UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

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No. 96-10707

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UNITED STATES of AMERICA,

Plaintiff - Appellee,

versus

JERROLD WAYNE HALTOM,

Defendant - Appellant.

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Appeal from the United States District Court for the

Northern District of Texas

______________________________________________ May 13, 1997

Before DUHÉ, BENAVIDES, and STEWART, Circuit Judges.

BENAVIDES, Circuit Judge:

The app ellant, Jerrold Wayne Haltom, pleaded guilty in

district court to one count of mail fraud and four counts of income

tax evasion. He was sentenced to concurrent prison terms of 26

months on each count. Haltom appeals his sentence on two grounds.

He contends that the district c ourt misapplied the United States

Sentencing Guidelines by refusing to group his mail fraud and tax

evasion offenses toget her as “closely related” counts. He also

claims that he was sentenced in violation of his rights under the

ex post facto clause of the Constitution.

Haltom has more to gain, in terms of a definite and1 Haltom would receive no incremental benefit from prevailing

on both the ex post facto claim and the grouping argument.

2 substantial reduction in his prison term, f rom his grouping

argument than from his ex post facto argument. Because we find the

grouping argument persuasive, we need not address the merits of his

constitutional claim. 1

I.

Haltom was an a ccount executive with Oliver Taylor Company

West, Inc., a food brokerage firm in Lubbock, Texas. He

represented the interests of food manufacturers, including Heinz

and Del Monte, in their dealings with wholesalers and retail

grocers in West Texas and New Mexico. Each manufacturer routinely

provided promotional funds to wholesalers and retailers that agreed

to promote its products. As the man in the middle, Haltom billed

the manufacturers for the grocers’ promotiona l expenses and

distributed the promotional funds.

Haltom exploited his position by perpetuating a false invoice

scheme against his clients, the manufacturers. In simple terms, he

claimed a greater amount in promotional funds than was owed the

wholesalers and retailers, and he pocketed the difference.

Unsurprisingly, he failed to report this illicit income on his

federal income tax returns. Haltom stipulated that he

misappropriated $766,618 from the food manufa cturers and cheated

the government of $100,838 in taxes for 1989, 1990, 1991, and 1992.

On February 16, 1996, Haltom was charged by information with3

one count of mail fraud and four counts of tax evasion in violation

of 18 U.S.C. § 1341 and 26 U.S.C. § 7201, respectively. He pleaded

guilty, and was sentenced in district court on June 7, 1996.

II.

We review d e novo the district court’s application an d

interpretation of the United States Sentencing Guidelin es. 18

U.S.C. § 3742(e); United States v. Domino

, 62 F.3d 71 6, 719 (5th

Cir. 1995) (footnote and internal citations omitted).

Calculations under the guidelines begin with the determination

of the appropriate base offense level for each count of conviction.

The b ase offense level generally reflects the seriousness of the

offense, as determined by the drafters of the guidelines. In order

to tailor the punis h ment to the crime in a given case, the

guidelines provide for adjustments to the offense level based on

various “ specific offense characteristics.” For example, a

sentence may be enhanced because of the amount of money or volume

of contraband involved, the youth or old age of the victim, or the

defendant’s use of physical force or a firearm. S ee generally

U NITED S TATES S ENTENCING C OMMISSION

, G UIDELINES M ANUAL

, Ch. 2 (Offense

Conduct), Introductory Commentary; see also id.

, Ch. 1, Pt. A,

subpart 4(a) (Real Offense vs. Charge Offense Sentencing) (1995).

In this case the district court was required to determine the

base offense level for each of Haltom’s offenses, adjust for any

specific offense characteristics, and then calculate a combined

offense level pursuant to the grouping rules g overning multiple2 The distr ict court’s reliance on the tax table in the 1995

edition of the Guidelines Manual gave rise to appellant’s ex post

facto claim. The tax table was amended November 1, 1993,

increasing by 2 the offense level for a tax loss of $ 70,000 to

$120,000. See U.S.S.G., App. C, amend. 491. This amendment took

effect af ter Haltom filed the last of his four false tax returns

but while his mail fraud scheme was ongoing. Guidelines section

1B1.11(b)(3) purports to authorize the retroactive application of

an amendment to the guidelines, so long as the defendant is being

sentenced for at least one crime perpetrated after the amendment.

Haltom argues, however, that the retroactive app lication of the

amended tax table in this case violated the ex post facto clause.

See United States v. Domino , 62 F.3d 716, 720 (5th Cir. 1995) (“A

sentence that is increased pursuant to an amendment to the

guidelines effective after the offense was committed violates the

ex post facto clause .”) (internal citation omitted). As noted at

the outset, we need not decide the merits of this claim.

4 counts of conviction. See G UIDELINES M ANUAL , Ch. 3, Pt. D.

The district court calculated that the adjusted offense level

f or Haltom’s mail fraud conviction was 20. The court began this

calculation by assigning Haltom a base offense level of 6 pursuant

to the appropriate fraud guideline, U.S.S.G. § 2F1.1(a). The court

then increased the offense level by 10 because the fraud resulted

in a loss of more than $500,000; by 2 because it involved the abuse

of a position of private trust; and again by 2 because it required

more than minimal planning. See U.S.S.G. §§ 2F1.1(b)(1)(K), 3B1.3,

2F1.1(b)(2).

The district court assigned Haltom an adjusted offense level

of 16 for tax evasion. The district court treated the four tax

evasion counts as a single offense, as required by the grouping

rules. See U.S.S.G. § 3D1.2(d). The base offense level, 14, was

determined in light of the aggregate tax loss to the government,

$100,838. See U.S.S. G. §§ 2T1.1(a)(1), 2T4.1 (Tax Table). 2 The

offense level for tax evasion was increased to 16 because the3 A defendant who fails to report more than $10,000 a year in

criminal income is punished more harshly than one who fails to

report a comp arable amount of legitimate income. U.S.S.G. §

2T1.1(b)(1).

5 offense involved more than $10,000 a year in unreported income from

criminal activity, i.e.

, the fraud charged in count one. 3 S ee

U.S.S.G. § 2T1.1(b)(1).

The district court next calculated Haltom’s combined offense

level based upon the adjusted offense levels of 20 for mail fraud

and 16 for tax evasion. Starting with the higher of the two

offense levels, 20, the court applied the formula in section 3D1.4

to reflect the additional harm caused by Haltom’s ta x crimes.

Because the offense level for the tax evasion counts was 4 levels

less than the offense level for mail fraud, the application of

section 3D1.4 resulted in an increase in Haltom’s offense level

from 20 to 22.

The district court then reduced appellant’s offense level by

3 because he accepted responsibility for his actions and assisted

authorities in investigating his own criminal conduct. U.S.S.G. §

3E1.1. Finally, on the government’s motion, the district court

departed downward 2 levels in recognition of Haltom’s substantial

assistance in the investigation and prosecution of other persons.

U.S.S.G. § 5K1.1. The court thus determined that Haltom’s total

offense level was 17. Because Haltom had no prior convictions, he

was subject to a sentence of 24 to 30 months. S ee U.S.S.G. Ch. 5,

Pt. A (Sentencing Table). He was sentenced to a prison term of 26

months on each count, to be served concurrently, followed by three6

years of supervised release. Haltom also was required to make

restitution in the amount of $635,621, and to pay a $5,000 fine.

III.

Appellant does not dispute the accuracy of the district

court’s arithmetic, but challenges the court’s refusal to group the

mail fraud count with the tax evasion counts. Had the counts been

grouped, Haltom’s offense level would not have been increased from

20 to 22. Taking into account the subsequent 5-level reduction in

Haltom’s offense level, his total offense level would have been 15

rather than 17; the resulting sentence range would have been 18 to

24 months. See U.S.S.G. Ch. 5, Pt. A (Sentencing Table).

Chapter 3, Part D of the guidelines prescribes how to sentence

a defendant who has been convicted of more than one count. Section

3D1.2 specifies the circumstances in which multiple counts must be

grouped together. When counts are grouped, they are essentially

treated as a single offense for sentencing purposes. The stated

purpose of the grouping rules is to ensure that a defendant

convicted of multiple offenses receives “incremental punishment for

significant additional criminal conduct.” U.S.S.G., Ch. 3, Pt. D,

Introductory Commentary. The operative word is “significant.”

Sometimes, an additional count does not represent significant

additional criminal conduct, and does not lead to an increased

sentence. As the commentary explains, embezzling money from a bank

and falsifying the related bank records are distinct offenses, yet

they “represent essentially the same type of wrongful conduct with4 The relevant text provides:

All counts involving substantially the same harm shall be

grouped together into a single Group. Counts involve

substantially the same harm within the meaning of this

rule:

* * *

(c) When one of the counts embodies conduct that is

treated as a specific offense characteristic in, or other

adjustment to, the guideline applicable to another of the

counts.

* * *

U.S.S.G. §3D1.2.

7 the same ultimate harm, so that it would be more appropriate to

treat them as a single offense for purposes of sentencing.” Id.

In other circumstances, the guidelines provide that the

offense level for one offense must be enhanced to reflect the

additional criminal conduct represented by another. In such cases,

grouping is appropriate because the additional harm represented by

the second count has already been factored into the sentencing

calculus as a specific offense characteristic of the first. Under

section 3D1.2(c), when the conduct underlying one cou nt is a

specific offense characteristic of another count, the counts must

be grouped. 4 As the commentary explains:

Convictions on mul tiple counts do not result in a

sentence enhancement unless they represent additional

conduct that is not otherwise acc ounted for by the

guidelines

. In essence, counts that are grouped together

are treated as constituting a single offense for purposes of the guidelines.

Id. (emphasis added). According to the commentary, an assault on

a bank teller during a robbery would be treated as a specific

offense characteristic of the robbery, not as a distinct offense.

Halto m contends that the conduct underlying his mail fraud8

conviction resulted in an enhanced offense level for tax evasion,

and that therefore the counts should have been grouped. We agree.

Haltom’s offense level for tax evasion was increased by 2

because his unreported income was derived from criminal activity,

i.e.

, the mail fraud alleged i n count one. It is therefore

indisputable that the mail fraud count “embod ies conduct that is

treated as a spec ific offense characteristic” of the tax evasion

counts.

We recognize that as a matter of common p arlance, Haltom’s

mail fraud and tax evasion convictions cannot readily be said to

have caused “substantially the same harm.” See U.S.S.G. § 3D1.2.

The mail fraud damaged the private financial interests of Haltom’s

corporate clients; the tax offenses harmed the government. Absent

a contrary di rective in the guidelines themselves, we might have

considered these harms quite distinct and concluded that Haltom’s

offenses were not groupable. However, we are bound by the text of

the applicable guideline, which provides explicitly that “[c]ounts

involve substantially the same harm within the meaning of this rule

. . . [w]hen one of the counts embodies conduct that is treated as

a specific offense characteristic in

. . . the guideline applicable

to another of the counts.” U.S.S.G. § 3D1.2(c). This definition

removes any doubt that Haltom’s offenses must be grouped.

Counsel stated at oral argument that the district court felt

itself bound, in the absence of controlling Fifth Circuit

precedent, to follow a similar case decided by the Third Circuit.

See United States v. Astorri , 923 F.2d 1052 (3d Cir. 1991). Even9

were we bound by the Third Circuit’s opinion in Astorri

, we do not

find Astorri to be determinative in the instant case.

Dennis L. Astorri was a stockbroker who defrauded investors of

substantial sums of money. He pleaded guilty to one count of wire

fraud and one count of in come tax evasion. The district court,

working from the base offense level for mail fraud, e nhanced

Astorri’s offense level by 2 to reflect his tax evasion conviction.

The district court gave two alternative grounds for the

enhancement. As the court of appeals explained:

First, the [district] court concluded that if Astorri’s

wire fraud and tax evasion convic tions are grouped

together under section 3D1.2, then the specific offense

characteristic of the tax evasion offense would increase

the offense level by two because Astorri evaded taxes due

on money gene rated by criminal activity. In the

alternative, the district court reasoned that if the two

offenses were not grouped together because they involved

different victims, the court could nonetheless enhance

the fraud conviction base offense level under [the

formula fo r combining discrete groups of offenses in]

section 3D1.4(a).

Astorri

, 923 F.2d at 1055-56. The Third Circuit concluded that

grouping was inappropriate , but went on to affirm the 2-level

enhancement under section 3D1.4.

We be lieve that A storri is distinguishable from the case we

decide today. The conduct underlying Haltom’s mail fraud

conviction was counted twice toward his sentence, once as the basis

for his mail fraud offense level and again a specific offense

characteristic of the tax evasion counts. This double-counting

actually lengthened Ha ltom’s sentence: the enhanced tax evasion

count was directly responsible for the ultimate 2-level increase in5 H ad Haltom’s tax evasion count not involved a failure to

report income derived from criminal sources, i.e.

, mail fraud, his

tax evasion offense level would have remained at 14. Under the

formula in section 3D1.4, his combined offense level (before the 5-

level reduction granted by the district court) would have been 21.

10 his total offense level for mail fraud, from 20 to 22. 5 The

purpose of section 3D1.2(c) is to prevent precisely this sort of

“‘doubl e counting’ of offense behavior.” U.S.S.G. § 3D1.2,

Commentary, Application Note 5. C f. United States v. Box

, 50 F.3d

345, 359 (5th Cir. 1995) (internal citation omitted) (stating that

double counting is forbidden only where specifically prohibited by

the guidelines), cert. denied

, ---U.S.---, 116 S.Ct. 714, 133

L.Ed.2d 668 (1996).

In contrast, there is no indication in th e Third Circuit’s

opinion that Astorri was the vict im of impermissible doublecounting. To the contrary, the opinion strongly implies that there

was n one. Astorri had received an offense level of 19 for fraud

and 15 for tax evasion. Applying the formula in section 3D1.4, the

district court added 2 levels to the offens e level for fraud to

reflect the additional harm caused by Astorri’s tax e vasion.

Astorri

, 923 F.2d at 1057. However, the published opinion contains

no hint that Astorri’s tax evasion had already been enhanced to

reflect the con duct underlying the fraud count. The sentence

affirmed in Astorri was based on a district judge’s determination

to enhance the sentence 2 levels, based on either the specific

offense characteristic for tax evasion or under the formula in

section 3D1.4. The district judge did not attempt to increase

Astorri’s sentence twice based on the same conduct.6 After the Third Circuit decided Astorri

, the Sentencing

Commission issued an advisory stating that tax evasion should

always be grouped with the offense that generated the i llegal

income--regardless of whether the 2-level increase for criminally

derived income was actually applied. S ee Questions Most Frequently

Asked About t he Sentencing Guidelines, Vol. V, March 1, 1992

(construing U.S.S.G. §§ 3D1.2(c), 2T1.1(b)(1)).

11 By requiring the grouping of Haltom’s tax evasion count with

his mail fraud count, the guidelines spare him any incremental

punishment for his tax crimes. This result may seem anomalous; but

in the circumstances presented here, to avoid punishing Haltom

twice for mail fraud, the guidelines impose no punishment at all

for tax evasion. However, the guidelines clearly forbid the

alternative appro ach taken by the district court: using the mail

fraud count to enhance the offense level for tax evasion and then

using the enhanced tax evasion offense level to incre ase the

offense level for mail fraud.

The district court, believing itself bound by Astorri

, imposed

too harsh a penalty by double-counting the conduct underlying

Haltom’s mail fraud conviction. 6 Perhaps a more Solomonic approach

would be to split the difference by assigning Haltom a combined

offense level (before downward adjustments) of 21. This would have

the neat effect of punishing Haltom for tax evasion without doubly

punishing him for mail fraud. King Solomon, however, was not

limited by the doctrine of separation of powers. Mindful of that

doctrine, we will enforce the sentencing guidelines as far as they

are authorized by statute; we will not rewrite them.

The sentence is VACATED and the case REMANDED to the district

court for resentencing.