1999 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-29-1999

United States v. Holmes

Precedential or Non-Precedential:

Docket 98-1703

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Recommended Citation

"United States v. Holmes" (1999). 1999 Decisions. Paper 267.

http://digitalcommons.law.villanova.edu/thirdcircuit_1999/267
Filed September 29, 1999 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 98-1703 

UNITED STATES OF AMERICA 

v. 

DANIEL G. HOLMES, 

 Appellant 

On Appeal from the United States District Court 

for the Eastern District of Pennsylvania 

(D.C. No. 97-cr-00424-1) 

District Judge: Hon. Robert F. Kelly 

Submitted Under Third Circuit LAR 34.1(a) 

September 7, 1999 

Before: SLOVITER and ROTH, Circuit Judges, 

and POGUE, Judge United States Court of 

International Trade* 

(Filed September 29, 1999) 

Regina M. Coyne 

David L. McColgin 

Maureen Kearney Rowley 

Defender Association of Philadelphia 

Federal Court Division 

Philadelphia, PA 19106 

 Attorneys for Appellant 

_________________________________________________________________ 

*Hon. Donald C. Pogue sitting by designation. 
 Thomas M. Gallagher 

 Michael R. Stiles 

 Walter S. Batty, Jr. 

 Office of United States Attorney 

 Philadelphia, PA 19106 

 Attorney for Appellee 

OPINION OF THE COURT 

SLOVITER, Circuit Judge. 

Appellant Daniel Holmes, a disbarred attorney and 

accountant, appeals from the sentence imposed by the 

District Court following his plea of guilty to two 

indictments. One indictment charged Holmes with 

conspiracy; bank, wire, and mail fraud; interstate 

transportation of stolen property; income tax fraud; and 

forgery. The other charged him with forgery of two federal 

judges' signatures. The District Court sentenced Holmes to 

96 months in prison, ordered him to pay restitution in the 

amount of $1,899,838.80, and imposed a special 

assessment of $8,650.00. 

Holmes appeals his sentence, challenging the District 

Court's upward departure from the sentencing guidelines 

by two levels for extraordinary abuse of a position of trust, 

the court's imposition of restitution without formally 

determining his ability to pay, and the court's calculation of 

the amount of the special assessment. 

I. 

We review the underlying facts briefly as they give some 

indication of the nature and extent of the schemes Holmes 

devised between 1994 and 1996 to defraud his clients and 

acquaintances. 

In October of 1994, one of Holmes' clients was involved 

in a protracted business dispute. In anticipation of 

litigation, Holmes asked his client to deposit money in an 

escrow account under Holmes' name while the matter was 

being resolved. Holmes then prepared a fabricated 

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settlement agreement for a non-existent lawsuit and forged 

the opposing party's signature. In connection with this 

scheme, Holmes produced what he represented to be court 

orders to which he forged the signatures first of United 

States District Judge James Giles and later of United States 

District Judge Norma L. Shapiro. Thereafter, Holmes

withdrew money from the escrow account that his client 

had funded and forwarded that money to his client as the 

purported settlement. To distract the client's requests for 

the additional funds he was to receive under the 

"settlement," Holmes invented more lies. 

Also in October of 1994, Holmes, presented with several 

bonds belonging to the aunt and uncle of his neighbor, 

forged the signature of his neighbor's dying uncle without 

the neighbor's knowledge, had a friend notarize the

signature, redeemed the bonds, and deposited the money, 

totaling over $150,000, in his own account. 

In January of 1995, Holmes created a fraudulent lowincome housing investment venture and fabricated 

documents that attested to the viability and soundness of 

the prospect. Eleven investors made checks payable to an 

account held by Holmes. After making one quarterly 

payment to his investors, Holmes admitted that he had 

spent all of the investors' money. 

Shortly thereafter, Holmes defrauded a client who had 

come to him with a tax problem by eliciting money from the 

client for a contrived settlement with the federal 

government. Holmes then used the "settlement" money for 

his own gain. He elicited additional money from the same 

client for a non-existent state tax liability, and then again 

for an investment scheme. 

In another scheme in 1995, Holmes persuaded two 

clients who were finally in a position to satisfy their 

outstanding federal tax obligations to write checks which he 

undertook to use to pay off taxes owed but which he

instead placed straight into his bank account. Although he 

eventually returned the money, he failed to satisfy his 

clients' outstanding tax obligations as promised. In yet 

another tax scheme, Holmes took advantage of two clients 

for whom he had been filing business tax returns for years 

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by selling them fictitious tax credits and claiming nonexistent low-income housing tax credits on their tax 

returns. 

Further, in early 1996 Holmes, acting in conspiracy with 

two of the three cousins of a man who died intestate, 

prepared a false will naming one of the cousins as the 

executor and naming the two cousins as the sole 

beneficiaries of the estate. Holmes forged the signature of 

the deceased testator and, acting with the two cousins, 

established an estate account from which all three drew for 

their personal benefit. 

In addition, Holmes engaged in money laundering. 

Between February and June of 1996, he withdrew money 

from the account established in the fake will scheme and 

purchased cashier's checks from Mellon Bank in an 

attempt to conceal the origin of the money. Thereafter, he 

used the cashier checks to pay off victims of his other 

schemes and to make purchases for his general benefit. 

Eventually, all of the above-mentioned schemes were

discovered and Holmes was charged in two indictments. 

Holmes pled guilty pursuant to a plea agreement in 

exchange for the dismissal of 114 counts from one 

indictment. His sentence was calculated under the 

Sentencing Guidelines. He was sentenced for fraud 

pursuant to U.S.S.G. S 2F1.1, which has a base offense 

level of 6, to which there were enhancements of twelve 

levels for the amount of loss, U.S.S.G. S 2F1.1 (b)(1)(M); two 

levels for more than minimal planning, U.S.S.G.S 2F1.1 

(b)(2)(A); two levels for vulnerable victim, U.S.S.G. S 3A1.1; 

four levels for aggravating role, U.S.S.G. S 3B1.1(a); and two 

levels for abuse of a position of trust or use of a special 

skill, U.S.S.G. S 3B1.3. At the request of the government, 

the District Court departed upwards two additional levels 

pursuant to S 5K2.0 based on Holmes' extraordinary abuse 

of a position of trust because the court believed the twolevel enhancement for abuse of a position of trust was 

insufficient. 

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II. 

A. 

Holmes asserts that the District Court erred in granting 

an upward departure for extraordinary abuse of trust. He 

argues that there was nothing extraordinary about his 

situation that warranted the upward departure, and 

contends that the other level enhancements included in his 

sentence accounted for any egregious actions on his part so 

that the two-level upward departure was in effect double 

counting. 

In determining the appropriateness of an upward 

departure, we must first determine "whether a factor is a 

permissible basis for departure under any circumstances," 

or, in other words, we must decide as a matter of law if 

departure was warranted. Koon v. United States , 518 U.S. 

81, 100 (1996). This phase of the review is plenary. United 

States v. Kikumura, 918 F.2d 1084, 1098 (3d Cir. 1990). If 

it is established that an upward departure is appropriate, 

we must then determine whether the degree of the 

departure was reasonable. Id. 

Under U.S.S.G. S 5K2.0, a district court may either

increase or decrease the offense level if it believes that the 

level contemplated by the sentencing guideline does not 

accurately reflect the nature of the case. U.S.S.G. S 5K2.0; 

United States v. Corrigan, 128 F.3d 330, 333 (6th Cir. 

1997). Grounds for departure include the finding of an 

aggravating circumstance not contemplated by the 

Commission or, if contemplated, the presence of a factor 

that far exceeds the expectation of the commissioners. 

U.S.S.G. S 5K2.0; United States v. Ventura, 146 F.3d 91, 97 

(2d Cir. 1998). Also, if a factor is not normally part of the 

equation in sentencing outside the guideline range, but is 

present in an unusual degree and distinguishes a case from 

the heartland of cases covered by the guidelines, departure 

is appropriate. U.S.S.G. S 5K2.0. Finally, the commentary to 

S 5K2.0 suggests that a court may be presented with a case 

where none of the characteristics or circumstances 

individually distinguish the case from the heartland cases, 

yet the court may find that a combination of the 

characteristics and circumstances make it extraordinary. 

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Holmes argues that his activities in this case were

precisely of the kind envisioned by the sentencing 

guidelines, and therefore could not be the subject of a 

departure. The guideline for abuse of a position of trust, 

S 3B1.3, provides that "[i]f the defendant abused a position 

of public or private trust, or used a special skill, in a 

manner that significantly facilitated the commission or 

concealment of the offense," the court should increase the 

sentence by two levels. Holmes refers to our opinion in 

United States v. Copple, 24 F.3d 535, 548 (3d Cir. 1994), 

where we held that a scheme involving thirty-one victims 

and millions of dollars of stolen money was not outside the 

heartland of fraud cases. Id. at 548. Copple is not

analogous to the situation here because the defendant 

there was not charged with abuse. Rather, the District 

Court in Copple upwardly departed based on the number of 

victims and the amount of monetary loss involved. Id. at 

547. 

Holmes also refers to United States v. Bennett , 161 F.3d 

171 (3d Cir. 1998), where the district court imposed a twolevel enhancement for abuse of trust but did not upwardly 

depart for the same offense even though the scheme in that 

case was extensive. In Bennett, however, the prosecution 

did not ask for an upward departure, so the court had no 

opportunity to review whether the abuse of trust in that 

case fell outside the heartland. See id. at 195-96.

The District Court in this case explained its reasons for 

the upward departure as follows: 

 I am of the view that the two point enhancement for 

 abuse of position of trust under 3B1.3 is inadequate to 

 reflect the widespread fraud and criminal activity in 

 this case. The act of signing a judge's signature, the act 

 of preparing a will and forging it after a decedent has 

 died and all of the other various acts of a violation of 

 trust to the various victims, some as attorney, some as 

 accountant, I find are extraordinary. 

App. at 72. The court later added: 

 A case like this, you don't really grasp the case 

 because it's just figures and documents, but if you 

 read the victim impact statements, it comes alive and 

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 there are people who will be suffering from this for the 

 rest of their lives because it has affected their 

 retirement income in some cases, it has affected their 

 expectations in others. 

App. at 87. 

Holmes perpetuated various and distinct schemes, all 

involving abuse of positions of trust. He prepared legal 

documents out of whole cloth, and then forged the 

signature of two federal judges. He defrauded clients, next 

door neighbors, and investors. His activities were 

successful in eight separate schemes because of the

positions of trust he held. We see nothing in the 

background and commentary sections that accompany the 

abuse-of-trust guideline that suggests the Sentencing 

Commission envisioned multiple acts of abuse of trust to 

the degree that was present in this case. Cf. Ventura, 146 

F.3d at 97 ("[T]he language of the guideline and 

commentary suggest that the rule was drafted without 

consideration that the defendant might engage in multiple 

episodes of obstructive conduct."). Accordingly, we agree 

with the District Court that the type and extent of Holmes' 

activities are beyond our experience and are not of the kind 

envisioned by the guideline for abuse of a position of trust. 

Holmes next contends that the departure is not justified 

because the factors not sufficiently accounted for under the 

abuse-of-trust provision are accounted for elsewhere in the 

adjustments that were made. First, he argues that the 

twelve-level enhancement he received for the amount of loss 

under U.S.S.G. S 2F1.1(b)(1)(M) considers the same factors 

on which the District Court based its decision to upwardly 

depart. He points us to the District Court's statement that 

the motion for upward departure was granted because"the 

two-point enhancement for abuse of a position of trust 

under 3B1.3 is inadequate to reflect the widespread fraud 

and criminal activity in this case." Contrary to Holmes' 

assertion, however, the District Court's statement focuses 

on the impact and suffering caused by Holmes' deceptions 

and the breadth and manner in which Holmes carried out 

his endeavors while in a position of trust, rather than on 

the number of people affected or the amount of economic 

loss incurred. 

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Nor does the two-level enhancement Holmes received for 

"more than minimal planning," U.S.S.G. S 2F1.1(b)(2)(A), 

account for his extraordinary abuse of trust. We have 

stated that "[w]hether a defendant's crime involved `more 

than minimal planning' considers the deliberative aspects 

of a defendant's conduct and criminal scheme, and does 

not necessarily include consideration of the defendant's 

position of trust, if any." United States v. Georgiadis, 933 

F.2d 1219, 1226 (3d Cir. 1991). If, as Georgiadis clearly 

indicates, adjustments for more than minimal planning and 

abuse of a position of trust do not amount to double 

counting, it follows that a departure based on extraordinary 

abuse of trust does not doubly count factors considered in 

an adjustment for more than minimal planning. Similarly, 

Holmes' increase under U.S.S.G. S 3A1.1 for a vulnerable 

victim does not speak to the manner and extent to which 

he defrauded those victims, and the four-level increase 

Holmes received for an "aggravating role" under U.S.S.G. 

S 3B1.1(a) reflects his leadership role in his extensive 

criminal activities rather than the egregious manner in 

which he abused his position of trust. 

Finally, the government did not move for departure solely 

on the fact that Holmes possessed a special skill as an 

attorney, as Holmes suggests. Instead, the government 

merely emphasized the fact that Holmes was in a position 

of trust because he had the special skills that made others 

confident in his abilities. U.S.S.G. S 3B1.3 (abuse of trust) 

does not prohibit an enhancement under S 3B1.1 

(aggravating role) if both prongs of U.S.S.G. S 3B1.3 are 

violated. Accordingly, we conclude that the District Court's 

decision to upwardly depart for extraordinary abuse of trust 

was not made on a legally impermissible basis. 

Having reached that conclusion, it requires considerably 

less discussion to affirm the reasonableness of the degree of 

departure. In Koon, the Supreme Court advised that on this 

issue we must allow the district courts considerable 

discretion to determine the degree to which a departure is 

warranted. 518 U.S. at 100. The departure of an additional 

two levels for abuse of a position of trust under the 

circumstances of this case was reasonable. We therefore 

hold that the two-level upward departure was within the 

District Court's discretion. 

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B. 

Holmes challenges the Order requiring him to pay 

restitution in the amount of $1,899,784.80 for all the 

offenses he committed between 1994 and 1996. Our review 

of this legal issue is plenary. Holmes contends that under 

the Victim and Witness Protection Act (VWPA), 18 U.S.C. 

S 3664, the statute applicable to all offenses occurring prior 

to April 24, 1996, the district courts were required to make 

a determination of the defendant's ability to pay before 

imposing restitution. In this case, all but one of Holmes' 

schemes took place prior to April 24, 1996. The government 

agrees with the need for a remand. It reads the District 

Court's order as properly ordering $1,320,872.59 in

restitution under the Mandatory Victim Restitution Act 

(MVRA) for the fake will scheme, but concedes that the 

court ordered restitution in the amount of $578,912.30 

under the VWPA. 

According to the VWPA, the court must "consider the

financial resources of the defendant, the financial needs 

and earning ability of the defendant . . . and other such 

factors the court deems appropriate." 18 U.S.C.S 3663(a). 

We have asked the district courts to " `make specific 

findings as to the factual issues that are relevant to the 

application of the restitution provisions of the VWPA.' " 

United States v. Logar, 975 F.2d 958, 961 (3d Cir. 1992) 

(quoting United States v. Palma, 760 F.2d 475, 480 (3d Cir. 

1985)). Because the District Court did not undertake the 

factual inquiry that is required of it before determining the 

amount of restitution Holmes should pay for all the

offenses falling under the purview of the VWPA, we are 

obliged to vacate the restitution order and remand the case 

so that the necessary factual findings may be made 

concerning Holmes' ability to pay. 

C. 

Holmes also argues that the District Court erred in

imposing the special assessment of $8,650. Holmes failed 

to object to the special assessment and thus we review for 

plain error. 

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As Holmes notes correctly, the special assessment was 

based on 165 counts from the two indictments. However, 

on July 31, 1998, the District Court dismissed 114 of the 

165 counts pursuant to the government's request. 

Therefore, the assessment should have been based on 51 

counts, the number of counts left after the dismissal. 

Holmes argues the correct total should be $2,950, which he 

computes as $50 per count for the 43 counts on offenses 

occurring prior to April 24, 1996, and $100 per count for 

the 8 counts on offenses occurring after April 24, 1996. The 

government agrees that we must remand for this purpose. 

On remand, the District Court will have the opportunity to 

impose the correct total special assessment. 

III. 

For the reasons set forth, we will affirm the judgment of 

conviction and the portion of the sentence that sets the 

term of imprisonment. We will vacate so much of the

sentence as imposes the order of restitution and the special 

assessment and remand for further proceedings. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

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