice Enhancement
Section 3C1.1 of the U.S.S.G. provides for an increase
of a defendant’s offense level if:
(A) the defendant willfully obstructed or impeded, or
attempted to obstruct or impede, the administration
of justice with respect to the investigation, prosecu-
tion, or sentencing of the instant offense of convic-
tion, and (B) the obstructive conduct related to (i) the
defendant’s offense of conviction and any relevant
conduct; or (ii) a closely related offense . . . .
The district court held that Hilda provided false testi-
mony with regard to the origin of certain items that were
installed at the Property, namely, the knobs for the
Pabeys’ cabinets, blue and purple paint, and a chandelier.
The court also found that Hilda lied when she claimed
18 No. 11-2046
that she never saw Camacho at the Property during her
numerous visits during the workday. Further, the
court held that Pabey suborned this perjury, given his
spousal relationship with Hilda and her clear motive to
further Pabey’s theory that he lacked any knowledge
about the use of city workers or city funds on the Prop-
erty. Even if Pabey did not actually ask or pressure
Hilda to falsely testify, the court reasoned, he used her
testimony as his main defense knowing that it was not
true, which amounts to suborning perjury. United States
v. Bradberry, 466 F.3d 1249, 1255 (11th Cir. 2006). Pabey
does not dispute that he used Hilda’s testimony in his
defense, but argues that the testimony regarding these
topics was not perjury. Suborning perjury undoubtedly
constitutes obstruction of justice for the purposes of
U.S.S.G. § 3C1.1, United States v. DeLeon, 603 F.3d 397, 403
(7th Cir. 2010), so the question at issue is whether
the district court clearly erred in finding that Hilda’s
testimony was perjurious.
Two elements must be present for a finding of per-
jury—and thus, in this case, subornation: (1) a witness
provides testimony falsely with willful intent, and (2) that
testimony is material. United States v. Rodriguez, 995
F.2d 776, 779 (7th Cir. 1993). As stated above, the district
court found that Hilda’s testimony regarding the knobs,
paint, and chandelier was false, as was her testimony
that she did not see Camacho during workdays at the
Property. The district court based this conclusion on
the testimony’s incompatibility with documentary evi-
dence—such as the receipts and SKU numbers indicating
that the items used in the Property were purchased by
No. 11-2046 19
the Engineering Department—and the testimony of
other witnesses—such as the workers that saw both
Camacho and Hilda at the house on many occasions.
The district court also found that this false testimony
was provided willfully, given Hilda’s very assertive
and combative nature in answering questions about
these topics.
In challenging this finding, Pabey cites application
note 2 for § 3C1.1, which states that “the court should
be cognizant that inaccurate testimony or statements
sometimes may result from confusion, mistake, or faulty
memory and, thus, not all inaccurate testimony or state-
ments necessarily reflect a willful attempt to obstruct
justice.” Pabey argues that Hilda’s false testimony falls
into one of the categories mentioned in note 2. He claims
that Hilda was simply mistaken about which knobs
were used on the cabinets—the knobs she allegedly
owned or the identical knobs that Camacho bought
with city money. She failed, however, to account for the
current whereabouts of the set of knobs she claimed to
have originally owned. She speculates that Camacho
put them somewhere else, but it was not clear error for
the court to reject this story that lacks evidentiary sup-
port. Hilda’s suggestion that she bought a chandelier
identical to the one that Camacho had installed in the
Property is similarly lacking in support. Pabey also
argues that it is possible that both Hilda and Camacho
bought the same kind of paint, and that Camacho and the
other workers had to use both sets of paint for the
house, making Hilda’s testimony accurate. Once again,
it was reasonable for the district court to conclude that
20 No. 11-2046
this story is simply made up, especially given the
district court’s unique ability to determine the credibility
of witnesses. Finally, Pabey argues that the nature of
Camacho’s job was such that he was on call 24/7, 365
days a year, and that Hilda was simply confused when
asked if she saw him “during work hours.” This argument
is misleading. The sentencing transcript suggests that
Hilda was not asked whether she saw Camacho while
he was on the clock, but rather whether she saw him
during the normal work hours of seven in the morning
to three in the afternoon. Her testimony, therefore,
could not have been the result of confusion about his
schedule or his payment arrangement with the city.
The district court’s finding that Hilda willfully testified
falsely is not clear error.
Pabey also argues that the allegedly perjured testi-
mony was not material to the case. If, however, Pabey’s
wife was aware that city employees were working on
the Property while on the clock and city money was
funding the renovations, Pabey was much more likely
to have been aware of those facts as well. Given that
Pabey’s knowledge about these facts was the central issue
in this case, the testimony was obviously material. See
United States v. Spagnola, 632 F.3d 981, 989 (7th Cir. 2011).
Since the district court did not clearly err in finding
that Hilda gave perjured testimony and Pabey suborned
that perjury, the obstruction of justice enhancement
was not inappropriate.
No. 11-2046 21
2. Role in the Scheme Enhancement
Pabey next contests the district court’s enhancement
based on Pabey’s role as the leader of the scheme to
defraud East Chicago. Section 3B1.1 of the U.S.S.G.
states the following:
Based on the defendant’s role in the offense, increase
the offense level as follows:
(a) If the defendant was an organizer or leader of a
criminal activity that involved five or more partici-
pants or was otherwise extensive, increase by 4 levels.
(b) If the defendant was a manager or supervisor
(but not an organizer or leader) and the criminal
activity involved five or more participants or was
otherwise extensive, increase by 3 levels.
(c) If the defendant was an organizer, leader,
manager, or supervisor in any criminal activity other
than described in (a) or (b), increase by 2 levels.
The district court held that Pabey was, in fact, the leader
of the scheme in question, and that there were five or
more criminal participants in this scheme, including
Pabey, Camacho, and several other low-level employees.
Pabey challenges both of these findings.
In determining whether Pabey was the leader of this
scheme, we must remain cognizant of the fact that
Pabey’s de jure control over all city workers is not neces-
sarily dispositive; he must have control over participants
with regard to the actual scheme to be eligible for
this enhancement. See United States v. DeGovanni, 104
22 No. 11-2046
F.3d 43, 45 (3d Cir. 1997). There are six factors a district
court must consider when examining a defendant’s
leadership role in a conspiracy:
(1) exercise of decision-making authority; (2) par-
ticipation in committing the offense; (3) recruitment
of accomplices; (4) degree of participation in planning
or organizing the criminal activity; (5) degree of
control or authority exercised over others involved
in the criminal activity; and (6) the nature and scope
of the illegal activity.
United States v. Hollins, 498 F.3d 622, 632 (7th Cir. 2007)
(citing United States v. Falcon, 347 F.3d 1000, 1004 (7th
Cir. 2003)). In applying these factors, the district court
found it relevant that Pabey recruited Camacho to
renovate his house (who in turn recruited all the oth-
ers), that Pabey met with Acosta and Camacho to
discuss potential improvements to the house, that
Pabey received the entirety of the benefit from the
scheme, and that all the workers who helped repair
the house owed their jobs to Pabey in one way or an-
other. Pabey contests that these findings make him
a leader, arguing that he could not have been the leader
of a scheme of which he was unaware. He claims that
Camacho paid for the home improvement items with
city money and pocketed the money received from
Pabey, thereby benefitting from the scheme. In support
of this theory, he once again cites the trial testimony
regarding Camacho’s statements that Pabey would be
upset upon learning about the scheme. This story is a
repackaging of Pabey’s general defense theory. While
No. 11-2046 23
the story, if believed, would clearly preclude a finding
that Pabey led the scheme, the jury rejected this theory,
and the court did not commit error by rejecting it as well.
Pabey also challenges the finding that this conspiracy
either involved five or more participants that were crimi-
nally culpable or was “otherwise extensive,” one of
which must be true for a four-point sentence enhance-
ment to apply under U.S.S.G § 3B1.1. United States v. Tai,
41 F.3d 1170, 1173 (7th Cir. 1994). We have stated that
a person need not have been charged or convicted to be
a participant in a crime; rather, a participant need only
be criminally responsible, meaning the participant
could have been charged. United States v. Mandel, 15
Fed. Appx. 369, 374 (7th Cir. 2001). Further, mere knowl-
edge of a conspiracy is not enough to render one
criminally responsible, but knowingly assisting a crim-
inal enterprise makes one criminally responsible as an
accessory. United States v. Hall, 101 F.3d 1174, 1178 (7th
Cir. 1996).
Only one of the workers under Pabey and Camacho
affirmatively stated that he knew doing the work
on Pabey’s house was illegal. But the fact that the employ-
ees were performing work on property in a different
city than East Chicago, along with Camacho’s continued
references to their work for Pabey as a “special assign-
ment,” was likely enough to make them accessories, in
that they knew the work was illegal and they helped
advance the scheme anyway. Regardless of whether
the subordinate workers were criminally responsible,
however, the scheme at issue was “otherwise extensive,”
and thus the court’s imposition of this enhancement
24 No. 11-2046
was justified under U.S.S.G. § 3B1.1. application note 3
of § 3B1.1 clarifies that under the “otherwise extensive”
prong, all persons involved in a scheme, whether they
are aware of the scheme or not, should be considered.
U.S.S.G. § 3B1.1, application note 3. Thus, “a fraud that
involved only three participants but used the unknowing
services of many outsiders could be considered exten-
sive.” Id. In United States v. Tai, we used application note 3
to conclude that the “otherwise extensive” prong can be
satisfied if the total number of criminal participants
and outsiders that unwittingly advance a conspiracy is
greater than five. 41 F.3d at 1174-75. Here, the participa-
tion of Pabey, Camacho, at least five lower-level city
workers, and the city controller satisfies this standard
whether or not the lower-level workers were aware of
the scheme’s illegality. Thus, at the very least, this
scheme is “otherwise extensive” and the enhancement
is appropriate.
3. Abuse of Position of Trust Enhancement
The final enhancement that Pabey challenges is an
enhancement based on Pabey’s abuse of his position of
trust. As § 3B1.3 of the U.S.S.G. states, “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.” Pabey does not contest that he occupied a
position of trust, but claims that his position did not
facilitate the commission or concealment of his offense.
Occupying a position of trust and participating in
illegal activities do not, by themselves, render an en-
No. 11-2046 25
hancement for abuse of trust proper. United States v.
Gould, 983 F.2d 92, 94 (7th Cir. 1993). The position held
by the defendant must have made the commission of
the offense significantly easier, id., not merely helped
incidentally. United States v. Holt, 170 F.3d 698, 704 (7th
Cir. 1999). In this case, the district court found pertinent
the fact that Pabey had control over both the money
and the people involved in the scheme, including
Camacho, who directly spent the city’s money, and the
city controller, who unknowingly approved those
illegal expenditures. The district court also noted that no
other citizen could have obtained the benefits Pabey
received by using city resources to improve his piece
of property, especially since the property was not even
located in his city of East Chicago.
Pabey argues that several of the city workers
implicated in this scheme had helped him repair other
pieces of property before he was mayor, so his position
could not have been the reason that city employees
helped renovate the Property. This argument does not
confront the fact that Pabey would not have had access
to on-the-clock workers or the city’s Menards and
Joseph’s Hardware accounts without his position.
Paybe also argues that it was not he, but the controller
of the city that was paying out the fraudulent claims
made to Menards and Joseph’s as a result of
Camacho’s purchases on city accounts. But this point
is unrelated to the fact that Pabey knowingly
allowed illicit benefits to funnel his way, and he
would not have had this opportunity were it not for
his position as mayor.
26 No. 11-2046
The district court’s finding that Pabey used his position
of trust to obtain benefits was not clear error, and the
enhancement for abuse of trust was therefore proper.
C. Divergence from Guidelines
Pabey’s final objection is that the district court’s upward
departure from the guidelines was inappropriate. “The
court reviews the reasonableness of a sentence under
an abuse of discretion standard,” United States v.
Pineda-Buenaventura, 622 F.3d 761, 778 (7th Cir. 2010), and
a sentence above the guidelines range is not presumed
to be unreasonable. United States v. Jackson, 547 F.3d 786,
792 (7th Cir. 2008). In determining whether to vary
from the Guidelines range, a judge must consider the
factors put forth in 18 U.S.C. § 3553(a). Id. A major depar-
ture requires a more significant justification, id., but a
judge need not provide an extraordinary justification.
United States v. Schlueter, 634 F.3d 965, 967 (7th Cir. 2011).
The district court’s explanation of its divergence
from the guidelines adequately discussed its application
of the § 3553(a) factors, which include “the nature and
circumstances of the offense,” “the need for the
sentence imposed . . . to reflect the seriousness of the
offense,” and “the need for the sentence imposed . . . to
afford adequate deterrence to criminal conduct.” 18 U.S.C.
§ 3553(a). The court discussed the seriousness of the
offense given the decades of corruption East Chicago
citizens have faced, their poverty rate, and the fact that
their government has had to lay off scores of employees
recently. The court also discussed Pabey’s campaign
No. 11-2046 27
promise to rid the government of corruption, on
which many voters relied, thus increasing his culpability.
Finally, the court discusses the need for deterring this
type of behavior in East Chicago, both generally and
specifically, given the rampant corruption that has
existed in East Chicago for the last several decades.
In further support of its departure, the district court
cited application note 19 of U.S.S.G. § 2B1.1, which sug-
gests an upward departure from the guidelines based
on the risk of non-monetary harm, and U.S.S.G. § 5k2.7,
which suggests an upward departure if the defendant’s
conduct significantly disrupted a government function.
The district court found that Pabey’s actions would
result in a loss of public confidence in the honesty and
integrity of elected officials, and that this loss of public
confidence is both a non-monetary harm and a disrup-
tion of a government function.
The district court provided adequate support for its
upward departure based on the § 3553(a) factors, and
further supported its departure using the U.S.S.G. recom-
mendations, and thus the district court was within
its discretion to depart in this fashion.
III. Conclusion
For the reasons discussed above, we A FFIRM George
Pabey’s conviction and the sentence imposed by the
district court.
12-28-11