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. e du/thir dc ir c uit_2000/55Filed March 14, 2000

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 99-5051

UNITED STATES OF AMERICA

v.

WILLIAM F. HELBLING, Appellant

On Appeal from the United States District Court for the District of New Jersey (D.C. Criminal No. 96-cr-00740) District Judge: Honorable William G. Bassler

Argued September 9, 1999

Before: BECKER, Chief Judge, ROTH, and RENDELL, Circuit Judges

(Filed: March 14, 2000)

Tonianne J. Bongiovanni, Esq.

(ARGUED)

Office of Federal Public Defender

972 Broad Street Newark, NJ 07102 Counsel for Appellant

George S. Leone, Esq. Elizabeth S. Ferguson, Esq.

(ARGUED) Office of United States Attorney 970 Broad Street, Room 700 Newark, NJ 07102 Counsel for Appellee

OPINION OF THE COURT

RENDELL, Circuit Judge.

William F. Helbling appeals from his conviction and sentence. A jury found that Helbling embezzled fund s from a profit sharing plan covered by the Employee Retir ement Income Security Act ("ERISA") to pay the operating expenses of three failing companies he owned, and e ngaged two lawyers to help him by creating false documentsindicating that the withdrawals had been part of a lawful

Employee Stock Ownership Plan ("ESOP") conversion. Helbling's appeal raises numerous issues relating t o the timeliness of his indictment, the sufficiency of th e evidence presented at trial, and the calculation of his sent ence.1 We will affirm his conviction and sentence in all aspe cts. An understanding of the facts of the case is a necessa ry foundation for a discussion of the issues he raises

.

I.

On December 18, 1996, a federal grand jury returned a thirty-five count indictment against Helbling. The indictment included: (1) one count of conspiracy to embezzle employee pension plan funds and falsify ER ISA documents (18 U.S.C. S 371); (2) four counts of

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1. We have jurisdiction over Helbling's appeal over his conviction under

28 U.S.C. S 1291 and his sentence under 18 U.S.C. S 3742. We gave Helbling leave to file a supplemental pro se brief and a reply brief and leave to the government to respond. We have conside red both his counseled and pro se submissions. We have denied He lbling's motions to file further supplemental briefs and appendices.

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embezzlement of employee pension plan funds from an ERISA covered plan (18 U.S.C. S 664); (3) eighteen counts of falsifying documents required by ERISA (18 U.S.C.S 1027); (4) six counts of wire fraud (18 U.S.C. S 1343); an d (5) six counts of mail fraud (18 U.S.C. S 1341). The mail f raud counts were dismissed during trial.2 The jury convi cted Helbling of twenty-seven of the remaining twenty-ni ne

counts.

Before trial, Helbling filed a motion to dismiss th e indictment on the basis that the indictment was not timely. On July 22, 1996, Helbling had signed an agreement waiving his statute of limitations defense. However , Helbling argued to the District Court that the waiver was in valid because he had been coerced into signing it by frau d and misconduct. Helbling also argued that the governmen t had failed to investigate allegations he had made about third parties to a degree Helbling says he believed the w aiver agreement required. The waiver agreement specifical ly allowed Helbling "to present for investigation" his allegations which included claims that a number of individuals purposely injured his companies. After an evidentiary hearing, the District Court denied the motion in part by finding that the government had fulfilled i ts part of the bargain. The Court found that on October 15, 19 96, government agents met with Helbling and accepted fr omhim documents he believed supported his claims. Bef ore

ceasing their investigative activities, the agents reviewed the documents and spoke with another agent who had previously investigated related complaints.

Trial commenced on May 13, 1998. At trial, the government offered proof that Helbling illegally wi thdrew money from the profit sharing plan covered by ERISA , used the funds to pay the operating costs of three compa nies he owned, and had two lawyers help him withdraw the mo ney and legitimize the withdrawals by creating backdate d documents to reflect that the plan had been lawfull y converted into an ESOP. Helbling did not contest ma ny of

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2. The District Court granted Helbling's motion to exclude the documents charged in the indictment. The United States filed a superseding indictment on May 20, 1998.

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the background facts presented at trial including h is control of the three companies, his administration of the plan, or the financial transactions themselves. Hel bling instead argued that the government failed to establ ish that he had acted with the requisite criminal intent, an d that the government witnesses were lying. In his pro se brief, Helbling explains that he acted on the advice of co unsel

who told him that he could withdraw funds from the plan and document the ESOP conversion later as long as h e had secured the consent of the company's board of direc tors.

To prove its case, the United States presented nume rous documents and several witnesses. The witnesses incl uded Helbling's alleged co-conspirators, the two lawyers , Gerald S. Susman and Stephen Sokolic, who testified to the false ESOP conversion, Laura Scurko, who testified about the financial transactions and explained that ERISA cov ered the plan, Barry Penn, Susan Kramer and Donald Mayle

, who testified to the forgery of two important docum ents, and John Grikis and Barry Katz who managed the plan investments at NatWest Bank and Oppenheimer & Co. Several of the plan participants also testified.

The witnesses explained that Helbling was the presi dent, chief executive officer, and sole shareholder of th ree companies, Micro-Technology Co. (and its subsidiary MicroProducts Engineering Co.), Scranton Electronics, In c., and Yardley Group, Inc., which Helbling ran as one comp any, and the administrator of Micro-Products Engineering Company Profit Sharing Retirement Plan. The plan wa s funded exclusively by Micro-Products. Ed Wisniewski , a plan participant and long-time employee, testified that theplan was established by a previous owner in 1965 to

provide retirement income as an incentive to salari ed employees to remain with the company. Laura Scurko, an attorney who was appointed trustee of the plan in a civil suit brought by the plan participants, testified as a lay witness and explained that the plan was covered by ERISA. She pointed out that the plan documents stated that the plan was amended and restated in 1976 to comply wit h the Employee Retirement Income Security Act of 1974. As of March 1991, the plan had assets of approximately $625,000 and covered ten salaried employees. The pl an's

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assets were held by NatWest Bank which also acted a s trustee to the plan.

Helbling's companies were manufacturing companies t hat relied heavily upon military contracts. In May 1990 , at Helbling's direction, the companies filed for Chapt er 11 reorganization. In February 1992, the Bankruptcy co urt converted the Chapter 11 bankruptcy proceedings int o a Chapter 7 liquidation because the companies failed to provide the Court with the required monthly filings . The companies subsequently ceased business. While in bankruptcy, the companies continued to struggle bec ause they lacked sufficient cash flow and were unable to procure new military contracts.

In February 1991, Helbling directed John Grikis, th en a trust officer at NatWest, to transfer the plan's as sets to Oppenheimer & Co. Helbling's companies had been contacted by Barry Katz, an Oppenheimer fund manage r, in late 1990. The funds were transferred on March 13, 1991 after Grikis received a letter sent by Katz indicat ing that Oppenheimer would assume responsibility for the fun ds. The day after the transfer to Oppenheimer, Helbling moved $125,000 to an account at Farmers & Mechanics Bank and used it to pay operating expenses. In July, after conversations with Katz during which Helbling expla ined that he wanted to remove more money, Helbling conve rted the account to a margin account and borrowed $350,0 00 against the plan's assets. Katz approved the conver sion after receiving a fax supposedly signed by Barry Pe nn, a lawyer, indicating that Micro-Product's plan permit ted the company to borrow against the plan's assets. The mo ney was again used to pay operating expenses. At trial, Penn and his secretary, testified that the letter was a forgery. They explained that Helbling, who had been Penn's c lient, twice asked Penn to write the opinion letter, first in person and later by fax, but that Penn refused because he was not familiar with pension law or the profit sharing pla n. Subsequently, Helbling instructed Katz to close the accountand sent Katz a letter, dated August 29, 1991, whic h

confirmed that the plan had been converted into an ESOP. Helbling subsequently withdrew money from the accou nt in the form of a check for $55,300 on September 6, 199 1, and

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a wire transfer for $29,700 on September 16, 1991. Helbling withdrew a final amount of $3,500 on Janua ry 3,

1992.

Attorneys Gerald Susman and Stephen Sokolic were th e government's two key witnesses. Both testified purs uant to plea agreements. Susman testified first. He explain ed that he first spoke with Helbling in the early part of 1 990 after Helbling had been referred to him by Arnold Kaminer , who provided health insurance for Helbling's companies, to help Helbling establish a trust to hold his life insuran ce. During the summer of 1990, Susman completed some estate planning work for Helbling. Kaminer confirmed that he referred Helbling to Susman for estate planning, an d also testified that he mentioned the possibility of an E SOP in a conversation with Helbling in February of 1991.

Susman testified that Helbling called him again in March, and July, of 1991. During the conversation in March

, Helbling asked Susman if he knew of any sources of financing because his companies were having financi al trouble. During the conversation in July, Helbling asked Susman about withdrawing money from a profit sharin g plan. Sometime around August, 20, Helbling called S usman again. This time, according to Susman, Helbling tol d him that he had made the large March and July withdrawa ls from the Micro-Products plan.

Susman testified that he "was flabbergasted" when Helbling told him in August of the large withdrawal s. Susman had thought that Helbling had been asking ab out removing money from his own personal stake in a pla n when he answered Helbling's questions in July. Susm an immediately told Helbling that he could not remove funds from the plan unless he had an ESOP and explained t hat to have an ESOP, Helbling needed a valid resolution of the board of directors that predated the distribution, and an appraisal of the stock. Susman testified further th at he explained that since the companies were in bankrupt cy, the stock was worthless. When Helbling asked if Susman would prepare the required resolution, Susman refused. Wh en Helbling asked if they could still go ahead with th e ESOP,

Susman said that he would look into the matter and get back to him. Helbling and Susman met the next day, and

6Helbling provided Susman with several documents

including a copy of the plan.

Susman subsequently sought advice from Stephen Sokolic, an attorney with more experience with ERIS A, to find out whether they could document what had been done as an ESOP. Susman testified that after talking wit h Sokolic, he felt that the documentation could legit imately be completed. Subsequently, Susman reviewed Helblin g's August 29, 1991 letter to Katz that said that the E SOP had

been converted into an ESOP under Susman's directio n. The letter also authorized the liquidation of the a ccount.

Both Susman and Sokolic testified that they reviewe d the documents Helbling gave them and met with Helbling on September 11, 1991. During that meeting, Susman and Sokolic explained to Helbling that the withdrawals were prohibited transactions under ERISA. However, after the meeting, Susman and Sokolic prepared a retainer agreement which Helbling later signed. The retainer agreement stated explicitly that the loan Helbling took from the plan was prohibited by ERISA, and that there co uld be a subsequent Department of Labor investigation and possibly fines because the transactions might viola teDepartment of Labor regulations. However, on crossexamination both Susman and Sokolic testified that while they told Helbling the withdrawals had been prohibi ted transactions under ERISA, they did not tell Helblin g that

the withdrawals or the creation of the backdated ES OP could be the basis for criminal prosecution.

Susman and Sokolic testified that on October 14, 19 91 they met again with Helbling who was accompanied by Donald Mayle, an employee of Helbling's companies. In preparation for this meeting, Susman and Sokolic dr afted

most of the documents needed to achieve the ESOP conversion. At the meeting, Helbling signed the emp loyee stock ownership plan and the ESOP trust agreement. Both documents were backdated to July 25, 1991. He also signed the stock purchase agreement, which purporte d to transfer 12.5% of the stock to the plan for $500,00 0, which was backdated to March 1, 1991.3 Mayle witnessed

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3. The ESOP conversion was limited to $500,000 to a void the need for filing with the SEC.

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Helbling's signatures. A promissory note for $85,00 0, representing the additional funds withdrawn from th eOppenheimer account in September, was signed by

Helbling in November, and backdated to September 8, 1991. The conversion was made dependent upon a late r appraisal of the companies validating the stock pri ce.

Both Susman and Sokolic testified that they were originally unwilling to backdate the ESOP plan docu ment and the trust agreement, but gave in to Helbling's demand during the meeting. Sokolic, however, testified tha t he backdated the stock purchase agreement and the stoc k certificates to coincide with Helbling's withdrawal s before the meeting. In response to questions from Helbling 's bankruptcy attorneys in December of 1991, Susman an d Sokolic drafted an opinion letter with Helbling's i nput that Susman and Sokolic testified was misleading and fal se. Ronald Santora, Helbling's bankruptcy attorney, subsequently presented the letter to the Bankruptcy Court.

When asked why he agreed to create the documents,

Susman testified that "he wanted the fee." On cross examination, Susman testified that he did not inten d to steal from the plan participants and did not conspi re with Helbling to steal money. Susman testified that afte r he first met with Sokolic he thought the ESOP conversion cou ld be completed legally, and that he first understood tha t he had committed a crime in November of 1991. He did, howe ver, admit that earlier, in August, he had committed a c rime because he had participated in Helbling's illegal a ctivities by reviewing a draft of Helbling's August 29 letter to Katz which confirmed that the plan had been converted in to an ESOP and authorized the liquidation of the Oppenhei mer

account.

Sokolic corroborated much of Susman's testimony, particularly the meetings with Helbling, the retain er agreement, and the backdating of documents. Sokolic

testified that he realized that he had committed a crime in "hindsight," explaining that he originally believed that he was serving his client to the best of his ability b y documenting the ESOP, and that it was not until Nov ember and December of 1991 that he first began to reconsi der the legality of his acts. Sokolic, however, also conced ed

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repeatedly that his actions were illegal because he created false or misleading documents that were required by ERISA. Sokolic explained his initial view by saying that he had understood that Helbling intended to create the ESOP in March of 1991, as indicated by the board of dire ctors' consent dated March 8, 1991, and that he had felt h e was simply documenting that transaction.Sokolic said that he first saw the consent sometime

between the September and October meetings with Helbling. At trial, Donald Mayle, who along with He lbling supposedly signed the consent, testified that his s ignature was forged. Susman testified that Helbling brought the consent to the October 14 meeting. Susman also test ified that Helbling had asked him to create a board of di rectors' consent during the first August conversation.

The government also presented witnesses who testifi ed that Helbling gave them specific directions on how to refer to the infusions of cash in reports to the Bankrupt cy Court and in certain letters. Donald Mayle testified that Helbling directed him to record the money as receipts and in ventory in reports filed with the Bankruptcy Court. Thomas Taylor, former sales manager and later vice-president of sa les at Scranton Electronics, testified that Helbling direc ted him to sign two letters intended to help Helbling's compan ies obtain a Certificate of Competence from the Small B usiness Association stating that Helbling had personally in jected $350,000 into the companies. Obtaining a certificat e would have made it easier for Helbling's companies to pro cure military contracts.

Throughout the period, the plan participants reques ted information from Helbling about the plan. After the money was moved from NatWest, NatWest stopped providing t he plan participants with monthly statements. Helbling first told the participants about the conversion in Octob er. After two meetings during which plan participants protest ed the conversion, they filed a lawsuit. The record from t he sentencing hearing reflects that Helbling had sent the participants letters blaming them for the companies ' difficulties and threatening them with unemployment

, sought to file retaliatory and harassing civil suit s against them, falsely informed the state of New Jersey that they

9

were responsible for approximately $240,000 in back taxes due to the ESOP conversion, and refused to comply w ith the order entered at the end of the civil proceedin gs. As a consequence of the civil lawsuit, Lauren Scurko was appointed trustee. In her role as trustee, Scurko r ecovered less than $24,000 of the original amount.

At the end of the government's case, Helbling offer ed no witnesses on his behalf. Helbling moved to dismiss the conspiracy count arguing that the government failed to

establish that either Susman or Sokolic entered int o an agreement with Helbling. The District Court denied the motion. After closing arguments were heard, Helblin gmoved for a new trial based upon alleged misconduct of the

prosecutor for making impermissible statements in t he opening and closing arguments, and for reconsiderat ion of his statute of limitations argument. The District C ourt also

denied both motions.

Helbling was sentenced on January 25, 1999. The District Court increased Helbling's offense level u nder S 3B1.1 of the Sentencing Guidelines for Helbling's role in the offense and under S 3C1.1 for obstruction of ju stice based on Helbling's efforts to pressure Susman, Sok olic and Mayle to lie during the investigation. The Dist rict Court also departed upwards under S 5K2.3 for extreme psychological damage to the victims of Helbling's

embezzlement.

Helbling now appeals the District Court's sentencin g decisions. He also seeks a new trial based on state ments made in the prosecutor's opening and closing statem ents, the insufficiency of the evidence presented at tria l, allegations of prosecutorial misconduct, and the Di strict Court's decision on the validity of the statute of limitations waiver. We will address all of these issues beginni ng with

the statute of limitations waiver.

II.

Helbling argues that the District Court erred by upholding the validity of his waiver of the statute of limitations. His primary contention is that the wai ver must be invalidated because the government failed to ful fill its

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part of the bargain, which required the government to allow Helbling "to present for investigation" charges he had leveled against individuals he felt sabotaged his c ompanies.4 He urges that the government was obligated to compl ete a full and thorough investigation of his allegations. He alleges that the District Court erred in rejecting this con tention because it failed to inquire into what Helbling rea sonably

understood the waiver to mean. We will affirm the D istrict Court's decision because, even if Helbling is corre ct to assert that we must compare the government's action s to what Helbling "reasonably understood" it had promis ed to do,5 we cannot conclude, on the basis of the langua ge of the waiver or the record in front of us, that Helbling reasonably understood the waiver to require an investigation a ny broader than he actually received.

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4. The relevant portion of the agreement, with the added rider, stated:In order to allow ample time for me to confe r with representatives

of the U.S. Attorney's Office,* I hereby knowin gly, voluntarily and expressly waive the right of defense provide d by any statute of limitations with regard to the above crimina l statutes of the

United

States Code based upon the failure of the U. S. Attorney's Office to

obtain an indictment for violations of those during the period from July 22, 1996 through December 31, 1996.

* and to present for investigation by the FB I and the Department of Labor those allegations which I have set for th in my letter to the U.S. Attorneys Office dated July 13, 1996, s pecifically paragraph #3.

5. The parties do not direct us to any controlling authority where we have actually considered whether the government had breached a

statute of limitations waiver in a criminal case. H elbling argues that we

should use the same standard here as we use to dete rmine whether a plea agreement has been complied with. See, e.g., U nited States v. NolanCooper, 155 F.3d 221, 236 (3d Cir. 1998) (consideri ng "whether the government's conduct is inconsistent with what was reasonably understood by the defendant when entering the plea of guilty."); see also United States v. Levine, 658 F.2d 113, 124, 124 n.1 7 (3d Cir. 1981) (noting that waivers of statutes of limitations hav e been viewed as being similar to guilty pleas). We decide neither that th is standard is necessarily applicable to waivers, nor that defenda nts who sign waiver agreements should always receive the same protectio ns as those who sign plea agreements. Rather, even assuming the sta ndard does apply, Helbling cannot succeed.

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The District Court addressed this specific contenti on, along with others, in a written opinion, after hold ing an evidentiary hearing into the circumstances surround ing the signing of the waiver agreement. Finding the govern ment's witnesses credible, the District Court addressed ea ch of Helbling's allegations as to why the waiver was fra udulently coerced and rejected each of them.6 Importantly for this discussion, the District Court found that Helbling knew and understood the implications of waiving the statute of limitations, was not unduly pressured into signing the waiver since he engaged in extensive negotiations r egarding the waiver provision, and was repeatedly advised to retain, or request, counsel.

Addressing whether the government fulfilled its bar gain, the District Court noted that the provision itself did not clearly describe the extent of investigation requir ed, and stated that Helbling had not introduced any evidenc e showing that a particular meaning had been agreed u pon.The District Court proceeded on the basis that the

agreement imposed a duty on the government to inves tigate and found that the government had done enough to sa tisfy

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6. Considering Helbling's allegations that he was c oerced into signing the waiver by threats and by misrepresentations, and th at he was not represented during the negotiations, the District C ourt determined that the government was ready to indict Helbling when th e waiver was signed so it did not coerce him into signing the waiver by falsely threatening immediate indictment, and that Helbling realized, o r should have realized, that the waiver would provide the governm ent more time to investigate, as well as provide him more time to pr epare, and, therefore, the government did not misrepresent the effect of t he waiver.

In his pro se brief, Helbling alleges that the pros ecutor conspired with Susman's lawyer to coerce Helbling to sign the waiv er, and states that Department of Labor investigator Daphne Rich testif ied that Susman and Sokolic had agreed to cooperate with the government before Helbling signed his statute of limitations waiver. However, Susman's lawyer's testified at the hearing, and the District Court re jected Helbling's argument that he was coerced by him. The District C ourt also found that Susman's plea agreement came months after Helbling signed the waiver. The Court's factual findings are not clearly errone ous, and we agree with its legal conclusions. Therefore, to the extent tha t Helbling asserts

these

arguments as separate grounds to invalidate the wai ver, we reject them. We find no evidence in the record to support Helbli ng's other allegations.

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its obligation and, therefore, the waiver was valid . We apply the clearly erroneous standard of review to the Dis trict Court's finding of facts and review the District Co urt's legal conclusion that the government fulfilled the terms of the agreement under the plenary standard of review. See United States v. Moscahlaidis, 868 F.2d 1357, 1360 (3d Cir . 1989) (reviewing a district court's determination that th e government did not breach a plea agreement).

The difficulty with Helbling's argument on appeal i s that his assertion -- that the government promised to en gage in a full scale investigation -- cannot be squared wit h the record evidence, or the language of the waiver itse lf. Helbling argues in effect that he reasonably unders tood that the government would complete a full scale investigation because he would not have agreed to t he waiver without such a promise. However, even if we were to step beyond the language of the provision which onl y requires the government to allow him to "present fo r investigation" -- a promise the government clearly fulfilled -- we cannot find support for his assertion because at thepre-trial hearing a government agent testified that she told

Helbling that the government would not agree to mor e than a promise to evaluate Helbling's evidence.

Helbling signed the waiver agreement on July 22, 19 96. According to testimony presented at the hearing, an d which the District Court found credible, SA Donald Wadswo rth had spoken to Helbling on July 19, and Helbling adv ised him that he wanted Wadsworth to perform an expansiv e investigation and include Helbling's allegations ag ainst others in his review. When Helbling, thereafter, to ld Department of Labor investigator Daphne Rich that Wadsworth had promised him that if he signed the wa iver, the government would investigate his charges, Rich said that the government would only evaluate the evidenc e he gave to Wadsworth and Rich. Thereafter, that day, H elbling signed the waiver in the presence of two other FBI agents. Therefore, we conclude that Helbling's belief that the waiver required the government to fully investigate his cl aims was

unreasonable.

Furthermore, we note that the government did indeed do more than permit Helbling to "present" his allegati ons.

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Reviewing the evidence, the District Court found th at, before the government ceased its investigation into Helbling's allegations, government agents met with Helbling and discussed his allegations, reviewed the documen ts Helbling gave them, and culled out those which the government already had, those that were new and tho se that were related to a prior investigation. The age nts also spoke to Robert Connolly, the Chief of the Antitrus t Division of the Department of Justice in Philadelph ia, who had already investigated allegations related to man y of Helbling's complaints of sabotage in a protracted investigation from 1989-1992, and reviewed the docu ments

with him.

Accordingly, we find the waiver to have been valid.

III.

Next, Helbling challenges the sufficiency of the ev idence supporting all the counts of his conviction. Helbli ng argues that the government failed: (1) to establish an agr eement necessary for a conspiracy; (2) to establish a sche me to defraud required by the wire fraud convictions; or (3) to establish that ERISA covered the Micro-Products pla n, as required by the embezzlement and false documents convictions.7 Our standard of review is highly defe rential.

"We determine whether there is substantial evidence that,when viewed in the light most favorable to the gove rnment,

would allow a rational trier of fact to convict." G overnment of the Virgin Islands v. Charles, 72 F.3d 401, 410 (3d Cir.

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7. We note at the outset of this discussion that He lbling also alleges in his pro se brief that the government withheld excul patory evidence and suborned false testimony in return for plea agreeme nts. Since these arguments were not raised to the District Court, we review for plain error. To the extent that Helbling's argument rests on United States v. Singleton, 144 F.3d 1343 (10th Cir. 1998), rev'd en banc, 165 F.3d 1297 (10th Cir.), cert. denied, 119 S. Ct. 2371 (1999), we note that this Court has now rejected the holding of the first Singleton decision in United States v. Hunte, 193 F.3d 173, 174 (3d Cir. 1999), decided after briefing. Furthermore, Helbling had the opportunity to cross- examine the witnesses at trial, and we find no factual support for his other allegations.

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1995). We find that substantial evidence did suppor t the

verdicts and we will affirm all the convictions on all counts.

Helbling first argues that the government failed to establish that he conspired with either Susman or S okolic.8 To establish a conspiracy, the government must show : (1) a unity of purpose between two or more persons; (2) an intent to achieve a common goal; and (3) an agreeme nt to work together. See United States v. Carr, 25 F.3d 1 194, 1201 (3d Cir. 1994). Circumstantial evidence may be used to establish a conspiracy although if the governmen t relies entirely on circumstantial evidence "the inferences drawn must have a logical and convincing connection to th e facts established." Id. (quoting United States v. Casper, 956 F.2d 416, 422 (3d Cir. 1992)) (internal quotations omitt ed). The indictment charges Helbling with conspiracy (1) to defraud the plan and participants, or (2) to put false info rmation in documents required by ERISA. We must affirm the jur y verdict if the government adduced sufficient eviden ce of either object of the conspiracy. See id. at 1201-02 (citing Griffin v. United States, 502 U.S. 46 (1991)).

Helbling argues that the government failed to show that he entered into an agreement with either Susman or Sokolic because both testified that they did not in tend to commit unlawful acts and that they came to understa nd the illegality of their actions only by hindsight. However, their testimony was replete with statements from wh ich the jury could reasonably have inferred that Sokolic an d Susman had the necessary intent and knowledge regar dless of their statements to the contrary. For example, b oth testified that they acted illegally, and that they agreed to complete work for Helbling after explaining to him that thewithdrawals were prohibited transactions.

Contesting his wire fraud convictions, Helbling arg ues that the government failed to establish that Helbli ng participated in a scheme with the specific intent t o defraud. See 18 U.S.C. S 1343; United States v. Veksler, 62 F.3d 544, 551-52 (3d Cir. 1995). Helbling argues that th e government failed to prove this element of the crim e

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8. Helbling raised this issue at trial as a Rule 29 motion to dismiss. The

District Court denied the motion.

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because he relied upon the expertise of Susman and Sokolic, and because both testified that they did n ot intend to defraud the participants.

Clearly, sufficient evidence existed to establish t hat Susman and Sokolic had the requisite intent. Howeve r, even if Helbling's contention about Susman's and So kolic's intent had merit, their intent is irrelevant to Hel bling's conviction since a wire fraud conviction is not dep endent upon the existence of an agreement. See United Stat es v. Nelson, 54 F.3d 1540, 1546 (10th Cir. 1995). Susman and Sokolic testified that Helbling directed them to co nstruct the ESOP and backdate the documents. Testimony also supports the conclusion that Helbling forged Barry Penn's letter to Oppenheimer before engaging the services of Susman or Sokolic, and that he alone forged the con sent of the directors sometime after engaging their help. T hese acts are clearly probative of Helbling's intent.

Finally, Helbling contends that the government fail ed to establish that the plan was subject to ERISA. Count s 2 through 5 of the indictment charged Helbling with embezzlement of plan assets in an "employee benefit plan subject to any provision of title 1 of [ERISA]" in violation of 18 U.S.C. S 664 and counts 6 through 23 charged Hel bling with violating documents required by title I of ERI SA to be published, kept as records or certified to the admi nistrator of the plan. See United States v. Furst, 886 F.2d 5 58, 565 (3d Cir. 1989) (explaining that a conviction underS 664 requires a showing that the plan is covered by ERIS A); see also United States v. Coyle, 63 F.3d 1239, 1245 (3d Cir. 1995) (explaining that a conviction under 18 U.S.C. S 1027 requires a showing that (1) the defendant made a fa lse statement; (2) knowing it to be false; (3) in a doc ument required by ERISA). A plan is subject to ERISA if i tfits under 29 U.S.C. S 1003(a), and is not exempted by t he 29 U.S.C. S 1003(b). Relevant definitions are provided in 29

U.S.C. S 1002.Helbling contends that the government failed to int roduce

sufficient evidence from which the jury could concl ude that the plan was covered by ERISA, and argues that the plan was not covered by ERISA as a matter of law.9 Gener ally,

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9. Helbling's counseled brief argues that the gover nment failed to submit sufficient evidence. Helbling raised and developed his second theory in

16

whether a plan is covered by ERISA is an issue of f act to be decided by the jury, which we review under the subs tantial evidence standard, see Furst, 886 F.2d at 565, thou gh we exercise plenary review when our review requires th e interpretation and application of legal precepts. S ee United States v. Martorano, 767 F.2d 63, 65 (3d Cir. 1985)

.

At trial, the District Court precluded the testimon y of two experts offered by the government who would have te stified about the nature of the plan because the government failed to comply fully with discovery requirements.10 The government therefore relied upon the lay testimony of Laura Scurko, the court appointed plan trustee, Sus man and Sokolic. Scurko testified that the plan was cov ered by ERISA, that the plan was restructured to be an ERIS A plan, and that the plan itself suggested that it was cove red by ERISA. Susman and Sokolic predicated their testimon y, as well as their guilty pleas, on the basis that the p lan was covered by ERISA. The government also introduced testimony of the plan participants indicating that the plan had the characteristics of an ERISA covered plan, i ncluding testimony that the plan was established to provide retirement income to workers who did not receive pi ece rate incentives, after they left the company.

Reviewing the factual evidence adduced at trial and the legal arguments raised in response by the governmen t, we

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his subsequent pro se brief. The government points out that he did not raise his second argument in front of the District Court. However, we have explained that since the alleged error directl y relates to his

criminal responsibility, such error would be plain error. Se e United States v. Cusumano, 943 F.2d 305, 309 (3d Cir. 1991) (conside ring whether a plan was covered by ERISA for the first time on app eal).

10. The government intended to have Debra Golding a nd Kevin Long testify, and presented a letter to Helbling outlini ng the general areas about which they would testify. Helbling moved to p reclude their testimony, asserting that the government's letter f ailed to comply withFederal Rule of Criminal Procedure 16(a)(1)(e) whic h requires the

government to "describe the witnesses' opinions, th e bases and the reasons for those opinions, and the witnesses' qual ifications." Rejecting the government's contention that Golding and Long w ere lay witnesses not covered by 16(a)(1)(e), the District Court gran ted Helbling's motion.

17

conclude that sufficient factual evidence and legal support existed for the conclusion that the plan was covere d by ERISA. The government convinces us as an initial ma tter, with reference to the facts discussed above, that t he plan fell within the general ERISA definitions, particul arly 29 U.S.C. S 1002(2)(A). See In re New Valley Corp. v. New Valley Corp., 89 F.3d 143, 148-49 (3d Cir. 1996) (e xplaining that a court must begin first look to see whether t he plan fits under the general provisions of ERISA and then consider the exceptions). Section 1002(2)(A) extend s ERISA to cover plans established or maintained by an empl oyer to the extent that it provides retirement income regar dless of the method use to determine contributions, or calcu late and distribute benefits. See 29 U.S.C.S 1002(2)(A). The government also explains that the plan fits within the definition of a defined contribution plan, see 29 U .S.C. S 1002(34), and correctly rebuts Helbling's argumen ts as to why the plan was exempt from ERISA coverage in whol e or in part. Finally, the government points out that ev en if the plan was exempt from certain provisions of ERISA, f or example, by having the characteristics of a "top ha t" plan, 18 U.S.C. S 1027 and 18 U.S.C. S 664 would still ap ply because they do not require that the plan in questi on be subject to all of ERISA's various provisions. Rathe r, these criminal provisions require that the plan be a plan "subject to any provision of title 1," 18 U.S.C. S 664, or t hat the fraudulent statement be contained in a document req uired by title 1. See 18 U.S.C. S 1027.

IV.

Helbling next argues that the prosecutor, Assistant United States Attorney Jayne K. Blumberg, made prejudicial comments in her opening and closing statements that require the grant of a new trial. H elbling argues that her opening statement included impermis sible characterizations and impermissible vouching, and t hat in her closing and rebuttal arguments, the prosecutor again acted impermissibly by characterizing Helbling and his actions, implying that Helbling committed improprie ties in the past, and by describing the evidence that the l etter supposedly signed by Barry Penn was forged as

18"uncontroverted." Without parsing the prosecutor's

comments, which we have paraphrased in the margin, 11 we note that, although the government disputes many of Helbling's contentions of misconduct, the United St ates acknowledged in its brief that the prosecutor's ope ning statement "overstepped the parameters of an opening

statement" in the manner in which it characterized Helbling. See Appellee's Br. at 38. We quite agree that Ms.

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11. Early in opening arguments, the prosecutor told the jury that the defendant had "[u]gly values: Dishonesty, disloyalt y, deceit, and above all, greed. To be sure, ladies and gentlemen, the D efendant, William Helbling is a thief. He lied to these men, he stole their retirement

moneys

boldly and brazenly." The prosecutor also called He lbling a looter while pointing a finger in his face, and said, while disc ussing the companies' financial problems, that "the one source [of money] was what he called his `secret fund,' his slush find, his private kitt y. And he stole the money, he stole the retirement money." The prosecut or also called Susman and Sokolic "unscrupulous," and explained th at they assisted Helbling in "covering up his fraud, his looting of moneys." After a

defense

counsel objection, the prosecutor completed her ope ning by stating that: "We believe that you will find the Defendant guilty as charged." The District Court directed the jury to disregard the c omment. During the prosecutor's opening, the Court sustained a number of defense counsel objections and brought counsel to side bar where th e judge admonished the prosecutor. At the close of the prosecutor's op ening, the judge reminded the jury, as he had already explained duri ng his preliminary instructions, that the opening statement was not to be considered as

evidence.

Before closing arguments began, the District Court again reminded the jurors, as part of the jury instructions, that they must not consider the opening and closing arguments as evidence. In the e arly portion of her closing argument, the prosecutor referred to "a gre edy person's plan," the "Defendant's plunder and thievery," and the Defenda nt's "track record of lying, cheating and deceit." The prosecutor also ca lled evidence that the letter from Barry Penn to Oppenheimer was forged"un controverted." In rebuttal, the prosecutor again referred to the same evidence as "uncontroverted," and further characterized the def endant as "arrogant" and "despicable" which the court instructed the jur y to disregard. Upon defense counsel objection to the second reference t o uncontroverted evidence, the District Court told the prosecutor to avoid such references. Later at side bar, the Court asked defense counsel what counsel wanted

the court to do to neutralize the statement. Counse l asked the Court to "leave it, please."

19Blumberg's remarks were over the line, and arguably even

out of line. The government will not be sanctioned in this instance, however, because our case law punishes th e government by granting a new trial in such a situat ion only if the defendant was prejudiced by the remarks in q uestion. Here, we conclude that a new trial is not warranted because Helbling was not in fact prejudiced. We rea ch this conclusion even though we view AUSA Blumberg's rema rks to have been inappropriate, and we urge that the Un ited States Attorney for New Jersey remind his assistant s of the limits of appropriate advocacy.

"Prosecutorial conduct does not always warrant the granting of a mistrial." United States v. Zehrbach, 47 F.3d 1252, 1264 (3d Cir. 1995) (en banc). "An appellate court should not exercise its `supervisory power to rever se a conviction . . . when the error to which it is addr essed is harmless since, by definition, the conviction would have been obtained notwithstanding the asserted error.' " Id. (quoting United States v. Hasting, 461 U.S. 499, 50 6 (1983)). The harmless error standard requires us to

consider the record as a whole. The standard of rev iew depends upon whether the error was constitutional o r nonconstitutional. If the error is non-constitutional, we will affirm "when it is highly probable that the error d id not contribute to the judgment." Id. (quoting Governmen t of Virgin Islands v. Toto, 529 F.2d 278, 284 (3d Cir. 1976)). If the error is constitutional, we will affirm if wefi nd that the error is harmless beyond a reasonable doubt. See Un ited States v. Molina-Guervara, 96 F.3d 698, 703 (3d Cir . 1996) (citing Chapman v. California, 386 U.S. 18, 24 (196 7)).

Even under the most stringent harmless error analys is, we cannot conclude that Helbling was prejudiced."In determining prejudice, we consider the scope of the objectionable comments and their relationship to th e entire proceeding, the ameliorative effect of any curative instructions given, and the strength of the evidenc e supporting the defendant's conviction." Zehrbach, 4 7 F.3d at 1265. First, the evidence presented by the Unite d States was overwhelming. See id. at 1267 (finding the evid ence at trial substantial). As discussed above, the governm ent adduced substantial direct evidence of Helbling's a ctivities,

20

and substantial circumstantial evidence of his moti vation and intent. Second, the District Court did give cur ative instructions. It repeatedly instructed the jury not to consider counsel's arguments as evidence, doing so before the prosecutor's opening, after the prosecutor's op ening, and before her closing argument, and appeared to do so ina way that conveyed the Court's displeasure with co unsel's

tactics. See id. at 1267 (finding characterizations neutralized in part by instructions not to consider the opening evidence); United States v. Somers, 496 F.2 d 723, 738 (3d Cir. 1974). Furthermore, the Court told the jury to disregard the vouching in the prosecutor's opening statement and to disregard the references to "arrog ant" and "despicable" in rebuttal. Lastly, we note that defe nse counsel asked the Court not to give a curative inst ruction

to neutralize reference to "uncontroverted" testimo ny in a

side bar conference.

Helbling seeks to distinguish this case by arguing that he was prejudiced because the government's comments poisoned the jury's mind regarding his intent, a cr ucial element in each count of his indictment. Helbling p laces considerable reliance on United States v. Mastrange lo, 172 F.3d 288 (3d Cir. 1998), in which we found the defe ndant to be prejudiced by the comments of a prosecutor in closing and rebuttal arguments which inflated a limited sti pulation that the defendant "had the chemical background to know the ingredients and equipment necessary to make methamphetamine" into one stating that the defendan t knew how to make methamphetamine. See Mastrangelo, 172 F.3d at 295. We find Mastrangelo to be easily distinguishable from our case. First, and most impo rtantly, in Mastrangelo, the prosecutor misstated a stipulat ion to make it encompass a fact central to the government' s charges and not otherwise supported by any evidence the government presented. See id. at 298. Here, the gov ernment introduced overwhelming circumstantial evidence of Helbling's intent. Second, in Mastrangelo, we expla ined that the district court's curative instruction may have served to exacerbate the problem because the court reaffirmed the prosecutor's incorrect view of the stipulation. See id. at 296. Here, we view the curative instructions as hav ing neutralized the possible prejudice.

21

We note that Helbling's argument is also weakened b y United States v. Retos, 25 F.3d 1220 (3d Cir. 1994) , where we found that a prosecutor's reference in opening a rgument to the defendant's "crooked law practice" was not misconduct requiring a new trial since the comment was clearly related to the charges the government had t o prove and was supported by the evidence presented at tria l. See Retos, 25 F.3d at 1226. But see Somers, 496 F.2d at 737- 38 ("Whether or not proofs were ultimately adduced warranting such characterizations is irrelevant. Su ch characterizations add nothing to the legitimate edu cation of the jury which is not afforded by the proper presen tation of the facts to be proved."). Here, although the prose cutor'scomments may have been a pointed assertion of Helbl ing's

guilt, the characterizations were related to the ch arges contained in the indictment which the evidence pres ented later did in fact establish. Accordingly, we find p rejudice to be lacking.

V.

Helbling also appeals the District Court's determin ation of his sentence. Helbling contends that the Distric t Court erred by increasing his offense level four-levels u nder U.S.S.G. S 3B1.1(a), "Aggravating Role," by increas ing his offense level two-levels for obstruction of justice , U.S.S.G. S 3C1.1, and by departing upwards two-levels for psychological harm. See U.S.S.G. S 5K2.3.

A. S 3B1.1(a), Aggravating Role

Helbling argues that the District Court erred in ap plying a four-level enhancement to his offense level pursu ant to S 3B1.1(a) of the Sentencing Guidelines for"Aggrava ting Role." Section 3B1.1(a) states in full: "If the def endant was an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensiv e, increase by 4 levels." U.S.S.G. S 3B1.1(a). Helblin g finds fault with the District Court's view regarding both aspects of this Guideline, namely that he was an organizer or leader, and that the activity was "otherwise extens ive." Both Helbling and the government agree that Helbling's c riminal activity did not involve five "participants" as def ined by the commentary to the Guideline.

22

We review a District Court's factual determinations underlying the application of the sentencing guidel ines for clear error. See United States v. Ortiz, 878 F.2d 1 25, 126-27 (3d Cir. 1989). Although we give due deference to t he District Court's application of the sentencing guid elines to those facts, as required by 18 U.S.C. S 3742(e), we exercise plenary review over legal questions involving the p roper interpretation and application of the sentencing gu idelines. See United States v. Katora, 981 F.2d 1398, 1402 (3 d Cir. 1992). We will address the two aspects of the relev ant

Guideline section in turn.

1. Leader or Organizer

Section 3B1.1(a) applies only if a sentencing court finds that "the defendant was an organizer or leader of a criminal activity." Application Note 4 explains that a court should consider a number of factors when determining if th e defendant was an organizer or leader, rather than amanager or supervisor.

In distinguishing a leadership and organizat ional role from one of mere management or supervision, titles such as "kingpin" or "boss" are not controll ing. Factors

the court should consider include the exerci se of decision making authority, the nature of par ticipation in the commission of the offense, the recrui tment of accomplices, the claimed right to a larger s hare of the fruits of the crime, the degree of participa tion in planning or organizing the offense, the natu re and scope of the illegal activity, and the degre e of control and authority exercised over others.

U.S.S.G. S 3B1.1, Application Note 3; United States v. Ortiz, 878 F.2d 125, 127 (3d Cir. 1989). We have explained that to be considered an organizer or leader, "the defen dant must have exercised some degree of control over oth ers involved in the commission of the offense." United States v. Phillips, 959 F.2d 1187, 1191 (3d Cir. 1992) (quoti ng United States v. Fuller, 897 F.2d 1217, 1220 (1st Cir. 199 0)).

The District Court made specific factual findings, which are not clearly erroneous, in determining that Helb ling acted as an organizer or leader. The Court found th at:

23

Helbling recruited all of the participants m entioned above and his attorneys, Sokolic and Susman, to help him in his criminal activity. He alone made the decision to conceive and implement his conve rsion

scheme. The benefits from his scheme went ei ther to his personal use or into shoring up companie s which he was the sole owner. Helbling played the k ey role in structuring the operation to defraud the ret irement plan and convert its assets. There is no evi dence that anyone else exercised control over the crimi nal scheme, nor exercised any decision-making authority.

On appeal, Helbling raises two arguments. Helbling argues first that the evidence failed to show that Helbling recruited Susman and Sokolic with a criminal purpos e or controlled their activities. Helbling also argues, citing United States v. Katora, 981 F.2d 1398 (3d Cir. 199 2), that he cannot be a leader or organizer because the othe r participants -- Susman and Sokolic -- were equally responsible for the criminal activity.

Given the guideline provision and the record eviden ce, we find the District Court's factual findings to be pr oper and its legal conclusion that Helbling was an organizer and leader unassailable. In so doing, we necessarily re jectHelbling's arguments which are essentially fact bas ed.

Contrary to his urging, the District Court could pr operly find that he had a criminal purpose in recruiting S usman, that he controlled their activities in orchestratin g the scheme through them thereafter, and that he was mor e culpable than they were.12 On these facts, Katora d oes not dictate a different result.13 Finally, we note that evidence

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12. Helbling's reliance on the terms of Susman's an d Sokolic's plea agreements as proof of their equal culpability is m isplaced. The Guideline clearly contemplates that a defendant may be the leader or organizer of another criminally responsible individ ual; the amount of loss stipulated to in a plea agreement is surely not the only factor that bears on the relationship between those individuals.

13. Katora is simply not applicable to this case. I n Katora, we explained

that a defendant cannot be assessed an offense leve l enhancement under

S 3B1.1 where the district court determined that th e two participants were equally culpable and did not organize, lead, m anage or supervise a third participant. See Katora, 981 F.2d at 1405. In this case, however, the District Court determined that Helbling alone o rganized and led the criminal activity which involved two other particip ants.

24

that certain individuals provided expertise or plan ning does not necessarily counter evidence that their actions were controlled by another.

2. "Otherwise Extensive"

The second part of S 3B1.1(a)'s analysis requires t he sentencing court to determine whether the "criminal activity . . . involved five or more participants or was oth erwise extensive." U.S.S.G. S 3B1.1(a). Since the governme nt acknowledges that Helbling, Susman and Sokolic are the only "participants," this case requires us to deter mine when a criminal activity is "otherwise extensive." See U nited States v. Colletti, 984 F.2d 1339, 1346 (3d Cir. 19 92) (holding that the leader or organizer may be includ ed when determining the number of participants); see also U .S.S.G. S 3B1.1, Application Note 1 (defining "participant" ). This seemingly simple phrase, which also appears in S 3B 1.1(b), has spawned much discussion, and some disagreement, in the opinions of several courts of appeals. The cour ts that have considered the question agree that the "otherw ise extensive" language makes S 3B1.1(a) applicable whe n criminal activity involves the equivalent of five p articipants, but disagree as to whether, if fewer than five part icipants are involved, the determination of equivalence must focus upon a headcount of the individuals involved, or ma y also rely upon other indices of extensiveness such as th emagnitude of the harm, the complexity of the planni ng, or

the number of victims. Compare United States v. Carrozzella, 105 F.3d 796, 802-03 (2d Cir. 1997) (f ocusing analysis on the number of individuals involved), wi th United States v. Dietz, 950 F.2d 50, 53-54 (1st Cir. 1991) (permitting consideration of a broad range of indic es).

In Carrozzella, the Court of Appeals for the Second Circuit explained that the analysis of "otherwise e xtensive" must focus initially upon the number of participant s, and the knowing or unknowing persons, involved in the criminal activity, and then a subsequent determinat ion

must be made as to whether the roles and involvemen t of all those persons constitute the functional equival ent of five "participants" as defined by the Application Notes. See Carrozzella, 105 F.3d at 802-04. This contrasts wit h the

25

rulings of several other courts of appeals that per mit a broader inquiry that examines other characteristics of the criminal activity as well. See United States v. Bro ckman, 183 F.3d 891, 900 (8th Cir. 1999), cert. denied , 1 20 S.Ct. 800 (2000) (permitting consideration of the number of persons involved and the amount of loss); United St ates v. Yarnell, 129 F.3d 1127, 1139 (10th Cir. 1997) (foll owing Dietz); United States v. Tai, 41 F.3d 1170, 1175 (7 th Cir. 1994) (permitting courts to "to examine factors in addition to a headcount to justify a finding that a given cr iminal activity is extensive"). For example, the Court of Appeals for the First Circuit, in United States v. Dietz, expl ained that "the extensiveness of a criminal activity is not ne cessarily a function of the precise number of persons, criminal ly culpable, or otherwise, engaged in the activity" an d upheld a four-level increase based upon a general concepti on of extensiveness which included a finding that the act ivity spanned twelve years, crossed seven states and vict imized a number of governmental agencies without an exact

determination of the number of individuals involved . See Dietz, 950 F.2d at 53-54. In United States v. Rose, 20 F.3d 367, 374 (9th Cir. 1994), the Court of Appeals for the Ninth Circuit explained that "[w]hether criminal activity is `otherwise extensive' depends on such factors as (i ) the number of knowing participants and unwitting outsid ers; (ii) the number of victims; and (iii) the amount of money fraudulently obtained or laundered." Id. at 374 (in ternal citations omitted).

In United States v. Bennett, 161 F.3d 171 (3d Cir. 1998), the only opinion in which we have previously consid ered the "otherwise extensive" prong of S 3B1.1(a), we a ffirmed the application of S 3B1.1(a) to enhance the offens e level of a defendant convicted of running a large and comple x"Ponzi" scheme which the district court found invol ved two

participants and at least thirteen non-participants who assisted Bennett. See id. at 194. Many of these ind ividuals served Bennett by withholding information from inve stors and legitimizing his activities by preparing report s based upon false information he had provided. See id. Be cause the evidence of extensiveness was so clear, due to the involvement of at least thirteen others, we did not discuss

whether other indices of "extensiveness" could be

26

appropriately considered under S 3B1.1.14 We take t he opportunity to decide this issue here.

We will subscribe to the analysis of the Court of A ppeals

for the Second Circuit as described in Carrozzella. We believe that the focus upon the number and roles of the individuals knowingly, and unknowingly, involved be st comports with the text of S 3B1.1, its application notes and commentary, as well as the overall structure of the Sentencing Guidelines. We note that while the Guide line itself provides no clear guidance as to the meaning of "otherwise extensive," the application notes and th e commentary strongly indicate that the focus should be upon the number of persons involved. Although we di sagree with the District Court's decision to count one"non participant," we agree with the District Court, whi ch essentially applied the Carrozzella test, that the combination of Helbling, Susman and Sokolic -- theparticipants -- together with the countable nonparticipants, made Helbling's criminal activity"oth erwise extensive" for the purposes of S 3B1.1.

Application Note 3 specifically includes an example of

"otherwise extensive" that is instructive."In asses sing whether an organization is `otherwise extensive,' a ll persons involved during the course of the entire offense ar e to be considered. Thus, a fraud that involved only three participants but used the unknowing services of man y outsiders could be considered extensive." U.S.S.G. S 3B1.1, Application Note 3 (emphasis added). The background commentary is consistent with a numerical focus:

This section provides a range of adjustments to increase the offense level based upon the si ze of the criminal organization (i.e., the number of p articipants in the offense) and the degree to which the def endant was

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14. Since we did not engage in a broader analysis, we place no significance upon citations in Bennett to United St ates v. D'Andrea, 107 F.3d 949, 957 (1st Cir. 1997), and United States v. Dietz, 950 F.2d at 53,decisions that permit the district court to conside r the "width, breadth,

scope, complexity, and duration of the scheme." See Bennett, 161 F.3d at 194 n.14. These citations were placed in a footn ote attached to the last part of the analysis and are no more than dict a.

27

responsible for committing the offense . . . . The Commission's intent is that this adjustment should increase with both the size of the organizat ion and the degree of the defendant's responsibility.

U.S.S.G. S 3B1.1, Background (emphasis added).

The background commentary also explains why the siz e of the criminal activity is important to the purpos e of the provision. It notes that the Sentencing Commission drafted the Guideline's separate provisions to respond to c riminal organizations whose size and structure increases th e significance of the defendant's role. Compare U.S. S.G. S 3B1.1(a)-(b), with S 3B1.1(c)."In relatively smal l criminal enterprises that are not otherwise to be considered as extensive in scope or in planning or preparation, t he distinction between organization and leadership, an d that of management or supervision, is of less significan ce than in larger enterprises that tend to have clearly del ineated divisions of responsibility." U.S.S.G. S 3B1.1, Bac kground (emphasis added).

If the Commission intended the courts to utilize a broader analysis to determine if a criminal activit y was "extensive" it could easily have said so. Instead, the notes clearly indicate the Commission meant the courts to

consider the role of the defendant and the size of the criminal organization as its way of determining the relative responsibility of the defendant, so as to mete a gr eater sentence to those who likely received a greater div ision of the illegal profit, posed a greater danger to the p ublic, and are more likely to commit more crimes in the future . See U.S.S.G. S 3B1.1, Background ("This adjustment is included primarily because of concerns about relati ve responsibility. However, it is also likely that per sons who exercise a supervisory or managerial role in the co mmission of an offense tend to profit more from it and prese nt a greater danger to the public and/or are more likely to recidivate.").

Furthermore, limiting our construction of "extensiv eness" to a head counting analysis reduces the potential f or double counting certain aspects of criminal activity that are considered elsewhere in the scheme of the guideline s, thus

28helping to maintain the distinct character of vario us

guideline sections. See Carrozzella, 105 F.3d at 80 2-03. For example, as the court in Carrozzella explained, in a fraud

conviction the base offense level can be increased based on the amount of loss, the extent of planning, and the number of victims. See U.S.S.G. S 2F1.1; Carrozzella, 105 F.3d at 802. Further adjustments may be made to account for the vulnerability of the victims, see U.S.S.G.S 3A1.1, the defendant's role, see U.S.S.G. S 3B1.2, and abuse o f a position of trust.15 See U.S.S.G. S 3A1.3. If we we re to adopt a broad reading of the phrase "otherwise extensive, " so that some of these possible adjustments could be conside red in that inquiry as well, a defendant would possibly re ceive two

sentence enhancements for the same attributes of th e crime. We avoid this result by focusing upon the nu mber of

individuals involved.

We disagree with the government that our opinion in United States v. Wong, 3 F.3d 667, 668 (3d. Cir. 19 93), undercuts this rationale. In Wong, we held that whe re the guidelines happen to direct the sentencing court to increase the defendant's sentence under two separate section s-- which respond to different evils -- based on differ ent aspects of the same conduct, the district court doe s not err by "double counting" those aspects in determining t he sentence. See Wong, 3 F.3d at 668; see also United States v. Johnstone, 107 F.3d 200, 211-13 (3d Cir. 1997) ( rejecting a double counting argument in accordance with Wong) ; United States v. Maurello, 76 F.3d 1304, 1315-16 (3 d Cir. 1996) (same). Thus in Wong, we found no error in th e district court's decision to increase the defendant 's offense

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15. Similarly, following a broad reading of "otherw ise extensive" would permit a court to consider the amount of drugs sold in both the base offense level and as an element leading to the dete rmination that the activity was extensive. See United States v. Rodriq uez, 981 F.2d 1199, 1200, 1200 n.3 (11th Cir. 1993) (per curiam) (findi ng no problem with considering drug quantities as evidence of extensiv eness).

Not surprisingly, courts following a broad test for extensiveness repeatedly encounter, though they have rejected the m, arguments complaining of double counting relating to the find ing of extensiveness in fraud cases. See, e.g., Brockman , 183 F.3d at 900 n.8 (rejecting argument based upon double counting by way of S 2F1 .1 and S 3B1.1.).

29

level for both more than minimal planning, see U.S .S.G. S 2B1.1(b)(5), and aggravating role under U.S.S.G. S 3B1.1(c) -- the degree of planning and defendant' s rolewere different attributes of the same conduct. See Wong, 3

F.3d at 668, 669 n.4. Here, the guideline focuses o n the attribute or aspect of the numerosity of the group that the defendant led or organized. The language of two or more sections may well require consideration of differen t

attributes of the same conduct. This is not an unto ward result, but, rather an intended one.16

Having adopted the test that requires us to focus u pon the number and participation of the individuals inv olved in the criminal activity, we must address how the dist rict courts are to apply it to the situations facing the m. Although Application Note 3 supports our mode of an alysis, the guidelines are silent as to how the sentencing court actually is to decide which non-participants should be considered, and what combination of participants an d

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16. Application Note 4, of S 1B1.1, was amended eff ective November 1, 1993, to state that "[a]bsent an instruction to the contrary, the adjustments from different guideline sections are a pplied cumulatively (added together). For example, the adjustments from S 2F1.1(b)(2) (more than minimal planning) and S 3B1.1 (Aggravating Rol e) are applied cumulatively." U.S.S.G. S 1B1.1, Application Note 4 (amended November 1, 1993, Amendment 497). We believe that this amend ment, which followed a few months after our decision in Wong , reinforces the decision in Wong and our reasoning here. We read the Applica tion Note to explain that a defendant cannot attack a sentence by arguin g that the district court impermissibly considered evidence of more tha n minimal planning when both adjusting under S 2F1.1(b)(2) and when en gaged in finding the defendant to be a leader, organizer, manager or supervisor as specifically directed by S 3B1.1, Application Note 4. Indeed, prior to the amendment, the Sixth Circuit Court of Appeals, in U nited States v. Romano, 970 F.2d 164 (6th Cir. 1992), found that be cause it viewed consideration of more than minimal planning as bein g required by S 3B1.1's application notes an enhancement under bo th provisions was not permitted. See Romano, 970 F.2d at 167. In Unit ed States v. Cobleigh, 75 F.3d 242 (6th Cir. 1996), the court re cognized that Romano had been effectively overruled by the amendment. Se e Cobleigh, 75 F.3d at 251. Nothing about the amendment leads us to bel ieve that it meant to implicate the breadth of analysis required or pe rmitted under the second part of S 3B1.1(a) -- the determination of t he size of the criminal activity.

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countable non-participants is the "equivalent" of f ive participants. We agree with the court in Carrozzell a that not every individual tangentially involved in the c riminal activity can fairly be considered in the analysis. See Carrozzella, 105 F.3d at 803. The purpose of the pr ovision would rarely be achieved by counting the unknowing services of some actors in a criminal scenario, a t axicabdriver or bank teller, for instance.

The court in Carrozzella developed a three step inq uiry to help determine which individuals should be counted. 17 See id. at 803-04. This test distinguishes non-particip ants who

should be considered from those who should not be

considered on the basis of the defendant's intent i n involving them in the criminal activity and the nat ure of their role in the offense.18 Under this test, a sen tencing

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17. The Second Circuit wrote in full:

[W]e believe that the following must be dete rmined by the sentencing

court:

(i) the number of knowing participants;

(ii) the number of unknowing participants wh ose ac tivities were organized or led by the defendant with speci fic criminal intent;

(iii) the extent to which the services of th e unkn owing participants were peculiar and necessary to the criminal scheme.

Carrozzella, 105 F.3d at 803-04.

18. We note that the Introductory Commentary to Par t B, which contains S 3B1.1, was amended effective November 1, 1990 to state that: "The

determination of a defendant's role in the offense is to be made on the basis of all conduct within the scope of S 1B1.3(a) (1-4), and not solely

on

the basis of elements and acts cited in the count o f conviction." Prior to the amendment, we held that S 1B1.3 did not apply t o the analysis under 3B1.1. See United States v. Murillo, 933 F.2d 195, 199 (3d Cir. 1991); see also United States v. Pollen, 978 F.2d 7 8, 89-90(3d Cir. 1992). In these cases, we focused upon the language of the provision -- the

offense -- to conclude that consideration of who co uld be considered a participant must be limited to those involved in th e offense charged and

all conduct in furtherance of the offence of convic tion. See Murillo, 933 F.2d at 199. In both cases, we noted that our decis ions did not address the effect of the amendment on our analysis. See id . at 198 n.1; see also Pollen, 978 F.2d at 89 n.24. We do not decide today whether the scope of S 1B1.3 might affect our analysis.

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court must first separate out the "participants" as definedby Application Note 1 from other individuals, nonparticipants, who were involved in the criminal act ivity. "A`participant' is a person who is criminally respons ible for

the commission of the offense, but need not have be en convicted." U.S.S.G. S 3B1.1, Application Note 1. T he defendant may be considered as one of the participa nts. See Colletti, 984 F.2d at 1346. The court must next

determine whether the defendant used each nonparticipants' services with specific criminal inten t. See Carrozzella, 105 F.3d at 804. Third, the court must

determine the extent to which the services of each individual, non-participant, were peculiar and nece ssary to the criminal scheme. See id. at 804. Utilizing this test, the Court of Appeals for the Second Circuit has upheld the consideration of individuals used by the defendant to legitimize, facilitate or hide the criminal activit y. See United States v. Napoli, 179 F.3d 1, 15 (2d Cir. 1999) (ap plying Carrozzella and upholding the finding that the crim inal activity was otherwise extensive on the basis of ca sino personnel who unwittingly helped the defendant laun der money); United States v. Nolan, 136 F.3d 265, 273 ( 2d Cir. 1998) (approving the consideration of accountants, bank officers, and lawyers used to perpetuate embezzleme nt from an ERISA covered pension plan including the filing of incomplete documents). We view this test as helpful in defining which non-participants should be counted, and

subscribe to it.

After deciding which individuals may be counted, th e court must then consider whether the sum of the participants and countable non-participants is the "functional equivalent" of five participants. We no te that, at a minimum, a criminal scheme must involve more than one participant in order to be found otherwise extensiv e; there can be no less than the defendant and one participa nt the defendant led or organized. See U.S.S.G.S 3B1.1, Application Note 2 ("To qualify for an adjustment u nder this section, the defendant must have been the organizer

, leader, manager, or supervisor of one or more other participants."). However, a court's determination a s to the functional equivalence does not lend itself to a me re numerical analysis, but will necessarily be guided by the

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sentencing court's discretion. In deciding whether the total is the equivalent to five participants, the sentenc ing court may consider other factors, including the nature of the criminal scheme, to evaluate the relative value of the various countable non-participants.

We will apply the test we have crafted to the case at hand. We note that Helbling urged us to adopt the S econd

Circuit's test and does not contest the District Co urt's determination that Helbling, Susman and Sokolic sho uld becounted as participants. Therefore, the analysis re sts upon

the validity of the court's decision to count six n onparticipants -- John Grikis, Arnold Kaminer, Bruce Katz, Donald Mayle, Ronald Santora and Thomas Taylor -- a nd

the conclusion that the combination of these three participants and these six non-participant individu als is the equivalent of five participants. Helbling disputes the consideration of each individual. He argues that Ka tz and Grikis should not be considered because both merely transferred funds at Helbling's instruction. Helbli ng argues that Mayle, Santora and Taylor should not be consid ered because they all acted as part of a bankruptcy frau d which was not peculiar and necessary to the criminal acti vities that supported Helbling's conviction, and, finally, Helbling argues that Kaminer should not be considered becaus e the letter Kaminer wrote at Helbling's behest, falsely saying that they had a conversation about an ESOP conversi on, was never sent. We agree with the District Court's conclusion in all but Kaminer's case, and find that the District Court properly concluded that the combinat ion of participants and countable non-participants makes Helbling's scheme "otherwise extensive."

In arguing that Katz and Grikis should not be consi dered, Helbling unduly narrows the scope of our inquiry. W hile our test, which considers both the intent with whic h the

defendant directed the individual's involvement and the

extent to which the services of the individual were peculiar and necessary to the criminal scheme, instructs the sentencing court to disregard individuals who are essentially functionaries, the activities of Katz a nd Grikis are distinguishable from those of other banking emp loyees who, for example, might have simply moved the money for

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Helbling. See generally Napoli, 179 F.3d at 15 (app lying Carrozzella and upholding the finding that the crim inal activity was otherwise extensive on the basis of ca sino personnel who unwittingly helped the defendant laun der money). Helbling used the services of Grikis and Ka tz to convert an account held by NatWest as a trustee owi ng fiduciary duties, into an account that from which h e could withdraw funds, borrow against and which he could eventually liquidate.

We also believe that the District Court was correct to count the activities of Mayle, Santora and Thomas. Each individual helped Helbling hide his criminal activi ties. See Bennett, 161 F.3d at 194 (counting non-participants who helped hide and legitimize the criminal activity). At the direction of Helbling, Mayle attested to Helbling's signatures

on the ESOP conversion documents and hid the influx of$350,000 from the Bankruptcy Court. Similarly, Thom as,

at Helbling's direction, submitted false documents to the Small Business Association describing the $350,000 as a personal cash infusion from Helbling. Lastly, at He lbling's direction, Santora, Helbling's bankruptcy lawyer, s ubmitted false documents given to him by Helbling to the ban kruptcy

court.

We reject Helbling's argument that Mayle, Santora, and Thomas ought not be considered because their activi ties were related to crimes for which Helbling was not i ndicted, and, therefore, their activities were not peculiar and necessary to Helbling's criminal behavior.19 These activities aided Helbling's embezzlement activities by conceal ing Helbling's withdrawals from the Bankruptcy Court, f rom the Small Business Administration, and from the pla n participants.

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19. In the proceedings in front of the District Cou rt and again on appeal, Helbling considers Mayle, Santora and Thomas togeth er because they provided services relating to bankruptcy fraud. See Appellant's Br. at 46. Our review of the trial testimony indicates that th efilings signed by Taylor were not part of the bankruptcy case. Instea d, they were

submitted to the United States Small Business Admin istration. However, we consider the three individuals together because Helbling's arguments why each person should not be considered are identi cal.

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We agree, however, that the District Court erred in counting Kaminer. The District Court found that Hel bling

directed Kaminer to write a letter in December 1991 stating falsely that he had a conversation with Helbling ab out an ESOP conversion in February 1991. While we disagree with the Court's factual conclusion, that is not the foc al point of our inquiry.20 As far as can be determined from the record, Helbling never used the letter, or even placed it i n a situation where it might be used, and, therefore, w e cannot say that Kaminer's conduct, innocuous in itself, wa s peculiar and necessary to Helbling's criminal activ ities.

We will therefore affirm the District Court's decis ion to enhance Helbling's sentence under S 3B1.1 on the ba sis that he was the organizer or leader of a criminal a ctivity that was otherwise extensive. Helbling's criminal a ctivity involved three criminally responsible participants and five other non-participant individuals whose involvement Helbling directed and whose actions were peculiar a nd necessary to the furtherance of Helbling's efforts. Given the nature of Helbling's criminal conduct, the combinat ion of these participants and non-participants was properl y held by the District Court to be the functional equivale nt of fiveparticipants.

B. Obstruction of Justice

Helbling contends that the District Court did notfi nd that Helbling had the requisite willful intent to o bstruct justice as is required in order to increase Helblin g's offense

level under S 3C1.1 of the Guidelines.21 See U.S.S. G.

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20. The District Court found that the letter was fa lse because the conversation never took place. We find this finding clearly erroneous

because Kaminer testified at trial that the Februar y 1991 conversation did occur and that the letter merely confirmed that fact. As we find that

Kaminer should not be counted because the letter wa s never used in furtherance of Helbling's activities, we need not d etermine whether submitting a truthful letter in an effort to suppor t a false conclusion is the type of involvement that should be counted unde rS 3B1.1.

21. Section 3C1.1 of the guidelines states:

If (A) the defendant willfully obstructed or impeded, or attempted

to obstruct or impede, the administration of ju stice during the course

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S 3C1.1; United States v. Belletiere, 971 F.2d 961, 965 (3d Cir. 1992) ("[T]he government bears the burden of p roving by a preponderance of the evidence that the defenda nt willfully obstructed or impeded, or willfully attem pted to instruct or impede, the administration of justice." ). We disagree.

The District Court applied the two-level enhancemen t on the basis of two acts by Helbling which it found we re "clearcut attempts to influence" testimony and which it concluded were covered under Application Note 4. Application Note 4 lists as one type of applicable behavior, "(a) threatening, intimidating, or otherwise unlawf ully influencing a co-defendant, witness, or juror, dire ctly or indirectly, or attempting to do so." U.S.S.G.S 3C1. 1, Application Note 4(a). The first act relied upon by the District Court was a letter written by Helbling to his two attorneys, Susman and Sokolic, in May of 1994. In t he letter Helbling threatened to file malpractice acti ons against the lawyers and file complaints with the bar associ ation if they refused to stand behind the documents they cre ated. Helbling, however, contends that the letter evidenc es his frustration rather than an attempt to intimidate. T he second act was a conversation between Helbling and Donald Mayle in July of 1996 during which Helbling pressured Mayle to say his signature on the board o fdirectors' consent was genuine.22 Helbling argues t hat the

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of the investigation, prosecution, or senten cing of the instant

offense of conviction, and (B) the obstructive condu ct related to (i) the defendant's offense of conviction and any re levant conduct; or (ii) closely related offense, increase the offens e level by 2 levels.

U.S.S.G. S 3C1.1.

22. Two conversations between Helbling and Mayle ar e reproduced in the record. The first conversation took place on July 1 9, 1996. The second conversation took place on July 20, 1996. The Distr ict Court's opinion does not make it clear whether it is relying upon b oth conversations or just one. The opinion quotes from the July 19, 1996 conversation.

Helbling suggests that part of the District Court's error was failing to consider both conversations. We believe, however, t hat both

conversations indicate the same desire to influence Mayle. The issue is

therefore moot.

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discussion of Mayle's signature was innocuous and t hat the District Court failed to put it in context. We disa gree on both scores. We review the District Court's factual findings under the clearly erroneous standard. See United St ates v. Boggi, 74 F.3d 470, 478 (3d Cir. 1996) (citing Unit ed States v. Cusumano, 943 F.2d 305, 315 (3d Cir. 1991)).

While we recognize that the Helbling's letter varie s in tone and could be subject to differing interpretations, the letter demanded that the lawyers stand behind documents fo und by the jury to be false, and threatened adverse consequences if they did not do so. With respect to the conversations with Mayle, the inference drawn from the conversations is that Helbling desired Mayle to say that he signed the board of directors' consent and was urgi ng Mayle to lie. We conclude that the District Court's finding that these acts represented attempts to influence t estimony was not clearly erroneous.

C. Extreme Psychological Injury to the Victims

Helbling also contends that the District Court abus ed its discretion when it departed upward two-levels from the applicable guideline level on the basis of extreme psychological damage to the victims because there w as insufficient evidence of psychological harm to just ify the departure. See U.S.S.G. S 5K2.3 (Extreme Psychologi cal Injury to the Victims) (Policy Statement); Unites S tates v. Neadle, 72 F.3d 1104, 1111-12 (3d Cir. 1995); Unite dStates v. Astorri, 923 F.2d 1052, 1058 (3d Cir. 199 1).

Section 5K2.3 permits a sentencing court to sentenc e above the guideline sentence level "[i]f a victim or vict ims suffered psychological injury much more serious than that no rmally resulting from commission of the offense . . ." The section continues to explain that:

Normally, psychological injury would be suff iciently severe to warrant application of this adjust ment only when there is a substantial impairment of th e intellectual, psychological, emotional, or b ehavioral functioning of a victim, when the impairment is likely to be of an extended or continuous duration, and when the impairment manifests itself by physical or psychological symptoms or by changes in beha vior

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patterns. The court should consider the exte nt to which such harm was likely, given the nature of the

defendant's conduct.

U.S.S.G. S 5K2.3. In Astorri, we upheld a departure for extreme psychological harm when the District Court found, both through testimony and its own observation, tha t the victims' health suffered after they lost their life savings. See Astorri, 923 F.2d at 1059.

We review a district court's decision to depart fro m the guidelines under an abuse of discretion standard. S ee United States v. Jacobs, 167 F.3d 792, 798 (3d Cir. 1999) (citing United States v. Baird, 109 F.3d 856, 862 ( 3d Cir. 1997)). We have noted that "[i]f there is any place in sentencing guidelines analysis where a fact-finder is to be given considerable deference, it is here where the district court is to be called upon to assess the psychologi cal impact upon victims." See Astorri, 923 F.2d at 1058

. However, in Jacobs, a case addressing the psycholog ical effects of an aggravated assault, we explained that a finding that the victim's psychological injury was "much mo re serious than that normally resulting from the commi ssion of the crime . . . is a prerequisite for a departur e under S 5K2.3." Jacobs, 167 F.3d at 799.

Relying principally on Astorri, a fraud case, the D istrict Court found that a two level departure was warrante d under S 5K2.3 because of the effects of Helbling's criminal activities and harassment. Helbling argues that the District Court's factual findings were insufficient for the departure.

The District Court found:

[T]he age of Helbling's victims did not faci litate the commission of his crimes, it did heighten th eir impact. . . . The Government has convincingly deta iled the

emotional and psychological costs of survivi ng Helbling's crimes and resisting his harassme nt. These costs include the humiliation of being force d to seek work at an advanced age and rely on help fro m family members, the trauma that comes from family members, the trauma that comes with losing o ne's savings, and the psychological damage result ing from resisting slurs, threats, frivolous lawsuits , and

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pressure from the tax authorities. The evide nce fully justifies this two level upward departure.

We believe that the District Court's findings are c learly supported by the record and that the record itself supports the determination that Helbling caused psychologica l injury "much more serious" than would normally result from his type of fraudulent activity. In fact, as the Distri ct Court recognized, the record, in the form of the Presente nce Report and the testimony of some of the victims at trial, contains the same type of evidence of individual lo ss and resulting medical complications we found sufficient in Astorri. Accordingly, we find that the District Cou rt did not abuse its discretion in departing upward under S 5K 2.3.

VI.

For the reasons above, we will affirm the judgment of

conviction and sentence.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

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