### 1999 D e c i sion s O p inion s of the U nit e d

S t a t e s C our t of Appe al s for the Thir d C ir c uit

9-29-1999 

# U nit ed S t a t es v

. H olmes

P r e c e de n t i al or N on-P r e c e de n t i al :

D ock e t 98-1703

F o l lo w thi s a nd a dd it ion al w ork s a t : h tt p://d i g it alc ommon s .l a w

. v i l l a no v a

. e du/thir dc ir c uit_1999

Thi s de c i sion i s br ou gh t t o y ou for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t a t e s C our t of Appe al s for the Thir d C ir c uit a t V i l l a no v a

U niv e r sit y S choo l of L a

w Di g it al R e posit or y

. I t h as be e n a c c e pt e d for inclusion in 1999 D e c i sion s b y a n a uthor i z e d a dmini s tr a t or of V i l l a no v a

U niv e r sit y S choo l of L a

w Di g it al R e posit or y

. F or mor e infor m a t ion, p le as e c on t a ct Be n j a min

. C a rl s on@l a

w

. v i l l a no v a

. e du

. 

### R e c omme nde d C it a t ion

" U nit e d S t a t e s v

. H o lme s " (1999). 1999 D e cisio n s

. P a pe r 267.
h tt p://d i g it alc ommon s .l a

w

. v i l l a no v a

. e du/thir dc ir c uit_1999/267Filed 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 th e 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 Ho lmes 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 Distri ct Court's upward departure from the sentencing guidel ines by two levels for extraordinary abuse of a position of trust, the court's imposition of restitution without forma lly determining his ability to pay, and the court's cal culation 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 client s and acquaintances.

In October of 1994, one of Holmes' clients was invo lved in a protracted business dispute. In anticipation o f litigation, Holmes asked his client to deposit mone y in an
escrow account under Holmes' name while the matter was being resolved. Holmes then prepared a fabricated

2settlement 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 c ourt orders to which he forged the signatures first of U nited States District Judge James Giles and later of Unit ed States District Judge Norma L. Shapiro. Thereafter, Holmes withdrew money from the escrow account that his cli ent had funded and forwarded that money to his client a s the purported settlement. To distract the client's requ ests for
the additional funds he was to receive under the "settlement," Holmes invented more lies.

Also in October of 1994, Holmes, presented with sev eral bonds belonging to the aunt and uncle of his neighb or, 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 mo ney, totaling over $150,000, in his own account.

In January of 1995, Holmes created a fraudulent low income housing investment venture and fabricated documents that attested to the viability and soundn ess 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 h ad spent all of the investors' money.

Shortly thereafter, Holmes defrauded a client who h ad come to him with a tax problem by eliciting money f rom 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 t heir 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. Alth ough he eventually returned the money, he failed to satisfy his clients' outstanding tax obligations as promised. I n yet another tax scheme, Holmes took advantage of two cl ients for whom he had been filing business tax returns fo r years

3by selling them fictitious tax credits and claiming nonexistent low-income housing tax credits on their ta x
returns.

Further, in early 1996 Holmes, acting in conspiracy with
two of the three cousins of a man who died intestat e, 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 sign ature of the deceased testator and, acting with the two cous ins,
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 mone y from the account established in the fake will schem e and purchased cashier's checks from Mellon Bank in an attempt to conceal the origin of the money. Thereaf ter, he used the cashier checks to pay off victims of his o ther schemes and to make purchases for his general benef it.

Eventually, all of the above-mentioned schemes were discovered and Holmes was charged in two indictment s. 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 offe nse level of 6, to which there were enhancements of twe lve 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 2F 1.1 (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 gove rnment, 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 t he twolevel enhancement for abuse of a position of trust was insufficient.

4II.

A.

Holmes asserts that the District Court erred in gra nting an upward departure for extraordinary abuse of trus t. He argues that there was nothing extraordinary about h is 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 d ouble counting.

In determining the appropriateness of an upward departure, we must first determine "whether a facto r is a permissible basis for departure under any circumsta nces," or, in other words, we must decide as a matter of l aw if departure was warranted. Koon v. United States , 51 8 U.S. 81, 100 (1996). This phase of the review is plenary . United States v. Kikumura, 918 F.2d 1084, 1098 (3d Cir. 19 90). If it is established that an upward departure is appro priate, 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 believ es 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 C ir. 1997). Grounds for departure include the finding of an aggravating circumstance not contemplated by the Commission or, if contemplated, the presence of a f actor that far exceeds the expectation of the commissione rs. U.S.S.G. S 5K2.0; United States v. Ventura, 146 F.3 d 91, 97 (2d Cir. 1998). Also, if a factor is not normally p art of the equation in sentencing outside the guideline range, but is present in an unusual degree and distinguishes a ca se from the heartland of cases covered by the guidelines, d eparture is appropriate. U.S.S.G. S 5K2.0. Finally, the comm entary 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 heartlan d cases, yet the court may find that a combination of the
characteristics and circumstances make it extraordi nary.

5Holmes 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 commissio n or concealment of the offense," the court should incre ase the sentence by two levels. Holmes refers to our opinio n in United States v. Copple, 24 F.3d 535, 548 (3d Cir. 1994), where we held that a scheme involving thirty-one vi ctims and millions of dollars of stolen money was not out side the heartland of fraud cases. Id. at 548. Copple is not analogous to the situation here because the defenda nt there was not charged with abuse. Rather, the Distr ict Court in Copple upwardly departed based on the numb er of victims and the amount of monetary loss involved. I d. at

547.

Holmes also refers to United States v. Bennett , 16 1 F.3d 171 (3d Cir. 1998), where the district court impose d a twolevel enhancement for abuse of trust but did not up wardly depart for the same offense even though the scheme in that case was extensive. In Bennett, however, the prosec ution did not ask for an upward departure, so the court h ad 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 reaso ns for the upward departure as follows:

I am of the view that the two point enhancem ent for abuse of position of trust under 3B1.3 is in adequate to reflect the widespread fraud and criminal ac tivity in this case. The act of signing a judge's sign ature, the act of preparing a will and forging it after a d ecedent has
died and all of the other various acts of a violation of trust to the various victims, some as attorn ey, 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

6there 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 affe cted their expectations in others.

App. at 87.

Holmes perpetuated various and distinct schemes, al l 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 clien ts, 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 t he abuse-of-trust guideline that suggests the Sentenci ng Commission envisioned multiple acts of abuse of tru st to the degree that was present in this case. Cf. Ventu ra, 146 F.3d at 97 ("[T]he language of the guideline and commentary suggest that the rule was drafted withou t consideration that the defendant might engage in mu ltiple 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 just ified because the factors not sufficiently accounted for under the abuse-of-trust provision are accounted for elsewher e in the adjustments that were made. First, he argues that t he
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 u pwardly depart. He points us to the District Court's statem ent that the motion for upward departure was granted because "the two-point enhancement for abuse of a position of tr ust under 3B1.3 is inadequate to reflect the widespread fraud and criminal activity in this case." Contrary to Ho lmes' assertion, however, the District Court's statement focuses on the impact and suffering caused by Holmes' decep tions
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 econ omic
loss incurred.

7Nor 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 ha ve stated that "[w]hether a defendant's crime involved `more than minimal planning' considers the deliberative a spects of a defendant's conduct and criminal scheme, and d oes not necessarily include consideration of the defend ant's position of trust, if any." United States v. Georgi adis, 933 F.2d 1219, 1226 (3d Cir. 1991). If, as Georgiadis c learly indicates, adjustments for more than minimal planni ng and abuse of a position of trust do not amount to doubl e counting, it follows that a departure based on extr aordinary abuse of trust does not doubly count factors consid ered in an adjustment for more than minimal planning. Simil arly,
Holmes' increase under U.S.S.G. S 3A1.1 for a vulne rable victim does not speak to the manner and extent to w hich he defrauded those victims, and the four-level incr ease Holmes received for an "aggravating role" under U.S .S.G. S 3B1.1(a) reflects his leadership role in his exte nsive criminal activities rather than the egregious manne r 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 a s an attorney, as Holmes suggests. Instead, the governme nt merely emphasized the fact that Holmes was in a pos ition of trust because he had the special skills that mad e 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 Distric t 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 conside rably
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 considerabl e discretion to determine the degree to which a depar ture is warranted. 518 U.S. at 100. The departure of an add itional two levels for abuse of a position of trust under t he
circumstances of this case was reasonable. We there fore hold that the two-level upward departure was within the
District Court's discretion.

8B.

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 re view of this legal issue is plenary. Holmes contends tha t under the Victim and Witness Protection Act (VWPA), 18 U. S.C. S 3664, the statute applicable to all offenses occu rring prior to April 24, 1996, the district courts were require d to make a determination of the defendant's ability to pay b efore imposing restitution. In this case, all but one of Holmes' schemes took place prior to April 24, 1996. The gov ernment agrees with the need for a remand. It reads the Dis trict 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 othe r such factors the court deems appropriate." 18 U.S.C.S 36 63(a). We have asked the district courts to " `make specif ic findings as to the factual issues that are relevant to the application of the restitution provisions of the VW PA.' " 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 undertak e the factual inquiry that is required of it before deter mining 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 f ailed to object to the special assessment and thus we rev iew for plain error.

9As Holmes notes correctly, the special assessment w as

based on 165 counts from the two indictments. Howev er, 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 dismiss al. Holmes argues the correct total should be $2,950, w hich he computes as $50 per count for the 43 counts on offe nses occurring prior to April 24, 1996, and $100 per cou nt for the 8 counts on offenses occurring after April 24, 1996. The government agrees that we must remand for this purp ose. On remand, the District Court will have the opportu nity to impose the correct total special assessment.

III.

For the reasons set forth, we will affirm the judgm ent of conviction and the portion of the sentence that set s the term of imprisonment. We will vacate so much of the sentence as imposes the order of restitution and th e special assessment and remand for further proceedings.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

10