Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca4-09-04018/USCOURTS-ca4-09-04018-0/pdf.json

Parties Involved:
United States of America
Appellant
Paul Wilkinson
Appellee

Document Text:

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA, 

Plaintiff-Appellant,

v.  No. 09-4018

PAUL WILKINSON,

Defendant-Appellee. 

Appeal from the United States District Court

for the District of Maryland, at Baltimore.

William M. Nickerson, Senior District Judge.

(1:07-cr-00570-WMN-2)

Argued: October 29, 2009

Decided: January 4, 2010

Before SHEDD, Circuit Judge, HAMILTON, Senior Circuit

Judge, and Norman K. MOON, United States District Judge

for the Western District of Virginia, sitting by designation.

Vacated and remanded by published opinion. Senior Judge

Hamilton wrote the opinion, in which Judge Shedd joined.

Judge Moon wrote a separate opinion concurring in part and

dissenting in part.

COUNSEL

ARGUED: Nickolai Gilford Levin, UNITED STATES

DEPARTMENT OF JUSTICE, Washington, D.C., for AppelAppeal: 09-4018 Doc: 32 Filed: 01/04/2010 Pg: 1 of 22
lant. Gordon Mehler, LAW OFFICE OF GORDON

MEHLER, PLLC, New York, New York, for Appellee. ON

BRIEF: Scott D. Hammond, Acting Assistant Attorney General; Mark W. Pletcher, John F. Terzaken, Portia R. Brown,

John J. Powers, III, UNITED STATES DEPARTMENT OF

JUSTICE, Antitrust Division, Washington, D.C., for Appellant. Rebecca Stack Campbell, LAW OFFICE OF GORDON

MEHLER, PLLC, New York, New York, for Appellee.

OPINION

HAMILTON, Senior Circuit Judge:

In this appeal, the government challenges the probationary

sentence of Paul Wilkinson (Wilkinson) in connection with

his guilty plea to various fraud charges stemming from his

participation in a government procurement fraud scheme

involving aviation fuel contracts. The government also challenges the district court’s failure to award the Defense Energy

Support Center (DESC) $592,922.00 in restitution under the

Mandatory Victims Restitution Act of 1996 (the MVRA), 18

U.S.C. §§ 3663A-3664. For reasons that follow, we vacate

Wilkinson’s sentence and remand with instructions for: (1)

resentencing; and (2) reconsideration of the district court’s

determination that DESC was entitled to no restitution under

the MVRA.

I.

A. Charges and Guilty Plea.

On December 5, 2007, a federal grand jury sitting in the

District of Maryland indicted Wilkinson on one count of conspiracy to defraud the United States (Count I), 18 U.S.C.

§ 371, one count of conspiracy to commit wire fraud (Count

II), id. § 1349, and one count of conspiracy to steal trade

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secrets (Count III), id. § 1832(a)(5). Pursuant to a plea agreement (the Plea Agreement), on July 29, 2008, Wilkinson pled

guilty to Counts I, II, and III, as charged in the indictment.

The Plea Agreement incorporated the allegations contained in

the indictment by reference, which allegations Wilkinson

"knowingly, voluntarily, and truthfully" admitted as fact. (J.A.

28). The Plea Agreement also specified that the parties would

"contest the amount of loss intended or occasioned by [Wilkinson’s offense] conduct, and thus leave to the judgment of

the Court the appropriate Guidelines enhancement under

U.S.S.G. § 2B1.1(b)(1)," (J.A. 30-31), and that the government "w[ould] not argue that the loss results in more than an

eighteen-level increase pursuant to U.S.S.G.

§ 2B1.1(b)(1)(J)." (J.A. 31). Additionally, Wilkinson agreed

"to the entry of a restitution order for the full amount of the

victims’ actual losses pursuant to" the MVRA, "as determined

by the Court at sentencing." (J.A. 32).

B. Facts of Wilkinson’s Offense Conduct Relevant to the

Issues on Appeal.

DESC, a logistics agency of the United States Department

of Defense, is responsible for procuring into-plane and posts,

camps, and stations (PC&S) aviation fuel supply contracts to

service United States military and civilian activities throughout the world. In carrying out this responsibility, DESC conducts a full and open, multi-stage, competitive procurement

process with respect to each contract. Competing offerors

submit initial bids by a given date, which bids are then

reviewed by DESC. Subsequently, competing offerors are

permitted to submit best and final bids by a given date. To

ensure fairness in the bidding process, competing offerors are

not permitted to share initial or best and final bid information.

Wilkinson’s convictions in this case stem from his criminal

activities with respect to three aviation fuel supply contracts

awarded by DESC—two into-plane contracts and one PC&S

contract. In general, a single DESC into-plane solicitation will

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contain line items for numerous airports within a broad geographical area, but offerors are not required to submit an offer

with respect to each airport. Rather, each airport may be

awarded as a separate contract or, where a single offeror is

awarded multiple airports from the same solicitation, a single

contract for all such locations is awarded. DESC awards

PC&S contracts for delivery of aviation fuel into authorized

storage facilities at destinations world wide.

Prior to DESC’s issuances of the three bid solicitations

involved in this case, Wilkinson and Christopher Cartwright

(Cartwright) had co-founded Far East Russia Aircraft Services (FERAS) and Aerocontrol, Ltd. (Aerocontrol). The pair

served as managing co-directors of each company, are citizens of the United States, and, at all times relevant to this

case, resided in the Czech Republic. For ease of reference, we

will treat FERAS and Aerocontrol as a single entity and refer

to it as FERAS/Aerocontrol.

Beginning in February 2005, Wilkinson and Cartwright

entered into a consultancy agreement (the Consultancy Agreement) with Matthew Bittenbender (Bittenbender), an

employee of FERAS/Aerocontrol’s direct competitor Avcard,

LLC (Avcard), whereby Bittenbender would secretively feed

them Avcard’s confidential bid information for various intoplane and PC&S aviation fuel solicitations in exchange for

money.1 Bittenbender had easy access to such information,

because one of his primary job responsibilities for Avcard

was to prepare Avcard’s bid packages for submission to

DESC. The Consultancy Agreement provided that, with

1The indictment in this case charged Cartwright as a codefendant with

respect to Counts I, II, and III. Pursuant to a plea agreement, Cartwright

pled guilty to Count II (the count alleging conspiracy to commit wire

fraud) and the remaining counts against him were dismissed. The district

court sentenced Cartwright to three years’ probation and 500 hours of

community service. Because Cartwright is not a party to the present

appeal, our remaining recitation of the facts will focus only upon Wilkinson’s conduct. 

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respect to every into-plane location that

FERAS/Aerocontrol’s bid would win through the aid of Bittenbender, Wilkinson would pay Bittenbender a flat fee, plus

ten percent commission on the profits. With respect to any

PC&S aviation fuel contract that FERAS/Aerocontrol would

win through the aid of Bittenbender, the Consultancy Agreement provided that Wilkinson would pay Bittenbender a percentage of the fuel sales.

DESC issued the first bid solicitation at issue in February

2005 (Bid Solicitation One). Bid Solicitation One pertained to

into-plane aviation fuel supply with respect to 109 airports

throughout Asia and Eastern Europe. After an amendment

changed the initial due date, DESC required initial bids to be

submitted on April 11, 2005, and required best and final bids

with respect to some airports to be submitted on or around the

first week of August 2005. Ultimately, DESC awarded

FERAS/Aerocontrol into-plane aviation fuel supply contracts

for seven locations under Bid Solicitation One. 

The second bid solicitation at issue was issued in May

2005, when DESC re-opened a bid solicitation for an intoplane aviation fuel supply contract with respect to an airport

in Baku, Azerbaijan (Bid Solicitation Two). DESC awarded

the corresponding contract to FERAS/Aerocontrol on or

around May 10, 2005.

On or about June 16, 2005, DESC issued the third bid

solicitation at issue—one for a PC&S aviation fuel supply

contract with respect to Bagram Air Field, Afghanistan (Bid

Solicitation Three). DESC originally required initial bids to

be submitted by July 1, 2005, but subsequently postponed the

deadline to March 31, 2006. Best and final bids were due by

July 13, 2006. On August 16, 2006, DESC awarded the corresponding contract to a company unaffiliated with

FERAS/Aerocontrol named Red Star. FERAS/Aerocontrol

had withdrawn from the bidding process prior to the final

award.

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With respect to Bid Solicitations One, Two, and Three, Bittenbender fed Wilkinson confidential information regarding

Avcard’s participation in the bidding process. Wilkinson

knowingly and willfully accepted such information with the

intent to gain unfair advantages for FERAS/Aerocontrol in the

respective bidding processes.2

C. Sentencing. 

Upon accepting Wilkinson’s guilty plea to Counts I, II, and

III, the district court ordered the United States Probation

Office to prepare a Presentence Report (the PSR) for Wilkinson. The PSR submitted in response specified: (1) a base

offense level of 7 under the United States Sentencing Commission, Guidelines Manual, (Nov. 2007) (USSG or the Guidelines),3

see USSG § 2B1.1(a)(1); (2) an 18 level enhancement

on the basis that the loss in this case was at least

$2,500,000.00, see id. § 2B1.1(b)(1)(J); (3) a 2 level enhancement because a substantial part of Wilkinson’s offense conduct was committed from outside the United States, see id.

§ 2B1.1(b)(9)(B); (4) a 2 level reduction for acceptance of

responsibility, see id. § 3E1.1(a); and (5) an additional 1 level

reduction for acceptance of responsibility, in anticipation of a

motion by the government to that effect, as agreed upon in the

Plea Agreement, see id. § 3E1.1(b). All of this resulted in a

total offense level of 24. When combined with Wilkinson’s

criminal history category of I, an offense level of 24 produced

an advisory Guidelines sentencing range of 51 to 63 months’

imprisonment. Additionally, the PSR stated that, pursuant to

18 U.S.C. § 3561(c)(1), Wilkinson was eligible for not less

than 1 nor more than 5 years’ probation. However, the PSR

2Notably, with respect to Bid Solicitation Two, the confidential bid

information that Bittenbender fed Wilkinson enabled FERAS/Aerocontrol

not only to underbid Avcard and win the contract, but also increase its

profit margin. 

3The Plea Agreement specifies that the November 1, 2007 edition of the

Guidelines apply in sentencing Wilkinson. 

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also stated that because the applicable advisory Guidelines

sentencing range was in Zone D of the Sentencing Table, Wilkinson was actually ineligible for probation. See USSG

§ 5B1.1, comment. (n.2); USSG § 5C1.1(f).

Wilkinson was originally scheduled to be sentenced on

October 30, 2008. Ultimately, he was sentenced on November

26, 2008, following a two-day sentencing hearing. Prior to

such hearing, on October 20, 2008, the government submitted

its initial sentencing memorandum to the district court,

requesting that the district court sentence Wilkinson to 51

months’ imprisonment, the low end of the advisory Guidelines sentencing range recommended in the PSR. With respect

to restitution due Avcard under the MVRA, the government

submitted that Avcard was due $286,236.00 ($40,927.00 for

its loss of Bittenbender’s honest services and the balance for

its losses from DESC contracts not awarded to it because of

Wilkinson’s offense conduct).4 With respect to restitution due

DESC under the MVRA, the government submitted that

DESC was due $592,922.00 ($26,813.00 for loss to DESC

from administrative costs in resoliciting and reawarding the

contracts tainted by Wilkinson’s offense conduct; $91,423.00

for loss to DESC from higher spot fuel purchases; and

$474,686.00 for loss to DESC from higher contract prices on

the reawarded contracts). The government’s sentencing memoranda had three attachments in the form of tables that pertained to the government’s actual pecuniary loss calculations

with respect to DESC. Table 1 was entitled "Loss to DESC

in Administrative Costs." (J.A. 65). Table 2 was entitled

"Loss to DESC from Higher Spot Prices." (J.A. 66). Table 3

was entitled "Loss to DESC from Higher Contract Prices."

(J.A. 67). 

On October 20, 2008, Wilkinson submitted his initial sen4The $40,927.00 figure represented the prorated portion of Bittenbender’s $54,569.00 annual salary over the nine months’ duration of Wilkinson’s offense conduct. 

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tencing memorandum to the district court, seeking a nonGuidelines sentence to be no greater than that to be given

Cartwright, who was already scheduled to be and was sentenced just nine days later on October 29, 2008. By the time

Wilkinson submitted his response to the government’s initial

sentencing memorandum on November 20, 2008, Wilkinson

took the position that his advisory Guidelines sentencing

range should be 10 to 16 months’ imprisonment, based on an

intended loss to Avcard of $39,741.00, and that he should

nonetheless receive the same non-Guidelines sentence as did

Cartwright of 3 years’ probation and 500 hours of community

service. Wilkinson also took the position that Avcard had sustained no actual pecuniary loss as the result of his offense

conduct, reasoning that Avcard’s estimated profit of

$8,964.00 with respect to the locations on which

FERAS/Aerocontrol bid against Avcard and won was entirely

offset by Avcard’s profits on untainted contracts awarded to

it because of Wilkinson’s offense conduct. Of specific relevance to the issues on appeal, Wilkinson took the position that

DESC had suffered no actual pecuniary loss as the result of

his offense conduct and, therefore, DESC was due no restitution under the MVRA. According to Wilkinson, DESC "did

not sustain an actual pecuniary loss because, . . . rebidding the

contracts awarded to [FERAS/Aerocontrol] did not involve

additional overtime or other avoidable costs attributable

solely to the offense conduct." (J.A. 131-32). 

Wilkinson’s sentencing hearing lasted two days, November

25-26, 2008, with the primary focus on calculating Avcard’s

intended and actual losses.5 The hearing only secondarily

focused on issues with regard to DESC’s actual losses. While

DESC’s actual losses are the primary subject of the present

appeal, Avcard’s losses, either intended or actual, are not at

issue.

5The Guidelines provide that loss is to be determined by the greater

amount of intended or actual loss suffered by the victim(s) of the defendant’s fraudulent acts. See USSG § 2B1.1, comment (n.3). 

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In support of its loss figures for DESC, the government

offered the live testimony of Dr. Charles Untiet (Dr. Untiet),

who holds a Ph.D. in economics from Stanford University.6

He also testified that he has "quite a bit of experience in the

petroleum industry." (J.A. 436). Dr. Untiet calculated DESC’s

actual loss from Wilkinson’s offense conduct at $592,922.00,

comprising three components of loss: (1) DESC’s administrative costs of $26,813.00 in preparing new bid solicitation

packages for the contracts tainted by Wilkinson’s offense conduct and in evaluating and reawarding untainted contracts; (2)

DESC’s costs of $91,423.00 in procuring fuel on the open

market using spot purchases between the time it cancelled the

tainted contracts and the time it obtained untainted replacement contracts; and (3) $474,686.00, representing the difference in costs to DESC between the tainted contracts and the

untainted replacement contracts. Dr. Untiet prepared Tables 1,

2, and 3, which were attached to the government’s initial sentencing memorandum. Each table corresponded to one of the

three components of DESC’s loss identified by Dr. Untiet.

With respect to the administrative costs to resolicit and reaward the untainted contracts, Dr. Untiet testified that he

obtained the information to create the table (e.g., labor costs)

"from a personnel person at the DESC." (J.A. 440). With

respect to creating the table regarding spot fuel costs, Dr.

Untiet testified:

I got data on spot [fuel] sales from the DESC. I

asked them for each spot [fuel] sale record. What

was the date, what was the quantity. What was the

spot [fuel] price the DESC paid. And what would

have been the [tainted] contract price had it still been

enforced.

6At the time of Wilkinson’s sentencing hearing, Dr. Untiet was

employed as an economist in the Antitrust Division of the United States

Department of Justice. He described his job as trying to ascertain the competitive effects of mergers and looking at the competitive effects of regulation. 

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(J.A. 441). In response to an immediate follow-up question by

the government, Dr. Untiet testified that the data that he

obtained from DESC was on actual spot liftings at each of

these locations. With respect to creating the table regarding

the increased costs to DESC resulting from the difference in

price for aviation fuel under the tainted contracts versus the

untainted contracts, Dr. Untiet consulted published pricing

indexes and the contracts themselves. Out of the eight

untainted contracts, Dr. Untiet concluded that DESC paid

more for aviation fuel under seven as compared to the tainted

contracts. Dr. Untiet also testified that DESC resolicited and

reawarded the contracts that had been tainted by Wilkinson’s

offense conduct, because "DESC has a policy not to deal with

criminals whenever possible." (J.A. 439). At no time did the

government produce, through Dr. Untiet or otherwise, any of

the underlying data on which Dr. Untiet relied in order to perform his loss calculations or create Tables 1, 2, and 3.

At the sentencing hearing, Wilkinson challenged the government’s proposed loss figures for DESC on three basic

grounds. First, Dr. Glenn Meyers (Dr. Meyers), a Ph.D. in

economics from Columbia University, testified in support of

Wilkinson’s position that DESC suffered no actual pecuniary

loss. According to Dr. Meyers, Dr. Untiet miscalculated

DESC’s increased fuel costs under the untainted contracts by

assuming, unrealistically, that Avcard would have performed

under the contracts, but at FERAS/Aerocontrol’s prices. Second, Wilkinson argued the government had provided no documentary evidence to support its $592,922.00 total loss figure.

For example, with respect to the government’s loss figure

regarding DESC’s fuel purchases on the spot market, Wilkinson pointed out that the government had not offered any

proof, such as invoices, that DESC had actually purchased

aviation fuel on the spot market for airport locations that were

the subject of the tainted contracts. For a second example,

Wilkinson contended that DESC suffered no actual pecuniary

loss in resoliciting bids for the tainted contracts, because

DESC’s employees are salaried, and there is no evidence that

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such employees performed overtime in order to carry out the

resolicitations.

In rebuttal, the government contended that its expert witness "testified that he reviewed all the underlying data from

DESC, including the actual liftings, including the hourly wage

reports, and these various things to make his calculations, and

that he presented a series of graphs that represented his conclusions as to loss. That’s evidence." (J.A. 650). See also (J.A.

651) (government: "DESC has the data, it provided it to Dr.

Untiet, he testified to the Court. Same thing as to the administrative calculations."). Additionally, the government argued

that Application Note 3(A)(v)(II) to USSG § 2B1.1 expressly

permitted it to count as loss the monetary compensation that

DESC paid its employees for their time in resoliciting bids for

the tainted contracts regardless of whether those employees

performed such work during overtime hours. See USSG

§ 2B1.1, comment. (n.3(A)(v)(II)) ("Procurement Fraud

Cases.—In the case of a procurement fraud, such as a fraud

affecting a defense contract award, reasonably foreseeable

pecuniary harm includes the reasonably foreseeable administrative costs to the government and other participants of

repeating or correcting the procurement action affected

. . . .").

After considering the parties’ opposing positions on the

actual pecuniary loss suffered by DESC as the result of Wilkinson’s offense conduct, the district court stated, in relevant

part:

Having heard the testimony from expert witnesses

yesterday on both sides, and argument this morning,

all of that has helped me to reach a conclusion with

regard to an appropriate guideline loss calculation. I

have to say that I found both of the expert witnesses to be knowledgeable, both to be credible,

which is unusual when you have such diverging

opinions about things. But I believe that each one

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of them presented their calculations and their

opinions straight forwardly and as honestly as

any fact finder could hope for. What I come away

convinced of is that with respect to the economic

issues that are involved in considering loss valuations in this particular matter, the complexities and

the variables are uniquely difficult to analyze and

evaluate in a meaningful way.

To support its proposed loss figures, of course, the

Government must satisfy me that those figures are

proven by a preponderance of the evidence. That in

my view, having heard all that I have heard, is a burden that the Government simply cannot meet on the

basis of the facts presented in this record. . . .

* * *

The Government’s claim of additional losses to

DESC, of course, is discussed at considerable length

in the sentencing memoranda, spoken to at considerable length here yesterday and today. The Government relies on figures that are set out in tables 1

though 3 of Appendix A to its initial memorandum.

My assessment of these claimed losses is that they

are simply not sufficiently supported by facts to

persuade me that they constitute losses that more

likely than not were caused by this defendant’s

conduct. Even assuming that loss was caused to

the Government, my conclusion is that I would

have to engage in speculation to assess any dollar

value to it.

(J.A. 657-59) (emphasis added). The district court then went

on to state: "So for the guideline calculation, by way of a reasonable estimate, the best I can do with it is to accept the

defendant’s recalculated figure of intended loss to AVCARD

$39,741." (J.A. 659). Such figure increased Wilkinson’s base

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offense level under the Guidelines by six levels, and with the

other sentencing adjustments applied by the district court (two

levels added because a substantial part of the fraudulent

scheme was committed from outside the United States, USSG

§ 2B1.1(b)(9)(B), and two levels subtracted for acceptance of

responsibility, id. § 3E1.1(a)),7 the district court determined

Wilkinson’s advisory Guidelines sentencing range to be 12 to

18 months’ imprisonment.

After hearing more argument from counsel for both sides,

statements from Wilkinson’s wife, mother, and Wilkinson

himself, the district court stated that, in its perspective, the

Guidelines calculation regarding loss was

so tenuous as to be anything but reliable in terms of

fashioning a sentence that comports with the sentencing factors set out in Title 18, section 3553. And

so the sentence that I am imposing is going to be a

variance sentence. And it’s based upon my conclusions and observations with regard to the following

3553 factors.

(J.A. 727). The district court then went on to address the

§ 3553 factors in a manner favorable to Wilkinson, stating at

one point that it was "convinced that what took place here

with respect to the criminal conduct would most likely not

have happened but for the aggressive intervention of Mr. Bittenbender." (J.A. 731). The district court ultimately sentenced

Wilkinson to a three-year term of probation as to Counts I, II,

and III, to run concurrently, and to 800 hours of community

service. Additionally, the district court ordered Wilkinson to

pay a $20,000.00 fine, a $300.00 special assessment, and

$40,962.75 in restitution to Avcard under the MVRA.

7The district court did not subtract an additional level under USSG

§ 3E1.1(b) for acceptance of responsibility, because the offense level

determined prior to subtracting two levels for acceptance of responsibility

under USSG § 3E1.1(a) was not a level 16 or greater. See id. § 3E1.1(b).

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II.

The government’s challenge to Wilkinson’s sentence

focuses on the district court’s finding that DESC suffered no

actual pecuniary loss as the result of Wilkinson’s offense conduct for purposes of applying USSG § 2B1.1(b)(1), and the

government’s challenge to the district court’s refusal to award

DESC restitution focuses on the same finding for purposes of

applying the MVRA. Under the Sentencing Guidelines, "‘Actual loss’ means the reasonably foreseeable pecuniary harm

that resulted from the offense," USSG § 2B1.1, comment.

(n.3(A)(i)), and "‘reasonably foreseeable pecuniary harm’

means pecuniary harm that the defendant knew or, under the

circumstances, reasonably should have known, was a potential result of the offense," id. (n.3(A)(iv)). Moreover, of particular relevance in the present appeal, Application Note

3(A)(v)(II) to USSG § 2B1.1 specifies:

In the case of a procurement fraud, such as a fraud

affecting a defense contract award, reasonably foreseeable pecuniary harm includes the reasonably foreseeable administrative costs to the government and

other participants of repeating or correcting the procurement action affected, plus any increased costs to

procure the product or service involved that was reasonably foreseeable.

id. § 2B1.1, comment. (n.3(A)(v)(II)).

Additionally, the amount of any restitution due DESC

under the MVRA is the amount of actual loss to DESC

directly and proximately caused by Wilkinson’s offense conduct. 18 U.S.C. § 3663A(a)(2). Indeed, the MVRA defines the

term "victim" as

a person directly and proximately harmed as a result

of the commission of an offense for which restitution

may be ordered including, in the case of an offense

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that involves as an element a scheme, conspiracy, or

pattern of criminal activity, any person directly

harmed by the defendant’s criminal conduct in the

course of the scheme, conspiracy, or pattern.

Id. § 3663(a)(2). Under the MVRA, the government bears the

burden of proving a victim’s loss by a preponderance of the

evidence. Id. § 3664(e); United States v. Harvey, 532 F.3d

326, 339 (4th Cir. 2008).

On appeal, the government challenges Wilkinson’s sentence on the basis that the district court’s finding that DESC

suffered no actual pecuniary loss as the result of Wilkinson’s

offense conduct is clearly erroneous. With respect to calculating DESC’s actual pecuniary loss under USSG § 2B1.1(b)(1),

the government argues that had the district court properly

applied Application Note 3(A)(v)(II) to USSG § 2B1.1, the

district court necessarily would have found that DESC had

suffered $592,922.00 in such loss as the result of Wilkinson’s

offense conduct.8 Such a finding, according to the government, would have resulted in an adjusted offense level under

the Guidelines of 20 and an advisory Guidelines sentencing

range of 33 to 41 months’ imprisonment. Because the district

court improperly calculated Wilkinson’s advisory Guidelines

sentencing range, as the government’s argument goes, we

cannot uphold the district court’s sentence as procedurally

reasonable nor reach the issue of its substantive reasonableness. Therefore, the government posits, we should vacate Wilkinson’s sentence and remand for resentencing with the

instruction that the district court calculate DESC’s actual

pecuniary loss pursuant to proper application of Application

Note 3(A)(v)(II) to USSG § 2B1.1. See United States v.

Carter, 564 F.3d 325, 328 (4th Cir. 2009) (improperly calculating advisory Guidelines sentencing range constitutes procedural error in sentencing which requires remand for

8The government contends that the district court either did not apply

Application Note 3(A)(v)(II) at all or incorrectly applied it sub silentio. 

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resentencing without addressing whether sentence is substantively reasonable under abuse of discretion standard). With

respect to the restitution issue, the government posits that if

we "hold[] that the district court clearly erred in finding no

[actual pecuniary loss to DESC], DESC will be entitled to restitution to the full extent of its losses determined on remand."

(government’s Reply Br. at 7-8).

On a macro level, Wilkinson defends the judgment below

on the ground that the district court’s finding that DESC suffered no actual pecuniary loss as the result of his offense conduct is not clearly erroneous. On a micro level, Wilkinson

argues that the government failed to carry its burden of proof

on DESC’s actual pecuniary loss, because "the government’s

case for actual loss to DESC rested on three conclusory charts

the government’s expert created with numbers he had

received from an interested party, had not corroborated, and

on which he could not be cross-examined." (Wilkinson’s Br.

at 26). 

Our review of Wilkinson’s sentence must take place in two

sequential steps. Carter, 564 F.3d at 328. In the first step, we

must ensure that the district court did not commit a significant

procedural error in sentencing Wilkinson. Id. If it did, we

must vacate and remand for resentencing. Id. at 329-30. Only

if we conclude that the district court committed no significant

procedural error in sentencing Wilkinson, may we move on to

the second step of considering the substantive reasonableness

of his sentence under an abuse of discretion standard. Id. at

328.

The government is correct that Wilkinson would need to be

resentenced if we were to conclude that the district court’s

finding that DESC suffered no actual pecuniary loss as the

result of Wilkinson’s offense conduct is clearly erroneous.

This is because proper calculation of the advisory Guidelines

sentencing range is dependent upon a non-clearly erroneous

finding of such loss, USSG § 2B1.1(b)(1), and improper cal16 UNITED STATES v. WILKINSON

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culation of such range as well as selecting a sentence based

on a clearly erroneous factual finding are procedural errors

that require correction before we can review Wilkinson’s sentence for substantive reasonableness, Carter, 564 F.3d at 328.

See also id. at 330 n.4 ("Having found the sentence procedurally unreasonable, however, we cannot review the sentence

for substantive reasonableness.").

In reviewing a district court’s finding of fact made at sentencing, we are mindful that the traditional rules of evidence

are not applicable to sentencing proceedings. See Fed. R.

Evid. 1101(d)(3). Rather, a sentencing court may give weight

to any relevant information before it, including uncorroborated hearsay, provided that the information has sufficient

indicia of reliability to support its accuracy. United States v.

Bowman, 926 F.2d 380, 381 (4th Cir. 1991); USSG 6A1.3(a),

p.s. "[W]here the reliability of evidence is an issue the court

should conduct an evidentiary hearing to determine the same."

Bowman, 926 F.2d at 381; see also USSG 6A1.3(b), p.s.

Unfortunately, the district court did not provide us anything

close to a sufficient explanation of its rationale in making its

loss finding with respect to DESC that would enable us to

review such finding under the clearly erroneous standard. For

example, the district court gave no explanation for its seemingly inconsistent position in finding the government’s expert

witness regarding DESC’s actual pecuniary loss knowledgeable and credible, but nonetheless rejecting his loss calculations in toto without explanation, making it totally incapable

of meaningful appellate review. For a second example, we

agree with the government that Wilkinson’s argument to the

effect that in order for DESC to have suffered an actual pecuniary loss in the form of administrative costs, the government

had to prove that DESC employees worked overtime in resoliciting bids and reawarding nontainted contracts is at odds

with the plain language of Application Note 3(A)(v)(II) to

USSG § 2B1.1. However, we have no idea whether the district court accepted this argument or accepted Wilkinson’s

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alternative argument that, assuming arguendo that DESC’s

administrative costs as calculated by the government are theoretically recoverable, the government nonetheless failed to

carry its burden of proof because it offered no documentary

evidence to support such costs (e.g., wage and hour records).

In order to address the government’s sentencing challenge,

we would have to know which argument (if any) the district

court accepted, and under Carter, we are prohibited from presuming the sentencing court has "silently adopted arguments

presented by a party." 564 F.3d at 329. The same situation

holds true for the government’s spot pricing evidence as well

as its evidence regarding increased costs for aviation fuel

under the tainted contracts verses the untainted contracts. In

short, on the present record, we cannot hold Wilkinson’s sentence procedurally reasonable. Id. at 328-30. Additionally, the

record is not amenable to appellate review with respect to the

government’s challenge to the district court’s finding that

DESC suffered no actual pecuniary loss for purposes of calculating restitution under the MVRA.

Accordingly, we vacate the sentencing portion of Wilkinson’s judgment and remand the case for resentencing with

instructions that the district court explain in detail why it

believes DESC’s claimed actual losses, as set forth in Tables

1, 2, and 3 of Appendix A to the government’s initial sentencing memorandum, are not sufficiently supported by the expert

testimony of Dr. Untiet, for purposes of calculating Wilkinson’s advisory Guidelines sentencing range and awarding

DESC restitution under the MVRA. For example, did the district court accept Wilkinson’s argument that without any documentary evidence such as invoices, the government failed to

carry its burden of proving that it had made spot purchases of

aviation fuel for the airport locations that were the subject of

the tainted contracts during the interim time between DESC’s

cancelling of such contracts and their respective untainted reaward? Moreover, as part of its explanation, we specifically

instruct the district court to explain the seeming inconsistency

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between its zero-loss finding as to DESC and its declaration

that it found Dr. Untiet knowledgeable and credible. Notably,

if the district court reached its zero-loss finding under USSG

§ 2B1.1(b)(1) based upon its acceptance of Wilkinson’s lack

of over-time argument, the district court must revisit its calculation of DESC’s actual pecuniary loss under USSG

§ 2B1.1(b)(1), because such argument, as we have already

stated, is at odds with the plain language of Application Note

3(A)(v)(II) to USSG § 2B1.1.9

Having arrived once again at the advisory Guidelines sentencing range stage,10 the district court must next allow the

government and Wilkinson "an opportunity to argue for whatever sentence" each "deem[s] appropriate." Gall v. United

States, 552 U.S. 38, 49 (2007). Following such arguments, the

district court should then proceed to render Wilkinson’s sentence. In reaching such sentence, "[r]egardless of whether the

district court imposes an above, below, or within-Guidelines

sentence, it must place on the record an ‘individualized

assessment’ based on the particular facts of the case before it."11

9We recognize that in making its loss finding with respect to DESC

under the MVRA, the district court is not bound by Application Note

3(A)(v)(II) to USSG § 2B1.1, and thus, the district court may reach a different loss finding for DESC under USSG § 2B1.1(b)(1) rather than under

the MVRA. See United States v. Allen, 529 F.3d 390, 397 (7th Cir. 2008)

(Application Notes to USSG § 2B1.1 not controlling in calculating loss

under the MVRA). 

10If the district court changes its loss finding under USSG § 2B1.1(b)(1)

with respect to DESC, depending upon the amount of loss found, such

finding has the potential to change the advisory Guidelines sentencing

range. However, we make clear that the district court may not revisit on

remand either the issue of Wilkinson’s intended pecuniary loss to Avcard

nor Avcard’s actual pecuniary loss, because the government does not challenge those loss findings on appeal. Thus, if the district court continues to

find that DESC suffered no actual pecuniary loss as the result of Wilkinson’s offense conduct, Wilkinson’s advisory Guidelines sentencing range

will remain at 12 to 18 months’ imprisonment. 

11In making this individualized assessment, the sentencing court must

apply the relevant factors of 18 U.S.C. § 3553 to the specific circumstances of Wilkinson’s case. Carter, 564 F.3d at 328. 

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Carter, 564 F.3d at 330 (quoting Gall, 552 U.S. at 50). Such

making of the record is critical, because "[i]n reviewing this

assessment, an appellate court may not guess at the district

court’s rationale, searching the record for statements by the

Government or defense counsel or for any other clues that

might explain a sentence." Carter, 564 F.3d at 329-330.

Finally, we instruct the district court to reconsider with care

its determination that DESC was not entitled to any restitution

under the MVRA. If, after such reconsideration, the district

court continues to adhere to its zero-loss finding with respect

to the government’s claim of restitution due DESC under the

MVRA, we instruct the district court to provide a detailed

rationale for such finding on the record in order that we may

review it under the clearly erroneous standard. If, however,

after such reconsideration, the district court finds that DESC

is entitled to a particular amount of restitution under the

MVRA, we instruct the district court to order restitution to

DESC in such amount and to provide a detailed rationale for

such loss finding on the record in order that we may review

it under the clearly erroneous standard.

III.

In conclusion, we vacate Wilkinson’s sentence and remand

with instructions for: (1) resentencing; and (2) reconsideration

of the district court’s determination that DESC was entitled to

no restitution under the MVRA, accompanied by an order of

restitution if the district court finds that DESC is entitled to

a particular amount of restitution under the MVRA.

VACATED AND REMANDED

MOON, District Judge, concurring in part and dissenting in

part:

I concur with the majority regarding the administrative cost

finding. Because the district court may have erred as a matter

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of law, I agree that we should remand as to that element of

loss. However, I find no clear error in the loss findings with

regard to either the higher spot fuel purchases or the higher

contract prices. Accordingly, I would affirm the district court

as to those findings. 

The majority holds that the district court failed to sufficiently explain its zero-loss finding. However, the sentencing

judge concluded that the government had not met its burden

of proof to establish loss. (J.A. 658). The sentencing judge

observed that, although he found both the government expert

and defense expert to be "credible," he nevertheless found the

defense expert more "compelling," stating that:

I find one of [the defendant’s expert’s] primary opinions to be particularly compelling. And that was a

statement that he made to the effect that the defendant’s calculations are probably about as accurate

as one could hope for in situations like this."

(J.A. 658) (emphasis added). Moreover, the sentencing judge

stated that his "assessment of [the government’s] claimed

losses is that they are simply not sufficiently supported by the

facts to persuade me that they constitute losses that more

likely than not were caused by this defendant’s conduct."

(J.A. 659).

The record discloses that the district court sufficiently justified its factual finding of zero loss to DESC as to the higher

spot fuel prices and higher contract prices. That the sentencing court did not describe in greater detail the rationale underlying its factual finding is not sufficient grounds for remand,

and is outside the scope of the particularity requirements

announced in Carter. In my view, Carter requires a sentencing court to state with particularity the reasons supporting a

chosen sentence.* It does not address, however, the degree of

*See Carter at 328 ("When rendering a sentence, the district court

‘must make an individualized assessment based on the facts presented.’"

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specificity required when making a finding of fact upon

which a sentence is to be predicated. 

(quoting Gall v. United States at 39) (first emphasis added)); see also id.

(when stating its reason for imposing a sentence, a sentencing court need

only "‘set forth enough to satisfy the appellate court that he has considered

the parties’ arguments and has a reasoned basis for exercising his own

legal decisionmaking authority.’" (quoting Rita v. United States, 551 U.S.

338, 339 (2007))). 

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