Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-00-03129/USCOURTS-caDC-00-03129-0/pdf.json

Parties Involved:
Arnett C. Smith
Appellant
United States of America
Appellee

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 6, 2001 Decided October 30, 2001

No. 00-3129

United States of America,

Appellee

v.

Arnett C. Smith,

Appellant

Appeal from the United States District Court

for the District of Columbia

(No. 99cr00370-01)

Charles B. Klein argued the cause for appellant. With him

on the briefs were Richard A. Hibey and Nathaniel H.

Speights.

Jeffrey W. Bellin, Assistant U.S. Attorney, argued the

cause for appellee. With him on the brief were Kenneth L.

Wainstein, U.S. Attorney, John R. Fisher and Mark H.

Dubester, Assistant U.S. Attorneys.

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Before: Ginsburg, Chief Judge, Edwards and Sentelle,

Circuit Judges.

Opinion for the court filed by Circuit Judge Edwards.

Edwards, Circuit Judge: Arnett C. Smith appeals his

conviction under 18 U.S.C. s 208(a) and s 371 for conflict of

interest by an officer or employee of the District of Columbia

and conspiracy. Smith, formerly the District official responsible for referring mentally disabled patients to day treatment programs, was convicted after engaging in dubious

financial dealings with the owner of one of the facilities to

which he had sent patients. The District Court sentenced

Smith to 46 months in prison, after fixing his total offense

level under the Sentencing Guidelines at 22, which included a

three-level upward departure based on uncharged fraudulent

conduct.

On appeal, Smith challenges both his conviction and his

resulting sentence. He claims first that he was wrongly

convicted for violating s 208(a), advancing the novel theory

that this statute should be read to exclude persons who are

employed at his government salary level. We reject this

argument, which borders on the frivolous. Smith's attacks on

his sentence, however, have considerable merit. Specifically,

Smith asserts that the District Court applied the wrong

burden of proof in determining the predicate offense for his

conspiracy conviction. He is correct. Because this error was

plain, we are compelled to vacate and remand Smith's sentence. In addition, we have concluded that the findings and

calculations that the District Court used to support its upward departure are materially flawed. On remand, the trial

court must therefore reconsider its decision to depart.

I. Background

Smith's convictions grew out of a series of questionable

transactions that he entered between 1993 and 1995 with

Denise Braxtonbrown-Smith (no relation), the owner of Psychological Development Associates ("PDA"). PDA offered

treatment services to the mentally disabled. One of Smith's

most important responsibilities as the Chief of the Day Programs Branch of the District of Columbia's Mental RetardaUSCA Case #00-3129 Document #635399 Filed: 10/30/2001 Page 2 of 18
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tion and Developmentally Disabled Administration

("MRDDA") was referring patients to treatment centers such

as those provided by PDA. In 1994, Smith helped PDA get

one of its facilities, Better Treatment Center ("BTC") accepted into Medicaid, thus making it eligible to receive reimbursements for patients sent by MRDDA. Quickly, MRDDA

referrals became a primary source of BTC's income. But all

was not rosy at BTC. On May 31, 1994, Smith received a

negative report on the conditions there from Jacquelin Smith

(also no relation), a MRDDA resource specialist. Ms. Smith

had visited the facility a week earlier and had concluded in

her report that the program was "not meeting the individual

needs of the customers as specified in their Individual Habitation Plan." Government's Record Material ("GRM") A-2.

Even after receiving this report, however, Mr. Smith continued to refer patients to BTC.

During this same period, appellant involved himself with

Braxtonbrown-Smith and her company in a different capacity. First, in early 1995, he made three separate loans to

PDA, which, despite the now-steady stream of MRDDA referrals, had found itself in financial difficulties. The first of

these loans was for $14,900; one week later PDA (on Braxtonbrown-Smith's direct order) repaid Smith $18,500. The

next two totaled $28,000, for which PDA wrote Smith a

$39,000 check less than a week after receiving the final loan.

Second, Smith entered into a complicated real estate deal in

which he purchased, at a significantly discounted price, a

piece of property that Braxtonbrown-Smith had been renting

and had a standing option to buy. In the fall of 1994,

Braxtonbrown-Smith told the property's elderly owner, Earnestine Keaton, that although she could not afford to exercise

her option (then worth $85,000) she had a friend (Mr. Smith)

who could. On October 18, Smith signed a contract with

Keaton to buy the land, 501 Columbia Road in Northwest

Washington, for $65,000. Though the contract price was low,

Keaton testified that Braxtonbrown-Smith had told her that

she would "make the rest of it up in the future." Tr. 5/5/2000

at 10. In the course of this transaction, Keaton was not

represented by counsel; Braxtonbrown-Smith had assured

her that she did not need a lawyer, saying "we can trust each

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other." See id. at 12. However, while Smith eventually paid

Keaton the entire $65,000 he owed her under the contract,

she received no more money from Braxtonbrown-Smith.

Soon after purchasing the house, Smith sold it to his

childhood friend, Terry Reid, for a net price of $102,000. In

the mortgage application that he completed to facilitate this

sale, Reid falsely stated (allegedly at Smith's urging) that he

himself would be moving into the Columbia Road property.

He went so far as to submit a fake lease, prepared by Smith,

in which Reid purported to rent his own house to Smith's

mother, whom Reid had never even met. Actually, however,

Braxtonbrown-Smith continued to occupy the property, and

to pay rent to its new owners, Reid and Smith. For, while

Reid did become the record owner, he and Smith had drawn

up a separate agreement by which they would own the

property as tenants-in-common. See id. at 78. Accordingly,

the two men shared Braxtonbrown's $1300 a month rental

payments, which more than covered their $1100 monthly

mortgage, and left them with a $200 monthly profit. This

arrangement continued until roughly 1997 or 1998, when

Braxtonbrown-Smith simply walked away from her lease.

See id. at 80.

Based on these events, Smith was indicted in November of

1999 on six counts of conflict of interest, paying and/or

receiving illegal gratuities, and conspiracy, in violation of 18

U.S.C. ss 208(a), 201(c), and 371, respectively. The Government's theory was that Smith had steered clients toward

BTC, despite knowing that its care was substandard, in

exchange for valuable concessions from Braxtonbrown-Smith

(the favorable "loans" and the opportunity to purchase the

Columbia Road property at a bargain). Smith countered

that, while he had referred clients toward BTC, he had no

agreement, overt or tacit, with Braxtonbrown-Smith to swap

such referrals for anything of value. In the end, Smith was

convicted on two counts of conflict of interest and on one

count of conspiracy. As to the three substantive illegal

gratuities counts, however, the jury deadlocked, so no verdict

was reached. Moreover, while Smith's indictment had identified three possible predicate offenses for the conspiracy

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charge -- conflict of interest, payment of illegal gratuities,

and receipt of illegal gratuities -- the jury did not indicate on

which of these its conspiracy conviction was based.

At sentencing, the District Court fixed Smith's total offense

level at 22. The court began with a base level of 7 for the

conspiracy count, the level for the substantive offense of

giving or receiving an illegal gratuity. See U.S. Sentencing

Guidelines Manual s 2C1.2 [hereinafter U.S.S.G.]. In selecting this base, the court noted that the jury had failed to

convict on the gratuities charges, but proceeded to determine,

by a preponderance of the evidence, that defendant was guilty

of conspiracy to receive and/or pay illegal gratuities. See

Memorandum Opinion and Order at 4 (D.D.C. Nov. 6, 2000)

("Sentencing Order"), reprinted in Joint Appendix ("J.A.")

tab 10. The court then supplemented this base level by

adding two levels for additional gratuities, see U.S.S.G.

s 2C1.2(b)(1), and four more for the value of the gratuities,

see id. at s 2C1.2(b)(2)(A), which the court set at $29,600. On

top of this, the court then added a two-level "vulnerable

victim" enhancement, see id. at s 3A1.1(b)(1), a two-level

"role in the offense" enhancement, see id. at s 3B1.1(c), and a

two-level enhancement for obstruction of justice by perjury,

see id. at s 3C1.1. Finally, the court departed upward three

levels for relevant, but uncharged, aggravating conduct, specifically Smith's alleged deceptions of Ms. Keaton and of the

mortgage company, as well as his attempts to defraud the

IRS by including false memo notations on checks that he

wrote in connection with the Columbia Road transactions.

See Sentencing Order at 19-26. This total offense level (22),

in connection with a criminal history level of I, produced a

Guidelines range of 41-51 months; the court imposed a

sentence of 46 months, plus a $25,000 fine. Smith now

appeals both this sentence and his underlying conviction.

II. Analysis

A. Smith's Conviction under 18 U.S.C. s 208(a)

In pertinent part, the federal conflict-of-interest statute, 18

U.S.C. s 208(a), forbids any "officer or employee of the

District of Columbia" from participating

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personally and substantially as a Government officer or

employee, through decision, approval, disapproval, recommendation, the rendering of advice, investigation, or

otherwise, in a ... particular matter in which, to his

knowledge, he, his spouse, minor child, general partner,

organization in which he is serving as officer, director,

trustee, general partner, or employee, or any person or

organization with whom he is negotiating or has any

arrangement concerning prospective employment, has a

financial interest ...

Smith argues that his conviction under this provision should

be held invalid, as a matter of law, because he -- a government worker paid only at the rate of GS-12 -- could not have

been an "officer or employee" who participated "personally

and substantially" in the decisions that gave rise to his

prosecution. His basis for advancing this interpretation is a

provision in the D.C. Code that, in the name of avoiding

conflicts of interest, requires any "public official" to make

certain financial disclosures. See D.C. Code s 1-1461(i)(1).

The linchpin of Smith's claim is that this requirement extends

only to those officials paid at GS-13 or above. Id. at

s 1462(a). Because he fails to meet this local law threshold,

Smith asserts, he cannot be convicted under the analogous

federal statute.

To state this argument is, in some sense, to refute it. In

the first place, the operative term in 18 U.S.C. s 208(a) is not

"public official," as it is in the D.C. Code, but rather "officer

or employee." It is perfectly obvious, and Smith does not and

indeed could not contest, that he was an "employee" of the

District of Columbia when he served as MRDDA's Chief of

Day Programs. Thus, the plain language of the statute, in

which we find no ambiguity relevant here, sweeps Smith

within its ambit. Moreover, even if there were some confusion over the scope of this text, it would make little sense for

this court to interpret a term in the federal statute applicable

here by reference to a different term in an unrelated nonfederal statute. This is especially so given that in 18 U.S.C.

s 201(a)(1), which is a related federal statute, the phrase

"officer or employee" is enlisted to help construe the very

term, "public official," that Smith now urges this court to use

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to define "officer and employee." Smith has thus unpersuasively attempted to reverse the interpretive chain; in Title 18,

"officer and employee" defines "public official," and not vice

versa. Finally, s 208(a) was intended, and has generally

been interpreted to have a broad reach, to cover all that a

commonsense reading of its language would suggest. See

United States v. Conlon, 628 F.2d 150, 154-55 (D.C. Cir.

1980). Smith's novel statutory construction argument must

therefore be rejected, and his conviction affirmed.

B. Smith's Base Offense Level

Smith's challenges to his sentencing stand on a different

footing, however. We agree with Smith that the District

Court committed plain error in determining the base offense

level ("BOL") for his conspiracy conviction, a mistake that

requires us to vacate and remand his sentence. When a

defendant is convicted of conspiracy, the Sentencing Guidelines direct the court to apply the offense level that would

have applied had that defendant been convicted of the substantive offense on which the conspiracy charge is based. See

U.S.S.G. s 2X1.1. However, where a count charges a conspiracy to commit more than one offense, and where the

guilty verdict does not establish which particular offense was

actually the object of the conspiracy, the above Guideline may

be applied only if "the court, were it sitting as a trier of fact,

would convict the defendant of conspiring to commit that

offense." U.S.S.G. s 1B1.2(d) & cmt. n.4 (emphasis added).

In this case, Smith's indictment listed both conflict of

interest and the more serious gratuities offense as possible

predicates for his conspiracy charge. The jury convicted

Smith of the substantive conflict of interest violation, but

hung on the gratuities counts. It did not specify on which of

these offenses its conspiracy conviction was hinged. Subsequently, however, the trial court found that "the evidence

proven by a preponderance at trial amply demonstrates that

defendant conspired to commit the offense of Receipt of

Illegal Gratuities and/or Payment of Illegal Gratuities." See

Sentencing Order at 4. Thus, although the jury, bound by a

reasonable doubt standard, had deadlocked as to whether

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Smith had violated 18 U.S.C. s 201(c), the trial court judge,

relying on a far more relaxed evidentiary standard, concluded

that Smith had at least conspired to do so, and sentenced him

accordingly.

The District Court's use of a preponderance standard to

make this finding was undoubtedly erroneous. The phrase

"sitting as a trier of fact" in the Commentary to s 1B1.2(d)

clearly contemplates that when a court sets the basis for a

conspiracy conviction, it will do so under a heightened burden

of proof. Both the Sentencing Commission and the courts

that have considered this issue have held that the appropriate

standard is beyond a reasonable doubt. See U.S.S.G. app. C,

amend. 75; United States v. Conley, 92 F.3d 157, 162 n.4 (3d

Cir. 1996); United States v. McKinley, 995 F.2d 1020, 1026

(11th Cir. 1993); United States v. Macklin, 927 F.2d 1272,

1280 (2d Cir. 1991). We agree. This, however, does not

settle the issue before us.

The central question that we face is not what the evidentiary standard should be, but whether the District Court's

failure to use the proper standard amounts to reversible

error. The Government claims that Smith did not object on

the burden of proof issue at sentencing, and thus that our

review can only be for plain error. Smith counters that in

fact he did preserve the issue, and that a harmless error

standard is therefore appropriate. We need not resolve

whether Smith offered a timely objection, because we conclude that the court's error was plain.

To prevail on an unpreserved issue, a criminal defendant

must establish that the error is "plain or obvious under

current law, affects substantial rights, and seriously affects

the fairness, integrity, or public reputation of judicial proceedings." United States v. Fields, 251 F.3d 1041, 1045 (D.C.

Cir. 2001) (internal quotations omitted). In other words,

Smith bears the burden of proving plainness, prejudice, and

public harm. See United States v. Olano, 507 U.S. 725, 734-

35 (1993); United States v. Gartmon, 146 F.3d 1015, 1024

(D.C. Cir. 1998). Here, the Government has conceded that

the trial court's error was plain. See Br. for Appellee 18.

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Moreover, we have no trouble concluding that a misapplication of the burden of proof that results in a defendant serving

a longer sentence adversely affects the fairness and integrity

of the judicial proceeding. See United States v. Jordan, 256

F.3d 922, 932 (9th Cir. 2001) ("But, where, as here, the

district court applied the wrong standard of proof, we must

necessarily conclude that the fairness and integrity of the

proceeding is threatened."); cf. Tippett v. Mayland, 436 F.2d

1153, 1166 (4th Cir. 1971) (Sobeloff, J., concurring in part)

("The standard of proof is more than an empty semantic

exercise; it reflects the value society places on individual

liberty.").

The only remaining question is whether Smith suffered

"prejudice" as a result of the court's error; in other words,

whether he has demonstrated that his sentence might likely

have been different had the court used the correct standard

of proof. In answering this question, it is significant that the

error occurred during sentencing. For, while the plain error

analysis applies to mistakes committed during trial, this court

has held that "the burden of persuasion in showing 'prejudice'

should be somewhat lighter in the sentencing context." United States v. Saro, 24 F.3d 283, 288 (D.C. Cir. 1994). That is,

while the defendant in such cases must still "show a reasonable likelihood that the sentencing court's obvious errors

affected his sentence," we are more willing to infer such a

causal relationship when the consequence is not that a conviction is overturned, but rather that a sentence is vacated. Id.

at 287-88. Guided by this principle, we conclude that Smith

has indeed met his burden.

As an initial matter, there is little doubt that had the

District Court used the conflict of interest violation, instead of

the illegal gratuities offense, as the predicate for Smith's

conspiracy conviction, the resulting sentence would have been

less than the 46 months that he actually received. This is so

not only because the BOL for the former is less, but also

because a number of the enhancements that the court used to

augment Smith's offense level (based on the number and

value of the gratuities involved) are not available under the

conflict of interest guideline. Compare U.S.S.G. s 2C1.3

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(conflicts) with s 2C1.2 (gratuities). As such, the length of

Smith's sentence depended on his being "convicted" by the

court of conspiring to violate 18 U.S.C. s 201(c). Cf. U.S.S.G.

app. C, amend. 75 (noting that when the jury does not specify

which offenses were the object of the conspiracy, a court's

s 1B1.2(d) finding creates "what is, in effect, a new count of

conviction"). And, because we find that it is reasonably likely

that Smith would not have been similarly convicted under a

reasonable doubt standard, it follows that the court's use of a

more lenient standard of proof was prejudicial.

We reach this conclusion for several reasons. First, we are

mindful of the significant difference between a preponderance

standard and a reasonable doubt standard. "Although the

phrases 'preponderance of the evidence' and 'proof beyond a

reasonable doubt' are quantitatively imprecise, they do communicate to the finder of fact different notions concerning the

degree of confidence he is expected to have in the correctness

of his factual conclusions." In re Winship, 397 U.S. 358, 370

(1970) (Harlan, J., concurring). Indeed, the reasonable doubt

standard requires the fact-finder to enter "a subjective state

of near certitude of the guilt of the accused." Jackson v.

Virginia, 443 U.S. 307, 315 (1979). A preponderance standard, in sharp contrast, requires merely that the fact-finder

believe that the existence of a fact is more probable than the

non-existence of that fact. See Neil Orloff & Jery Stedinger,

A Framework for Evaluating the Preponderance-of-theEvidence Standard, 131 U. Penn. L. Rev. 1159, 1159 (1983);

see also United States v. Fatico, 458 F. Supp. 388, 403-04

(E.D.N.Y. 1978) (Weinstein, J.). Whereas a reasonable doubt

standard is designed to "exclude as nearly as possible the

likelihood of an erroneous judgment" against a criminal defendant, a preponderance standard compels the litigants to

"share the risk of error in roughly equal fashion." Addington

v. Texas, 441 U.S. 418, 423 (1979). For this reason, the

Supreme Court has indicated that a trial judge's improper

jury instruction regarding the necessity of proof beyond a

reasonable doubt can never be harmless error. See Sullivan

v. Louisiana, 508 U.S. 275 (1993). "Thus, a defendant whose

guilt was actually proved by overwhelming evidence would be

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denied due process if the jury was instructed that he could be

found guilty on a mere preponderance of the evidence."

Jackson, 443 U.S. at 320 n.14 (internal citations omitted).

This case raises a similar concern. Here, the District

Court, in effect, erroneously instructed itself that it could

"convict" Smith of conspiring to violate 18 U.S.C. s 201(c)

based on a finding to that effect by a mere preponderance of

the evidence. Given (1) the substantial difference between the

standard that the trial court used and the proper standard,

(2) the due process concerns associated with convicting and

sentencing criminal defendants under the appropriate burdens of proof, (3) the difficulties of determining whether an

erroneous burden of proof was outcome determinative, see

Carvalho v. Raybestos-Manhattan, Inc., 794 F.2d 454, 455

(9th Cir. 1986), and (4) our greater willingness to find prejudice in the context of sentencing errors, we find that Smith

has satisfied his burden of proof. One of our sister circuits

has reached the same result in like circumstances. Indeed,

United States v. Farese, 248 F.3d 1056 (11th Cir. 2001),

presented a similar situation to the one that now confronts us:

a sentencing court that had failed to use a reasonable doubt

standard to fix the unspecified predicate offense for a conspiracy conviction. The Eleventh Circuit reversed, holding that

the "district court's failure to apply the proper standard of

proof at sentencing compels us to vacate the appellants'

sentences and remand this case to the district court for

resentencing." Id. at 1061; see also United States v. Nguyen, 255 F.3d 1335, 1341-42 (11th Cir. 2001) (vacating sentences imposed under a RICO conspiracy conviction where

court determined unspecified predicate offense under a preponderance standard, and where that determination increased

defendants' offense levels); United States v. Ross, 131 F.3d

970, 994 (11th Cir. 1997) (vacating sentence imposed under

U.S.S.G. s 1B1.2(d) where district court "did not state that it

had determined that the evidence was sufficient to persuade

it beyond a reasonable doubt" that defendants had conspired

to commit a particular substantive offense).

Apart from misconstruing the burden of proof, the trial

court determined that Smith conspired to commit an offense

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with respect to which the jury failed to convict. Normally,

this would not be noteworthy, because it is settled that

conspiracy and the substantive offense underlying a conspiracy are treated as separate and distinct crimes; indeed, a

defendant can be convicted of the former while simultaneously acquitted of the latter. See Ianelli v. United States, 420

U.S. 770, 777-78 (1975); United States v. Hernandez, 141

F.3d 1042, 1052-53 (11th Cir. 1998). In this case, however,

the result is anomalous. The discrepancy here between the

actions of judge and jury is most readily explained in one of

two ways: (1) the difference between conspiracy crimes and

substantive crimes or (2) the difference in the burdens of

proof applied with respect to each. None of the District

Court's pronouncements give any reason to credit the former

explanation.

In its Sentencing Order, the trial court announced that its

task under U.S.S.G. s 1B1.2(d) was "to make a finding as to

whether the evidence proven at trial establishes the object

offense of Receipt of Illegal Gratuities and/or Payment of

Illegal Gratuities." Sentencing Order at 4. True to its

stated intention, the trial court's analysis fails to address the

"sine qua non of the statutory crime of conspiracy," i.e., the

existence of an agreement to commit an illegal act, United

States v. Wilson, 160 F.3d 732, 737 (D.C. Cir. 1998). Rather,

the District Court focuses instead solely on the evidence

suggesting that Smith engaged in the object acts that would

render him criminally liable under 18 U.S.C. s 201(c) itself.

See Sentencing Order at 4-13. Moreover, at Smith's sentencing hearing, the trial court opined that the defendant "did, in

fact, take gratuities by taking these monies and the loans, and

charging the interest rates that [he] did while [he was] in a

position over the contracting." Tr. 12/12/2000 at 15. These

statements suggest that the District Court's determination

was based not on the technical differences between the

elements of the federal conspiracy statute and the federal

gratuities statute, but rather on its conclusion that Smith had

in fact violated the latter. As such, in light of the jury's

inability to reach a similar conclusion based on a reasonable

doubt instruction, it is at least reasonably likely that the court

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would not have done so had it employed the same (and the

proper) standard of proof.

A final reason to think that the District Court's burden of

proof error was prejudicial lies in the court's treatment of the

elements of s 201(c). The Supreme Court has recently made

clear that, in order to obtain a conviction under this statute,

the Government "must prove a link between a thing of value

conferred upon a public official and a specific 'official act' for

or because of which it was given." United States v. SunDiamond Growers of Cal., 526 U.S. 398, 414 (1999). While

the District Court here did identify Smith's official acts and

the things of value that he received, it never attempted to

articulate or to "prove a link" between the two. The court's

bare assertion that Braxtonbrown-Smith "undertook to enrich Smith and bestow reciprocal benefits on him" in acknowledgment of his referrals to PDA, Sentencing Order at 7, is

not sufficient to satisfy a reasonable doubt standard. This

court is simply not empowered to comb the record on its own

to make a determination that the District Court should have,

but did not, make under a significantly heightened evidentiary burden that the District Court should have, but did not,

use. See Jordan, 256 F.3d at 933 (remanding where district

court used a preponderance standard for a sentencing determination that should have been governed by clear and convincing evidence; the Court of Appeals declared that "we are

not in a position to weigh conflicting evidence, which is an

important responsibility of the district court"); cf. Hernandez, 141 F.3d at 1052 ("It is emphatically not within the

province of an appellate court to reweigh the evidence and the

credibility of the witnesses at trial.").

In sum, then, we hold that the court's use of a preponderance standard to reach a conclusion that should have been

determined beyond a reasonable doubt was prejudicial. Accordingly, Smith's sentence must be vacated and the case

remanded so that the District Court may recalculate his

offense level under the proper standard of proof.

C. The Upward Departure

Smith also challenges the District Court's decision to impose a three-level upward departure under U.S.S.G. s 5K2.0.

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This departure elevated Smith's total offense level from 19 to

22; without such an increase, Smith's 46-month sentence

would have been impermissible. Applying the familiar

"heartland" analysis of Koon v. United States, 518 U.S. 81

(1996), the court held that the defendant's "commission of

other crimes on persons or entities in the course of committing the offenses of conviction" justified a departure. Sentencing Order at 22. These purported "crimes," for which

Smith was never charged, included: (1) Smith's alleged efforts to defraud the IRS by using false memo notations

(indicating business-related expenses) on checks that he

wrote in connection with the Columbia Road transactions; (2)

Smith's alleged defrauding of Earnestine Keaton by purchasing her house at a reduced price after she had been told that

she did not need a lawyer; (3) Smith's alleged attempts to

commit bank fraud by helping Terry Reid submit a false

mortgage application.

Smith mounts three principal attacks on this departure.

First, he argues that none of these alleged frauds were

sufficiently related to the crimes for which he was actually

convicted. Second, he asserts that no record evidence supports the finding that Smith committed either the tax fraud

or the fraud on Ms. Keaton. Finally, and relatedly, he

contends that, even assuming a departure was warranted, the

court erred in determining the extent of that departure.

The first contention can be disposed of quickly. It is true

that while a sentencing court is not limited by the definition

of "relevant conduct" in U.S.S.G. s 1B1.3 in considering a

s 5K2.0 departure, a court may not depart based on "acts

bearing no relationship to the offense of conviction." United

States v. Kim, 896 F.2d 678, 684 (2d Cir. 1990); see also

United States v. Cross, 121 F.3d 234, 240 (6th Cir. 1997)

(citing cases). In other words, the conduct forming the basis

for the departure must be descriptively or logically, and not

merely temporally, connected to the crime for which the

defendant was actually convicted. See United States v.

Baird, 109 F.3d 856, 864-65 (3d Cir. 1997). Here, however,

the frauds on the bank and on Ms. Keaton were certainly

connected to Smith's conflict of interest crime in this relevant

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sense, as both of these facilitated and made more lucrative

the purchase of the Columbia Road property, the improper

transaction that ultimately led to Smith's conviction. While

the tax fraud is perhaps more tangential, the evidence suggests that Smith used the checks on which he included the

false memo notations to purchase the cashier's check with

which he made his initial payment to Ms. Keaton in December of 1994. See Tr. 5/9/2000 at 128-30; 5/10/2000 at 152-55.

That these deceptions may have allowed Smith to conceal his

involvement in the Columbia Road transaction, see Memorandum and Order at 6 (D.D.C. Dec. 12, 2000) ("Sentencing

Reconsideration Order"), reprinted in J.A. tab 11, is relationship enough to allow them to be considered for purposes of a

s 5K2.0 departure. See United States v. Burns, 893 F.2d

1343, 1346 (D.C. Cir. 1990), rev'd on other grounds, 501 U.S.

129 (1991).

Smith's next two arguments, however, are more compelling.

To see why, we must begin with the method by which the

District Court calculated its departure. The trial court treated each of the three alleged frauds as separate crimes and

inquired how Smith would have been sentenced, pursuant to

the "grouping" rules of U.S.S.G. s 3D, had he been convicted

of all three. Under this approach, the alleged loan fraud

resulted in an offense level of 12, which was composed of a

BOL of 6, see U.S.S.G. s 2F1.1, plus two-level enhancements

for planning, for role in the organization, and for perjury.

The alleged fraud on Ms. Keaton resulted in a level of 15, also

starting with a BOL of 6, with a three-level enhancement for

the amount of the fraud (more than $10,000), and two-level

increases for planning, role in the offense, and because Ms.

Keaton was deemed a vulnerable victim. Finally, the alleged

tax fraud produced an offense level of 8, based on a BOL of 6,

see U.S.S.G. s 2T1.1(a)(2), and a two-level perjury enhancement. Sentencing Order at 24-25; Sentencing Reconsideration Order at 7-9. Still proceeding as if Smith had been

convicted of these offenses, the trial court then turned to

U.S.S.G. s 3D1.4, which is used to determine a defendant's

"combined offense level." Under this rule, one unit is assigned for the group with the highest offense level (here,

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Smith's already problematic conspiracy sentence, to which the

court had assigned a level 19). Another unit was added for

Smith's "conviction" for defrauding Ms. Keaton, as the hypothetical offense level of that offense was one to four levels less

serious than that of the conspiracy conviction. See U.S.S.G.

s 3D1.4(a). Finally, another half unit came from the alleged

loan fraud offense, as its offense level was five to eight levels

less serious. See U.S.S.G. s 3D1.4(b). And under the grouping rules, two-and-a-half units translates to three levels;

accordingly, the court departed by that degree. See Sentencing Order at 25.

In the abstract, this sentencing methodology is permissible,

because it helps provide a set of standards to guide what

otherwise could become a rather arbitrary decision. See

United States v. Molina, 952 F.2d 514, 521 (D.C. Cir. 1992)

("A district court's responsibility to respect the Guidelines'

underlying policies of uniformity and proportionality in sentencing does not end when the court departs from the sentencing grid; indeed, that responsibility becomes more

weighty because it is unguided departures that pose the

greatest danger of undermining sentencing uniformity."); cf.

United States v. Cash, 983 F.2d 558, 561 (4th Cir. 1992)

(suggesting that district courts may determine the proper

extent of a departure "by extrapolating from the existing

sentencing table"). However, a sentencing court's methodology is only as good as its inputs; if the findings supporting the

multiple-conviction analogy were inadequate, then so too is

the analogy.

In this case, the District Court's presumed analogy results

in Smith being sentenced exactly as if he had actually been

convicted of two counts of fraud, i.e., offenses that were not

among the charges against him. While it is well-settled that

uncharged conduct, and even acquitted conduct, can serve as

the basis for a sentencing determination (including a departure) under the Guidelines, see U.S.S.G. s 1B1.3, cmt. background; United States v. Watts, 519 U.S. 148 (1997) (conduct

for which defendant was acquitted may be considered); United States v. Arce, 118 F.3d 335, 340-41 (5th Cir. 1997)

(conduct need not be criminal); Baird, 109 F.3d at 870

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(conduct underlying dismissed counts is permissible), it is

equally well-settled that in order to satisfy due process such

conduct must be proven by a least a preponderance of the

evidence, see U.S.S.G. s 6A1.3, cmt. background; Watts, 519

U.S. at 157; United States v. Gigante, 94 F.3d 53, 56 (2d Cir.

1996); United States v. Mahaffey, 53 F.3d 128, 133 (6th Cir.

1995); United States v. Wilson, 900 F.2d 1350, 1354 (9th Cir.

1990). Thus, the District Court's analogy could not provide a

"reasoned basis" for determining the extent of a departure,

Molina, 952 F.3d at 522, unless the purported "convictions,"

and the corresponding enhancements, were supported by a

preponderance of the evidence. Applying the "clearly erroneous" standard under which we review the factual findings of a

sentencing court, see United States v. Bridges, 175 F.3d 1062,

1065 (D.C. Cir. 1999), we reject the trial court's findings

because with the benefit of the full record we have reached "a

definite and firm conviction" that the analogy underlying the

sentences is not supported by the greater weight of the

evidence. See United States v. U.S. Gypsum Co., 333 U.S.

364, 395 (1948).

First, Smith could not have been convicted of tax evasion,

under any standard of proof. The elements of that crime are

(1) willfulness, (2) the existence of a tax deficiency, and (3) an

affirmative act constituting an evasion. See Sansone v. United States, 380 U.S. 343, 351 (1965); United States v. Plitman,

194 F.3d 59, 65 (2d Cir. 1999). Even if the false memo

notations could be construed to satisfy the first and third

elements, there is absolutely no indication in the record of

any tax deficiency. The Government presented no evidence

that Smith ever took, or even tried to take, a deduction on the

basis of those notations. While cross-examining Smith, the

prosecutor raised the point briefly, but then dropped it after

Smith denied the suggestion. See Tr. 5/10/2000 at 155.

Second, the evidence does not support the conclusion that

Smith defrauded Ms. Keaton. In finding that he had done so,

the District Court focused on two facts: (1) BraxtonbrownSmith told Keaton that she did not need a lawyer in connection with the sale of her property to Smith; (2) Smith

prepared a real estate contract that was "utterly one-sided."

Sentencing Order at 23. Even assuming, as the court did,

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that Braxtonbrown-Smith's statement was properly attributed to Smith on a theory of co-conspirator liability, see

Sentencing Reconsideration Order at 4-5, we do not see how

this could amount to a violation of any fraud statute. What

we seem to have here is a contract with some irregular,

buyer-friendly terms signed by a seller not represented by

counsel. While it may be that the defendant and others took

advantage of a vulnerable Ms. Keaton, it is not apparent,

absent further evidence of deception and reliance, that this

transaction could constitute a crime supporting an upward

departure.

Finally, while the court's conclusions regarding Smith's

loan fraud are well supported by the record, its decision to

include a hypothetical two-level enhancement for perjury

committed in connection with that offense, see U.S.S.G.

s 3C1.1, cmt. n.4, is questionable. We are concerned that

this finding may have confused lying to the bank, which Smith

admitted doing, with lying to the court. On rehearing, the

District Court should therefore reexamine whether Smith's

testimony regarding the phony lease actually meets all of the

elements of perjury. See United States v. Dunnigan, 507

U.S. 87, 94-95 (1993) (holding that a perjury enhancement is

only appropriate where the sentencing court makes a finding

that "encompasses all of the factual predicates for a finding of

perjury," specifically that the defendant gave "false testimony

concerning a material matter with the willful intent to provide

false testimony").

The problems we have identified regarding the alleged tax

fraud and the alleged fraud on Ms. Keaton, along with our

questions regarding this perjury enhancement, undermine the

trial court's justification for the extent of its departure. It

falls to the District Court on remand to reconsider both its

decision to depart and the proper degree of any such departure under a viable methodology.

III. Conclusion

For the reasons given above, we affirm Smith's conviction

under 18 U.S.C. s 208(a), but vacate his sentence and remand

the case for resentencing consistent with this opinion.

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