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. e du/thir dc ir c uit_1996/120UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

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No. 95-1367 (Consolidated with No. 95-1292)

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UNITED STATES OF AMERICA

vs.

CRAIG B. SOKOLOW,

Appellant

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Appeal from the United States District C ourt for the Eastern District of Pennsylvan ia (D.C. Crim. No. 93-cr-394)

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Argued January 22, 1996 BEFORE: MANSMANN and SCIRICA, Circuit Ju dges, and RESTANI, Judge, Court of International Trade.

(Filed July 26, 1996)

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John Rogers Carroll
Johanna E. Markind

Carroll & Carroll 400 Market Street, Suite 850 Philadelphia, PA 19106

Peter Goldberger (Argued)
Anna M. Durbin
Pamela A. Wilk
50 Rittenhouse Place Ardmore, PA 19003-2276

COUNSEL FOR APPELLANT

Michael R. Stiles United States Attorney Walter S. Batty, Jr. Chief of Appeals Joseph T. LaBrum, III (Argued) Maryanne Donaghy (Argued)
Sarah L. Grieb Assistant United States Attorneys615 Chestnut Street, Suite 1250

Philadelphia, PA 19106-4476

COUNSEL FOR APPELLEE

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OPINION OF THE COURT

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RESTANI, Judge. Defendant Craig B. Sokolow ("Sokolow") appeals from his
conviction in the United States District Court for the Eastern District of Pennsylvania following a two month jury trial. On March 18, 1994, Sokolow was convicted of 107 counts of mail fraud
in violation of 18 U.S.C.  1341 (1988), 17 counts of money laundering in violation of 18 U.S.C.  1957 (1988), and one count
of criminal forfeiture in violation of 18 U.S.C.  982 (1988). Following several sentencing hearings, the district judge sentenced Sokolow to 92 months in prison, to be fol lowed by three years supervised release, and ordered a $50,000 fin e, $6200 in special assessments, $690,246.34 in restitution, an d the forfeiture of $2.1 million. On appeal, defendant c hallenges both his conviction and sentencing. For the reasons sta ted herein, we will affirm the conviction, sentencing, and the ord er of forfeiture, but remand for reconsideration of the r estitution

order.

I. BACKGROUND The events leading to Sokolow's indictment and subsequent conviction occurred between May 1, 1987 and July 23 , 1990. Sokolow, an attorney and licensed insurance agent, offered health benefits plans to the public in Pennsylvania and se veral other states through a series of corporations that he est ablished and controlled, but primarily through the National Inde pendent Business Association, Inc. ("NIBA"). The plans wer e marketed to small business employers, their employees, and thei r families. Association Insurance Marketing, Inc. ("AIM"), a co rporation established and controlled by Sokolow, served as th e primary marketing arm of NIBA. Through AIM, Sokolow receiv ed commissions on all premiums received for the sale of NIBA polic ies. Prior to May 1987, NIBA members were fully ins ured by NIBA's group insurance contract with World Life and Health Insurance Company ("World Company"). On May 1, 1987, Sokolowreplaced World Life with Independence Blue Cross and Pennsyl vania Blue Shield to administer and process NIBA's health care claims. Sokolow purchased stop-loss coverage from Blue Cros s, whereby NIBA assumed responsibility for the payment of NIBA members' medical care claims up to the first $25,000. Blue Cross would pay any remaining claims in excess of $25,000. The indictment charged that Sokolow falsely represented to the pub lic that NIBA was fully-insured by Blue Cross, when, in fact, it was a selffunded plan, thus defrauding members of their premi ums. In addition, Sokolow allegedly used the Blue Cross log o on marketingand billing materials, in violation of NIBA's agree ment with Blue

Cross, to foster the impression that NIBA was the e quivalent of a Blue Cross fully-insured health benefits plan. On June 30, 1988, Blue Cross terminated its se rvice plan with NIBA when Sokolow failed to pay approximately $2 million in claims for which Blue Cross sought reimbursement. Sokolow then contracted with another company for higher stop-los s coverage that required NIBA to pay the first $50,000 of a me mber's medical care claims. The indictment alleged that Sokolow a gain misrepresented that NIBA was fully insured by the n ew coverage, when, in fact, it was self-funded. After receiving complaints concerning NIBA's c laims administration in late 1988, the Pennsylvania Insur ance Department (the "Department") began to investigate NIBA's operations. The Department determined that Sokolowhad been operating NIBA as an illegal, unlicensed insurer in Pennsylvania. Sokolow objected to the Department's inquiries on t he basis that NIBA was a Multi-Employer Welfare Arrangement ("MEWA") that could file a benefits plan under ERISA and, thus, was not subject to state regulation. The Department disagreed with So kolow's contentions and, on May 2, 1989, suspended NIBA's o perations. On August 31, 1989, the Commonwealth Court of Pennsylv ania ruled that NIBA did not constitute a valid MEWA plan, but was a commercial enterprise "marketing insurance, without the benefit of a licensed company status, while purporting to b e a valid ERISA plan, such that state licensing would not be necessary." Appellant's App. [hereinafter "App."] at 1193. Con sequently, NIBA was ordered liquidated by the commonwealth cou rt on February 15, 1990. Sokolow collected more than $34 million in pre miums from NIBA plan members who were allegedly defrauded by S okolow during the period covered by the indictment. The indictme nt alleged that Sokolow converted approximately $4 million of the premiums for his personal benefit. He received $2,239,575.6 7 in commissions through AIM and two other related insur ance companies ($1,837,152.30 of those commissions went to AIM) and $1,806,259.23 in salary, officer's loans, and other disbursements. These monies were deposited into AI M and NIBA accounts. The indictment alleged that Sokolow laun dered these funds through a number of bank and brokerage accoun ts, as well as real property and mortgages. The jury trial commenced on January 10, 1994, and concluded on March 18, 1994, with the return of guilty verdic ts on all counts considered by the jury. Sentencing proceedi ngs were held on January 6 and 11, and February 6, 1995, during w hich sentencing issues were argued, and evidence of forf eiture, loss calculations, and restitution was presented. On Ma rch 14, 1995, the district court filed three separate Memorandum Opinions and Orders, inter alia, determining the Sentencing Guid elines calculations, and ordering the restitution and forf eiture obligation. Following entry of judgment, Sokolow f iled this timely appeal challenging both his conviction and s entence.

II. CHALLENGES TO THE CONVICTION A. Evidentiary ChallengesSokolow challenges three evidentiary rulings m ade by the

district court. Sokolow claims that the district c ourt (1) erred in admitting into evidence Government Exhibit B-110 ("Gov't Ex. B-110"), a summary of unpaid insurance claims of NI BA members; (2) improperly allowed evidence of NIBA's alleged o peration as an unlicensed insurance company; and (3) abused its di scretion in admitting irrelevant and highly prejudicial victim impact testimony. To the extent the district court's admi ssion of evidence was based on an interpretation of the Fede ral Rules of Evidence, our standard of review is plenary. See U nited States v. Furst, 886 F.2d 558, 571 (3d Cir. 1989), cert de nied, 493 U.S. 1062 (1990). Our review of a district court's ruli ng to admit or exclude evidence, if premised on a permissible viewof the law, however, is only for an abuse of discretion. See i d.; see alsoUnited States v. Versaint, 849 F.2d 827, 831 (3d Cir. 1988 ). We will address each of Sokolow's evidentiary challeng es in turn.
1. Government Exhibit B-110
Sokolow contends that Gov't Ex. B-110 is inadm issible hearsay. Gov't Ex. B-110 is a compilation and summ ary of over $7 million in unpaid insurance claims of NIBA members. The document was prepared for the Department in July 1992 by Ins ervco, a third-party administrator hired to adjust the unpai d claims after the commonwealth court ordered the liquidation of N IBA. Originally, NIBA members' claims were documented in the course of regularly conducted business by NIBA's third party administrators -- National Benefits Corp., Insurance Benefits Serv ices ("IBS"), and Independent Insurance Administrators ("IIA"). The companies processed NIBA claims and kept records on behalf of NIBA, which
Sokolow later authorized to be turned over to the D epartment's Statutory Liquidator in connection with NIBA's liqu idation. As custodian of the NIBA plan records, the Statutory L iquidator made the records available to Inservco for the adjustmen t of unpaid
claims. Over Sokolow's objection, the district court a dmitted the exhibit as an admission by Sokolow, under Federal R ule of Evidence 801(d)(2)(C). The district court reasoned : Inservco summarized information held by the St atutory Liquidator, who in turn obtained the informati on from another administrator hired by Sokolow. Each entity that held the information had the express auth orization of [Sokolow]. As such, Exhibit B-110 is a par ty
admission . . . . United States v. Sokolow, No. 93-394-01, 1994 WL 61 3640, at *5 (E.D. Pa. Nov. 1, 1994). We disagree with the dist rict court's reasoning. Rule 801(d)(2)(C) specifically excludes from t he definition of hearsay any statements used against a party whic h were made by another person authorized by the party to make a st atement concerning the subject. Fed. R. Evid. 801(d)(2)(C) ; Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1198 (3d Ci r. 1993). We find, and the government admits, that Inservco's ad justments to
the NIBA members' claims were not "done with Sokolo w's consent or at his direction," and, thus, are not admissions by Sokolow. SeeAppellee's Br. at 23. The government continues to assert,however, that the collection of these claims by NIB A's thirdparty administrators constitutes an admission by So kolow, and are, thus, not hearsay. This argument is untenable . Rule 801(d)(2)(C) requires that the declarant be an agen t of the party-opponent against whom the admission is offere d. Kirk v. Raymark Indus., Inc., 61 F.3d 147, 164 (3d Cir. 199 5), cert. denied, 116 S.Ct. 1015 (1996). We find that neithe r the underlying claims submitted by NIBA insurance benef iciaries to NIBA's third-party administrators nor Sokolow's sub sequent release of these records to the Department constitu tes an admission by Sokolow. Thus, Gov't Ex. B-110 is hea rsay because the entries of NIBA members' claims, whether or not adjusted by Inservco, were written out-of-court statements offe red to prove not merely the existence but the genuineness of the claims, and ultimately, the underfunding of Sokolow's enterpris e. We now turn to whether Gov't Ex. B-110 falls w ithin one of the exceptions to the hearsay exclusion. The gover nment argues
that Gov't Ex. B-110 is admissible under the busine ss records exception to the hearsay rule. This exception allo ws the admission of hearsay documents provided a foundatio n is laid by "the custodian or other qualified witness" that: (1) [t]he declarant in the records had persona l knowledge to make accurate statements; (2) the declarant recorded the statements contemporane ously with the actions that were the subject of the reports; (3) the declarant made the record in the regul ar course of the business activity; and (4) such records were regularly kept by the business. United States v. Pelullo, 964 F.2d 193, 200 (3d Cir . 1992).
We find that Gov't Ex. B-110 is admissible und er the business records exception. Contrary to Sokolow's contentions,
the NIBA members' claims were collected in the cour se of regularly conducted business of NIBA's original cla ims administrators. IIA initially received NIBA plan m ember information from IBS, a prior third party administr ator, with
Sokolow's consent and authorization. Pursuant to t he liquidation order, Sokolow specifically authorized the IIA to " release any and all data base information as required concernin g [NIBA] on the in-house history tapes and claims system to the [Department]." App. at 826. Joseph DiMemmo testif ied that as the representative of the Statutory Liquidator, he took custody
of all NIBA records. We find that a clear chain of custody and foundation for this data, upon which Inservco based its claims adjustment, was established. As to the claim adjustments made by Inservco, and summarized in Gov't Ex. B-110, we find that this data also fal ls within the business records exception. As a third party admin istrator, Inservco contracted with the Department to administ er NIBA health insurance claims. The claims adjustments made by I nservco were the same type of adjustments NIBA's third party adm inistrators would have had to make if NIBA had stayed in busine ss. Margaret Lee attested to the authenticity of Gov't Ex. B-110 and laid the
foundation for its admission. Lee testified that G ov't Ex. B-110 was derived from Inservco's claims processing syste m and thatthese records were made and kept in Inservco's regu lar course of

business. Although the Inservco business records were de rived in part from information provided by outside persons not un der a business compulsion, the business records exception may stil l apply "[i]f the business entity has adequate verification or ot her assurance of accuracy of the information provided by the outs ide person." See United States v. McIntyre, 997 F.2d 687, 700 (1 0th Cir. 1993), cert. denied, 114 S. Ct. 736 (1994); see als o United States v. Console, 13 F.3d 641, 657-58 (3d Cir. 199 3) (under Rule 803(6), person transmitting recorded information no t required to be under business duty to provide accurate informat ion if "standard practice was to verify the information pr ovided.") (internal quotes omitted), cert. denied, 114 S. Ct. 160 and 115 S. Ct. 64 (1994). In this case, a proof of claim p rocedure was utilized whereby the beneficiaries would reverify t heir claims and submit supporting provider documentation throug h the Department. The beneficiaries were under a duty to submit accurate proof of claims in order to be entitled to payment, and subject to criminal and/or civil penalties for subm itting
fraudulent claims. See 18 Pa. Cons. Stat.  4117 (criminal/civil liability for insurance fraud). Inservco would then begin its own verification procedure. Ms. Lee testified that Inservco set up the processi ng of the proof of claim forms submitted by each claimant. I nservco received database information from NIBA's prior thi rd party administrators regarding NIBA members. With this i nformation placed into Inservco's claims processing system, In servco verified the information submitted on the proof of claim forms. Ms. Lee and her staff evaluated each proof of claim for correct benefits, according to NIBA guidelines and benefit plans, and submitted a notice of explanation of benefits and a notice of claim evaluation to each claimant. There were roug hly 4,600 policy holder claims against the NIBA estate. Ms. Lee audited between 10 and 30 percent of each benefit amount le ss than $1,000. Also, Ms. Lee, in coordination with the st atutory liquidators, audited any claim that had a benefit a mount of over $1,000. In sum, we find that because the claims audit performed here was unique, the government properly established the admissibility of Gov't Ex. B-110 under the business records excep tion to the hearsay rule. Defendant asserts, however, that the methods a nd circumstances under which Inservco prepared the summary of claims were untrustworthy and unreliable. Sokolow argues that many claims were not checked for pre-existing conditions , double submissions, or the timeliness of the claims. We d isagree. Inservco adjusted the claims according to NIBA poli cy guidelines, and these adjustments were subject to committee rev iew and oversight by the Department. Final approval of the claim adjustments was made by the Department. Although t he adjustments made by Inservco did not take into account the time liness of claims, trial testimony indicated that this informa tion could not be determined from the submissions made to the Depa rtment.Further, Sokolow offers no specific evidence that t he claims were

not properly inspected by Inservco. Much of the ev idence indicates the contrary. In any event, such questio ns go to the weight to be given to Gov't Ex. B-110, and not its admissibility. Finally, Sokolow claims that Gov't Ex. B-110 i s a public report under Federal Rule of Evidence 803(8)(C), an d, thus,
should be excluded under the rationale set forth in United States v. Oates, 560 F.2d 45 (2d Cir. 1977). There the co urt held that, "police and evaluative reports not satisfying the s tandards of [Federal Rules of Evidence] 803(8)(B) and (C) may n ot qualify for admission under [Rule] 803(6) or any of the other e xceptions to the hearsay rule." Id. at 77. Generally, a public report consisting of "factual findings resulting from an i nvestigation made pursuant to authority granted by law," is not admissible against a criminal defendant under Rule 803(8)(C). We agree with
Sokolow that Gov't Ex. B-110 contains some indicia of a public report under Rule 803(8)(C). In processing NIBA me mbers' claims, Inservco was performing a fact-finding function and acting essentially as the agent of the Department, which w as required to liquidate NIBA pursuant to state law. We disagree, however, with Sokolow's contention that the findings made by the Department, i.e. Inservco's adjustments, were inadmissible unde r the Oatesrule. Criticizing Oates as an unduly broad interpret ation of Rule 803(8), many courts have declined to import the lim itations of Rule 803(8)(B) and (C) into other hearsay exception s. See, e.g., United States v. Picciandra, 788 F.2d 39, 44 (1st Cir.) (upholding admission of DEA report against criminal defendants under Rule 803(5) (past recollection recorded)), ce rt. denied, 479 U.S. 847 (1986); United States v. Metzger, 778 F.2d 1195, 1201 (6th Cir. 1985) (declining to read Rule 803(8) (C) limitations into Rule 803(10) (absence of public re cord or entry)), cert. denied, 477 U.S. 906 (1986). Althou gh we have not specifically addressed this issue, the Seventh and Tenth Circuits have held that Rule 803(8)(C) does not compel the exclusion of documents properly admitted under Rule 803(6) where the author testifies. See United States v. Hayes, 861 F.2d 1225, 1230 (10th Cir. 1988); United States v. King, 613 F .2d 670, 672- 73 (7th Cir. 1980). The Hayes court stated that th e Oates rule does not apply in such circumstances "because such [investigator] testimony protects against the loss of an accused's confrontation rights, the underlying rationale for Rule 803(8) an d the basis of the court's concern in Oates." 861 F.2d at 1230 (c itation omitted). We reach the same conclusion here. Here, Margaret Lee, the Inservco employee who supervised the claims adjustments, testified and was cross-examine d at some length. Lee personally audited many of the submitt ed claims and stated that Gov't Ex. B-110 represented the results of Inservco's processing of the NIBA members' claims. We find th at the circumstances surrounding the preparation of Gov't Ex. B-110 were probed and there was no loss of confrontation right s. Thus, Gov't Ex. B-110 was properly admissible under the b usiness records exception of Rule 803(6), and we will affir m on that
basis.
2. Evidence of NIBA's Non-LicensureAt trial, the district court permitted the rea ding into

evidence of portions of a ruling made by the Common wealth Court of Pennsylvania upholding the NIBA suspension order entered by the Department. Denying Sokolow's motion to strike , the district court ruled that "the probative value [of the opinion] outweigh[ed] the prejudicial value." App. at 608. In addition, various testimony regarding the non-licensure of NI BA was permitted to be addressed.
Sokolow asserts that the district court erred in admitting this evidence. He argues that (1) the allegations of violations of state law were confusing and unduly prejudicial, (2) NIBA's alleged non-licensure was not an element of the mai l fraud scheme alleged in the indictment, (3) prejudicial effect i s highlighted by the fact that the deliberating jury requested Ju dge Colins's opinion, and (4) the groundlessness of Judge Colins 's opinion is supported by an en banc decision in a related case by the commonwealth court, which found NIBA was a MEWA and not an insurance entity under state law. See supra note 3

. We find that the district court did not abuse its discretion in admitting this evidence. Under Federal Rule of Evidence 403, "[relevant] evidence may be excluded if its probati ve value is substantially outweighed by the danger of unfair pr ejudice, confusion of the issues, or misleading the jury." Fed. R. Evid. 403. According to the government, the evidence of non-licensure and the reading of Judge Colins's opinion was for t he purpose of providing background information regarding the susp ension and liquidation of NIBA. The non-licensure of NIBA was a factual allegation in the indictment which would demonstrat e the nature of the fraud scheme and show the factual predicate for NIBA's suspension and liquidation.
Sokolow asserts that the evidence of non-licen sure was unduly prejudicial and confusing, as evidenced by t he jury's request for Judge Colins's opinion. We disagree. In responding to the jury's request, the district judge submitted the following instruction, agreed to by the parties, rather than the requested opinion: [Judge Colins's opinion] was referred to in the evidence to give a historical background of th e proceedings. The opinion of Judge Collins [si c] is just that, an opinion. Judge Collins [sic] wa s not a
witness to the facts. You have seen and heard the witnesses. You must make your decision on the basis of the witnesses['] testimony, exhibits relating to facts and the stipulations of counsel - pursuant to my instructions on the law. App. at 1203. We find that any prejudicial effect was remedied by this instruction. Additionally, as indicated, J udge Colins's ruling formed the basis for the liquidation of NIBA , and although
non-licensure was not an element of the mail fraud or money laundering charges, it was a necessary factual pred icate to the
mail fraud scheme. Sokolow claimed to have created a valid health benefits plan filed with the Department of L abor and operating under ERISA, when in fact, no such filing was ever made. Accordingly, we find the district court did not abuse itsdiscretion in admitting evidence of NIBA's non-lice nsure.

3. Victim Impact Testimony
Sokolow asserts that the district court abused its discretion in permitting highly prejudicial victim impact testimony to be admitted at trial. The district co urt allowed 20 NIBA members to testify that they were denied payme nt of their claims. Some witnesses were also permitted to test ify as to collateral losses that they suffered. One witness, Kenneth Harris, who was injured in an auto race, was permit ted to testify as to $238,111.46 in unpaid claims, and to his long hospitalization and prolonged rehabilitation. Addi tionally, he was permitted to testify as to problems with collec tion agencies. A year after the jury's verdict, the district court found that Harris's claims were "caused by non-covered activit y," and, thus, he was not entitled to restitution. Sokolow also p oints to the testimony of Frank Yeager, who became a quadriplegi c as a result of a gunshot wound. Sokolow asserts that collatera l testimony as to this witness's injury, and repeated reference to the injury by government counsel in closing arguments, were undul y prejudicial. In general, to satisfy the elements for mail f raud, "[p]roof of actual loss by the intended victim is not necess ary." United States v. Copple, 24 F.3d 535, 544 (3d Cir.), cert. denied, 115 S.Ct. 488 (1994). Evidence of loss, however, may b e treated as
evidence of the schemer's intent to defraud. See i d. at 545. In Copple, we found that extensive victim impact testi mony as to collateral losses "went beyond anything that was re asonable to prove [defendant's] specific intent to defraud." I d. In that case, some of the objectionable collateral impact t estimony included testimony that money used to pay back loss es came from savings for children's college educations, that pay ing back the money had affected the witnesses' health, caused we ight loss, and required depletion of all personal savings. Id. at 545-46. Accordingly, the court found that the district cour t erred in allowing the testimony as the "[t]estimony was desi gned to generate feelings of sympathy for the victims and o utrage toward [defendant] for reasons not relevant to the charges [defendant]
faced." Id. at 546. In the case before us, the victims testified t o a careful

account of the dollar value of the loss suffered as a result of the fraud. Many of the victims also provided signi ficant embellishment concerning adverse personal consequen ces, similar to the victims in Copple. By asking every victim w ho testified whether he or she suffered any adverse consequences from the unpaid claims, the government was attempting to hig hlight the personal tragedies of the victims. Such testimony has little, if any, probative v alue and may be unfairly prejudicial. While normally the balanc ing under Federal Rule of Evidence 403 is done by the distric t court, for purposes of this discussion, we can assume, arguend o, that the testimony was in fact prejudicial because we believ e that its
admission was harmless. "Trial error is harmless i f it is highly probable that the error did not affect the j udgment." Id.(citing United States v. Simon, 995 F.2d 1236, 1244 (3d Cir

. 1993)). We stated in Simon that a high probability exists wherethe court has a "'sure conviction that the error di d not

prejudice the defendant.'" 995 F.2d at 1244 (quoti ng United States v. Asher, 854 F.2d 1483, 1500 (3d Cir. 1988) (citation omitted), cert. denied, 488 U.S. 1029 (1989)). In making this determination, we are not required to "disprov[e] e very 'reasonable possibility of prejudice.'" Id. (citati ons omitted). Here the error of admitting the adverse conseq uences testimony was harmless because, as in Copple, 24 F. 3d at 526-47,
the evidence of the scheme to defraud and of Sokolo w's specific intent was overwhelming. As we have set forth abov e, the record is replete with proof of Sokolow's intentional misr epresentations to small business employers and employees and conce alment of material facts which induced them to purchase what they believed to be fully insured health care coverage. Substant ial evidence of the actual scheme to defraud was also presented at trial. Eighteen of the twenty victim-witnesses who testifi ed were improperly denied coverage even though they paid pr emiums for what they believed to be a fully insured health car e plan. Sokolow was forced to deny claims to make up for a shortage in the claims reserve fund, since he diverted a large portion of the collected premiums to his personal bank accounts. Thus, it is "highly probable" that Sokolow would have been conv icted of mail fraud even without adverse consequences testimony. Any error, therefore, was harmless. B. Defendant's Challenges to Jury Instructio ns 1. Scienter Element for Violation of Mo ney Laundering
Under 18 U.S.C.  1957 Sokolow asserts that the district court improp erly instructed the jury on the scienter element of 18 U .S.C.  1957. That section makes it unlawful for a person to " knowingly engage[] or attempt[] to engage in a mone tary transaction in criminally derived property of a val ue greater than $10,000 and is derived from specified unlawful activity." Id. The elements necessary to prove a violation of  1957 are

that

(1) the defendant engage or attempt to engage (2) in a monetary transaction (3) in criminally derived property that is of a value greater than $10,000 (4) kn owing that the property is derived from unlawful act ivity, and (5) the property is, in fact, derived from 'specified unlawful activity.' United States v. Johnson, 971 F.2d 562, 567 n.3 (10 th Cir. 1992). Defendant contends that the knowledge requirem ent of  1957 requires "proof that Sokolow knew his conduct was p rohibited by law." As Sokolow never objected to the instruction s at issue, the court's review is limited to plain error, that is, the error must be "plain" and "affect[] substantial rights." See United States v. Retos, 25 F.3d 1220, 1228-29 (3d Cir. 199 4) (quotingUnited States v. Olano, 113 S.Ct. 1770, 1777 (1993); see a lsoFed. R. Crim. P. 52(b) ("Plain errors or defects affecting substantial rights may be noticed although they wer e not brought to the attention of the court."). In support of his argument, Sokolow relies pri marily uponthe Supreme Court decision in Ratzlaf v. United Sta tes, 114 S.Ct.

655 (1994). In Ratzlaf, the defendant was charged with violating
31 U.S.C.  5324, which makes it unlawful for a person to
"structure" numerous transactions with several bank s to evade the banks' obligation to report cash transactions excee ding $10,000. See id. at 658. Section 5322(a), Title 31, United States Code, imposes criminal penalties for a "person willfully violating" the antistructuring provision. At issue was the trial court's instruction that the government did not have to pro ve the defendant knew the "structuring" in which he engage d was unlawful, but only that the defendant knew of the r eporting obligation and attempted to evade that obligation. In reversing the court of appeals, which upheld the conviction, the Supreme Court held that in order to give effect to  5322(a)'s "willfulness" requirement, the government must prov e that the defendant knew the structuring in which he was enga ged was unlawful. 114 S.Ct. at 663. The Court was unpersu aded by arguments that the offense of structuring is "so ob viously 'evil' or inherently 'bad' that the 'willfulness' requirem ent [of  5324 is] satisfied irrespective of the defendant's knowl edge of the illegality of structuring." Id. at 662. Sokolow claims that the offense of money laund ering is analogous to the offense at issue in Ratzlaf. He a rgues that engaging in monetary transactions, such as bank dep ositing, with known criminal proceeds is not conduct that is "obv iously evil or inherently bad." Sokolow contends the jury must fi nd that he knew his spending and regular bank transactions wer e prohibited by law. Absent a "willfulness" requirement, however, w e will not require proof of knowledge of illegality to sustain a conviction under the money laundering provision of 18 U.S.C.  1957. In United States v. Zehrbach, 47 F.3d 1252, 1261 (3d C ir.), cert. denied, 115 S.Ct. 1699 (1995), in discussing the pr oof necessary for bankruptcy fraud, we stated that "[t]he statuto ry requirement that the underlying acts be performed 'knowingly' r equires only that the act be voluntary and intentional and not t hat a person knows that he is breaking the law." In Zehrbach, w e distinguished Ratzlaf on the basis of the "willfuln ess" element required under the structuring offense. Id.; see a lso United States v. Hilliard, 31 F.3d 1509, 1518 (10th Cir. 1 994) (Ratzlafproof of knowledge of illegality requirement not applicable to, inter alia,  1957 money laundering provision); United States v. Santos, 20 F.3d 280, 284 n.3 (7th Cir. 1994) (Ratzl af not applicable to  1956 money laundering provision because of absence of willfulness requirement). Similarly, as  1957 does not contain a willfulness requirement, we decline t o adopt Ratzlaf for the money laundering provision at issue in this case. Moreover, Sokolow's citation to our decision i n United States v. Curran, 20 F.3d 560 (3d Cir. 1994), is di stinguishable. In Curran, we followed Ratzlaf in construing the "w illfulness" component of 18 U.S.C.  2(b), which makes it unlawful to deliberately cause another person to perform an act that would
violate federal criminal law. 20 F.3d at 566-68. In that case, defendant was charged with causing election campaig n treasurersto submit false reports to the Federal Election Commission in

violation of 18 U.S.C.  2(b) and 1001, the false statement statute. Id. at 562. Thus, unlike the money laund ering statute involved here, "willfulness" was an element of the crime at issue in Curran. See id. at 567-68. In sum, we find the district court properly instructed the jury on the scienter element of Sokolow's money laundering violation. 2. Criminally Derived Property Element of  1957
Sokolow asserts that the district court commit ted plain error in the jury instruction as to the element of  1957 that requires the criminally derived property in a monet ary transaction to have a value in excess of $10,000. Specifically, Sokolow asserts that in the court's explanation of "tracing" criminal proceeds, the district court erred in stat ing the following: [T]he Government need not prove that there [si c] $20,000 came from this sale over here, because as I un derstand it, the Government's theory is these different sum s -- they have to initially prove they came from NIBA. It ha s to prove that it came from NIBA, initially, but not wha t NIBA

account.

So the matter goes from $20,000 from NIBA to Sokolow & Associates and then Sokolow & Associates spend s the money or spends a similar sum of money some places. Th ey don't have to prove it's the same $20,000 that went from Sokolow's [account] to Sokolow & Associates. The Govern ment need not prove that all the property involved in the tr ansaction was the proceeds of the money laundering. It is s ufficient if the Government proves at least part of the pro perty represents such proceeds. App. at 945 (emphasis on alleged error). Sokolow a lleges that the instruction "allowed the jury to convict simply on a showing that even $1 of the proceeds of fraud were deposite d into a Sokolow account and later used to pay, in part, for the items charged [in the counts] of the indictment." We fin d this
contention is without merit.
It is clear from the full context of the distr ict judge's explanation of the concept of proceeds that he is a ddressing the absence of a legal requirement that the government trace the funds constituting criminal proceeds when they are commingled with funds obtained from legitimate sources. See U nited States v. Johnson, 971 F.2d at 570 (noting that there is n o requirement that government "show that funds withdrawn from the defendant's account could not possibly have come from any sourc e other than the unlawful activity."). We find no error in the district court's jury instructions in this regard. 3. Sokolow's Responsibility for Actions of His Agents Sokolow alleges error in the district court's jury instructions as to Sokolow's responsibility for act ions of his agents, particularly as it relates to "insurance ag ents' improper use of the Blue Cross logo on advertisements as par t of the fraud
scheme." The instruction read as follows: In order to sustain the burden of proof in t hismatter, it is not necessary in either of these counts

to prove -- these types of crimes -- to prove that the defendant did everything, every act. A person can act through his agent, and therefore, if the acts or conduct of another were ordered by the defenda nt or directed by the defendant or authorized by the defendant, the law holds the defendant respons ible for the acts, just as if he had personally done th em. That includes both human beings and corporate agent s. App. at 945. According to Sokolow, the jury instru ction is
erroneous in that the jury could have found Sokolow guilty of ma il fraud if he authorized employees to prepare marketin g materials for his plan, and those employees on their own misrepresented the extent of Blue Cross underwriting in such materials. No proof that Sokolow directed the misrepresentations with an intent to
defraud was demanded. Appellant's Br. at 26. Sokolow quotes the court in Curran, 20 F.3d at 567, which stated that, "Section 2(b) [of T itle 18, United States Code] imposes criminal liability on t hose persons who possess the mens rea to commit an offense and c ause others to
violate a criminal statute." As defendant did not object to the jury instru ction, we review the district court's failure to provide a sp ecific instruction for plain error only. See United State s v. Xavier, 2 F.3d 1281, 1287 (3d Cir. 1993). Reading the jury i nstructions in context, the district judge clearly explains the sc ienter requirements to convict Sokolow of both the mail fr aud and money laundering offenses. See App. at 941 ("[T]he defen dant, Mr. Sokolow, is charged with knowingly and unlawfully d evising and intend[ing] to defraud the members of [NIBA] . . . and that he knowingly caused the United States [mails] to be us ed to execute these schemes or this scheme."); App. at 944 ("[T]h e Government must prove beyond a reasonable doubt that there was -- that not only was there a fraudulent activity, but the defen dant had a conscious intent to defraud. . . . [T]he defendant himself did not have to mail anything. He may or he can order someone to do it."); App. at 945 ("The Government must prove tha t the defendant knew that property involved in the money transaction constituted or was derived, either directly or indi rectly from a criminal offense . . . . [H]e has to know he recei ved this money through fraudulent means. He has to be conscious o f that."). The jury was instructed properly that intent to def raud was required. Thus, we find no plain error in the dist rict court's
instruction and we affirm Sokolow's conviction.

III. CHALLENGES TO SENTENCING

A. Calculation Under the Sentencing Guidelin es In determining the Sentencing Guideline range, the district court grouped together Sokolow's mail fraud and mon ey laundering counts pursuant to U.S.S.G.  3D1.2(c). The higher offense level for the two groups, the money laundering offe nse, was used for computing the sentence. Sokolow does not conte st thegrouping of the counts.

1. The "value of funds"
Sokolow asserts that the district court incorr ectly applied the Sentencing Guidelines to determine the "value o f funds" involved in the money laundering offense. The "val ue of funds" involved in a money laundering offense is a specifi c offense
characteristic. U.S.S.G.  2S1.2(b). Under  1B1.3, specific offense characteristics are determined by "relevant conduct," defined, inter alia, as (1) all acts and omissions committed or aided and abetted by the defendant, or for which th e defendant would be otherwise accountable, that occurred during the commission of the off ense of conviction, in preparation for that offen se, or in the course of attempting to avoid detecti on or responsibility for that offense, or that otherwise were in furtherance of that offense;

(2) solely with respect to offenses of a char acter for
which  3D1.2(d) would require grouping of multiple counts, all such acts and omissions that were part
of the same course of conduct or common s cheme or plan as the offense of conviction.

U.S.S.G.  1B1.3(a)(1)-(2). When reviewing a district court' s sentencing decisions, the court has plenary review over questions as to the meaning of the Sentencing Guidelines. Un ited States v. Edmonds, 52 F.3d 1236, 1244 (3d Cir. 1995). Factua l determinations underlying the application of the gu idelines are reviewed under the clearly erroneous standard. Id. As to the money laundering counts, the present ence investigation report ("PSR") determined that over $ 2.2 million in proceeds from the unlawful mail fraud scheme had be en laundered by Sokolow. PSR at 6. This amount represented the commissions received by Sokolow through AIM, and the related in surance agencies, Sokolow & McMillan, and Sokolow, McMillan & O'Leary. In addition to this amount, the district court adde d the additional $1.8 million Sokolow received in salary, officer's loans, and other disbursements to calculate the "va lue of funds" involved in the money laundering offenses under the Sentencing
Guidelines. The district court concluded that Soko low had converted $4 million from the mail fraud scheme for personal benefit, and, therefore, this amount represented th e "accurate measure of harm from Defendant's money laundering o ffenses." See Appellant's Br., Addendum D, at 13. Sokolow ar gues the district court erroneously included the $1.8 millio n as relevant conduct of the money laundering offense, without de termining whether that amount independently satisfied the ele ments of  1957, namely, that Sokolow engaged in monetary tran sactions in criminally derived property of a value greater than $10,000. We disagree with Sokolow's contention. We have previously noted that the commentary t o U.S.S.G. 
2S1.1 does not define "the value of funds." United States v. Thompson, 40 F.3d 48, 51 (3d Cir. 1994), cert. deni ed, 115 S.Ct.1390 (1995). In Thompson, we stated that "[the Commentary]

states that '[t]he amount of money involved is incl uded as a factor because it is an indicator of the magnitude of the criminal enterprise, and the extent to which the de fendant aided the enterprise.'" Id. In United States v. Johnson , 971 F.2d 562, 576 (10th Cir. 1992), the court stated that "t he measure of

harm under  2S1.1 is the total amount of the funds involved." In dicta, the Johnson court noted that [F]unds associated with uncharged instances of money laundering can be added in to determine the of fense

level under  2S1.1 if those acts are within the scope

of relevant conduct under  1B1.3(a)(2). Thus, in determining the 'value of funds' under  2S1.1, the district court is not necessarily limited only to the
funds identified with the counts of conviction

. Id. at 576 n.10.
We find that the district court did not err in finding the additional $1.8 million as "relevant conduct" withi n the meaning of the Sentencing Guidelines. As previously noted, this amount
was derived from Sokolow's unlawful mail fraud sche me. Further, Sokolow's accountant testified that the $4 million represented
the total amount of funds disbursed from NIBA to So kolow during the period relevant to the mail fraud scheme. As s uch acts were "part of the same course of conduct or common schem e or plan as the offense of conviction," U.S.S.G.  1B1.3(a)(2), we find that the $1.8 million was properly considered "relevant conduct" under the Sentencing Guidelines even though this amount w as not charged in the money laundering counts. See United States v. Rose, 20 F.3d 367, 372-73 (9th Cir. 1994) (finding that unch arged acts of money laundering may be considered in determining a ppropriate sentence under Sentencing Guidelines). 2. Abuse of position of trust enhanceme nt.
Sokolow received a two-level enhancement for a buse of position of trust under U.S.S.G.  3B1.3. That section states, in relevant part: If the defendant abused a position of public o r private trust, or used a special skill, in a manner th at significantly facilitated the commission or co ncealment of the offense, increase by 2 levels.

U.S.S.G.  3B1.3. At the time of the relevant offenses, Application Note 1 in the commentary to this sectio n stated the following: The position of trust must have contributed in some substantial way to facilitating the crime and not merely have provided an opportunity that could as easily have been afforded to other persons. T his adjustment, for example, would not apply to an embezzlement by an ordinary bank teller.

U.S.S.G.  3B1.3, comment. (n.1). In applying this section, "a sentencing court must determine whether a defendant was placed in a position of trust, and if he was, whether he abus ed that position in a way that significantly facilitated hi s crime." United States v. Craddock, 993 F.2d 338, 340 (3d Ci r. 1993). The inquiry into whether someone obtains a position of trustapproaches a purely legal determination for which d e novo review

is appropriate. Id.; see also United States v. Lie berman, 971 F.2d 989, 993 (3d Cir. 1992). Whether or not a def endant abuses a position of trust more closely resembles a questi on of fact and is reviewed for clear error. Craddock, 993 F.2d at 340. Sokolow argued before the district court, as he does here on appeal, that enhancement for abuse of position of t rust is inappropriate because Sokolow was not in a position of trust and because there were no "victims" to the money launde ring counts. Relying upon United States v. Lowder, 5 F.3d 467, 4 73 (10th Cir. 1993), the district court rejected Sokolow's argume nt. In Lowder, the Tenth Circuit upheld an enhancement for abuse of position of trust for a money laundering conviction where (1) as a CPA, defendant provided tax and financial advice to elderly and unsophisticated clients; (2) he advised his clients to place their money with him and promised them security; an d (3) as president of the fraudulent investment corporations , he was free to spend that money, without oversight. Id. In th is case, the district court determined that Sokolow, as CEO and President of NIBA, abused a position of trust in facilitating th e commission of the money laundering offenses. The court relied upon the fact that Sokolow marketed his insurance plans to small- business owners and self-employed persons, and was freely ab le to spend
the derived monies as he wished. We agree with the district court's conclusion. In United States v. Pardo, 25 F.3d 1187, 1192 (3d Cir. 1994), we explained that in determining whether a position constitutes a position of trust for purposes of  3B1.3, a court must consider: (1) whether the position allows the defendant to commit a difficult-to-detect wrong; (2) the degree of authority which the position vests in defendan t vis-a- vis the object of the wrongful act; and (3) wh ether there has been reliance on the integrity of th e person occupying the position. Id. The court further stated that, "[t]hese factor s should be considered in light of the guiding rationale of the section--to punish 'insiders' who abuse their position rather t han those who take advantage of an available opportunity." Id. Applying the Pardo factors to this case, we fi nd that Sokolow held a position of trust under U.S.S.G.  3B1.3. First, as President of NIBA, Sokolow was able to commit di fficult-todetect wrongs, as he had sole control over NIBA's a ccounts without oversight or supervision. Second, Sokolow exercised the requisite degree of authority over the object of hi s wrong. It was within Sokolow's authority to withdraw funds fr om NIBA and that authority was necessary for the commission of the money laundering offenses. Finally, as the district cour t noted, the
funds to be laundered were derived from Sokolow's m arketing of NIBA insurance plans to small business owners and s elf-employed persons. In selecting the NIBA health benefits pla n for their employees and families, these members clearly place d a measure of reliance on the integrity of Sokolow in his positio n as President of NIBA. NIBA members testified to receiving mater ials regarding the health benefits plan, signed by Sokolow in his capacity asPresident.

Sokolow argues that no fiduciary relationship existed with NIBA members in connection with the submission of p remiums. Unlike in Lowder, where the defendant induced elder ly and unsophisticated clients to entrust money to him to invest securely on their behalf, Sokolow contends that NIB A members had no similar expectation with premiums entrusted to N IBA. We disagree. NIBA members submitted premiums with the expectation that their health care claims would be covered by N IBA. As president of NIBA, Sokolow was entrusted with the p roper use of those funds. Thus, Sokolow held a formal position of trust visa-vis NIBA members. As Sokolow occupied a position of trust, it mu st be determined whether he abused this position "in a ma nner that significantly facilitated the commission or conceal ment of the

offense." U.S.S.G.  3B1.3. As indicated, the district court found that Sokolow's role as president facilitated the commission of the money laundering offenses. Sokolow had sign ificant authority over the distribution of NIBA funds. As the district court noted, Sokolow was "free to spend the money a s he wished." Accordingly, we find that the district court did no t clearly err in finding an abuse of position of trust. In sum, we will affirm the district court's application of the Sentencing Guidelines.
B. The Restitution Order The district court ordered Sokolow to pay $690 ,246 in restitution to 17 NIBA members in the amount of unp aid claims for medical care and treatment. According to the gover nment, the basis for calculating the losses was Gov't Ex. B-11 0, the Inservco compilation of adjusted, unpaid claims. T he restitution amount excluded $238,111.46 claimed by Kenneth Harr is for
uncovered medical care claims. The district court stated that "[t]he evidence at trial and the sentencing hearing does not support any other reductions in the amount of resti tution." Generally, the "district judge must point to e vidence in the record supporting the calculation of loss to the vi ctims." Copple, 24 F.3d at 549-50. Sokolow argues that oth er factual evidence in the record warrants further adjustment to many of the alleged unpaid claims. Sokolow cites five examples of NIBA members whose alleged unpaid claims should have bee n reduced.

(1) Martha Mosher submitted a $12,000 cl aim, which was valued by the liquidator at $512. T he court awarded her $51,834.99. In Gov't Ex. B-110, t his amount is listed as an adjusted unpaid claim f or Shawn

Mosher.

(2) Patricia and Gerald Ferrier's claims were valued by the statutory liquidator at zero. This amo unt is reflected in Gov't Ex. B-110. Yet, the distri ct court granted them $3492 in restitution.

(3) Olivia Anderson submitted no documen ts in support of her claim, and a letter from the statutory liquidator stated that all her bills had been paid but on e. The courtgranted her $47,654. Further, she is not list ed in the

excerpts of Gov't Ex. B-110, and the parties h ave not
indicated from where this amount derives.

(4) David Ahakinian and William Vincent B radford were allegedly not paid claims because they misrepr esented preexisting conditions. They disputed these a llegations on
the witness stand. The district court awarded them $45,450 and $277,377 respectively. See Appellant's Br. at 39-40. Sokolow correctly contends that the basis upon which the restitution awards was granted is unclear from Gov' t Ex. B-110, and often contradicted by trial testimony. We will remand the restitution order for the district court to make sp ecific factual findings regarding the actual amount of recoverable loss sustained by these claimants.
C. The Forfeiture Order
The district court ordered Sokolow to forfeit $2,141,108.67, plus the contents of a Commonwealth Federal Savings and Loan Account, all to be satisfied from substitute assets

. 1. Identifiable Forfeitable "Property" Sokolow challenges the validity of the special verdict forms used by the jury with regard to 17 money laundering counts. As an example, the verdict forms for the counts read a s follows: ITEM 1. $125,000.00

We the jury find that the property identified as Item 1 is:

a) Property involved in the violation of mon ey laundering (18 U.S.C.  1957) charged in Count 126 of the Indictment and[/]or property traceable to such property.

YES ________

NO ________

App. at 974. The jury marked "YES" for each of the monetary amounts listed for the money laundering counts. Th e criminal forfeiture provision provides as follows: The court, in imposing sentence on a person co nvicted of an offense in violation of [inter alia, 18 U.S.C.  1957], shall order that the person forfeit to the United States any property, real or personal, involved in such offense, or any property traceable to such property.
18 U.S.C  982(a) (1994). Sokolow argues that the special verdict forms are invalid because they failed to id entify specifically the property involved. We disagree. Federal Rule of Criminal Procedure 7(c)(2) provides that [n]o judgment of forfeiture may be entered in a criminal proceeding unless the indictment or t he information shall allege the extent of the int erest or property subject to forfeiture.Fed. R. Crim. P. 7(c)(2). Further, Rule 31(e) prov ides that

[i]f the indictment or the information alleges that an interest or property is subject to criminal fo rfeiture, a special verdict shall be returned as to the extent of the interest or property subject to forfeiture , if any. Fed. R. Crim. P. 31(e). The indictment specificall y alleges the amounts involved, and from where the amounts are de rived. We find that the special verdict forms elicited the pr oper findings from the jury.
2. Substitutable Assets Sokolow argues that the forfeiture of substitu te assets on the basis of the invalid special verdict forms was improper. As noted above, however, the verdict forms were approp riate, and, thus, Sokolow's argument on this ground is without merit. Sokolow also challenges the order of forfeitur e of substitute assets on the basis that the government failed to demonstrate that this action was appropriate. In g eneral, we may not set aside the district court's factual findings unless they are clearly erroneous. United States v. One 1973 R olls Royce, 43 F.3d 794, 804 (3d Cir. 1994). Forfeiture of substi tute assets may be ordered if the property traceable to money l aundering, as a result of any act or omission of the defendant,

(1) cannot be located upon the exercise of due diligence; (2) has been transferred or sold to , or deposited with, a third party; (3) has been pl aced beyond the jurisdiction of the court; (4) has been substantially diminished in value, or (5) has been commingled with other property which cannot be divided without difficulty.
21 U.S.C.  853(p) (1994). In this regard, the district court
found that Sokolow diminished the value of certain real estate property owned by him, and transferred much of his assets to other parties and family members, over whom he stil l exercised
control. We find no clear error in the district co urt's order of
forfeiture of substitute assets.
3. Criminal Forfeiture Under Count 126 Count 126 charged Sokolow with a money launder ing transaction involving $125,000 made on October 4, 1 988. The most recent amendment to the forfeiture statute, however , became effective on November 18, 1988. Sokolow asserts th at, on ex post facto grounds, this forfeiture should be vacated. Prior to November 18, 1988, 18 U.S.C.  982 permitted the
forfeiture of

any property, real or personal, which represen ts the gross receipts the person obtained, directly o r indirectly, as a result of such offense, or wh ich is traceable to such gross receipts.
18 U.S.C.  982(a) (Supp. V 1987) (emphasis added). The legislative history of the statute suggested a narr ow reading of the statute stating that "gross receipts" meant "on ly the commission earned by the money launderer . . ., and not the corpus laundered itself." S. Rep No. 433, 99th Con g., 2d Sess.23 (1986). According to Sokolow, only later was th e statute

amended to cover "any property, real or personal, i nvolved in such offense, or any property traceable to such pro perty." Appellant's Br. at 48-49 (quoting Anti-Drug Abuse A ct of 1988,
Pub. L. No. 100-690  6463, 102 Stat. 4374 (1988)). Neither party has cited any case law interpret ing "gross receipts" to mean the "corpus laundered." The gove rnment argues, however, that where, as here, the defendant committ ed the specified unlawful activity as well as the money la undering violation, the corpus of the money is the "gross re ceipts" to the defendant and is thus forfeitable. We agree. As Sokolow was the person committing the unlaw ful activity of mail fraud and also laundering money derived fro m that unlawful activity, it is clear that he obtained the total $125,000 as the "gross receipts" of the money laund ering offense. There is no need for a finding that "Sokolow paid h imself a commission for laundering his own money." See Appe llant's Br. at 49. The money was derived from unlawful activity, and there is no evidence indicating that this does not represent the "gross receipts" of his money laundering scheme. As revie w by this court is for plain error (Sokolow did not challenge this issue at trial), we find that the district court did not err in instructing the jury to determine whether the $125, 000 was the amount "involved in the violation of money launderi ng."

IV. CONCLUSION In light of the foregoing, we will affirm the judgment of conviction and sentence, and the forfeiture order. We will remand for entry of a new restitution order in acco rdance with this opinion.